RELIV INTERNATIONAL INC (Form: 10-K, Received: 03/29/2019 10:32:17)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

____________

FORM 10-K

ANNUAL REPORT PURSUANT TO

SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

(Mark One)

☒	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fis cal year ended December 31, 201 8
OR

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________to_________

Commission File Number

000-19932

RELIV’ INTERNATIONAL, INC.

(Exact name of Registrant as specified in its charter)

Delaware		371172197
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

136 Chesterfield Industrial Boulevard
Chesterfield, Missouri		63005
(Address of principal executive offices)		(Zip Code)

(636) 537-9715

Registrant’s telephone number, including area code

Securities registered pursuant to Sections 12(b) of the Act:

Title of Each Class

Name of Each Exchange on Which Registered

Common Stock, par value $0.001

NASDAQ Global Select Market

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☑

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☑

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☑

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☐

Smaller reporting company ☑ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

Based upon the closing price of $4.83 per share of the registrant’s common stock as reported on the NASDAQ Global Select Market on June 29, 2018, the aggregate market value of the common stock held by non-affiliates of the registrant was approximately $5.4 million. (The determination of stock ownership by non-affiliates was made solely for the purpose of responding to the requirements of the Form and the registrant is not bound by this determination for any other purpose.)

The number of shares outstanding of the registrant’s common stock as of March 18, 2019 was 1,746,499 (excluding treasury shares).

Documents Incorporated by Reference

Document

Part of Form 10-K into Which

Document Is Incorporated

Sections of the registrant’s definitive Proxy Statement for the Annual Meeting of Stockholders to be held on May 23, 2019, which is expected to be filed no later than 120 days after December 31, 2018

Part III

1. Nature of Business and Significant Accounting Policies

Nature of Business

Reliv’ International, Inc. (the Company) produces a proprietary line of nutritional supplements addressing basic nutrition, specific wellness needs, weight management, and sports nutrition. These products are sold by subsidiaries of the Company to a sales force of independent distributors of the Company that sell products directly to consumers. The Company and its subsidiaries sell products to distributors throughout the United States and in Australia, Austria, Canada, France, Germany, Ireland, Malaysia, Mexico, the Netherlands, New Zealand, the Philippines, Singapore, and the United Kingdom.

Basis of Presentation

The consolidated financial statements include the accounts of the Company and its foreign and domestic subsidiaries. All significant intercompany accounts and transactions have been eliminated.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Cash Equivalents

The Company's policy is to consider the following as cash and cash equivalents: demand deposits and short-term investments with a maturity of three months or less when purchased.

Inventories

Inventories are valued at the lower of cost or market. Product cost includes raw materials, labor, and overhead costs and is accounted for on a first-in, first-out basis. On a periodic basis, the Company reviews its inventory levels, as compared to future demand requirements and the shelf life of the various products. Based on this review, the Company records inventory write-downs when necessary.

Sales aids and promotional materials inventories represent distributor kits, product brochures, and other sales and business development materials which are held for sale to distributors. Cost of the sales aids and promotional materials held for sale are capitalized as inventories and subsequently recorded to cost of goods sold upon recognition of revenue when sold to distributors. All other advertising and promotional costs are expensed when incurred.

F-8

Reliv’ International, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

1. Nature of Business and Significant Accounting Policies (continued)

Property, Plant, and Equipment

Property, plant, and equipment are stated on the cost basis. Depreciation is computed using the straight-line or an accelerated method over the useful life of the related assets. Generally, computer equipment and software are depreciated over 3 to 5 years, office equipment and machinery over 7 years, and real property over 39 years.

Foreign Currency Translation and Transaction Gains or Losses

All balance sheet accounts have been translated using the exchange rates in effect at the balance sheet date. Statements of net income (loss) amounts have been translated using the average exchange rate for the year. The gains and losses resulting from the changes in exchange rates from year to year have been reported in other comprehensive income (loss). The foreign currency translation adjustment is the only component of accumulated other comprehensive loss. If applicable, foreign currency translation adjustments exclude income tax expense (benefit) as certain of the Company’s investments in non-U.S. subsidiaries are deemed to be reinvested for an indefinite period of time. Foreign currency transaction gains (losses) were $32,577 and $20,659 for 2018 and 2017, respectively.

Basic and Diluted Earnings (Loss) per Share

Basic earnings (loss) per common share are computed using the weighted average number of common shares outstanding during the year. Diluted earnings (loss) per common share are computed using the weighted average number of common shares and potential dilutive common shares that were outstanding during the period. Potential dilutive common shares consist of outstanding stock options, outstanding stock warrants, and convertible preferred stock. See Note 9 for additional information regarding earnings (loss) per share.

Stock-Based Compensation

The Company has stock-based incentive plans under which it may grant stock option, restricted stock, and unrestricted stock awards. The Company recognizes stock-based compensation expense based on the grant date fair value of the award and the related vesting terms. Depending upon the characteristics of the option, the fair value of stock-based awards is primarily determined using the Black-Scholes model, which incorporates assumptions and management estimates including the risk-free interest rate, expected volatility, expected option life, and dividend yield. The Company recognizes forfeitures when incurred. See Note 8 for additional information.

The Company accounts for options granted to non-employees and warrants granted to distributors under the fair value approach required by FASB ASC Topic 505-50, “Equity Based Payments to Non-Employees.”

F-9

Reliv’ International, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

1. Nature of Business and Significant Accounting Policies (continued)

Fair Value Measurements

FASB ASC Topic 820, “Fair Value Measurements and Disclosures,” defines fair value, establishes a framework for measuring fair value, and requires disclosures about fair value measurements required under other accounting pronouncements. See Note 6 for further discussion.

Income Taxes

The provision for income taxes is computed using the liability method. The primary differences between financial statement and taxable income result from financial statement accruals and reserves and differences between depreciation and amortization for book and tax purposes.

Unrecognized tax benefits are accounted for as required by FASB ASC Topic 740 which prescribes a more likely than not threshold for financial statement presentation and measurement of a tax position taken or expected to be taken in a tax return. See Note 12 for further discussion.

Advertising

Costs of sales aids and promotional materials are capitalized as inventories. All other advertising and promotional costs are expensed when incurred. The Company recorded $19,300 and $22,300 of advertising expense in 2018 and 2017, respectively.

Research and Development Expenses

Research and development expenses, which are charged to selling, general, and administrative expenses as incurred, were $473,000 and $488,000 in 2018 and 2017, respectively.

Amortizable Intangible Assets

The Company records intangible assets based on management’s determination of the fair value of the respective assets at the time of acquisition. Determining the fair value of intangible assets is judgmental and involves the use of significant estimates and assumptions of future company operations. The Company bases its fair value estimates and related asset lives on assumptions it believes to be reasonable but that are unpredictable and inherently uncertain. Actual future results may differ from these estimates.

Intangible assets estimated to have finite lives are amortized over their estimated economic life under the straight-line method; such method correlates to management’s estimate of the assets’ economic benefit. Based on management’s estimates at origination, these lives range from two to seventeen years. Related amortization expense is presented within Selling, General, and Administrative in the accompanying consolidated statements of net loss and comprehensive loss. As of December 31, 2018, remaining lives of intangible assets range from six to eleven years.

F-10

Reliv’ International, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

1. Nature of Business and Significant Accounting Policies (continued)

Revenue Recognition

On January 1, 2018, the Company adopted Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (including amendments), and applied the new revenue standard to all contracts using the modified retrospective method. Under this method, prior periods are not restated. Upon adoption, the Company recognized the cumulative effect of applying the new revenue standard as a reduction of $367,568 (with zero net tax effect) to the opening retained earnings (accumulated deficit) balance.

The new revenue standard defines a five step process to recognize revenues. The Company accounts for a contract with its independent distributors (including customers) when there is a legally enforceable contract, the rights of the parties are identified, the contract has commercial substance, and collectability of the contract consideration is probable. Product sales revenue (principally nutritional and dietary supplements) and commission expenses are recorded when control is transferred to independent distributors, which occurs at the time of shipment. Generally, net sales reflect product sales less the distributor discount of 20 percent to 40 percent of the suggested retail price. The Company presents distributor royalty and commission expense as an operating expense, rather than a reduction to net sales, as these payments are not made to the purchasing distributor. At point of sale, the Company receives payment by credit card, personal check, or guaranteed funds for contracts from independent distributors and makes related commission payments in the following month.

Under this new revenue standard, the Company determined that the timeframe for recognizing the revenue performance obligation for membership fees-type revenue would be lengthened to more closely correlate with the distributor (including customer) membership terms of generally twelve months. Based upon all membership fees contracts still in existence as of December 31, 2017, the adoption of the new revenue standard resulted in the recognition of a deferred revenue liability balance of $367,568. The Company receives payment for membership fees at the beginning of the annual membership term and recognizes membership fees revenue on a straight-line basis in correlation with the completion of its performance obligation under the membership term. At December 31, 2018, the deferred revenue liability balance was $337,234.

Actual and estimated sales returns are classified as a reduction of net sales. The Company estimates and accrues a reserve for product returns based on the Company’s return policy and historical experience. The Company’s return policy allows for distributors to return product only upon termination of his or her distributorship. Allowable returns are limited to saleable product which was purchased within twelve months of the termination for a refund of 100% of the original purchase price less any distributor royalties and commission received relating to the original purchase of the returned products. For the years ended December 31, 2018 and 2017, total returns as a percent of net sales were approximately 0.17% and 0.25%, respectively.

F-11

Reliv’ International, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

1. Nature of Business and Significant Accounting Policies (continued)

Revenue Recognition (continued)

The Company records handling and freight income as a component of net sales and records handling and freight costs as a component of cost of products sold. Total net sales do not include sales tax as the Company considers itself a pass-through conduit for collecting and remitting applicable sales taxes.

In accordance with the new revenue standard requirements, the disclosure of the impact of adoption to the Company’s results from operations are as follows:

	Year Ended December 31, 2018
				Without			Effect of
				Adoption of			Change
	As Reported			ASU 2014-09			Higher/(Lower)
Operating results
Net sales	$	36,115,741		$	36,086,633		$	29,108
Net loss		(1,903,341	)		(1,932,449	)		29,108

The Company does not anticipate that the adoption of the new revenue standard will be material to net sales and net income on an ongoing basis.

New Accounting Pronouncements – Not Yet Adopted

In February 2016, the Financial Accounting Standards Board (FASB) issued ASU No. 2016-02, Leases (Topic 842) which supersedes the existing lease guidance. This update requires lessees to recognize a lease liability and a lease asset for all leases, including operating leases, on its balance sheet. The update also expands the required quantitative and qualitative disclosures surrounding leases. Subsequent to its issuance of ASU No. 2016-02, the FASB issued related ASU’s, including ASU No. 2018-11, Leases (Topic 842): Targeted Improvements, which provides for another transition method in addition to the modified retrospective approach originally required by ASU No. 2016-02. This transition method option under ASU No. 2018-11 allows entities to initially apply the new leases standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption.

As required, the Company will adopt ASU 2016-02 on January 1, 2019. The Company anticipates applying certain practical expedients permitted in the standard, as well as the prospective transition method. The Company’s adoption of this new lease standard will result in the January 1, 2019 recognition of right-of-use assets and lease liabilities of approximately $460,000 in the Company’s consolidated financial statements. The Company leases certain office facilities, storage, and equipment.

F-12

Reliv’ International, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

1. Nature of Business and Significant Accounting Policies (continued)

Going Concern

The Company has incurred operating losses, declining net sales, and negative net cash flows over its most recent five years. Management estimates that these unfavorable trends are more likely than not to continue for the foreseeable future, and as a result, the Company will require additional financial support to fund its operations and execute its business plan. As of December 31, 2018, the Company had $1,989,974 in cash and cash equivalents which may not be sufficient to fund the Company’s planned operations through one year after the date the consolidated financial statements are issued, and accordingly, there is substantial doubt about the Company’s ability to continue as a going concern. The analysis used to determine the Company’s ability to continue as a going concern does not include cash sources outside of the Company’s direct control that management expects to be available within the next twelve months.

The Company may not be able to obtain sufficient additional funding through monetizing certain of its existing assets, sourcing additional borrowings, and issuing additional equity, or any other means, and if it is able to do so, these available sources of funds may not be on satisfactory terms. The Company’s ability to raise additional capital in the equity markets, should the Company choose to do so, is dependent on a number of factors, including, but not limited to, the market demand for the Company’s common stock, which itself is subject to a number of business risks and uncertainties, as well as the uncertainty that the Company would be able to raise such additional capital at a price or on terms that are favorable to the Company

The Company has taken several steps which management believes will result in an improved financial position, operating results, and cash flows. As detailed in Note 7 of these consolidated financial statements, in January 2019, the Company has borrowed $500,000 of its available $750,000 revolving line of credit balance. In March 2019, the Company and its lender have agreed to extend its available $750,000 revolving line of credit agreement to April 28, 2020.

As detailed in Note 2 of these consolidated financial statements, in January 2019, the Company entered into a Purchase Agreement with Nutracom, LLC (Nutracom) pursuant to which Nutracom purchased the assets used by the Company in its manufacturing operations. Assets purchased by Nutracom from the Company were financed by the Company under payment terms scheduled to provide incoming funds to the Company of $200,000 or more per year. The Company has also entered into an agreement for Nutracom to lease a significant portion of the Company’s headquarters building. Management believes that these transactions with Nutracom will be favorable to its financial position, operating results, and cash flows; however, there are risks and uncertainties which arise with these Nutracom transactions and their impact to the Company’s operations.

F-13

Reliv’ International, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

1. Nature of Business and Significant Accounting Policies (continued)

Going Concern (continued)

Should the aforementioned changes to the company’s operations not provide sufficient cash flow improvement or should the Company be unable to obtain sufficient additional capital or borrowings, the Company may have to engage in any or all of the following activities: (i) seek to monetize its headquarters building via traditional bank lending or a sale and leaseback-type transaction; (ii) monetizing its note receivable from a distributor (see Note 11); (iii) restructure its core distributor business model including recruiting, promotions, incentives, and other activities; (iv) cease operations in certain geographic regions, and (v) reduce employee compensation and benefits.

These actions may have a material adverse impact on the Company’s ability to achieve certain of its planned objectives. Even if the Company is able to source additional funding, it may be forced to significantly reduce its operations if its business operating performance does not improve. If the Company is unable to source additional funding, it may be forced to significantly reduce or shut down its operations. These consolidated financial statements have been prepared on a going concern basis and do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary in the event the Company can no longer continue as a going concern.

2. Assets Held For Sale

On January 1, 2019, the Company entered into a Purchase Agreement with Nutracom, LLC (Nutracom) pursuant to which Nutracom purchased the following assets used by the Company in its manufacturing operations:

●

Inventories (sold at cost of $1.56 million) and,

●

Machinery and other equipment with a net book value of $565,000 (sold for $1 million; gain on disposal of $435,000).

Nutracom was formed by the Company’s manufacturing operations management which included former officers of the Company. Employees of the Company’s manufacturing operations were offered employment by Nutracom.

Prior to its approval of the transaction, the Company’s Board of Directors formed a special committee consisting of the Company’s independent directors to review the transaction. To assist in its review, the special committee engaged a qualified third-party expert to opine a fairness opinion on the transaction and related agreements as detailed below.

F-14

Reliv’ International, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

2. Assets Held For Sale (continued)

Concurrently with the execution of the Purchase Agreement, the Company entered into several agreements with Nutracom including a product supply agreement for a term of seven years, a fulfillment agreement, and a facility lease agreement whereby Nutracom will lease manufacturing, warehouse, and certain office space of the Company’s headquarters building from the Company for a term of seven years, with a Nutracom option for an additional five-year term. Annual lease amounts range from $193,000 to $410,000 per year over the seven-year term.

Nutracom provided the following consideration to the Company for the manufacturing operations and related identified assets and agreements:

●

$1 million secured promissory note, seven year term, fixed interest rate of 5.5%, principal and interest payable monthly;

●

$764,344 unsecured promissory note, seven year term, fixed interest rate of 7.0%, interest only payable for the first two years with monthly payment of principal and interest thereafter under a ten-year amortization schedule. The face value of the unsecured note includes the first year’s rent due the Company under the facility lease agreement.

●

Nutracom management transferred to the Company its ownership of 99,200 shares of the Company’s common stock valued at $540,144.

●

Nutracom issued to the Company a non-voting Class B 15% equity membership interest in Nutracom, LLC. The Class B interest does not share in any profits or losses from operations of Nutracom. As defined within the Nutracom Operating Agreement, upon any merger, consolidation, disposition, or liquidation of Nutracom, the Class B equity membership interest converts to a Class A equity membership interest.

●

Commencing January 1, 2020, the Company’s Class B interest will be entitled to receive a percentage, (ranging from 1.0% to 1.25%) of Nutracom’s annual revenues (excluding Nutracom’s revenues from sales to the Company).

The Company’s non-voting Class B 15% equity membership interest in Nutracom was valued by the aforementioned third-party expert at $505,000. As the Company’s non-voting membership interest does not participate in the management of Nutracom, nor does the Company share in any Nutracom operating profits or losses, the Company anticipates accounting for its Nutracom equity investment under the cost method.

As of December 31, 2018, the Company has presented inventories and machinery and other equipment sold to Nutracom as a current asset under the caption of “Assets held for sale” in the accompanying consolidated balance sheets. The Company will account for the Nutracom transactions in its first quarter 2019 financial results.

F-15

Reliv’ International, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

8. Stockholders’ Equity

Stock Options – Incentive Stock Plans

The Company sponsors an incentive stock plan (the “2014 Plan”) allowing for a maximum of 142,857 shares to be granted in the form of either incentive stock options, non-qualified stock options, restricted stock awards, or unrestricted stock awards. Employees, directors, advisors, and consultants of the Company are eligible to receive the grants. This plan has been approved by the stockholders of the Company. The Compensation Committee of the Board of Directors administers the plan.

The 2014 Plan provides that options may be issued under the Plan at an option price not less than fair market value of the stock at the time the option is granted. Under the plan, restricted stock of the Company may be granted at no cost to the grantee. The grantees are entitled to dividends and voting rights for their respective shares. Restrictions limit the sale or transfer of these shares during the requisite service period. In addition, the committee may grant or sell unrestricted stock at a purchase price to be determined by the committee. Vesting terms and restrictions, if applicable, under the plan, are set by the committee and will be 10 years or less. The 2014 Plan expires in 2024.

In May 2017, the Company’s shareholders voted to approve a 2017 Incentive Stock Plan (2017 Plan) which authorizes the issuance of up to 200,000 shares of the Company’s common stock in various forms of stock options and/or stock awards. The 2017 Plan will not become effective until registered with the Securities and Exchange Commission.

A summary of the Company’s stock option activity and related information for the years ended December 31 follows:

	2018					2017
	Options			Weighted Avg. Exercise Price		Options			Weighted Avg. Exercise Price
Outstanding beginning of the year		140,424		$	7.85		236,844		$	$8.14
Granted		-					-
Exercised		-					-
Expired and forfeited		(58,998	)		7.96		(96,420	)		8.57
Outstanding at end of year		81,426		$	7.77		140,424		$	7.85

Exercisable at end of year		14,655		$	7.77		13,713		$	7.77

Compensation cost for the stock option plan was approximately $21,000 ($21,000 net of tax) and $27,000 ($27,000 net of tax) for the years ended December 31, 2018 and 2017, respectively, and has been recorded in selling, general, and administrative expense. As of December 31, 2018, the total remaining unrecognized compensation cost related to the non-vested portion of time vesting stock options totaled $19,000 ($19,000 net of tax), which will be amortized over the weighted remaining requisite service period of 1.17 years. The aggregate intrinsic value of stock options outstanding and currently exercisable at December 31, 2018 was $-0-.

F-20

Reliv’ International, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

8. Stockholders’ Equity (continued)

Distributor Stock Purchase Plan

In July 2009, the Company established a Distributor Stock Purchase Plan (2009 Plan) which replaced a similar plan which had expired.

The plan allows distributors who have reached the “Ambassador” status the opportunity to allocate up to 10% of their monthly compensation into the plan to be used to purchase the Company’s common stock at the current market value. The plan also states that at the end of each year, the Company will grant warrants to purchase additional shares of the Company’s common stock based on the number of shares purchased by the distributors under the plan during the year. The warrant exercise price will equal the market price for the Company’s common stock at the date of issuance. The warrants issued shall be in the amount of 25% of the total shares purchased under the plan during the year and the warrants are fully vested upon grant.

The Company records expense under the fair value method for warrants granted to distributors. Total expense for the warrants was $3,000 and $6,600 in 2018 and 2017, respectively.

A summary of the Company’s warrant activity for the years ended December 31 follows:

	2018					2017
	Warrants			Weighted Avg. Exercise Price		Warrants			Weighted Avg. Exercise Price

Outstanding beginning of the year		5,960		$	4.46		6,291		$	5.34
Granted		1,113			4.24		1,258			4.77
Exercised		-					-
Expired		(2,183	)		4.06		(1,589	)		8.19
Outstanding at end of year		4,890		$	4.58		5,960		$	4.46

Exercisable at end of year		4,890					5,960

			As of December 31, 2018
			Warrants Outstanding and Exercisable
Range of Exercise Prices			Warrants		Weighted Avg. Exercise Price		Weighted Avg. Remaining Life
	$4.24			1,113	$	4.24		3.00
	$4.64			2,519		4.64		1.00
	$4.77			1,258		4.77		2.00
$4.24	-	$4.77		4,890	$	4.58		1.71

F-21

Reliv’ International, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

8. Stockholders’ Equity (continued)

Distributor Stock Purchase Plan (continued)

The fair value of the warrants was estimated at the date of grant using a Black-Scholes option pricing model with the following assumptions:

	Year ended December 31
	2018			2017

Expected warrant life (years)		3.0			3.0
Risk-free weighted average interest rate		2.46	%		1.98	%
Stock price volatility		55.8	%		73.8	%
Dividend yield		0.0	%		0.0	%

The intrinsic value for stock warrants outstanding at December 31, 2018 was $-0-.

The 2009 Distributor Stock Purchase Plan was established with a ten-year life. As a result, there will be no further grants from this Plan. Upon exercise, forfeiture or expiration of all outstanding warrants, the Plan will terminate.

12. Income Taxes

Compenents of loss before income taxes:	Year ended December 31
	2018			2017

United States	$	(1,694,301	)	$	(30,606	)
Foreign		(111,040	)		(121,306	)
	$	(1,805,341	)	$	(151,912	)

Compenents of provision (benefit) for income taxes:	Year ended December 31
	2018			2017
Current:
Federal	$	(3,000	)	$	(2,000	)
State		4,000			5,000
Foreign		97,000			33,000
Total current		98,000			36,000

Deferred:
Federal		-			-
State		-			-
Foreign		-			509,000
Total deferred		-			509,000
	$	98,000		$	545,000

F-24

Reliv’ International, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

12. Income Taxes (continued)

The provision (benefit) for income taxes is different from the amounts computed by applying the United States federal statutory income tax rate of 21% and 34% for the years ended December 31, 2018 and 2017, respectively. The reasons for these differences are as follows:

	Year ended December 31
	2018			2017

Income taxes at U.S. statutory rate	$	(379,000	)	$	(52,000	)
State income taxes, net of federal benefit		7,000			11,000
Higher/(lower) effective taxes on earnings/losses in foreign countries		38,000			(65,000	)
Foreign corporate income taxes		97,000			33,000
Foreign tax credit carryover		-			(66,000	)
Life insurance settlement		118,000			-
GILTI		34,000			-
Nondeductible meals and entertainment expense		9,000			13,000
Valuation allowance, net		186,000			707,000
Other		(12,000	)		(36,000	)
	$	98,000		$	545,000

The Company has determined that it was more likely than not that its U.S. federal and various state net operating losses will not be realized based on projections of future U.S. taxable income, estimated reversals of existing taxable timing differences, and other considerations. Accordingly, the 2018 and 2017 income tax provisions include the impact of recording a full deferred tax asset valuation allowance of approximately $186,000 and $198,000, respectively, against the annual losses generated from a U.S. tax perspective. The Company has a deferred tax asset relating to domestic federal net operating loss carryforwards of approximately $451,000 at December 31, 2018 of which approximately $188,000 will expire between 2036 and 2037. The Company has a deferred tax asset of $3,118,000 at December 31, 2018 relating to foreign net operating loss carryforwards in various jurisdictions which principally do not expire. At December 31, 2018, the Company has recorded a full valuation allowance against all domestic and foreign net operating loss carryforward balances as it is more likely than not that this asset will not be realized.

As of December 31, 2017, management’s assessment of the realizability of its Europe’s subsidiary’s deferred tax assets concluded that it no longer meets the threshold of more likely than not based upon the subsidiary’s recent declining operating results. Accordingly, the Company recorded a full valuation allowance against the Europe subsidiary’s deferred tax assets with a corresponding deferred income tax charge of $509,000 in 2017.

F-25

Reliv’ International, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

12. Income Taxes (continued)

The components of the deferred tax assets and liabilities, and the related tax effects of each temporary difference at December 31, 2018 and 2017, are as follows:

	2018			2017
Deferred tax assets:
Inventory obsolescence reserve	$	53,000		$	62,000
Product refund reserve		-			7,000
Deferred revenue		91,000			-
Organization costs		117,000			127,000
Deferred compensation		97,000			94,000
Depreciation and amortization		2,000			-
Miscellaneous accrued expenses		23,000			13,000
Domestic net operating loss carryforwards		451,000			186,000
Foreign net operating loss carryforwards		3,118,000			3,413,000
Valuation allowance		(3,845,000	)		(3,767,000	)
		107,000			135,000
Deferred tax liabilities:
Depreciation and amortization		-			28,000
Foreign currency exchange		107,000			107,000
		107,000			135,000
Net deferred tax assets (liabilities)	$	-		$	-

The United States Tax Cuts and Jobs Act (TCJA) was enacted in December 2017, which significantly changed U.S. tax law, principally by permanently reducing the U.S. federal statutory rate to 21% effective January 1, 2018, implementing a territorial tax system, and imposing a repatriation tax on deemed repatriated earnings of foreign subsidiaries. The effect of the federal tax rate reduction to 21% was reflected as a reduction in the December 31, 2017 U.S. deferred tax asset balances with a corresponding reduction in the valuation allowance. Under the TCJA’s repatriation tax, the Company’s cumulative amount of unremitted foreign earnings and related tax was immaterial.

Securities and Exchange Commission (“SEC”) issued Staff Accounting Bulletin (“SAB”) 118 to provide guidance to companies on the reporting of the impacts of TCJA in their financial statements. Under SAB 118, the Company recorded affected items in fiscal year 2017 as provisional to allow additional time for clarifying technical guidance from Treasury and analysis of the effect to the Company’s current tax positions. In 2018, the Company has completed its analysis and did not record any adjustments to its 2017 provisional income tax amounts.

The TCJA introduced a new tax on global intangible low-taxed income (“GILTI”) effective as of January 1, 2018. The Company’s policy is to treat GILTI as a period cost when incurred.

F-26

Reliv’ International, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

12. Income Taxes (continued)

At December 31, 2018 and 2017, the Company had $32,000 and $36,000, respectively, of cumulative unrecognized tax benefits, of which only the net amount of $22,000 would impact the effective income tax rate if recognized.

The aggregate changes in the balance of net unrecognized tax benefits were as follows:

	2018			2017

Beginning of year	$	26,000		$	32,000
Settlements and effective settlements with tax authorities		-			-
Lapse of statute of limitations		(7,000	)		(6,000	)
Decrease to tax positions taken during prior periods		(3,000	)		(6,000	)
Increase to tax positions taken during current period		6,000			6,000
End of year	$	22,000		$	26,000

The Company applied applicable accounting guidance relating to accounting for uncertainty in income taxes. Reserves for uncertainty in income taxes are adjusted quarterly in light of changing facts and circumstances, such as the progress of tax audits, case law, and emerging legislation. The primary difference between gross unrecognized tax benefits and net unrecognized tax benefits is the U.S. federal tax benefit from state tax deductions. It is the Company’s practice to recognize interest and / or penalties related to income tax matters in income tax expense.

At December 31, 2018 and 2017, the Company had $10,000 and $11,000, respectively, accrued for interest and penalties within the balance of unrecognized tax benefits. The Company’s unrecognized tax benefits balance is included within other noncurrent liabilities on the consolidated balance sheets.

The Company, including its domestic and foreign subsidiaries, is subject to U.S. federal income tax as well as income tax of multiple state and foreign jurisdictions. The Company has concluded all U.S. federal income tax matters for years through 2014 and concluded years through 2014 with its primary state jurisdiction.

One of the Company’s foreign subsidiaries is presently under local country audit for alleged deficiencies (totaling approximately $800,000 plus interest at 20% per annum) in value-added tax (VAT) and withholding tax for the years 2004 through 2006. The Company, in consultation with its legal counsel, believes that there are strong legal grounds that it should not be liable to pay the majority of the alleged tax deficiencies. As of December 31, 2010, management estimated and reserved approximately $185,000 for resolution of this matter and recorded this amount within Selling, General, and Administrative expense in the 2010 Consolidated Statement of Income. In 2011, the Company made good faith deposits to the local tax authority under the tax agency’s administrative judicial resolution process. As of December 31, 2018, management’s estimated reserve (net of deposits) for this matter is approximately $172,500.

F-27

Reliv’ International, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Part I

Item No. 1	Business	1
Item No. 2	Properties	16
Item No. 3	Legal Proceedings	16

Part II

Item No. 5	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	17
Item No. 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item No. 8	Financial Statements and Supplementary Data	28
Item No. 9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	28
Item No. 9A	Controls and Procedures	28
Item No. 9B	Other Information	28

Part III

Item No. 10	Directors, Executive Officers and Corporate Governance	29
Item No. 11	Executive Compensation	29
Item No. 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	29
Item No. 13	Certain Relationships and Related Transactions, and Director Independence	29
Item No. 14	Principal Accounting Fees and Services	29

Part IV

Item No. 15	Exhibits and Financial Statement Schedules	29
Item No. 16	Form 10-K Summary	29

Product Category	Product Name	% of 201 8 Net Sales ⁽¹⁾		Year Introduced
Basic Nutrition	Reliv Now		17.3		1988
	Reliv Now with Whey		1.5		2018
	Reliv Classic		10.5		1988
	Now for Kids		6.3		2000

Specific Wellness	FibRestore		9.5		1993
	Arthaffect		6.9		1996
	ReversAge		3.6		2000
	SoySentials		1.5		1998
	CardioSentials		1.7		2005
	GlucAffect		1.0		2008
	24K		1.2		2011
	LunaRich X capsules		12.6		2013

Weight Management	Fit3 product line		2.5		2017
	Meal replacements		0.1		Various

Sports Nutrition	Innergize!		7.6		1991
	ProVantage		2.9		1997

Designation	Discount
Retail Distributor ⁽¹⁾		20	%
Affiliate		25	%
Key Affiliate		30	%
Senior Affiliate		35	%
Master Affiliate		40	% ⁽¹⁾
Director		40	% ⁽¹⁾
Key Director		40	% ⁽¹⁾
Senior Director		40	% ⁽¹⁾
Master Director/Ambassador		40	% ⁽¹⁾
Presidential Director/Ambassador		40	% ⁽¹⁾

Product	Patent Expiration Date

ReversAge	May 2021
ProVantage	December 2030
GlucAffect	November 2029
24K	February 2032
CardioSentials	January 2029

Location	Nature of Use	Square Feet		Owned/Leased

Chesterfield, MO, USA	corporate headquarters/call center/manufacturing/warehouse		126,000	Owned
Seven Hills (Sydney), Australia	central office/call center		1,000	Leased
Oakville, Ontario, Canada	warehouse/distribution		2,100	Leased
Guadalajara, Mexico	central office/warehouse/call center		2,300	Leased
Makati City (Manila), Philippines	central office/ warehouse/distribution		4,000	Leased
Redditch (Birmingham), England, UK	central office/ warehouse/distribution		11,500	Leased
Subang Jaya (Kuala Lumpur), Malaysia	central office/call center		300	Leased

	•	Innergize! is a sports supplement, containing vitamins and minerals designed for performance enhancement. Innergize! is available in every country where we operate. In Canada, the product is marketed as Optain due to local product regulations.

	•	During 2018, we sponsored numerous special events in cities across all of our markets led by corporate executives and/or experienced Ambassadors;

	•	For the key markets in which we operate, we sponsor our annual conference for distributors; and

Country	Year Entered	Country	Year Entered
United States	1988	Malaysia	2003
Australia	1991	Ireland	2003
New Zealand	1992	Singapore	2004
Canada	1992	Germany	2005
Mexico	1993	Austria	2006
United Kingdom ⁽¹⁾	1995	Netherlands	2006
Philippines	2000	France	2013

	•	help ensure that our network marketing system and products comply with all applicable regulations;

	High		Low		Dividend

Year Ending December 31, 201 8
Fourth Quarter	$	5.06	$	3.83	$	-
Third Quarter		5.26		4.62		-
Second Quarter		5.35		4.15		-
First Quarter		6.24		4.60		-

Year Ending December 31, 201 7
Fourth Quarter	$	8.44	$	3.72	$	-
Third Quarter		13.77		6.22		-
Second Quarter		9.00		5.18		-
First Quarter		8.87		4.13		-

Net Sales by Market	Year Ended December 31,
(in thousands)	201 8					201 7					Change from prior year
	Amount		% of Net Sales			Amount		% of Net Sales			Amount			%
	(dollars in thousands)
United States	$	27,673		76.6	%	$	32,475		77.7	%	$	(4,802	)		(14.8	)%
Australia/New Zealand		732		2.0			923		2.2			(191	)		(20.7	)
Canada		719		2.0			915		2.2			(196	)		(21.4	)
Mexico		474		1.3			445		1.0			29			6.5
Europe		3,973		11.0			4,578		11.0			(605	)		(13.2	)
Asia		2,545		7.1			2,453		5.9			92			3.8
Consolidated total	$	36,116		100.0	%	$	41,789		100.0	%	$	(5,673	)		(13.6	)%

Active Distributors/Master	December 31, 201 8				December 31, 201 7				% Change
Affiliates by Market	Active Distributors and Preferred Customers		Master Affiliates and Above		Active Distributors and Preferred Customers		Master Affiliates and Above		Active Distributors and Preferred Customers			Master Affiliates and Above

United States		19,810		2,340		23,050		2,820		(14.1	)%		(17.0	)%
Australia/New Zealand		960		90		1,100		110		(12.7	)		(18.2	)
Canada		560		80		660		90		(15.2	)		(11.1	)
Mexico		970		90		710		60		36.6			50.0
Europe		2,980		390		3,800		450		(21.6	)		(13.3	)
Asia		5,090		380		4,300		380		18.4			0.0
Consolidated total		30,370		3,370		33,620		3,910		(9.7	)%		(13.8	)%

Distributor Activity by Market																			International
	United States			AUS/NZ			Canada			Mexico			Europe			Asia			-- Total
Sales in USD (in 000's):
Year ended 12/31/2018	$	27,673		$	732		$	719		$	474		$	3,973		$	2,545		$	8,443
Year ended 12/31/2017	$	32,475		$	923		$	915		$	445		$	4,578		$	2,453		$	9,314

% change in sales-2018 vs. 2017:
Change in GAAP sales in USD		-14.8	%		-20.7	%		-21.4	%		6.5	%		-13.2	%		3.8	%		-9.4	%
Due to currency fluctuation		-			-2.1	%		0.1	%		-2.1	%		3.0	%		-4.1	%		0.0	%
Sales in local currency (non-GAAP)		-14.8	%		-18.6	%		-21.5	%		8.6	%		-16.2	%		7.9	%		-9.4	%

# of new distributors-2018 ⁽¹⁾		3,696			146			106			558			1,258			3,042			5,110
# of new distributors-2017 ⁽¹⁾		4,667			168			145			271			1,646			2,632			4,862
% change		-20.8	%		-13.1	%		-26.9	%		105.9	%		-23.6	%		15.6	%		5.1	%

# of new Master Affiliates-2018		330			9			14			50			86			171			330
# of new Master Affiliates-2017		534			8			15			15			108			215			361
% change		-38.2	%		12.5	%		-6.7	%		233.3	%		-20.4	%		-20.5	%		-8.6	%

# of Product orders-2018		107,731			4,452			2,418			3,496			13,000			29,791			53,157
# of Product orders-2017		125,648			5,537			3,060			3,235			16,246			25,926			54,004
% change		-14.3	%		-19.6	%		-21.0	%		8.1	%		-20.0	%		14.9	%		-1.6	%

Statement of Operations data
(amounts in thousands)	2018						2017
	Amount			% of net sales			Amount			% of net sales

Net sales	$	36,116			100.0	%	$	41,789			100.0	%

Costs and expenses:
Cost of products sold		9,710			26.9			9,401			22.5
Distributor royalties and commissions		11,749			32.6			14,686			35.1
Selling, general and adminstrative		16,521			45.7			17,885			42.8

Loss from operations		(1,864	)		(5.2	)		(183	)		(0.4	)
Interest income		93			0.3			102			0.2
Interest expense		(96	)		(0.3	)		(109	)		(0.3	)
Other income		62			0.2			38			0.1

Loss before income taxes		(1,805	)		(5.0	)		(152	)		(0.4	)
Provision for income taxes		98			0.3			545			1.3

Net loss	$	(1,903	)		(5.3	)%	$	(697	)		(1.7	)%

Loss per common share-Basic	$	(1.03	)				$	(0.38	)
Loss per common share-Diluted	$	(1.03	)				$	(0.38	)

Exhibit Number	Document

2.1	Purchase Agreement with Nutracom, LLC dated January 1, 2019 (filed herewith).

3.1	Second Amended and Restated Certificate of Incorporation (incorporated by reference to Appendix B of Schedule 14A of the Registrant filed on April 17, 2003).

3.2	Certificate of Amendment to the Second Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.2 to the Form 10-K of the Registrant for the year ended December 31, 2016)

3.3	By-Laws (incorporated by reference to the Registration Statement on Form S-3 of the Registrant filed on February 21, 2006).

3.4	Amendment to By-Laws dated March 22, 2001 (incorporated by reference to the Registration Statement on Form S-3 of the Registrant filed on February 21, 2006).

3.5	Certificate of Designation to Create a Class of Series A Preferred Stock for Reliv’ International, Inc. (incorporated by reference to Exhibit 3.1 to the Form 10-Q of the Registrant for quarter ended March 31, 2003).

4.1	Form of Reliv International, Inc. common stock certificate (incorporated by reference to the Registration Statement on Form S-3 of the Registrant filed on February 21, 2006).

10.1	Amended Exclusive License Agreement with Theodore P. Kalogris dated December 1, 1991 (incorporated by reference to Exhibit 10.1 to the Form 10-K of the Registrant for the year ended December 31, 1992).

10.2*	Robert L. Montgomery Employment Agreement dated June 19, 2007 (incorporated by reference to Exhibit 10.1 to the Form 8-K of the Registrant filed June 25, 2007).

10.3*	Carl W. Hastings Employment Agreement dated January 1, 2019 (filed herewith).

10.4*	Reliv’ International, Inc. Supplemental Executive Retirement Plan dated June 1, 1998 (incorporated by reference to Exhibit 10.19 to the Form10-K of the Registrant for year ended December 31, 1998).

10.5*	Reliv International, Inc. Employee Stock Ownership Plan and Trust dated August 29, 2006 (incorporated by reference to Exhibit 10.1 to the Form 8-K of the Registrant filed August 30, 2006).

10.6*	2009 Distributor Stock Purchase Plan (incorporated by reference to Appendix 1 of Form S-3 Registration Statement the Registrant filed July 1, 2009).

10.7*	2009 Incentive Stock Plan (incorporated by reference to Exhibit 10.1 to the Form S-8 Registration Statement the Registrant filed December 2, 2010).

10.8*	2014 Incentive Stock Plan (incorporated by reference to Exhibit 10.1 to the Form S-8 Registration Statement the Registrant filed November 19, 2014).

10.9*	Reliv International, Inc. Incentive Compensation Plan effective January 1, 2007 (incorporated by reference to Exhibit 10.1 to the Form 8-K of the Registrant filed May 31, 2007).

10.10*	R. Scott Montgomery Employment Agreement dated January 2, 2008 (incorporated by reference to Exhibit 10.1 to the Form 8-K of the Registrant filed January 4, 2008).

10.11*	Ryan A. Montgomery Employment Agreement dated January 2, 2008 (incorporated by reference to Exhibit 10.2 to the Form 8-K of the Registrant filed January 4, 2008).

10.12*	Steven D. Albright Employment Agreement dated January 2, 2008 (incorporated by reference to Exhibit 10.4 to the Form 8-K of the Registrant filed January 4, 2008).

10.13	Loan Sale Agreement between 2010-1 RADC/CADC Venture, LLC and Reliv International, Inc. dated March 16, 2012 (incorporated by reference to Exhibit 10.1 to the Form 10-Q of the Registrant for the quarter ended March 31, 2012).

10.14	Technology License Agreement by and between SL Technology, Inc. and Soy Labs, LLC dated July 23, 2013 (incorporated by reference to Exhibit 10.1 to the Form 8-K of the Registrant filed July 25, 2013).

10.15	Agreement by and among Reliv International, Inc., SL Technology, Inc., Soy Labs, LLC and 1Soy, Inc. dated July 23, 2013 (incorporated by reference to Exhibit 10.2 to the Form 8-K of the Registrant filed July 25, 2013).

10.16	Letter agreement between SL Technology, Inc. and Soy Labs, LLC dated September 2, 2016 (incorporated by reference to Exhibit 10.18 to the Form 10-K of the Registrant for the year ended December 31, 2016)

10.17	Promissory Note (revolving credit facility) dated September 30, 2015 among Reliv International, Inc., Reliv, Inc., Reliv World Corporation, and SL Technology, Inc., as Borrowers and Enterprise Bank & Trust (incorporated by reference to Exhibit 10.2 to the Form 10-Q of the Registrant filed November 13, 2015).

10.18	Business Loan Agreement dated September 30, 2015 among Reliv International, Inc., Reliv, Inc., Reliv World Corporation, and SL Technology, Inc., as Borrowers and Enterprise Bank & Trust (incorporated by reference to Exhibit 10.3 to the Form 10-Q of the Registrant filed November 13, 2015).

10.19	Deed of Trust dated September 30, 2015 between Reliv International, Inc. as Grantor and Enterprise Bank & Trust (incorporated by reference to Exhibit 10.4 to the Form 10-Q of the Registrant filed November 13, 2015).

10.20	First Amendment to Loan Agreement dated September 30, 2016 among Reliv International, Inc., Reliv, Inc., Reliv World Corporation, and SL Technology, Inc., as Borrowers and Enterprise Bank & Trust (incorporated by reference to Exhibit 10.1 to the Form 10-Q of the Registrant filed November 14, 2016).

10.21	Change in Terms Agreement (revolving credit facility) dated September 30, 2016 among Reliv International, Inc., Reliv, Inc., Reliv World Corporation, and SL Technology, Inc., as Borrowers and Enterprise Bank & Trust (incorporated by reference to Exhibit 10.2 to the Form 10-Q of the Registrant filed November 14, 2016).

10.22	Second Amendment to Loan Agreement dated April 11, 2018 among Reliv International, Inc., Reliv, Inc., Reliv World Corporation, and SL Technology, Inc., as Borrowers and Enterprise Bank & Trust (incorporated by reference to Exhibit 10.1 to the Form 10-Q of the Registrant filed May 15, 2018).

10.23	Change in Terms Agreement (revolving credit facility) dated April 30, 2018 among Reliv International, Inc., Reliv, Inc., Reliv World Corporation, and SL Technology, Inc., as Borrowers and Enterprise Bank & Trust (incorporated by reference to Exhibit 10.3 to the Form 10-Q of the Registrant filed May 15, 2018).

10.24	Third Amendment to Loan Agreement dated September 11, 2018 among Reliv International, Inc., Reliv, Inc., Reliv World Corporation, and SL Technology, Inc., as Borrowers and Enterprise Bank & Trust (incorporated by reference to Exhibit 10.1 to the Form 10-Q of the Registrant filed November 14, 2018).

10.25	Change in Terms Agreement (revolving credit facility) dated September 11, 2018 among Reliv International, Inc., Reliv, Inc., Reliv World Corporation, and SL Technology, Inc., as Borrowers and Enterprise Bank & Trust (incorporated by reference to Exhibit 10.2 to the Form 10-Q of the Registrant filed November 14, 2018).

10.26	Lease between Registrant (lessor) and Nutracom, LLC (lessee) dated January 1, 2019 (filed herewith).

10.27	Secured Term Note issued by Nutracom, LLC to Registrant dated January 1, 2019 (filed herewith).

10.28	Unsecured Term Note issued by Nutracom, LLC to Registrant dated January 1, 2019 (filed herewith).

10.29	Fourth Amendment to Loan Agreement dated March 25, 2019 among Reliv International, Inc., Reliv, Inc., Reliv World Corporation, and SL Technology, Inc., as Borrowers and Enterprise Bank & Trust (filed herewith)

10.30	Change in Terms Agreement (revolving credit facility) dated March 25, 2019 among Reliv International, Inc., Reliv, Inc., Reliv World Corporation, and SL Technology, Inc., as Borrowers and Enterprise Bank & Trust (filed herewith).

11	Statement re: computation of per share earnings (incorporated by reference to Note 9 of the Consolidated Financial Statements contained in Part IV).

21	Subsidiaries of the Registrant (filed herewith).

23	Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm (filed herewith).

31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended (filed herewith).

31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended (filed herewith).

32	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).

101	Interactive Data Files, including the following materials from the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, formatted in XBRL: (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Net Loss and Comprehensive Loss, (iii) the Consolidated Statements of Stockholders’ Equity, (iv) the Consolidated Statements of Cash Flows, and (v) the Notes to Consolidated Financial Statements.

By:	/s/ Ryan A. Montgomery
	Ryan A. Montgomery, Chief Executive Officer

Date: March 29, 2019

Pursuant to the requirements of the Securities Act of 1934, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By:	/s/ Robert L. Montgomery
	Robert L. Montgomery, Chairman of the Board of Directors

Date: March 29, 2019

By:	/s/ Steven D. Albright
	Steven D. Albright, Chief Financial Officer (and accounting officer)

Date: March 29, 2019

By:	/s/ Ryan A. Montgomery
	Ryan A. Montgomery, Chief Executive Officer, Director

Date: March 29, 2019

By:	/s/ Denis St. John
	Denis St. John, Director

Date: March 29, 2019

By:	/s/ Robert M. Henry
	Robert M. Henry, Director

Date: March 29, 2019

By:	/s/ John M. Klimek
	John M. Klimek, Director

Date: March 29, 2019

Consolidated Financial Statements:
Report of Independent Registered Public Accounting Firm	F-1
Consolidated Balance Sheets as of December 31, 2018 and 2017	F-2
Consolidated Statements of Net Loss and Comprehensive Loss for the years ended December 31, 2018 and 2017	F-4
Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2018 and 2017	F-5
Consolidated Statements of Cash Flows for the years ended December 31, 2018 and 2017	F-6
Notes to Consolidated Financial Statements – December 31, 2018	F-8

	December 31
	2018		2017
Assets
Current assets:
Cash and cash equivalents	$	1,989,974	$	3,272,788
Accounts receivable, less allowances of $5,000 in 2018 and $26,300 in 2017		400,759		29,760
Accounts due from employees and distributors		151,222		138,497
Inventories:
Finished goods		2,460,563		2,762,249
Raw materials		372,865		1,653,466
Sales aids and promotional materials		121,519		139,770
Total inventories		2,954,947		4,555,485

Refundable income taxes		22,712		26,552
Assets held for sale		2,124,939		-
Prepaid expenses and other current assets		441,453		372,602
Total current assets		8,086,006		8,395,684

Other assets		338,974		337,190
Cash surrender value of life insurance		-		3,086,522
Note receivable due from distributor		1,282,072		1,405,113
Intangible assets, net		1,948,263		2,174,248

Property, plant, and equipment		14,420,559		19,055,260
Less accumulated depreciation		9,722,009		13,378,021
Property, plant, and equipment, net		4,698,550		5,677,239




Total assets	$	16,353,865	$	21,075,996

										Accumulated
					Additional					Other
	Common Stock				Paid-In		Accumulated			Comprehensive			Treasury Stock
	Shares		Amount		Capital		Deficit			Loss			Shares		Amount			Total
Balance at December 31, 2016		2,110,013	$	2,110	$	30,565,144	$	(9,284,317	)	$	(1,030,205	)		264,853	$	(5,338,560	)	$	14,914,172
Net loss		-		-		-		(696,912	)		-			-		-			(696,912	)
Other comprehensive income (loss):
Foreign currency translation adjustment		-		-		-		-			113,551			-		-			113,551
Income tax effects of Tax Cuts & Jobs Act		-		-		-		(59,000	)		59,000			-		-			-
Total comprehensive loss																			(583,361	)
Stock-based compensation		-		-		33,776		-			-			-		-			33,776
Balance at December 31, 2017		2,110,013		2,110		30,598,920		(10,040,229	)		(857,654	)		264,853		(5,338,560	)		14,364,587
Net loss		-		-		-		(1,903,341	)		-			-		-			(1,903,341	)
Other comprehensive income (loss):
Foreign currency translation adjustment		-		-		-		-			(124,441	)		-		-			(124,441	)
Total comprehensive loss																			(2,027,782	)
Adoption of Accounting Standards Update 2014-09		-		-		-		(367,568	)		-			-		-			(367,568	)
Stock-based compensation		-		-		23,627		-			-			-		-			23,627
Balance at December 31, 2018		2,110,013	$	2,110	$	30,622,547	$	(12,311,138	)	$	(982,095	)		264,853	$	(5,338,560	)	$	11,992,864

	2018		2017

Land and land improvements	$	905,190	$	905,190
Building		9,964,523		9,950,190
Machinery and equipment		180,519		4,755,727
Office equipment		1,157,392		1,183,115
Computer equipment and software		2,212,935		2,261,038
		14,420,559		19,055,260
Less accumulated depreciation		9,722,009		13,378,021
	$	4,698,550	$	5,677,239

	2018		2017

Trade payables	$	2,105,814	$	1,667,495
Distributors' commissions		1,030,948		1,115,649
Sales taxes		195,802		154,958
Deferred revenue		337,234		-
Payroll and payroll taxes		210,288		261,916
	$	3,880,086	$	3,200,018

					Accumulated
	Gross Carrying Amount				Amortization
	2018		2017		2018		2017

Distributorship and related agreements	$	2,060,000	$	2,060,000	$	1,437,423	$	1,327,556
Lunasin technology license		1,954,661		1,954,661		628,975		512,857
	$	4,014,661	$	4,014,661	$	2,066,398	$	1,840,413

	Intangible
	Amortization

2019	$	226,000
2020		226,000
2021		226,000
2022		226,000
2023		226,000

	Carrying		Fair
Description	Amount		Value		Level 1		Level 2		Level 3

*December 31, 2018*
Note receivable	$	1,405,112	$	1,529,000		-	$	1,529,000		-
Marketable securities		339,000		339,000	$	339,000		-		-

December 31, 2017
Long-term debt	$	3,045,421	$	3,045,421		-	$	3,045,421		-
Note receivable		1,521,005		1,684,000		-		1,684,000		-
Marketable securities		330,000		330,000	$	330,000		-		-

	Level 1:	Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.

	Level 2:	Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets or similar assets or liabilities in markets that are not active.

	Level 3:	Unobservable inputs that reflect the reporting entity’s own assumptions.

	2018		2017

Term loan	$	-	$	2,545,421
Revolving line of credit		-		500,000
		-		3,045,421
Less current maturities		-		3,045,421
Long-term portion	$	-	$	-

2019	$	268,652
2020		186,168
2021		16,479
2022		16,479
2023		6,681
Thereafter		-
	$	494,459

	2018		2017

Net sales to external customers
United States	$	27,673,352	$	32,474,797
Australia/New Zealand		732,227		922,594
Canada		718,560		914,775
Mexico		474,372		445,299
Europe ⁽¹⁾		3,972,381		4,578,095
Asia ⁽²⁾		2,544,849		2,453,222
Total net sales	$	36,115,741	$	41,788,782

Assets by area
United States	$	13,584,424	$	18,100,872
Australia/New Zealand		540,591		572,368
Canada		166,533		265,629
Mexico		179,713		219,501
Europe ⁽¹⁾		867,008		1,032,641
Asia ⁽²⁾		1,015,596		884,985
Total consolidated assets	$	16,353,865	$	21,075,996

⁽¹⁾	Europe consists of United Kingdom, Ireland, France, Germany, Austria, and the Netherlands.
⁽²⁾	Asia consists of Philippines, Malaysia, and Singapore.

	2018		2017

Net sales by product category
Nutritional and dietary supplements	$	32,670,362	$	37,326,863
Sales aids, membership fees, and other		1,247,807		1,424,494
Handling & freight income		2,197,572		3,037,425
Total net sales	$	36,115,741	$	41,788,782

Inventory Value (est)	$1,700,000
+Prepaid Rent	+ $250,000
-Share Payment	- $540,144
-Membership Value	- $505,000

Initial Note Principal Amount	$904,856

	2.	Nutracom Intellectual Property . Reliv hereby sells, transfers and assigns to Nutracom any and all rights, title and interest in and to the ideas, concepts, formulas, products and associated intellectual property developed in connection with the Business for customers other than Reliv, as listed on Exhibit D.

	3.	Condition to Closing . The following will be conditions to Closing: