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8-K - FORM 8-K - RELIV INTERNATIONAL INCrelv20200813_8k.htm

Exhibit 99.1

 

NEWS RELEASE

 

For more information, contact:

 

Steve Albright

Chief Financial Officer                    

(636) 733-1305                         

 

FOR IMMEDIATE DISTRIBUTION

 

Reliv International Reports Second-Quarter Financial Results for 2020

 

CHESTERFIELD, MO, August 14, 2020 – Reliv International, Inc. (NASDAQ:RELV), a developer and marketer of nutritional supplements that promote optimal health, today reported its financial results for the second quarter of 2020.

 

Reliv reported net sales of $8.0 million for the second quarter of 2020 compared with net sales of $8.3 million in the second quarter of 2019, a decrease of 2.9%. Net sales in the United States increased to $6.1 million in the second quarter of 2020, which represented a 3.1% increase in net sales when compared to the prior-year quarter. Net sales in Reliv’s foreign markets decreased 18.0% in the second quarter of 2020 compared with the prior-year quarter. All foreign markets experienced decreases in net sales, including decreases in net sales in Asia and Europe of 18.3% and 20.4%, respectively, in the second quarter of 2020. The decreases in foreign net sales were primarily the result of local business disruptions caused by COVID-19 pandemic.

 

Reliv reported a net loss for the second quarter of 2020 of $199,000 (loss per diluted share of $0.11) compared to a net loss of $388,000 (loss per diluted share of $0.22) in the second quarter of 2019. The loss from operations for the second quarter of 2020 was $277,000 compared to a loss from operations of $366,000 in the same period in 2019. Results from operations in the second quarter of 2020 improved from the prior-year quarter as selling, general and administrative expenses decreased by $188,000 to $3.5 million in the second quarter of 2020 compared to $3.7 million in the prior-year quarter; however, the decline in sales did not permit the Company to reach profitability in the quarter.

 

Net sales for the first six months of 2020 were $18.3 million, which represented a 3.1% increase compared to same period in 2019. Net sales in the United States increased by 7.0% and net sales in Reliv’s foreign markets decreased by 7.6% in the first half of 2020 compared with the first half of last year. Net sales in Reliv’s foreign markets decreased by 6.7% during the first half of 2020 when the impact of foreign currency fluctuation is removed.

 

Reliv reported net income of $463,000, or $0.27 per diluted share in the first six months of 2020, compared to net income of $236,000 or $0.13 per diluted share in the same period of 2019. The improvement in the first six months of 2020 is the result of the increase in sales and resulting gross margin, coupled with the income tax benefit in the first quarter of 2020 generated by the net operating loss carryback of $225,000 provided under the CARES Act.

 

Reliv had cash and cash equivalents of $2.7 million as of June 30, 2020, compared to $1.6 million as of December 31, 2019. Net cash generated by operating activities was $222,000 in the first six months of 2020.

 

 

 

As of June 30, 2020, Reliv had 25,490 active Distributors – an increase of 0.6% from June 30, 2019. The number of Master Affiliates increased by 5.7% compared to the year-ago total, driven by the growth in Master Affiliates in Asia of 48.9%. Master Affiliate is the level at which Distributors are eligible to earn generation royalties. As of June 30, 2020, Reliv had 13,020 retail customers and Preferred Customers in total – a decrease of 12.6% from June 30, 2019. The actual number of customers is much higher as many Distributors (approximately 74% in the U.S.) join Reliv to purchase our products at a discount and do not participate in the business opportunity and the count also does not include those customers that buy product directly from distributors rather than from the Company. 

 

“In spite of the obstacles created by the COVID-19 pandemic, our business showed its resiliency during the second quarter of 2020,” commented Ryan A. Montgomery, Chief Executive Officer. “We were able to generate a modest increase in sales in the United States as our company and distributors continue to adapt our business model and use of technology to the ‘new normal’ of life during these challenging times.”

 

“We continue to enhance our online tools for distributors for their outreach to new potential customers and distributors, as well our communications with our distributors through the use of Zoom video calls, online training videos, and other features available through our Reliv mobile app,” Montgomery added.

 

In place of its traditional U.S. distributor conference originally planned to be held in St. Louis in late July, Reliv will instead host a world-wide online conference on August 28-29. Registration is free to all distributors and registered customers. “We are well into the process of creating the content for this first-ever virtual Reliv conference, with portions of the conference targeted to our markets in Asia-Pacific and Europe. We are excited by the opportunity of reaching out to a much larger audience, not only in the United States, but all over the Reliv world.”

 

In international operations, net sales in all foreign markets decreased as local COVID-19 guidelines were generally more restrictive than those in the United States. “After a difficult April in our foreign markets, we saw steady improvements each month as the restrictions eased,” noted Montgomery. “We are hopeful for a full recovery of our foreign operations overall in the coming months as people see the value of our products and in the home-based business opportunity that Reliv provides.”

 

About Reliv International, Inc.

 

Reliv International, based in Chesterfield, MO, develops and markets nutritional supplements that promote optimal nutrition. Reliv supplements address core nutrition, targeted solutions and overall wellness and now include a line of RLV hemp extracts. Reliv is the exclusive provider of LunaRich® products, which optimize levels of lunasin, a soy peptide that works at the epigenetic level to promote optimal health. The company sells its products through an international network marketing system of independent distributors in 13 countries. Learn more about Reliv at reliv.com, or on FacebookTwitter or Instagram.

 

Statements made in this news release that are not historical facts are “forward-looking” statements (as defined in the Private Securities Litigation Reform Act of 1995) that involve risks and uncertainties and are subject to change at any time. These forward-looking statements may include, but are not limited to, statements containing words such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “continue” or similar expressions. Factors that could cause actual results to differ are identified in the public filings made by Reliv with the Securities and Exchange Commission. More information on factors that could affect Reliv’s business and financial results are included in its public filings made with the Securities and Exchange Commission, including its Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, copies of which are available on the Company’s web site, reliv.com.

 

--FINANCIAL HIGHLIGHTS FOLLOW –

 

 

 

Reliv International, Inc. and Subsidiaries

               
                 

Condensed Consolidated Balance Sheets

               
   

June 30

   

December 31

 
   

2020

   

2019

 
   

(Unaudited)

   

(Audited)

 

Assets

               

Current Assets:

               

Cash and cash equivalents

  $ 2,730,672     $ 1,630,779  

Accounts receivable, less allowances of $5,000 in 2020 and 2019

    279,920       107,369  

Notes & accounts receivables & deposits - related parties

    889,022       1,099,228  

Inventories

    3,028,031       2,701,688  

Other current assets

    855,741       326,454  
                 

Total current assets

    7,783,386       5,865,518  
                 

Notes & accounts receivables - related parties

    2,361,910       2,418,921  

Other assets

    2,431,384       2,581,717  

Net property, plant and equipment

    4,281,323       4,440,840  
                 

Total Assets

  $ 16,858,003     $ 15,306,996  
                 

Liabilities and Stockholders' Equity

               
                 

Accounts payable, accruals & other current liabilities

  $ 3,741,717     $ 3,489,157  

Long-term debt - current

    833,649       500,000  

Long-term debt, less current portion

    528,351       -  

Other noncurrent liabilities

    242,771       216,196  

Stockholders' equity

    11,511,515       11,101,643  
                 

Total Liabilities and Stockholders' Equity

  $ 16,858,003     $ 15,306,996  

 

 

Consolidated Statements of Operations

                               
   

Three months ended June 30

   

Six months ended June 30

 
   

2020

   

2019

   

2020

   

2019

 
   

(Unaudited)

   

(Unaudited)

   

(Unaudited)

   

(Unaudited)

 

Product sales

  $ 7,371,162     $ 7,603,041     $ 16,919,979     $ 16,414,038  

Freight income

    446,707       479,881       1,004,802       999,822  

Other revenue

    198,691       174,091       374,444       332,657  
                                 

Net Sales

    8,016,560       8,257,013       18,299,225       17,746,517  
                                 

Costs and expenses:

                               

Cost of goods sold

    2,202,488       2,268,992       4,857,331       4,702,723  

Distributor royalties and commissions

    2,590,078       2,665,093       5,918,533       5,782,665  

Selling, general and administrative

    3,501,104       3,688,944       7,278,786       7,428,472  
                                 

Total Costs and Expenses

    8,293,670       8,623,029       18,054,650       17,913,860  
                                 

Income (loss) from operations

    (277,110 )     (366,016 )     244,575       (167,343 )
                                 

Other income (expense):

                               

Interest income

    39,048       46,218       78,710       95,480  

Interest expense

    (7,933 )     (10,075 )     (14,038 )     (15,487 )

Other income (expense):

    100,938       4,768       30,032       (660 )

Gain on sale of fixed assets

    -       -       -       434,549  
                                 

Income (loss) before income taxes

    (145,057 )     (325,105 )     339,279       346,539  

Provision (benefit) for income taxes

    54,000       63,000       (124,000 )     111,000  
                                 

Net income (loss)

  $ (199,057 )   $ (388,105 )   $ 463,279     $ 235,539  
                                 
                                 

Earnings (loss) per common share - Basic & Diluted

  $ (0.11 )   $ (0.22 )   $ 0.27     $ 0.13  

Weighted average shares

    1,746,000       1,746,000       1,746,000       1,746,000  

 

 

 

Reliv International, Inc. and Subsidiaries

                                 
                                                 

Net sales by Market

                                               

(in thousands)

 

Three months ended June 30,

   

Change from

 
   

2020

   

2019

   

prior year

 
   

Amount

   

% of Net

Sales

   

Amount

   

% of Net

Sales

   

Amount

   

%

 
                                                 

United States

  $ 6,088       75.9 %   $ 5,905       71.5 %   $ 183       3.1 %

Australia/New Zealand

    119       1.5 %     132       1.6 %     (13 )     -9.8 %

Canada

    126       1.6 %     140       1.7 %     (14 )     -10.0 %

Mexico

    125       1.6 %     153       1.8 %     (28 )     -18.3 %

Europe

    602       7.5 %     756       9.2 %     (154 )     -20.4 %

Asia

    957       11.9 %     1,171       14.2 %     (214 )     -18.3 %
                                                 

Consolidated Total

  $ 8,017       100.0 %   $ 8,257       100.0 %   $ (240 )     -2.9 %

 

 

Net sales by Market

                                               

(in thousands)

 

Six months ended June 30,

   

Change from

 
   

2020

   

2019

   

prior year

 
   

Amount

   

% of Net

Sales

   

Amount

   

% of Net

Sales

   

Amount

   

%

 
                                                 

United States

  $ 13,930       76.1 %   $ 13,016       73.4 %   $ 914       7.0 %

Australia/New Zealand

    289       1.6 %     309       1.7 %     (20 )     -6.5 %

Canada

    285       1.6 %     340       1.9 %     (55 )     -16.2 %

Mexico

    253       1.4 %     289       1.6 %     (36 )     -12.5 %

Europe

    1,564       8.5 %     1,695       9.6 %     (131 )     -7.7 %

Asia

    1,978       10.8 %     2,098       11.8 %     (120 )     -5.7 %
                                                 

Consolidated Total

  $ 18,299       100.0 %   $ 17,747       100.0 %   $ 552       3.1 %

 

 

 

Reliv International, Inc. and Subsidiaries

                         
                                         

Retail and Preferred Customers/Active Distributors/Master Affiliates and Above by Market

 

 
                                         
   

As of 6/30/2020

 
   

Retail

Customers

   

Preferred

Customers

   

Active

Distributors

   

Total

Customers and

Distributors

   

Master

Affiliates and

Above

 
                                         
                                         

United States

    3,650       1,740       17,370       22,760       1,950  

Australia/New Zealand

    50       240       660       950       80  

Canada

    90       20       450       560       70  

Mexico

    30       110       1,110       1,250       80  

Europe

    710       580       1,610       2,900       270  

Asia

    1,050       4,750       4,290       10,090       700  
                                         

Consolidated Total

    5,580       7,440       25,490       38,510       3,150  

 

 

   

As of 6/30/2019

 
   

Retail

Customers

   

Preferred

Customers

   

Active

Distributors

   

Total

Customers and

Distributors

   

Master

Affiliates and

Above

 
                                         
                                         

United States

    3,730       1,540       17,750       23,020       1,980  

Australia/New Zealand

    40       230       680       950       70  

Canada

    90       30       500       620       60  

Mexico

    10       90       1,100       1,200       100  

Europe

    810       820       1,710       3,340       300  

Asia

    2,690       4,810       3,610       11,110       470  
                                         

Consolidated Total

    7,370       7,520       25,350       40,240       2,980  

 

 

   

Change in %

 
   

Retail

Customers

   

Preferred

Customers

   

Active

Distributors

   

Total

Customers and

Distributors

   

Master

Affiliates and

Above

 
                                         
                                         

United States

    -2.1 %     13.0 %     -2.1 %     -1.1 %     -1.5 %

Australia/New Zealand

    25.0 %     4.3 %     -2.9 %     0.0 %     14.3 %

Canada

    0.0 %     -33.3 %     -10.0 %     -9.7 %     16.7 %

Mexico

    200.0 %     22.2 %     0.9 %     4.2 %     -20.0 %

Europe

    -12.3 %     -29.3 %     -5.8 %     -13.2 %     -10.0 %

Asia

    -61.0 %     -1.2 %     18.8 %     -9.2 %     48.9 %
                                         

Consolidated Total

    -24.3 %     -1.1 %     0.6 %     -4.3 %     5.7 %

 

 

The table above sets forth, as of June 30, 2020 and 2019, the number of our Retail Customers/Preferred Customers/Active Distributors and Master Affiliates and above.  The total number of active distributors includes Master Affiliates and above. We define an active retail or preferred customer as one that has placed a product order in the prior twelve months, and we define an active distributor as one that enrolls as a distributor or renews his or her distributorship during the prior twelve months. Many individuals join Reliv as distributors to obtain our products at a discount (approximately 74% of distributors in the United States) and may not participate in the Reliv business opportunity. Master Affiliates and above are distributors that have attained the highest level of discount and are eligible for royalties generated by Master Affiliate groups in their downline organization.