| | |
x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 371172197 |
(State or other jurisdiction of | (I.R.S. Employer Identification Number) |
incorporation or organization) | |
136 Chesterfield Industrial Boulevard | |
Chesterfield, Missouri | 63005 |
(Address of principal executive offices) | (Zip Code) |
Part I Financial Information | | |
| | |
Item No. 1 | Financial Statements (Unaudited) | 1 |
Item No. 2 | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 9 |
Item No. 4 | Controls and Procedures | 15 |
| | |
Part II Other Information | | |
| | |
Item No. 2 | Unregistered Sales of Equity Securities and Use of Proceeds | 15 |
Item No. 6 | Exhibits | 16 |
| | June 30 | | December 31 | | ||
| | 2013 | | 2012 | | ||
| | (unaudited) | | | | | |
Assets | | | | | | | |
| | | | | | | |
Current assets: | | | | | | | |
Cash and cash equivalents | | $ | 4,255,963 | | $ | 5,801,042 | |
Accounts receivable, less allowances of $32,000 in 2013 and $35,700 in 2012 | | | 172,899 | | | 247,087 | |
Accounts and note due from employees and distributors | | | 141,372 | | | 109,346 | |
Inventories | | | | | | | |
Finished goods | | | 3,691,195 | | | 3,661,289 | |
Raw materials | | | 1,634,295 | | | 1,332,293 | |
Sales aids and promotional materials | | | 256,520 | | | 269,334 | |
Total inventories | | | 5,582,010 | | | 5,262,916 | |
| | | | | | | |
Refundable income taxes | | | 22,261 | | | 10,632 | |
Prepaid expenses and other current assets | | | 1,396,611 | | | 688,669 | |
Deferred income taxes | | | 352,000 | | | 371,000 | |
Total current assets | | | 11,923,116 | | | 12,490,692 | |
| | | | | | | |
Other assets | | | 231,365 | | | 206,022 | |
Cash surrender value of life insurance | | | 2,343,146 | | | 2,083,420 | |
Note receivable due from distributor | | | 1,876,119 | | | 1,923,000 | |
Intangible assets, net | | | 1,366,630 | | | 1,443,635 | |
| | | | | | | |
Property, plant and equipment: | | | | | | | |
Land and land improvements | | | 883,563 | | | 883,563 | |
Building | | | 9,836,895 | | | 9,905,967 | |
Machinery & equipment | | | 3,769,327 | | | 3,767,910 | |
Office equipment | | | 1,194,484 | | | 1,231,215 | |
Computer equipment & software | | | 2,662,325 | | | 2,666,150 | |
| | | 18,346,594 | | | 18,454,805 | |
Less: Accumulated depreciation | | | 11,471,451 | | | 11,343,033 | |
Net property, plant and equipment | | | 6,875,143 | | | 7,111,772 | |
| | | | | | | |
Total assets | | $ | 24,615,519 | | $ | 25,258,541 | |
| | June 30 | | December 31 | | ||
| | 2013 | | 2012 | | ||
| | (unaudited) | | | | | |
Liabilities and stockholders' equity | | | | | | | |
| | | | | | | |
Current liabilities: | | | | | | | |
Accounts payable and accrued expenses: | | | | | | | |
Trade accounts payable and other accrued expenses | | $ | 3,441,196 | | $ | 2,924,111 | |
Distributors' commissions payable | | | 1,952,110 | | | 2,293,019 | |
Sales taxes payable | | | 171,354 | | | 283,700 | |
Payroll and payroll taxes payable | | | 354,061 | | | 484,170 | |
Total accounts payable and accrued expenses | | | 5,918,721 | | | 5,985,000 | |
| | | | | | | |
Current maturities of long-term debt | | | 444,807 | | | 629,631 | |
Total current liabilities | | | 6,363,528 | | | 6,614,631 | |
| | | | | | | |
Noncurrent liabilities: | | | | | | | |
Long-term debt, less current maturities | | | 2,194,129 | | | 2,401,312 | |
Deferred income taxes | | | 166,000 | | | 289,000 | |
Other noncurrent liabilities | | | 630,162 | | | 371,728 | |
Total noncurrent liabilities | | | 2,990,291 | | | 3,062,040 | |
| | | | | | | |
Stockholders' equity: | | | | | | | |
Preferred stock, par value $.001 per share; 3,000,000 shares authorized; -0- shares issued and outstanding in 2013 and 2012 | | | - | | | - | |
Common stock, par value $.001 per share; 30,000,000 authorized; 14,511,816 shares issued and 12,615,595 shares outstanding as of 6/30/2013; 14,511,816 shares issued and 12,619,640 shares outstanding as of 12/31/2012 | | | 14,512 | | | 14,512 | |
Additional paid-in capital | | | 30,097,038 | | | 30,074,801 | |
Accumulated deficit | | | (8,828,504) | | | (8,557,178) | |
Accumulated other comprehensive loss: | | | | | | | |
Foreign currency translation adjustment | | | (560,267) | | | (494,550) | |
Treasury stock | | | (5,461,079) | | | (5,455,715) | |
| | | | | | | |
Total stockholders' equity | | | 15,261,700 | | | 15,581,870 | |
| | | | | | | |
Total liabilities and stockholders' equity | | $ | 24,615,519 | | $ | 25,258,541 | |
(unaudited) | | Three months ended June 30 | | Six months ended June 30 | | ||||||||
| | 2013 | | 2012 | | 2013 | | 2012 | | ||||
| | | | | | | | | | | | | |
Product sales | | $ | 14,165,463 | | $ | 14,894,640 | | $ | 31,054,921 | | $ | 32,509,480 | |
Handling & freight income | | | 1,259,945 | | | 1,886,064 | | | 3,227,751 | | | 4,014,868 | |
| | | | | | | | | | | | | |
Net sales | | | 15,425,408 | | | 16,780,704 | | | 34,282,672 | | | 36,524,348 | |
| | | | | | | | | | | | | |
Costs and expenses: | | | | | | | | | | | | | |
Cost of products sold | | | 3,057,940 | | | 3,220,860 | | | 6,961,798 | | | 7,121,441 | |
Distributor royalties and commissions | | | 5,617,245 | | | 6,319,613 | | | 12,620,448 | | | 13,774,773 | |
Selling, general and administrative | | | 6,972,599 | | | 7,021,658 | | | 14,488,088 | | | 14,495,904 | |
| | | | | | | | | | | | | |
Total costs and expenses | | | 15,647,784 | | | 16,562,131 | | | 34,070,334 | | | 35,392,118 | |
| | | | | | | | | | | | | |
Income (loss) from operations | | | (222,376) | | | 218,573 | | | 212,338 | | | 1,132,230 | |
| | | | | | | | | | | | | |
Other income (expense): | | | | | | | | | | | | | |
Interest income | | | 38,668 | | | 40,863 | | | 75,832 | | | 50,177 | |
Interest expense | | | (18,493) | | | (31,295) | | | (35,995) | | | (62,214) | |
Other income / (expense) | | | (64,544) | | | (38,564) | | | (91,119) | | | (61,232) | |
| | | | | | | | | | | | | |
Income (loss) before income taxes | | | (266,745) | | | 189,577 | | | 161,056 | | | 1,058,961 | |
Provision (benefit) for income taxes | | | (53,000) | | | 87,000 | | | 180,000 | | | 424,000 | |
| | | | | | | | | | | | | |
Net income (loss) | | $ | (213,745) | | $ | 102,577 | | $ | (18,944) | | $ | 634,961 | |
| | | | | | | | | | | | | |
Other comprehensive income (loss): | | | | | | | | | | | | | |
Foreign currency translation adjustment | | | (48,944) | | | (51,228) | | | (65,717) | | | 58,544 | |
| | | | | | | | | | | | | |
Comprehensive income (loss) | | $ | (262,689) | | $ | 51,349 | | $ | (84,661) | | $ | 693,505 | |
| | | | | | | | | | | | | |
Earnings (loss) per common share - Basic | | $ | (0.02) | | $ | 0.01 | | $ | (0.00) | | $ | 0.05 | |
Weighted average shares | | | 12,616,000 | | | 12,507,000 | | | 12,617,000 | | | 12,499,000 | |
| | | | | | | | | | | | | |
Earnings (loss) per common share - Diluted | | $ | (0.02) | | $ | 0.01 | | $ | (0.00) | | $ | 0.05 | |
Weighted average shares | | | 12,708,000 | | | 12,678,000 | | | 12,707,000 | | | 12,658,000 | |
| | | | | | | | | | | | | |
Cash dividends declared per common share | | $ | 0.02 | | $ | 0.02 | | $ | 0.02 | | $ | 0.02 | |
| | Six months ended June 30 | | ||||
| | 2013 | | 2012 | | ||
| | | | | | | |
Operating activities: | | | | | | | |
Net income (loss) | | $ | (18,944) | | $ | 634,961 | |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | | | | | | | |
Depreciation and amortization | | | 438,648 | | | 486,892 | |
Stock-based compensation | | | 22,237 | | | 78,984 | |
Deferred income taxes | | | (103,000) | | | (35,000) | |
Foreign currency transaction (gain)/loss | | | 99,779 | | | 14,401 | |
(Increase) decrease in accounts receivable | | | 50,322 | | | (272,892) | |
(Increase) decrease in inventories | | | (410,442) | | | (171,933) | |
(Increase) decrease in refundable income taxes | | | (13,190) | | | 96,387 | |
(Increase) decrease in prepaid expenses and other current assets | | | (719,884) | | | (400,608) | |
(Increase) decrease in other assets | | | (25,343) | | | (3,155) | |
Increase (decrease) in income taxes payable | | | - | | | 6,345 | |
Increase (decrease) in accounts payable & accrued expenses and other noncurrent liabilities | | | 280,525 | | | 910,806 | |
| | | | | | | |
Net cash (used in) provided by operating activities | | | (399,292) | | | 1,345,188 | |
| | | | | | | |
Investing activities: | | | | | | | |
Purchase of property, plant and equipment | | | (130,797) | | | (191,523) | |
Purchase of note and mortgage secured by underlying property | | | - | | | (2,000,000) | |
Payments received on distributor note receivable | | | 35,352 | | | - | |
Payment of life insurance premiums | | | (259,726) | | | (259,121) | |
| | | | | | | |
Net cash used in investing activities | | | (355,171) | | | (2,450,644) | |
| | | | | | | |
Financing activities: | | | | | | | |
Principal payments on long-term borrowings | | | (392,008) | | | (288,681) | |
Common stock dividends paid | | | (252,380) | | | (250,283) | |
Purchase of stock for treasury | | | (5,364) | | | (46,904) | |
| | | | | | | |
Net cash used in financing activities | | | (649,752) | | | (585,868) | |
| | | | | | | |
Effect of exchange rate changes on cash and cash equivalents | | | (140,864) | | | 23,127 | |
| | | | | | | |
Increase (decrease) in cash and cash equivalents | | | (1,545,079) | | | (1,668,197) | |
| | | | | | | |
Cash and cash equivalents at beginning of period | | | 5,801,042 | | | 7,174,213 | |
| | | | | | | |
Cash and cash equivalents at end of period | | $ | 4,255,963 | | $ | 5,506,016 | |
Note 1 | Accounting Policies |
| | Three months ended June 30 | | Six Months ended June 30 | | ||||||||
| | 2013 | | 2012 | | 2013 | | 2012 | | ||||
Numerator: | | | | | | | | | | | | | |
Net income (loss) | | $ | (213,745) | | $ | 102,577 | | $ | (18,944) | | $ | 634,961 | |
| | | | | | | | | | | | | |
Denominator: | | | | | | | | | | | | | |
Denominator for basic earnings (loss) per shareweighted average shares | | | 12,616,000 | | | 12,507,000 | | | 12,617,000 | | | 12,499,000 | |
Dilutive effect of employee stock options and other warrants | | | 92,000 | | | 171,000 | | | 90,000 | | | 159,000 | |
| | | | | | | | | | | | | |
Denominator for diluted earnings (loss) per shareadjusted weighted average shares | | | 12,708,000 | | | 12,678,000 | | | 12,707,000 | | | 12,658,000 | |
| | | | | | | | | | | | | |
Basic earnings (loss) per share | | $ | (0.02) | | $ | 0.01 | | $ | (0.00) | | $ | 0.05 | |
Diluted earnings (loss) per share | | $ | (0.02) | | $ | 0.01 | | $ | (0.00) | | $ | 0.05 | |
| 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. |
Description | | Carrying Value | | Fair Value | | Level 1 | | Level 2 | | Level 3 | | |||||
| | | | | | | | | | | | | | | | |
June 30, 2013 | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Long-term debt | | $ | 2,638,936 | | $ | 2,638,936 | | | - | | $ | 2,638,936 | | | - | |
Note receivable | | | 1,964,648 | | | 2,428,000 | | | - | | | 2,428,000 | | | - | |
Marketable securities (a) | | | 231,000 | | | 231,000 | | $ | 231,000 | | | - | | | - | |
| | | | | | | | | | | | | | | | |
December 31, 2012 | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Long-term debt | | $ | 3,030,943 | | $ | 3,030,943 | | | - | | $ | 3,030,943 | | | - | |
Note receivable | | | 2,000,000 | | | 2,640,000 | | | - | | | 2,640,000 | | | - | |
Marketable securities (a) | | | 206,000 | | | 206,000 | | $ | 206,000 | | | - | | | - | |
| (a) | Representing assets of the Company's Supplemental Executive Retirement Plan (trading securities). Presented within Other Assets in the condensed consolidated balance sheets. |
Long-term debt consists of the following: | | June 30 | | December 31 | | ||
| | 2013 | | 2012 | | ||
| | | | | | | |
Term loan | | $ | 2,638,936 | | $ | 2,807,298 | |
Obligation for purchase of distributorship, as modified | | | - | | | 223,645 | |
| | | 2,638,936 | | | 3,030,943 | |
Less current maturities | | | 444,807 | | | 629,631 | |
| | $ | 2,194,129 | | $ | 2,401,312 | |
| | Six Months ended June 30 | | ||||
| | 2013 | | 2012 | | ||
| | | | | | | |
Income taxes at U.S. statutory rate | | $ | 55,000 | | $ | 360,000 | |
State income taxes, net of federal benefit | | | 26,000 | | | 57,000 | |
Higher/(lower) effective taxes on earnings in foreign countries | | | 68,000 | | | (44,000) | |
Foreign corporate income taxes | | | 21,000 | | | 43,000 | |
Other, net | | | 10,000 | | | 8,000 | |
| | | | | | | |
| | $ | 180,000 | | $ | 424,000 | |
| | Three months ended June 30, | | | Six months ended June 30, | | ||||||
| | 2013 | | 2012 | | | 2013 | | 2012 | | ||
| | | | | | | | | | | | |
Net sales | | 100.0 | % | | 100.0 | % | | 100.0 | % | | 100.0 | % |
Costs and expenses: | | | | | | | | | | | | |
Cost of products sold | | 19.8 | | | 19.2 | | | 20.3 | | | 19.5 | |
Distributor royalties and commissions | | 36.4 | | | 37.7 | | | 36.8 | | | 37.7 | |
Selling, general and administrative | | 45.2 | | | 41.8 | | | 42.3 | | | 39.7 | |
| | | | | | | | | | | | |
Income (loss) from operations | | (1.4) | | | 1.3 | | | 0.6 | | | 3.1 | |
Interest expense | | (0.1) | | | (0.2) | | | (0.1) | | | (0.2) | |
Interest and other income (expense) | | (0.2) | | | 0.0 | | | (0.1) | | | 0.0 | |
| | | | | | | | | | | | |
Income (loss) before income taxes | | (1.7) | | | 1.1 | | | 0.4 | | | 2.9 | |
Provision (benefit) for income taxes | | (0.3) | | | 0.5 | | | 0.5 | | | 1.2 | |
| | | | | | | | | | | | |
Net income (loss) | | (1.4) | % | | 0.6 | % | | (0.1) | % | | 1.7 | % |
| | Three months ended June 30, | | | | | | | | |||||||||
| | 2013 | | | 2012 | | | Change from prior year | | |||||||||
| | Amount | | % of Net Sales | | | Amount | | % of Net Sales | | | Amount | | % | | |||
| | | | | (dollars in thousands) | | | | | | | | | | ||||
United States | | $ | 11,828 | | 76.7 | % | | $ | 12,943 | | 77.1 | % | | $ | (1,115) | | (8.6) | % |
Australia/New Zealand | | | 524 | | 3.4 | | | | 480 | | 2.9 | | | | 44 | | 9.2 | |
Canada | | | 372 | | 2.4 | | | | 439 | | 2.6 | | | | (67) | | (15.3) | |
Mexico | | | 256 | | 1.7 | | | | 271 | | 1.6 | | | | (15) | | (5.5) | |
Europe | | | 1,960 | | 12.7 | | | | 1,741 | | 10.4 | | | | 219 | | 12.6 | |
Asia | | | 485 | | 3.1 | | | | 907 | | 5.4 | | | | (422) | | (46.5) | |
Consolidated total | | $ | 15,425 | | 100.0 | % | | $ | 16,781 | | 100.0 | % | | $ | (1,356) | | (8.1) | % |
| | Six months ended June 30, | | | | | | | | |||||||||
| | 2013 | | | 2012 | | | Change from prior year | | |||||||||
| | Amount | | % of Net Sales | | | Amount | | % of Net Sales | | | Amount | | % | | |||
| | | | | (dollars in thousands) | | | | | | | | | | ||||
United States | | $ | 26,938 | | 78.6 | % | | $ | 28,713 | | 78.6 | % | | $ | (1,775) | | (6.2) | % |
Australia/New Zealand | | | 973 | | 2.8 | | | | 1,020 | | 2.8 | | | | (47) | | (4.6) | |
Canada | | | 926 | | 2.7 | | | | 989 | | 2.7 | | | | (63) | | (6.4) | |
Mexico | | | 534 | | 1.6 | | | | 558 | | 1.6 | | | | (24) | | (4.3) | |
Europe | | | 3,979 | | 11.6 | | | | 3,335 | | 9.1 | | | | 644 | | 19.3 | |
Asia | | | 933 | | 2.7 | | | | 1,909 | | 5.2 | | | | (976) | | (51.1) | |
Consolidated total | | $ | 34,283 | | 100.0 | % | | $ | 36,524 | | 100.0 | % | | $ | (2,241) | | (6.1) | % |
| | June 30, 2013 | | June 30, 2012 | | % Change | | ||||||
| | Total Active Distributors | | Master Affiliates and Above | | Total Active Distributors | | Master Affiliates and Above | | Total Active Distributors | | Master Affiliates and Above | |
United States | | 38,860 | | 4,180 | | 42,080 | | 4,790 | | (7.7) | % | (12.7) | % |
Australia/New Zealand | | 1,570 | | 200 | | 1,940 | | 130 | | (19.1) | | 53.8 | |
Canada | | 1,260 | | 180 | | 1,320 | | 200 | | (4.5) | | (10.0) | |
Mexico | | 1,150 | | 130 | | 1,800 | | 150 | | (36.1) | | (13.3) | |
Europe | | 6,490 | | 780 | | 6,020 | | 600 | | 7.8 | | 30.0 | |
Asia | | 4,060 | | 440 | | 6,070 | | 550 | | (33.1) | | (20.0) | |
Consolidated total | | 53,390 | | 5,910 | | 59,230 | | 6,420 | | (9.9) | % | (7.9) | % |
Period | | Total Number of Shares Purchased | | Average Price Paid per Share | | Total Number of Shares Purchased as Part of Publicly Announced Programs | | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs(1) | | ||||
| | | | | | | | | | | | | |
April 1-30, 2013 | | | 4,045 | | $ | 1.33 | | | 4,045 | | | | |
| | | | | | | | | | | | | |
Total | | | 4,045 | | | | | | 4,045 | | | | |
Exhibit | | |
Number | | Document |
| | |
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 Quarterly Report on Form 10-Q for the quarter ended June 30, 2013, formatted in XBRL: (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Net Income (Loss) and Comprehensive Income (Loss), (iii) the Condensed Consolidated Statements of Cash Flows, and (iv) the Notes to Consolidated Financial Statements. |
RELIV’ INTERNATIONAL, INC. | |
| |
By: | /s/ Robert L. Montgomery |
| Robert L. Montgomery, Chairman of the Board of Directors and Chief Executive Officer |
| |
Date: August 14, 2013 | |
| |
By: | /s/ Steven D. Albright |
| Steven D. Albright, Chief Financial Officer (and accounting officer) |
| |
Date: August 14, 2013 |
| /s/ Robert L. Montgomery |
| Robert L. Montgomery |
| Chief Executive Officer |
| a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| | |
| b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| | |
| c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| | |
| d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| | |
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| /s/ Steven D. Albright |
| Steven D. Albright |
| Chief Financial Officer |
/s/ Robert L. Montgomery | |
Robert L. Montgomery | |
Chief Executive Officer | |
| |
Date: August 14, 2013 | |
/s/ Steven D. Albright | |
Steven D. Albright | |
Chief Financial Officer | |
| |
Date: August 14, 2013 | |
Fair Value of Financial Instruments (Tables)
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Jun. 30, 2013
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value, by Balance Sheet Grouping [Table Text Block] | The carrying amount and fair value of the Company's financial instruments are approximately as follows:
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Condensed Consolidated Statements of Net Income (Loss) and Comprehensive Income (Loss) (USD $)
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3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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Product sales | $ 14,165,463 | $ 14,894,640 | $ 31,054,921 | $ 32,509,480 |
Handling & freight income | 1,259,945 | 1,886,064 | 3,227,751 | 4,014,868 |
Net sales | 15,425,408 | 16,780,704 | 34,282,672 | 36,524,348 |
Costs and expenses: | ||||
Cost of products sold | 3,057,940 | 3,220,860 | 6,961,798 | 7,121,441 |
Distributor royalties and commissions | 5,617,245 | 6,319,613 | 12,620,448 | 13,774,773 |
Selling, general and administrative | 6,972,599 | 7,021,658 | 14,488,088 | 14,495,904 |
Total costs and expenses | 15,647,784 | 16,562,131 | 34,070,334 | 35,392,118 |
Income (loss) from operations | (222,376) | 218,573 | 212,338 | 1,132,230 |
Other income (expense): | ||||
Interest income | 38,668 | 40,863 | 75,832 | 50,177 |
Interest expense | (18,493) | (31,295) | (35,995) | (62,214) |
Other income / (expense) | (64,544) | (38,564) | (91,119) | (61,232) |
Income (loss) before income taxes | (266,745) | 189,577 | 161,056 | 1,058,961 |
Provision (benefit) for income taxes | (53,000) | 87,000 | 180,000 | 424,000 |
Net income (loss) | (213,745) | 102,577 | (18,944) | 634,961 |
Other comprehensive income (loss): | ||||
Foreign currency translation adjustment | (48,944) | (51,228) | (65,717) | 58,544 |
Comprehensive income (loss) | $ (262,689) | $ 51,349 | $ (84,661) | $ 693,505 |
Earnings (loss) per common share - Basic (in dollars per share) | $ (0.02) | $ 0.01 | $ 0.00 | $ 0.05 |
Weighted average shares (in shares) | 12,616,000 | 12,507,000 | 12,617,000 | 12,499,000 |
Earnings (loss) per common share - Diluted (in dollars per share) | $ (0.02) | $ 0.01 | $ 0.00 | $ 0.05 |
Weighted average shares (in shares) | 12,708,000 | 12,678,000 | 12,707,000 | 12,658,000 |
Cash dividends declared per common share (in dollars per share) | $ 0.02 | $ 0.02 | $ 0.02 | $ 0.02 |
Long-Term Debt
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6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-term Debt [Text Block] | Note 5Long-Term Debt
Originating in September 2012 with its primary lender, the term loan is for a period of thirty-eight months with interest accruing at a floating interest rate based on the 30-day LIBOR plus 2%. At June 30, 2013, the term loan's interest rate was 2.1943%. Monthly principal and interest are based on approximately a seven-year amortization. The aggregate outstanding balance of principal and interest is due and payable on November 30, 2015. The Company also has a $5 million revolving loan agreement with its primary lender. As of June 30, 2013, there have not been any revolver borrowings in 2013. The term loan agreement and the revolving line of credit agreement are secured by all tangible and intangible assets of the Company and also by a mortgage on the real estate of the Company's headquarters. These agreements also include loan covenants requiring the Company to maintain net tangible worth of not less than $11 million, and that borrowings under the agreements shall not exceed EBITDA by a ratio of 2.5 to 1. At June 30, 2013, the Company was in compliance with its loan covenants. The Company's obligation for purchase of a distributorship required monthly payments of principal and interest of $37,500 which ended in June 2013. |
Long-Term Debt (Details) (USD $)
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Jun. 30, 2013
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Dec. 31, 2012
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Term loan | $ 2,638,936 | $ 2,807,298 |
Obligation for purchase of distributorship, as modified | 0 | 223,645 |
Long-term Debt | 2,638,936 | 3,030,943 |
Less current maturities | 444,807 | 629,631 |
Long-term Debt, Excluding Current Maturities | $ 2,194,129 | $ 2,401,312 |
Long-Term Debt (Tables)
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6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-term Debt Instruments [Table Text Block] |
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Taxes (Details) (USD $)
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3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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Income taxes at U.S. statutory rate | $ 55,000 | $ 360,000 | ||
State income taxes, net of federal benefit | 26,000 | 57,000 | ||
Higher/(lower) effective taxes on earnings in foreign countries | 68,000 | (44,000) | ||
Foreign corporate income taxes | 21,000 | 43,000 | ||
Other, net | 10,000 | 8,000 | ||
Income Tax Expense (Benefit), Total | $ (53,000) | $ 87,000 | $ 180,000 | $ 424,000 |
Note Receivable Due from Distributor (Details Textual) (USD $)
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6 Months Ended | 12 Months Ended | ||||
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Jun. 30, 2013
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Dec. 31, 2012
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Jun. 30, 2013
Loan Modification Agreement [Member]
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Dec. 31, 2012
Loan Modification Agreement [Member]
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May 31, 2012
Loan Modification Agreement [Member]
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Mar. 31, 2012
Real Estate Investment [Member]
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Due From Related Parties, Noncurrent | $ 1,876,119 | $ 1,923,000 | $ 2,000,000 | |||
Note Receivable Face Amount | 2,000,000 | |||||
Loans Receivable, Description Of Variable Rate Basis | greater of 6% or prime | |||||
Notes Receivable, Net | $ 1,964,648 | $ 2,000,000 | ||||
Note Receivable Frequency Of Periodic Payment | monthly payment of principal and interest | |||||
Note Receivable, Maturity Date, Description | fifteen-year |
Long-Term Debt (Details Textual) (USD $)
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6 Months Ended | 12 Months Ended |
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Jun. 30, 2013
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Dec. 31, 2012
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Long Term Loan Maturity Period | thirty-eight months | |
Debt Instrument, Restrictive Covenants | These agreements also include loan covenants requiring the Company to maintain net tangible worth of not less than $11 million, and that borrowings under the agreements shall not exceed EBITDA by a ratio of 2.5 to 1. | |
Revolving Credit Facility [Member]
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Line of Credit Facility, Maximum Borrowing Capacity | $ 5,000,000 | |
Secured Debt [Member]
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Debt Instrument, Description Of Variable Rate Basis | floating interest rate based on the 30-day LIBOR plus 2%. | floating interest rate based on the 30-day LIBOR plus 2%. |
Debt Instrument, Maturity Date | Nov. 30, 2015 | |
Debt Instrument, Interest Rate At Period End | 2.1943% | |
Debt Instrument, Frequency Of Periodic Payment | Monthly | |
Debt Instrument, Maturity Date, Description | seven-year | |
Obligation For Purchase Of Distributorship [Member]
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Debt Instrument, Frequency Of Periodic Payment | monthly | |
Debt Instrument, Maturity Date, Description | June 2013 | |
Debt Instrument, Periodic Payment | $ 37,500 |
Accounting Policies
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6 Months Ended | |||
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Jun. 30, 2013
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Accounting Policies [Abstract] | ||||
Business Description and Accounting Policies [Text Block] |
Basis of Presentation The accompanying unaudited condensed consolidated financial statements and notes thereto have been prepared in accordance with the instructions to Form 10-Q and reflect all adjustments (which primarily include normal recurring accruals) which management believes are necessary to present fairly the financial position, results of operations and cash flows. These statements, however, do not include all information and footnotes necessary for a complete presentation of financial position, results of operations and cash flows in conformity with accounting principles generally accepted in the United States. Interim results may not necessarily be indicative of results that may be expected for any other interim period or for the year as a whole. These financial statements should be read in conjunction with the audited consolidated financial statements and footnotes included in the annual report on Form 10-K for the year ended December 31, 2012, filed March 26, 2013 with the Securities and Exchange Commission. |
Stock-based Compensation
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6 Months Ended |
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Jun. 30, 2013
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Disclosure of Compensation Related Costs, Share-based Payments [Text Block] | Note 3Stock-based Compensation In March 2013, the Company issued performance based stock option grants totaling 230,000 shares. These option grants have an exercise price of $1.17 per share with a five-year term. The options' vesting provisions are contingent upon the Company achieving certain financial performance measurements. The aggregate estimated compensation cost related to the performance based options is $110,400; however, recognition is contingent upon performance vesting. The grant-date fair value of the options is $0.48 per share and was determined using a binomial option pricing model using an average risk-free rate of 0.90%, an average dividend yield of 1.60%, and an average volatility of 52.7%. The Company recognized stock-based compensation expense from all plans of approximately $10,576 and $25,708 in the three months ended June 30, 2013 and 2012, respectively. The Company recognized stock-based compensation expense from all plans of approximately $22,237 and $78,984 in the six months ended June 30, 2013 and 2012, respectively. This expense is presented in Selling, General and Administrative in the accompanying condensed consolidated statements of net income (loss) and comprehensive income (loss). |
Note Receivable Due from Distributor
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6 Months Ended |
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Jun. 30, 2013
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Receivables [Abstract] | |
Note Receivable Due From Distributor [Text Block] | Note 6Note Receivable Due from Distributor In March 2012, the Company purchased from a real estate investment management firm a note and mortgage ("Note") on certain properties in Wyoming and Idaho for $2 million. In May 2012, the Company entered into a Loan Modification Agreement ("LMA") with the Note's original and present borrower ("Borrower") to restructure the Note's principal amount due and related terms. The LMA terms are for a principal balance due of $2 million with interest only payable monthly in 2012. The LMA's interest rate is the greater of 6% or prime and there is no prepayment penalty for voluntary principal payments. Concurrently, with the execution of of the LMA, the Company and the Borrower also entered into a Security Agreement in which repayment of the LMA is secured by the Borrower's Reliv distributorship business. As originally structured, beginning in 2013, the LMA was to require monthly payment of principal and interest under a five-year amortization period. In the first half of 2013, while a permanent restructuring of the LMA's repayment terms are being negotiated, management and the Borrower have verbally agreed to a temporary LMA modification which prospectively requires the Borrower to make monthly payments of principal and interest under a fifteen-year amortization period. The outstanding balance of the note receivable was $1,964,648 and $2,000,000 as of June 30, 2013 and December 31, 2012, respectively. |
Fair Value of Financial Instruments
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Jun. 30, 2013
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Text Block] | Note 4Fair Value of Financial Instruments Fair value can be measured using valuation techniques such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). Accounting standards utilize a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those levels:
The carrying amount and fair value of the Company's financial instruments are approximately as follows:
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Taxes (Details Textual) (USD $)
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6 Months Ended | 12 Months Ended | 36 Months Ended | |
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Jun. 30, 2013
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Dec. 31, 2010
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Dec. 31, 2006
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Dec. 31, 2012
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Effective Income Tax Rate Reconciliation, Percent, Total | 34.00% | |||
Vat And Withholding Taxes | $ 800,000 | |||
Interest Penalty Percentage | 20.00% | |||
Selling, General and Administrative Expense | 185,000 | |||
Management Estimated Reserve For Tax | $ 70,000 | $ 70,000 |