RELIV INTERNATIONAL INC - 10-K Annual Report

Back to GetFilings.com

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
For the Fiscal Year Ended December 31, 1999

Commission File Number
1-11768
RELIV' INTERNATIONAL, INC.
(Exact name of Registrant as specified in its charter)

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

136 Chesterfield Industrial Boulevard
Chesterfield, Missouri 63006
---------------------- -----
(Address of principal executive offices) (Zip Code)

(636) 537-9715
--------------
Registrant's telephone number, including area code

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

Name of each exchange
Title of Class on which registered:
-------------- --------------------
Common Stock, without par value NASDAQ National Market tier
of The NASDAQ Stock Market

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. X Yes No
---- -----

Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated in Part III of the Form 10-K or any amendment to the
Form 10-K. [ ]

Based upon the closing price of $2.00 per share of Registrant's Common
Stock as reported on NASDAQ National Market tier of The NASDAQ Stock Market at
March 15, 2000, the aggregate market value of the voting stock held by non-
affiliates of the Registrant was then approximately $11,277,180. (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 15, 2000, was 9,551,102 (excluding treasury shares).

DOCUMENTS INCORPORATED BY REFERENCE

Portions of Registrant's Proxy Statement for the 2000 Annual Meeting of
Shareholders to be filed with the Commission within 120 days of the end of
Registrant's last fiscal year is incorporated by reference into Part III.

PART I

Item No. 1 - Business

General

Reliv' International, Inc. (the "Company") was incorporated in Illinois
on February 11, 1985, under the name American Life Investors, Inc. The name of
the Company was changed to its current name on January 20, 1992. The Company
maintains its principal executive offices at 136 Chesterfield Industrial
Boulevard, Chesterfield, Missouri 63006.

The Company produces a line of food products including nutritional
supplements, diet management products, functional foods, a line of granola bars
and a sports drink mix. Functional foods are products designed to influence
specific functions of the body. These products are sold by subsidiaries of the
Company to a sales force of independent distributors who sell products directly
to consumers. The Company and its subsidiaries sell products to distributors
throughout the United States and in Australia, Canada, New Zealand, Mexico, the
United Kingdom and Colombia.

The Company has two wholly-owned subsidiaries, Reliv', Inc. ("Reliv'")
and Reliv' World Corporation ("Reliv' World"). Reliv' World has six subsidiaries
- - Reliv' Australia, Reliv' Canada, Reliv' New Zealand, Reliv' Mexico, Reliv'
Europe and Reliv Now Colombia.

Reliv' was organized as an Illinois corporation on May 24, 1988, as a
wholly-owned subsidiary of the Company, and began selling nutritional supplement
products in October, 1988, in the United States.

In Australia, Canada, New Zealand, Mexico, the United Kingdom and
Colombia, the Company's products are sold through Reliv' World and its
subsidiaries in each of such countries. Reliv' World was organized as an
Illinois corporation on March 30, 1992, as a wholly-owned subsidiary of Reliv'.
Reliv' World was organized to conduct the foreign sales operations of the
Company and to own foreign sales operations and subsidiaries. On July 1, 1992,
Reliv' declared a dividend of all of the stock of Reliv' World and distributed
all of such stock to its sole shareholder, the Company.

In February, 1991, Reliv' entered into a joint venture agreement with
an Australian corporation and the joint venture began to market, sell and
distribute Reliv' products in Australia in May, 1991. Reliv' Australia Pty, Ltd.
("Reliv' Australia"), a wholly-owned subsidiary of Reliv' World, entered into an
agreement to purchase the joint venture interest of the Australian corporation.
Reliv' Australia also entered into an agreement with the three shareholders of
the Australian corporation under which a partnership of such persons, as a
distributor of Reliv' Australia, is to receive, for a period of 10 years from
March 1, 1992, 2 percent of sales in Australia and New Zealand (defined as the
designated retail selling price of all products, on which commissions are
payable to distributors), up to approximately $10 million (AUS) in 1992, and $12
million (AUS) in all subsequent years during the term, and 3 percent of sales
that exceed those figures. Since March

2

1, 1992, the business of the Company in Australia and sales of the Company's
products there has been conducted by Reliv' Australia.

During April, 1992, Reliv' New Zealand Limited ("Reliv' New Zealand")
was organized as a New Zealand company and as a wholly-owned subsidiary of
Reliv' World (except for nominal shares held by an officer). In June, 1992,
Reliv' New Zealand began selling the Company's products through independent
distributors in New Zealand.

On June 9, 1992, Reliv' Canada, Ltd. ("Reliv' Canada") was organized as
an Ontario, Canada corporation and as a wholly-owned subsidiary of Reliv' World.
Reliv' Canada commenced operations during October, 1992, and began selling the
Company's products to distributors in Canada in November, 1992. On December 31,
1995, Reliv' Canada was converted to a Nova Scotia, Canada unlimited liability
company, wholly-owned by Reliv' World (except for one percent owned by the
Company), under the name Reliv' Canada Company.

On June 28, 1993, Reliv' Mexico S.A. de C.V. ("Reliv' Mexico") was
organized as a Mexican corporation and as a wholly-owned subsidiary of Reliv'
World (except for one share owned by the Company). Reliv' Mexico commenced
operations in June, 1993, and began selling the Company's products to
distributors in Mexico in August, 1993. On December 20, 1994, Reliv' Mexico was
converted to a Mexican limited liability company under the name Reliv' Mexico,
S. de R.L. de C.V.

On July 1, 1995, Reliv' UK began the marketing and sale of the
Company's products in the United Kingdom in accordance with the Reliv' system
under a license and distributor arrangement with the Company. Pursuant to the
terms of the arrangement, Reliv' UK purchased all of its requirements for
products from the Company and paid Reliv' World a royalty on products sold. On
October 1, 1998, Reliv' Europe, Inc., a wholly-owned subsidiary of Reliv' World,
purchased all of Reliv' U.K.'s capital stock in return for a 3% equity ownership
in Reliv' Europe. The former owner of Reliv' U.K. forgave approximately $435,000
in advances to Reliv' U.K. Under the purchase arrangement, the former owner will
receive monthly payments equal to 1.5% of Reliv' Europe's retail sales for a
period of ten years.

In July, 1999, Reliv Now Colombia Ltda. ("Reliv Now Colombia") was
organized as a Colombian corporation and as a wholly-owned subsidiary of Reliv
World. Reliv Now Colombia commenced set-up operations in October, 1999, and
began selling the Company's products to distributors in Colombia in March, 2000.

Principal Products

Through its subsidiaries, the Company markets and sells a line of
related products including nutritional supplements, weight control products,
functional foods, granola bars, and sports drink mixes. In December, 1999, the
Company discontinued the sale of its skin care line.

The nutritional supplements include Reliv' NOW(R) and Reliv'
Classic(R). Both products are designed to provide a balanced nutritional
supplement for an individual's diet and contain a variety of vitamins and
minerals, soy and other protein sources and various herbs. The products are in

3

powdered form to be mixed with juice or other beverages. The Reliv' Classic
formula has a U.S. patent and the Reliv' NOW formula is a no-yeast derivative of
the Reliv' Classic formula. Reliv' NOW is available with all natural flavoring
or in the original formula.

Reliv' Ultrim-Plus(R) is designed as a meal replacement (for a maximum
of two meals per day) in a weight loss program. In January, 2000, the Company
introduced a newly modified formulation of Reliv' Ultrim-Plus to enhance weight
loss in its users. The new product formulation now includes an advanced complex
of thermogenic fat burners, along with an increased level of soy protein. Each
serving of the product provides 35 percent of the recommended daily allowance of
many essential vitamins and minerals. Reliv' Ultrim-Plus is available in three
flavors - vanilla, chocolate and strawberry. The product is in powdered form for
mixture with water or milk.

Reliv' Cellebrate(R) is a patented weight loss aid designed to suppress
appetite, curb the storage of body fat, and facilitate the body's fat burning
process. Reliv' Cellebrate is in powdered form and is recommended to be used
alone or with Reliv' Ultrim Plus meal replacement.

Reliv' Ultra Bar(R) is a line of granola bars containing a mixture of
grains and nuts which use the core formulation of Reliv' NOW vitamins, minerals,
proteins and herbs. Flavors include yogurt, chocolate and raspberry carob. The
bars are a snack food and nutritional supplement and are used with Reliv'
Ultrim-Plus as a meal replacement in a weight loss program.

Reliv' Innergize!(R)is a patented powdered sports drink containing a
mixture of vitamins and minerals. Reliv' Innergize is available in lemon, orange
and cool punch flavors.

Reliv' Fibrestore(R) is a patented nutritional supplement containing
fiber, vitamins, minerals and herbs. The product is in powdered form for mixture
with water or juice. In January, 2000, the Company introduced a newly modified
formulation of Reliv' Fibrestore to significantly reduce its calorie intake to
just 25 calories per serving. A modified version of the Reliv' Fibrestore
formula is marketed in Canada under the name Herbal Harmony in compliance with
that country's nutritional regulations.

Reliv' Arthaffect(R) is a nutritional supplement and functional food
containing Arthred(TM), a patented form of hydrolyzed collagen protein, which is
clinically reported to nutritionally support healthy joint function. The product
is in powdered form for mixture with water, milk or juice. Reliv' Arthaffect was
introduced in October, 1996.

Reliv' ProVantage(TM) is a nutritional supplement containing soy,
designed to enhance athletic performance. The product is also of benefit to
dieters and others wanting to increase their soy intake. The product is in
powdered form for mixture with water or juice. Reliv' ProVantage was introduced
in October, 1997.

Reliv' Healthy Pantry(TM) premium entrees are a line of soy-based
functional foods. The meals are designed to offer the advantages of soy in low
fat, easy to prepare meals. The line includes Pasta Prima Vera, Hearty Chili,
Hearty Burger and Ala King dinner. The meals are in dried form and can

4

be prepared quickly with a minimum of additional ingredients. Reliv' Healthy
Pantry was introduced in May, 1997.

In November, 1998, the Company introduced Reliv' SoySentials(TM), a
nutritional supplement containing soy as well as other vitamins, minerals and
herbs designed for use by women. The product is in powdered form for mixture
with water or juice. The U.S. Food and Drug Administration has identified soy
protein as an effective nutrient for reducing cholesterol levels, and thereby
reducing the risk of heart disease.

In January, 2000, the Company introduced Reliv' SoySense(TM), a berry
flavored nutritional supplement containing soy as well as other vitamins,
minerals and herbs to be consumed by men as well as women. The product is in
powdered form for mixture with water or juice.

In January, 2000, the Company introduced Reliv Now For Kids, a product
designed to provide a balanced nutritional supplement for a child's diet which
contains a variety of vitamins and minerals. The products are in powdered form
to be mixed with water or milk. Reliv Now for kids is available in chocolate and
vanilla.

The Company conducts ongoing research and development on its product
line and intends to introduce additional product items. See "Research and
Development."

Patents and Trademarks

The Company has obtained U.S. patents on the formulations of Reliv'
Innergize!, Reliv' Fibrestore and Reliv' Cellebrate.

The Reliv' Classic formula has a U.S. Patent. Reliv' NOW is a trade
secret formulation which is a derivative of the Reliv' Classic formulation. The
core mixture of Reliv' NOW is incorporated in the Reliv' Ultra Bars. These
products are manufactured and sold by the Company under an Exclusive License
Agreement dated December 1, 1991 ("License Agreement"). The License Agreement is
worldwide in scope and continues through the life of the patent. Pursuant to the
License Agreement, the Company is obligated to pay the owner of the patent and
the developer of the formulations, Dr. Theodore P. Kalogris, a royalty of 5
percent of the revenues from the sale of products containing the licensed
formulas, with a minimum $10,000 and maximum $22,000 monthly royalty. The
Company's obligation to pay the royalty payments will terminate on the later of
(i) 10 years from the date of the License Agreement or (ii) the death of Dr.
Kalogris, and the License Agreement will be deemed to be paid in full at that
time.

The principal ingredient of Reliv' Arthaffect is the subject of an
issued U.S. patent. Under an agreement dated November 6, 1996, Traco Labs, Inc.
("Traco"), exclusive licensee of the patent rights, sublicensed the rights to
sell the product to the Company ("Traco Agreement"). The license is exclusive
for direct sales in certain sales areas and is for a term ending upon the later
of (i) the termination of Traco's rights to market the product or (ii) December
31, 2014. The Traco Agreement provides that the Company will purchase its
requirements of the product from Traco, and the

5

exclusivity of the license is contingent on minimum purchases of the product
being made by the Company.

Trademark registrations for "Reliv'" and for many of the Company's
product names are either issued or pending in the U.S. Patent and Trademark
Office. Trademark registrations for selected marks have been issued or applied
for in Australia, New Zealand, Canada, Mexico, the United Kingdom, Colombia, the
Philippines and several other foreign countries. The Company considers its
trademarks and tradenames to be an important asset of its business.

Sales and Marketing

The Company sells its products to a network of independent contractors,
designated as "distributors", who in turn sell the products directly to
consumers. The Company's products are marketed and sold to distributors in the
United States, Australia, Canada, New Zealand, Mexico, the United Kingdom and
Colombia through a subsidiary in each country. The marketing efforts of the
Company and these subsidiaries are focused on the development, training and
support of this network of independent distributors. The Company, through these
subsidiaries, supports an active training program for distributors in which
Company representatives and experienced distributors lead group training
sessions. The Company and these subsidiaries also create and provide
distributors with manuals, brochures and other promotional, training and
informational publications. Periodically, each subsidiary sponsors distributor
meetings at which Company representatives provide training and information
concerning the Company's products. Company subsidiaries also sponsor group
telephone conference calls for training and promotional activities.

Distributors consist principally of individuals, although a limited
number of distributors are corporations or partnerships. New distributors are
sponsored by existing distributors. A new distributor is required to complete a
distributor application and, in most areas, to purchase a package of distributor
materials (for $39.95 in the United States) consisting of a distributor manual,
business forms and promotional materials. Distributors purchase products from
Company subsidiaries or from other distributors for resale or consumption by the
distributor or his or her family.

In each country in which the Company conducts business, distributors
operate under a uniform distributor system which compensates distributors at
varying levels based on sales volumes. Initially, a distributor is designated a
Retail Distributor and is entitled to purchase products from a Company
subsidiary or other distributors at a discount of 25 percent from the Company's
suggested retail price. A distributor is promoted to higher levels in the system
by increasing his or her sales of the Company's products, directly or through
other distributors sponsored in the distributor's sales group, and by achieving
designated sales volumes. These higher ranks of distributor are designated in
order as Affiliate, Key Affiliate, Senior Affiliate and Master Affiliate. At
each higher level, a distributor is entitled to purchase products at an
increasingly higher discount; a Master Affiliate receives a 45 percent discount.

Distributors receive retail profits equal to the difference between the
price at which they sell the product to customers and the discounted price they
paid for the product. Distributors also earn wholesale commissions on products
purchased by other distributors in the distributor's sponsored

6

group equal to the difference between the price at which the distributor is
entitled to purchase product at and the price at which downline distributors
purchase product. The Company pays a Master Affiliate a commission with respect
to products purchased directly from the Company by Retail Distributors,
Affiliates, Key Affiliates or Senior Affiliates directly sponsored by them or
who are in their personally sponsored group (i.e., individuals sponsored by the
Master Affiliate's distributors, directly or indirectly). The commission is
equal to the difference between the prices at which such distributors were
entitled to purchase products and the 45 percent discounted price available to
Master Affiliates. Senior Affiliates, Key Affiliates and Affiliates are entitled
to receive from their Master Affiliate a portion of the commission paid to the
Master Affiliate, based upon the purchases of products from Company subsidiaries
by distributors sponsored by them or by distributors in their personal group.

Master Affiliates are also entitled to receive additional compensation
payments of two percent to five percent of the retail sales volume of product
purchased from Company subsidiaries by Master Affiliates (and their personal
groups) whom they have sponsored, and for up to five levels of sponsorship. To
qualify for these additional compensation payments, Master Affiliates are
required to maintain certain monthly sales volumes and document specified levels
of retail sales. Master Affiliates who sponsor other distributors to the level
of Master Affiliate are entitled to become part of the Director Program, and
attain higher positions in the program based on the size of their additional
compensation payments. The levels of Director, in order, are Director, Key
Director, Senior Director, Master Director and Presidential Director.
Distributors reaching these levels receive pins and/or rings recognizing their
achievement and recognition in Company publications and at Company sponsored
activities.

In mid-1996, the Company introduced the Star Director Program, which
allows Directors to receive increased additional compensation payments based on
the number of Master Affiliates they have sponsored since the program commenced.
Directors are entitled to receive an additional one percent to three percent of
additional compensation on the retail sales volume of Master Affiliates in their
sponsorship.

The Company also sponsors an Ambassador Program. To qualify as an
Ambassador, a distributor must hold the level of Master Director and must assist
personally sponsored Master Affiliates in meeting specified levels of additional
compensation payments. The levels of Ambassador are, in order, Ambassador,
Bronze Ambassador, Silver Ambassador, Gold Ambassador and Platinum Ambassador.
As higher levels are reached, Ambassadors are entitled to increased percentages
of the retail sales volume of Master Affiliates below them through five levels
of sponsorship, and at the two highest levels, a percentage of the sixth level
of sponsorship below their personally sponsored Master Affiliates. Ambassadors
are also entitled, depending on the level, to additional benefits, such as
participation in Company sponsored events, paid hotel rooms at conventions,
health insurance and car allowances. Periodically, a group of high level
Ambassadors meet with Company executives in the "Reliv Inner Circle" to exchange
ideas on new programs, products and marketing opportunities.

The Company's Direct Select(sm) program is available in the United
States whereby distributors and their retail customers may order product in less
than case lots directly from the Company by

7

phone. An automatic monthly reorder program is also available. Product is
shipped directly to the customer and distributors earn a commission on Direct
Select sales made to their customers.

Company subsidiaries also provide a variety of additional incentives or
bonuses to the most productive distributors.

As of December 31, 1999, 37,018 persons or entities were registered as
distributors of Company subsidiaries of which 4,227 were Master Affiliates. This
is a slight increase in the number of distributors from December 31, 1998 totals
of 36,884 distributors of which 5,198 were Master Affiliates. The number of
registered distributors and Master Affiliates in each country in which Company
subsidiaries operate is as follows:

Distributors Master Affiliates
------------ -----------------
United States 30,100 3,250

Australia 2,727 206

New Zealand 625 38

Canada 659 123

Mexico 2,528 456

United Kingdom 379 154

Not all persons registered as distributors of Company subsidiaries are
active. Reliv' requires that persons wishing to continue as distributors renew
their distributorship annually by the payment of a fee ($20 in the United
States); the number of distributors shown in the preceding table reflects
persons who have become distributors within the past 12 months and those who
renewed their distributorship during 1999.

The Company recognizes that its sales growth is based upon the
continued development of its independent distributor force and strives to
maintain an active and motivated distributor network through a combination of
quality products, discounts, commissions and bonus payments, sales conventions
and training, personal recognition and a variety of publications and promotional
materials.

The Company recognizes that businesses in the network marketing
industry risk the possibility that a portion of sales made to distributors may
not be consumed or sold to consumers and instead, may remain as inventory in the
distributors' possession. The Company's distributor organization and
compensation system is designed and intended to promote the sale of the
Company's products to consumers by distributors. Sales training and promotional
efforts emphasize that intention. To that end, and to comply with applicable
governmental regulations of multilevel selling organizations, the Company and
each subsidiary have established specific programs and

8

requirements for distributors including (i) monitoring by the Company of
purchases by distributors to identify potentially excessive individual
purchases, (ii) requiring that distributors certify to a specified amount of
retail sales to receive commissions, and (iii) requiring that distributors
certify the sale of at least 70 percent of previous purchases prior to the
purchase of additional amounts of product. The Direct Select program, as
described above, further promotes sales of the Company's products to consumers.
Distributors are not required at any time to purchase product, although Master
Affiliates are required to maintain certain minimum sales levels in their
personal groups to continue receiving royalty compensation payments.

Each subsidiary maintains a policy that unused product may be returned
by customers to the selling distributor or the subsidiary or licensee for a full
refund within 30 days after purchase. Each subsidiary also maintains a policy
that any distributor who terminates his distributorship may return resalable
product for a refund of 90 percent of the purchase price less any discounts or
commissions received relating to the purchase of the products.

The Company has established a suggested retail price for each of the
Company's products in each country in which the Company conducts business, but
distributors are free to determine the price at which they will sell the
Company's products. Distributors are not assigned territories and there are no
restrictions on marketing areas for distributors.

In the United States, the Company's products are warehoused and shipped
by common carrier to distributors. A facility in Chesterfield, Missouri serves
the east and central parts of the country and the Company utilizes a public
warehouse facility in Las Vegas, Nevada to supply the West Coast. See "Item No.
2 - Properties". Products are also warehoused in, and shipped to local
distributors from: Sydney, Australia; Auckland, New Zealand; Toronto, Canada;
Mexico City, Mexico; London, England and Medellin, Colombia. Each subsidiary of
the Company maintains an office and personnel to receive, record and fill orders
from distributors. Distributors order product from Company subsidiaries in case
lots and pay for the goods prior to shipment. In general, state or local
governmental sales taxes are collected by Company subsidiaries for taxing
authorities.

Manufacturing and Product Sources

The Company established a manufacturing line at its facility in
Chesterfield, Missouri and had begun manufacture of its nutritional products in
early 1993. Shortly after manufacturing commenced, the facility was flooded in
July 1993, as a result of a break in a levee on the Missouri River. The Company
initiated the return of manufacturing to its Chesterfield facility in mid-1995
and currently manufactures all of its products (except granola bars) at this
facility. The Company expanded its Chesterfield facility in 1997. See "Item No.
2 - Properties".

In 1996, the Company received approval from the Australian Therapeutic
Goods Authority ("TGA") to manufacture products sold in Australia at its
Chesterfield plant and currently manufactures all of Australia's requirements of
nutritional products at its Chesterfield facility. The certification of the
Company's Chesterfield site by the Australian TGA, also satisfied Canadian
manufacturing requirements and the Company manufactures substantially all of the
nutritional products sold in Canada. The Company has not experienced any
difficulty in obtaining supplies of

9

raw materials for its nutritional products and does not believe it will
encounter any such difficulty in the future.

The Company's granola bars are manufactured by contract manufacturers,
predominantly located in the United States, who produce the products in
accordance with formulas provided by the Company, subject to quality control
requirements and inspections by representatives of the Company. Arthred(TM), the
principal ingredient of Reliv' Arthaffect, is supplied to the Company by Traco.
The Company has had no difficulty in obtaining contract manufacturing and there
has been no material effect on the timely supply of goods.

Research and Development

At its Chesterfield facility, the Company conducts research, product
development and formulation, testing and quality control, all relating to food
products. Research and development costs were $393,000 in 1999, $319,000 in
1998, and $286,000 in 1997.

Employees

As of December 31, 1999, the Company and all subsidiaries had
approximately 194 full-time employees compared with 228 such employees at the
end of 1998. This decrease is the result of a reduction in manufacturing and
warehouse employees due to the cutback in the contract manufacturing business
segment.

Product Regulation

The formulation, labeling and advertising or promotion of the Company's
products are subject to regulation by the Federal Food and Drug Administration
(FDA) which regulates the Company's products under the Federal Food, Drug and
Cosmetic Act (the "FDCA"), the Federal Trade Commission (FTC) and various
agencies of the states or countries into which the Company's products are
shipped or sold. FDA regulations include requirements and limitations with
respect to the labeling of the Company's food products and also with respect to
the formulation of those products. FDA regulations also limit and control the
extent to which health or other claims can be made with respect to the efficacy
of any food. The FDCA has been amended several times with respect to nutritional
supplements, most recently by the Nutrition Labeling and Education Act of 1990
(the "NLEA") and the Dietary Supplement Health and Education Act of 1994 (the
"DSHEA") and related regulations. Such legislation governs the marketing and
sale of nutritional supplements, including the content and presentation of
health related information included on the labels or labeling of nutritional
supplements. The Company does not believe these laws or regulations will have a
material effect on its products or operations. Nutritional and dietary
supplements such as those manufactured and sold by the Company, for which no
therapeutic claim is made, are not subject to FDA approval prior to their sale.
Products can be removed from the market if shown to be unsafe, and if the FDA
determines, based on the labeling of products, that the intended use of the
product is for the diagnosis, cure, mitigation treatment or prevention of
disease, it can regulate those products as drugs and require pre-market
clearance. In addition, if the FDA determines that the claims concerning a
product's affect on the "structure or function" of the body do not meet the
requirements of DSHEA, such claims could result in such product being subject to
regulation as a drug.

10

The Company's advertising of its nutritional supplement products is
also subject to regulation by the FTC under the Federal Trade Commission Act,
which prohibits unfair or deceptive trade practices, including false or
misleading advertising. The FTC in recent years has brought a number of actions
challenging claims by companies (other than the Company) for weight loss and
"fat burning" dietary supplement products and plans. The FTC has also recently
issued regulations governing the marketing of nutritional supplements.

Governmental regulations in foreign countries where the Company plans
to commence or expand sales may prevent or delay entry into the market or
prevent or delay the introduction, or require the reformulation, of certain of
the Company's products. Such regulations have caused delays in introducing
certain of the Company's products in the past and such delays have had negative
affects on sales.

The Company may be subject to additional laws or regulations
administered by the FDA or other federal, state or foreign regulatory
authorities, the repeal of laws or regulations which the Company considers
favorable, such as the DSHEA, or more stringent interpretations of current laws
or regulations, from time to time in the future. The Company is unable to
predict the nature of such future laws, regulations, interpretations or
applications, nor can it predict what effect additional governmental regulations
or administrative orders, when and if promulgated, would have on its business in
the future.

Sales Program Regulation

The Company's distribution and sales program is subject to regulation
by the FTC and other federal and state regulation. Various state agencies
regulate multi-level distribution activities. The Company is required to
register with, and submit information to, certain of such agencies and has
complied fully. The Company actively strives to comply with all applicable state
and federal laws and regulations affecting its products and its sales and
distribution programs. The Attorney Generals of several states have taken an
active role in investigating and prosecuting companies whose compensation plans
they feel violate local anti-pyramid and/or consumer protection statutes. The
Company is unable to predict the effect such increased activity will have on its
business in the future nor is the Company able to predict the probability of
future laws, regulations or interpretations which may be passed by state or
federal regulatory authorities.

Under current law, the Company's distributors are treated for federal
income tax purposes as independent contractors and compensation paid to them is
not subject to withholding by the Company. Several bills have been introduced in
Congress which would restrict the definition of independent contractor and
possibly jeopardize the exempt status enjoyed by direct sellers. Such a change
would negatively impact the Company's recruiting efforts. The direct selling
industry is strongly opposing such bills as they relate to direct sellers. The
Company is unable to assess the likelihood of these or similar bills being
enacted. In several states, legislation has been introduced which would narrow
the definition of independent contractor for purposes of income tax withholding
as well as unemployment compensation, worker's compensation and other employee
benefits. To date, the status of direct sellers as independent contractors has
not been affected. States are becoming increasingly active in this area,
however, and there is no assurance that future legislation at the state level
affecting direct sellers will not be enacted.

11

Competition

The Company's products are sold in highly competitive markets against
companies with substantially greater sales volume and financial resources than
the Company and with brands that are, through advertising and other methods,
better known to consumers. The Company competes against other direct selling
companies and against companies which sell heavily advertised and promoted
products through retail stores, including supermarkets, drug stores and health
food stores. The Reliv' Ultrim-Plus and Cellebrate products compete with
numerous other products in the weight loss market, including nationally
advertised products such as SlimFast(tm). Many companies have entered, or have
plans to enter, the sports drink market in which Reliv' Innergize! and
ProVantage compete, a market long dominated by Gatorade(tm). Reliv' NOW, Reliv'
Classic and Reliv' Fibrestore compete with numerous mineral and vitamin
supplement products. With Arthaffect, the Company has entered the relatively new
"functional foods" market, which is expected to be extremely competitive and led
by the major food companies.

International Operations

Prior to 1991, the Company marketed and sold its products solely within
the United States. In February, 1991, Reliv' entered into a joint venture with
an Australian corporation and the joint venture began marketing and selling the
Company's products in Australia in May, 1991. As of March, 1992, the Company
organized Reliv' World to conduct international operations, acquired the
business of the Australian joint venture and began conducting business in
Australia through Reliv' Australia. In June, 1992, the Company began marketing
and selling its products in New Zealand through Reliv' New Zealand, in November,
1992, began marketing and selling its products in Canada through Reliv' Canada,
and in August, 1993, began marketing and selling its products in Mexico through
Reliv' Mexico. In July, 1995, the Company began marketing and selling its
products in the United Kingdom through Reliv' UK, a licensee. In October, 1998,
Reliv' Europe acquired Reliv' U.K. In March, 2000, the Company began marketing
and selling its products in Colombia through Reliv Now Colombia.

Each foreign subsidiary markets, sells and uses substantially the same
line of products, labeling and method of distribution as Reliv' in the United
States, although not all of the Company's products are available in each country
and the formulation of some of the products vary to comply with local
governmental regulations or requirements.

Reference is made to Note 19 of the Consolidated Financial Statements
contained in Part IV hereof for financial information on geographical segments.

Manufacturing and Packaging Services

In the last quarter of 1995, the Company commenced providing
manufacturing and packaging services at its Chesterfield manufacturing facility.
These services include blending, processing and packaging food products in
accordance with specifications or materials provided by the customer. Revenues
from these services during 1997 were $1,525,000, increased to $6,332,000 in 1998
as a result of regaining a major customer and obtaining other business, and
increased even further to $27,292,000 in 1999 due to retaining the business of
several large customers. In 1998 and 1999, one

12

customer, Met-Rx USA, Inc., accounted for $5,447,000 and $21,350,000 of the
Company's total sales, respectively.

Reference is made to Note 19 of the Consolidated Financial Statements
contained in Part IV hereof for financial information on business segments.

Item No. 2 - Properties

The Company owns approximately six acres of land and a building
containing approximately 136,000 square feet of office, manufacturing and
warehouse space located at 136 Chesterfield Industrial Boulevard, Chesterfield,
Missouri, 63006, where it currently maintains its corporate headquarters. In
1998, the Company completed an expansion to the Chesterfield facility on land
owned by the Company adjacent to existing building. Approximately 90,000 square
feet of manufacturing, warehouse and office space was added to the existing
46,000 square foot facility. The Company obtained a construction loan of
$4,430,000 to finance the expansion. As of December 31, 1999, this loan had a
principal balance of $4,261,000.

The original property was purchased in July, 1991, and, as part of the
purchase price for the premises, the Company assumed the remaining principal
balance of $850,108 of a 1984 industrial revenue bond with an original principal
sum of $975,000. In addition, the Company executed a promissory note to the
seller in the amount of $250,000. The principal balances of the bond and
promissory note at December 31, 1999, are $477,000 and $205,000, respectively.
The promissory note is secured by a deed of trust on the premises. The Company
funds payments under the industrial revenue bond and promissory note from
working capital. In 1992, the Company completed an addition to its building of
approximately 12,000 square feet used for manufacturing of its products. In May,
1993, the Company purchased 3.4 acres of land adjacent to the original facility
for $400,000.

The Company leases office space in Suburban Sydney, Australia;
Mississauga, Ontario, Canada; Mexico City, Mexico; Suburban London, England and
in Medellin, Colombia to support its operations in those areas, and has a
contract warehouse arrangement in Auckland, New Zealand.

Item No. 3 - Legal Proceedings

In May, 1998, the former sales/general manager of the Company's
Canadian subsidiary filed a lawsuit claiming unlawful termination and breach of
contract. The individual had been terminated by the Company in March, 1998. The
Company believes the claim is without merit and intends to vigorously defend
itself. The Company has engaged Canadian counsel to defend this suit.
Examinations of discovery may not yet be completed as some undertakings of the
parties remain outstanding. At this time, the outcome of this matter is
uncertain, and a range of loss cannot be reasonably estimated. However,
management believes that the final outcome will not have a material adverse
effect on the financial position or results of operations of the Company.

Item No. 4 - Submission of Matters to a Vote of Security Holders

N/A

13

PART II

Item No. 5 - Market for Registrant's Common Equity and Related Stockholder
Matters

The Company's Common Stock was admitted to trading on the Emerging
Company Market Place at the American Stock Exchange on March 8, 1993 and
subsequently was approved for listing on the American Stock Exchange Main Board.
Prior to that time, there was no established public trading market for the
Company's Common Stock. On September 6, 1996, the Company moved the listing of
its Common Stock to the NASDAQ National Market Tier of the NASDAQ Stock Market
under the symbol: RELV.

1999 and 1998 Quarterly Stock Price Data
----------------------------------------

HI LO
----- -----
1999
First Quarter 2.625 1.875
Second Quarter 2.000 1.313
Third Quarter 1.750 1.063
Fourth Quarter 1.625 0.750

1998
First Quarter 5.125 2.875
Second Quarter 4.875 3.063
Third Quarter 4.000 2.438
Fourth Quarter 3.750 2.031

As of March 15, 2000, there were approximately 1,771 holders of record
of the Company's Common Stock.

On January 29, 1998, a cash dividend of $.01 per share was paid to
shareholders of record. On June 22, 1998, a cash dividend of $.015 per share was
paid to shareholders of record. On March 20, 1999, a cash dividend of $.01 per
share was paid to shareholders of record. The amount and timing of future
dividends will be subject to declaration of the Board of Directors consistent
with results of operation of the Company and its financial condition at the
time.

In March, 1995, the Company instituted an automatic dividend
reinvestment plan for its shareholders of record. Participation in the plan,
which is voluntary, provides for dividends paid by the Company to be reinvested
in shares of common stock at the then current market price. The plan also allows
participants to make additional voluntary purchases of common stock at the
market price.

Effective January 1, 1999, the Company instituted a Distributor Stock
Purchase Plan whereby qualified distributors can allocate a portion of their
commission check toward the purchase of the Company's Common Stock and can make
additional purchases of Common Stock through direct contributions. Purchases are
made at the market price. Distributors also are entitled to receive at the end
of each year warrants to purchase the Company's Common Stock based on the number
of shares of Common Stock purchased by the distributor during the year pursuant
to the Plan.

14

In 1997, pursuant to a consulting agreement, the Company issued
warrants to purchase 9,600 shares of its Common Stock at a price of $6.25 per
share, with a term of two years. The issuance of these securities was exempt
from registration under Section 4(2) of the Securities Act of 1933, as amended,
as an issuance not involving a public offering.

Item No. 6 - Selected Financial Data

The following selected financial data are derived from the consolidated
financial statements of the Company. The data should be read in conjunction with
the consolidated financial statements, related notes, and other financial
information included herein.

Year ended December 31
1999 1998 1997 1996 1995
------------------------------------------------------------------------------

Net Sales $67,973,526 $51,893,511 $46,836,270 $40,729,993 $28,913,873

Net Income (Loss) $(1,400,181) $ 1,556,929 $ 2,028,988 $ 1,507,014 $ 569,823

Earnings (Loss) per common share(1):
Basic (.15) .16 .21 .15 .06
Diluted (.15) .16 .20 .15 .06

Cash Dividends per share of Common Stock .01 .025 .03 .02 .01

Total Assets $20,771,818 $20,252,972 $15,969,948 $11,401,665 $10,276,234

Long-term debt and
capital lease obligations,
less current maturities $ 5,295,720 $ 5,589,562 $ 5,148,625 $ 1,478,079 $ 1,416,764

- ---------------------------------------------

(1) All earnings per share data has been retroactively adjusted for the pro
forma effect of the Company's 10% stock dividend issued in February 1997.

15

Item No. 7 - Management's Discussion and Analysis of Financial Condition and
Results of Operations

Results of Operations

Net Income and Net Sales

1999 vs. 1998

The Company's 1999 net loss was $1,400,000 or $.15 per share. This
compares with net income of $1,557,000 or $.16 per share in 1998. Net loss in
the United States, the Company's primary market, was $915,000 in 1999, compared
to net income of $1,659,000 in 1998. The United States operation is comprised of
the network marketing segment and the manufacturing and packaging services
segment. In 1999, the network marketing segment in the United States had a net
income of $338,000, and the manufacturing and packaging segment incurred a loss
of $1,253,000. Net loss from international operations was $485,000 in 1999,
compared with a loss of $102,000 in 1998. The decrease in income, as explained
in greater detail below, resulted from a variety of factors, but primarily a
decrease in network marketing sales in United States, and losses in the
manufacturing and packaging operation, due in part to increases in interest,
facility and administrative expenses necessary to support this business segment.

Net sales increased in 1999 to $68,000,000, as compared to $51,900,000
in 1998, as a result of a 34% increase in net sales in the United States from
$47,400,000 in 1998 to $63,400,000 in 1999. Net sales in the United States,
which accounts for 93% of total net sales, is comprised of network marketing
sales and manufacturing and packaging services. In 1999, network marketing sales
in the United States were $36,100,000 compared to $41,000,000 in 1998, and net
sales from manufacturing and packaging services increased to $27,300,000 from
$6,300,000 in 1998. Net sales in the foreign operations increased to $4,600,000
in 1999 from $4,500,000 in 1998.

Net sales for the fourth quarter of 1999 were $14,300,000, a decrease
from the fourth quarter 1998 net sales of $15,000,000. During the period,
network marketing sales in the United States declined to $8,400,000, as compared
to $9,500,000 in the fourth quarter 1998. Net sales in manufacturing and
packaging services increased from $4,400,000 to $4,700,000. Net sales in foreign
operations remained constant at $1,200,000 for the quarter.

In the United States, the Company's largest market, the number of
active distributors increased slightly to 30,100 from 29,200. The retention rate
of distributors who renew their annual agreement continued to remain high at
57%. Master Affiliates, distributors who have attained the highest level of
discount and are eligible for generation royalties, decreased to 3,250 in the
United States in 1999 from 4,123 in 1998. In 1999, the Company processed 74,103
wholesale orders at an average retail price of $603, compared to 78,609 orders
at an average of $663 in 1998. Wholesale orders are defined as distributor
orders placed at their qualified discount level and are in full case quantities.

The Company's Direct Select Program makes products available to
consumers by ordering directly through the Company. These orders are placed at
full retail price and can be ordered in

16

quantities in less than full case lots. In the United States in 1999, the
program processed a total of 57,598 orders for a net sales total of $5,800,000,
compared to $6,300,000 in 1998.

The Company is continuing to develop existing marketing programs such
as the "The Star Director," "Ambassador" and "Road to Presidential" programs.
The Star Director Program compensates distributors who reach certain levels of
sales organization growth with bonuses based on the retail sales of their
distributor network. In 1999, $1,315,000 was paid through this program compared
to $1,345,000 in 1998. The Ambassador Program compensates distributors at the
highest levels for their leadership and development of sales. At year end 1999,
there were 64 Ambassadors who shared in bonuses totaling $584,000, compared to
58 Ambassadors at the end of 1998 sharing bonuses of $799,000. The Road to
Presidential Program, through training and rewards, is designed to encourage
distributors to reach the highest level of earnings potential by building
downline organizations.

During the third quarter of 1999, the Company successfully launched its
enhanced Internet site, with e-commerce capabilities. The web site allows a
number of features for distributors, including online ordering, online
sponsoring of new distributors, account information and sales organization
activity. In conjunction with the launch of the Internet site, distributors are
also able to establish their own personal web site, which enabled distributors
to market themselves through the Internet, as well as place product orders,
track shipments, receive Company e-mails and other interactive functions. Over
500 distributors have signed up for personal web sites. The Company believes the
use of the Internet will contribute significantly to sales growth in the future.

Contributing to the decrease in United States net sales in 1999 was the
lack of a new product introduction during the year. In January 2000, the Company
introduced four new products at its United States National Convention in Reno,
NV. The product introduction included NOW for Kids, a nutritional supplement
important for growing bodies, SoySense, a supplement that provides soy protein,
a nutrient proven to lower the risk of heart disease, Ultrim Plus, a
reformulated meal replacement product to assist in weight loss, and a new
formula of Fibrestore, a fiber-rich antioxidant supplement. The Company
anticipates sales on these new products to enhance sales during 2000 and is
expanding its investment and development in new products to promote sales growth
in future years.

In Australia and New Zealand net sales declined to $2,544,000 in 1999
from $2,897,000 in 1998. Fourth quarter 1999 sales decreased to $630,000 from
$687,000 in 1998. New distributor enrollments declined in Australia and New
Zealand to 1,186 from 1,814 in 1998. Distributor renewals in Australia were 56%
and in New Zealand 39% in 1999 as compared to 54% and 38% in 1998, respectively.
The Company believes sales in Australia and New Zealand will be affected
positively by several additions, including a new sales manager, employed in
July, and the introduction in May 1999 of Arthaffect, a product that represents
nearly 10% of retail sales in the United States. SoySense, a soy based
nutritional supplement was introduced in March 2000. In addition, a number of
top selling products have been submitted for regulatory approval and should be
available for sale there in the near future.

Net sales in Canada decreased in 1999 to $993,000 from $1,214,000 in
1998. Fourth quarter sales decreased to $258,000 in 1999 compared to $274,000 in
1998. New distributor enrollments declined to 568 from 797 in 1998. Sales for
the year have continued to be adversely affected by the

17

change in sales leadership. The Company is initiating several product
introductions, including the introduction of SoSense, a soy based nutritional
supplement in March 2000. The Company believes stability is returning to the
Canadian distributor force and that sales will improve in 2000.

Net sales in Mexico in 1999 were $691,000 compared to $317,000 in 1998.
Net sales in the fourth quarter 1999 were $215,000 compared to $81,000 in 1998.
New distributor enrollment increased in 1999 to 2,324 compared to 445 in 1998.
Net Sales have been affected positively by the efforts of the sales management
team, plus the establishment of distribution centers owned and operated by key
distributors to facilitate sales and the delivery of product in cities outside
of Mexico City. With the inadequate distribution system in Mexico, this is a
common method used by network marketing companies to distribute their products.
The Company has submitted several products for regulatory approval and believes
these additions to the product line will have a positive effect on future sales.

The Company began marketing its products in the United Kingdom in July
1995, through a licensee. Revenues under the license agreement in 1996, 1997 and
1998 were minimal and in October 1998, the Company, through a subsidiary,
assumed ownership and control of the United Kingdom operations. The United
Kingdom subsidiary reported net sales of $109,000 in the fourth quarter of 1998.
Sales in the United Kingdom in 1999 were $356,000. The Company hired a sales
manager in January 2000 to improve sales efforts in this region. During 1999,
the Company operated without a sales manager.

The Company announced that in the first quarter 2000 it would commence
sales in Colombia, with intentions of expanding into other Latin and South
American countries.

The Company provides contract packaging services, including blending,
processing and packaging food products in accordance with specifications
provided by its customers. Net sales increased in 1999 to $27,300,000 from
$6,300,000 in 1998. Despite the increase in net sales, the Company experienced
significant setbacks in profitability reporting a net loss of $1,253,000,
compared to a net loss of $407,000 in 1998.

The increase in sales was due to services provided for two major
customers. The Company's sales to third party customers consists of the Company
purchasing raw materials, using customer provided packaging, and selling a
finished product to the customer. The Company's growth in net sales led to
production capacity and warehousing problems, and related labor inefficiencies.
Cost of goods for 1999 were 101% of net sales. Even under optimal operating
efficiencies, the gross margin for these customers is substantially less than
margins in sales of network marketing products. The Company has taken steps to
better manage this area, including plant staff reductions, warehouse cost
reductions, elimination of the unprofitable business and review of profit
margins by customer and project. Future efforts to develop contract packaging
services have been discontinued as the Company has placed its efforts in
increasing network marketing sales.

1998 vs. 1997

The Company's 1998 net income was $1,557,000 or $.16 per share. This
compares with net income of $2,029,000 or $.21 per share in 1997. Net income in
the United States was $1,659,000

18

in 1998, compared to $2,177,000 in 1997. Net income from international
operations was a loss of $102,000 in 1998, compared with a loss of $148,000 in
1997.

Net sales increased in 1998 to $51,900,000, as compared to $46,800,000
in 1997, as a result of the 14% increase in net sales in the United States from
$41,700,000 in 1997 to $47,400,000 in 1998. Net sales in the United States,
which accounts for 91% of total net sales, is comprised of network marketing
sales and manufacturing and packaging services. In 1998, network marketing sales
in the United States increased to $41,000,000 compared to $40,200,000 in 1997,
and net sales from manufacturing and packaging services increased to $6,300,000
from $1,500,000 in 1997. Net sales in the foreign operations declined to
$4,500,000 in 1998 from $5,100,000 in 1997.

In the United States, the Company's largest market, the number of
active distributors decreased 2% to 29,169. The retention rate of distributors
who renew their annual agreement continued to remain high at 54%. Master
Affiliates, distributors who have attained the highest level of discount and are
eligible for generation royalties, increased to 4,123 in the United States in
1998 from 3,631 in 1997. In 1998 the Company processed 78,609 orders at an
average retail price of $663, compared to 73,136 orders at an average of $695 in
1997.

The United States 1998 net sales were positively affected by the
introduction of a new product, SoySentials, a soy-based nutritional supplement
designed for use by women. This product expands the Company's product line in
the growing functional foods category.

The Company's Direct Select Program makes products available to
consumers by ordering directly through the Company. In 1998, the program in the
United States, produced $6,300,000, or nearly 11% of total product sales at
retail value, compared to $5,900,000 in 1997 and $4,300,000 in 1996. The Company
introduced the Direct Select Program in Canada in October 1997 and in Australia,
New Zealand and the United Kingdom over the course of 1998.

In Australia and New Zealand net sales declined to $2,897,000 in 1998
from $3,449,000 in 1997. Fourth quarter 1998 sales decreased to $687,000 from
$753,000 in 1997. New distributor enrollments declined in Australia and New
Zealand to 1,814 from 1,820 in 1997. Distributor renewals in Australia were 54%
and in New Zealand 38% in 1998 as compared to 48% and 37% in 1997, respectively.
Reported net sales in Australia and New Zealand were also affected by the
decline in the value of their currency as compared to the United States dollar.
As of the end of 1998, the Australian and New Zealand dollars declined 6% and
9%, respectively, from their rates as of December 31, 1997.

Sales in Australia and New Zealand have been affected by continued
delays in the introduction of several new products due to regulatory policies,
plus increased levels of competition. The Company has received approval in
Australia and New Zealand to sell Reliv' Classic and introduced it in May 1998.
Reliv' Classic is the number one selling product in the United States accounting
for approximately 25% of total retail sales. Fibrestore, a product which
averages in excess of 10% of sales in the United States, was introduced in
Australia in September, 1997.

Net sales in Canada decreased in 1998 to $1,214,000 from $1,338,000 in
1997. Fourth quarter sales decreased to $274,000 in 1998 compared to $334,000 in
1997. New distributor enrollments declined to 797 from 991 in 1997.

19

Net sales in Mexico in 1998 were $317,000 compared to $330,000 in 1997.
Net sales in the fourth quarter 1998 were $81,000 compared to $74,000 in 1997.
New distributor enrollment increased in 1998 to 445 compared to 360 in 1997.

The Company began marketing its products in the United Kingdom in July
1995, through a licensee. Revenues under the license agreement in 1996, 1997 and
1998 were minimal and in October 1998, the Company through a subsidiary assumed
ownership and control of the United Kingdom operations. The United Kingdom
subsidiary reported net sales of $109,000 in the fourth quarter of 1998.

Cost of Sales

During 1999, cost of network marketing products sold was 17% of net
sales compared with 17% in 1998, and 18% in 1997. Cost of network marketing
products sold remained constant at 17% in the fourth quarter of both 1999 and
1998. Cost of goods for contract packaging services was 101% for both 1999 and
1998. The high level of cost of goods in contract packaging sales was a result
of production capacity and warehousing problems, and related labor
inefficiencies.

Distributor Royalties and Discounts

Distributor royalties and discounts as a percentage of network
marketing sales increased to 38% in 1999 compared to 37% in both 1998 and 1997.
In the fourth quarter of 1999, distributor royalties and discounts increased to
37% from 35% in 1998. These expenses are governed by the distributor agreements
and are directly related to the level of sales. The Company pays a percentage of
sales up to 18% in royalties and as much as 45% in discounts. On an annual
basis, the percentage of distributor royalties and discounts to network
marketing sales has remained fairly constant. Included in distributor royalties
and discounts are royalties of $584,000 for 1999 earned through the Ambassador
Program as compared to $799,000 in 1998 and $838,000 in 1997.

Selling, General and Administrative

Selling, general and administrative expenses decreased to 29% as a
percentage of net sales for 1999, from 35% in 1998, and 37% in 1997. The
percentage change is primarily due to the increase in sales of the manufacturing
and packaging business segment in comparison to total SGA expenses. Selling,
general and administrative expenses for 1999 were $19,800,000 compared to
$18,100,000 in 1998.

In 1999, distribution and warehouse expense increased to $1,524,000
from $811,000 in 1998 primarily due to the increase in volume generated by
contract packaging services, as expenses in this segment increased from $336,000
in 1998 to $972,000 in 1999.

In 1999, sales incentive bonuses were $653,000, compared to $480,000 in
1998, as a result of a fourth quarter incentive that replaced a promotional trip
that is generally expensed in the first quarter of the following year. Overall,
sales and marketing expenses remained constant in 1999, despite a decrease in
sales.

20

Staff compensation and fringes increased by 15%, or $719,000, as
departments were increased in order to service the anticipated sales growth, in
both network marketing and manufacturing and packaging operations. Senior level
management received a 25% compensation reduction as of August 1, 1999.

Selling, general and administrative expense were also affected by the
$425,000 increase in the reserve for bad debts as a result of financial
difficulties experienced by one of the Company's contract packaging customers.
This also accounts for the increase in selling, general and administrative
expenses as a percentage of net sales in the fourth quarter 1999, which
increased to 36% of net sales, compared to 31% during the fourth quarter 1998.

Interest Expense

Interest expense in 1999 was $585,000 compared to $509,000 in 1998 and
$210,000 in 1997. Interest expense in 1999 and 1998 increased in comparison to
1997 due to a loan package secured for the expansion of the Company's office and
manufacturing facility, plus capital leases of furnishings and equipment.
Interest expense in 1999 increased further as the result of increased short-term
borrowings and the impact of higher interest rates.

Income Taxes

Income taxes for 1999 reflects a tax benefit of $770,000 due to the
pretax loss of $2,170,000. The provision for income taxes in 1998 was 1.8% of
net sales or $941,000, and 3.0% of net sales, or $1,385,000 in 1997. The
effective tax rate for 1999 was 35%. Effective tax rates for 1998 and 1997 were
38% and 41%, respectively. The 1997 effective rate was higher than the
subsequent years as the result of the settlement of an audit by the Internal
Revenue Service for the fiscal years 1992 through 1994. The 1999 tax benefit
will be carried back against previous year's earnings.

Financial Condition

The Company utilized $1,274,000 of net cash during 1999 for operating
activities and increased cash by $1,779,000 through long-term financing and use
of their lines of credit. This compares to $2,111,000 of cash generated from
operating activities and $785,000 through long-term financing and use of the
lines of credit in 1998. Cash and cash equivalents decreased $1,285,000 to
$1,532,000 by year-end 1999. The Company invested $1,082,000, primarily in the
acquisition of machinery and plant equipment. The Company used $584,000 to repay
long-term borrowings and capital lease obligations.

Current assets increased to $8,497,000 at December 31, 1999 from
$8,358,000 as of December 31, 1998. Cash and cash equivalents decreased
$1,285,000 as described above. Accounts receivable increased to $794,000 at
December 31, 1999 from $688,000 at December 31, 1998. The increase is due to
sales to the Company's contract packaging customers. At December 31, 1999, the
Company has reserved $430,000 as an allowance toward accounts receivable. This
compares to $5,000 at year-end 1998. The increase is the result of financial
difficulties experienced by one of the Company's contract packaging services
customers.

21

Inventories increased to $4,705,000 from $3,929,000 at year-end 1998,
primarily as a result of increases in raw material inventories necessitated by
increases in sales by the manufacturing and packaging business.

Refundable income taxes increased to $855,000 at the end of 1999 from
$314,000 as of the end of 1998. The increase is due to tax benefit from the loss
incurred in 1999.

Property, plant and equipment, after dispositions, increased $1,190,000
to $15,363,000 at December 31, 1999, primarily as a result of purchases of
machinery and plant equipment in 1999. Acquisition was funded with working
capital, as well as through a term loan with the Company's primary lender of
$300,000.

Current liabilities increased to $8,307,000 at December 31, 1999 from
$6,175,000 at December 31, 1998. Trade accounts payable increased to $3,994,000
from $3,568,000 at December 31, 1998 primarily due to the increase in raw
material inventory. Distributor commissions payable increased $249,000 to
$1,421,000 at year-end as a result of improved net sales in December 1999 as
compared to December 1998. Borrowings under the line of credit increased to
$1,793,000 from $314,000 at December 31, 1998.

Long-term debt decreased to $5,296,000 from $5,590,000 at December 31,
1998. Principal payments of $584,000 were offset by a $300,000 term loan used to
acquire manufacturing equipment. The Company has a term loan with an outstanding
balance of $4,261,000 as of December 31, 1999. This loan provided financing for
the expansion of its facility in 1997. The Company has term loans with principal
balances of $277,000 and $239,000 as of December 31, 1999, as well as long-term
debt totaling $682,000, relating to the purchase of its original building and
land. The Company also has operating lines of credit totaling $2,400,000. At
December 31, 1999, the Company had utilized $1,793,000 of the lines of credit.

Stockholders' equity decreased to $6,800,000 compared with $8,300,000
at December 31, 1998. The reduction is primarily due to the 1999 net loss of the
Company. The Company paid out cash dividends of $97,000 in the first quarter
1999 and used $136,000 in cash to purchase treasury stock.

The Company's working capital balance has decreased by $1,993,000 since
December 31, 1998. The current ratio at December 31, 1999 declined to 1.02 from
1.35 at previous year-end. The Company's line of credit is formula-based and
provides a borrowing arrangement based on a percentage of accounts receivable
and inventory up to a maximum borrowing limit. As of December 31, 1999, the
Company had borrowed more than the amount allowed under the collateral
calculation, but has obtained a waiver to allow it to borrow the maximum amount
under the line through September 30, 2000. Management believes that the
Company's internally generated funds together with the loan agreement will be
sufficient to meet working capital requirements in 2000.

Year 2000 Issues

Based on recent assessments, the Company did not experience a material
effect on its operations as a result of Year 2000 issues. The Company's computer
hardware and software systems are Year 2000 compliant. The Company has
determined it has no exposure related to the Year 2000

22

for the products it sells. The cost of attaining Year 2000 compliance was not
material for the Company.

Safe Harbor Provision of the Private Securities Litigation Act of 1995 and
Forward Looking Statements.

The statements contained in Item 7 (Management's Discussion and
Analysis of Financial Condition and Results of Operation) that are not
historical facts may be forward-looking statements (as such term is defined in
the rules promulgated pursuant to the Securities Exchange Act of 1934) that are
subject to a variety of risks and uncertainties. The forward-looking statements
are based on the beliefs of the Company's management, as well as assumptions
made by, and information currently available to the Company's management.
Accordingly, these statements are subject to significant risks, uncertainties
and contingencies which could cause the Company's actual growth, results,
performance and business prospects and opportunities in 2000 and beyond to
differ materially from those expressed in, or implied by, any such
forward-looking statements. Wherever possible, words such as "anticipate,"
"plan," "expect," "believe," "estimate," and similar expressions have been used
to identify these forward-looking statements, but are not the exclusive means of
identifying such statements. These risks, uncertainties and contingencies
include, but are not limited to, the Company's ability to continue to attract,
maintain and motivate its distributors, changes in the regulatory environment
affecting network marketing sales and sales of food and dietary supplements and
other risks and uncertainties detailed in the Company's other SEC filings.

Item No. 7A - Qualitative And Quantitative Disclosures Regarding Market Risk

The Company's earnings and cash flow are subject to fluctuations due to
changes in foreign currency rates as it has several foreign subsidiaries and
continues to explore expansion into other foreign countries. As a result,
exchange rate fluctuations may have an effect on its sales and the Company's
gross margins. Accounting practices require that the Company's results from
operations be converted to U.S. dollars for reporting purposes. Consequently,
the reported earnings of the Company in future periods may be significantly
affected by fluctuations in currency exchange rates, generally increasing with a
weaker U.S. dollar and decreasing with a strengthening U.S. dollar. Products
manufactured by the Company for sale to the Company's foreign subsidiaries are
transacted in U.S. dollars. As the Company's foreign operations expand, its
operating results will be subject to the risks of exchange rate fluctuations and
the Company may not be able to accurately estimate the impact of such changes on
its future business, product pricing, results of operations or financial
condition.

The Company also is exposed to market risk in changes in interest rates
on its long-term debt arrangements and commodity prices in some of the raw
materials it purchases for its manufacturing needs. However, neither presents a
risk that would have a material effect on the Company's results of operations or
financial condition.

Item No. 8 - Financial Statements and Supplementary Data

Reference is made to the Consolidated Financial Statements contained in
Part IV hereof.

Item No. 9 - Changes in and Disagreements with Accountants on Accounting and

23

Financial Disclosure

None.

PART III

Item No. 10 - Directors and Executive Officers of the Registrant

Information called for by Item 10 of Part III is incorporated by reference to
the definitive Proxy Statement for the 2000 Annual Meeting of Shareholders to be
held on May 25, 2000, to be filed with the Commission within 120 days of the end
of the Company's last fiscal year.

Item No. 11 - Executive Compensation

Information called for by Item 11 of Part III is incorporated by reference to
the definitive Proxy Statement for the 2000 Annual Meeting of Shareholders to be
held on May 25, 2000, to be filed with the Commission within 120 days of the end
of the Company's last fiscal year.

Item No. 12 - Security Ownership of Certain Beneficial Owners and Management

Information called for by Item 12 of Part III is incorporated by reference to
the definitive Proxy Statement for the 2000 Annual Meeting of Shareholders to be
held on May 25, 2000, to be filed with the Commission within 120 days of the end
of the Company's last fiscal year.

Item No. 13 - Certain Relationships and Related Transactions

Information called for by Item 13 of Part III is incorporated by reference to
the definitive Proxy Statement for the 2000 Annual Meeting of Shareholders to be
held on May 25, 2000, to be filed with the Commission within 120 days of the end
of the Company's last fiscal year.

PART IV

Item No. 14 - Exhibits, Financial Statement Schedules and Reports on Form 8K

(a) 1. The Consolidated Financial Statements filed as
part of this report on Form 10-K are listed on the
accompanying Index to Consolidated Financial
Statements and Consolidated Financial Statement
Schedules.

2. The Consolidated Financial Statement Schedules filed
as part of this report on Form 10-K are listed on the
accompanying Index to Consolidated Financial
Statements and Consolidated Financial Statement
Schedules.

3. Exhibits:

24

Exhibit
Document Number

Articles of Incorporation, as amended
(incorporate by reference Exhibit 3.1 to
the Form 10-K of the Registrant for year
ended December 31, 1995) 3.1

By-laws, as amended (incorporate by
reference Exhibit 3.2 to the Form 10-K of
the Registrant for year ended December
31, 1992) 3.2

Amended Exclusive License Agreement
(incorporate by reference Exhibit 10.1 to
the Form 10-K of the Registrant for year
ended December 31, 1992) 10.1

Asset Purchase Agreement (Australian
Joint Venture) (incorporate by reference
Exhibit 10.2 to the Form 10-K of the
Registrant for year ended December 31,
1992) 10.2

Master Agent Agreement (re: Australia)
(incorporate by reference Exhibit 10.3 to
the Form 10-K of the Registrant for year
ended December 31, 1992) 10.3

1995 Stock Option Plan (incorporate by
reference Exhibit 10.7 to the Form 10-K
of the Registrant for year ended December
31, 1995) 10.4

Montgomery Employment Agreement dated
June 1, 1997 (incorporate by reference
Exhibit 10.6 to the Form 10-K of the
Registrant for year ended December 31,
1997) 10.5

Hastings Employment Agreement dated June
1, 1997 (incorporate by reference Exhibit
10.8 to the Form 10-K of the Registrant
for year ended December 31, 1997) 10.6

25

Exhibit
Document Number

Kreher Employment Agreement dated April
13, 1994 (incorporate by reference
Exhibit 10.14 to the Registrant's Form
10-Q for quarter ended June 30, 1994). 10.7

1994 Annual Incentive Compensation Plan
(incorporate by reference Exhibit 10.11
to the Form 10-K of the Registrant for
year ended December 31, 1995) 10.8

1994 Long-Term Incentive Compensation
Plan (incorporate by reference Exhibit
10.12 to the Form 10-K of the Registrant
for year ended December 31, 1995) 10.9

Agreement with Avogen, Inc. dated July 1,
1995 (incorporate by reference Exhibit
10.13 to the Form 10-K of the Registrant
for year ended December 31, 1995) 10.10

Agreement with Conkle & Olesten and
Avogen, Inc. dated July 1, 1995
(incorporate by reference Exhibit 10.14
to the Form 10-K of the Registrant for
year ended December 31, 1995) 10.11

Agreement with Traco Labs, Inc.
(incorporate by reference Exhibit 10.14
to the Form 10-K of the Registrant for
year ended December 31, 1996) 10.12

26

Exhibit
Document Number

Amendment to Avogen and Conkle & Oleston
Agreements dated April 25, 1997
(incorporate by reference Exhibit 10.15
to the Form 10-K of the Registrant for
year ended December 31, 1997) 10.13

Loan Agreement dated March 20, 1996 with
Southwest Bank of St. Louis (incorporate
by reference Exhibit 10.14 to the Form
10-K of the Registrant for year ended
December 31, 1998) 10.14

Deed of Trust Note dated January 2, 1996
in the amount of $950,000 with Southwest
Bank of St. Louis (incorporate by
reference Exhibit 10.15 to the Form 10-K
of the Registrant for year ended December
31, 1998) 10.15

Line of Credit Note dated March 20, 1996
in the amount of $1,000,000 with
Southwest Bank of St. Louis (incorporate
by reference Exhibit 10.16 to the Form
10-K of the Registrant for year ended
December 31, 1998) 10.16

Line of Credit Note dated January 2, 1996
in the amount of $500,000 with Southwest
Bank of St. Louis (incorporate by
reference Exhibit 10.17 to the Form 10-K
of the Registrant for year ended December
31, 1998) 10.17

Deed of Trust Note dated September 2,
1997 in the amount of $4,430,000 with
Southwest Bank of St. Louis (incorporate
by reference Exhibit 10.18 to the Form
10-K of the Registrant for year ended
December 31, 1998) 10.18

Reliv' International, Inc. Supplemental
Executive Retirement Plan dated June 1,
1998 (incorporate by reference Exhibit
10.19 to the Form 10-K of the Registrant
for year ended December 31, 1998) 10.19

Stock Purchase Agreement dated October 1,
1998 among Reliv' World Corporation,
Reliv' Europe, Inc. and Global Nutrition,
Inc. regarding purchase of Reliv' UK,
Ltd. (incorporate by reference Exhibit
10.20 to the Form 10-K of the Registrant
for year ended December 31, 1998) 10.20

1999 Stock Option Plan (incorporate by
reference to Appendix E of the Form 14A
the Registrant filed April 22, 1999) 10.21

27

Exhibit
Document Number

Statement re: computation of per share
earnings (incorporate by reference to
Note 8 of the Consolidated Financial
Statements contained in Part IV) 11

Subsidiaries of the Registrant
(incorporate by reference the
Registrants's Response to Item 1 of Part
I of this Form 10-K) 22

Consent of Ernst & Young L.L.P.,
Independent Auditors 23

(b) No reports on Form 8-K have been filed by the Registrant
during the last quarter of the period covered by this report.

(c) The Exhibits listed in subparagraph (a)(3) of this Item 14 are
attached hereto unless incorporated by reference to a previous
filing.

(d) The Schedules listed in subparagraph (a)(2) of this Item 14
are attached hereto.

28

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

RELIV' INTERNATIONAL, INC.

By: /s/ Robert L. Montgomery
-------------------------------
Robert L. Montgomery, Chairman of the Board of Directors, President and
Chief Executive Officer, Treasurer

Date: March 30, 2000

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, President and
Chief Executive Officer, Treasurer

Date: March 30, 2000

By: /s/ David G. Kreher
-------------------------------
David G. Kreher, Senior Vice President, Assistant Secretary

Date: March 30, 2000

By: /s/ Carl W. Hastings
-------------------------------
Carl W. Hastings, Executive Vice President, Assistant Secretary,
Director

Date: March 30, 2000

By: /s/ Thomas W. Pinnock
-------------------------------
Thomas W. Pinnock III, Director

Date: March 30, 2000

By: /s/ Stephen M. Merrick
-------------------------------

Stephen M. Merrick, Senior Vice President, Secretary, Director
(principal financial and accounting officer)

Date: March 30, 2000

29

By: /s/ Donald L. McCain
-------------------------------
Donald L. McCain, Director

Date: March 30, 2000

By: /s/ John Akin
-------------------------------
John Akin, Director

Date: March 30, 2000

By: /s/ Sandra S. Montgomery
-------------------------------
Sandra S. Montgomery, Director

Date: March 30, 2000

By: /s/ Thomas T. Moody
-------------------------------
Thomas T. Moody, Director

Date: March 30, 2000

By: /s/ Marvin W. Solomonson
-------------------------------
Marvin W. Solomonson, Director

Date: March 30, 2000

Reliv' International, Inc.
and Subsidiaries

Consolidated Financial Statements

Years ended December 31, 1999, 1998 and 1997

Contents

Consolidated Financial Statements:
Report of Independent Auditors........................................F-1
Consolidated Balance Sheets as of December 31, 1999 and 1998..........F-2
Consolidated Statements of Operations for the years ended
December 31, 1999, 1998 and 1997...................................F-4
Consolidated Statements of Stockholders' Equity for the years ended
December 31, 1999, 1998 and 1997...................................F-5
Consolidated Statements of Cash Flows for the years ended
December 31, 1999, 1998 and 1997....................................F-6
Notes to Consolidated Financial Statements - December 31, 1999........F-8

Financial Statement Schedule:
Schedule II - Valuation and Qualifying Accounts for the years ended
December 31, 1999, 1998 and 1997......................................F-28

All other schedules for which provision is made in the applicable accounting
regulation of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable and, therefore, have been omitted.

[Letterhead of Ernst & Young LLP]

Report of Independent Auditors

Board of Directors and Stockholders
Reliv' International, Inc.

We have audited the accompanying consolidated balance sheets of Reliv'
International, Inc. and subsidiaries as of December 31, 1999 and 1998, and the
related consolidated statements of operations, stockholders' equity and cash
flows for each of the three years in the period ended December 31, 1999. Our
audits also included the financial statement schedule listed in the Index at
Item 14(a). These financial statements and financial statement schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and financial statement schedule based on
our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Reliv'
International, Inc. and subsidiaries at December 31, 1999 and 1998, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1999, in conformity with accounting
principles generally accepted in the United States. Also, in our opinion, the
related financial statement schedule, when considered in relation to the basic
financial statements taken as a whole, presents fairly in all material respects
the information set forth therein.

/s/ Ernst & Young LLP

March 7, 2000,
except for Note 6, as to which
the date is March 20, 2000

St. Louis, Missouri

F-1

Reliv' International, Inc. and Subsidiaries

Consolidated Balance Sheets

December 31
1999 1998
-------------------------------------------

Assets
Current assets:
Cash and cash equivalents $ 1,531,700 $ 2,816,804
Accounts and notes receivable,
less allowances of $430,000 in
1999 and $5,000 in 1998 794,037 688,194
Note receivable from officer 164,250 89,250
Inventories:
Finished goods 1,826,748 1,702,359
Raw materials 2,402,006 1,865,649
Sales aids and promotional materials 476,708 361,322
-------------------------------------------
Total inventories 4,705,462 3,929,330

Refundable income taxes 855,178 314,284
Prepaid expenses and other current assets 304,734 440,596
Deferred income taxes 141,236 79,269
-------------------------------------------
Total current assets 8,496,597 8,357,727

Other assets:
Goodwill, net of accumulated amortization
of $65,692 in 1999 and
$13,000 in 1998 459,846 512,399
Other assets 1,013,130 703,623
-------------------------------------------
Total other assets 1,472,976 1,216,022

Property, plant and equipment 15,362,583 14,172,977
Less accumulated depreciation and amortization (4,560,338) (3,493,754)
-------------------------------------------
10,802,245 10,679,223
-------------------------------------------

Total assets $20,771,818 $20,252,972
===========================================

See accompanying notes.

F-2

Reliv' International, Inc. and Subsidiaries

Consolidated Balance Sheets

December 31
1999 1998
-------------------------------------------

Liabilities and stockholders' equity Current liabilities:
Accounts payable and accrued expenses $ 5,882,612 $ 5,189,755
Income taxes payable 3,391 55,258
Borrowings under line of credit 1,792,986 313,825
Current maturities of long-term debt and
capital lease obligations 622,973 508,362
Unearned income 5,003 107,695
-------------------------------------------
Total current liabilities 8,306,965 6,174,895

Non-current liabilities:
Capital lease obligations, less current maturities 305,081 373,455
Long-term debt, less current maturities 4,990,639 5,216,107
Other non-current liabilities 350,415 148,349
-------------------------------------------
Total non-current liabilities 5,646,135 5,737,911

Stockholders' equity:
Common stock, no par value; 20,000,000 shares authorized,
9,551,102 shares issued and outstanding in 1999 and 9,653,502
shares issued and outstanding in 1998 9,082,382 9,179,764
Notes receivable - officers and directors (38,217) (44,746)
Accumulated deficit (1,889,297) (354,195)
Accumulated other comprehensive loss:
Foreign currency translation adjustment (336,150) (440,657)
-------------------------------------------
Total stockholders' equity 6,818,718 8,340,166

-------------------------------------------
Total liabilities and stockholders' equity $20,771,818 $20,252,972
===========================================

See accompanying notes.

F-3

Reliv' International, Inc. and Subsidiaries

Consolidated Statements of Operations

Year ended December 31
1999 1998 1997
----------------------------------------------------------------

Sales at suggested retail $88,781,139 $75,987,414 $71,066,845
Less distributor allowances on
product purchases 20,807,613 24,093,903 24,230,575
----------------------------------------------------------------
Net sales 67,973,526 51,893,511 46,836,270

Costs and expenses:
Cost of products sold 34,557,290 14,286,498 9,404,283
Distributor royalties and commissions 15,316,965 16,664,486 16,837,084
Selling, general and administrative 19,834,063 18,069,355 17,083,792
----------------------------------------------------------------
69,708,318 49,020,339 43,325,159
----------------------------------------------------------------
Income (loss) from operations (1,734,792) 2,873,172 3,511,111

Other income (expense):
Interest expense (585,255) (509,492) (210,268)
Other income 149,866 134,249 113,145
----------------------------------------------------------------
Income (loss) before income taxes (2,170,181) 2,497,929 3,413,988
Provision (benefit) for income taxes (770,000) 941,000 1,385,000
----------------------------------------------------------------
Net income (loss) $ (1,400,181) $ 1,556,929 $ 2,028,988
================================================================

Earnings (loss) per common share $(.15) $.16 $.21

Earnings (loss) per common share -
assuming dilution $(.15) $.16 $.20

See accompanying notes.

F-4

Reliv' International, Inc. and Subsidiaries

Consolidated Statements of Stockholders' Equity

Accumulated
Common Stock Notes Receivable Other Treasury Stock
------------ Officers and Accumulated Comprehensive --------------
Shares Amount Directors Deficit Income/(Loss) Shares Amount Total
------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------
Balance at December 31, 1996 9,900,529 $9,211,826 $ (4,633) $(2,516,181) $ 10,970 250,580 $(644,660) $6,057,322
-------------------------------------------------------------------------------------------------
Net income - - - 2,028,988 - - - 2,028,988
Other comprehensive
income/(loss):
Foreign currency
translation adjustment - - - - (300,872) - - (300,872)
-----------
Total comprehensive income $1,728,116
-----------
Common stock purchased
for treasury - - - - - 86,306 (337,127) (337,127)
Options exercised 10,438 13,125 - - - - - 13,125
Warrants exercised 29,140 - - - - - - -
Cancellation of treasury stock (314,106) (89,187) - (892,600) - (314,106) 981,787 -
Adjustment to stock dividend (8,694) - - - - (22,780) - -
Dividends paid ($.03 per share) - - - (293,371) - - - (293,371)
-------------------------------------------------------------------------------------------------
Balance at December 31, 1997 9,617,307 9,135,764 (4,633) (1,673,164) (289,902) - - $7,168,065
-------------------------------------------------------------------------------------------------
Net income - - - 1,556,929 - - - 1,556,929
Other comprehensive
income/(loss):
Foreign currency
translation adjustment - - - - (150,755) - - (150,755)
-----------
Total comprehensive income $1,406,174
-----------
Options exercised 36,195 44,000 (44,000) - - - - -
Repayment of loan by
officers and directors - - 3,887 - - - - 3,887
Dividends paid
($.025 per share) - - - (237,960) - - - (237,960)
-------------------------------------------------------------------------------------------------
Balance at December 31, 1998 9,653,502 9,179,764 (44,746) (354,195) (440,657) - - $8,340,166
-------------------------------------------------------------------------------------------------
Net loss - - - (1,400,181) - - - (1,400,181)
Other comprehensive
income/(loss):
Foreign currency
translation adjustment - - - - 104,507 - - 104,507
adjustment
-----------
Total comprehensive loss $(1,295,674)
-----------
Common stock purchased
for treasury - - - - - 102,400 (135,798) 135,798)
Cancellation of treasury stock (102,400) (97,382) - (38,416) - (102,400) 135,798 -
Repayment of loan by
officers and directors - - 6,529 - - - - 6,529
Dividends paid
($.01 per share) - - - (96,505) - - - (96,505)
-------------------------------------------------------------------------------------------------
Balance at December 31, 1999 9,551,102 $9,082,382 $(38,217) $(1,889,297) $(336,150) - $ - $6,818,718
=================================================================================================

See accompanying notes.

F-5

Reliv' International, Inc. and Subsidiaries
Consolidated Statements of Cash Flows

Year ended December 31
1999 1998 1997
---------------------------------------------------------------

Operating activities
Net income (loss) $(1,400,181) $1,556,929 $2,028,988
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating activities:
Depreciation and amortization 1,121,025 806,146 607,281
Provision for losses on accounts receivable 431,625 9,915 -
Provision for deferred income taxes (61,225) 9,232 (31,096)
Foreign currency transaction (gain)/loss (23,782) 38,756 (23,019)
(Increase) decrease in accounts and notes
receivable (561,104) (474,159) 185,115
(Increase) decrease in inventories (740,168) (1,348,163) 30,553
(Increase) decrease in refundable income taxes (541,074) (294,589) 21,496
(Increase) decrease in prepaid expenses and
other current assets 138,244 56,032 14,803
(Increase) decrease in other assets (313,383) (502,034) (128,244)
Increase (decrease) in accounts payable and
accrued expenses 834,360 2,083,822 (128,082)
Increase (decrease) in income taxes payable (55,749) 66,756 (68,940)
Increase (decrease) in unearned income (102,712) 102,711 (17,594)
---------------------------------------------------------------
Net cash provided by (used in)operating activities (1,274,124) 2,111,354 2,491,261

Investing activities
Proceeds from the sale of property, plant and
equipment - 8,923 73,010
Purchase of property, plant and equipment (1,081,746) (1,756,442) (5,054,726)
Repayment of loans by officers and directors 6,529 3,887 -
---------------------------------------------------------------
Net cash used in investing activities (1,075,217) (1,743,632) (4,981,716)

Financing activities
Proceeds from long-term borrowings and line of
credit 1,779,162 785,307 3,958,514
Principal payments on long-term borrowings and
line of credit (419,863) (344,774) (220,144)
Principal payments under capital lease obligations (163,654) (44,336) (84,723)
Proceeds from stock options exercised - - 13,125
Dividends paid (96,505) (237,960) (293,371)
Purchase of treasury stock (135,798) - (337,127)
---------------------------------------------------------------
Net cash provided by financing activities 963,342 158,237 3,036,274
Effect of exchange rate changes on cash and cash
equivalents 100,895 (135,581) (228,163)
---------------------------------------------------------------
Increase (decrease) in cash and cash equivalents (1,285,104) 390,378 317,656
Cash and cash equivalents at beginning of year 2,816,804 2,426,426 2,108,770
---------------------------------------------------------------
Cash and cash equivalents at end of year $1,531,700 $2,816,804 $2,426,426
===============================================================

F-6

Reliv' International, Inc. and Subsidiaries

Consolidated Statements of Cash Flows (continued)

Year ended December 31
1999 1998 1997
----------------------------------------------------------------

Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $ 581,235 $ 556,962 $ 219,997
===============================================================

Income taxes $ 55,710 $1,201,896 $ 1,396,476
===============================================================

Non cash investing and financing transactions:
Capital lease obligations entered into $ 104,285 $ 508,830 $ 92,519
===============================================================

See accompanying notes.

F-7

Reliv' International, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

1. Nature of Business and Significant Accounting Policies

Nature of Business

Reliv' International, Inc. (the Company) produces a line of food products
including nutritional supplements, diet management products, granola bars and
sports drink mixes. These products are sold by subsidiaries of the Company to a
sales force of independent distributors and licensees 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, Canada, New
Zealand, Mexico, the United Kingdom and Colombia. In addition, the Company
provides manufacturing a