Note Receivable Due from Distributor

9 Months Ended

Sep. 30, 2013

Note Receivable Due From Distributor [Text Block]

Note 8—

Note Receivable Due from Distributor

In March 2012, the Company purchased from a real estate investment management firm a note and mortgage ("Note") on certain properties in Wyoming and Idaho for $2 million. In May 2012, the Company entered into a Loan Modification Agreement ("LMA") with the Note's original and present borrower ("Borrower") to restructure the Note's principal amount due and related terms. The LMA terms are for a principal balance due of $2 million with interest only payable monthly in 2012. The LMA's interest rate is the greater of 6% or prime and there is no prepayment penalty for voluntary principal payments. Concurrently, with the execution of of the LMA, the Company and the Borrower also entered into a Security Agreement in which repayment of the LMA is secured by the Borrower's Reliv distributorship business.

As originally structured, beginning in 2013, the LMA was to require monthly payment of principal and interest under a five-year amortization period. In 2013, while a permanent restructuring of the LMA's repayment terms are being negotiated, management and the Borrower verbally agreed to a temporary LMA modification which, beginning February 2013, requires the Borrower to make monthly payments of principal and interest under a fifteen-year amortization period. The outstanding balance of the note receivable was $1,943,010 and $2,000,000 as of September 30, 2013 and December 31, 2012, respectively.