Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2018

Nature of Operations, Policy [Policy Text Block]

Nature of Business

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

Basis of Accounting, Policy [Policy Text Block]

Basis of Presentation

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

Use of Estimates, Policy [Policy Text Block]

Use of Estimates

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

Cash and Cash Equivalents, Policy [Policy Text Block]

Cash Equivalents

The Company's policy is to consider the following as cash and cash equivalents: demand deposits and short-term investments with a maturity of

three

months or less when purchased.

Inventory, Policy [Policy Text Block]

Inventories

Inventories are valued at the lower of cost or market. Product cost includes raw materials, labor, and overhead costs and is accounted for on a

first

-in,

first

-out basis. On a periodic basis, the Company reviews its inventory levels, as compared to future demand requirements and the shelf life of the various products. Based on this review, the Company records inventory write-downs when necessary.

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

Property, Plant and Equipment, Policy [Policy Text Block]

Property, Plant, and Equipment

Property, plant, and equipment are stated on the cost basis. Depreciation is computed using the straight-line or an accelerated method over the useful life of the related assets. Generally, computer equipment and software are depreciated over

years, office equipment and machinery over

years, and real property over

years.

Foreign Currency Transactions and Translations Policy [Policy Text Block]

Foreign Currency Translation and Transaction Gains or Losses

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

$32,577

and

$20,659

for

2018

and

2017,

respectively.

Earnings Per Share, Policy [Policy Text Block]

Basic and Diluted Earnings (Loss) per Share

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

for additional information regarding earnings (loss) per share.

Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block]

Stock-Based Compensation

The Company has stock-based incentive plans under which it

may

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

for additional information.

The Company accounts for options granted to non-employees and warrants granted to distributors under the fair value approach required by FASB ASC Topic

505

50,

“Equity Based Payments to Non-Employees.”

Fair Value Measurement, Policy [Policy Text Block]

Fair Value Measurements

FASB ASC Topic

820,

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

for further discussion.

Income Tax, Policy [Policy Text Block]

Income Taxes

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

Unrecognized tax benefits are accounted for as required by FASB ASC Topic

740

which prescribes a more likely than

not

threshold for financial statement presentation and measurement of a tax position taken or expected to be taken in a tax return. See Note

for further discussion.

Advertising Costs, Policy [Policy Text Block]

Advertising

Costs of sales aids and promotional materials are capitalized as inventories. All other advertising and promotional costs are expensed when incurred. The Company recorded

$19,300

and

$22,300

of advertising expense in

2018

and

2017,

respectively.

Research and Development Expense, Policy [Policy Text Block]

Research and Development Expenses

Research and development expenses, which are charged to selling, general, and administrative expenses as incurred, were

$473,000

and

$488,000

2018

and

2017,

respectively.

Goodwill and Intangible Assets, Intangible Assets, Policy [Policy Text Block]

Amortizable Intangible Assets

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

may

differ from these estimates.

Intangible assets estimated to have finite lives are amortized over their estimated economic life under the straight-line method; such method correlates to management’s estimate of the assets’ economic benefit. Based on management’s estimates at origination, these lives range from

two

seventeen

years. Related amortization expense is presented within Selling, General, and Administrative in the accompanying consolidated statements of net loss and comprehensive loss. As of

December 31, 2018,

remaining lives of intangible assets range from

six

eleven

years.

Revenue Recognition, Policy [Policy Text Block]

Revenue Recognition

January 1, 2018,

the Company adopted Accounting Standards Update (ASU)

No.

2014

09,

Revenue from Contracts with Customers

(including amendments), and applied the new revenue standard to all contracts using the modified retrospective method. Under this method, prior periods are

not

restated. Upon adoption, the Company recognized the cumulative effect of applying the new revenue standard as a reduction of

$367,568

(with

zero

net tax effect) to the opening retained earnings (accumulated deficit) balance.

The new revenue standard defines a

five

step process to recognize revenues. The Company accounts for a contract with its independent distributors (including customers) when there is a legally enforceable contract, the rights of the parties are identified, the contract has commercial substance, and collectability of the contract consideration is probable. Product sales revenue (principally nutritional and dietary supplements) and commission expenses are recorded when control is transferred to independent distributors, which occurs at the time of shipment. Generally, net sales reflect product sales less the distributor discount of

percent to

percent of the suggested retail price. The Company presents distributor royalty and commission expense as an operating expense, rather than a reduction to net sales, as these payments are

not

made to the purchasing distributor. At point of sale, the Company receives payment by credit card, personal check, or guaranteed funds for contracts from independent distributors and makes related commission payments in the following month.

Under this new revenue standard, the Company determined that the timeframe for recognizing the revenue performance obligation for membership fees-type revenue would be lengthened to more closely correlate with the distributor (including customer) membership terms of generally

twelve

months. Based upon all membership fees contracts still in existence as of

December 31, 2017,

the adoption of the new revenue standard resulted in the recognition of a deferred revenue liability balance of

$367,568.

The Company receives payment for membership fees at the beginning of the annual membership term and recognizes membership fees revenue on a straight-line basis in correlation with the completion of its performance obligation under the membership term. At

December 31, 2018,

the deferred revenue liability balance was

$337,234.

Actual and estimated sales returns are classified as a reduction of net sales. The Company estimates and accrues a reserve for product returns based on the Company’s return policy and historical experience. The Company’s return policy allows for distributors to return product only upon termination of his or her distributorship. Allowable returns are limited to saleable product which was purchased within

twelve

months of the termination for a refund of

100%

of the original purchase price less any distributor royalties and commission received relating to the original purchase of the returned products. For the years ended

December 31, 2018

and

2017,

total returns as a percent of net sales were approximately

0.17%

and

0.25%,

respectively.

The Company records handling and freight income as a component of net sales and records handling and freight costs as a component of cost of products sold. Total net sales do

not

include sales tax as the Company considers itself a pass-through conduit for collecting and remitting applicable sales taxes.

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

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

The Company does

not

anticipate that the adoption of the new revenue standard will be material to net sales and net income on an ongoing basis.

New Accounting Pronouncements, Policy [Policy Text Block]

New Accounting Pronouncements –

Not

Yet Adopted

February 2016,

the Financial Accounting Standards Board (FASB) issued ASU

No.

2016

02,

Leases (Topic

842

)

which supersedes the existing lease guidance. This update requires lessees to recognize a lease liability and a lease asset for all leases, including operating leases, on its balance sheet. The update also expands the required quantitative and qualitative disclosures surrounding leases. Subsequent to its issuance of ASU

No.

2016

02,

the FASB issued related ASU’s, including ASU

No.

2018

11,

Leases (Topic

842

): Targeted Improvements,

which provides for another transition method in addition to the modified retrospective approach originally required by ASU

No.

2016

02.

This transition method option under ASU

No.

2018

allows entities to initially apply the new leases standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption.

As required, the Company will adopt ASU

2016

January 1, 2019.

The Company anticipates applying certain practical expedients permitted in the standard, as well as the prospective transition method. The Company’s adoption of this new lease standard will result in the

January 1, 2019

recognition of right-of-use assets and lease liabilities of approximately

$460,000

in the Company’s consolidated financial statements. The Company leases certain office facilities, storage, and equipment.

Going Concern [Policy Text Block]

Going Concern

The Company has incurred operating losses, declining net sales, and negative net cash flows over its most recent

five

years. Management estimates that these unfavorable trends are more likely than

not

to continue for the foreseeable future, and as a result, the Company will require additional financial support to fund its operations and execute its business plan. As of

December 31, 2018,

the Company had

$1,989,974

in cash and cash equivalents which

may

not

be sufficient to fund the Company’s planned operations through

one

year after the date the consolidated financial statements are issued, and accordingly, there is substantial doubt about the Company’s ability to continue as a going concern. The analysis used to determine the Company’s ability to continue as a going concern does

not

include cash sources outside of the Company’s direct control that management expects to be available within the next

twelve

months.

The Company

may

not

be able to obtain sufficient additional funding through monetizing certain of its existing assets, sourcing additional borrowings, and issuing additional equity, or any other means, and if it is able to do so, these available sources of funds

may

not

be on satisfactory terms. The Company’s ability to raise additional capital in the equity markets, should the Company choose to do so, is dependent on a number of factors, including, but

not

limited to, the market demand for the Company’s common stock, which itself is subject to a number of business risks and uncertainties, as well as the uncertainty that the Company would be able to raise such additional capital at a price or on terms that are favorable to the Company

The Company has taken several steps which management believes will result in an improved financial position, operating results, and cash flows. As detailed in Note

of these consolidated financial statements, in

January 2019,

the Company has borrowed

$500,000

of its available

$750,000

revolving line of credit balance. In

March 2019,

the Company and its lender have agreed to extend its available

$750,000

revolving line of credit agreement to

April 28, 2020.

As detailed in Note

of these consolidated financial statements, in

January 2019,

the Company entered into a Purchase Agreement with Nutracom, LLC (Nutracom) pursuant to which Nutracom purchased the assets used by the Company in its manufacturing operations. Assets purchased by Nutracom from the Company were financed by the Company under payment terms scheduled to provide incoming funds to the Company of

$200,000

or more per year. The Company has also entered into an agreement for Nutracom to lease a significant portion of the Company’s headquarters building. Management believes that these transactions with Nutracom will be favorable to its financial position, operating results, and cash flows; however, there are risks and uncertainties which arise with these Nutracom transactions and their impact to the Company’s operations.

Should the aforementioned changes to the company’s operations

not

provide sufficient cash flow improvement or should the Company be unable to obtain sufficient additional capital or borrowings, the Company

may

have to engage in any or all of the following activities: (i) seek to monetize its headquarters building via traditional bank lending or a sale and leaseback-type transaction; (ii) monetizing its note receivable from a distributor (see Note

); (iii) restructure its core distributor business model including recruiting, promotions, incentives, and other activities; (iv) cease operations in certain geographic regions, and (v) reduce employee compensation and benefits.

These actions

may

have a material adverse impact on the Company’s ability to achieve certain of its planned objectives. Even if the Company is able to source additional funding, it

may

be forced to significantly reduce its operations if its business operating performance does

not

improve. If the Company is unable to source additional funding, it

may

be forced to significantly reduce or shut down its operations. These consolidated financial statements have been prepared on a going concern basis and do

not

include any adjustments to the amounts and classification of assets and liabilities that

may

be necessary in the event the Company can

longer continue as a going concern.