November 16, 2005
Mr. Jim Rosenberg
Senior Assistant Chief Accountant
Securities and Exchange Commission
Division of Corporation Finance
Mail Stop 6010
100 First Street, N.E.
Washington, DC 20549
Re: Reliv' International, Inc.
Form 10-K for the fiscal year ended December 31, 2004
Filed March 16, 2005
File No. 000-19932
Dear Mr. Rosenberg:
This letter is in response to your comment letter of November 8, 2005. Our
responses are in numerical order corresponding to the order of the comments in
your letter.
Form 10-K for the year ended December 31, 2004
1. Effectiveness of Controls and Procedures--We confirm that the company's
disclosure controls and procedures were designed to provide "reasonable
assurance" that the controls and procedures met their objectives. For
future filings, we will clarify our discussion of this matter.
Form 10-Q for the six months ended June 30, 2005
2. Note 7--Related Party Transactions
o As treasury shares are retired, the company allocates the excess
purchase price over par between additional paid-in capital and
accumulated deficit. The portion allocated to capital surplus is
limited to the sum of (a) all capital surplus arising from previous
retirements and net "gains" on sales of treasury stock of the same
issue and (b) the prorata portion of capital surplus paid in,
voluntary transfers of retained earnings, capitalization of stock
dividends, etc. on the same issue. Accordingly, we first determined
the additional paid-in capital per share, reduced additional paid-in
capital by this amount for each share retired, then allocated the
remaining amount to accumulated deficit.
Page 2
o As treasury shares are initially purchased, they are shown on the
balance sheet as a deduction from total capital stock, additional
paid-in capital, and retained earnings as a separate line item under
"Treasury stock", reported at cost, in accordance with APB 6, Para.
12(b). Upon retirement, the cost is removed from the "Treasury
stock" line item, and allocated between common stock at par,
additional paid-in capital, and accumulated deficit in accordance
with APB 6, Para. 12 and 13, as described above.
o A reconciliation as requested is attached to this letter in Appendix
1 and 2, including details of the shares purchased as disclosed in
the related party transactions.
In connection with this response to your comment letter, the company
acknowledges that:
o the company is responsible for the adequacy and accuracy of the disclosure
in the filings;
o staff comments or changes to disclosure in response to staff comments in
the filings reviewed by the staff do not foreclose the Commission from
taking any action with respect to the filing; and
o the company may not assert staff comments as a defense in any proceeding
initiated by the Commission or any person under federal securities laws of
the United States.
We believe our response answers all of your comments in a satisfactory manner.
Please contact us if you require further explanation of any of our responses.
Sincerely,
/s/ Steven D. Albright
- -----------------------
Steven D. Albright
Vice President and Chief Financial Officer
Reliv' International, Inc.
Appendix 1
Reliv International, Inc. and Subsidiaries
Consolidated Statement of Stockholders' Equity
For the Six Months Ended June 30, 2005 (unaudited)
Common Stock Additional
-------------------------- Paid-In Accumulated
Shares Amount Capital Deficit
---------- ------------ ------------ ------------
Balance at December 31, 2004 16,323,668 $ 16,324 $ 22,661,179 $ (3,719,711)
Net income -- -- ' 4,042,163
Other comprehensive income:
Foreign currency translation adjustment -- -- -- --
Total comprehensive income
Common stock dividends paid, $0.035 per share -- -- -- (565,158)
Compensation expense for warrants granted -- -- 33,374 --
Common stock purchased for treasury -- -- -- --
Retirement of treasury stock (1,162,630) (1,163) (1,383,878) (9,437,126)
Proceeds from sale of common stock -- -- -- --
Options and warrants exercised 480,721 481 328,001 (305,516)
Tax benefit from exercise of options
and warrants -- -- 1,185,000 --
---------- ------------ ------------ ------------
Balance at June 30, 2005 15,641,759 $ 15,642 $ 22,823,676 $ (9,985,348)
========== ============ ============ ============
Accumulated
Other Treasury Stock
Comprehesive -------------------------
Loss Shares Amount Total
------------ --------- ------------ -------------
Balance at December 31, 2004 $ (758,331) 2,737 $ (8,708) $ 18,190,753
Net income -- -- -- 4,042,163
Other comprehensive income:
Foreign currency translation adjustment 50,789 -- -- 50,789
------------
Total comprehensive income 4,092,952
------------
Common stock dividends paid, $0.035 per share -- -- -- (565,158)
Compensation expense for warrants granted -- -- -- 33,374
Common stock purchased for treasury -- 1,280,071 (12,051,805) (12,051,805)
Retirement of treasury stock -- (1,162,630) 10,822,167 --
Proceeds from sale of common stock -- -- -- --
Options and warrants exercised -- -- -- 22,966
Tax benefit from exercise of options
and warrants -- -- -- 1,185,000
------------ --------- ------------ -------------
Balance at June 30, 2005 $ (707,542) 120,178 $ (1,238,346) $ 10,908,082
============ ========= ============ ============
Appendix 2
Reliv International, Inc. and Subsidiaries
Consolidated Statement of Stockholders' Equity - Supplemental Information
For the Six Months Ended June 30, 2005 (unaudited)
Supplemental Information: Details of Common Stock Purchased for Treasury
($)
Form 10-Q
Tres. Stk. Tres. Stk. Footnote 7
Date Description # of shares Amount ($) Disclosure
---- ----------- ----------- ------------ -------------
Company Stock Re-purchase for Treasury: Officers/Directors
14-Mar-05 T/Stk. Purchase - Kreher 100,000 900,000.00 900,000.00
14-Mar-05 T/Stk. purchase - Kreher (promissory note) 350,000 3,150,000.00 3,150,000.00
22-Mar-05 T/Stk. purchase 39,193 352,737.00 352,737.00
24-May-05 Kreher promissory note principal payment - $50,000
31-May-05 T/Stk. purchase 245,533 2,332,563.50 2,332,563.50
31-May-05 T/Stk. purchase 178,948 1,700,006.00 1,700,006.00
31-May-05 T/Stk. purchase 110,527 1,050,006.50 1,050,006.50
------------
9,485,313
Company Stock Re-purchase for Treasury: Open Market
March 2005 T/Stk. purchase 11,663 102,548.47
April 2005 T/Stk. purchase 118,511 1,148,295.16
May 2005 T/Stk. purchase 58,245 596,344.20
June 2005 T/Stk. purchase 67,451 719,303.86
------------ -------------
Sub-total: Purchases of Treasury Stock 1,280,071.00 12,051,804.69
Less: Promissory Note Payable - Kreher (Comment #1)
Current maturities of long-term debt (900,000.00)
Non-current liabilities: Promissory Note (2,200,000.00)
-------------
Purchases of Treasury Stock - Cash Paid (Comment #2) 8,951,804.69
Comment #1: As of and for the six month period ended June 30, 2005, $3,100,000
is owed to Kreher for the company's repurchase of Kreher's
Reliv common stock.
Comment #2: Amount equals "Purchase of stock for treasury" per the Consolidated
Statements of Cash Flows (unaudited) for the Six Months
Ended June 30, 2005