**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**


**____________**





**FORM
      10-Q**




**(Mark
      One)**


x
            **QUARTERLY
                REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934****For
                the quarterly period ended September 30, 2008****OR**o
            **TRANSITION
                REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934**


**For
      the transition period from _________to_________**




**Commission
      File Number**


**1-11768**


**RELIV’
      INTERNATIONAL, INC.**


(Exact
      name of Registrant as specified in its charter)






Delaware
            371172197(State
                or other jurisdiction of
              incorporation
                or organization)
            (I.R.S.
                Employer Identification
                Number)136
                Chesterfield Industrial Boulevard
              Chesterfield,
                Missouri
            63005(Address
                of principal executive
                offices)
            (Zip
                Code)




(636)
      537-9715


(Registrant’s
      telephone number, including area code)







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.  Yes þ No o




Indicate
      by check mark whether the Registrant is a large accelerated filer, an
      accelerated filer, or a non-accelerated filer. See definition of “accelerated
      filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.
      (Check one):





Large
      accelerated filer o Accelerated
      filer þ Non-accelerated
      filer o




Indicate
      by check mark whether the Registrant is a shell company (as defined in
      Rule 12b-2 of the Exchange Act).  Yes o No þ





The
      number of shares outstanding of the Registrant’s common stock as of October 31,
      2008 was 14,424,670 (excluding treasury shares).









**INDEX**




PART
                  I - FINANCIAL INFORMATIONItem
                  No. 1
              Financial
                  Statements (Unaudited)
              1Item
                  No. 2
              Management’s
                  Discussion and Analysis ofFinancial
                  Condition and Results of Operations
              8Item
                  No. 3
              Quantitative
                  and Qualitative Disclosures Regarding Market Risk
              15Item
                  No. 4
              Controls
                  and Procedures
              15PART
                  II - OTHER INFORMATIONItem
                  No. 1A
              Risk
                  Factors
              15Item
                  No. 2
              Unregistered
                  Sales of Equity Securities and Use of Proceeds
              16Item
                  No. 6
              Exhibits
              16









**PART
        I -- FINANCIAL INFORMATION**


**Item
        No. 1 - Financial Statements**


Reliv
                  International, Inc. and SubsidiariesConsolidated
                  Balance SheetsSeptember
                  30
              
              December
                  312008
              
              2007(unaudited)AssetsCurrent
                  assets:Cash
                  and cash equivalents
              
              $
              5,761,294
              
              $
              11,694,699Short-term
                  investments
              
              
              -
              
              
              398,592Accounts
                  and notes receivable, less allowances of$8,400
                  in 2008 and $8,300 in 2007
              
              
              517,051
              
              
              811,634Accounts
                  due from employees and distributors
              
              
              241,945
              
              
              204,705InventoriesFinished
                  goods
              
              
              3,235,902
              
              
              3,290,114Raw
                  materials
              
              
              2,578,123
              
              
              1,630,976Sales
                  aids and promotional materials
              
              
              968,893
              
              
              1,258,148Total
                  inventories
              
              
              6,782,918
              
              
              6,179,238Refundable
                  income taxes
              
              
              227,697
              
              
              362,330Prepaid
                  expenses and other current assets
              
              
              1,064,849
              
              
              862,172Deferred
                  income taxes
              
              
              524,430
              
              
              574,430Total
                  current assets
              
              
              15,120,184
              
              
              21,087,800Other
                  assets
              
              
              2,804,587
              
              
              2,999,903Accounts
                  due from employees and distributors
              
              
              178,391
              
              
              319,883Property,
                  plant and equipment:Land
              
              
              829,222
              
              
              829,222Building
              
              
              9,822,310
              
              
              9,817,692Machinery
                  & equipment
              
              
              3,293,185
              
              
              3,673,515Office
                  equipment
              
              
              1,478,080
              
              
              1,525,905Computer
                  equipment & software
              
              
              2,853,289
              
              
              2,665,61018,276,086
              
              
              18,511,944Less:
                  Accumulated depreciation
              
              
              9,160,580
              
              
              9,312,759Net
                  property, plant and equipment
              
              
              9,115,506
              
              
              9,199,185Total
                  assets
              
              $
              27,218,668
              
              $
              33,606,771See
                  notes to financial statements.




1




Reliv
      International, Inc. and Subsidiaries




Consolidated
      Balance Sheets


September
                  30
              
              December
                  312008
              
              2007(unaudited)Liabilities
                  and stockholders' equityCurrent
                  liabilities:Accounts
                  payable and accrued expenses:Trade
                  accounts payable and other accrued expenses
              
              $
              4,509,008
              
              $
              4,288,481Distributors
                  commissions payable
              
              
              3,024,403
              
              
              3,285,270Sales
                  taxes payable
              
              
              392,013
              
              
              390,585Payroll
                  and payroll taxes payable
              
              
              585,384
              
              
              499,921Total
                  accounts payable and accrued expenses
              
              
              8,510,808
              
              
              8,464,257Income
                  taxes payable
              
              
              10,000
              
              
              110,000Total
                  current liabilities
              
              
              8,520,808
              
              
              8,574,257Other
                  noncurrent liabilities
              
              
              956,990
              
              
              1,227,313Stockholders'
                  equity:Preferred
                  stock, par value $.001 per share; 3,000,000shares
                  authorized; -0- shares issued and outstandingin
                  2008 and 2007
              
              
              -
              
              
              -Common
                  stock, par value $.001 per share; 30,000,000authorized;
                  15,474,379 shares issued and 14,520,672shares
                  outstanding as of 9/30/2008; 15,877,179 sharesissued
                  and 15,873,754 shares outstanding as of 12/31/2007
              
              
              15,475
              
              
              15,877Additional
                  paid-in capital
              
              
              32,437,301
              
              
              33,100,351Accumulated
                  deficit
              
              
              (8,605,191
              )
              
              (8,869,332
              )Accumulated
                  other comprehensive loss:Foreign
                  currency translation adjustment
              
              
              (492,737
              )
              
              (419,179
              )Treasury
                  stock
              
              
              (5,613,978
              )
              
              (22,516
              )Total
                  stockholders' equity
              
              
              17,740,870
              
              
              23,805,201Total
                  liabilities and stockholders' equity
              
              $
              27,218,668
              
              $
              33,606,771See
                  notes to financial statements.
 
 2


Reliv
        International, Inc. and Subsidiaries
 
 Consolidated
        Statements of Income
 (unaudited)
  Three
                    months ended September 30
                
                Nine
                    months ended September 302008
                
                2007
                
                2008
                
                2007Product
                    sales
                
                $
                21,226,975
                
                $
                22,501,899
                
                $
                67,719,727
                
                $
                77,450,784Handling
                    & freight income
                
                
                2,633,832
                
                
                2,619,260
                
                
                8,372,176
                
                
                8,958,556Net
                    sales
                
                
                23,860,807
                
                
                25,121,159
                
                
                76,091,903
                
                
                86,409,340Costs
                    and expenses:Cost
                    of products sold
                
                
                4,464,874
                
                
                4,320,557
                
                
                13,410,310
                
                
                14,780,889Distributor
                    royalties and commissions
                
                
                9,320,880
                
                
                9,926,735
                
                
                29,865,734
                
                
                34,458,125Selling,
                    general and administrative
                
                
                8,950,900
                
                
                9,740,241
                
                
                28,472,176
                
                
                30,969,921Total
                    costs and expenses
                
                
                22,736,654
                
                
                23,987,533
                
                
                71,748,220
                
                
                80,208,935Income
                    from operations
                
                
                1,124,153
                
                
                1,133,626
                
                
                4,343,683
                
                
                6,200,405Other
                    income (expense):Interest
                    income
                
                
                64,329
                
                
                122,788
                
                
                299,893
                
                
                498,904Interest
                    expense
                
                
                (21,011
                )
                
                (159
                )
                
                (31,405
                )
                
                (732
                )Other
                    income (expense)
                
                
                (211,550
                )
                
                73,302
                
                
                (229,139
                )
                
                268,540Income
                    before income taxes
                
                
                955,921
                
                
                1,329,557
                
                
                4,383,032
                
                
                6,967,117Provision
                    for income taxes
                
                
                420,000
                
                
                429,000
                
                
                1,752,000
                
                
                2,623,000Net
                    income
                
                $
                535,921
                
                $
                900,557
                
                $
                2,631,032
                
                $
                4,344,117Earnings
                    per common share - Basic
                
                $
                0.04
                
                $
                0.06
                
                $
                0.17
                
                $
                0.27Weighted
                    average shares
                
                
                14,806,000
                
                
                15,938,000
                
                
                15,498,000
                
                
                16,166,000Earnings
                    per common share - Diluted
                
                $
                0.04
                
                $
                0.06
                
                $
                0.17
                
                $
                0.27Weighted
                    average shares
                
                
                14,810,000
                
                
                16,171,000
                
                
                15,502,000
                
                
                16,374,000Cash
                    dividends declared per common share
                
                $
                -
                
                $
                -
                
                $
                0.05
                
                $
                0.05See
                    notes to financial statements.
  3





Reliv
      International, Inc. and Subsidiaries





Consolidated
      Statements of Cash Flows


(unaudited)




Nine
                  months ended September 302008
              
              2007Operating
                  activities:Net
                  income
              
              $
              2,631,032
              
              $
              4,344,117Adjustments
                  to reconcile net income tonet
                  cash provided by operating activities:Depreciation
                  and amortization
              
              
              830,870
              
              
              807,606Stock-based
                  compensation
              
              
              177,497
              
              
              90,865Deferred
                  income taxes
              
              
              (107,000
              )
              
              7,000Foreign
                  currency transaction (gain)/loss
              
              
              310,408
              
              
              (235,225
              )(Increase)
                  decrease in accounts and notes receivable
              
              
              386,886
              
              
              112,585(Increase)
                  decrease in inventories
              
              
              (677,754
              )
              
              (853,100
              )(Increase)
                  decrease in refundable income taxes
              
              
              137,274
              
              
              (548,172
              )(Increase)
                  decrease in prepaid expensesand
                  other current assets
              
              
              (223,023
              )
              
              3,474(Increase)
                  decrease in other assets
              
              
              31,707
              
              
              (287,459
              )Increase
                  (decrease) in accounts payable and accrued expenses
              
              
              170,442
              
              
              382,199Increase
                  (decrease) in income taxes payable
              
              
              (100,000
              )
              
              -Net
                  cash provided by operating activities
              
              
              3,568,339
              
              
              3,823,890Investing
                  activities:Proceeds
                  from the sale of property, plant and equipment
              
              
              27,790
              
              
              4,904Purchase
                  of property, plant and equipment
              
              
              (756,960
              )
              
              (761,310
              )Purchase
                  of investments
              
              
              (1,521,111
              )
              
              (1,398,592
              )Proceeds
                  from sales or maturities of investments, at cost
              
              
              1,919,703
              
              
              4,864,000Net
                  cash provided by (used in) investing activities
              
              
              (330,578
              )
              
              2,709,002Financing
                  activities:Proceeds
                  from line of credit borrowings
              
              
              4,000,000
              
              
              -Repayment
                  of line of credit borrowings
              
              
              (4,000,000
              )
              
              -Common
                  stock dividends paid
              
              
              (793,313
              )
              
              (806,763
              )Proceeds
                  from options and warrants exercised
              
              
              -
              
              
              83,498Purchase
                  of stock for treasury
              
              
              (8,008,261
              )
              
              (7,677,124
              )Other
              
              
              2,272
              
              
              -Net
                  cash used in financing activities
              
              
              (8,799,302
              )
              
              (8,400,389
              )Effect
                  of exchange rate changes on cash and cash equivalents
              
              
              (371,864
              )
              
              258,237Increase
                  (decrease) in cash and cash equivalents
              
              
              (5,933,405
              )
              
              (1,609,260
              )Cash
                  and cash equivalents at beginning of period
              
              
              11,694,699
              
              
              9,332,810Cash
                  and cash equivalents at end of period
              
              $
              5,761,294
              
              $
              7,723,550See
                  notes to financial statements.
 
 4


Reliv
        International, Inc. and Subsidiaries
 Notes
        to
        Consolidated Financial Statements
 (Unaudited)
 
 September
        30, 2008
  **Note
                  1--**
                **Accounting
                    Policies**
  *Basis
          of Presentation*
  The
            accompanying unaudited consolidated financial statements and notes thereto
            have
            been prepared in accordance with the instructions to Form 10-Q and reflect
            all
            adjustments which management believes necessary (which primarily include
            normal
            recurring accruals) to present fairly the financial position, results
            of
            operations and cash flows. These statements, however, do not include
            all
            information and footnotes necessary for a complete presentation of financial
            position, results of operations and cash flows in conformity with accounting
            principles generally accepted in the United States. Interim results may
            not
            necessarily be indicative of results that may be expected for any other
            interim
            period or for the year as a whole. These financial statements should
            be read in
            conjunction with the audited consolidated financial statements and footnotes
            included in the annual report on Form 10-K for the year ended December
            31, 2007,
            filed March 14, 2008 with the Securities and Exchange Commission. The
            accounting
            policies used in preparing these financial statements are the same as
            those
            applied in the prior year, except that the Company adopted a new financial
            accounting standard at the beginning of its 2008 fiscal year concerning
            fair
            value measurements which is discussed in Note 4. This new standard was
            adopted
            prospectively and comparative periods were not restated.
  *Reclassification
              -- Consolidated Statements of Cash
              Flows*




To
        conform to the 2008 presentation, previously reported 2007 amounts for *(increase)
        decrease in other assets* and *increase
        (decrease) in accounts payable and accrued expenses* have
        been reclassified and restated within the consolidated statements of cash
        flows.
        This reclassification had no impact to total net cash provided by operating
        investing activities within the consolidated statements of cash flows.
 **Note
                  2--**
                **Comprehensive
                    Income**




Total
        comprehensive income was $451,174 and $2,557,474 for the three and nine months
        ended September 30, 2008, respectively. For the three and nine months ended
        September 30, 2007, comprehensive income was $899,159 and $4,419,461,
        respectively. The Company's only component of other comprehensive income
        is the
        foreign currency translation adjustment.
  **Note
                3--**
              **Basic
                  and Diluted Earnings per
                  Share**




Basic
        earnings per common share are computed using the weighted average number
        of
        common shares outstanding during the period. Diluted earnings per 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.
  The
          following table sets forth the omputation of basic and diluted earnings
          per
          share:
 Three
                      months ended September 30
                  
                  Nine
                      months ended September 302008
                  
                  2007
                  
                  2008
                  
                  2007Numerator:Net
                      income
                  
                  $
                  535,921
                  
                  $
                  900,557
                  
                  $
                  2,631,032
                  
                  $
                  4,344,117Denominator:Denominator
                          for basic earnings per share--weighted average
                          shares
                  
                  
                  14,806,000
                  
                  
                  15,938,000
                  
                  
                  15,498,000
                  
                  
                  16,166,000Dilutive
                          effect of employee stock options and other
                          warrants
                  
                  
                  4,000
                  
                  
                  233,000
                  
                  
                  4,000
                  
                  
                  208,000Denominator
                          for diluted earnings per share--adjusted weighted average
                          shares
                  
                  
                  14,810,000
                  
                  
                  16,171,000
                  
                  
                  15,502,000
                  
                  
                  16,374,000Basic
                      earnings per share
                  
                  $
                  0.04
                  
                  $
                  0.06
                  
                  $
                  0.17
                  
                  $
                  0.27Diluted
                      earnings per share
                  
                  $
                  0.04
                  
                  $
                  0.06
                  
                  $
                  0.17
                  
                  $
                  0.27
  For
              the
              three months and nine months ended September 30, 2008, options and warrants
              to
              purchase 826,224 shares of common stock and 801,224 shares of common
              stock,
              respectively, were not included in the denominator for diluted earnings
              per
              share because their effect would be antidilutive. Warrants to purchase
              25,303 of
              common stock for the three months and nine months ended September 30,
              2007,
              respectively, were not included in the denominator for diluted earnings
              per
              share because their effect would be antidilutive.


5




Reliv
        International, Inc. and Subsidiaries
 Notes
        to
        Consolidated Financial Statements
 (Unaudited)
 
 September
        30, 2008
  **Note
                  4--**
                **Adoption
                    of New Accounting Standards -- Fair Value**




Effective
        January 1, 2008, the Company adopted the provisions of Statement of Financial
        Accounting Standards (SFAS) No. 157, “Fair Value Measurements,” which defines
        fair value, establishes a framework for fair value and expands disclosures
        about
        fair value measurements required under other accounting pronouncements. SFAS
        No.
        157 clarifies that fair value is an exit price, representing the amount that
        would be received to sell an asset or paid to transfer a liability in an
        orderly
        transaction between market participants. SFAS No. 157 also requires that
        a fair
        value measurement reflect the assumptions market participants would use in
        pricing an asset or liability based on the best information available.
        Assumptions include the risks inherent in a particular valuation technique
        (such
        as a pricing model) and/or the risks inherent in the inputs to the model.
        In
        February 2008, the Financial Accounting Standards Board ("FASB") issued Staff
        Position No. 157-2 that delays the effective date of SFAS No. 157 for
        non-financial assets and non-financial liabilities, except for items that
        are
        recognized or disclosed at fair value in the financial statements on a recurring
        basis (at least annually).
 The
          adoption of SFAS No. 157 did not have a significant impact on the Company’s
          financial statements. Assets or liabilities measured at fair value are
          shown
          below as of September 30, 2008:
  Using
                      Quoted
                  
                  Using
                      SignificantTotal
                  
                  Prices
                      in
                  
                  Other
                      ObservableCarrying
                  
                  Active
                      Markets
                  
                  InputsDescription
                  
                  Value
                  
                  (Level
                      1)
                  
                  (Level
                      2)Marketable
                      securities(1)
                  
                  $
                  726,750
                  
                  $
                  726,750
                  
                  $
                  -Derivatives(2)
                  
                  
                  16,522
                  
                  
                  -
                  
                  
                  16,522$
                  743,272
                  
                  $
                  726,750
                  
                  $
                  16,522


(1)
            Representing
                assets of the Company's Supplemental Executive Retirement Plan (trading
                securities). Presented  within Other Assets in the consolidated
                balance sheets.




(2)
            Representing
                recorded asset of forward currency contracts and is presented within
                Prepaid Expenses and Other  Current Assets in the consolidated
                balance sheets. The fair values of derivatives are determined either
                through  quoted market prices in active markets for exchange
                traded derivatives or through pricing from brokers who  develop
                values based on inputs observable in active markets such as interest
                rates
                and currency volatilities.




The
        carrying value of other financial instruments, including cash, accounts
        receivable and accounts payable, and accrued liabilities approximate fair
        value
        due to their short maturities or variable-rate nature of the respective
        balances.
  In
        February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
        Financial Assets and Financial Liabilities, Including an Amendment of FASB
        Statement No. 115.” SFAS No. 159 allows an entity the irrevocable option to
        elect fair value for the initial and subsequent measurement of certain financial
        assets and liabilities under an instrument-by-instrument election. Under
        SFAS
        No. 159, subsequent measurements for the financial assets and liabilities
        an
        entity elects to measure at fair value will be recognized in its results
        of
        operations. SFAS No. 159 also establishes additional disclosure requirements.
        The Company adopted SFAS No. 159 on January 1, 2008 and did not elect to
        measure
        any additional assets or liabilities at fair value.
  **Note
                  5--**
                **Recent

                    Accounting Standards Pending
                    Adoption**




In
        March
        2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments
        and Hedging Activities." SFAS No. 161 requires companies with derivative
        instruments to disclose information that should enable financial statement
        users
        to understand how and why a company uses derivative instruments, how derivative
        instruments and related hedged items are accounted for under SFAS No. 133
        “Accounting for Derivative Instruments and Hedging Activities”, and how
        derivative instruments and related hedged items affect a company’s financial
        position, financial performance, and cash flows. SFAS No. 161 is effective
        for
        financial statements issued for fiscal years beginning after November 15,
        2008.
        The Company is currently evaluating the impact of SFAS No. 161 and has not
        yet
        determined the impact on its financial statements.


6




Reliv
        International, Inc. and Subsidiaries
 Notes
        to
        Consolidated Financial Statements
 (Unaudited)
 
 September
        30, 2008




**Note
                6--**
              **Restructuring
                  of European
                  Operations**




In
        June
        2008, the Company began closing the operations of its Reliv Germany subsidiary.
        Under this restructuring plan, the Company will now manage its sales, marketing,
        and overall general management for its entire European operations from its
        existing Reliv United Kingdom office. While this plan results in the closing
        of
        the Reliv Germany office, the Company's Germany distribution center will
        remain
        open to support that region's customers. In the second quarter of 2008, the
        Company has incurred a charge of $215,000 ($110,000 on an after-tax basis,
        or
        approximately one-half cent per diluted share) for employee severance and
        lease
        exit costs. The Company expects that a significant portion of these accrued
        liabilities will be paid out by the end of 2008.
  The
        following is a summary of the costs incurred and payments made by category.
        (These costs have been recorded in Selling, General and Administrative within
        the Consolidated Statements of Income).
  Employee
                
                LeaseSeverance
                
                Exit
                
                TotalOriginal
                    charges and reserve balance
                
                $
                107,000
                
                $
                108,000
                
                $
                215,000Amounts
                    settled in second quarter 2008
                
                
                (22,000
                )
                
                -
                
                
                (22,000
                )Reserve
                    balance at June 30, 2008
                
                $
                85,000
                
                $
                108,000
                
                $
                193,000Amounts
                    settled in third quarter 2008
                
                
                (85,000
                )
                
                (30,000
                )
                
                (115,000
                )Reserve
                    balance at September 30, 2008
                
                $
                0
                
                $
                78,000
                
                $
                78,000
  **Note
                  7--**
                **Stock-Based
                    Compensation**
  *Stock
          Options*
  During
            the third quarter of 2008, the Company granted options to purchase 16,500
            and
            25,000 shares of common stock with exercise prices of $5.28 per share
            and $5.50
            per share, respectively, and a grant-date fair value of $1.84 per share
            and
            $1.91 per share, respectively. The options' fair value was determined
            using the
            Black-Scholes option pricing model, using a risk-free rate of approximately
            3.0%, a dividend rate of 1.9% and a volatility of 0.447. The options
            have a term
            of five years and vest in various increments ranging from one year to
            4.67
            years.
 
 Including
            stock option grants made prior to 2008, the Company recognized stock-based
            compensation expense of $44,000 ($28,000 net of tax) and $134,000 ($89,000
            net
            of tax) for the three months and nine months ended September 30, 2008,
            respectively. The Company recognized stock-based compensation expense
            of $31,000
            ($21,000 net of tax) for the three months and nine months ended September
            30,
            2007. These amounts have been recorded in selling, general, and administrative
            expense. At September 30, 2008, the Company has unrecognized stock-based
            compensation expense of $710,000 ($470,000 net of tax) which is expected
            to be
            recognized over a remaining period ranging from 1.92 years to 4.58 years.




**Note
                8--**
              **Purchase
                  of Stock for Treasury and related
                  Borrowing**




On
        July
        24, 2008, the Company entered into similar, but separate, Stock Purchase
        Agreements with two significant shareholders to purchase, as amended, 999,000
        shares of the Company's common stock for $5.994 million ($6 per share). To
        finance the purchase, the Company utilized cash on hand and borrowed $4 million
        under its existing line of credit. As of September 30, 2008, the aforementioned
        $4 million borrowing had been repaid and the Company's line of credit balance
        was zero.
  Included
        within the Stock Purchase Agreements, each of the selling shareholders also
        granted the Company a right of first refusal regarding each subsequent proposed
        sale or sales of shares of the Company's common stock. Under this provision,
        as
        defined within the Agreements, the Company will have two days to exercise
        its
        purchase right as to all or any of the shares to be sold on the negotiated
        terms.
  **Note
                  9--**
                **Other
                    Investment**
  In
          June
          2006, the Company contributed $1,000,000 as a limited partner in a private
          equity fund. In accordance with EITF Topic D-46, “Accounting for Limited
          Partnership Investments,” the Company accounts for its investment under the
          equity method. Under this method, the Company’s proportionate share of
          partnership income (loss) is recorded to other income (expense) with a
          corresponding increase (decrease) in the carrying value of its investment.
          For
          the three and nine months ended September 30, 2008, the partnership's income
          (loss) was $(115,000) and $(260,000), respectively. For the three and nine
          months ended September 30, 2007, the partnership's income (loss) was $20,000
          and
          $66,000, respectively. The carrying value of this investment was $824,000
          and
          $1,084,000 at September 30, 2008 and December 31, 2007, respectively, and
          is
          included in “Other Assets” in the accompanying consolidated balance
          sheets.
  7


**FORWARD-LOOKING
      STATEMENTS**





This
      quarterly report includes both historical and “forward-looking statements”
within the meaning of Section 21E of the Securities Exchange Act of 1934, as
      amended. We have based these forward-looking statements on our current
      expectations and projections about future results. Words such as “may,”
“should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,”
“estimate,” “predict,” “potential,” “continue,” or similar words are intended to
      identify forward-looking statements, although not all forward-looking statements
      contain these words. Although we believe that our opinions and expectations
      reflected in the forward-looking statements are reasonable, we cannot guarantee
      future results, levels of activity, performance or achievements, and our actual
      results may differ substantially from the views and expectations set forth
      in
      this quarterly report on Form 10-Q. We disclaim any intent or obligation to
      update any forward-looking statements after the date of this quarterly report
      to
      conform such statements to actual results or to changes in our opinions or
      expectations. These forward-looking statements are affected by risks,
      uncertainties and assumptions that we make, including, among other things,
      the
      factors that are described in “Item No. 1A - Risk Factors” in our 2007 Annual
      Report on Form 10-K filed with the Securities and Exchange Commission on March
      14, 2008, as the same may be updated or amended in our quarterly reports on
      Form
      10-Q.




**Item
      No. 2 - Management’s Discussion and Analysis of
      Financial**  **Condition
      and Results of Operations**





*The
      following discussion and analysis of our financial condition and results of
      operations should be read in conjunction with our financial statements and
      related notes included elsewhere in this Quarterly Report on Form 10-Q. The
      following discussion and analysis discusses the financial condition and results
      of our operations on a consolidated basis, unless otherwise indicated.*





**Overview**





We
      are a
      developer, manufacturer and marketer of a proprietary line of nutritional
      supplements addressing basic nutrition, specific wellness needs, weight
      management and sports nutrition. We also offer a line of skin care products.
      We
      sell our products through an international network marketing system using
      independent distributors. Sales in the United States represented approximately
      86.7% of worldwide net sales for the nine months ended September 30, 2008 and
      89.4% of worldwide net sales for the nine months ended September 30, 2007.
      Our
      international operations currently generate sales through distributor networks
      in Australia, Canada, Germany, Malaysia, Mexico, New Zealand, the
      Philippines, Singapore and the United Kingdom. We also operate on a limited
      basis in Austria, the Netherlands, and Ireland from our United Kingdom
      office.





We
      derive
      our revenues principally through product sales made by our global independent
      distributor base, which, as of September 30, 2008, consisted of approximately
      68,540 distributors. Our sales can be affected by several factors, including
      our
      ability to attract new distributors and retain our existing distributor base,
      our ability to properly train and motivate our distributor base and our ability
      to develop new products and successfully maintain our current product line.





All
      of
      our sales to distributors outside the United States are made in the
      respective local currency; therefore, our earnings and cash flows are subject
      to
      fluctuations due to changes in foreign currency rates as compared to the
      U.S. dollar. As a result, exchange rate fluctuations may have an effect on
      sales and gross margins. Accounting practices require that our results from
      operations be converted to U.S. dollars for reporting purposes.
      Consequently, our reported earnings 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 us for sale to our foreign subsidiaries are transacted in
      U.S. dollars. From time to time, we enter into foreign exchange forward
      contracts to mitigate our foreign currency exchange risk.





**Components
      of Net Sales and Expense**





Net
      sales
      are comprised of two components. Product sales represent the actual product
      purchase price typically paid by our distributors, after giving effect to
      distributor allowances, which range from 20% to 40% of suggested retail prices.
      Handling and freight income represents the amounts billed to distributors for
      shipping costs. We record net sales and the related commission expense when
      the
      merchandise is shipped.




8





Our
      primary expenses include cost of products sold, distributor royalties and
      commissions and selling, general and administrative expenses.





Cost
      of
      products sold primarily consists of expenses related to raw materials, labor,
      quality control and overhead directly associated with production of our products
      and sales materials, as well as shipping costs relating to the shipment of
      products to distributors, and duties and taxes associated with product exports.
      Cost of products sold is impacted by the cost of the ingredients used in our
      products and the cost of shipping the distributors’ orders, along with our
      efficiency in managing the production of our products.





Distributor
      royalties and commissions are monthly payments made to Master Affiliates and
      above, based on products sold by Master Affiliates and above sponsored by such
      Master Affiliates or higher-level distributors. “Master Affiliates and above”
are active distributors that have attained the highest level of discount on
      purchases of our products and are eligible for royalties from sales volume
      generated by Master Affiliates and above that they sponsor. Based on our
      distributor agreements, these expenses typically approximate 23% of sales at
      suggested retail. Also, we include other sales leadership bonuses, such as
      Ambassador bonuses, in this line item. We generally expect total distributor
      royalties and commissions to approximate 40% of our net sales. Distributor
      royalties and commissions are directly related to the level of our sales and,
      absent any changes in our distributor compensation plan, should continue at
      comparable levels as a percentage of net sales as in recent periods.





Selling,
      general and administrative expenses include the compensation and benefits paid
      to our employees, all other selling expenses, marketing, promotional expenses,
      travel and other corporate administrative expenses. These other corporate
      administrative expenses include professional fees, depreciation and
      amortization, occupancy costs, communication costs and other similar operating
      expenses. Selling, general and administrative expenses can be affected by a
      number of factors, including staffing levels and the cost of providing
      competitive salaries and benefits; the amount we decide to invest in distributor
      training and motivational initiatives; the cost of regulatory compliance, such
      as the costs incurred to comply with the various provisions of the
      Sarbanes-Oxley Act of 2002; and other administrative costs.





**Results
      of Operations**





The
      following table sets forth selected results of our operations expressed as
      a
      percentage of net sales for the three- and nine-month periods ended September
      30, 2008 and 2007. Our results of operations for the periods described below
      are
      not necessarily indicative of results of operations for future periods.




**Three
                months ended**
              **September
                30,**
            
            **Nine
                months ended**
              **September
                30,****2008**
            
            **2007**
            
            **2008**
            
            **2007**Net
                sales
            
            
            100.0
            %
            
            100.0
            %
            
            100.0
            %
            
            100.0
            %Costs
                and expenses:Cost
                of products sold
            
            
            18.7
            
            
            17.2
            
            
            17.6
            
            
            17.1Distributor
                royalties and commissions
            
            
            39.1
            
            
            39.5
            
            
            39.3
            
            
            39.9Selling,
                general and administrative
            
            
            37.5
            
            
            38.8
            
            
            37.4
            
            
            35.8Income
                from operations
            
            
            4.7
            
            
            4.5
            
            
            5.7
            
            
            7.2Interest
                expense
            
            
            (0.1
            )
            
            (0.0
            )
            
            (0.0
            )
            
            (0.0
            )Interest
                and other income/(expense)
            
            
            (0.6
            )
            
            0.8
            
            
            0.1
            
            
            0.9Income
                before income taxes
            
            
            4.0
            
            
            5.3
            
            
            5.8
            
            
            8.1Provision
                for income taxes
            
            
            1.8
            
            
            1.7
            
            
            2.3
            
            
            3.1Net
                income
            
            
            2.2
            %
            
            3.6
            %
            
            3.5
            %
            
            5.0
            %




9







*Net
      Sales.* Overall
      net sales decreased by 5.0% in the three months ended September 30, 2008
      compared to the same period in 2007. During the third quarter of 2008, sales
      in
      the United States decreased by 5.4%, and our international sales decreased
      by
      2.1% over the prior-year period.





The
      following table summarizes net sales by geographic market ranked by the date
      we
      began operations in each market for the three months ended September 30, 2008
      and 2007.


**Three
                months ended September 30,****2008**
            
            **2007**
            
            **Change
                from prior year****Amount**
            
            **%
                of Net**
              **Sales**
            
            **Amount**
            
            **%
                of Net**
              **Sales**
            
            **Amount**
            
            **%****(dollars
                in thousands)**United
                States
            
            $
            20,814
            
            
            87.2
            %
            $
            22,009
            
            
            87.6
            %
            $
            (1,195
            )
            
            (5.4
            )%Australia/New
                Zealand
            
            
            667
            
            
            2.8
            
            
            715
            
            
            2.8
            
            
            (48
            )
            
            (6.7
            )Canada
            
            
            404
            
            
            1.7
            
            
            378
            
            
            1.5
            
            
            26
            
            
            6.9Mexico
            
            
            389
            
            
            1.6
            
            
            351
            
            
            1.4
            
            
            38
            
            
            10.8United
                Kingdom/Ireland
            
            
            234
            
            
            1.0
            
            
            242
            
            
            1.0
            
            
            (8
            )
            
            (3.3
            )Philippines
            
            
            583
            
            
            2.4
            
            
            809
            
            
            3.2
            
            
            (226
            )
            
            (27.9
            )Malaysia/Singapore
            
            
            682
            
            
            2.9
            
            
            419
            
            
            1.7
            
            
            263
            
            
            62.8Germany
            
            
            88
            
            
            0.4
            
            
            198
            
            
            0.8
            
            
            (110
            )
            
            (55.6
            )Consolidated
                total
            
            $
            23,861
            
            
            100.0
            %
            $
            25,121
            
            
            100.0
            %
            $
            (1,260
            )
            
            (5.0
            )%








The
      following table summarizes net sales by geographic market ranked by the date
      we
      began operations in each market for the nine months ended September 30, 2008
      and
      2007.




**Nine
                months ended September 30,****2008**
            
            **2007**
            
            **Change
                from prior year****Amount**
            
            **%
                of Net**
              **Sales**
            
            **Amount**
            
            **%
                of Net**
              **Sales**
            
            **Amount**
            
            **%****(dollars
                in thousands)**United
                States
            
            $
            65,934
            
            
            86.7
            %
            $
            77,215
            
            
            89.4
            %
            $
            (11,281
            )
            
            (14.6
            )%Australia/New
                Zealand
            
            
            2,096
            
            
            2.8
            
            
            2,090
            
            
            2.4
            
            
            6
            
            
            0.3Canada
            
            
            1,301
            
            
            1.7
            
            
            1,196
            
            
            1.4
            
            
            105
            
            
            8.8Mexico
            
            
            1,269
            
            
            1.7
            
            
            1,155
            
            
            1.3
            
            
            114
            
            
            9.9United
                Kingdom/Ireland
            
            
            791
            
            
            1.0
            
            
            781
            
            
            0.9
            
            
            10
            
            
            1.3Philippines
            
            
            2,092
            
            
            2.7
            
            
            2,108
            
            
            2.4
            
            
            (16
            )
            
            (0.8
            )Malaysia/Singapore
            
            
            2,174
            
            
            2.8
            
            
            1,173
            
            
            1.4
            
            
            1,001
            
            
            85.3Germany
            
            
            435
            
            
            0.6
            
            
            691
            
            
            0.8
            
            
            (256
            )
            
            (37.0
            )Consolidated
                total
            
            $
            76,092
            
            
            100.0
            %
            $
            86,409
            
            
            100.0
            %
            $
            (10,317
            )
            
            (11.9
            )%




The
      following table sets forth, as of September 30, 2008 and 2007, the number of
      our
      active distributors and Master Affiliates and above. The total number of active
      distributors includes Master Affiliates and above. We define an active
      distributor as one that enrolls as a distributor or renews his or her
      distributorship during the prior twelve months. Master Affiliates and above
      are
      distributors that have attained the highest level of discount and are eligible
      for royalties generated by Master Affiliates and above in their downline
      organization. Growth in the number of active distributors and Master Affiliates
      and above is a key factor in continuing the growth of our business.




10




**September
                  30, 2008**
              
              **September
                  30, 2007**
              
              **%
                  Change****Active
                  Distributors**
              
              **Master
                  Affiliates and Above**
              
              **Active
                  Distributors**
              
              **Master
                  Affiliates and Above**
              
              **Active
                  Distributors**
              
              **Master
                  Affiliates and Above**United
                  States
              
              
              54,210
              
              
              10,630
              
              
              57,420
              
              
              13,600
              
              
              (5.6
              )%
              
              (21.8
              )%Australia/New
                  Zealand
              
              
              2,480
              
              
              230
              
              
              2,510
              
              
              280
              
              
              (1.2
              )
              
              (17.9
              )Canada
              
              
              1,250
              
              
              160
              
              
              1,150
              
              
              160
              
              
              8.7
              
              
              0.0Mexico
              
              
              1,550
              
              
              240
              
              
              1,380
              
              
              220
              
              
              12.3
              
              
              9.1United
                  Kingdom/Ireland
              
              
              750
              
              
              110
              
              
              790
              
              
              120
              
              
              (5.1
              )
              
              (8.3
              )Philippines
              
              
              4,590
              
              
              420
              
              
              4,460
              
              
              370
              
              
              2.9
              
              
              13.5Malaysia/Singapore
              
              
              3,270
              
              
              580
              
              
              2,230
              
              
              310
              
              
              46.6
              
              
              87.1Germany
              
              
              440
              
              
              80
              
              
              560
              
              
              140
              
              
              (21.4
              )
              
              (42.9
              )Consolidated
                  total
              
              
              68,540
              
              
              12,450
              
              
              70,500
              
              
              15,200
              
              
              (2.8
              )%
              
              (18.1
              )%




In
      the
      United States, net sales were down 5.4% in the third quarter of 2008 compared
      to
      the same period in 2007. Sales in the United States are being adversely impacted
      by a few factors. First, we believe the credit problems in the U.S. economy,
      during the third quarter and particularly in September, played a role in our
      sales decline. In addition to the direct impact on sales, we are seeing slower
      recruiting activity in the form of a decrease in new distributor enrollments.
      In
      the third quarter of 2008, new distributor enrollments in the United States
      were
      approximately 4,260 compared to 5,011 in the prior year quarter, a decrease
      of
      15.0%. The net number of active Distributors in the United States as of
      September 30, 2008 decreased by 5.6% to 54,210, compared to the number of active
      Distributors as of September 30, 2007. Distributor retention was 64.0% for
      the
      first nine months of 2008 compared to a rate of 65.2% for all of 2007. Also
      contributing to the decline was that fewer distributors qualified for the level
      of Master Affiliate during the third quarter of 2008, compared to the same
      period in 2007. In the third quarter of 2008, approximately 907 distributors
      qualified as new Master Affiliates, compared to approximately 1,094 in the
      prior-year quarter, a decline of 17%. In addition, the net number of Master
      Affiliates and above as of September 30, 2008 decreased by 21.8%, as compared
      to
      the net number of Master Affiliates and above as of September 30, 2007. This
      is
      consistent with reduced number of distributors qualifying for the level of
      Master Affiliate discussed above. Over the past year, we have emphasized the
      importance of bringing in new distributors at all levels, not just directly
      into
      the Master Affiliate level. We intend to continue our distributor growth
      strategy of bringing in new distributors at all levels. However, we will
      continue to focus on efforts to teach our newest distributors to build their
      business to the Master Affiliate level through training and other
      programs.





Another
      factor in the decline in U.S. sales is the reduction in sales volume of
      Slimplicity®, the weight control product line we introduced in this market in
      February 2007. Approximately 48% of the 2008 year-to-date overall reduction
      in
      U.S. sales was the result of the decline in the sales of the Slimplicity product
      line.





In
      the
      third quarter of 2008, we processed approximately 69,400 orders in the U.S.
      for
      products at an average order of $387 at suggested retail. In the same period
      of
      2007, we processed approximately 79,400 product orders at an average order
      of
      $360 at suggested retail. The average order size for all of 2007 was $386 at
      suggested retail.





During
      the three months ended September 30, 2008, net sales in our international
      operations decreased in aggregate by 2.1% to $3.05 million compared to
      $3.11 million for the three months ended September 30, 2007. Sales results
      were mixed in our foreign markets during the third quarter of 2008. Sales
      continued to strengthen in our Malaysia/Singapore markets, as sales increased
      62.8% in the third quarter of 2008 compared to the same period in 2007. However,
      sales in the Philippines decreased by 27.9% in the third quarter 2008, and
      sales
      in Germany/continental EU market decreased by 55.6%. All other markets had
      moderate fluctuations as indicated in the sales table on the previous page.
      For
      the nine-month period ended September 30, 2008, international net sales
      increased by 10.5% to $10.16 million compared to $9.19 million in the same
      period in 2007. Although the U.S. dollar dramatically strengthened over the
      last
      two months of the third quarter of 2008, the average exchange rate for the
      U.S.
      dollar for the first nine months of 2008 was still slightly weaker against
      all
      currencies of the countries we conduct business in, when compared to the rates
      over the first nine months of 2007. When net sales are converted using the
      2007
      exchange rate for both 2007 and 2008, international net sales improved 3.2%
      for
      the first nine months of 2008 compared to the first nine months of the prior
      year. We expect this impact to reverse in the fourth quarter as the U.S. dollar
      continues to strengthen during the current economic conditions compared to
      prior
      quarters.




11





Net
      sales
      in Malaysia/Singapore increased by 62.8% in the third quarter of 2008 compared
      to the same period of 2007. Positive distributor growth continues to take place
      in this region as new distributor enrollments were approximately 552 in the
      third quarter of 2008, compared to 352 in the prior year quarter. The active
      distributor and Master Affiliate totals as of September 30, 2008 were up 46.6%
      and 87.1%, respectively, when compared to September 30, 2007. This was offset
      by
      a decrease in net sales in the Philippines during the third quarter 2008 of
      27.9%, compared to the prior year quarter. Sales were negatively impacted,
      in
      part, due to corporate staff and distributor leaders being out of the market
      to
      attend the International distributor conference held in the U.S. during August
      and other events that took the distributor leaders out of the field. We also
      believe that the general economic uncertainty that is present in the U.S. is
      also having an impact on sales in the Philippines.





Sales
      in
      Germany/continental EU were down 55.6% in the third quarter 2008, compared
      to
      the prior-year quarter. For the nine months ended September 30, 2008, sales
      were
      down 37.0%, compared to the prior-year period. We expected this decline in
      sales
      to continue in response to the closing of our Germany corporate office and
      restructuring efforts there. During the second quarter of 2008, we centralized
      all European call center and administrative functions to our office in the
      United Kingdom. While our corporate office in Germany has been closed, our
      distribution facility there continues to ship product orders for the European
      continent. Orders for the United Kingdom and Ireland continue to be shipped
      from
      our U.K. office. As a result of this restructuring, we took a one-time charge
      of
      $110,000 after taxes in our second quarter results. This charge related to
      severance payments and lease termination costs.





*Cost
      of Products Sold.* Cost
      of
      products sold as a percentage of net sales was 18.7% and 17.6% for the three-
      and nine-month periods ended September 30, 2008, respectively, compared to
      17.2%
      and 17.1% for the same periods in 2007. Gross margins were impacted in the
      third
      quarter of 2008 compared to the same period of 2007 by raw material price
      increases and higher freight costs. Lower plant utilization also had a negative
      impact on cost of products sold. On a nine-month basis, these same factors
      impacted gross margins in 2008.





As
      a
      result of the increasing raw material costs, we increased the suggested retail
      sales price of a number of our products in the United States, effective August
      1, 2008. On the products affected, which include our key products of Reliv
      NOW,
      Reliv Classic, and Fibrestore, the price increase ranges from 6% to
      12%.





*Distributor
      Royalties and Commissions.* Distributor
      royalties and commissions as a percentage of net sales were 39.1% and 39.3%
      for
      the three- and nine-month periods ended September 30, 2008, respectively,
      compared to 39.5% and 39.9% for the same periods in 2007. Due to the structure
      of our distributor compensation plan, we do not expect to experience significant
      fluctuations in distributor royalties and commissions as a percentage of net
      product sales. However, the slight decrease as a percentage of net sales is
      the
      result of changes made to our handling and freight income rates as of January
      1,
      2008.





*Selling,
      General and Administrative Expenses.* For
      the
      three and nine months ended September 30, 2008, selling, general and
      administrative, or SGA, expenses decreased by $789,000 and $2.50 million,
      respectively, compared to the same periods in 2007. SGA expenses as a percentage
      of net sales were 37.5% and 37.4% for the three- and nine-month periods ended
      September 30, 2008, respectively, compared to 38.8% and 35.8% for the same
      periods of 2007.





Sales
      and
      marketing expenses decreased by approximately $1.8 million in the first nine
      months of 2008, compared to the prior-year period. Sales and marketing expenses
      in 2007 included charges for distributor bonus programs and incentive trips
      that
      are not being repeated in 2008. Sales development expenses are lower by $304,000
      over the first nine months of 2008, compared to the same period in 2007.
      Decreases in other distributor bonuses and expenses directly related to the
      level of sales also contributed to the decline.





Distribution
      and warehouse expenses decreased by $71,000 in the areas of wages, contract
      labor expenses, and shipping supply expenses in the first nine months of 2008
      compared to the prior-year period. Furthermore, general and administrative
      expenses decreased by approximately $627,000, primarily in
      professional/consulting fees, corporate travel expenses, and incentive
      compensation. General and administrative expenses in the second quarter also
      included a pre-tax charge of $215,000 for the German office
      restructuring.




12




*Interest
      Income/Expense.* Interest
      income decreased to $300,000 for the nine months ended September 30, 2008,
      compared to $499,000 for the same period in 2007. The decrease is the result
      of
      a lower level of invested funds. We incurred $21,000 in interest expense during
      the third quarter of 2008, as we utilized our line of credit for a period of
      time during the quarter to finance certain treasury stock purchases that took
      place in July 2008.





*Other
      Income/Expense.* We
      incurred other expenses of $229,000 during the first nine months of 2008,
      compared to income of $269,000 during the same period of 2007. These expenses
      consisted of a reduction in the value of our investment as a limited partner
      in
      a private equity fund of $260,000 and foreign currency translation losses of
      $69,000 due to the strengthening of the U.S. dollar during the third quarter
      2008.





*Income
      Taxes.* We
      recorded income tax expense of $1.75 million for the first nine months of
      2008, an effective rate of 40.0%. In the same period in 2007, we recorded income
      tax expense of $2.62 million, which represented an effective rate of 37.6%.
      Our effective rate is higher in 2008 due primarily to the non-deductible nature
      of the foreign currency translation losses.





*Net
      Income.* Our
      net
      income for the three and nine months ended September 30, 2008 was $536,000
      ($0.04 per share basic and diluted) and $2.6 million ($0.17 per share basic
      and diluted), respectively, compared to $901,000 ($0.06 per share basic and
      diluted) and $4.3 million ($0.27 per share basic and diluted) for the same
      periods in 2007. Profitability decreased during the three and nine month periods
      of 2008 primarily as net sales decreased in the United States, coupled with
      the
      other expenses, as described in *Other
      Income/Expense* above.





**Financial
      Condition, Liquidity and Capital Resources**





During
      the first nine months of 2008, we generated $3.6 million of net cash from
      operating activities, used $331,000 in investing activities, and used
      $8.8 million in financing activities. This compares to $3.8 million of
      net cash provided by operating activities, $2.7 million provided by
      investing activities, and $8.4 million used in financing activities in the
      same
      period of 2007. Cash and cash equivalents decreased by $5.9 million to
      $5.8 million as of September 30, 2008 compared to December 31, 2007.





Significant
      changes in working capital items consisted of a decrease in accounts and notes
      receivable of $387,000, an increase in inventories of $678,000, an increase
      in
      prepaid expenses/other current assets of $223,000, and a decrease in other
      assets of $325,000 in the first nine months of 2008. Accounts and notes
      receivable decreased primarily due to the receipt of a refund due from the
      promotional trip management company we utilized and payment received on a
      receivable from a vendor. The increase in inventory is a result of lower than
      expected sales levels, compared to scheduled production, along with materials
      needed for a new product launch planned in the fourth quarter. The increase
      in
      prepaid expenses/other current assets represents the annual premium payments
      made in the second quarter on most of the corporate insurance policies. The
      change in other assets is due to the reduction in value of our investment in
      the
      private equity fund as described in *Other
      Income/Expense* offset
      primarily by payments made on various officer life insurance policies.





Investing
      activities during the first nine months of 2008 consisted of $757,000 for
      capital expenditures, along with net proceeds of $399,000 in short-term
      investments.





Financing
      activities in the first nine months of 2008 included $8.0 million in treasury
      stock purchases, and common stock dividends paid of $793,000.





Stockholders’
      equity decreased to $17.7 million at September 30, 2008 compared with
      $23.8 million at December 31, 2007. The decrease is due to the
      treasury stock purchases of $8.0 million and common stock dividends paid during
      the first nine months of the year, offset by our net income during the first
      nine months of 2008 of $2.6 million. Our working capital balance was
      $6.6 million at September 30, 2008 compared to $12.5 million at
      December 31, 2007. The current ratio at September 30, 2008 was 1.8 compared
      to 2.5 at December 31, 2007.




13





We
      had a
      $5 million secured revolving credit facility with our primary lender that
      we entered into in June 2006. This facility was renewed by the bank in March
      2008 and expired in September 2008. We
      are
      currently working with our lender to extend the facility and intend to have
      the
      documents finalized in the fourth quarter; however, the agreements have not
      been
      finalized as of this filing. We have
      opted to renew the facility for only a one-year term due to higher credit
      pricing in the current market on longer term facilities. Under the proposed
      one-year facility, advances would accrue interest at a variable interest rate
      based on LIBOR, and the credit facility would be secured by all of our assets.
      The facility would include covenants to maintain total stockholders’ equity of
      not less than $10.5 million, and that the ratio of borrowings to earnings
      before interest, taxes, depreciation and amortization, or EBITDA, under the
      facility would not exceed 3.5 to 1.0. In late July 2008, we drew $4 million
      on the previous facility as part of a stock purchase described in Note 8 to
      the
      unaudited Consolidated Financial Statements. The balance outstanding on the
      facility was fully repaid as of September 30, 2008 and we were in compliance
      with the minimum stockholders’ equity covenant as of that date.





Management
      believes that our internally generated funds and the borrowing capacity under
      the proposed revolving line of credit facility expected to be entered into
      during the fourth quarter will be sufficient to meet working capital
      requirements for the remainder of 2008 and into 2009.





**Critical
      Accounting Policies**





A
      summary
      of our critical accounting policies and estimates is presented on pages 38-41
      of
      our 2007 Annual Report on Form 10-K filed with the Securities and Exchange
      Commission on March 14, 2008.





*Recent
      Accounting Pronouncements*





Effective
      January 1, 2008, we adopted the provisions of Statement of Financial Accounting
      Standards (SFAS) No. 157, “Fair Value Measurements,” which defines fair value,
      establishes a framework for fair value and expands disclosures about fair value
      measurements required under other accounting pronouncements. SFAS No. 157
      clarifies that fair value is an exit price, representing the amount that would
      be received to sell an asset or paid to transfer a liability in an orderly
      transaction between market participants. SFAS No. 157 also requires that a
      fair
      value measurement reflect the assumptions market participants would use in
      pricing an asset or liability based on the best information available.
      Assumptions include the risks inherent in a particular valuation technique
      (such
      as a pricing model) and/or the risks inherent in the inputs to the model. In
      February 2008, the Financial Accounting Standards Board ("FASB") issued Staff
      Position No. 157-2 that delays the effective date of SFAS No. 157 for
      non-financial assets and non-financial liabilities, except for items that are
      recognized or disclosed at fair value in the financial statements on a recurring
      basis (at least annually). The adoption of SFAS No. 157 did not have a
      significant impact on our financial statements.





In
      February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
      Financial Assets and Financial Liabilities, Including an Amendment of FASB
      Statement No. 115.” SFAS No. 159 allows an entity the irrevocable option to
      elect fair value for the initial and subsequent measurement of certain financial
      assets and liabilities under an instrument-by-instrument election. Under SFAS
      No. 159, subsequent measurements for the financial assets and liabilities an
      entity elects to measure at fair value will be recognized in its results of
      operations. SFAS No. 159 also establishes additional disclosure requirements.
      We
      adopted SFAS No. 159 on January 1, 2008 and did not elect to measure any
      additional assets or liabilities at fair value.





In
      March
      2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments
      and Hedging Activities." SFAS No. 161 requires companies with derivative
      instruments to disclose information that should enable financial statement
      users
      to understand how and why a company uses derivative instruments, how derivative
      instruments and related hedged items are accounted for under SFAS No. 133
“Accounting for Derivative Instruments and Hedging Activities”, and how
      derivative instruments and related hedged items affect a company’s financial
      position, financial performance, and cash flows. SFAS No. 161 is effective
      for
      financial statements issued for fiscal years beginning after November 15, 2008.
      We are currently evaluating the impact of SFAS No. 161 and have not yet
      determined the impact on our financial statements.




14




**Item
      No. 3 - Quantitative and Qualitative Disclosures Regarding Market
      Risk**





We
      are
      exposed to various market risks, primarily foreign currency risks and interest
      rate risks.




**Foreign
      Currency Risk**





Our
      earnings and cash flows are subject to fluctuations due to changes in foreign
      currency rates as we have several foreign subsidiaries and continue to explore
      expansion into other countries. As a result, exchange rate fluctuations may
      have
      an effect on sales and gross margins. Accounting practices require that our
      results from operations be converted to U.S. dollars for reporting purposes.
      Consequently, our reported earnings 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 us for sale to our foreign subsidiaries are transacted in U.S.
      dollars.





From
      time
      to time, we enter into foreign exchange forward contracts with a financial
      institution to sell Canadian dollars in order to protect against currency
      exchange risk associated with expected future cash flows. We have accounted
      for
      these contracts as free standing derivatives, such that gains or losses on
      the
      fair market value of these forward exchange contracts are recorded as other
      income and expense in the consolidated statements of operations. As of September
      30, 2008, we were holding Canadian forward exchange contracts with notional
      values totaling $205,000 with maturities through December 31, 2008, and a
      related mark-to-market gain of $17,000. As of September 30, 2008, we had no
      hedging instruments in place to offset exposure to any foreign currencies for
      any of the other countries in which we do business.





There
      have been no other material changes in market risk exposures during the first
      nine months of 2008 that affect the disclosures presented in Item 7A -
“Quantitative and Qualitative Disclosures Regarding Market Risk” on pages 41 and
      42 of our 2007 Annual Report on Form 10-K filed with the Securities and Exchange
      Commission on March 14, 2008.





**Item
      No. 4 - Controls and Procedures**





Our
      management, under the supervision and with the participation of our Chief
      Executive Officer and Chief Financial Officer, has reviewed and evaluated the
      effectiveness of the design and operation of our disclosure controls and
      procedures as of September 30, 2008. Based on such review and evaluation, our
      Chief Executive Officer and Chief Financial Officer have concluded that the
      disclosure controls and procedures were effective as of September 30, 2008,
      to
      ensure that the information required to be disclosed by us in the reports that
      we file or submit under the Securities Exchange Act of 1934, as amended, (a)
      is
      recorded, processed, summarized and reported within the time period specified
      in
      the SEC’s rules and forms and (b) is accumulated and communicated to our
      management, including the officers, as appropriate to allow timely decisions
      regarding required disclosure. There were no material changes in our internal
      control over financial reporting during the third quarter of 2008 that have
      materially affected or are reasonably likely to materially affect our internal
      controls over financial reporting.




**PART
      II - OTHER INFORMATION**





**Item
      No. 1A - Risk Factors**





Risk
      factors associated with our business activities have not changed materially
      from
      the disclosure in our 2007 Annual Report on Form 10-K filed with the Securities
      and Exchange Commission on March 14, 2008, as updated by our Quarterly Report
      on
      Form 10-Q for the quarterly period ended March 31, 2008 filed with the
      Securities and Exchange Commission on May 9, 2008.




15




**Item
      No. 2 - Unregistered Sales of Equity Securities and Use of
      Proceeds**




**ISSUER
      PURCHASES OF EQUITY SHARES**




Period
            
            Total
                Number of SharesPurchased(1)
            
            Average
                PricePaid
                per Share
            
            Total
                Number of Shares Purchased as Part of Publicly AnnouncedPrograms
            
            Approximate
                Dollar Value of Shares that May Yet Be Purchased Under the Plans
                orPrograms(2)July
                1-31, 2008
            
            
            1,130,180
            
            $
            5.94
            
            
            131,180
            
            $
            12,500,000August
                1-31, 2008
            
            
            11,200
            
            $
            6.59
            
            
            11,200
            
            $
            12,426,000September
                1-30, 2008
            
            
            --
            
            
            --
            
            
            --
            
            $
            12,426,000Total
            
            
            1,141,380
            
            
            
            
            
            142,380(1)Includes
                999,000 shares purchased from two significant shareholders at $6.00
                per
                share in July 2008.
              (2)In
                May 2007, the Company’s Board of Directors approved a share repurchase
                plan of up to $15 million through April
                2010.




**Item
      No. 6 - Exhibits**





Exhibit
              Number
            Document  10.1
            Stock
                Purchase Agreement dated July 24, 2008 by and between the Paul and
                Jane
                Meyer Family Foundation and Reliv International, Inc. (incorporated
                by
                reference to Exhibit 10.1 to the Form 8-K of the Registrant filed
                July 30,
                2008).





10.2
            Stock
                Purchase Agreement dated July 24, 2008 by and between Centre Island
                Properties, Ltd. and Reliv International, Inc. (incorporated by reference
                to Exhibit 10.2 to the Form 8-K of the Registrant filed July 30,
                2008).





10.3
            Standstill
                Letter from Paul J. Meyer to Robert L. Montgomery dated July 25,
                2008.
                (incorporated by reference to Exhibit 10.3 to the Form 8-K of the
                Registrant filed July 30, 2008).





31.1
            Certification
                of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a)
                of theSecurities
                Exchange Act, as amended (filed
                herewith).





31.2
            Certification
                of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a)
                of theSecurities
                Exchange Act, as amended (filed
                herewith).





32
            Certification
                of Chief Executive Officer and Chief Financial Officer pursuant to
                18
                U.S.C.1350,
                as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
                (filed herewith).


16


**SIGNATURES**





Pursuant
      to the requirements 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. MontgomeryRobert L. Montgomery, Chairman of
                the
                Board of Directors, President and Chief Executive Officer





Date:
      November 7, 2008




By:
              /s/
                Steven D. AlbrightSteven D. Albright, Chief Financial
                Officer (and accounting officer)


Date:
      November 7, 2008




17





**Exhibit
      Index**







Exhibit
                Number
              Document  10.1
              Stock
                  Purchase Agreement dated July 24, 2008 by and between the Paul
                  and Jane
                  Meyer Family Foundation and Reliv International, Inc. (incorporated
                  by
                  reference to Exhibit 10.1 to the Form 8-K of the Registrant filed
                  July 30,
                  2008).
 
 10.2
              Stock
                  Purchase Agreement dated July 24, 2008 by and between Centre Island
                  Properties, Ltd. and Reliv International, Inc. (incorporated by
                  reference
                  to Exhibit 10.2 to the Form 8-K of the Registrant filed July 30,
                  2008).
 
 10.3
              Standstill
                  Letter from Paul J. Meyer to Robert L. Montgomery dated July 25,
                  2008.
                  (incorporated by reference to Exhibit 10.3 to the Form 8-K of the
                  Registrant filed July 30, 2008).
 
 31.1
              Certification
                  of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule
                  15d-14(a)
                  of theSecurities
                  Exchange Act, as amended (filed
                  herewith).
 
 31.2
              Certification
                  of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule
                  15d-14(a)
                  of theSecurities
                  Exchange Act, as amended (filed
                  herewith).
 
 32
              Certification
                  of Chief Executive Officer and Chief Financial Officer pursuant
                  to 18
                  U.S.C.1350,
                  as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
                  2002
                  (filed herewith).