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
      1934For
      the quarterly period ended March 31, 2009OR ̈
                  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
                        
                        (I.R.S.
      Employer Identification Number)incorporation
      or organization)136
      Chesterfield Industrial BoulevardChesterfield, 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 has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such
files).   Yes o     No o





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





Large
accelerated filer o     Accelerated
filer þ     Non-accelerated
filer o Smaller reporting company 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 April 30, 2009 was 12,233,612 (excluding
treasury shares).








INDEXPART
      I – FINANCIAL INFORMATIONItem
      No. 1
                  Financial
      Statements (Unaudited)
                  
                  1Item
      No. 2
                  Management’s
      Discussion and Analysis ofFinancial
      Condition and Results of Operations
                  
                  7Item
      No. 3
                  Quantitative
      and Qualitative Disclosures Regarding Market Risk
                  
                  12Item
      No. 4
                  Controls
      and Procedures
                  
                  12PART
      II – OTHER INFORMATIONItem
      No. 1A
                  Risk
      Factors
                  
                  12Item
      No. 2
                  Unregistered
      Sales of Equity Securities and Use of Proceeds
                  
                  13Item
      No. 6
                  Exhibits
                  
                  13







PART
I — FINANCIAL INFORMATION





Item No. 1 - Financial
Statements





Reliv International, Inc. and Subsidiaries





Consolidated
Balance Sheets





March
      31
                
                
                December
      312009
                
                
                2008(unaudited)AssetsCurrent
      assets:Cash
      and cash equivalents
                
                $
                6,983,335
                
                
                $
                4,460,637Accounts
      and notes receivable, less allowances of $15,400 in 2009 and $10,200 in
      2008
                
                
                273,144
                
                
                
                494,689Accounts
      due from employees and distributors
                
                
                207,948
                
                
                
                241,532InventoriesFinished
      goods
                
                
                3,551,391
                
                
                
                3,533,371Raw
      materials
                
                
                2,226,945
                
                
                
                1,710,319Sales
      aids and promotional materials
                
                
                870,721
                
                
                
                978,264Total
      inventories
                
                
                6,649,057
                
                
                
                6,221,954Refundable
      income taxes
                
                
                -
                
                
                
                129,137Prepaid
      expenses and other current assets
                
                
                1,295,312
                
                
                
                1,525,665Deferred
      income taxes
                
                
                511,000
                
                
                
                522,000Total
      current assets
                
                
                15,919,796
                
                
                
                13,595,614Other
      assets
                
                
                1,463,749
                
                
                
                1,220,546Accounts
      due from employees and distributors
                
                
                148,729
                
                
                
                164,462Property,
      plant and equipment:Land
      and land improvements
                
                
                852,147
                
                
                
                852,147Building
                
                
                9,778,692
                
                
                
                9,786,037Machinery
      & equipment
                
                
                3,368,345
                
                
                
                3,293,526Office
      equipment
                
                
                1,464,030
                
                
                
                1,452,015Computer
      equipment & software
                
                
                2,910,571
                
                
                
                2,904,84618,373,785
                
                
                
                18,288,571Less:
      Accumulated depreciation
                
                
                9,589,612
                
                
                
                9,376,414Net
      property, plant and equipment
                
                
                8,784,173
                
                
                
                8,912,157Total
      assets
                
                $
                26,316,447
                
                
                $
                23,892,779





See notes
to financial statements.




1




Reliv
International, Inc. and Subsidiaries





Consolidated
Balance Sheets





March
      31
                
                
                December
      312009
                
                
                2008(unaudited)Liabilities
      and stockholders' equityCurrent
      liabilities:Accounts
      payable and accrued expenses:Trade
      accounts payable and other accrued expenses
                
                $
                4,453,850
                
                
                $
                2,948,467Distributors
      commissions payable
                
                
                2,878,268
                
                
                
                2,809,164Sales
      taxes payable
                
                
                289,860
                
                
                
                374,643Payroll
      and payroll taxes payable
                
                
                728,187
                
                
                
                648,550Total
      accounts payable and accrued expenses
                
                
                8,350,165
                
                
                
                6,780,824Notes
      payable
                
                
                -
                
                
                
                569,375Income
      taxes payable
                
                
                523,255
                
                
                
                -Total
      current liabilities
                
                
                8,873,420
                
                
                
                7,350,199Noncurrent
      liabilities:Deferred
      income taxes
                
                
                30,000
                
                
                
                70,000Other
      noncurrent liabilities
                
                
                363,912
                
                
                
                364,990Total
      noncurrent liabilities
                
                
                393,912
                
                
                
                434,990Stockholders'
      equity:Preferred
      stock, par value $.001 per share; 3,000,000 shares authorized; -0- shares
      issued and outstanding in 2009 and 2008
                
                
                -
                
                
                
                -Common
      stock, par value $.001 per share; 30,000,000 authorized; 14,425,185 shares
      issued and 14,299,160 shares outstanding as of 3/31/2009; 14,425,185
      shares issued and 14,302,160 shares outstanding as of
      12/31/2008
                
                
                14,425
                
                
                
                14,425Additional
      paid-in capital
                
                
                30,372,895
                
                
                
                30,321,066Accumulated
      deficit
                
                
                (11,926,512
                )
                
                
                (12,938,430
                )Accumulated
      other comprehensive loss:Foreign
      currency translation adjustment
                
                
                (771,585
                )
                
                
                (663,478
                )Treasury
      stock
                
                
                (640,108
                )
                
                
                (625,993
                )Total
      stockholders' equity
                
                
                17,049,115
                
                
                
                16,107,590Total
      liabilities and stockholders' equity
                
                $
                26,316,447
                
                
                $
                23,892,779





See notes
to financial statements.




2




Reliv
International, Inc. and Subsidiaries





Consolidated
Statements of Income


(unaudited)





Three
      months ended March 312009
                
                
                2008Product
      sales
                
                $
                21,166,181
                
                
                $
                25,197,178Handling
      & freight income
                
                
                2,624,809
                
                
                
                3,074,208Net
      sales
                
                
                23,790,990
                
                
                
                28,271,386Costs
      and expenses:Cost
      of products sold
                
                
                4,575,751
                
                
                
                4,834,526Distributor
      royalties and commissions
                
                
                8,937,667
                
                
                
                11,122,372Selling,
      general and administrative
                
                
                8,617,873
                
                
                
                9,931,799Total
      costs and expenses
                
                
                22,131,291
                
                
                
                25,888,697Income
      from operations
                
                
                1,659,699
                
                
                
                2,382,689Other
      income (expense):Interest
      income
                
                
                20,715
                
                
                
                134,873Interest
      expense
                
                
                (9,550
                )
                
                
                (413
                )Other
      income (expense)
                
                
                12,055
                
                
                
                (35,112
                )Income
      before income taxes
                
                
                1,682,919
                
                
                
                2,482,037Provision
      for income taxes
                
                
                671,000
                
                
                
                956,000Net
      income
                
                $
                1,011,919
                
                
                $
                1,526,037Earnings
      per common share - Basic
                
                $
                0.07
                
                
                $
                0.10Weighted
      average shares
                
                
                14,299,000
                
                
                
                15,874,000Earnings
      per common share - Diluted
                
                $
                0.07
                
                
                $
                0.10Weighted
      average shares
                
                
                14,299,000
                
                
                
                15,874,000Cash
      dividends declared per common share
                
                $
                -
                
                
                $
                -





See notes
to financial statements.




3




Reliv
International, Inc. and Subsidiaries





Consolidated
Statements of Cash Flows


(unaudited)





Three
      months ended March 312009
                
                
                2008Operating
      activities:Net
      income
                
                $
                1,011,919
                
                
                $
                1,526,037Adjustments
      to reconcile net income to net cash provided by operating
      activities:Depreciation
      and amortization
                
                
                277,010
                
                
                
                264,052Stock-based
      compensation
                
                
                51,829
                
                
                
                59,655Deferred
      income taxes
                
                
                (29,000
                )
                
                
                (20,000
                )Foreign
      currency transaction (gain)/loss
                
                
                12,819
                
                
                
                (17,928
                )(Increase)
      decrease in accounts and notes receivable
                
                
                251,858
                
                
                
                272,560(Increase)
      decrease in inventories
                
                
                (485,459
                )
                
                
                (232,909
                )(Increase)
      decrease in refundable income taxes
                
                
                128,319
                
                
                
                362,330(Increase)
      decrease in prepaid expenses and other current assets
                
                
                (316,049
                )
                
                
                46,308(Increase)
      decrease in other assets
                
                
                (252,355
                )
                
                
                (4,793
                )Increase
      (decrease) in accounts payable & accrued expenses and other
      non-current liabilities
                
                
                1,598,651
                
                
                
                390,387Increase
      (decrease) in income taxes payable
                
                
                523,255
                
                
                
                566,196Net
      cash provided by operating activities
                
                
                2,772,797
                
                
                
                3,211,895Investing
      activities:Proceeds
      from the sale of property, plant and equipment
                
                
                -
                
                
                
                6,510Purchase
      of property, plant and equipment
                
                
                (146,131
                )
                
                
                (135,186
                )Purchase
      of investments
                
                
                -
                
                
                
                (1,521,111
                )Proceeds
      from final withdrawal in limited partnership investment
                
                
                488,633
                
                
                
                -Proceeds
      from sales or maturities of investments, at cost
                
                
                -
                
                
                
                398,592Net
      cash provided by (used in) investing activities
                
                
                342,502
                
                
                
                (1,251,195
                )Financing
      activities:Principal
      payments on notes payable
                
                
                (569,375
                )
                
                
                -Purchase
      of stock for treasury
                
                
                (14,115
                )
                
                
                -Net
      cash used in financing activities
                
                
                (583,490
                )
                
                
                -Effect
      of exchange rate changes on cash and cash equivalents
                
                
                (9,111
                )
                
                
                11,530Increase
      (decrease) in cash and cash equivalents
                
                
                2,522,698
                
                
                
                1,972,230Cash
      and cash equivalents at beginning of period
                
                
                4,460,637
                
                
                
                11,694,699Cash
      and cash equivalents at end of period
                
                $
                6,983,335
                
                
                $
                13,666,929





See notes
to financial statements.




4




Reliv
International, Inc. and Subsidiaries


Notes to
Consolidated Financial Statements


(Unaudited)





March 31,
2009





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, 2008, filed March 13, 2009 with the Securities and Exchange
Commission.





Note
      2—
            Comprehensive
      Income




Total
comprehensive income was $903,812 and $1,560,037 for the three months ended
March 31, 2009 and March 31, 2008, 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 computation of basic and diluted earnings per
share:





Three
      months ended March 312009
                  
                  
                  2008Numerator:Net
      income
                  
                  $
                  1,011,919
                  
                  
                  $
                  1,526,037Denominator:Denominator
      for basic earnings per share—weighted average shares
                  
                  
                  14,299,000
                  
                  
                  
                  15,874,000Dilutive
      effect of employee stock options and other warrants
                  
                  
                  -
                  
                  
                  
                  -Denominator
      for diluted earnings pershare—adjusted
      weighted average shares
                  
                  
                  14,299,000
                  
                  
                  
                  15,874,000Basic
      earnings per share
                  
                  $
                  0.07
                  
                  
                  $
                  0.10Diluted
      earnings per share
                  
                  $
                  0.07
                  
                  
                  $
                  0.10





Options
and warrants to purchase 842,040 and 805,224 shares of common stock for the
three months ended March 31, 2009 and 2008, 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)
 
 March 31,
2009


Note
      4—
            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 resulted in the closing of the Reliv Germany
office, the Company's Germany distribution center remains open to support that
region's customers.  In the second quarter of 2008, the Company
incurred a charge of $215,000 ($110,000 net of tax) for employee severance and
lease exit costs.  The Company expects that the March 31, 2009 reserve
balance will be substantially settled over the remainder of 2009.





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
                  
                  
                  $
                  215,000Additional
      charges in 2008
                  
                  
                  17,500
                  
                  
                  
                  -
                  
                  
                  
                  17,500Amounts
      settled in 2008
                  
                  
                  (124,500
                  )
                  
                  
                  (42,000
                  )
                  
                  
                  (166,500
                  )Reserve
      balance at December 31, 2008
                  
                  
                  -
                  
                  
                  
                  66,000
                  
                  
                  
                  66,000Amounts
      settled in first quarter 2009
                  
                  
                  -
                  
                  
                  
                  (13,000
                  )
                  
                  
                  (13,000
                  )Reserve
      balance at March 31, 2009
                  
                  
                  -
                  
                  
                  $
                  53,000
                  
                  
                  $
                  53,000





Note
      5—
            Subsequent
      Event




On April
23, 2009, the Company entered into a Stock Purchase Agreement with a large
shareholder (Seller) to purchase 2,068,973 shares of the Company's common stock
for $6,106,919 (an average price of $2.95 per share).  To finance the
purchase, on April 27, 2009, the Company borrowed $5 million under its existing
line of credit and issued a promissory note to the Seller for
$1,106,919.  The promissory note bears interest at 6% per annum with
all principal and unpaid interest due no later than ninety days from
closing.  This transaction closed on April 27, 2009.





6


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 2008 Annual Report on Form 10-K filed with the Securities
and Exchange Commission on March 13, 2009, 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 FinancialCondition
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 89.9% of worldwide net sales for the
three months ended March 31, 2009 and 87.3% of worldwide net sales for the three
months ended March 31, 2008. Our international operations currently generate
sales through distributor networks in Australia, Canada, Germany, Ireland,
Malaysia, Mexico, New Zealand, the Philippines, Singapore and the
United Kingdom.  We also operate on a limited basis in Austria
and the Netherlands from our German distribution center and in Brunei from our
Malaysia office.





We derive our revenues principally
through product sales made by our global independent distributor base, which, as
of March 31, 2009, consisted of approximately 68,680 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





Product sales represent the actual
product purchase price typically paid by our distributors, after giving effect
to distributor allowances, which can range between 20% to 40% of suggested
retail price, depending on the rank of a particular
distributor.  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.


7





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, the cost of shipping 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
in their downline organization. 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. 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.
However, in 2008, we adjusted the commission structure on our newest product,
GlucAffect, and other higher priced products in our line.  We reduced the
value of the product used to determine distributor allowances and commission
payouts on these products.  This, in turn, allows us to sell these products
at a lower suggested retail price.  This adjustment appears as a
slight reduction in the percentage of distributor royalties and commissions as a
percentage of net sales.





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-month period ended March 31, 2009 and
2008. Our results of operations for the periods described below are not
necessarily indicative of results of operations for future periods.




Three months ended
                    March 31,2009
                  
                  
                  2008Net
      sales
                  
                  
                  100.0
                  %
                  
                  
                  100.0
                  %Costs
      and expenses:Cost
      of products sold
                  
                  
                  19.2
                  
                  
                  
                  17.1Distributor
      royalties and commissions
                  
                  
                  37.6
                  
                  
                  
                  39.4Selling,
      general and administrative
                  
                  
                  36.2
                  
                  
                  
                  35.1Income
      from operations
                  
                  
                  7.0
                  
                  
                  
                  8.4Interest
      expense
                  
                  
                  (0.0
                  )
                  
                  
                  (0.0
                  )Interest
      and other income
                  
                  
                  0.1
                  
                  
                  
                  0.4Income
      before income taxes
                  
                  
                  7.1
                  
                  
                  
                  8.8Provision
      for income taxes
                  
                  
                  2.8
                  
                  
                  
                  3.4Net
      income
                  
                  
                  4.3
                  %
                  
                  
                  5.4
                  %


8





Net Sales.Overall
net sales decreased by 15.8% in the three months ended March 31, 2009 compared
to the same period in 2008.  During the first quarter of 2009, sales
in the United States decreased by 13.4%, and our international sales decreased
by 32.8% 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 March 31, 2009 and
2008. Beginning with this quarterly report, we have condensed the sales and
distributor count data for the various countries where we operate within Europe
and Asia into single line items for each region.




Three months ended March 31,2009
                      
                      
                      2008
                      
                      
                      Change from prior yearAmount
                      
                      
                      % of Net
                        Sales
                      
                      
                      Amount
                      
                      
                      % of Net
                        Sales
                      
                      
                      Amount
                      
                      
                      %(dollars
      in thousands)United
      States
                      
                      $
                      21,381
                      
                      
                      
                      89.9
                      %
                      
                      $
                      24,685
                      
                      
                      
                      87.3
                      %
                      
                      $
                      (3,304
                      )
                      
                      
                      (13.4
                      )%Australia/New
      Zealand
                      
                      
                      516
                      
                      
                      
                      2.1
                      
                      
                      
                      747
                      
                      
                      
                      2.6
                      
                      
                      
                      (231
                      )
                      
                      
                      (30.9
                      )Canada
                      
                      
                      336
                      
                      
                      
                      1.4
                      
                      
                      
                      461
                      
                      
                      
                      1.6
                      
                      
                      
                      (125
                      )
                      
                      
                      (27.1
                      )Mexico
                      
                      
                      281
                      
                      
                      
                      1.2
                      
                      
                      
                      398
                      
                      
                      
                      1.4
                      
                      
                      
                      (117
                      )
                      
                      
                      (29.4
                      )Europe
                      
                      
                      308
                      
                      
                      
                      1.3
                      
                      
                      
                      524
                      
                      
                      
                      1.9
                      
                      
                      
                      (216
                      )
                      
                      
                      (41.2
                      )Asia
                      
                      
                      969
                      
                      
                      
                      4.1
                      
                      
                      
                      1,456
                      
                      
                      
                      5.2
                      
                      
                      
                      (487
                      )
                      
                      
                      (33.4
                      )Consolidated
      total
                      
                      $
                      23,791
                      
                      
                      
                      100.0
                      %
                      
                      $
                      28,271
                      
                      
                      
                      100.0
                      %
                      
                      $
                      (4,480
                      )
                      
                      
                      (15.8
                      )%





The following table sets forth, as of
March 31, 2009 and 2008, 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 Affiliate groups 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.





March 31, 2009
                      
                      
                      March 31, 2008
                      
                      
                      % ChangeActive
                        Distributors
                      
                      
                      Master
                        Affiliates and
                        Above
                      
                      
                      Active
                        Distributors
                      
                      
                      Master
                        Affiliates and
                        Above
                      
                      
                      Active
                        Distributors
                      
                      
                      Master
                        Affiliates and
                        AboveUnited
      States
                      
                      
                      54,440
                      
                      
                      
                      7,490
                      
                      
                      
                      55,970
                      
                      
                      
                      9,400
                      
                      
                      
                      (2.7
                      )%
                      
                      
                      (20.3
                      )%Australia/New
      Zealand
                      
                      
                      2,440
                      
                      
                      
                      180
                      
                      
                      
                      2,520
                      
                      
                      
                      210
                      
                      
                      
                      (3.2
                      )
                      
                      
                      (14.3
                      )Canada
                      
                      
                      1,250
                      
                      
                      
                      110
                      
                      
                      
                      1,180
                      
                      
                      
                      130
                      
                      
                      
                      5.9
                      
                      
                      
                      (15.4
                      )Mexico
                      
                      
                      1,700
                      
                      
                      
                      200
                      
                      
                      
                      1,490
                      
                      
                      
                      190
                      
                      
                      
                      14.1
                      
                      
                      
                      5.3Europe
                      
                      
                      1,080
                      
                      
                      
                      140
                      
                      
                      
                      1,280
                      
                      
                      
                      170
                      
                      
                      
                      (15.6
                      )
                      
                      
                      (17.6
                      )Asia
                      
                      
                      7,770
                      
                      
                      
                      880
                      
                      
                      
                      7,270
                      
                      
                      
                      720
                      
                      
                      
                      6.9
                      
                      
                      
                      22.2Consolidated
      total
                      
                      
                      68,680
                      
                      
                      
                      9,000
                      
                      
                      
                      69,710
                      
                      
                      
                      10,820
                      
                      
                      
                      (1.5
                      )%
                      
                      
                      (16.8
                      )%





In the United States, net sales were
down 13.4% in the first quarter of 2009 compared to the same period in
2008.   Sales in the United States are being adversely impacted
by a few factors.  First, we believe the credit problems in the U.S.
financial markets continue to play a role in our sales decline.  In
addition to the direct impact on sales, we believe the issues in credit
availability are directly related to the lower number of distributors qualifying
for the level of Master Affiliate.  In the first quarter of 2009,
approximately 753 distributors qualified as new Master Affiliates, compared to
approximately 1,215 in the prior-year quarter, a decline of 38%.  In
addition, the net number of Master Affiliates and above as of March 31, 2009
decreased by 20.3%, as compared to the net number of Master Affiliates and above
as of March 31, 2008.  This is consistent with reduced number of
distributors qualifying for the level of Master Affiliate discussed
above.   The net number of active Distributors in the United
States as of March 31, 2009 decreased by 2.7% to 54,440, compared to the number
of active Distributors as of March 31, 2008.  To help offset this, we
launched an initiative in January 2009 to increase new distributor enrollments
by offering an enrollment fee of $20, half of the normal $39.95
fee.  As a result, new distributor enrollments increased in the first
quarter of 2009 to 6,127 compared to 4,910 in the prior year quarter, an
increase of 24.8%.  Distributor retention was 61.9% for the first
three months of 2009 compared to a rate of 64.7% for all of
2008.   We continue to structure our distributor training to help
distributors reach the Master Affiliate level as quickly as possible, as we
believe that is a key in their potential for long-term success.


9





In the
first quarter of 2009, we processed approximately 69,770 orders in the U.S. for
products at an average order of $396 at suggested retail.  In the same
period of 2008, we processed approximately 75,680 product orders at an average
order of $427 at suggested retail.  The average order size for all of
2008 was $388 at suggested retail.   This decline in the average
order size is another indicator of the reduced credit availability and the lower
numbers of distributors reaching the Master Affiliate level.





During the three months ended March 31,
2009, net sales in our international operations decreased in aggregate by 32.8%
to $2.41 million compared to $3.59 million for the three months ended
March 31, 2008.  Sales results were down in our foreign markets during
the first quarter of 2009.   Nearly half of the decline was the
result of foreign currency fluctuation in the form of a stronger U.S.
dollar.  When net sales are converted using the 2008 exchange rate for
both 2008 and 2009, international net sales decreased by 16.2% for the first
quarter of 2009 compared to the first quarter of the prior
year.  Sales in all of our foreign markets are being similarly
impacted for many of the same reasons as in the United States.  Our
half-price distributor enrollment initiative has been implemented in nearly all
of our foreign markets.  Sales in the Australia/New Zealand market
were less impacted by these issues as sales on a constant currency basis were
down only 5.6%.  We rolled out our current meal replacement/appetite
suppressant product line in this market in February 2009, marketed under the
name, Slimsimply, in this region.  Other regional sales results on a
constant currency basis for the first quarter of 2009 compared to the first
quarter of 2008 were as follows:  Canada net sales down 9.6%, Mexico
net sales down 5.9%, European sales down 22.9%, and Asian sales down
24.1%.





Cost of Products Sold.Cost
of products sold as a percentage of net sales was 19.2% for the three-month
period ended March 31, 2009, compared to 17.1% for the same period in
2008.  Gross margins were impacted in the first quarter of 2009
compared to the same period of 2008 by raw material price increases and higher
freight costs.  Lower plant utilization also continues to have a
negative impact on cost of products sold.





Distributor Royalties and
Commissions.Distributor royalties and commissions as a
percentage of net sales were 37.6% for the three-month period ended March 31,
2009, compared to 39.4% for the same period in 2008.  The decrease as
a percentage of net sales is the result of changes made to our commission payout
structure on our newest product, GlucAffect, and certain other higher priced
products in our line.





Selling, General and Administrative
Expenses.For the three months ended March 31, 2009, selling, general and
administrative, or SGA, expenses decreased by $1.3 million, compared to the same
period in 2008. SGA expenses as a percentage of net sales were 36.2% for the
three-month period ended March 31, 2009, compared to 35.1% for the same period
of 2008.





Sales and marketing expenses decreased
by approximately $705,000 in the first quarter of 2009, compared to the prior
year quarter.  The decrease is comprised of lower bonuses and expenses
directly related to the level of sales and a reduction in the amount spent on
company-sponsored business opportunity meetings and other special events, as we
restructured our schedule of major distributor events to include a nationwide
distributor conference held in the United States in February 2009 in Ft. Worth,
Texas.  We anticipate a higher level of company-sponsored meetings in
the second quarter of 2009.





Distribution
and warehouse expenses decreased by $51,000 and general and administrative
expenses decreased by approximately $559,000 in the first quarter of 2009,
compared to the prior year quarter.  The decrease in general and
administrative expenses consists primarily of reductions in professional fees,
corporate travel expenses, salaries, and incentive compensation.





Interest Income/Expense.Interest income decreased to $21,000 for the three months ended March 31,
2009, compared to $135,000 for the same period in 2008.  The decrease
is the result of a lower level of invested funds.  We incurred $10,000
in interest expense during the first quarter of 2009, on promissory notes
related to the purchase of our common stock from a significant shareholder
during the fourth quarter of 2008.


10





Income Taxes.We recorded
income tax expense of $671,000 for the first three months of 2009, an
effective rate of 39.9%. In the same period in 2008, we recorded income tax
expense of $956,000, which represented an effective rate of
38.5%.  Our effective rate is higher in 2009 due to higher effective
state income taxes.





Net Income.Our net income
for the three months ended March 31, 2009 was $1.0 million ($0.07 per share
basic and diluted), compared to $1.5 million ($0.10 per share basic
and diluted) for the same period in 2008. Profitability decreased in the first
quarter of 2009 as net sales decreased in the United States and across our
international markets as discussed above.





Financial
Condition, Liquidity and Capital Resources





During the first three months of 2009,
we generated $2.8 million of net cash from operating activities, $343,000
was provided by investing activities, and we used $583,000 in financing
activities. This compares to $3.2 million of net cash provided by operating
activities and $1.3 million used in investing activities in the same period
of 2008. Cash and cash equivalents increased by $2.5 million to
$7.0 million as of March 31, 2009 compared to December 31,
2008.





Significant
changes in working capital items consisted of a decrease in accounts and notes
receivable of $252,000, an increase in inventories of $485,000, an increase in
prepaid expenses/other current assets of $316,000, an increase in accounts
payable and accrued expenses of $1.6 million, an increase in other assets of
$252,000, and a net increase in income taxes payable of $652,000 in the first
three months of 2009.  Accounts and notes receivable decreased due to
collections on VAT refunds in Mexico and credits applied to distributor accounts
on sales taxes.  The increase in inventory is a result of lower than
expected sales levels, compared to scheduled production, coupled with the timing
of receipts of raw materials for April’s production.  The increase in
prepaid expenses/other current assets represents the annual premium payments
made in the first quarter on most of the corporate insurance
policies.  The increase in accounts payable and accrued expenses is
partially related to the increase in inventory, a financing arrangement for our
annual corporate insurance policy renewals, coupled with various annual
accruals.  The change in other assets is due to payments made on
various officer life insurance policies.  The net increase in income
taxes payable is the result of our increase in net income compared to the fourth
quarter of 2008, coupled with the timing of estimated tax payments





Investing
activities during the first three months of 2009 consisted of $146,000 for
capital expenditures, along with proceeds of $489,000 from the final withdrawal
in a limited partnership investment.





Stockholders’ equity increased to
$17.0 million at March 31, 2009 compared with $16.1 million at
December 31, 2008. The increase is due to our net income during the first
three months of 2009 of $1.0 million, offset by a decrease in the cumulative
foreign currency translation adjustment.  Our working capital balance
was $7.0 million at March 31, 2009 compared to $6.2 million at
December 31, 2008. The current ratio at March 31, 2009 was 1.79 compared to
1.85 at December 31, 2008.





We also
have a $5 million secured revolving credit facility with our primary lender
that we renewed in September 2008. This facility expires in September 2009, and
any advances accrue interest at a variable interest rate based on LIBOR. The
credit facility is secured by all of our assets. The facility includes covenants
to maintain total stockholders’ equity of not less than $10.5 million, and
that the ratio of borrowings under the facility to EBITDA shall not exceed 3.5
to 1.0. At March 31, 2009, we had no outstanding borrowings on the
revolving line of credit facility and were in compliance with the minimum
stockholders’ equity covenant.  In late April 2009, we drew $5 million
on this facility as part of a stock purchase described in Note 5 to the
unaudited Consolidated Financial Statements.





We
intend to restructure this debt in the form of a long-term bank loan within the
next 30 days, coupled with a revised revolving line of credit facility, and
therefore, we believe that our internally generated funds coupled with the
expected restructured bank loan facilities will be sufficient to meet working
capital requirements for the remainder of 2009.


11


Critical Accounting
Policies





A summary of our critical accounting
policies and estimates is presented on pages 39-42 of our 2008 Annual Report on
Form 10-K filed with the Securities and Exchange Commission on March 13,
2009.





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 freestanding 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.   However, as the value of Canadian dollar versus the
U.S. dollar declined during the 4th quarter
of 2008 and into 2009, we did not enter into any contracts, and therefore, we
hold no foreign exchange contracts for Canadian dollars or for any other foreign
currencies for any of the other countries in which we do business as of March
31, 2009.





There
have been no other material changes in market risk exposures during the first
three months of 2009 that affect the disclosures presented in Item 7A –
“Quantitative and Qualitative Disclosures Regarding Market Risk” on pages 42 and
43 of our 2008 Annual Report on Form 10-K filed with the Securities and Exchange
Commission on March 13, 2009.





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 March 31, 2009.  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 March 31, 2009, 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 first quarter of 2009 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 2008
Annual Report on Form 10-K filed with the Securities and Exchange Commission on
March 13, 2009.


12


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





ISSUER
PURCHASES OF EQUITY SHARES





Period
              
              Total Number
                of Shares
                Purchased
              
              
              Average Price
                Paid per Share
              
              
              Total Number of Shares
                Purchased as Part of
                Publicly Announced
                Programs
              
              
              Approximate Dollar
                Value of Shares that
                May Yet Be Purchased
                Under the Plans or
                Programs(1)January
      1-31, 2009
              
              
              3,000
              
              
              $
              4.71
              
              
              
              3,000
              
              
              $
              11,991,000February
      1-28, 2009
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              $
              11,991,000March
      1-31, 2009
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              $
              11,991,000Total
              
              
              3,000
              
              
              
              
              
              
              
              3,000





(1)
            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





ExhibitNumber
                    
                    Document31.1
                    
                    Certification
      of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a)
      of the Securities
      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 the Securities
      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).


13


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 OfficerDate:  May
      11, 2009By:
                /s/ Steven D. AlbrightSteven
      D. Albright, Chief Financial Officer (and accounting
    officer)Date:  May
      11, 2009





14




Exhibit
Index





ExhibitNumber
                    
                    Document31.1
                    
                    Certification
      of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a)
      of the Securities
      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 the Securities
      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).