On August 22, 2014, RBC Life Sciences Inc. entered into a two-year exclusive distributorship agreement effective as of August 1, 2014 with Coral Club International, Inc. This Agreement replaces a ten-year exclusive distributorship agreement between the parties that automatically renewed for a one-year term following expiration of the initial term on July 1, 2014. CCI is the company's principal licensee and accounted for virtually all of the company's licensees' net sales in the six months ended June 30, 2014 and 2013, respectively. Pursuant to the Agreement, CCI's exclusive territory includes Russia and other countries located primarily in Europe and Central Asia, which represents an expansion of the territory set out in the Former Agreement.

In consideration of the rights granted to CCI under the Agreement, CCI is required to purchase certain minimum amounts of products from the Company each year, which minimum amounts are consistent with the Former Agreement. Under the Former Agreement, CCI was required to pay the company a monthly royalty calculated as a percentage of its sales of the company's products. Under the Agreement, in lieu of a royalty, the prices at which products are sold to CCI were marked up as of the effective date of the Agreement to include the royalty so that no additional royalty will be due upon the sale of the company's products by CCI.

To affect the transition of royalty calculations under the Former Agreement and the Agreement, the company will recognize on a one-time basis royalty revenue of approximately $476,000 in the third quarter of 2014.