Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2015 | Aug. 11, 2015 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | FOREVERGREEN WORLDWIDE CORP | |
Entity Central Index Key | 1,091,983 | |
Trading Symbol | fvrg | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 23,596,951 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2015 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q2 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 518,390 | $ 580,522 |
Restricted cash | 1,420,066 | 589,449 |
Accounts receivable, net | 1,627,462 | 530,509 |
Member advances | 559,607 | 381,500 |
Prepaid expenses and other assets | 518,325 | 644,189 |
Inventory | 1,782,354 | 2,017,263 |
Total Current Assets | 6,426,204 | 4,743,432 |
PROPERTY AND EQUIPMENT, net | 3,103,946 | 2,565,003 |
OTHER ASSETS | ||
Deposits and other assets | 190,532 | 208,795 |
Intangible assets | 144,918 | 192,403 |
Total Other Assets | 335,450 | 401,198 |
TOTAL ASSETS | 9,865,600 | 7,709,633 |
CURRENT LIABILITIES | ||
Bank overdraft | 13,188 | 93,701 |
Accounts payable | 2,314,864 | 1,442,349 |
Accrued expenses | 4,359,571 | 4,879,172 |
Deferred Revenue | 524,958 | 171,885 |
Notes payable, related parties | 922,478 | 922,478 |
Convertible notes, related parties | 245,000 | 245,000 |
Convertible notes payable, unrelated parties | 1,221,756 | 331,756 |
Total Current Liabilities | 9,601,815 | 8,086,341 |
TOTAL LIABILITIES | $ 9,601,815 | $ 8,086,341 |
COMMITMENTS AND CONTINGENCIES | ||
STOCKHOLDERS' EQUITY (DEFICIT) | ||
Preferred stock; no stated par value; authorized 10,000,000 shares; no shares issued or outstanding | ||
Common stock, par value $0.001 per share; authorized 100,000,000 shares; 25,342,285 and 23,596,951 shares issued and outstanding, respectively | $ 25,342 | $ 23,597 |
Additional paid-in capital | 35,897,945 | 34,263,045 |
Accumulated other comprehensive income (loss) | (329,175) | (444,442) |
Accumulated deficit | (35,330,327) | (34,218,908) |
Total Stockholders' Equity (Deficit) | 263,785 | (376,708) |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | $ 9,865,600 | $ 7,709,633 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Unaudited) (Parentheticals) - $ / shares | Jun. 30, 2015 | Dec. 31, 2014 |
Statement of Financial Position [Abstract] | ||
Preferred stock, no stated par value (in dollars per share) | ||
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 25,342,285 | 23,596,951 |
Common stock, shares outstanding | 25,342,285 | 23,596,951 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Income Statement [Abstract] | ||||
REVENUES, net | $ 16,079,017 | $ 14,127,840 | $ 33,277,957 | $ 24,664,242 |
COST OF SALES, net | 4,039,543 | 2,894,508 | 8,232,744 | 5,453,513 |
GROSS PROFIT | 12,039,474 | 11,233,332 | 25,045,213 | 19,210,729 |
OPERATING EXPENSES | ||||
Sales and marketing | 7,890,203 | 7,430,651 | 16,078,464 | 12,450,697 |
General and administrative | 5,140,899 | 3,314,984 | 9,384,743 | 5,946,422 |
Depreciation and amortization | 181,486 | 75,337 | 343,307 | 134,249 |
Total Operating Expenses | 13,212,588 | 10,820,972 | 25,806,514 | 18,531,368 |
NET OPERATING INCOME (LOSS) | (1,173,114) | 412,360 | (761,301) | 679,361 |
OTHER INCOME (EXPENSE) | ||||
Interest expense | $ (81,897) | $ (70,407) | $ (139,216) | $ (145,258) |
Gain on conversion of convertible notes payable | ||||
Gain on settlement of liability | $ 114,398 | $ 114,398 | ||
Other Income (Expense) | $ (191,786) | (1,495) | $ (210,902) | (12,594) |
Total Other Income (Expense) | (273,683) | 42,496 | (350,118) | (43,454) |
Income (loss) from continuing operations before income tax provision | $ (1,446,797) | $ 454,856 | $ (1,111,419) | $ 635,907 |
Income Tax Benefit | ||||
NET INCOME (LOSS) | $ (1,446,797) | $ 454,856 | $ (1,111,419) | $ 635,907 |
BASIC AND DILUTED LOSS PER COMMON SHARE (in dollar per share) | $ (0.06) | $ 0.02 | $ (0.05) | $ 0.03 |
BASIC WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING (in shares) | 23,991,778 | 20,852,141 | 24,385,233 | 20,548,274 |
DILUTED WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING (in shares) | 23,991,778 | 21,866,023 | 24,385,233 | 21,562,156 |
COMPREHENSIVE INCOME (LOSS) A Summary of the components of other comprehensive income (loss) for the periods ended June 30, 2015 and 2014 are as follows: | ||||
Net Income | $ (1,446,797) | $ 454,856 | $ (1,111,419) | $ 635,907 |
Other Comprehensive Income (Loss) - foreign currency translation | 146,615 | (3,806) | 115,266 | (16,501) |
Comprehensive Income (Loss) | $ (1,300,182) | $ 451,050 | $ (996,153) | $ 619,406 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income (loss) | $ (1,111,419) | $ 635,907 |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | $ 337,580 | 134,249 |
Changes in operating assets and liabilities: | ||
Gain on settlement of liabilities | (114,398) | |
Restricted cash | $ (830,617) | |
Accounts receivable | (1,278,558) | (824,751) |
Prepaid expenses | 101,850 | (594,285) |
Deposits and other assets | 27,827 | (150,067) |
Inventory | 217,766 | (187,865) |
Accounts payable | 919,480 | 244,939 |
Deferred revenue | 324,955 | (162,542) |
Accrued expenses | (552,009) | (43,025) |
Net Cash Used in Operating Activities | $ (1,843,145) | (1,061,838) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Cash paid for intangibles | (1,510) | |
Purchases of property and equipment | $ (826,262) | (952,435) |
Net Cash Used in Investing Activities | (826,262) | (953,945) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds (Payments) from bank overdraft | $ (93,701) | 258,598 |
Payments on notes payable | (17,220) | |
Payments on convertible notes payable | (100,000) | |
Proceeds from convertible notes payable | $ 1,000,000 | |
Proceeds from common stock issuance | 1,490,000 | 2,000,000 |
Net Cash Provided by Financing Activities | 2,396,299 | 2,141,378 |
Effect of Foreign Currency on Cash | 210,976 | (4,140) |
NET INCREASE (DECREASE) IN CASH | (62,132) | 121,455 |
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 580,522 | 284,741 |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | 518,390 | 406,196 |
SUPPLEMENTAL CASH FLOW INFORMATION | ||
Cash paid for interest | $ 81,898 | $ 145,258 |
Cash paid for income taxes | ||
NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||
Common stock issued for convertible notes payable | $ 636,645 |
CONDENSED CONSOLIDATED FINANCIA
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS | 6 Months Ended |
Jun. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS | The accompanying consolidated financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows as of and for the period ended June 30, 2015 and for all periods presented have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s December 31, 2014 audited financial statements as reported in its Form 10-K. The results of operations for the six-month period ended June 30, 2015 are not necessarily indicative of the operating results for the full year ended December 31, 2015. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2015 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying consolidated financial statements are prepared on the basis of accounting principles generally accepted in the United States of America. Principles of Consolidation The consolidated balance sheets and statement of operations at June 30, 2015 include the books of ForeverGreen Worldwide Corporation (Nevada) and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in the consolidation. During the period ended June 30, 2015, the Company formed ForeverGreen Peru S.A.C., a wholly owned subsidiary. Foreign Currency Translation The Company’s functional currency is recorded in various currencies, corresponding to the various foreign subsidiaries and its reporting currency is the United States dollar. Management has adopted ASC 830-20, “Foreign Currency Matters – Foreign Currency Transactions.” All assets and liabilities denominated in foreign currencies are translated using the exchange rate prevailing at the balance sheet date. For revenues and expenses, the weighted average exchange rate for the period is used. Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in other comprehensive loss. Use of Estimates The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Fair Value of Financial Instruments The carrying amounts reported in the balance sheets for accounts receivable, accounts payable and accrued liabilities approximate fair value because of the immediate or short-term nature of these financial instruments. The carrying amounts reported for notes payable approximate fair value because the underlying instruments are at interest rates which approximate current market rates. Basic and Diluted Loss Per Share Basic loss per share is computed by dividing net loss by the weighted-average number of common shares outstanding during the period. Diluted loss per share is computed by dividing net loss by the weighted-average number of common shares and dilutive potential common shares outstanding during the period. Such potentially dilutive shares are excluded when the effect would be anti-dilutive. Our potentially dilutive shares from convertible notes payable in the amount of 4,083,403 were excluded as of June 30, 2015. Revenue Recognition Revenues and costs of revenues are recognized during the period in which the products are provided. The Company applies the provisions of FASB Accounting Standards Codification (“ASC”) 605-10, Revenue Recognition in Financial Statements ASC 605-10, which provides guidance on the recognition, presentation, and disclosure of revenue in financial statements filed with the SEC. ASC 605-10 outlines the basic criteria that must be met to recognize revenue and provides guidance for disclosure related to revenue recognition policies. In general, the Company recognizes revenue for sale of products when (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred, (iii) the fee is fixed or determinable, and (iv) collectability is reasonably assured. The Company’s source of revenue is from the sale of various food and other natural products. The Company recognizes the sale upon shipment of such goods. The Company offers a 100% satisfaction guarantee against defects for 30 days after the sale of their product except for a few circumstances. The Company extends this return policy to its members for a 30 day period and the consumer has the same return policy in effect against the member. All conditions of ASC 605-10 are met and the revenue is recorded upon sale, with an estimated allowance for returns where material. Inventory Inventory is recorded at the lower of cost or market and valued on a first-in, first-out basis. Inventory consists primarily of consumable food products and ingredients. Food products are discarded as they reach the expiration dates because the food products are made with natural foods containing a minimum of preservatives. Non-food products are reviewed periodically to determine any obsolescence and a reserve is booked when appropriate. The products have expiration dates that range from 3 months on some of the food products to 2 years for non-food products. On June 30, 2015 and December 31, 2014, the reserve for obsolete inventory had balances in the amount of $40,000 and $40,000, respectively. This allowance is due to receiving some defective inventory. Accounts Receivable and Member Advances Accounts receivable arise from doing business with third party distributor centers in various locations throughout South America and Korea. The accounts receivable are made up of fees owed by the distribution centers to the Company for the right to do business in our name. The Company evaluates the need for an allowance for doubtful accounts when it is determined that collection amounts owed is unlikely. No allowance has been recorded at June 30, 2015 or at December 31, 2014. Members are required to pay for products prior to shipment. Members typically pay for products in cash, by wire transfer or by credit card. Accordingly, the Company seldom carries accounts receivable from members that are not distribution centers and any balances carried would be minimal. As a business growth incentive, the Company advanced $559,607 to new Members to assist them with building their businesses. No allowance has been recorded for uncollectable advances. Valuation of Long-lived Assets In accordance with ASC 360-10, the carrying values of the Company’s long-lived assets are reviewed for impairment annually and whenever events or changes in circumstances indicate that they may not be recoverable. The Company records impairment of long-lived assets to be held and used or to be disposed of when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the carrying amount. The Company’s assessment of events and circumstances indicated that an analysis for impairment of long-lived assets as of June 30, 2015 was not needed. Intangible Assets Intangible assets consist of patent costs, trademark costs and the customer base. Patent costs are costs incurred to develop and file patent applications. Trademark costs are costs incurred to develop and file trademark applications. If the patents or trademarks are approved, the costs are amortized using the straight-line method over the estimated lives of 7 years for patents and 10 years for trademarks. Unsuccessful patent and trademark application costs are expensed at the time the application is denied. Management assesses the carrying values of long-lived assets for impairment when circumstances warrant such a review. In performing this assessment, management considers current market analysis of the technology and future cash flows. The Company recognizes impairment losses when undiscounted cash flows estimated to be generated from long-lived assets are less than the net carrying amount of intangible assets. No impairment was recognized, accordingly, during the periods ended June 30, 2015 and 2014. New Accounting Pronouncements After evaluating the recent accounting pronouncements through the date of this filing, the Company has concluded that application of these pronouncements will have no material impact on the Company’s financial results. |
DEBT
DEBT | 6 Months Ended |
Jun. 30, 2015 | |
NOTES PAYABLE [Abstract] | |
DEBT | NOTE 3 – DEBT Notes payable as of June 30, 2015 AMOUNT TYPE CONVERSION RATE PER SHARE ORIGINATION DATE INTEREST RATE DUE DATE $ 485,000 Related party (Director – controlled entity) NA 12/9/2008 10% Due on demand $ 437,478 Related party (Director) NA 7/31/2009 10% 12/31/2015 $ 45,000 Convertible, Related party (Director) .15 10/7/2010 10% 12/31/2015 $ 200,000 Convertible, Related party (Director) .20 1/19/2011 10% 12/31/2015 $ 100,000 Convertible, Non-related .20 3/14/2011 10% 12/31/2015 Notes payable as of June 30, 2015 - continued AMOUNT TYPE CONVERSION RATE PER SHARE ORIGINATION DATE INTEREST RATE DUE DATE $ 231,756 Convertible, Non-related .20 3/9/2010 10% 12/31/15 $ 890,000 Convertible Non-related .70 4/9/2015 8% 12/31/15 $ 2,389,234 Total |
MEMBER ADVANCES
MEMBER ADVANCES | 6 Months Ended |
Jun. 30, 2015 | |
Related Party Transactions [Abstract] | |
MEMBER ADVANCES | NOTE 4 – MEMBER ADVANCES The Company has advanced amounts to three Members in the amount of $559,607. The first Member’s advance amount of $365,000 is due on demand and bears a 10% compound annual interest rate. The second Member’s advance amount of $178,608 bears an 8% compound annual interest rate is to be repaid in future commissions owing to the Member up through December 31, 2015 and starting in 2016 is to be repaid in $8,000 monthly payments or 9% of future commissions, whichever is greater. The third Member’s advance of $10,000 bears an 8% compound annual interest rate and is to be repaid with future commissions. The remaining $6,000 represents amounts advanced to another member and is due on demand and bears no interest. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2015 | |
COMMITMENTS AND CONTINGENCIES [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 5 – COMMITMENTS AND CONTINGENCIES The Company has evaluated commitments and contingencies from the balance sheet date through the date the financial statements were issued and has determined that there are no such commitments and contingencies that would be a material impact on the financial statements. |
INVENTORIES
INVENTORIES | 6 Months Ended |
Jun. 30, 2015 | |
INVENTORY [Abstract] | |
INVENTORIES | NOTE 6 – INVENTORY Inventories for June 30, 2015 and December 31, 2014 were classified as follows: June 30, 2015 December 31, 2014 Raw Materials $ 1,092,739 $ 1,271,915 Finished Goods 729,615 785,348 Total Inventory 1,822,354 2,057,263 Less Reserve for Obsolete Inventory (40,000) (40,000) Total Inventory (net of reserve) $ 1,782,354 $ 2,017,263 |
COMMON STOCK
COMMON STOCK | 6 Months Ended |
Jun. 30, 2015 | |
Equity [Abstract] | |
COMMON STOCK | NOTE 7 – COMMON STOCK During May 2015, the Company authorized the issuance of 1,450,000 restricted shares to an escrow account. The shares in escrow are held as collateral against the convertible note payable (balance at June 30, 2015 of $890,000) entered into during April 2015 (Note 3). Because the shares are considered to be contingently issued shares they were not included in the reported outstanding share balance or in the calculation of EPS as of June 30, 2015. During May 2015, a non-related party converted a note payable in the amount of $630,000 in principle and $6,645 in accrued interest into 910,000 shares of the escrowed common stock described in the previous paragraph. On May 27, 2015, the Company entered into an Agreement with a third party to sell up to 2,500,000 shares of common stock. The third party was to purchase $1,000,000 of stock upon execution of the agreement and was to purchase an additional $2,000,000 of stock, conditioned upon the Company entering into a joint venture agreement with an affiliate of the third party by June 30, 2015. Pursuant to the agreement, 835,334 shares of stock were purchased by a non-related party at $1.20 per share for total cash proceeds of $1,000,000. The Company did not enter into a joint venture agreement as of June 30, 2015, or through the date of this filing and therefore has not issued any additional shares of common stock to the third party. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 6 Months Ended |
Jun. 30, 2015 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 8 – SUBSEQUENT EVENTS On July 6, 2015, the Company signed a $300,000 short term promissory note with a non-related party with an 8% interest rate and a repayment date of August 31, 2015. The note holder has the option to convert the note into common stock at a conversion rate of $1.00 per share. |
SUMMARY OF SIGNIFICANT ACCOUN14
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2015 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements are prepared on the basis of accounting principles generally accepted in the United States of America. |
Principles of Consolidation | Principles of Consolidation The consolidated balance sheets and statement of operations at June 30, 2015 include the books of ForeverGreen Worldwide Corporation (Nevada) and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in the consolidation. During the period ended June 30, 2015, the Company formed ForeverGreen Peru S.A.C., a wholly owned subsidiary. |
Foreign Currency Translation | Foreign Currency Translation The Company’s functional currency is recorded in various currencies, corresponding to the various foreign subsidiaries and its reporting currency is the United States dollar. Management has adopted ASC 830-20, “Foreign Currency Matters – Foreign Currency Transactions.” All assets and liabilities denominated in foreign currencies are translated using the exchange rate prevailing at the balance sheet date. For revenues and expenses, the weighted average exchange rate for the period is used. Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in other comprehensive loss. |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The carrying amounts reported in the balance sheets for accounts receivable, accounts payable and accrued liabilities approximate fair value because of the immediate or short-term nature of these financial instruments. The carrying amounts reported for notes payable approximate fair value because the underlying instruments are at interest rates which approximate current market rates. |
Basic and Diluted Loss Per Share | Basic and Diluted Loss Per Share Basic loss per share is computed by dividing net loss by the weighted-average number of common shares outstanding during the period. Diluted loss per share is computed by dividing net loss by the weighted-average number of common shares and dilutive potential common shares outstanding during the period. Such potentially dilutive shares are excluded when the effect would be anti-dilutive. Our potentially dilutive shares from convertible notes payable in the amount of 4,083,403 were excluded as of June 30, 2015. |
Revenue Recognition | Revenue Recognition Revenues and costs of revenues are recognized during the period in which the products are provided. The Company applies the provisions of FASB Accounting Standards Codification (“ASC”) 605-10, Revenue Recognition in Financial Statements ASC 605-10, which provides guidance on the recognition, presentation, and disclosure of revenue in financial statements filed with the SEC. ASC 605-10 outlines the basic criteria that must be met to recognize revenue and provides guidance for disclosure related to revenue recognition policies. In general, the Company recognizes revenue for sale of products when (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred, (iii) the fee is fixed or determinable, and (iv) collectability is reasonably assured. The Company’s source of revenue is from the sale of various food and other natural products. The Company recognizes the sale upon shipment of such goods. The Company offers a 100% satisfaction guarantee against defects for 30 days after the sale of their product except for a few circumstances. The Company extends this return policy to its members for a 30 day period and the consumer has the same return policy in effect against the member. All conditions of ASC 605-10 are met and the revenue is recorded upon sale, with an estimated allowance for returns where material. |
Inventory | Inventory Inventory is recorded at the lower of cost or market and valued on a first-in, first-out basis. Inventory consists primarily of consumable food products and ingredients. Food products are discarded as they reach the expiration dates because the food products are made with natural foods containing a minimum of preservatives. Non-food products are reviewed periodically to determine any obsolescence and a reserve is booked when appropriate. The products have expiration dates that range from 3 months on some of the food products to 2 years for non-food products. On June 30, 2015 and December 31, 2014, the reserve for obsolete inventory had balances in the amount of $40,000 and $40,000, respectively. This allowance is due to receiving some defective inventory. |
Accounts Receivable and Member Advances | Accounts Receivable and Member Advances Accounts receivable arise from doing business with third party distributor centers in various locations throughout South America and Korea. The accounts receivable are made up of fees owed by the distribution centers to the Company for the right to do business in our name. The Company evaluates the need for an allowance for doubtful accounts when it is determined that collection amounts owed is unlikely. No allowance has been recorded at June 30, 2015 or at December 31, 2014. Members are required to pay for products prior to shipment. Members typically pay for products in cash, by wire transfer or by credit card. Accordingly, the Company seldom carries accounts receivable from members that are not distribution centers and any balances carried would be minimal. As a business growth incentive, the Company advanced $559,607 to new Members to assist them with building their businesses. No allowance has been recorded for uncollectable advances. |
Valuation of Long-lived Assets | Valuation of Long-lived Assets In accordance with ASC 360-10, the carrying values of the Company’s long-lived assets are reviewed for impairment annually and whenever events or changes in circumstances indicate that they may not be recoverable. The Company records impairment of long-lived assets to be held and used or to be disposed of when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the carrying amount. The Company’s assessment of events and circumstances indicated that an analysis for impairment of long-lived assets as of June 30, 2015 was not needed. |
Intangible Assets | Intangible Assets Intangible assets consist of patent costs, trademark costs and the customer base. Patent costs are costs incurred to develop and file patent applications. Trademark costs are costs incurred to develop and file trademark applications. If the patents or trademarks are approved, the costs are amortized using the straight-line method over the estimated lives of 7 years for patents and 10 years for trademarks. Unsuccessful patent and trademark application costs are expensed at the time the application is denied. Management assesses the carrying values of long-lived assets for impairment when circumstances warrant such a review. In performing this assessment, management considers current market analysis of the technology and future cash flows. The Company recognizes impairment losses when undiscounted cash flows estimated to be generated from long-lived assets are less than the net carrying amount of intangible assets. No impairment was recognized, accordingly, during the periods ended June 30, 2015 and 2014. |
New Accounting Pronouncements | New Accounting Pronouncements After evaluating the recent accounting pronouncements through the date of this filing, the Company has concluded that application of these pronouncements will have no material impact on the Company’s financial results. |
DEBT (Tables)
DEBT (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
NOTES PAYABLE [Abstract] | |
Schedule of notes payable | AMOUNT TYPE CONVERSION RATE PER SHARE ORIGINATION DATE INTEREST RATE DUE DATE $ 485,000 Related party (Director – controlled entity) NA 12/9/2008 10% Due on demand $ 437,478 Related party (Director) NA 7/31/2009 10% 12/31/2015 $ 45,000 Convertible, Related party (Director) .15 10/7/2010 10% 12/31/2015 $ 200,000 Convertible, Related party (Director) .20 1/19/2011 10% 12/31/2015 $ 100,000 Convertible, Non-related .20 3/14/2011 10% 12/31/2015 AMOUNT TYPE CONVERSION RATE PER SHARE ORIGINATION DATE INTEREST RATE DUE DATE $ 231,756 Convertible, Non-related .20 3/9/2010 10% 12/31/15 $ 890,000 Convertible Non-related .70 4/9/2015 8% 12/31/15 $ 2,389,234 Total |
INVENTORIES (Tables)
INVENTORIES (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
INVENTORY [Abstract] | |
Schedule of inventories | June 30, 2015 December 31, 2014 Raw Materials $ 1,092,739 $ 1,271,915 Finished Goods 729,615 785,348 Total Inventory 1,822,354 2,057,263 Less Reserve for Obsolete Inventory (40,000) (40,000) Total Inventory (net of reserve) $ 1,782,354 $ 2,017,263 |
SUMMARY OF SIGNIFICANT ACCOUN17
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Detail Textuals) | 6 Months Ended |
Jun. 30, 2015shares | |
Convertible notes payable | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |
Number of antidilutive securities excluded from earnings per share | 4,083,403 |
SUMMARY OF SIGNIFICANT ACCOUN18
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Detail Textuals 1) | 6 Months Ended |
Jun. 30, 2015 | |
Patents | |
Finite-Lived Intangible Assets [Line Items] | |
Amortization Period (Estimated Lives) | 7 years |
Trademarks | |
Finite-Lived Intangible Assets [Line Items] | |
Amortization Period (Estimated Lives) | 10 years |
SUMMARY OF SIGNIFICANT ACCOUN19
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Detail Textuals 2) - USD ($) | 6 Months Ended | |
Jun. 30, 2015 | Dec. 31, 2014 | |
Significant Accounting Policies [Line Items] | ||
Allowance for obsolete inventory | $ 40,000 | $ 40,000 |
Member advances | $ 559,607 | $ 381,500 |
Allowance for uncollectable advances | ||
Food products | ||
Significant Accounting Policies [Line Items] | ||
Inventory, expiration period | 3 months | |
Non-food products | ||
Significant Accounting Policies [Line Items] | ||
Inventory, expiration period | 2 years |
DEBT - Summary of Notes Payable
DEBT - Summary of Notes Payable (Details) - Jun. 30, 2015 - USD ($) | Total |
Short-term Debt [Line Items] | |
NOTES PAYABLE | $ 890,000 |
Related party (Director - controlled entity) | 12/9/2008 | |
Short-term Debt [Line Items] | |
NOTES PAYABLE | $ 485,000 |
ORIGINATION DATE | Sep. 12, 2008 |
INTEREST RATE | 10.00% |
Related party (Director) | 7/31/2009 | |
Short-term Debt [Line Items] | |
NOTES PAYABLE | $ 437,478 |
ORIGINATION DATE | Jul. 31, 2009 |
INTEREST RATE | 10.00% |
DUE DATE | Dec. 31, 2015 |
Convertible, Related party (Director) | 10/7/2010 | |
Short-term Debt [Line Items] | |
NOTES PAYABLE | $ 45,000 |
CONVERSION RATE PER SHARE | $ 0.15 |
ORIGINATION DATE | Oct. 7, 2010 |
INTEREST RATE | 10.00% |
DUE DATE | Dec. 31, 2015 |
Convertible, Related party (Director) | 1/19/2011 | |
Short-term Debt [Line Items] | |
NOTES PAYABLE | $ 200,000 |
CONVERSION RATE PER SHARE | $ 0.20 |
ORIGINATION DATE | Jan. 19, 2011 |
INTEREST RATE | 10.00% |
DUE DATE | Dec. 31, 2015 |
Convertible, Non-related | 3/14/11 | |
Short-term Debt [Line Items] | |
NOTES PAYABLE | $ 100,000 |
CONVERSION RATE PER SHARE | $ 0.20 |
ORIGINATION DATE | Mar. 14, 2011 |
INTEREST RATE | 10.00% |
DUE DATE | Dec. 31, 2015 |
Convertible, Non-related | 3/9/2010 | |
Short-term Debt [Line Items] | |
NOTES PAYABLE | $ 231,756 |
CONVERSION RATE PER SHARE | $ 0.20 |
ORIGINATION DATE | Mar. 9, 2010 |
INTEREST RATE | 10.00% |
DUE DATE | Dec. 31, 2015 |
Convertible, Non-related | 4/9/2015 | |
Short-term Debt [Line Items] | |
NOTES PAYABLE | $ 890,000 |
CONVERSION RATE PER SHARE | $ 0.70 |
ORIGINATION DATE | Apr. 9, 2015 |
INTEREST RATE | 8.00% |
DUE DATE | Dec. 31, 2015 |
MEMBER ADVANCES (Detail Textual
MEMBER ADVANCES (Detail Textuals) - USD ($) | 6 Months Ended | |
Jun. 30, 2015 | Dec. 31, 2014 | |
Related Party Transaction [Line Items] | ||
Member advances | $ 559,607 | $ 381,500 |
First Member | ||
Related Party Transaction [Line Items] | ||
Member advances | $ 365,000 | |
Compound annual interest rate | 10.00% | |
Second Member | ||
Related Party Transaction [Line Items] | ||
Member advances | $ 178,608 | |
Compound annual interest rate | 8.00% | |
Monthly payment | $ 8,000 | |
Future commissions | 9.00% | |
Third Member | ||
Related Party Transaction [Line Items] | ||
Member advances | $ 10,000 | |
Compound annual interest rate | 8.00% | |
Another Member | ||
Related Party Transaction [Line Items] | ||
Member advances | $ 6,000 |
INVENTORIES - Summary of invent
INVENTORIES - Summary of inventories (Details) - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
INVENTORY [Abstract] | ||
Raw Materials | $ 1,092,739 | $ 1,271,915 |
Finished Goods | 729,615 | 785,348 |
Total Inventory | 1,822,354 | 2,057,263 |
Less Reserve for Obsolete Inventory | (40,000) | (40,000) |
Total Inventory (net of reserve) | $ 1,782,354 | $ 2,017,263 |
COMMON STOCK (Detail Textuals)
COMMON STOCK (Detail Textuals) | 1 Months Ended | 6 Months Ended | ||
May. 31, 2015USD ($)shares | May. 27, 2015USD ($)$ / sharesshares | Jun. 30, 2015USD ($) | Jun. 30, 2014USD ($) | |
Common Stock [Line Items] | ||||
Number of shares issued | shares | 835,334 | |||
Notes payable | $ 890,000 | |||
Number of shares sold | shares | 2,500,000 | |||
Value of stock issued to third party upon execution of the agreement | $ 1,000,000 | |||
Value of additional shares issued to third party | $ 2,000,000 | |||
Share price | $ / shares | $ 1.20 | |||
Cash proceeds | $ 1,000,000 | $ 1,490,000 | $ 2,000,000 | |
Notes Payable | ||||
Common Stock [Line Items] | ||||
Principle amount of note payable | $ 630,000 | |||
Accrued interest | $ 6,645 | |||
Number of shares transferred to escrow account | 910,000 | |||
Restricted Stock | ||||
Common Stock [Line Items] | ||||
Number of shares issued | shares | 1,450,000 |
SUBSEQUENT EVENTS (Detail Textu
SUBSEQUENT EVENTS (Detail Textuals) - Jul. 06, 2015 - Subsequent event - Short term promissory note - USD ($) | Total |
Subsequent Event [Line Items] | |
Short term promissory note | $ 300,000 |
Rate of interest on promissory note | 8.00% |
Repayment date | Aug. 31, 2015 |
Debt conversion, price per share | $ 1 |