Forevergreen Worldwide (FVRG) 10-Q 2018 Q3 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

 Washington, D.C. 20549

FORM 10-Q

[X]

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2018

[  ]

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: 000-26973

FOREVERGREEN WORLDWIDE CORPORATION

(Exact name of registrant as specified in its charter)

NEVADA                                                            __   _                (State or other jurisdiction of incorporation or organization)	87-0621709                                         (I.R.S. Employer Identification No.)
632 NORTH 2000 WEST, SUITE 101, LINDON, UTAH          (Address of principal executive offices)	84042        (Zip Code)

(801) 655-5500

(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 [X]   No [  ]

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).

Yes [X]    No [  ]

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

Large accelerated filer [  ] Non-accelerated filer [X] Emerging growth company [   ] Accelerated filer [  ] Smaller reporting company [X]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  [   ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [  ]   No [X]

The number of shares outstanding of the registrant’s common stock as of November 21, 2018 was 30,779,786.

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TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)	2
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations and Comprehensive Loss	4
	Condensed Consolidated Statements of Cash Flows	5
	Notes to the Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	10
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	14
Item 4.	Controls and Procedures	14

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	15
Item 1a.	Risk Factors Information	15
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	15
Item 3.	Defaults upon Senior Securities	16
Item 4.	Mine Safety Disclosures	16
Item 5.	Other Information	16
Item 6.	Exhibits	17
Signatures		18

PART I – FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

The financial information set forth below with respect to our consolidated statements of operations for the three and nine-month periods ended September 30, 2018 and 2017 is unaudited.  This financial information, in the opinion of management, includes all adjustments consisting of normal recurring entries necessary for the fair presentation of such data.  The results of operations for the three and nine-month periods ended September 30, 2018 are not necessarily indicative of results to be expected for any subsequent period.  

2

ForeverGreen Worldwide Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
				September 30, 2018		December 31, 2017
ASSETS				(Unaudited)
CURRENT ASSETS
	Cash and cash equivalents		$	119,766	$	108,112
	Restricted cash			56,976		56,976
	Accounts receivable			107,670		215,445
	Prepaid expenses and other assets			291,644		127,339
	Inventory, net			592,857		718,775
		Total Current Assets		1,168,913		1,226,647
PROPERTY AND EQUIPMENT, net				2,146,930		2,679,638
TOTAL ASSETS			$	3,315,843	$	3,906,285
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
	Accounts payable		$	1,877,587	$	2,179,096
	Accrued expenses			2,788,271		2,429,495
	Deferred revenue			22,367		14,409
	Current portion of notes payable			--		101,247
	Current portion of convertible notes payable, related parties, net			1,173,770		963,577
	Current portion of convertible notes payable			818,186		781,756
		Total Current Liabilities		6,680,181		6,469,580
LONG-TERM DEBT
	Notes payable, net of current portion			483,000		658,000
	Convertible notes payable, related parties, net of current portion			1,718,000		1,718,000
	Convertible notes payable, net of current portion			2,622,437		3,416,768
TOTAL LIABILITIES				11,503,618		12,262,348
COMMITMENTS AND CONTINGENCIES				--		--
STOCKHOLDERS' DEFICIT
	Preferred stock; no stated par value; authorized 10,000,000 shares; no shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively			--		--
	Common stock, par value $0.001 per share; authorized 100,000,000 shares; 31,779,786 shares issued and 30,779,786 outstanding at September 30, 2018 and 26,692,286 shares issued and 25,692,286 outstanding at December 31, 2017			31,780		26,692
	Additional paid-in capital			38,105,176		37,118,264
	Treasury stock			(1,000,000)		(1,000,000)
	Accumulated other comprehensive income			554,617		401,344
	Accumulated deficit			(45,879,348)		(44,902,363)
		Total Stockholders' Deficit		(8,187,775)		(8,356,063)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT			$	3,315,843	$	3,906,285
The accompanying notes are an integral part of these condensed consolidated financial statements.

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ForeverGreen Worldwide Corporation and Subsidiaries
Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited)
		Three Months Ended September 30,					Nine Months Ended September 30,
		2018		2017		2018			2017
TOTAL REVENUES, net	$	2,295,066	$	4,033,766	$	8,236,591		$	14,914,147
COST OF SALES, net		381,379		877,390		1,801,342			3,689,684
GROSS PROFIT		1,913,687		3,156,376		6,435,249			11,224,463
OPERATING EXPENSES
Sales and marketing		1,028,416		1,750,898		3,404,843			6,301,496
General and administrative		650,380		1,196,830		2,524,400			5,106,197
Depreciation and    amortization		235,205		207,449		710,321			665,518
Total Operating Expenses		1,914,001		3,155,177		6,639,564			12,073,211
OPERATING INCOME (LOSS)		(314)		1,199		(204,315)			(848,748)
OTHER INCOME (EXPENSE)
Other income (expense)		(2,359)		(44,233)		40,488			(61,387)
Gain on extinguishment		24,690		--		24,690			--
Interest expense		(293,655)		(211,470)		(837,848)			(548,589)
Total Other Income
(Expense)		(271,324)		(255,703)		(772,670)			(609,976)
Loss before income tax    provision
Income Tax Provision		--		--		--			--
NET LOSS	$	(271,638)	$	(254,504)	$	(976,985)		$	(1,458,724)
BASIC AND DILUTED LOSS PER COMMON SHARE	$	(0.01)	$	(0.01)	$	(0.04)		$	(0.05)
BASIC AND DILUTED WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING		29,071,090		26,692,285		26,830,931			26,692,285
COMPREHENSIVE LOSS
A summary of the components of other comprehensive loss for the fiscal years ended September 30, 2018 and 2017 is as follows:
Net Loss	$	(271,638)	$	(254,504)	$	(976,985)		$	(1,458,724)
Other Comprehensive       Income (Loss) foreign       currency translation		61,575		(269,134)		153,273			(1,471)
Comprehensive Loss	$	(210,063)	$	(523,638)	$	(823,712)		$	(1,460,195)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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ForeverGreen Worldwide Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
						September 30, 2018				September 30, 2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss				$		(976,985)		$		(1,458,724)
Adjustments to reconcile net loss to net cash provided (used) by operating activities:
	Depreciation					725,289				676,787
	Amortization of debt discount					282,357				147,095
	Expense paid on behalf of the Company					--				345,000
	Gain on extinguishment of convertible notes payable					(24,690)				--
Changes in operating assets and liabilities:
	Accounts receivable					107,775				76,940
	Prepaid expenses and other assets					(164,305)				146,877
	Inventory					125,918				368,574
	Accounts payable					(301,509)				(259,377)
	Deferred revenue					7,958				(49,157)
	Accrued expenses					485,466				(558,703)
		Net Cash Provided By (Used In) Operating Activities				267,274				(564,688)
CASH FLOWS FROM INVESTING ACTIVITIES:
	Purchases of property and equipment					(192,581)				(19,066)
		Net Cash Used in Investing Activities				(192,581)				(19,066)
CASH FLOWS FROM FINANCING ACTIVITIES:
	Proceeds from convertible notes payable – related parties					--				655,000
	Proceeds from convertible notes payable					130,000				300,000
	Repayments on notes payable					(276,247)				(385,423)
	Repayments on convertible notes payable					(70,065)				(86,770)
		Net Cash Provided By (Used in) Financing Activities				(216,312)				482,807
		Effect of Foreign Currency on Cash				153,273				(1,471)
NET CHANGE IN CASH						11,654				(102,418)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD						108,112				187,136
CASH AND CASH EQUIVALENTS AT END OF PERIOD				$		119,766		$		84,718
SUPPLEMENTAL CASH FLOW INFORMATION
	Cash paid for interest		$		67,644		$		86,186
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Beneficial conversion feature			$		--		$		734,603
Extinguishment of convertible notes			$		--		$		1,908,826
Extinguishment of convertible notes, related parties			$		--		$		1,718,000
Conversion of convertible notes payable to common stock			$		317,000		$		--
Extinguishment of convertible notes payable to common stock			$		699,690		$		--

The accompanying notes are an integral part of these condensed consolidated financial statements.

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FOREVERGREEN WORLDWIDE CORPORATION

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

NOTE 1 – 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 three and nine-month periods ended September 30, 2018 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, 2017 audited financial statements as reported in its Form 10-K. The results of operations for the three and nine-month periods ended September 30, 2018 are not necessarily indicative of the operating results for the full year ended December 31, 2018.

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 September 30, 2018 include the books of ForeverGreen Worldwide Corporation (Nevada) and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in the consolidation.

Recognition of Revenue

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). The new revenue recognition standard provides a five-step analysis of transactions to determine when and how revenue is recognized. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

The Company’s sources of revenue are from the sale of various food and other natural product sales and royalties earned. 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. Returns are less than 2.0% of sales for both years presented. Revenues are reported net of returns. All conditions of ASC 606 are met and the revenue is recorded upon sale, with an estimated allowance for returns where material.

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.

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Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make assumptions that affect the amounts reported in the financial statements and accompanying notes. In these financial statements, assets, liabilities and earnings involve extensive reliance on management’s estimates. 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. As of September 30, 2018, there were 36,743,423 common stock equivalents from convertible notes that were excluded from the diluted EPS (earnings per share) calculation as their effect is anti-dilutive.

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.

NOTE 3 – DEBT

Notes Payable

Notes payable consisted of the following as of September 30, 2018 and December 31, 2017:

Balance December 31, 2017	$      759,247
Cash additions	--
Cash payments	(276,247)
Balance September 30, 2018	$      483,000
Less current portion September 30, 2018	--
Total long-term September 30, 2018	483,000

Convertible Notes Payable

Convertible notes payable due to non-related parties consisted of the following as of September 30, 2018 and December 31, 2017:

Balance December 31, 2017, net	$     4,198,524
Cash additions	130,000
Cash payments	(70,065)
Conversions to common stock	(890,000)
Amortization of debt discounts	72,164
Balance September 30, 2018, net	$      3,440,623
Less current portion September 30, 2018	(818,186)
Total long-term September 30, 2018	2,622,437

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On April 16, 2018 the Company issued a convertible promissory note for $75,000 to a non-related party.  The note has an interest rate of 10% and is secured by the Company’s inventory.  The principal amount of the note and all accrued interest is due and payable on or before December 31, 2018.  The note has a conversion feature for common shares at $0.08 per share.  

On June 29, 2018 the Company issued a convertible promissory note for $55,000 to a non-related party.  The note has an interest rate of 10% and is secured by the Company’s inventory.  The principal amount of the note and all accrued interest is due and payable on or before September 30, 2018.  The note has a conversion feature for common shares at $0.12 per share.

See Note 7 for details of the conversions to common stock.

Convertible Notes Payable – Related Parties

Convertible notes payable due to related parties consisted of the following as of September 30, 2018 and December 31, 2017:

Balance December 31, 2017, net	$     2,681,577
Cash additions	--
Cash payments	--
Conversions to common stock	--
Amortization of debt discounts	210,193
Balance September 30, 2018, net	$      2,891,770
Less current portion September 30, 2018	(1,173,770)
Total long-term September 30, 2018	1,718,000

NOTE 4 – COMMITMENTS AND CONTINGENCIES

The Company leases facilities and warehouses under operating leases with terms ranging from 12 months to 120 months. The total rent expense recorded during the nine-months ended September 30, 2018 was $282,902. The future annual non-cancelable operating lease payments on these leases are as follows:

Total Lease Commitments:
2018 - remaining	$	94,300
2019		330,865
2020		339,373
2021		348,106
2022		356,831
Thereafter		1,095,455
Total	$	2,564,930

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.

NOTE 5 – INVENTORY

		September 30, 2018		December 31, 2017
Raw Materials	$	285,020	$	433,463
Finished Goods		347,837		325,312
Total Inventory		632,857		758,775
Less Reserve for Obsolete Inventory		(40,000)		(40,000)
Total Inventory (net of reserve)	$	592,857	$	718,775

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NOTE 6 – GOING CONCERN

The accompanying financial statements have been prepared using generally accepted accounting principles applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business.  As reported in the accompanying consolidated financial statements, the Company has a working capital deficit of $5,511,268 and accumulated deficit of $45,879,348 at September 30, 2018, and has experienced cash flow difficulties.  These factors combined, raise substantial doubt about the Company’s ability to continue as a going concern.  Management’s plans to address and alleviate these concerns are as follows:

The Company continues to monitor its cost structure and implements cost saving measures deemed to be effective.  The Company has initiated some new marketing initiatives to stimulate growth in its monthly revenues, which combined with some new equity financing is allowing the Company to continue to invest in its expansion plan.  This plan has involved hosting a number of industry leaders who are performing their due diligence on our Company.  Additionally, we expect we will take advantage of some international expansion opportunities.  These expansion opportunities will continue to be evaluated and those which provide the best opportunity for success will be pursued on a priority basis.  New products have been and will continue to be introduced to bolster Member recruiting and sales.  Management will make improvements to the marketing plan to enhance the success that is developed.  The Company intends to seek debt and equity financing as necessary.

NOTE 7 – EQUITY

On July 25, 2018 the Company extinguished $240,000 of debt for 1,200,000 shares of common stock. The effective exercise price was $0.20 per share, resulting in a gain on extinguishment of $12,000.

On July 27, 2018 the Company extinguished $200,000 of debt for 1,000,000 shares of common stock. The effective exercise price was $0.20 per share.

On August 5, 2018 the Company extinguished $259,690 of debt for 1,300,000 shares of common stock. The effective exercise price was $0.20 per share, resulting in a gain on extinguishment of $12,690.

On August 5, 2018 the Company converted $263,500 of debt for 1,320,000 shares of common stock. The effective exercise price was $0.20 per share.

On August 10, 2018 the Company converted $53,500 of debt for 267,500 shares of commons stock. The effective exercise price was $0.20 per share.

NOTE 8 – SUBSEQUENT EVENTS

The Company has evaluated subsequent events from the balance sheet date through the date of the financial statements were issued and has determined that there are no such events that would have a material impact on the financial statements.

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In this report references to “ForeverGreen,” “the Company,” “we,” “us,” and “our” refer to ForeverGreen Worldwide Corp. and its subsidiaries.

NOTE REGARDING FORWARD LOOKING STATEMENTS

The U.S. Securities and Exchange Commission (“SEC”) encourages reporting companies to disclose forward-looking information so that investors can better understand future prospects and make informed investment decisions.  This report contains these types of statements.  Words such as “may,” “expect,” “believe,” “anticipate,” “estimate,” “project,” or “continue” or comparable terminology used in connection with any discussion of future operating results or financial performance identify forward-looking statements.  You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this report.  All forward-looking statements reflect our present expectation of future events and are subject to a number of important factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements.

ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Executive Overview

ForeverGreen Worldwide is a holding company which operates through its wholly-owned subsidiaries ForeverGreen International, LLC, Productos Naturales Forevergreen Internacional en Mexico S.A. de C.V., FVGR Colombia S.A.S., 3-101-607360 S.A. (a Costa Rican corporation), FVGR Bolivia S.R.L., ForeverGreen Peru SAC, ForeverGreen (HK) Limited (Hong Kong), Forevergreen Peru, SAC and ForeverGreen Team B.V. (Europe).

During 2017, and through the first six months of 2018, the Company completed its planned consolidation and restructuring of the Company, including reducing overhead costs, streamlining the Company's product offerings, reducing shipping costs, reduction of personnel and consolidating domestic and foreign warehouse and office spaces.  These strategies were directed to reduce overhead and debt, streamline domestic and international operations, improve distribution channels and consolidate the Company's product offerings.  While gross profits increased, we recorded a net loss for 2017, as well as through 2018.  The Company is now seeing the positive impact on the Company's model and its profitability.  As seen on these financial statements, even though the Company is bringing in substantially less revenue compared to the same period last year, the Company is showing a small profit for the quarter.

Four key differentiators separate ForeverGreen from our competitors in the direct sales and traditional consumer spaces.   One is our proprietary marine phytoplankton nutritional component which is sourced through exclusive strategic partnerships in both farming and processing. The second is our patent-pending Aqueous Molecular Partitioning (AMP™) technology which renders ingredients water-soluble without the use of chemicals or heat which may compromise the nutritional value or health benefits of many processed foods.  Third is our industry exclusive license agreement to the patented ingredients in KetonX™, the flagship product of the Ketopia weight management product line. Fourth is our unique global express model delivery method, enabling the Company to deliver a number of its products to many countries around the world both economically and efficiently.

During the coming year, ForeverGreen intends to empower a health-conscious global community with emphasis on self-care that necessitates mindfulness. To achieve this objective, the Company is strengthening its focus on its domestic and international Membership and consumer base by introducing a new and focused marketing effort on creating “The Total Health Experience”, which revolutionizes how people take care of their health by facilitating the convergence of the Company’s nutraceuticals, advanced technologies and most complete entrepreneurial opportunity.

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ForeverGreen is dedicated to its Members by continuing to give home business training and mentorship while facilitating accountability so residual income is a reality and is attractive to prospective Members. As our international markets mature, additional ForeverGreen products are expected to be introduced in each international market. We will seek relations with key vendors to continue developing innovative new products that are exclusive to our Members with opportunities that include a complete build-out of a Preferred Customer program.

Our major challenge for the next twelve months will be to respond to current economic conditions and to properly manage our systems and logistics centers around the world to support the demand for our products and business.

Results of Operations

The following chart summarizes the consolidated statements of operations of ForeverGreen Worldwide and subsidiaries for the three and nine-month periods ending September 30, 2018 and 2017.

SUMMARY OF OPERATIONS		Three-month period ended September 30,				Nine-month period ended September 30,
		(Unaudited)				(Unaudited)
		2018		2017			2018		2017
Revenues, net	$	2,295,066		4,033,766		$	8,236,591	$	14,914,147
Cost of sales		381,379		877,390			1,801,342		3,689,984
Gross profit		1,913,687		3,156,376			6,435,249		11,224,463
Selling and marketing expenses		1,028,416			1,750,898		3,404,843		6,301,496
General and administrative expenses		885,585			1,404,279		3,234,721		5,771,715
Total operating expenses		1,914,001			3,155,177		6,639,564		12,073,211
Operating income (loss)		(314)			1,199		(204,315)		(848,748)
Total other expense		(271,324)			(255,703)		(976,985)		(609,976)
Income tax provision		--			--		--		--
Net loss	$	(271,638)	$		(254,504)	$	(976,985)	$	(1,458,724)
Net loss per share both (basic) and diluted	$	(0.01)	$		(0.01)	$	(0.04)	$	(0.05)

We recognized revenues of $2,295,066 for the third quarter of 2018 compared to revenues of $4,033,766 for the third quarter of 2017. We recognized revenues of $8,236,591 for the first nine months of 2018 compared to $14,914,147 for the first nine months of 2017. Our source of revenues is from the sale of various foods, other natural products, member sign up fees, kits, and freight and handling to deliver products to the members and customers.

The Company experienced a 43% decrease in revenues for the third quarter of 2018 compared to the third quarter of 2017. The Company experienced 45% decrease in revenues for the first nine months of 2018 compared to the first nine months of 2017. Some of the cost cutting initiatives implemented resulted in a loss of revenues, but the net effect of the changes was to put the Company in a position for improved profitability.  The decrease in revenues relates to a significant decline in the number of Members placing monthly orders due to the consolidation of our international markets and a decrease in new enrolled Members.

Cost of sales consists primarily of the cost of procuring and packaging products, shipping product, and credit card sales processing fees.  Cost of sales was approximately 17% of revenues for the third quarter of 2018 compared to

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22% of revenues for the third quarter of 2017.   Cost of sales was approximately 22% of revenues for the first nine months of 2018 compared to 25% for the first nine months of 2017.  The 2018 decrease is primarily due to increased focus on our envelope products, which have lowered shipping and storage costs.

Management continues to negotiate better costs and terms with our key vendors to lower our cost of goods sold. New products have been and will continue to be introduced to bolster Member recruiting and product sales.  As the TransArmor™ technology is implemented in additional products, the Company expects the global express product mix to become a larger part of our total revenues.  With this shift to more envelope products, the Company will be able to deliver those products more inexpensively than a corresponding Farmer’s Market product.  In addition, management intends to improve our marketing plan to enhance overall profitability.  Our management will continue to scrutinize expenses related to our operating activities and order fulfillment to determine appropriate actions to take to reduce these costs.

Selling and marketing expenses include sales commissions paid to our Members, special incentives, costs for incentive trips and other rewards incentives.  For the third quarter of 2018 selling and marketing expenses increased to 45% of revenues compared to 43% for the third quarter of 2017. For the first nine months of 2018 selling and marketing expenses decreased to 41% of revenues compared to 42% of revenues in 2017. Selling and marketing expenses are computed from the commission structure for the product sold and the commission tier the member receiving the commission is in.

General and administrative expense (inclusive of depreciation and amortization) increased as a percentage of revenues to 39% in the third quarter of 2018 from 35% in the third quarter of 2017.  General and administrative expenses (inclusive of depreciation and amortization) remained the same as a percentage of revenues at 39% for the first nine months of 2018 from 39% during the same period in 2017.

Total other expenses increased in the third quarter of 2018 compared to the third quarter of 2017 by $15,621.   The total other expenses increased for the first nine months of 2018 compared to the same period in 2017 increased by $162,694. The increase is due to amortization of the debt discounts recorded in interest expense in 2018 compared to 2017 and the costs of converting the debt to equity

Liquidity and Capital Resources

SUMMARY OF BALANCE SHEET		September 30, 2018		December 31, 2017
		(Unaudited)
Cash and cash equivalents	$	119,766	$	108,112
Total current assets		1,168,913		1,226,647
Total assets		3,315,843		3,906,285
Total current liabilities		6,680,181		6,469,580
Total liabilities		11,503,618		12,262,348
Accumulated deficit		(45,879,348)		(44,902,363)
Total stockholders’ deficit	$	(8,187,775)	$	(8,356,063)

Our total assets decreased to $3,315,843 at September 30, 2018 from $3,906,285 at December 31, 2017. The decrease is primarily due to a $532,708 decrease in property plant, and equipment due to continued depreciation of those assets, and a $125,918 decrease in inventory to keep inventory supply in line with the lower revenues. Both of these decreases are due to the reduced revenues in 2018.

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Our total liabilities at September 30, 2018 were $11,503,618 compared to $12,262,348 at December 31, 2017.  The decrease is primarily due to the conversion and extinguishment of convertible notes payable to equity.

At September 30, 2018, the Company had cash and cash equivalents of $119,766, a working capital deficit of $5,511,268, an accumulated deficit of $45,879,348, and has experienced cash flow difficulties.  These factors combined raise substantial doubt about the Company’s ability to continue as a going concern.  Management’s plans to address and alleviate these concerns are as follows.

The Company continues to monitor its cost structure and implements cost saving measures deemed to be effective.  The Company has initiated some new marketing initiatives to stimulate growth in its monthly revenues, which combined with some new financing is allowing the Company to continue to invest in its expansion plan.  This plan has involved hosting a number of industry leaders who are performing their due diligence on our Company.  Additionally, we expect we will take advantage of some international expansion opportunities.  These expansion opportunities will continue to be evaluated and those which provide the best opportunity for success will be pursued on a priority basis.  New products have been and will continue to be introduced to bolster Member recruiting and sales.  Management will make improvements to the marketing plan to enhance the success that is developed.  The Company intends to seek debt and equity financing as necessary.

Management anticipates that future additional capital needed for cash shortfalls will be provided by either debt or equity financing.  We may pay these loans with cash, if available, or convert these loans into common stock.  Any common stock issuance likely will rely upon exemptions from registration provided by federal and state securities laws.  The purchasers and manner of issuance will be determined according to our financial needs and the available exemptions.  We also note that if we issue more shares of our common stock then our shareholders may experience dilution in the value per share of their common stock.

	Nine-month period ended September 30,
SUMMARY OF CASH FLOWS	2018	2017
Net cash provided by (used in) operating activities	267,274	(564,688)
Net cash used in investing activities	(192,581)	(19,066)
Net cash provided by (used in) financing activities	(216,312)	482,807
Effect of foreign currency on cash	153,273	(1,471)
Net change in cash	11,654	(102,418)

The net cash provided by operating activities increased by $831,962 through September of 2018 compared to the same period in 2017.  This is attributable to management’s cost cutting efforts.

Net cash used in investing activities increased by $173,515 through September of 2018 compared to the same period of 2017.  This increase is due to the increase in software capitalization.

Net cash used in financing activities increased by $699,119 through September of 2018 compared to the same period 2017.  This increase is due to the repayment of notes during 2018.

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Commitments and Obligations

The Company has an agreement with one vendor, Marine Life Sciences, LLC, that supplies 100% of the marine phytoplankton included in several top selling products.  If that vendor were to discontinue the supply of this ingredient, our sales could decrease significantly. There are other providers of that ingredient in the world, however, the Company considers this provider to have the very best quality, which is nutritionally superior to other sources of this ingredient, and has no intention of obtaining it from any other provider.  Marine Life Sciences, LLC is 50% owned by a board member.

As of September 30, 2018, the Company has $2,063,186 in debt that will be due in the next twelve months. Management anticipates it will satisfy these notes payable through increased revenues or negotiation of new payment due dates.

Off-balance Sheet Arrangements

We have not entered into any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources and would be considered material to investors.

Critical Accounting Estimates

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 did an annual analysis for the period ended December 31, 2017 and determined no adjustment to long-lived assets was needed.

The Company adjusts its inventories to lower of cost or market. Additionally, we adjust the carrying value of our inventory based on assumptions regarding future demand for our products and market conditions. If future demand and market conditions are less favorable than management’s assumptions, additional inventory write-downs could be required. Likewise, favorable future demand and market conditions could positively impact future operating results if previously written down inventories are sold. We had obsolete and slow-moving inventories which were reserved against in the amount of $40,000 at September 30, 2018.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable to smaller reporting companies.

ITEM 4.  CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Under the supervision and with the participation of our management, our Principal Executive Officer and Principal Financial Officer have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act) as of the end of the period covered by this report.  The disclosure controls and procedures ensure that all information required to be disclosed by us in the reports that we file or submit under the Exchange Act is: (i) recorded, processed, summarized and reported, within the time periods specified in the SEC’s rule and forms; and (ii) accumulated and communicated to our management as appropriate to allow timely decisions regarding required disclosure.  Based on that evaluation, management concluded that our controls were not effective as of September 30, 2018.

The material weaknesses relate to the limited number of persons responsible for the recording and reporting of financial information, the lack of separation of financial reporting duties, and the limited size of our management

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team in general. We are in the process of evaluating methods of improving our internal control over financial reporting, including the possible addition of financial reporting staff and the increased separation of financial reporting responsibility, and intend to implement such steps as are necessary and possible to correct these material weaknesses.

Notwithstanding this finding of ineffective disclosure controls and procedures, we concluded that the consolidated financial statements included in this Form 10-Q present fairly, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with accounting principles generally accepted in the United States.

Changes to Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act).  Management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the criteria set forth in “Internal Control - Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Our management has determined that there were no changes made in the implementation of our internal controls over financial reporting during the quarter ended September 30, 2018 that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting.  

PART II – OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

The Company is not aware of any material, existing or pending legal proceedings against us, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our company.

ITEM 1A.  RISK FACTORS

A smaller reporting company is not required to provide the information required by this Item.

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On July 25, 2018 the board of directors authorized the issuance of 1,200,000 shares of common stock to Liberty Partners, LLC to convert debt of $240,000.

On July 27, 2018 the board of directors authorized the issuance of 1,000,000 shares of common stock to Compass Equity Partners, LLC to convert debt of $200,000.

On August 5, 2018 the board of directors authorized the issuance of 1,300,000 shares of common stock to Empire Fund Managers, LLC to convert debt of $259,690.

On August 5, 2018 the board of directors authorized the issuance of 1,320,000 shares of common stock to Bryan Development, LLC to convert debt of $263,500.

On August 10, 2018 the board of directors authorized the issuance of 267,500 shares of common stock to Captus Global Consulting, LLC to convert debt of $53,500.

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All shares were or will be privately issued with a restrictive legend in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.  MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5.  OTHER INFORMATION

None.

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ITEM 6.  EXHIBITS

Part I Exhibits

No.	Description
31.1	Principal Executive Officer Certification
31.2	Principal Financial Officer Certification
32.1	Section 1350 Certification

Part II Exhibits

No.	Description
3(i)	Articles of incorporation, as revised (Incorporated by reference to exhibit 3.1 for Form 8-K, as amended, filed December 18, 2006)
3(ii)	Bylaws, as revised (Incorporated by reference to exhibit 3.2 for Form 8-K, as amended, filed December 18, 2006)
10.1	Lease agreement between ForeverGreen International LLC and WI Commercial West Lindon LLC, dated September 29, 2015  (Incorporated by reference to exhibit 10.1 to Form 10-Q, filed November 14, 2016)
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Label Linkbase Document.
101.PRE	XBRL Taxonomy Presentation Linkbase Document.

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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.

FOREVERGREEN WORLDWIDE CORPORATION
By:  /s/ Joseph Jensen                Joseph Jensen          Principal Executive Office
By:  /s/ Blake C. Cloward          Blake C. Cloward          Principal Financial Officer


Date:  November 23, 2018


Date:  November 23, 2018

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