Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2016 | Aug. 01, 2016 | |
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 | 25,342,285 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2016 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q2 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Jun. 30, 2016 | Dec. 31, 2015 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 181,759 | $ 495,304 |
Restricted cash | 52,923 | 62,382 |
Accounts receivable, net | 711,427 | 688,719 |
Member advances | 159,952 | 165,521 |
Other receivables | 837,410 | 43,297 |
Prepaid expenses and other assets | 436,518 | 512,023 |
Inventory | 2,779,138 | 2,027,642 |
Total Current Assets | 5,159,127 | 3,994,888 |
PROPERTY AND EQUIPMENT, net | 4,078,542 | 3,493,170 |
OTHER ASSETS | ||
Deposits and other assets | 176,470 | 195,656 |
Intangible assets | 64,277 | 97,724 |
Total Other Assets | 240,747 | 293,380 |
TOTAL ASSETS | 9,478,416 | 7,781,438 |
CURRENT LIABILITIES | ||
Bank overdraft | 95,144 | 125,482 |
Accounts payable | 3,728,804 | 3,048,537 |
Accrued expenses | 2,987,734 | 2,757,775 |
Deferred revenue | 148,803 | 87,396 |
Convertible notes payable, related parties | 245,000 | |
Convertible notes payable | 1,191,718 | 1,423,474 |
Total Current Liabilities | 8,152,203 | 7,687,664 |
LONG-TERM DEBT | ||
Convertible notes payable | 881,756 | |
Convertible notes payable, related parties | 1,746,024 | 1,501,024 |
Notes payable | 440,214 | |
Total Long-Term Debt | 3,067,994 | 1,501,024 |
TOTAL LIABILITIES | 11,220,197 | 9,188,688 |
COMMITMENTS AND CONTINGENCIES | ||
STOCKHOLDERS' 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 25,342,285 shares issued and outstanding, respectively | 25,342 | 25,342 |
Additional paid-in capital | 35,952,711 | 35,897,711 |
Accumulated other comprehensive loss | (547,705) | (490,974) |
Accumulated deficit | (37,172,129) | (36,839,329) |
Total Stockholders' Deficit | (1,741,781) | (1,407,250) |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | $ 9,478,416 | $ 7,781,438 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parentheticals) - $ / shares | Jun. 30, 2016 | Dec. 31, 2015 |
Statement of Financial Position [Abstract] | ||
Preferred stock, no stated par value (in dollars per share) | $ 0 | $ 0 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
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 | 25,342,285 |
Common stock, shares outstanding | 25,342,285 | 25,342,285 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Income Statement [Abstract] | ||||
REVENUES, net | $ 10,798,076 | $ 16,079,017 | $ 22,742,032 | $ 33,277,957 |
COST OF SALES, net | 3,015,135 | 4,039,543 | 6,908,221 | 8,232,744 |
GROSS PROFIT | 7,782,941 | 12,039,474 | 15,833,811 | 25,045,213 |
OPERATING EXPENSES | ||||
Sales and marketing | 4,056,821 | 7,890,203 | 8,874,451 | 16,078,464 |
General and administrative | 3,387,969 | 5,322,385 | 7,719,321 | 9,728,050 |
Total Operating Expenses | 7,444,790 | 13,212,588 | 16,593,772 | 25,806,514 |
NET OPERATING INCOME (LOSS) | 338,151 | (1,173,114) | (759,961) | (761,301) |
OTHER INCOME (EXPENSE) | ||||
Interest expense | (147,988) | (81,897) | (231,808) | (139,216) |
Gain on legal settlement | 698,113 | |||
Other income (expense) | (444) | (191,786) | (39,144) | (210,902) |
Total Other Income (Expense) | (148,432) | (273,683) | 427,161 | (350,118) |
Income (loss) before income taxes | 189,719 | (1,446,797) | (332,800) | (1,111,419) |
Income taxes | ||||
Net Income (Loss) | $ 189,719 | $ (1,446,797) | $ (332,800) | $ (1,111,419) |
BASIC AND DILUTED INCOME (LOSS) PER COMMON SHARE | $ 0.01 | $ (0.06) | $ (0.01) | $ (0.05) |
BASIC WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING | 25,342,285 | 23,991,778 | 25,342,285 | 24,385,233 |
DILUTED WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING | 34,994,173 | 23,991,778 | 25,342,285 | 24,385,233 |
COMPREHENSIVE INCOME (LOSS) A Summary of the components of other comprehensive income (loss) for the periods ended June 30, 2016 and 2015 are as follows: | ||||
NET INCOME (LOSS) | $ 189,719 | $ (1,446,797) | $ (332,800) | $ (1,111,419) |
Other Comprehensive Income (Loss) - foreign currency translation | (79,535) | 146,615 | (56,731) | 115,266 |
Comprehensive Income (Loss) | $ 110,184 | $ (1,300,182) | $ (389,531) | $ (996,153) |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (332,800) | $ (1,111,419) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 527,852 | 337,580 |
Amortization of beneficial conversion feature | 55,000 | |
Changes in operating assets and liabilities: | ||
Restricted cash | 9,459 | (830,617) |
Accounts receivable | (22,708) | (1,278,558) |
Prepaid expenses | 75,505 | 101,850 |
Other receivables | (794,113) | |
Member advances | 5,569 | |
Deposits and other assets | 19,186 | 27,827 |
Inventory | (751,496) | 217,766 |
Accounts payable | 652,070 | 919,480 |
Deferred revenue | 61,407 | 324,955 |
Accrued expenses | 229,959 | (552,009) |
Net Cash Used in Operating Activities | (265,110) | (1,843,145) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchases of property and equipment | (545,422) | (826,262) |
Net Cash Used in Investing Activities | (545,422) | (826,262) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from bank overdraft | (30,338) | (93,701) |
Proceeds from convertible notes payable | 850,000 | 1,000,000 |
Repayment of notes payable | (65,944) | |
Repayment of convertible notes payable | (200,000) | |
Proceeds from common stock issuance | 1,490,000 | |
Net Cash Provided by Financing Activities | 553,718 | 2,396,299 |
Effect of Foreign Currency on Cash | (56,731) | 210,976 |
NET DECREASE IN CASH | (313,545) | (62,132) |
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 495,304 | 580,522 |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | 181,759 | 518,390 |
SUPPLEMENTAL CASH FLOW INFORMATION | ||
Cash paid for interest | 154,061 | 81,898 |
Cash paid for income taxes | ||
NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||
Beneficial conversion feature | 55,000 | |
Notes payable issued for leasehold improvements | $ 506,158 |
CONDENSED CONSOLIDATED FINANCIA
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS | 6 Months Ended |
Jun. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS | 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 period ended June 30, 2016 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, 2015 audited financial statements as reported in its Form 10-K. The results of operations for the three-month and six-month period ended June 30, 2016 are not necessarily indicative of the operating results for the full year ended December 31, 2016. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2016 | |
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, 2016 include the books of ForeverGreen Worldwide Corporation (Nevada) and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in the consolidation. 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. Reclassification Certain balances in previously issued financial statements have been reclassified to be consistent with the current period presentation. Basic and Diluted Income (Loss) Per Share Basic income (loss) per share is computed by dividing net loss by the weighted-average number of common shares outstanding during the period. Diluted income (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. For the six-months ended June 30, 2016, there was 9,651,888 common stock equivalents from convertible notes that were excluded from the diluted EPS calculation as their effect is anti-dilutive. For the three-months ended June 30, 2016 there were 9,651,888 common stock equivalents from convertible notes that were included in the diluted EPS calculation. 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, 2016 and December 31, 2015, the reserve for obsolete inventory had balances in the amount of $40,000 and $40,000, respectively. Accounts Receivable and Member Advances Normally the majority of accounts receivable are sales deposits processed by third parties from the prior one to four days that have not posted to the Company’s bank account. 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. In order to increase business, the Company occasionally makes advances to new Members to assist them with building their businesses. 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, 2016 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, 2016 and 2015. 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, 2016 | |
NOTES PAYABLE [Abstract] | |
DEBT | NOTE 3 – DEBT Convertible notes payable and notes payable as of June 30, 2016 TYPE CONVERSION RATE PER SHARE ORIGINATION DATE INTEREST RATE DUE DATE BALANCE Convertible, Related party 0.68 12/01/2015 10% 12/31/2018 $ 1,501,024 Convertible, Related party 0.15 10/7/2010 10% 12/31/2017 $ 45,000 Convertible, Related party 0.20 1/19/2011 10% 12/31/2017 $ 200,000 Convertible, Non-related 0.20 3/9/2010 10% 12/31/2017 $ 231,756 Convertible, Non-related 0.20 3/14/2011 14% 12/31/2015 $ 100,000 TYPE CONVERSION RATE PER SHARE ORIGINATION DATE INTEREST RATE DUE DATE BALANCE Convertible, Non-related 0.70 02/25/2015 14% 12/31/2015 $ 891,718 Convertible, Non-related 1.00 07/06/2015 12% 08/31/2015 $ 200,000 Convertible, Non-related 0.35 05/27/2016 10% 12/31/2018 $ 500,000 Convertible, Non-related 0.35 06/23/2016 10% 12/31/2018 $ 150,000 Non-related NA 03/01/2016 4.66% 03/01/2018 $ 440,214 Total $ 4,259,712 During the period ended, March 31, 2016, the Company issued two promissory notes for $100,000 each. Both notes have an annual interest rate of 10% and are secured by the Company's inventory. The principal amount of the notes, and all accrued interest is due and payable on or before February 28, 2021. The notes have a conversion feature for common shares at $0.40 per share. Due to the fact that the trading price of our stock was greater than the stated conversion rate of this note, a total discount of $55,000 for the beneficial conversion was recorded against these notes and will be amortized against interest expense through the life of the notes. As of March 31, 2016 interest expense of $55,000 was recorded as part of the amortization of the beneficial conversion feature of these notes. Both of these notes were paid off on May 18, 2016. During the period ended, March 31, 2016, the Company issued a promissory note for $506,158 in exchange for leasehold improvements to a Company warehouse and offices. This note has an annual interest rate of 4.66%. The principal amount of the note and all accrued interest is due and payable on or before March 1, 2018. As of June 30, 2016 the Company has paid $65,944 toward the note balance, leaving a balance of $440,214 due on this note. During the period ended, June 30, 2016, the Company issued two promissory notes totaling $650,000. These notes have an annual interest rate of 10% and are secured by the Company's inventory. The principal amount of the notes and all accrued interest is due and payable on or before December 31, 2018. The notes have a conversion feature for common shares at $0.35 per share. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 4 - 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. |
INVENTORY
INVENTORY | 6 Months Ended |
Jun. 30, 2016 | |
INVENTORY [Abstract] | |
INVENTORY | NOTE 5 – INVENTORY Inventories for June 30, 2016 and December 31, 2015 were classified as follows: June 30, 2016 December 31, 2015 Raw Materials $ 1,681,527 $ 1,055,243 Finished Goods 1,137,611 1,012,399 Total Inventory 2,819,138 2,067,642 Less Reserve for Obsolete Inventory (40,000) (40,000) Total Inventory (net of reserve) $ 2,779,138 $ 2,027,642 |
LITIGATION SETTLEMENT
LITIGATION SETTLEMENT | 6 Months Ended |
Jun. 30, 2016 | |
Litigation Settlement [Abstract] | |
LITIGATION SETTLEMENT | NOTE 6 – LITIGATION SETTLEMENT On August 24, 2015, Pruvit Ventures, Inc. filed a complaint in the United States District Court, Eastern District of Texas, Sherman Division, against Axcess Global LLC (Axcess) and ForeverGreen International LLC (FGI) alleging, among other things, breach of contract and unfair competition. Both Axcess and FGI answered the complaint and asserted counterclaims against Pruvit for, among other things, patent infringement, false advertising, and misappropriation of trade secrets. Both FGI and Axcess claimed injunctive relief as well as damages in an amount to be determined. As of February 25, 2016, Axcess Global Sciences, LLC, ForeverGreen International, LLC and Pruvit Ventures, Inc. reached an agreement to settle the existing lawsuit between them. The settlement resolves all claims between all parties to the litigation. Under the settlement agreement, the parties have agreed to dismiss the pending litigation and to refrain from any statements that disparage or criticize the other. Other terms of the settlement agreement are confidential. |
GOING CONCERN
GOING CONCERN | 6 Months Ended |
Jun. 30, 2016 | |
Going Concern [Abstract] | |
GOING CONCERN | NOTE 7 – GOING CONCERN As reported in the accompanying consolidated financial statements the Company has a working capital deficit of $2,993,076 and accumulated deficit of $37,172,129 at June 30, 2016, negative cash flows from operations, and has experienced periodic 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 has reviewed its cost structure and is taking steps to implement cost saving measures deemed to be effective. This includes a reduction in labor force, restructuring of lease agreements, revised pricing of certain products to enhance sales incentives, and a marketing plan which involves more interaction with a broad scope of customers and Members. Additionally, we expect we will take advantage of limited 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 is reviewing improvements to the marketing plan which will enhance the opportunities for continued growth. The Company intends to seek debt and equity financing as necessary. Management anticipates that any future additional capital needed for cash shortfalls will be provided by debt financing. We may pay these loans with cash, if available, or convert these loans into common stock. We may also issue private placements of stock to raise additional funding. Any private placement 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. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 6 Months Ended |
Jun. 30, 2016 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 8 – SUBSEQUENT EVENTS On July 8, 2016, the Company received a $50,000 draw from its line of credit. This draw is from the same promissory note issued on May 27, 2016 with a conversion feature for common shares of $0.35 per share and has a due date of December 31, 2018. |
SUMMARY OF SIGNIFICANT ACCOUN14
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2016 | |
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, 2016 include the books of ForeverGreen Worldwide Corporation (Nevada) and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in the consolidation. |
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. |
Reclassification | Reclassification Certain balances in previously issued financial statements have been reclassified to be consistent with the current period presentation. |
Basic and Diluted Income (Loss) Per Share | Basic and Diluted Income (Loss) Per Share Basic income (loss) per share is computed by dividing net loss by the weighted-average number of common shares outstanding during the period. Diluted income (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. For the six-months ended June 30, 2016, there was 9,651,888 common stock equivalents from convertible notes that were excluded from the diluted EPS calculation as their effect is anti-dilutive. For the three-months ended June 30, 2016 there were 9,651,888 common stock equivalents from convertible notes that were included in the diluted EPS calculation. |
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, 2016 and December 31, 2015, the reserve for obsolete inventory had balances in the amount of $40,000 and $40,000, respectively. |
Accounts Receivable and Member Advances | Accounts Receivable and Member Advances Normally the majority of accounts receivable are sales deposits processed by third parties from the prior one to four days that have not posted to the Company’s bank account. 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. In order to increase business, the Company occasionally makes advances to new Members to assist them with building their businesses. |
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, 2016 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, 2016 and 2015. |
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, 2016 | |
NOTES PAYABLE [Abstract] | |
Schedule of notes payable | TYPE CONVERSION RATE PER SHARE ORIGINATION DATE INTEREST RATE DUE DATE BALANCE Convertible, Related party 0.68 12/01/2015 10% 12/31/2018 $ 1,501,024 Convertible, Related party 0.15 10/7/2010 10% 12/31/2017 $ 45,000 Convertible, Related party 0.20 1/19/2011 10% 12/31/2017 $ 200,000 Convertible, Non-related 0.20 3/9/2010 10% 12/31/2017 $ 231,756 Convertible, Non-related 0.20 3/14/2011 14% 12/31/2015 $ 100,000 TYPE CONVERSION RATE PER SHARE ORIGINATION DATE INTEREST RATE DUE DATE BALANCE Convertible, Non-related 0.70 02/25/2015 14% 12/31/2015 $ 891,718 Convertible, Non-related 1.00 07/06/2015 12% 08/31/2015 $ 200,000 Convertible, Non-related 0.35 05/27/2016 10% 12/31/2018 $ 500,000 Convertible, Non-related 0.35 06/23/2016 10% 12/31/2018 $ 150,000 Non-related NA 03/01/2016 4.66% 03/01/2018 $ 440,214 Total $ 4,259,712 |
INVENTORY (Tables)
INVENTORY (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
INVENTORY [Abstract] | |
Schedule of inventories | June 30, 2016 December 31, 2015 Raw Materials $ 1,681,527 $ 1,055,243 Finished Goods 1,137,611 1,012,399 Total Inventory 2,819,138 2,067,642 Less Reserve for Obsolete Inventory (40,000) (40,000) Total Inventory (net of reserve) $ 2,779,138 $ 2,027,642 |
SUMMARY OF SIGNIFICANT ACCOUN17
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Detail Textuals) - Convertible notes payable - shares | 3 Months Ended | 6 Months Ended |
Jun. 30, 2016 | Jun. 30, 2016 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Number of antidilutive securities excluded from earnings per share | 9,651,888 | |
Common stock equivalents from convertible notes included in the diluted EPS | 9,651,888 |
SUMMARY OF SIGNIFICANT ACCOUN18
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Detail Textuals 1) - USD ($) | 6 Months Ended | |
Jun. 30, 2016 | Dec. 31, 2015 | |
Significant Accounting Policies [Line Items] | ||
Reserve for obsolete inventory | $ 40,000 | $ 40,000 |
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 |
SUMMARY OF SIGNIFICANT ACCOUN19
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Detail Textuals 2) | 6 Months Ended |
Jun. 30, 2016 | |
Patents | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated lives | 7 years |
Trademarks | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated lives | 10 years |
DEBT - Summary of Notes Payable
DEBT - Summary of Notes Payable (Details) | 6 Months Ended |
Jun. 30, 2016USD ($)$ / shares | |
Short-term Debt [Line Items] | |
NOTES PAYABLE | $ 4,259,712 |
Convertible, Related party | 12/01/2015 | |
Short-term Debt [Line Items] | |
CONVERSION RATE PER SHARE | $ / shares | $ 0.68 |
ORIGINATION DATE | Dec. 1, 2015 |
INTEREST RATE | 10.00% |
DUE DATE | Dec. 31, 2018 |
NOTES PAYABLE | $ 1,501,024 |
Convertible, Related party | 10/7/2010 | |
Short-term Debt [Line Items] | |
CONVERSION RATE PER SHARE | $ / shares | $ 0.15 |
ORIGINATION DATE | Oct. 7, 2010 |
INTEREST RATE | 10.00% |
DUE DATE | Dec. 31, 2017 |
NOTES PAYABLE | $ 45,000 |
Convertible, Related party | 1/19/2011 | |
Short-term Debt [Line Items] | |
CONVERSION RATE PER SHARE | $ / shares | $ 0.20 |
ORIGINATION DATE | Jan. 19, 2011 |
INTEREST RATE | 10.00% |
DUE DATE | Dec. 31, 2017 |
NOTES PAYABLE | $ 200,000 |
Convertible, Non-related | 3/9/2010 | |
Short-term Debt [Line Items] | |
CONVERSION RATE PER SHARE | $ / shares | $ 0.20 |
ORIGINATION DATE | Mar. 9, 2010 |
INTEREST RATE | 10.00% |
DUE DATE | Dec. 31, 2017 |
NOTES PAYABLE | $ 231,756 |
Convertible, Non-related | 3/14/2011 | |
Short-term Debt [Line Items] | |
CONVERSION RATE PER SHARE | $ / shares | $ 0.20 |
ORIGINATION DATE | Mar. 14, 2011 |
INTEREST RATE | 14.00% |
DUE DATE | Dec. 31, 2015 |
NOTES PAYABLE | $ 100,000 |
Convertible, Non-related | 02/25/2015 | |
Short-term Debt [Line Items] | |
CONVERSION RATE PER SHARE | $ / shares | $ 0.70 |
ORIGINATION DATE | Feb. 25, 2015 |
INTEREST RATE | 14.00% |
DUE DATE | Dec. 31, 2015 |
NOTES PAYABLE | $ 891,718 |
Convertible, Non-related | 7/6/2015 | |
Short-term Debt [Line Items] | |
CONVERSION RATE PER SHARE | $ / shares | $ 1 |
ORIGINATION DATE | Jul. 6, 2015 |
INTEREST RATE | 12.00% |
DUE DATE | Aug. 31, 2015 |
NOTES PAYABLE | $ 200,000 |
Convertible, Non-related | 05/27/2016 | |
Short-term Debt [Line Items] | |
CONVERSION RATE PER SHARE | $ / shares | $ 0.35 |
ORIGINATION DATE | May 27, 2016 |
INTEREST RATE | 10.00% |
DUE DATE | Dec. 31, 2018 |
NOTES PAYABLE | $ 500,000 |
Convertible, Non-related | 06/23/2016 | |
Short-term Debt [Line Items] | |
CONVERSION RATE PER SHARE | $ / shares | $ 0.35 |
ORIGINATION DATE | Jun. 23, 2016 |
INTEREST RATE | 10.00% |
DUE DATE | Dec. 31, 2018 |
NOTES PAYABLE | $ 150,000 |
Non-related | 03/01/2016 | |
Short-term Debt [Line Items] | |
ORIGINATION DATE | Mar. 1, 2016 |
INTEREST RATE | 4.66% |
DUE DATE | Mar. 1, 2018 |
NOTES PAYABLE | $ 440,214 |
DEBT (Detail Textuals)
DEBT (Detail Textuals) | 1 Months Ended | 6 Months Ended |
Mar. 31, 2016USD ($)Promissory_Note$ / shares | Jun. 30, 2016USD ($)Promissory_Note$ / shares | |
Short-term Debt [Line Items] | ||
Notes payable | $ 4,259,712 | |
Amortization of beneficial conversion feature | 55,000 | |
Repayment of notes payable | 65,944 | |
Notes payable | $ 440,214 | |
Convertible promissory notes | Due and payable on or before February 28, 2021 | ||
Short-term Debt [Line Items] | ||
Number of promissory notes | Promissory_Note | 2 | |
Notes payable | $ 100,000 | |
Rate of interest on promissory note | 10.00% | |
Conversion rate per share (in dollars per share) | $ / shares | $ 0.40 | |
Total discount for beneficial conversion feature | $ 55,000 | |
Amortization of beneficial conversion feature | 55,000 | |
Convertible promissory notes | Due and payable on or before March 1, 2018 | ||
Short-term Debt [Line Items] | ||
Notes payable | $ 506,158 | |
Rate of interest on promissory note | 4.66% | |
Convertible promissory notes | Due and payable on or before December 31, 2018 | ||
Short-term Debt [Line Items] | ||
Number of promissory notes | Promissory_Note | 2 | |
Notes payable | $ 650,000 | |
Rate of interest on promissory note | 10.00% | |
Conversion rate per share (in dollars per share) | $ / shares | $ 0.35 |
INVENTORY - Summary of inventor
INVENTORY - Summary of inventories (Details) - USD ($) | Jun. 30, 2016 | Dec. 31, 2015 |
INVENTORY [Abstract] | ||
Raw Materials | $ 1,681,527 | $ 1,055,243 |
Finished Goods | 1,137,611 | 1,012,399 |
Total Inventory | 2,819,138 | 2,067,642 |
Less Reserve for Obsolete Inventory | (40,000) | (40,000) |
Total Inventory (net of reserve) | $ 2,779,138 | $ 2,027,642 |
GOING CONCERN (Detail Textuals)
GOING CONCERN (Detail Textuals) - USD ($) | Jun. 30, 2016 | Dec. 31, 2015 |
Going Concern [Abstract] | ||
Working capital deficit | $ (2,993,076) | |
Accumulated deficit | $ (37,172,129) | $ (36,839,329) |
SUBSEQUENT EVENTS (Detail Textu
SUBSEQUENT EVENTS (Detail Textuals) - Subsequent event | Jul. 08, 2016USD ($)$ / shares |
Subsequent Event [Line Items] | |
Proceeds from lines of credit | $ | $ 50,000 |
Debt conversion, price per share | $ / shares | $ 0.35 |