Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Sep. 30, 2014 | Nov. 07, 2014 | |
Document And Entity Information | ' | ' |
Entity Registrant Name | 'Youngevity International, Inc. | ' |
Entity Central Index Key | '0001569329 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 30-Sep-14 | ' |
Amendment Flag | 'false | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Is Entity a Well-known Seasoned Issuer? | 'No | ' |
Is Entity a Voluntary Filer? | 'No | ' |
Is Entity's Reporting Status Current? | 'Yes | ' |
Entity Filer Category | 'Smaller Reporting Company | ' |
Entity Common Stock, Shares Outstanding | ' | 389,974,837 |
Document Fiscal Period Focus | 'Q3 | ' |
Document Fiscal Year Focus | '2014 | ' |
Condensed_Consolidated_Balance
Condensed Consolidated Balance Sheets (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Current Assets: | ' | ' |
Cash and cash equivalents | $5,375,000 | $4,320,000 |
Accounts receivable, due from factoring company | 1,144,000 | 1,051,000 |
Accounts receivable, trade | 36,000 | 76,000 |
Inventory | 11,302,000 | 5,973,000 |
Prepaid expenses and other current assets | 3,455,000 | 1,209,000 |
Total current assets | 21,312,000 | 12,629,000 |
Property and equipment, net | 9,646,000 | 4,669,000 |
Intangible assets, net | 14,380,000 | 11,532,000 |
Goodwill | 6,323,000 | 6,023,000 |
Total | 51,661,000 | 34,853,000 |
Current Liabilities: | ' | ' |
Accounts payable | 6,277,000 | 2,764,000 |
Accrued distributor compensation | 3,857,000 | 2,711,000 |
Accrued expenses | 1,379,000 | 1,238,000 |
Deferred revenues | 5,180,000 | 3,308,000 |
Other current liabilities | 390,000 | 148,000 |
Capital lease payable, current portion | 47,000 | 95,000 |
Notes payable, current portion | 228,000 | 245,000 |
Warrant derivative liability | 3,970,000 | ' |
Contingent acquisition debt, current portion | 2,715,000 | 1,072,000 |
Total current liabilities | 24,043,000 | 11,581,000 |
Capital lease payable, net of current portion | 5,000 | 27,000 |
Deferred tax liability | 723,000 | 723,000 |
Notes payable, net of current portion | 4,892,000 | 5,015,000 |
Convertible notes payable, net of debt discount | 158,000 | ' |
Contingent acquisition debt, net of current portion | 7,831,000 | 6,008,000 |
Total liabilities | 37,652,000 | 23,354,000 |
Youngevity International, Inc. stockholders' equity: | ' | ' |
Convertible Preferred Stock, $0.001 par value: 100,000,000 shares authorized; 211,135 shares issued and outstanding at September 30, 2014 and December 31, 2013 | ' | ' |
Common Stock, $0.001 par value: 600,000,000 shares authorized; 389,872,923 and 388,686,445 shares issued and outstanding at September 30, 2014 and December 31, 2013, respectively | 390,000 | 389,000 |
Additional paid-in capital | 167,224,000 | 165,759,000 |
Accumulated deficit | -153,125,000 | -154,281,000 |
Accumulated other comprehensive loss | -277,000 | -165,000 |
Total Youngevity International, Inc. stockholders' equity | 14,212,000 | 11,702,000 |
Noncontrolling interest | -203,000 | -203,000 |
Total equity | 14,009,000 | 11,499,000 |
Total | $51,661,000 | $34,853,000 |
Condensed_Consolidated_Balance1
Condensed Consolidated Balance Sheets (Parenthetical) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Equity: | ' | ' |
Convertible Preferred Stock, par value | $0.00 | $0.00 |
Convertible Preferred Stock, shares authorized | 100,000,000 | 100,000,000 |
Convertible Preferred Stock, shares issued | 211,135 | 211,135 |
Convertible Preferred Stock, shares outstanding | 211,135 | 211,135 |
Common Stock, par value | $0.00 | $0.00 |
Common Stock, shares authorized | 600,000,000 | 600,000,000 |
Common Stock, shares issued | 389,872,923 | 388,686,445 |
Common Stock, shares outstanding | 389,872,923 | 388,686,445 |
Condensed_Consolidated_Stateme
Condensed Consolidated Statements of Operations (Unaudited) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Condensed Consolidated Statements Of Operations | ' | ' | ' | ' |
Revenues | $37,619 | $21,212 | $96,740 | $62,932 |
Cost of revenues | 16,641 | 8,325 | 40,984 | 24,930 |
Gross profit | 20,978 | 12,887 | 55,756 | 38,002 |
Operating expenses | ' | ' | ' | ' |
Distributor compensation | 14,470 | 8,540 | 38,172 | 24,584 |
Sales and marketing | 2,167 | 1,071 | 5,434 | 3,267 |
General and administrative | 3,103 | 2,341 | 8,712 | 6,688 |
Total operating expenses | 19,740 | 11,952 | 52,318 | 34,539 |
Operating income | 1,238 | 935 | 3,438 | 3,463 |
Other income (expense) | 3 | ' | 5 | -1 |
Interest expense, net | -713 | -300 | -1,598 | -855 |
Change in fair value of warrant derivative liability | -273 | ' | -273 | ' |
Total other expense | -983 | -300 | -1,866 | -856 |
Income before income taxes | 255 | 635 | 1,572 | 2,607 |
Income tax provision | 70 | 119 | 416 | 436 |
Net income | 185 | 516 | 1,156 | 2,171 |
Net loss attributable to noncontrolling interest | ' | ' | ' | -81 |
Net income attributable to Youngevity | 185 | 516 | 1,156 | 2,252 |
Preferred stock dividends | -4 | -4 | -12 | -12 |
Net income available to common stockholders | $181 | $512 | $1,144 | $2,240 |
Net income per share, basic | $0 | $0 | $0 | $0.01 |
Net income per share, diluted | $0 | $0 | $0 | $0.01 |
Weighted average shares outstanding, basic | 390,219,932 | 389,082,677 | 389,235,633 | 389,227,156 |
Weighted average shares outstanding, diluted | 392,139,155 | 393,541,049 | 389,839,584 | 393,172,875 |
Condensed_Consolidated_Stateme1
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Condensed Consolidated Statements Of Comprehensive Income Loss | ' | ' | ' | ' |
Net income | $185 | $516 | $1,156 | $2,171 |
Foreign currency translation | -3 | -14 | -52 | -35 |
Total other comprehensive loss | -3 | -14 | -52 | -35 |
Comprehensive income | $182 | $502 | $1,104 | $2,136 |
Condensed_Consolidated_Stateme2
Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $) | 9 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Cash Flows from Operating Activities: | ' | ' |
Net Income | $1,156,000 | $2,171,000 |
Adjustments to reconcile net loss to net cash provided by operating activities: | ' | ' |
Depreciation and amortization | 1,948,000 | 1,467,000 |
Stock based compensation expense | 387,000 | 651,000 |
Amortization of deferred financing costs | 16,000 | ' |
Change in fair value of warrant derivative liability | 273,000 | ' |
Amortization of debt discount | 190,000 | 37,000 |
Change in fair value of contingent acquisition debt | -429,000 | 45,000 |
Gain on disposal of assets | -1,000 | ' |
Interest income accrued on note receivable, related party | ' | -3,000 |
Changes in operating assets and liabilities, net of effect from business combinations: | ' | ' |
Accounts receivable | -53,000 | -89,000 |
Inventory | -5,329,000 | -1,261,000 |
Prepaid expenses and other current assets | -1,772,000 | -172,000 |
Accounts payable | 3,513,000 | 569,000 |
Accrued distributor compensation | 1,146,000 | -201,000 |
Deferred revenues | 1,872,000 | 427,000 |
Accrued expenses and other liabilities | 49,000 | -244,000 |
Net Cash Provided by Operating Activities | 2,966,000 | 3,397,000 |
Cash Flows from Investing Activities: | ' | ' |
Acquisitions, net of cash acquired | -2,100,000 | -22,000 |
Purchases of property and equipment | -2,120,000 | -1,074,000 |
Net Cash Used in Investing Activities | -4,220,000 | -1,096,000 |
Cash Flows from Financing Activities: | ' | ' |
Proceeds from issuance of convertible notes payable, net | 4,260,000 | ' |
Proceeds from the exercise of stock options and warrants, net | 352,000 | 2,000 |
Proceeds from factoring company, net | 2,000 | 67,000 |
Payments of notes payable, net | -172,000 | -282,000 |
Proceeds for note receivable, related party, net | ' | 62,000 |
Payments of contingent acquisition debt | -1,637,000 | -508,000 |
Payments of capital leases | -70,000 | -94,000 |
Repurchase of common stock | -314,000 | -144,000 |
Net Cash Provided by (Used) in Financing Activities | 2,421,000 | -897,000 |
Foreign Currency Effect on Cash | -112,000 | -35,000 |
Net increase in cash and cash equivalents | 1,055,000 | 1,369,000 |
Cash and Cash Equivalents, Beginning of Period | 4,320,000 | 3,025,000 |
Cash and Cash Equivalents, End of Period | 5,375,000 | 4,394,000 |
Interest | 1,640,000 | 855,000 |
Income taxes | 594,000 | 473,000 |
Supplemental Disclosures of Noncash Investing and Financing Activities | ' | ' |
Acquisition of net assets in exchange for contingent acquisition debt | $5,532,000 | ' |
Basis_of_Presentation_and_Natu
Basis of Presentation and Nature of Business | 9 Months Ended |
Sep. 30, 2014 | |
Notes to Financial Statements | ' |
Disclosure - 1. Basis of Presentation and Nature of Business | ' |
Basis of Presentation | |
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission for interim financial information. Accordingly, certain information and footnote disclosures, normally included in financial statements prepared in accordance with generally accepted accounting principles, have been condensed or omitted pursuant to such rules and regulations. | |
The statements presented as of September 30, 2014 and for the three and nine months ended September 30, 2014 and 2013 are unaudited. In the opinion of management, these financial statements reflect all normal recurring and other adjustments necessary for a fair presentation, and to make the financial statements not misleading. These financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s Form 10-K for the year ended December 31, 2013. The results for interim periods are not necessarily indicative of the results for the entire year. Certain reclassifications have been made to conform to the current year presentations. These reclassifications had no effect on reported results of operations or stockholders’ equity. | |
Estimates are used in accounting for, among other things, allowances for doubtful accounts, deferred taxes and related valuation allowances, uncertain tax positions, loss contingencies, fair value of options granted under our stock based compensation plans, fair value of assets and liabilities acquired in business combinations, capital leases, asset impairments, estimates of future cash flows used to evaluate impairments, useful lives of property, equipment and intangible assets, value of contingent acquisition debt, inventory obsolescence, and the allowance for sales returns. Actual results may differ from previously estimated amounts and such differences may be material to the condensed consolidated financial statements. Estimates and assumptions are reviewed periodically and the effects of revisions are reflected prospectively in the period they occur. | |
Nature of Business | |
Youngevity International, Inc., founded in 1996, operates through the following domestic wholly owned subsidiaries: AL Global Corporation, which operates our direct selling networks, CLR Roasters, LLC (“CLR Roasters”), our commercial coffee business which includes our recently acquired Siles Plantation Family Group in Nicaragua, Financial Destinations, Inc., FDI Management, Inc., and MoneyTrax, LLC (collectively referred to as “FDI”), MK Collaborative LLC, Youngevity Global, LLC and the wholly owned foreign subsidiaries Youngevity Australia Pty. Ltd. and Youngevity NZ, Ltd. Effective July 23, 2013, the Company changed its name from AL International, Inc. to Youngevity International, Inc. | |
We operate in two segments: the direct selling segment where products are offered through a global distribution network of preferred customers and distributors and the commercial coffee segment where products are sold directly to businesses. During the nine months ended September 30, 2014, we derived approximately 87% of our revenue from our direct sales segment and approximately 13% of our revenue from our commercial coffee sales segment. | |
The Company consolidates all majority owned subsidiaries, investments in entities in which we have controlling influence and variable interest entities where we have been determined to be the primary beneficiary. All significant intercompany accounts and transactions have been eliminated in consolidation. | |
New Accounting Pronouncements | |
In April 2014, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, No. 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. This ASU changes the threshold for a disposal to qualify as a discontinued operation. To be considered a discontinued operation a disposal now must represent a strategic shift that has or will have a major effect on an entity’s operations and financial results. This ASU also requires new disclosures for individually material disposal transactions that do not meet the definition of a discontinued operation. This update will be applied prospectively and is effective for annual periods, and interim periods within those years, beginning after December 15, 2014. Early adoption is permitted provided the disposal was not previously disclosed. The adoption of this guidance did not have a material impact on the Company’s condensed consolidated financial statements. | |
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. This ASU is effective for annual periods beginning after December 15, 2016 and shall be applied either retrospectively to each period presented or as a cumulative-effect adjustment as of the date of adoption. The Company is evaluating the potential impact of this adoption on its condensed consolidated financial statements. | |
In June 2014, the Financial Accounting Standards Board issued Accounting Standards Update, or ASU, No. 2014-12 “Compensation – Stock Compensation” (Topic 718). The ASU provides guidance for accounting for share-based payments when the terms of an award provide that a performance target could be achieved after the requisite service period. That is the case when an employee is eligible to retire or otherwise terminate employment before the end of the period in which a performance target could be achieved and still be eligible to vest in the award if and when the performance target is achieved. The amendment requires a performance target that affects vesting and that could be achieved after requisite service period be treated as a performance condition. Compensation cost should be recognized in the period in which it becomes probable that such performance condition would be achieved and should represent the compensation cost attributable to the periods for which the requisite service has already been rendered. Those amendments are effective for annual reporting periods beginning after December 15, 2015, and interim periods therein. The Company is currently evaluating the potential impact that adoption of this standard may have on its financial statements. | |
2_Income_Taxes
2. Income Taxes | 9 Months Ended |
Sep. 30, 2014 | |
Notes to Financial Statements | ' |
Disclosure - 2. Income Taxes | ' |
Income taxes for the interim periods are computed using the effective tax rates estimated to be applicable for the full fiscal year, as adjusted for any discrete taxable events that occur during the period. | |
The Company files income tax returns in the United States (“U.S.”) on a federal basis and in many U.S. state and foreign jurisdictions. Certain tax years remain open to examination by the major taxing jurisdictions to which the Company is subject. | |
3_Inventory_and_Cost_of_Sales
3. Inventory and Cost of Sales | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Notes to Financial Statements | ' | ||||||||
Disclosure - 3. Inventory and Cost of Sales | ' | ||||||||
Inventory is stated at the lower of cost or market value. Cost is determined using the first-in, first-out method. The Company records an inventory reserve for estimated excess and obsolete inventory based upon historical turnover, market conditions and assumptions about future demand for its products. When applicable, expiration dates of certain inventory items with a definite life are taken into consideration. | |||||||||
Inventories consist of the following (in thousands): | |||||||||
As of | |||||||||
September 30, | December 31, | ||||||||
2014 | 2013 | ||||||||
Finished goods | $ | 7,753 | $ | 4,642 | |||||
Raw materials | 4,051 | 1,667 | |||||||
11,804 | 6,309 | ||||||||
Reserve for excess and obsolete | (502 | ) | (336 | ) | |||||
Inventory, net | $ | 11,302 | $ | 5,973 | |||||
Cost of revenues includes the cost of inventory, shipping and handling costs incurred by the Company in connection with shipments to customers, royalties associated with certain products, transaction banking costs and depreciation on certain assets. |
4_Acquisitions_and_Business_Co
4. Acquisitions and Business Combinations | 9 Months Ended | ||||
Sep. 30, 2014 | |||||
Notes to Financial Statements | ' | ||||
Disclosure - 4. Acquisitions and Business Combinations | ' | ||||
The Company accounts for business combinations under the acquisition method and allocates the total purchase price for acquired businesses to the tangible and identified intangible assets acquired and liabilities assumed, based on their estimated fair values as of the acquisition date. When a business combination includes the exchange of the Company’s Common Stock, the value of the Common Stock is determined using the closing market price as of the date such shares were tendered to the selling parties. The fair values assigned to tangible and identified intangible assets acquired and liabilities assumed are based on management or third party estimates and assumptions that utilize established valuation techniques appropriate for the Company’s industry and each acquired business. Goodwill is recorded as the excess, if any, of the aggregate fair value of consideration exchanged for an acquired business over the fair value (measured as of the acquisition date) of total net tangible and identified intangible assets acquired. A liability for contingent consideration, if applicable, is recorded at fair value as of the acquisition date. In determining the fair value of such contingent consideration, management estimates the amount to be paid based on probable outcomes and expectations of the financial performance of the related acquired business. The fair value of contingent consideration is reassessed quarterly, with any change in the estimated value charged to operations in the period of the change. Increases or decreases in the fair value of the contingent consideration obligations can result from changes in actual or estimated revenue streams, discount periods, discount rates and probabilities that contingencies will be met. | |||||
During the nine months ended September 30, 2014, the Company entered into three acquisitions, which are detailed below. All of the acquisitions were conducted in an effort to expand the Company’s distributor network, enhance and expand its product portfolio, diversify its product mix or expand the coffee business. As such, the major purpose for all of the business combinations was to increase revenue and profitability. The acquisitions were structured as asset purchases which resulted in the recognition of certain intangible assets. | |||||
Good Herbs, Inc. | |||||
On April 28, 2014, the Company acquired certain assets and assumed certain liabilities of Good Herbs, Inc., (“Good Herbs”) a traditional natural herbal supplements company, whose primary sales channel has been targeted toward certified natural health professionals. As a result of this business combination, the Company’s distributors and customers have access to Good Herbs’ unique line of products and Good Herbs’ distributors and clients gained access to products offered by the Company. The purchase price consisted of a maximum purchase price of $1,900,000, of which approximately $120,000 was related to assumed liabilities. The Company has agreed to pay Good Herbs a monthly payment equal to five (5%) of all gross sales revenue generated by the Good Herbs’ distributor organization, regardless of products being sold within the Good Herbs’ distributor organization; provided, however, for the first six (6) months effective May 12, 2014 Good Herbs will receive a minimum guaranteed payment of $20,000 per month which will be applied to the maximum purchase price. In addition, the Company agreed to pay Good Herbs five percent (5%) of Good Herbs’ product sales generated outside the Good Herbs’ distributor organization. Payments will be made monthly until the earlier of the date that is ten (10) years from the closing or until such time the Company has paid aggregate cash payments equal to $1,900,000; however if the aggregate gross sales revenue generated by the Good Herbs’ distributor organization, regardless of the products being sold, received by the Company for the fifteen (15) months period following the Closing Date does not equal or exceed $1,900,000, then the maximum aggregate purchase price will be reduced by the difference between $1,900,000 and the fifteen month revenue; provided that in no event will the maximum aggregate purchase price be reduced below $1,000,000. The contingent consideration’s estimated fair value at the date of acquisition was $800,000, as determined by management using a discounted cash flow methodology. The acquisition related costs, such as legal costs and other professional fees were minimal and expensed as incurred. | |||||
The assets acquired and liabilities assumed were recorded at estimated fair values as of the date of the acquisition. The fair values of the acquired assets have not been finalized pending further information that may impact the valuation of certain assets or liabilities. The preliminary purchase price allocation for Good Herbs (in thousands) is as follows: | |||||
Trademarks and trade name | $ | 200 | |||
Customer-related intangible | 200 | ||||
Distributor organization | 520 | ||||
Accrued expenses | (120 | ) | |||
Total purchase price | $ | 800 | |||
The preliminary fair value of intangible assets acquired was determined through the use of a discounted cash flow methodology. The trademarks and trade name, customer-related intangible and distributor organization intangible are being amortized over their estimated useful life of (10) ten years using the straight-line method which is believed to approximate the time-line within which the economic benefit of the underlying intangible asset will be realized. | |||||
The Company expects to finalize the valuation within one (1) year from the acquisition date. | |||||
Revenue from the Good Herbs’ distributors included in the condensed consolidated statement of operations for the three and nine months ended September 30, 2014 was approximately $183,000 and $242,000, respectively. | |||||
The Company’s business combination related to Good Herbs did not have a material impact on the Company’s unaudited condensed consolidated financial statements as of September 30, 2014, and therefore pro forma disclosures have not been presented. | |||||
Beyond Organic, LLC | |||||
On May 1, 2014, the Company acquired certain assets and assumed certain liabilities of Beyond Organic, LLC, (“Beyond Organic”) a vertically integrated organic food and beverage company. The purchase price consisted of a maximum purchase price of $6,200,000, of which approximately $200,000 was related to assumed liabilities. The Company has agreed to pay Beyond Organic a monthly payment equal to ten (10%) of all gross sales revenue generated by the Beyond Organic distributor organization, regardless of products being sold within the Beyond Organic distributor organization; provided, however, for the first ten (10) months effective May 12, 2014 Beyond Organic will receive a minimum guaranteed payment of $92,500 per month which will be applied to the maximum purchase price. In addition, the Company agreed to pay Beyond Organic five percent (5%) of Beyond Organic product sales generated outside the Beyond Organic distributor organization. Payments will be made monthly until the earlier of the date that is seven (7) years from the closing or until such time the Company has paid aggregate cash payments equal to $6,000,000. The contingent consideration’s estimated fair value at the date of acquisition was $3,100,000, as determined by management using a discounted cash flow methodology. The acquisition related costs, such as legal costs and other professional fees were minimal and expensed as incurred. | |||||
The assets acquired and liabilities assumed were recorded at their estimated fair values as of the date of the acquisition. The fair values of the acquired assets have not been finalized pending further information that may impact the valuation of certain assets or liabilities. The preliminary purchase price allocation for Beyond Organic (in thousands) is as follows: | |||||
Goodwill | $ | 300 | |||
Trademarks and trade name | 300 | ||||
Customer-related intangible | 1,300 | ||||
Distributor organization | 1,400 | ||||
Accrued expenses | (200 | ) | |||
Total purchase price | $ | 3,100 | |||
The preliminary fair value of intangible assets acquired was determined through the use of a discounted cash flow methodology. The trademarks and trade name, customer-related intangible and distributor organization intangible are being amortized over their estimated useful life of (10) ten years using the straight-line method which is believed to approximate the time-line within which the economic benefit of the underlying intangible asset will be realized. | |||||
Goodwill of $300,000 was recognized as the excess purchase price over the acquisition-date fair value of net assets acquired. Goodwill is estimated to represent the synergistic values expected to be realized from the combination of the two businesses. The goodwill is expected to be deductible for tax purposes. | |||||
The Company expects to finalize the valuation within one (1) year from the acquisition date. | |||||
Revenue from the Beyond Organic distributors included in the condensed consolidated statement of operations for the three and nine months ended September 30, 2014 was approximately $1,202,000 and $1,957,000, respectively. | |||||
The Company’s business combination related to Beyond Organic did not have a material impact on the Company’s unaudited condensed consolidated financial statements as of September 30, 2014, and therefore pro forma disclosures have not been presented. | |||||
Siles Plantation Family Group SA (Sociedad Anonima), Nicaragua coffee plantations and dry-processing plant. | |||||
On May 13, 2014, the Company, through its wholly owned subsidiary CLR Roasters, LLC (“CLR”), completed the acquisition of the Siles Plantation Family Group SA (“Siles Plantation”), a Nicaraguan entity. The results of Siles Plantation are included in the condensed consolidated financial statements of the Company from the date of acquisition. The transaction is being accounted for as a business combination. | |||||
The Siles Plantation is operated and managed by a Nicaraguan plantation group Hernandez, Hernandez Export Co., LTD (“H&H”). As an inducement to harvest the plantations and operate the dry-processing plant profitably, CLR and H&H entered into an Operating and Profit Sharing Agreement (“Agreement”). In accordance with the Agreement, H&H shares equally (50%) in all profits and losses generated by the Siles Plantation, and profits from any subsequent sale of the plantation, after profits are first distributed to CLR equal to the amount of CLR’s cash contributions for the acquisitions, then after profits are distributed to H&H in an amount equal to their cash contributions, and after certain other conditions are met. | |||||
Concurrent with the acquisition of the Siles Plantation, the Siles Plantation acquired the assets of a dry-processing plant “La Pita”, a coffee plantation “El Paraiso” and has an option to purchase a second coffee plantation “El Paraisito” as follows: | |||||
1) “La Pita”, a dry-processing plant sitting on approximately 18 acres of land is located in Matagalpa, Nicaragua. The property includes buildings, structures, machinery and equipment, and furnishings and fixtures. The total purchase price was $1,904,840, of which CLR paid $1,050,000 and H&H paid $854,840. The preliminary purchase price allocation for La Pita (in thousands) is as follows: | |||||
Buildings and structures | $ | 832 | |||
Machinery and equipment | 417 | ||||
Customer relationships, intangible | 367 | ||||
Land | 289 | ||||
Total purchase price | $ | 1,905 | |||
2) “EL Paraiso”, a coffee plantation located in Matagalpa, Nicaragua, consisting of approximately 450 acres of land and hundreds of thousands of coffee plants of various ages. The total purchase price was $1,400,000, of which CLR paid $1,050,000 and H&H paid $350,000. The purchase price allocation for El Paraiso (in thousands) is as follows: | |||||
Land | $ | 1,400 | |||
Total purchase price | $ | 1,400 | |||
3) Additionally, the Siles Plantation has the option to purchase “El Paraisito”, an approximate 450 acre plantation located adjacent to El Paraiso. The Company is currently in the process of completing final settlement of the purchase agreement. CLR and H&H has a deposit towards this purchase of $284,000, of which CLR paid $200,000 and H&H paid $84,000 towards the deposit and is recorded in prepaid expenses and other current assets on the Company’s condensed consolidated balance sheet. | |||||
In connection with the acquisitions of the Siles Plantation, La Pita, and El Paraiso, the Company recognized a contingent liability of approximately $1,600,000, which is payable after certain working capital conditions are met and after CLR’s cash contributions for the acquisitions are fully paid. This liability is included in the contingent acquisition debt balance as of September 30, 2014. | |||||
As of the date of this Quarterly Report on Form 10-Q, the Company is still finalizing the allocation of the purchase price. Changes to the preliminary purchase price allocation are expected to occur, and may be significant, upon completion of the acquisition valuation. The Company expects to finalize the valuation within one (1) year from the acquisition date. | |||||
Siles Family Plantation is a newly formed entity and does not have current or historical financial statements, therefore pro forma disclosures have not been presented. | |||||
Go Foods Global, LLC | |||||
During the quarter ended September 30, 2014, the Company entered into an amendment agreement related to the Go Foods Global, LLC business acquisition that was consummated in a prior year. The amendment agreement provides for the cancellation of certain obligations provided under the original asset purchase agreement, releasing the Company from certain royalty and commission payments. The Company retains all the rights pursuant to the original agreement. This resulted in the elimination of the related contingent acquisition debt of approximately $342,000, as of September 30, 2014. | |||||
Financial Destinations, Inc., FDI Management, Inc., and MoneyTrax, LLC (collectively referred to as “FDI”) | |||||
During the nine months ended September 30, 2014, the Company entered into an amendment agreement related to its FDI business acquisition that was consummated in a prior year, which reduces the maximum amount that will be paid to the seller. This resulted in a reduction in the estimated fair value of the related contingent acquisition debt. |
5_Intangible_Assets_and_Goodwi
5. Intangible Assets and Goodwill | 9 Months Ended | ||||||||||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||||||||||
Notes to Financial Statements | ' | ||||||||||||||||||||||||
Disclosure - 5. Intangible Assets and Goodwill | ' | ||||||||||||||||||||||||
Intangible assets are comprised of distributor organizations, trademarks, customer relationships and internally developed software. The Company's acquired intangible assets, which are subject to amortization over their estimated useful lives, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an intangible asset may not be recoverable. An impairment loss is recognized when the carrying amount of an intangible asset exceeds its fair value. | |||||||||||||||||||||||||
Intangible assets consist of the following (in thousands): | |||||||||||||||||||||||||
30-Sep-14 | 31-Dec-13 | ||||||||||||||||||||||||
Cost | Accumulated | Net | Cost | Accumulated | Net | ||||||||||||||||||||
Amortization | Amortization | ||||||||||||||||||||||||
Distributor organizations | $ | 10,345 | $ | 4,909 | $ | 5,436 | $ | 8,425 | $ | 4,169 | $ | 4,256 | |||||||||||||
Trademarks and trade names | 4,341 | 252 | 4,089 | 3,841 | 113 | 3,728 | |||||||||||||||||||
Customer relationships | 6,000 | 1,733 | 4,267 | 4,133 | 1,248 | 2,885 | |||||||||||||||||||
Internally developed software | 720 | 132 | 588 | 720 | 57 | 663 | |||||||||||||||||||
Intangible assets, net | $ | 21,406 | $ | 7,026 | $ | 14,380 | $ | 17,119 | $ | 5,587 | $ | 11,532 | |||||||||||||
Amortization expense related to intangible assets was approximately $480,000 and $396,000 for the three months ended September 30, 2014 and 2013, respectively. Amortization expense related to intangible assets was approximately $1,439,000 and $1,154,000 for the nine months ended September 30, 2014 and 2013, respectively. | |||||||||||||||||||||||||
Goodwill is recorded as the excess, if any, of the aggregate fair value of consideration exchanged for an acquired business over the fair value (measured as of the acquisition date) of total net tangible and identified intangible assets acquired. In accordance with Accounting Standards Codification (“ASC”) Topic 350, “Intangibles — Goodwill and Other”, goodwill and other intangible assets with indefinite lives are not amortized but are tested for impairment on an annual basis or whenever events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable. The Company conducts annual reviews for goodwill and indefinite-lived intangible assets in the fourth quarter or whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be fully recoverable. During the nine months ending September 30, 2014 the Company recorded an increase in goodwill in the amount of $300,000 related to the acquisition of Beyond Organic. The goodwill balance as of September 30, 2014 was $6,323,000. There were no triggering events indicating impairment of goodwill or intangible assets during the three and nine months ended September 30, 2014 and 2013. | |||||||||||||||||||||||||
6_Stock_Based_Compensation
6. Stock Based Compensation | 9 Months Ended |
Sep. 30, 2014 | |
Notes to Financial Statements | ' |
Disclosure - 6. Stock Based Compensation | ' |
The Company accounts for stock based compensation in accordance with the guidance provided by ASC Topic 718, “Compensation – Stock Compensation”, which establishes accounting for equity instruments exchanged for employee services. Under such provisions, stock based compensation cost is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense, under the straight-line method, over the vesting period of the equity grant. | |
The Company accounts for equity instruments issued to non-employees in accordance with authoritative guidance for equity based payments to non-employees. Stock options issued to non-employees are accounted for at their estimated fair value, determined using the Black-Scholes option-pricing model. The fair value of options granted to non-employees is re-measured as they vest, and the resulting increase in value, if any, is recognized as expense during the period the related services are rendered. | |
Convertible_Notes_Payable
Convertible Notes Payable | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Convertible Notes Payable | ' | ||||||||
Disclosure - 7. Convertible Notes Payable | ' | ||||||||
Note Purchase Agreement | |||||||||
Between July 31, 2014 and September 10, 2014, the Company, entered into Note Purchase Agreements (the "Note" or "Notes") by way of completing a private placement offering (“2014 Private Placement”) with seven accredited investors pursuant to which the Company raised aggregate gross proceeds of $4,750,000 and sold units consisting of five year senior secured convertible Notes in the aggregate principal amount of $4,750,000, that are convertible into 13,571,429 shares of our common stock, at a conversion price of $0.35 per share, and warrants to purchase 18,586,956 shares of common stock at an exercise price of $0.23 per share, subject to adjustment as provided therein. | |||||||||
The convertible Notes bear interest at a rate of eight percent (8%) per annum to be paid quarterly in arrears starting September 30, 2014, with all principal and unpaid interest due at maturity on July 30, 2019. The Company has the right to prepay the Notes at any time after the one year anniversary date of the issuance of the Notes at a rate equal to 110% of the then outstanding principal balance and any unpaid accrued interest. The Notes are secured by pledged assets of CLR Roasters and rank senior to all debt of CLR Roasters other than certain senior debt that has been previously defined in the agreement as senior to the convertible Notes debt. Additionally, Stephan Wallach, the Company’s Chief Executive Officer, has also personally guaranteed the repayment of the Notes, subject to the terms of a Guaranty Agreement executed by him with the investors. In addition, Mr. Wallach has agreed not to sell, transfer or pledge 30 million shares of the Common Stock that he owns so long as his personal guaranty is in effect. | |||||||||
With respect to the aggregate offering, the Company used one placement agent in the transactions and paid $490,000, in expenses, including a placement agent fee of $477,000 and miscellaneous other fees. We also issued the placement agent two five-year warrants exercisable in an aggregate amount of 1,357,143 shares of common stock at an exercise price of $0.35 per share and two five-year warrants exercisable in the aggregate amount of 1,858,694 shares of common stock at an exercise price of $0.23 per share. The placement agent fees have been capitalized as deferred financing costs and will be amortized to interest expense over the term of the Notes. There is approximately $474,000 in deferred financing costs as of September 30, 2014 that are included in prepaid expenses and other current assets on the condensed consolidated balance sheet. | |||||||||
We analyzed the nature of the warrants that were issued in the transaction and determined that because the exercise price of the warrants is protected against down-round financing throughout the term of the warrant agreement, the warrants require derivative liability classification in accordance with authoritative guidance ASC Topic 815, “Derivatives and Hedging.” The estimated fair value of the warrants issued in connection with the Notes totaled $3,697,000, and has been recorded as a derivative liability with a corresponding debt discount that will be amortized over the term of the Note to interest expense. | |||||||||
Additionally, upon issuance of the Notes, the Company recorded the discount for the beneficial conversion feature of $1,053,000. The beneficial conversion feature was recorded to equity and the debt discount associated with the beneficial conversion feature will be amortized to interest expense over the life of the Notes. The Company recorded approximately $158,000 of interest expense for the amortization of the debt discounts during the three and nine months ended September 30, 2014. | |||||||||
The following table summarizes information relative to the convertible note outstanding: | |||||||||
30-Sep-14 | 31-Dec-13 | ||||||||
Convertible notes | $ | 4,750,000 | $ | - | |||||
Less: detachable warrants discount | (3,697,000 | ) | - | ||||||
Less: conversion feature discount | (1,053,000 | ) | - | ||||||
Amortization of debt discounts | 158,000 | - | |||||||
Convertible notes, net of discounts | $ | 158,000 | $ | - | |||||
The balance of the unamortized debt discounts as of September 30, 2014 is approximately $4,592,000. | |||||||||
Registration Rights Agreement | |||||||||
The Company entered into a registration rights agreement (“Registration Rights Agreement”) with the investors in the 2014 Private Placement. Under the terms of the Registration Rights Agreement, the Company agreed to file a registration statement covering the resale of the common stock underlying the units and the common stock that is issuable on exercise of the warrants within 90 days from the final closing date of the 2014 Private Placement (the “Filing Deadline”). | |||||||||
The Company has agreed to use reasonable efforts to maintain the effectiveness of the registration statement through the one year anniversary of the date the registration statement is declared effective by the Securities and Exchange Commission (the “SEC”), or until Rule 144 of the 1933 Act is available to investors in the 2014 Private Placement with respect to all of their shares, whichever is earlier. If the Company does not meet the Filing Deadline or Effectiveness Deadline, as defined in the Registration Rights Agreement, the Company will be liable for monetary penalties equal to one-half of one percent (1.0%) of each investor’s investment at the end of every 30 day period following such Filing Deadline or Effectiveness Deadline failure until such failure is cured. | |||||||||
The payment amount shall be prorated for partial 30 day periods. The maximum aggregate amount of payments to be made by the Company as the result of such shall be an amount equal to six (6%) of each investor’s investment amount. Notwithstanding the foregoing, no payments shall be owed with respect to any period during which all of the investor’s registrable securities may be sold by such investor under Rule 144 or pursuant to another exemption from registration. | |||||||||
The Company filed a registration statement on October 3, 2014 and an amended statement on October 17, 2014 and it was declared effective by the SEC on November 4, 2014. |
Derivative_Liability
Derivative Liability | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Derivative Liability | ' | ||||||||||||||||
Disclosure - 8. Derivative Liability | ' | ||||||||||||||||
We accounted for the warrants issued in conjunction with our 2014 Private Placement in accordance with the accounting guidance for derivatives ASC Topic 815. The accounting guidance sets forth a two-step model to be applied in determining whether a financial instrument is indexed to an entity’s own stock, which would qualify such financial instruments for a scope exception. This scope exception specifies that a contract that would otherwise meet the definition of a derivative financial instrument would not be considered as such if the contract is both (i) indexed to the entity’s own stock and (ii) classified in the stockholders’ equity section of the entity’s balance sheet. We determined the warrants related to Notes are ineligible for equity classification due to anti-dilution provisions set forth therein. | |||||||||||||||||
Warrants classified as derivative liabilities are recorded at their estimated fair value (see Note 9) at the issuance date and are revalued at each subsequent reporting date. Warrants were determined to have an estimated fair value per share and in aggregate value as of the respective dates as follows: | |||||||||||||||||
Closing Dates: | Issued Warrants | Estimated Fair Value Per Share as of September 30, 2014 | Estimated Total | Estimated Total Fair Value in Aggregate $ as of issuance dates | |||||||||||||
Fair Value in Aggregate $ as of September 30, 2014 | |||||||||||||||||
July 31, 2014 Warrants | 19,966,768 | $ | 0.18 | $ | 3,633,000 | $ | 3,374,000 | ||||||||||
August 14, 2014 Warrants | 1,721,273 | 0.18 | 316,000 | 300,000 | |||||||||||||
September 10, 2014 Warrants | 114,752 | 0.18 | 21,000 | 23,000 | |||||||||||||
21,802,793 | $ | 3,970,000 | $ | 3,697,000 | |||||||||||||
The change in the fair value of the derivative liability between the issuance dates and September 30, 2014, includes an increase to the derivate liability of $273,000, which was recognized through earnings in the condensed consolidated income statement. We will continue to revalue the derivative liability on each subsequent balance sheet date until the securities to which the derivative liabilities relate are exercised or expire. | |||||||||||||||||
The estimated fair values of the warrants were computed at issuance and as of September 30, 2014 by a third party valuation company using a Monte Carlo option pricing model based on the following assumptions: | |||||||||||||||||
Volatility | 90 | % | |||||||||||||||
Risk-free interest rates | 1.58 -1.79 | % | |||||||||||||||
Dividend yield | 0 | % | |||||||||||||||
Expected term | 5 | Yrs | |||||||||||||||
In addition, as of the valuation dates, management assessed the probabilities of future assumptions in the Monte Carlo valuation models. | |||||||||||||||||
Fair_Value_of_Financial_Instru
Fair Value of Financial Instruments | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Notes to Financial Statements | ' | ||||||||||||||||
Disclosure - 9. Fair Value of Financial Instruments | ' | ||||||||||||||||
Fair value measurements are performed in accordance with the guidance provided by ASC Topic 820, “Fair Value Measurements and Disclosures.” ASC Topic 820 defines fair value as the price that would be received from selling an asset, or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Where available, fair value is based on observable market prices or parameters or derived from such prices or parameters. Where observable prices or parameters are not available, valuation models are applied. | |||||||||||||||||
ASC Topic 820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Assets and liabilities recorded at fair value in the financial statements are categorized based upon the hierarchy of levels of judgment associated with the inputs used to measure their fair value. Hierarchical levels directly related to the amount of subjectivity associated with the inputs to fair valuation of these assets and liabilities, are as follows: | |||||||||||||||||
Level 1 – Quoted prices in active markets for identical assets or liabilities that an entity has the ability to access. | |||||||||||||||||
Level 2 – Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. | |||||||||||||||||
Level 3 – Unobservable inputs that are supportable by little or no market activity and that are significant to the fair value of the asset or liability. | |||||||||||||||||
The carrying amounts of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate their fair values based on their short-term nature. The carrying amount of the Company’s long term notes payable approximates its fair value based on interest rates available to the Company for similar debt instruments and similar remaining maturities. The estimated fair value of the contingent consideration related to the Company’s business combinations is recorded using significant unobservable measures and other fair value inputs and is therefore classified as a Level 3 financial instrument. | |||||||||||||||||
In connection with the 2014 Private Placement, we issued warrants to purchase shares of our common stock which are accounted for as derivative liabilities (see Note 8.) The estimated fair value of the warrants is recorded using significant unobservable measures and other fair value inputs and is therefore classified as a Level 3 financial instrument. | |||||||||||||||||
We used Level 3 inputs for the valuation methodology of the derivative liabilities. The estimated fair values were computed by a third party valuation company using a Monte Carlo option pricing model based on various assumptions. Our derivative liabilities are adjusted to reflect estimated fair value at each period end, with any decrease or increase in the estimated fair value being recorded in other income or expense accordingly, as adjustments to the fair value of the derivative liabilities. | |||||||||||||||||
The following table details the fair value measurement within the three levels of the value hierarchy of the Company’s financial instruments, which includes the Level 3 liabilities (in thousands): | |||||||||||||||||
Fair Value at September 30, 2014 | |||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | ||||||||||||||
Liabilities: | |||||||||||||||||
Contingent acquisition debt, current portion | $ | 2,715 | $ | - | $ | - | $ | 2,715 | |||||||||
Contingent acquisition debt, less current portion | 7,831 | - | - | 7,831 | |||||||||||||
Warrant derivative liability | 3,970 | - | - | 3,970 | |||||||||||||
Total liabilities | $ | 14,515 | $ | - | $ | - | $ | 14,515 | |||||||||
Fair Value at December 31, 2013 | |||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | ||||||||||||||
Liabilities: | |||||||||||||||||
Contingent acquisition debt, current portion | $ | 1,072 | $ | - | $ | - | $ | 1,072 | |||||||||
Contingent acquisition debt, less current portion | 6,008 | - | - | 6,008 | |||||||||||||
Warrant derivative liability | - | - | - | - | |||||||||||||
Total liabilities | $ | 7,080 | $ | - | $ | - | $ | 7,080 | |||||||||
The fair value of the contingent acquisition liabilities are evaluated each reporting period using projected revenues, discount rates, and projected timing of revenues. Projected contingent payment amounts are discounted back to the current period using a discount rate. Projected revenues are based on the Company’s most recent internal operational budgets and long-range strategic plans. In some cases, there is no maximum amount of contingent consideration that can be earned by the sellers. Increases in projected revenues will result in higher fair value measurements. Increases in discount rates and the time to payment will result in lower fair value measurements. Increases (decreases) in any of those inputs in isolation may result in a significantly lower (higher) fair value measurement. During the nine months ended September 30, 2014 and 2013, the net adjustment to the fair value of the contingent acquisition debt was a decrease of approximately $429,000 and an increase of approximately $45,000, respectively. |
Deferred_Revenues_and_Costs
Deferred Revenues and Costs | 9 Months Ended |
Sep. 30, 2014 | |
Deferred Revenue Disclosure [Abstract] | ' |
Disclosure - 10. Deferred Revenues and Costs | ' |
Deferred revenues relate primarily to the Heritage Makers product line and represent the Company’s obligation for points purchased by customers that have not yet been redeemed for product. Cash received for points sold is recorded as deferred revenue. Revenue is recognized when customers redeem the points and the product is shipped. As of September 30, 2014, the balance in deferred revenues attributable to Heritage Makers was approximately $5,180,000. | |
Deferred costs relate to Heritage Makers prepaid commissions that are recognized in expense at the time the related revenue is recognized. As of September 30, 2014, the balance in deferred costs was approximately $1,679,000 and was included in prepaid expenses and current assets. |
Earnings_per_share
Earnings per share | 9 Months Ended |
Sep. 30, 2014 | |
Notes to Financial Statements | ' |
Disclosure - 11. Earnings per share | ' |
Basic earnings per share is computed by dividing net income attributable to common stockholders by the weighted-average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing net income attributable to common stockholders by the sum of the weighted-average number of common shares outstanding during the period and the weighted-average number of dilutive common share equivalents outstanding during the period, using the treasury stock method. Dilutive common share equivalents are comprised of stock options, warrants and convertible preferred stock. |
Stockholders_Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2014 | |
Notes to Financial Statements | ' |
Disclosure - 12. Stockholders' Equity | ' |
The Company’s Articles of Incorporation, as amended, authorize the issuance of two classes of stock to be designated “Common Stock” and “Preferred Stock”. | |
The Company had 389,872,923 common shares outstanding as of September 30, 2014. The holders of Common Stock are entitled to one vote per share on matters brought before the shareholders. As of September 30, 2014, warrants to purchase 35,556,005 shares of Common Stock at prices ranging from $0.10 to $0.50 were outstanding, exercisable and expire at various dates through August 2019. | |
On December 11, 2012, the Company authorized a share repurchase program to repurchase up to 15 million of the Company's issued and outstanding common shares from time to time on the open market or via private transactions through block trades. Under this program, for the nine months ended September 30, 2014, the Company repurchased a total of 1,321,272 shares at a weighted-average cost of $0.23. A total of 2,337,675 shares have been repurchased to date at a weighted-average cost of $0.23. The remaining number of shares authorized for repurchase under the plan as of September 30, 2014 is 12,662,325. | |
The Company had 211,135 shares of Series A Convertible Preferred Stock ("Series A Preferred") outstanding as of September 30, 2014 and December 31, 2013. The holders of the Series A Preferred Stock are entitled to receive a cumulative dividend at a rate of 8.0% per year, payable annually either in cash or shares of the Company's Common Stock at the Company's election. Shares of Common Stock paid as accrued dividends are valued at $0.50 per share. Each share of Series A Preferred is convertible into two shares of the Company's Common Stock. The holders of Series A Preferred are entitled to receive payments upon liquidation, dissolution or winding up of the Company before any amount is paid to the holders of Common Stock. The holders of Series A Preferred shall have no voting rights, except as required by law. | |
Stock_Option_Plan
Stock Option Plan | 9 Months Ended | ||||||||||||
Sep. 30, 2014 | |||||||||||||
Notes to Financial Statements | ' | ||||||||||||
Disclosure - 13. Stock Option Plan | ' | ||||||||||||
On May 16, 2012, the Company established the 2012 Stock Option Plan (“Plan”) authorizing the granting of options for up to 40,000,000 shares of Common Stock. The purpose of the Plan is to promote the long-term growth and profitability of the Company by (i) providing key people and consultants with incentives to improve stockholder value and to contribute to the growth and financial success of the Company and (ii) enabling the Company to attract, retain and reward the best available persons for positions of substantial responsibility. The Plan permits the granting of stock options, including non-qualified stock options and incentive stock options qualifying under Section 422 of the Code, in any combination (collectively, "Options"). At September 30, 2014, the Company had 15,788,000 shares of Common Stock available for issuance under the Plan. | |||||||||||||
The Company uses the Black-Scholes option-pricing model (“Black-Scholes model”) to estimate the fair value of stock option grants. The use of a valuation model requires the Company to make certain assumptions with respect to selected model inputs. Expected volatility is calculated based on the historical volatility of the Company’s stock price over the contractual term of the option. The expected life is based on the contractual term of the option and expected employee exercise and post-vesting employment termination behavior. The risk-free interest rate is based on U.S. Treasury zero-coupon issues with a remaining term equal to the expected life assumed at the date of the grant. | |||||||||||||
A summary of the Plan Options for the nine months ended September 30, 2014 is presented in the following table: | |||||||||||||
Number of | Weighted | Aggregate | |||||||||||
Shares | Average | Intrinsic | |||||||||||
Exercise Price | Value | ||||||||||||
(in thousands) | |||||||||||||
Outstanding December 31, 2013 | 17,572,500 | $ | 0.22 | $ | 478 | ||||||||
Granted | 6,620,500 | 0.23 | |||||||||||
Canceled | (10,000 | ) | 0.18 | ||||||||||
Exercised | (7,750 | ) | 0.24 | - | |||||||||
Outstanding September 30, 2014 | 24,175,250 | 0.22 | 795 | ||||||||||
Exercisable September 30, 2014 | 14,663,750 | $ | 0.22 | $ | 439 | ||||||||
The weighted-average fair value per share of the granted options for the nine months ended September 30, 2014 and 2013 was $0.16 and $0.14, respectively. | |||||||||||||
Stock-based compensation expense was approximately $141,000 and $388,000 for the three and nine months ended September 30, 2014, respectively, compared to approximately $224,000 and $651,000 for the three and nine months ended September 30, 2013, respectively. | |||||||||||||
As of September 30, 2014, there was approximately $1,234,000 of total unrecognized compensation expense related to unvested share-based compensation arrangements granted under the Plan. The expense is expected to be recognized over a weighted-average period of 4.92 years. |
Factoring_Agreement
Factoring Agreement | 9 Months Ended |
Sep. 30, 2014 | |
Notes to Financial Statements | ' |
Disclosure - 14. Factoring Agreement | ' |
The Company has a factoring agreement (“Factoring Agreement”) with Crestmark Bank (“Crestmark”) related to the Company’s accounts receivable resulting from sales of certain products within its commercial coffee reportable segment. Under the terms of the Factoring Agreement, the Company effectively sells all of its accounts receivable to Crestmark with non-credit related recourse. The Company continues to be responsible for the servicing and administration of the receivables. In January 2013, the Company extended its Factoring Agreement through February 1, 2016, and modified certain of the terms. | |
The Factoring Agreement provides for the Company to receive advances against the purchase price of its receivables at a rate up to 85% of the aggregate purchase price of the receivable outstanding at any time less: receivables that are in dispute, receivables that are not credit approved within the terms of the Factoring Agreement and any fees or estimated fees related to the Factoring Agreement. Interest is accrued on all outstanding advances at the greater of 5.25% per annum or the Prime Rate (as identified by the Wall Street Journal) plus an applicable margin. The margin is based on the magnitude of the total outstanding advances and ranges from 2.50% to 5.00%. In addition to the interest accrued on the outstanding balance, the factor charges a factoring commission for each invoice factored which is calculated as the greater of $5.00 or 0.875% to 1.00% of the gross invoice amount and is recorded as interest expense. The minimum factoring commission payable to the bank is $90,000 during each consecutive 12-month period. | |
The Company accounts for the sale of receivables under the Factoring Agreement as secured borrowing with a pledge of the subject receivables as well as all bank deposits as collateral, in accordance with the authoritative guidance for accounting for transfers and servicing of financial assets and extinguishments of liabilities. The caption “Accounts receivable, due from factoring company” on the accompanying condensed consolidated balance sheets in the amount of approximately $1,144,000 and $1,051,000 as of September 30, 2014 and December 31, 2013, respectively, reflects the related collateralized accounts. Amounts advanced under the Factoring Agreement were approximately $2,000 and $0 as of September 30, 2014 and December 31, 2013, respectively. These balances are included in other current liabilities. | |
Segment_and_Geographic_Informa
Segment and Geographic Information | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Segment Reporting [Abstract] | ' | ||||||||||||||||
Disclosure - 15. Segment and Geographic Information | ' | ||||||||||||||||
The Company offers a wide variety of products including nutritional and health, sports and energy drinks, gourmet coffee, skincare and cosmetics, lifestyle, pharmaceutical discount card and pet related items. In addition, the Company offers health and wellness services. The Company’s business is classified by management into two reportable segments: direct selling and commercial coffee. | |||||||||||||||||
The Company’s segments reflect the manner in which the business is managed and how the Company allocates resources and assesses performance. The Company’s chief operating decision maker is the Chief Executive Officer. The Company’s chief operating decision maker evaluates segment performance primarily based on revenue and segment operating income. The principal measures and factors the Company considered in determining the number of reportable segments were revenue, gross margin percentage, sales channel, customer type and competitive risks. In addition, each reporting segment has similar products and customers, similar methods of marketing and distribution and a similar regulatory environment. | |||||||||||||||||
Segment revenue excludes intercompany revenue eliminated in the consolidation. The following tables present certain financial information for each segment (in thousands): | |||||||||||||||||
Three months ended | Nine months ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Revenues | |||||||||||||||||
Direct selling | $ | 31,275 | $ | 19,223 | $ | 84,063 | $ | 56,549 | |||||||||
Commercial coffee | 6,344 | 1,989 | 12,677 | 6,383 | |||||||||||||
Total revenues | $ | 37,619 | $ | 21,212 | $ | 96,740 | $ | 62,932 | |||||||||
Gross profit | |||||||||||||||||
Direct selling | $ | 20,899 | $ | 12,850 | $ | 55,674 | $ | 37,492 | |||||||||
Commercial coffee | 79 | 37 | 82 | 510 | |||||||||||||
Total gross margin | $ | 20,978 | $ | 12,887 | $ | 55,756 | $ | 38,002 | |||||||||
Net income (loss) | |||||||||||||||||
Direct selling | $ | 668 | $ | 918 | $ | 2,740 | $ | 2,979 | |||||||||
Commercial coffee | (483 | ) | (402 | ) | (1,584 | ) | (808 | ) | |||||||||
Total net income | $ | 185 | $ | 516 | $ | 1,156 | $ | 2,171 | |||||||||
Capital expenditures | |||||||||||||||||
Direct selling | $ | 344 | $ | 16 | $ | 680 | $ | 2,866 | |||||||||
Commercial coffee | 528 | 102 | 4,806 | 775 | |||||||||||||
Total capital expenditures | $ | 872 | $ | 118 | $ | 5,486 | $ | 3,641 | |||||||||
As of | |||||||||||||||||
September 30, | December 31, | ||||||||||||||||
2014 | 2013 | ||||||||||||||||
Total assets | |||||||||||||||||
Direct selling | $ | 32,692 | $ | 24,887 | |||||||||||||
Commercial coffee | 18,969 | 9,966 | |||||||||||||||
Total assets | $ | 51,661 | $ | 34,853 | |||||||||||||
Revenues are primarily derived from customers within the United States. International revenues represent 60 different countries. Revenues based on geographic location are summarized in the following table: | |||||||||||||||||
Three months ended | Nine months ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Revenues | |||||||||||||||||
United States | $ | 35,296 | $ | 19,752 | $ | 90,927 | $ | 58,292 | |||||||||
International | 2,323 | 1,460 | 5,813 | 4,640 | |||||||||||||
Total revenues | $ | 37,619 | $ | 21,212 | $ | 96,740 | $ | 62,932 | |||||||||
Distributor Compensation | |||||||||||||||||
In the direct selling segment, the Company utilizes a network of independent distributors, each of whom has signed an agreement with the Company, enabling them to purchase products at wholesale prices, enroll new distributors for their down-line and earn compensation on product purchases made by those down-line distributors. | |||||||||||||||||
Due to the multi-layer independent sales approach, distributor incentives are a significant component of the Company’s cost structure. The Company accrues all distributor compensation expense in the month earned and pays the compensation the following month. | |||||||||||||||||
Subsequent_Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2014 | |
Subsequent Events [Abstract] | ' |
Disclosure - 16. Subsequent Events | ' |
Acquisition of Restart Your Life, LLC | |
On October 1, 2014, the Company acquired certain assets and assumed certain liabilities of Restart Your Life, LLC, a dietary supplement company and provider of immune system support products and therapeutic skin lotions. As a result of this business combination, the Company’s distributors and customers will have access to Restart Your Life’s unique line of products and Restart Your Life’s distributors and clients will gain access to products offered by the Company. The maximum consideration payable by the Company shall be $1,492,000, subject to adjustments. The Company will make monthly payments based on a percentage of Restart Your Life’s distributor revenue and royalty revenue until the earlier of the date that is 10 years from the closing date or such time as the Company has paid to Restart Your Life’s aggregate cash payments of Restart Your Life’s distributor revenue and royalty revenue equal to the maximum aggregate purchase price. The final purchase price allocation has not been determined as of the filing of this report. | |
Line of Credit | |
Subsequent to September 30, 2014, the Company entered into a revolving line of credit agreement (“Line of Credit”), with Wells Fargo Bank, National Association (“Bank”), the Company’s principal banking partner. The Line of Credit provides the Company with a $2.5 million revolving credit line. The outstanding principal balance of the Line of Credit shall bear interest at a fluctuating rate per annum determined by the Bank to be two and three-quarter percent (2.75%) above Daily One Month LIBOR as in effect from time to time. The Company intends to utilize the revolver to finance working capital. As of November 13, 2014, there were no amounts currently drawn against this facility. | |
Inventory_and_Cost_of_Sales_Ta
Inventory and Cost of Sales (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Inventory And Cost Of Sales Tables | ' | ||||||||
Inventories | ' | ||||||||
As of | |||||||||
September 30, | December 31, | ||||||||
2014 | 2013 | ||||||||
Finished goods | $ | 7,753 | $ | 4,642 | |||||
Raw materials | 4,051 | 1,667 | |||||||
11,804 | 6,309 | ||||||||
Reserve for excess and obsolete | (502 | ) | (336 | ) | |||||
Inventory, net | $ | 11,302 | $ | 5,973 |
Acquisitions_and_Business_Comb
Acquisitions and Business Combinations (Tables) | 9 Months Ended | ||||
Sep. 30, 2014 | |||||
LaPitaMember | ' | ||||
Assets acquired and liabilities assumed | ' | ||||
Buildings and structures | $ | 832 | |||
Machinery and equipment | 417 | ||||
Customer relationships, intangible | 367 | ||||
Land | 289 | ||||
Total purchase price | $ | 1,905 | |||
ElParaiso [Member] | ' | ||||
Assets acquired and liabilities assumed | ' | ||||
Land | $ | 1,400 | |||
Total purchase price | $ | 1,400 | |||
Good Herbs [Member] | ' | ||||
Assets acquired and liabilities assumed | ' | ||||
Trademarks and trade name | $ | 200 | |||
Customer-related intangible | 200 | ||||
Distributor organization | 520 | ||||
Accrued expenses | (120 | ) | |||
Total purchase price | $ | 800 | |||
BeyondOrganicMember | ' | ||||
Assets acquired and liabilities assumed | ' | ||||
Goodwill | $ | 300 | |||
Trademarks and trade name | 300 | ||||
Customer-related intangible | 1,300 | ||||
Distributor organization | 1,400 | ||||
Accrued expenses | (200 | ) | |||
Total purchase price | $ | 3,100 |
Intangible_Assets_and_Goodwill
Intangible Assets and Goodwill (Tables) | 9 Months Ended | ||||||||||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||||||||||
Intangible Assets And Goodwill Tables | ' | ||||||||||||||||||||||||
Intangible Assets and Goodwill | ' | ||||||||||||||||||||||||
30-Sep-14 | 31-Dec-13 | ||||||||||||||||||||||||
Cost | Accumulated | Net | Cost | Accumulated | Net | ||||||||||||||||||||
Amortization | Amortization | ||||||||||||||||||||||||
Distributor organizations | $ | 10,345 | $ | 4,909 | $ | 5,436 | $ | 8,425 | $ | 4,169 | $ | 4,256 | |||||||||||||
Trademarks and trade names | 4,341 | 252 | 4,089 | 3,841 | 113 | 3,728 | |||||||||||||||||||
Customer relationships | 6,000 | 1,733 | 4,267 | 4,133 | 1,248 | 2,885 | |||||||||||||||||||
Internally developed software | 720 | 132 | 588 | 720 | 57 | 663 | |||||||||||||||||||
Intangible assets, net | $ | 21,406 | $ | 7,026 | $ | 14,380 | $ | 17,119 | $ | 5,587 | $ | 11,532 |
Convertible_Notes_Payable_Tabl
Convertible Notes Payable (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Convertible Notes Payable Tables | ' | ||||||||
Convertible note oustanding | ' | ||||||||
30-Sep-14 | 31-Dec-13 | ||||||||
Convertible notes | $ | 4,750,000 | $ | - | |||||
Less: detachable warrants discount | (3,697,000 | ) | - | ||||||
Less: conversion feature discount | (1,053,000 | ) | - | ||||||
Amortization of debt discounts | 158,000 | - | |||||||
Convertible notes, net of discounts | $ | 158,000 | $ | - |
Derivative_Liability_Tables
Derivative Liability (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Derivative Liability Tables | ' | ||||||||||||||||
Warrants estimated fair value | ' | ||||||||||||||||
Closing Dates: | Issued Warrants | Estimated Fair Value Per Share as of September 30, 2014 | Estimated Total | Estimated Total Fair Value in Aggregate $ as of issuance dates | |||||||||||||
Fair Value in Aggregate $ as of September 30, 2014 | |||||||||||||||||
July 31, 2014 Warrants | 19,966,768 | $ | 0.18 | $ | 3,633,000 | $ | 3,374,000 | ||||||||||
August 14, 2014 Warrants | 1,721,273 | 0.18 | 316,000 | 300,000 | |||||||||||||
September 10, 2014 Warrants | 114,752 | 0.18 | 21,000 | 23,000 | |||||||||||||
21,802,793 | $ | 3,970,000 | $ | 3,697,000 | |||||||||||||
Monte Carlo fair value of warrants | ' | ||||||||||||||||
Volatility | 90 | % | |||||||||||||||
Risk-free interest rates | 1.58 -1.79 | % | |||||||||||||||
Dividend yield | 0 | % | |||||||||||||||
Expected term | 5 | Yrs |
Fair_Value_of_Financial_Instru1
Fair Value of Financial Instruments (Tables) | 9 Months Ended | 12 Months Ended | ||||||||||||||||||||||||||||||||
Sep. 30, 2014 | Dec. 31, 2013 | |||||||||||||||||||||||||||||||||
Fair Value Of Financial Instruments Tables | ' | ' | ||||||||||||||||||||||||||||||||
Fair value measurement within the three levels of value hierarchy | ' | ' | ||||||||||||||||||||||||||||||||
Fair Value at September 30, 2014 | Fair Value at December 31, 2013 | |||||||||||||||||||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||||||
Liabilities: | Liabilities: | |||||||||||||||||||||||||||||||||
Contingent acquisition debt, current portion | $ | 2,715 | $ | - | $ | - | $ | 2,715 | Contingent acquisition debt, current portion | $ | 1,072 | $ | - | $ | - | $ | 1,072 | |||||||||||||||||
Contingent acquisition debt, less current portion | 7,831 | - | - | 7,831 | Contingent acquisition debt, less current portion | 6,008 | - | - | 6,008 | |||||||||||||||||||||||||
Warrant derivative liability | 3,970 | - | - | 3,970 | Warrant derivative liability | - | - | - | - | |||||||||||||||||||||||||
Total liabilities | $ | 14,515 | $ | - | $ | - | $ | 14,515 | Total liabilities | $ | 7,080 | $ | - | $ | - | $ | 7,080 |
Stock_Option_Plan_Tables
Stock Option Plan (Tables) | 9 Months Ended | ||||||||||||
Sep. 30, 2014 | |||||||||||||
Stock Option Plan Tables | ' | ||||||||||||
Summary of Plan Options | ' | ||||||||||||
Number of | Weighted | Aggregate | |||||||||||
Shares | Average | Intrinsic | |||||||||||
Exercise Price | Value | ||||||||||||
(in thousands) | |||||||||||||
Outstanding December 31, 2013 | 17,572,500 | $ | 0.22 | $ | 478 | ||||||||
Granted | 6,620,500 | 0.23 | |||||||||||
Canceled | (10,000 | ) | 0.18 | ||||||||||
Exercised | (7,750 | ) | 0.24 | - | |||||||||
Outstanding September 30, 2014 | 24,175,250 | 0.22 | 795 | ||||||||||
Exercisable September 30, 2014 | 14,663,750 | $ | 0.22 | $ | 439 |
Recovered_Sheet1
Segment and Geographic information (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Segment And Geographical Information Tables | ' | ||||||||||||||||
Segment information revenue | ' | ||||||||||||||||
Three months ended | Nine months ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Revenues | |||||||||||||||||
Direct selling | $ | 31,275 | $ | 19,223 | $ | 84,063 | $ | 56,549 | |||||||||
Commercial coffee | 6,344 | 1,989 | 12,677 | 6,383 | |||||||||||||
Total revenues | $ | 37,619 | $ | 21,212 | $ | 96,740 | $ | 62,932 | |||||||||
Gross profit | |||||||||||||||||
Direct selling | $ | 20,899 | $ | 12,850 | $ | 55,674 | $ | 37,492 | |||||||||
Commercial coffee | 79 | 37 | 82 | 510 | |||||||||||||
Total gross margin | $ | 20,978 | $ | 12,887 | $ | 55,756 | $ | 38,002 | |||||||||
Net income (loss) | |||||||||||||||||
Direct selling | $ | 668 | $ | 918 | $ | 2,740 | $ | 2,979 | |||||||||
Commercial coffee | (483 | ) | (402 | ) | (1,584 | ) | (808 | ) | |||||||||
Total net income | $ | 185 | $ | 516 | $ | 1,156 | $ | 2,171 | |||||||||
Capital expenditures | |||||||||||||||||
Direct selling | $ | 344 | $ | 16 | $ | 680 | $ | 2,866 | |||||||||
Commercial coffee | 528 | 102 | 4,806 | 775 | |||||||||||||
Total capital expenditures | $ | 872 | $ | 118 | $ | 5,486 | $ | 3,641 | |||||||||
Segment information assets | ' | ||||||||||||||||
As of | |||||||||||||||||
September 30, | December 31, | ||||||||||||||||
2014 | 2013 | ||||||||||||||||
Total assets | |||||||||||||||||
Direct selling | $ | 32,692 | $ | 24,887 | |||||||||||||
Commercial coffee | 18,969 | 9,966 | |||||||||||||||
Total assets | $ | 51,661 | $ | 34,853 | |||||||||||||
Segment information geographical | ' | ||||||||||||||||
Three months ended | Nine months ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Revenues | |||||||||||||||||
United States | $ | 35,296 | $ | 19,752 | $ | 90,927 | $ | 58,292 | |||||||||
International | 2,323 | 1,460 | 5,813 | 4,640 | |||||||||||||
Total revenues | $ | 37,619 | $ | 21,212 | $ | 96,740 | $ | 62,932 |
Basis_of_Presentation_and_Natu1
Basis of Presentation and Nature of Business (Details Narrative) | 9 Months Ended |
Sep. 30, 2014 | |
Direct Selling | ' |
Percentage of revenues | 87.00% |
Commercial Coffee | ' |
Percentage of revenues | 13.00% |
Inventory_and_Cost_of_Sales_De
Inventory and Cost of Sales (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Notes to Financial Statements | ' | ' |
Finished goods | $7,753 | $4,642 |
Raw materials | 4,051 | 1,667 |
Inventory, gross | 11,804 | 6,309 |
Reserve for excess and obsolete | -502 | -336 |
Inventory, net | $11,302 | $5,973 |
Acquisitions_and_Business_Comb1
Acquisitions and Business Combinations (Details) (Good Herbs [Member], USD $) | 9 Months Ended |
In Thousands, unless otherwise specified | Sep. 30, 2014 |
Purchase price assets and liabilities acquired | $800 |
Trademarks [Member] | ' |
Purchase price assets and liabilities acquired | 200 |
Customer Related Intangible [Member] | ' |
Purchase price assets and liabilities acquired | 200 |
Distributor Organization [Member] | ' |
Purchase price assets and liabilities acquired | 520 |
Accrued Expenses [Member] | ' |
Purchase price assets and liabilities acquired | ($120) |
Acquisitions_and_Business_Comb2
Acquisitions and Business Combinations (Details 1) (USD $) | 9 Months Ended |
In Thousands, unless otherwise specified | Sep. 30, 2014 |
BeyondOrganicMember | ' |
Purchase price assets and liabilities acquired | $3,100 |
Goodwill [Member] | BeyondOrganicMember | ' |
Purchase price assets and liabilities acquired | 300 |
Trademarks [Member] | BeyondOrganicMember | ' |
Purchase price assets and liabilities acquired | 300 |
Customer Related Intangible [Member] | BeyondOrganicMember | ' |
Purchase price assets and liabilities acquired | 1,300 |
Distributor Organization [Member] | BeyondOrganicMember | ' |
Purchase price assets and liabilities acquired | 1,400 |
BeyondOrganicMember | Accrued Expenses [Member] | ' |
Purchase price assets and liabilities acquired | ($200) |
Acquisitions_and_Business_Comb3
Acquisitions and Business Combinations (Details 2) (USD $) | 9 Months Ended |
In Thousands, unless otherwise specified | Sep. 30, 2014 |
Building [Member] | LaPitaMember | ' |
Purchase price assets and liabilities acquired | $832 |
Machinery and Equipment [Member] | LaPitaMember | ' |
Purchase price assets and liabilities acquired | 417 |
LaPitaMember | ' |
Purchase price assets and liabilities acquired | 1,905 |
LaPitaMember | Customer Related Intangible [Member] | ' |
Purchase price assets and liabilities acquired | 367 |
LaPitaMember | Land [Member] | ' |
Purchase price assets and liabilities acquired | $289 |
Acquisitions_and_Business_Comb4
Acquisitions and Business Combinations (Details 3) (ElParaiso [Member], USD $) | 9 Months Ended |
In Thousands, unless otherwise specified | Sep. 30, 2014 |
Purchase price assets and liabilities acquired | $1,400 |
Land [Member] | ' |
Purchase price assets and liabilities acquired | $1,400 |
Acquisitions_and_Business_Comb5
Acquisitions and Business Combinations (Details Narrative) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
Revenue | $37,619,000 | $21,212,000 | $96,740,000 | $62,932,000 |
Contingent liability | 1,600,000 | ' | 1,600,000 | ' |
Related contingent acquisition debt, eliminated | 342,000 | ' | 342,000 | ' |
LaPitaMember | ' | ' | ' | ' |
Maximum purchase price | ' | ' | 1,904,840 | ' |
Purchase price paid by CLR | ' | ' | 1,050,000 | ' |
Purchase price paid by H&H | ' | ' | 854,840 | ' |
ElParaiso [Member] | ' | ' | ' | ' |
Maximum purchase price | ' | ' | 1,400,000 | ' |
Purchase price paid by CLR | ' | ' | 1,050,000 | ' |
Purchase price paid by H&H | ' | ' | 350,000 | ' |
El Parasaito Deposit [Member] | ' | ' | ' | ' |
Maximum purchase price | ' | ' | 284,000 | ' |
Purchase price paid by CLR | ' | ' | 200,000 | ' |
Purchase price paid by H&H | ' | ' | 84,000 | ' |
Good Herbs [Member] | ' | ' | ' | ' |
Maximum purchase price | ' | ' | 1,900,000 | ' |
Assumed liabilities | ' | ' | 120,000 | ' |
Revenue compensation percent | ' | ' | 5.00% | ' |
Minimum guaranteed payment | ' | ' | 20,000 | ' |
Estimated fair value of acquisition | ' | ' | 800,000 | ' |
Estimated useful life | ' | ' | '10 years | ' |
Revenue | 183,000 | ' | 242,000 | ' |
BeyondOrganicMember | ' | ' | ' | ' |
Maximum purchase price | ' | ' | 6,200,000 | ' |
Assumed liabilities | ' | ' | 200,000 | ' |
Revenue compensation percent | ' | ' | 10.00% | ' |
Minimum guaranteed payment | ' | ' | 92,500 | ' |
Estimated fair value of acquisition | ' | ' | 3,100,000 | ' |
Aggregate cash amount to be reached | ' | ' | 6,000,000 | ' |
Goodwill | ' | ' | 300,000 | ' |
Revenue | $1,202,000 | ' | $1,957,000 | ' |
Intangible_Assets_and_Goodwill1
Intangible Assets and Goodwill (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Cost | $21,406 | $17,119 |
Accumulated Amortization | 7,026 | 5,587 |
Net | 14,380 | 11,532 |
Distributor Organizations [Member] | ' | ' |
Cost | 10,345 | 8,425 |
Accumulated Amortization | 4,909 | 4,169 |
Net | 5,436 | 4,256 |
Trademarks [Member] | ' | ' |
Cost | 4,341 | 3,841 |
Accumulated Amortization | 252 | 113 |
Net | 4,089 | 3,728 |
Customer Relationships [Member] | ' | ' |
Cost | 6,000 | 4,133 |
Accumulated Amortization | 1,733 | 1,248 |
Net | 4,267 | 2,885 |
Internally Developed Software [Member] | ' | ' |
Cost | 720 | 720 |
Accumulated Amortization | 132 | 57 |
Net | $588 | $663 |
Intangible_Assets_and_Goodwill2
Intangible Assets and Goodwill (Details Narrative) (USD $) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | |
Notes to Financial Statements | ' | ' | ' | ' | ' |
Amortization expense | $480,000 | $396,000 | $1,439,000 | $1,154,000 | ' |
Increase in goodwill | 300,000 | ' | ' | ' | ' |
Goodwill | $6,323,000 | ' | $6,323,000 | ' | $6,023,000 |
Convertible_Notes_Payable_Deta
Convertible Notes Payable (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Convertible Notes Payable Details | ' | ' |
Convertible notes | $158,000 | ' |
Less: detachable warrants discount | -3,697,000 | ' |
Less: conversion feature discount | -1,053,000 | ' |
Amotization of debt discount | 158,000 | ' |
Convertible notes, net of discounts | $158,000 | ' |
Convertible_Notes_Payable_Deta1
Convertible Notes Payable (Details Narrative) (USD $) | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2013 | |
Interest expense for the amortization of the debt discounts | $158,000 | $190,000 | $37,000 |
Unamortized debt discounts | 4,592,000 | 4,592,000 | ' |
Convertible Notes Payable [Member] | ' | ' | ' |
Gross proceeds | ' | 4,750,000 | ' |
Aggregate principal amount of notes sold | ' | 4,750,000 | ' |
Notes convertible into shares of common stock | ' | 13,571,429 | ' |
Conversion price per share | $0.35 | $0.35 | ' |
Warrants to purchase shares of common stock | ' | 18,586,956 | ' |
Exercise price per share | $0.23 | $0.23 | ' |
Interest rate | ' | 8.00% | ' |
Placement agent expenses | ' | 490,000 | ' |
Placement fee | ' | 477,000 | ' |
Warrants issued to placement agent, 1 | ' | 1,858,694 | ' |
Warrants issued to placement agent, 2 | ' | 1,357,143 | ' |
Deferred financing costs | 474,000 | 474,000 | ' |
Fair estimated value of warrants | ' | 3,697,000 | ' |
Discount for the beneficial conversion feature | ' | $1,053,000 | ' |
Derivative_Liability_Details
Derivative Liability (Details) (USD $) | Sep. 30, 2014 |
Issued Warrants | 21,802,793 |
Estimated total fair value in aggregate | $3,970,000 |
Estimated total fair value in aggregate at issuance date | 3,697,000 |
July Warrants [Member] | ' |
Issued Warrants | 19,966,768 |
Estimated fair value per share | $0.18 |
Estimated total fair value in aggregate | 3,633,000 |
Estimated total fair value in aggregate at issuance date | 3,374,000 |
August Warrants [Member] | ' |
Issued Warrants | 1,721,273 |
Estimated fair value per share | $0.18 |
Estimated total fair value in aggregate | 316,000 |
Estimated total fair value in aggregate at issuance date | 300,000 |
September Warrants [Member] | ' |
Issued Warrants | 114,752 |
Estimated fair value per share | $0.18 |
Estimated total fair value in aggregate | 21,000 |
Estimated total fair value in aggregate at issuance date | $23,000 |
Derivative_Liability_Details_1
Derivative Liability (Details 1) (USD $) | 9 Months Ended |
Sep. 30, 2014 | |
Volatility | 90.00% |
Dividend yield | $0 |
Expected term | '5 years |
Minimum [Member] | ' |
Risk-free interest rate | 1.58% |
Maximum [Member] | ' |
Risk-free interest rate | 1.79% |
Derivative_Liability_Details_N
Derivative Liability (Details Narrative) (USD $) | 9 Months Ended |
Sep. 30, 2014 | |
Derivative Liability Details Narrative | ' |
Increase to derivative liability | $273,000 |
Fair_Value_of_Financial_Instru2
Fair Value of Financial Instruments (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Liabilities: | ' | ' |
Contingent acquisition debt, current portion | $2,715 | $1,072 |
Contingent acquisition debt, less current portion | 7,831 | 6,008 |
Warrant derivative liability | 3,970 | ' |
Total liabilities | 14,515 | 7,080 |
Level 1 [Member] | ' | ' |
Liabilities: | ' | ' |
Contingent acquisition debt, current portion | ' | ' |
Contingent acquisition debt, less current portion | ' | ' |
Warrant derivative liability | ' | ' |
Total liabilities | ' | ' |
Level 2 [Member] | ' | ' |
Liabilities: | ' | ' |
Contingent acquisition debt, current portion | ' | ' |
Contingent acquisition debt, less current portion | ' | ' |
Warrant derivative liability | ' | ' |
Total liabilities | ' | ' |
Level 3 [Member] | ' | ' |
Liabilities: | ' | ' |
Contingent acquisition debt, current portion | 2,715 | 1,072 |
Contingent acquisition debt, less current portion | 7,831 | 6,008 |
Warrant derivative liability | 3,970 | ' |
Total liabilities | $14,515 | $7,080 |
Fair_Value_of_Financial_Instru3
Fair Value of Financial Instruments (Details Narrative) (USD $) | 9 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Fair Value Of Financial Instruments Details Narrative | ' | ' |
Net adjustment to fair value of contingent acquisition debt | ($429,000) | $45,000 |
Deferred_Revenues_and_Costs_De
Deferred Revenues and Costs (Details Narrative) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Deferred revenue | $5,180,000 | $3,308,000 |
Heritage Makers [Member] | ' | ' |
Deferred revenue | 5,180,000 | ' |
Deferred costs | $1,679,000 | ' |
Stockholders_Equity_Details_Na
Stockholders' Equity (Details Narrative) (USD $) | 9 Months Ended | |
Sep. 30, 2014 | Dec. 31, 2013 | |
Preferred stock outstanding | 211,135 | 211,135 |
Cumulative dividend payable rate | 8.00% | ' |
Accrued dividends | $0.50 | ' |
Preferred stock conversion rate | '1 for 2 | ' |
Common shares outstanding | 389,872,923 | 388,686,445 |
Warrants to purchase Common stock outstanding | 35,556,005 | ' |
Stock repurchase program authorized shares amount | 15,000,000 | ' |
Stock repurchase program, shares repurchased | 1,321,272 | ' |
Stock repurchase program, shares repurchased price per share | $0.23 | ' |
Stock repurchase program, total shares repurchased to date | 2,337,675 | ' |
weighted average cost | $0.23 | ' |
Remaining shares authorized for repurchase | 12,662,325 | ' |
Minimum [Member] | ' | ' |
Warrants to purchase Common stock outstanding purchase stock price | $0.10 | ' |
Maximum [Member] | ' | ' |
Warrants to purchase Common stock outstanding purchase stock price | $0.50 | ' |
Stock_Option_Plan_Details
Stock Option Plan (Details) (USD $) | 9 Months Ended |
In Thousands, except Share data, unless otherwise specified | Sep. 30, 2014 |
Number of Shares | ' |
Outstanding, beginning of period | 17,572,500 |
Granted | 6,620,500 |
Cancelled | -10,000 |
Exercised | -7,750 |
Outstanding, end of period | 24,175,250 |
Exercisable, end of period | 14,663,750 |
Weighted Average Exercise Price | ' |
Outstanding, beginning of period | $0.22 |
Granted | $0.23 |
Cancelled | $0.18 |
Exercised | $0.24 |
Outstanding, end of period | $0.22 |
Exercisable, end of period | $0.22 |
Aggregate Intrinsic Value | ' |
Outstanding, beginning of period | $478 |
Granted | ' |
Exercised | ' |
Outstanding, end of period | 795 |
Exercisable, end of period | $439 |
Stock_Option_Plan_Details_Narr
Stock Option Plan (Details Narrative) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Notes to Financial Statements | ' | ' | ' | ' |
Common stock options authorized | 40,000,000 | ' | 40,000,000 | ' |
Weighted-average fair value per share of the granted options | ' | ' | $0.16 | $0.14 |
Common stock available for issuance | 15,788,000 | ' | 15,788,000 | ' |
Stock based compensation expense | $141,000 | $224,000 | $388,000 | $651,000 |
Unrecognized compensation expense related to unvested share-based compensation arrangements | $1,234,000 | ' | $1,234,000 | ' |
Weighted-average period recognized | ' | ' | '4 years 11 months 1 day | ' |
Factoring_Agreement_Details_Na
Factoring Agreement (Details Narrative) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Factoring Agreement Details Narrative | ' | ' |
Minimum annual factoring commission payable | $90,000 | $90,000 |
Accounts receivable, due | 1,144,000 | 1,051,000 |
Advancement amounts under Factoring Agreement | $2,000 | $0 |
Segment_and_Geographic_informa1
Segment and Geographic information (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
Revenues | $37,619,000 | $21,212,000 | $96,740,000 | $62,932,000 |
Gross profit | 20,978,000 | 12,887,000 | 55,756,000 | 38,002,000 |
Net income (loss) | ' | ' | 1,156,000 | 2,171,000 |
Direct Selling | ' | ' | ' | ' |
Revenues | ' | ' | 84,063,000 | 56,549,000 |
Gross profit | ' | ' | 55,674,000 | 37,492,000 |
Net income (loss) | ' | ' | 2,740,000 | 2,979,000 |
Capital expenditures | ' | ' | 680,000 | 2,866,000 |
Commercial Coffee | ' | ' | ' | ' |
Revenues | ' | ' | 12,677,000 | 6,383,000 |
Gross profit | ' | ' | 82,000 | 510,000 |
Net income (loss) | ' | ' | -1,584,000 | -808,000 |
Capital expenditures | ' | ' | 4,806,000 | 775,000 |
Total Segment [Member] | ' | ' | ' | ' |
Revenues | ' | ' | 96,740,000 | 62,932,000 |
Gross profit | ' | ' | 55,756,000 | 38,002,000 |
Net income (loss) | ' | ' | 1,156,000 | 2,171,000 |
Capital expenditures | ' | ' | 5,486,000 | 3,641,000 |
Direct Selling [Member] | ' | ' | ' | ' |
Revenues | 31,275,000 | 19,223,000 | ' | ' |
Gross profit | 20,899,000 | 12,850,000 | ' | ' |
Net income (loss) | 668,000 | 918,000 | ' | ' |
Capital expenditures | 344,000 | 16,000 | ' | ' |
Commercial Coffee [Member] | ' | ' | ' | ' |
Revenues | 6,344,000 | 1,989,000 | ' | ' |
Gross profit | 79,000 | 37,000 | ' | ' |
Net income (loss) | -483,000 | -402,000 | ' | ' |
Capital expenditures | 528,000 | 102,000 | ' | ' |
Total Segment [Member] | ' | ' | ' | ' |
Revenues | 37,169,000 | 21,212,000 | ' | ' |
Gross profit | 20,978,000 | 12,887,000 | ' | ' |
Net income (loss) | 185,000 | 516,000 | ' | ' |
Capital expenditures | $872,000 | $118,000 | ' | ' |
Segment_and_Geographic_informa2
Segment and Geographic information (Details 1) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Total assets | $51,661 | $34,853 |
Direct Selling | ' | ' |
Total assets | 32,692 | 24,887 |
Commercial Coffee | ' | ' |
Total assets | $18,969 | $9,966 |
Segment_and_Geographic_informa3
Segment and Geographic information (Details 2) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
Total revenues | $37,619,000 | $21,212,000 | $96,740,000 | $62,932,000 |
United States [Member] | ' | ' | ' | ' |
Total revenues | 35,296,000 | 19,752,000 | 90,927,000 | 58,292,000 |
International [Member] | ' | ' | ' | ' |
Total revenues | $2,323,000 | $1,460,000 | $5,813,000 | $4,640,000 |
Subsequent_Events_Details_Narr
Subsequent Events (Details Narrative) (USD $) | 1 Months Ended |
Nov. 14, 2014 | |
Credit line | $2,500,000 |
Credit line interest rate above LIBOR | 2.75% |
Restart Your Life [Member] | ' |
Maximum consideration payable by the Company | $1,492,000 |