Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Mar. 31, 2015 | 8-May-15 | |
Document And Entity Information | ||
Entity Registrant Name | Youngevity International, Inc. | |
Entity Central Index Key | 1569329 | |
Document Type | 10-Q | |
Document Period End Date | 31-Mar-15 | |
Amendment Flag | FALSE | |
Current Fiscal Year End Date | -19 | |
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 | 392,272,887 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2015 |
Condensed_Consolidated_Balance
Condensed Consolidated Balance Sheets (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Current Assets: | ||
Cash and cash equivalents | $4,273 | $2,997 |
Accounts receivable, due from factoring company | 2,062 | 1,612 |
Accounts receivable, trade | 147 | 180 |
Income tax receivable | 521 | 308 |
Deferred tax assets, net current | 801 | 801 |
Inventory | 13,920 | 11,783 |
Prepaid expenses and other current assets | 4,695 | 3,753 |
Total current assets | 26,419 | 21,434 |
Property and equipment, net | 10,988 | 10,319 |
Deferred tax assets, long-term | 3,140 | 3,140 |
Intangible assets, net | 14,583 | 14,516 |
Goodwill | 6,323 | 6,323 |
Total assets | 61,453 | 55,732 |
Current Liabilities: | ||
Accounts payable | 5,191 | 5,407 |
Accrued distributor compensation | 4,267 | 4,177 |
Accrued expenses | 2,641 | 2,332 |
Deferred revenues | 4,656 | 5,075 |
Other current liabilities | 1,059 | 477 |
Capital lease payable, current portion | 9 | 24 |
Notes payable, current portion | 5,398 | 228 |
Warrant derivative liability | 3,804 | 3,712 |
Contingent acquisition debt, current portion | 2,703 | 2,765 |
Total current liabilities | 29,728 | 24,197 |
Capital lease payable, net of current portion | 1 | 4 |
Notes payable, net of current portion | 4,865 | 4,839 |
Convertible notes payable, net of debt discount | 633 | 396 |
Contingent acquisition debt, net of current portion | 7,385 | 7,707 |
Total liabilities | 42,612 | 37,143 |
Commitments and contingencies | ||
Stockholders' Equity: | ||
Convertible Preferred Stock, $0.001 par value: 100,000,000 shares authorized; 161,135 shares issued and outstanding at March 31, 2015 and December 31, 2014 | ||
Common Stock, $0.001 par value: 600,000,000 shares authorized; 392,392,887 and 390,301,312 shares issued and outstanding at March 31, 2015 and December 31, 2014, respectively | 392 | 390 |
Additional paid-in capital | 168,021 | 167,386 |
Accumulated deficit | -149,281 | -148,912 |
Accumulated other comprehensive loss | -291 | -275 |
Total stockholders' equity | 18,841 | 18,589 |
Total | $61,453 | $55,732 |
Condensed_Consolidated_Balance1
Condensed Consolidated Balance Sheets (Parenthetical) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
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 | 161,135 | 161,135 |
Convertible Preferred Stock, shares outstanding | 161,135 | 161,135 |
Common Stock, par value | $0.00 | $0.00 |
Common Stock, shares authorized | 600,000,000 | 600,000,000 |
Common Stock, shares issued | 392,392,887 | 390,301,312 |
Common Stock, shares outstanding | 392,392,887 | 390,301,312 |
Condensed_Consolidated_Stateme
Condensed Consolidated Statements of Operations (Unaudited) (USD $) | 3 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Condensed Consolidated Statements Of Operations | ||
Revenues | $36,807 | $26,403 |
Cost of revenues | 16,525 | 10,567 |
Gross profit | 20,282 | 15,836 |
Operating expenses | ||
Distributor compensation | 14,138 | 10,949 |
Sales and marketing | 2,121 | 1,362 |
General and administrative | 3,649 | 2,567 |
Total operating expenses | 19,908 | 14,878 |
Operating income | 374 | 958 |
Interest expense, net | -1,082 | -380 |
Change in fair value of warrant derivative liability | -92 | |
Total other expense | -1,174 | -380 |
Net (loss) income before income taxes | -800 | 578 |
Income tax (benefit) provision | -431 | 151 |
Net (loss) income | -369 | 427 |
Preferred stock dividends | -3 | -4 |
Net (loss) income available to common stockholders | ($372) | $423 |
Net (loss) income per share, basic | $0 | $0 |
Net (loss) income per share, diluted | $0 | $0 |
Weighted average shares outstanding, basic | 391,059,153 | 388,505,369 |
Weighted average shares outstanding, diluted | 391,059,153 | 389,804,068 |
Condensed_Consolidated_Stateme1
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Condensed Consolidated Statements Of Comprehensive Income Loss | ||
Net (loss) income: | ($369) | $427 |
Foreign currency translation | -16 | 2 |
Total other comprehensive loss (income) | -16 | 2 |
Comprehensive (loss) income | ($385) | $429 |
Condensed_Consolidated_Stateme2
Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $) | 3 Months Ended | 12 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 |
Cash Flows from Operating Activities: | |||
Net (loss) income | ($369) | $427 | $427 |
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities: | |||
Depreciation and amortization | 776 | 615 | |
Stock based compensation expense | 144 | 148 | |
Amortization of deferred financing costs | 213 | ||
Change in fair value of warrant derivative liability | 92 | ||
Amortization of debt discount | 237 | 11 | |
Expenses allocated to profit sharing agreement | -176 | ||
Gain on disposal of assets | -1 | ||
Changes in operating assets and liabilities, net of effect from business combinations: | |||
Accounts receivable | -417 | -83 | |
Inventory | -2,137 | -63 | |
Prepaid expenses and other current assets | -398 | -997 | |
Accounts payable | -216 | 981 | |
Accrued distributor compensation | 90 | 759 | |
Deferred revenues | -419 | 876 | |
Accrued expenses and other liabilities | 609 | -8 | |
Income taxes receivable | -213 | ||
Net Cash (Used in) Provided by Operating Activities | -2,184 | 2,665 | |
Cash Flows from Investing Activities: | |||
Acquisitions, net of cash acquired | -100 | ||
Purchases of property and equipment | -932 | -326 | |
Net Cash Used in Investing Activities | -1,032 | -326 | |
Cash Flows from Financing Activities: | |||
Proceeds from issuance of secured promissory notes and common stock, net of offering costs | 5,080 | ||
Proceeds from factoring company, net | 279 | 519 | |
Payments of notes payable, net | -54 | -60 | |
Payments of contingent acquisition debt | -688 | -303 | |
Payments of capital leases | -18 | -22 | |
Repurchase of common stock | -91 | -48 | |
Net Cash Provided by Financing Activities | 4,508 | 86 | |
Foreign Currency Effect on Cash and Cash Equivalents | -16 | 2 | |
Net increase in cash and cash equivalents | 1,276 | 2,427 | |
Cash and Cash Equivalents, Beginning of Period | 2,997 | 4,320 | 4,320 |
Cash and Cash Equivalents, End of Period | 4,273 | 6,747 | 2,997 |
Supplemental Disclosures of Cash Flow Information | |||
Cash paid during the period for: Interest | 637 | 386 | |
Cash paid during the period for: Income taxes | 280 | ||
Supplemental Disclosures of Noncash Investing and Financing Activities | |||
Acquisition of net assets in exchange for contingent acquisition debt (see Note 4 for non-cash activity) | 505 | ||
Common stock issued in connection with financing | $587 |
Basis_of_Presentation_and_Desc
Basis of Presentation and Description of Business | 3 Months Ended |
Mar. 31, 2015 | |
Notes to Financial Statements | |
Disclosure - 1. Basis of Presentation and Description 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 March 31, 2015 and for the three months ended March 31, 2015 and 2014 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, 2014. 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. | |
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. | |
Nature of Business | |
Youngevity International, Inc. (the “Company”), founded in 1996, develops and distributes health and nutrition related products through its global independent direct selling network, also known as multi-level marketing, and sells coffee products to commercial customers. The Company operates in two business segments, its direct selling segment where products are offered through a global distribution network of preferred customers and distributors and its commercial coffee segment where products are sold directly to businesses. In the following text, the terms “we,” “our,” and “us” may refer, as the context requires, to the Company or collectively to the Company and its subsidiaries. | |
The Company operates through the following domestic wholly-owned subsidiaries: AL Global Corporation, which operates our direct selling networks, CLR Roasters, LLC (“CLR”), our commercial coffee business, Financial Destinations, Inc., FDI Management, Inc., and MoneyTrax LLC (collectively referred to as “FDI”), 2400 Boswell LLC, MK Collaborative LLC, Youngevity Global LLC and the wholly-owned foreign subsidiaries Youngevity Australia Pty. Ltd. and Youngevity NZ, Ltd., Siles Plantation Family Group S.A. located in Nicaragua (subsidiary of CLR), Youngevity Mexico S.A. de CV, Youngevity Israel, Ltd., Youngevity Russia, LLC, Youngevity Colombia S.A.S and Youngevity International Singapore Pte. Ltd. | |
Use of Estimates | |
The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense for each reporting period. Estimates are used in accounting for, among other things, allowances for doubtful accounts, deferred taxes, and related valuation allowances, fair value of derivative liabilities, uncertain tax positions, loss contingencies, fair value of options granted under our stock based compensation plan, 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 sales returns. | |
Actual results may differ from previously estimated amounts and such differences may be material to the consolidated financial statements. Estimates and assumptions are reviewed periodically and the effects of revisions are reflected prospectively in the period they occur. | |
Cash and Cash Equivalents | |
The Company considers only its monetary liquid assets with original maturities of three months or less as cash and cash equivalents. | |
Earnings Per Share | |
Basic earnings (loss) per share is computed by dividing net income (loss) 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 in-the-money stock options, warrants and convertible preferred stock, based on the average stock price for each period using the treasury stock method. Since the Company incurred a loss for the three months ended March 31, 2015, 1,405,101 common share equivalents were excluded in the computation of diluted loss per share. | |
Stock Based Compensation | |
The Company accounts for stock based compensation in accordance with 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. | |
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 segment. Under the terms of the Factoring Agreement, the Company effectively sold those identified accounts receivable to Crestmark with non-credit related recourse. The Company continues to be responsible for the servicing and administration of the receivables. | |
The Company accounts for the sale of receivables under the Factoring Agreement as secured borrowings 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 $2,062,000 and $1,612,000 as of March 31, 2015 and December 31, 2014, respectively, reflects the related collateralized accounts. | |
The Company's outstanding liability related to the Factoring Agreement was approximately $818,000 and $538,000 as of March 31, 2015 and December 31, 2014, respectively, and is included in other current liabilities on the condensed consolidated balance sheets. | |
Plantation Costs | |
The Company’s commercial coffee segment CLR includes the results of the Siles Plantation Family Group (“Siles”), which is a 450 acre coffee plantation and a dry-processing facility located on 26 acres both located in Matagalpa, Nicaragua. Siles is a wholly-owned subsidiary of CLR, which includes the depreciation and amortization of capitalized costs, development and maintenance and harvesting costs. In accordance with US generally accepted accounting principles (“GAAP”), plantation maintenance and harvesting costs for commercially producing coffee farms are charged against earnings when sold. Deferred harvest costs accumulate throughout the year, and are expensed over the remainder of the year as the coffee is sold. The difference between actual harvest costs incurred and the amount of harvest costs recognized as expense is recorded as either an increase or decrease in deferred harvest costs, which is reported as an asset and included with prepaid expenses and other current assets in the condensed consolidated balance sheets. As of March 31, 2015 the harvest cost associated with the 2015 production is $697,000. | |
Revenue Recognition | |
The Company recognizes revenue from product sales when the following four criteria are met: persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the selling price is fixed or determinable, and collectability is reasonably assured. The Company ships the majority of its direct selling segment products directly to the distributors via UPS or USPS and receives substantially all payments for these sales in the form of credit card transactions. The Company regularly monitors its use of credit card or merchant services to ensure that its financial risk related to credit quality and credit concentrations is actively managed. Revenue is recognized upon passage of title and risk of loss to customers when product is shipped from the fulfillment facility. The Company ships the majority of its coffee segment products via common carrier and invoices its customer for the products. Revenue is recognized when the title and risk of loss is passed to the customer under the terms of the shipping arrangement, typically, FOB shipping point. | |
Sales revenue and a reserve for estimated returns are recorded net of sales tax when product is shipped. | |
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 March 31, 2015, the balance in deferred revenues attributable to Heritage Makers was approximately $4,656,000. | |
Deferred costs relate to Heritage Makers prepaid commissions that are recognized in expense at the time the related revenue is recognized. As of March 31, 2015, the balance in deferred costs was approximately $1,725,000 and was included in prepaid expenses and current assets. | |
Recently Issued Accounting Pronouncements | |
With the exception of those stated below, there have been no recent accounting pronouncements or changes in accounting pronouncements during the three months ended March 31, 2015, as compared to the recent accounting pronouncements described in the Annual Report that are of material significance, or have potential material significance, to the Company. | |
In February 2015, the FASB issued ASU No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis. ASU 2015-02 provides guidance on the consolidation evaluation for reporting organizations that are required to evaluate whether they should consolidate certain legal entities such as limited partnerships, limited liability corporations, and securitization structures (collateralized debt obligations, collateralized loan obligations, and mortgage-backed security transactions). ASU 2015-02 is effective for periods beginning after December 15, 2015. The adoption of ASU 2015-02 is not expected to have a material effect on the Company's consolidated financial statements. Early adoption is permitted. | |
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. On April 1, 2015 the FASB proposed a one year delay in the effective date. If approved, the proposal will also permit early adoption up to the original effective date for public companies. The Company is evaluating the potential impact of this adoption on its consolidated financial statements. |
2_Income_Taxes
2. Income Taxes | 3 Months Ended |
Mar. 31, 2015 | |
Notes to Financial Statements | |
Disclosure - 2. Income Taxes | The Company accounts for income taxes in accordance with ASC Topic 740, "Income Taxes," under the asset and liability method which includes the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements. Under this approach, deferred taxes are recorded for the future tax consequences expected to occur when the reported amounts of assets and liabilities are recovered or paid. The provision for income taxes represents income taxes paid or payable for the current year plus the change in deferred taxes during the year. Deferred taxes result from differences between the financial statement and tax basis of assets and liabilities, and are adjusted for changes in tax rates and tax laws when changes are enacted. The effects of future changes in income tax laws or rates are not anticipated. |
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 | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
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. | ||||||||
The Company analyzes its firm purchase commitments, which currently consist primarily of commitments to purchase green coffee, at each period end. When necessary, provisions are made in each reporting period if the amounts to be realized from the disposition of the inventory items are not adequately protected by firm sales contracts of such inventory items. In that situation, a loss would be recorded for the inventory cost in excess of the saleable market value. There were no such losses for the three months ended March 31, 2015 and 2014. | |||||||||
Inventories consist of the following (in thousands): | |||||||||
As of | |||||||||
March 31, | December 31, | ||||||||
2015 | 2014 | ||||||||
Finished goods | $ | 7,886 | $ | 7,817 | |||||
Raw materials | 6,511 | 4,444 | |||||||
14,397 | 12,261 | ||||||||
Reserve for excess and obsolete | (477 | ) | (478 | ) | |||||
Inventory, net | $ | 13,920 | $ | 11,783 | |||||
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 | 3 Months Ended | ||||
Mar. 31, 2015 | |||||
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. 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 on 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 three months ended March 31, 2015, the Company entered into two acquisitions, which are detailed below. The acquisitions were conducted in an effort to expand the Company’s distributor network, enhance and expand its product portfolio, and diversify its product mix. 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. | |||||
Sta-Natural, LLC | |||||
On February 23, 2015, the Company acquired certain assets and assumed certain liabilities of Sta-Natural, LLC, (“Sta-Natural”) a dietary supplement company and provider of vitamins, minerals and supplements for families and their pets. As a result of this business combination, the Company’s distributors and customers have access to Sta-Natural’s unique line of products and Sta-Natural’s distributors and clients gain access to products offered by the Company. The purchase price consisted of a maximum aggregate purchase price of $500,000. The Company made an initial cash payment of $50,000 of which the Company also received certain inventories valued at $25,000, the initial cash payment will be applied against and reduce the maximum aggregate purchase price. | |||||
The Company has agreed to pay Sta-Natural a monthly payment equal to eight (8%) of all gross sales revenue generated by the Sta-Natural distributor organization in accordance with the asset purchase agreement, regardless of products being sold and pay five (5%) royalty on Sta-Natural product revenue until the earlier of the date that is fifteen (15) years from the closing date or such time as the Company has paid aggregate cash payment equal to $450,000. All payments of Sta-Natural distributor revenue will be applied against and reduce the maximum aggregate purchase price; however if the aggregate gross sales revenue generated by the Sta-Natural distributor organization, for a twelve (12) months period following the closing date does not equal or exceed $500,000 then the maximum aggregate purchase price will be reduced by the difference of the $500,000 and the average distributor revenue for a twelve (12) month period: provided, however, that in no event will the maximum aggregate purchase price be reduced below $300,000. | |||||
The contingent consideration’s estimated fair value at the date of acquisition was $285,000 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 Sta-Natural is as follows (in thousands): | |||||
Distributor organization | $ | 140 | |||
Customer-related intangible | 110 | ||||
Trademarks and trade name | 60 | ||||
Initial cash payment | (25 | ) | |||
Total purchase price | $ | 285 | |||
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 ten (10) 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. | |||||
Revenues related to the acquisition for the three months ending March 31, 2015 were minimal. | |||||
The pro-forma effect assuming the business combination with Sta-Natural discussed above had occurred at the beginning of the current period is not presented as the information was not available. | |||||
JD Premium LLC | |||||
On March 4, 2015, the Company acquired certain assets of JD Premium, LLC (“JD Premium”) a dietary supplement company. As a result of this business combination, the Company’s distributors and customers have access to JD Premium’s unique line of products and JD Premium’s distributors and clients gain access to products offered by the Company. The purchase price consisted of a maximum aggregate purchase price of $500,000. The Company made an initial cash payment of $50,000 for the purchase of certain inventories, which will be applied against and reduce the maximum aggregate purchase price. | |||||
The Company has agreed to pay JD Premium a monthly payment equal to seven (7%) of all gross sales revenue generated by the JD Premium distributor organization in accordance with the asset purchase agreement, regardless of products being sold and pay five (5%) royalty on JD Premium product revenue until the earlier of the date that is fifteen (15) years from the closing date or such time as the Company has paid aggregate cash payment equal to $450,000. All payments of JD Premium distributor revenue will be applied against and reduce the maximum aggregate purchase price; however if the aggregate gross sales revenue generated by the JD Premium distributor organization, effective April 4, 2015 for a twenty-four (24) months period does not equal or exceed $500,000 then the maximum aggregate purchase price will be reduced by the difference of the $500,000 and the average annual distributor revenue; provided, however, that in no event will the maximum aggregate purchase price be reduced below $300,000. | |||||
The contingent consideration’s estimated fair value at the date of acquisition was $195,000 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 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 JD Premium is as follows (in thousands): | |||||
Distributor organization | $ | 110 | |||
Customer-related intangible | 85 | ||||
Total purchase price | $ | 195 | |||
The preliminary fair value of intangible assets acquired was determined through the use of a discounted cash flow methodology. The customer-related intangible and distributor organization intangible are being amortized over their estimated useful life of ten (10) 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. | |||||
Revenues related to the acquisition for the three months ending March 31, 2015 were minimal. | |||||
The pro-forma effect assuming the business combination with JD Premium discussed above had occurred at the beginning of the current period is not presented as the information was not available. | |||||
5_Intangible_Assets_and_Goodwi
5. Intangible Assets and Goodwill | 3 Months Ended | ||||||||||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||||||||||
Notes to Financial Statements | |||||||||||||||||||||||||
Disclosure - 5. Intangible Assets and Goodwill | Intangible Assets | ||||||||||||||||||||||||
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): | |||||||||||||||||||||||||
31-Mar-15 | 31-Dec-14 | ||||||||||||||||||||||||
Cost | Accumulated | Net | Cost | Accumulated | Net | ||||||||||||||||||||
Amortization | Amortization | ||||||||||||||||||||||||
Distributor organizations | $ | 10,760 | $ | 5,357 | $ | 5,403 | $ | 10,475 | $ | 5,126 | $ | 5,349 | |||||||||||||
Trademarks and trade names | 4,516 | 360 | 4,156 | 4,441 | 304 | 4,137 | |||||||||||||||||||
Customer relationships | 6,620 | 2,133 | 4,487 | 6,400 | 1,932 | 4,468 | |||||||||||||||||||
Internally developed software | 720 | 183 | 537 | 720 | 158 | 562 | |||||||||||||||||||
Intangible assets | $ | 22,616 | $ | 8,033 | $ | 14,583 | $ | 22,036 | $ | 7,520 | $ | 14,516 | |||||||||||||
Amortization expense related to intangible assets was approximately $513,000 and $477,000 for the three months ended March 31, 2015 and 2014, respectively. | |||||||||||||||||||||||||
Trade names, which do not have legal, regulatory, contractual, competitive, economic, or other factors that limit the useful lives are considered indefinite lived assets and 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. Approximately $2,267,000 in trademarks from business combinations have been identified as having indefinite lives. | |||||||||||||||||||||||||
Goodwill | |||||||||||||||||||||||||
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 Financial Accounting Standards Board (“FASB”) 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. | |||||||||||||||||||||||||
The Company first assesses qualitative factors to determine whether it is more likely than not (a likelihood of more than 50%) that goodwill is impaired. After considering the totality of events and circumstances, the Company determines whether it is more likely than not that goodwill is not impaired. If impairment is indicated, then the Company conducts the two-step impairment testing process. The first step compares the Company’s fair value to its net book value. If the fair value is less than the net book value, the second step of the test compares the implied fair value of the Company’s goodwill to its carrying amount. If the carrying amount of goodwill exceeds its implied fair value, the Company would recognize an impairment loss equal to that excess amount. The testing is generally performed at the “reporting unit” level. A reporting unit is the operating segment, or a business one level below that operating segment (referred to as a component) if discrete financial information is prepared and regularly reviewed by management at the component level. The Company has determined that its reporting units for goodwill impairment testing are the Company’s reportable segments. As such, the Company analyzed its goodwill balances separately for the commercial coffee reporting unit and the direct selling reporting unit. The goodwill balance as of March 31, 2015 was $6,323,000. There were no triggering events indicating impairment of goodwill or intangible assets during the three months ended March 31, 2015 and 2014. |
Debt
Debt | 3 Months Ended | ||||
Mar. 31, 2015 | |||||
Notes to Financial Statements | |||||
Disclosure - 6. Debt | January 2015 Private Placement | ||||
On January 29, 2015, the Company completed its January 2015 Private Placement and entered into Note Purchase Agreements (the “Note” or “Notes”) with three accredited investors. The Company raised aggregate gross proceeds of $5,250,000 in the offering and sold aggregate units consisting of the Notes in the aggregate principal amount of $5,250,000 and 1,575,000 shares of our common stock, par value $0.001 per share. The Notes bear interest at a rate of eight percent (8%) per annum to be paid quarterly in arrears starting March 31, 2015, with all principal and unpaid interest due at maturity on January 5, 2016 and January 28, 2016 in accordance with the respective Notes. The Company has the right to prepay the Notes at any time at a rate equal to 100% of the then outstanding principal balance and accrued interest. The Notes rank pari passu to all other notes of the Company other than certain outstanding senior debt. The Company’s wholly-owned subsidiary, CLR, has provided collateral to secure the repayment of the Notes and has pledged the Nicaragua green coffee beans acquired with the proceeds, that are to be sold under the terms of our customer’s Letter of Intent, Sourcing and Supply Agreement, the contract rights under the letter of intent and all proceeds of the foregoing (which lien is junior to CLR’s line of credit and equipment lease but senior to all of its other obligations), all subject to the terms and conditions of a security agreement among the Company, CLR and the investors. 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. With respect to the aggregate offering, the Company used one placement agent and paid a placement fee of $157,500, in addition to the payment of certain legal expenses of the placement agent, and the Company issued to the placement agent an aggregate of 875,000 shares of common stock, par value $0.001 per share. | |||||
Issuance costs related to the Notes and the common stock were approximately $170,000 and $587,000 in cash and non-cash costs, respectively, which were recorded as deferred financing costs and are included under prepaid expenses and other current assets on the condensed consolidated balance sheets and are being amortized over the term of the Notes. As of March 31, 2015 the remaining balance in deferred financing costs is approximately $568,000. The quarterly amortization of the deferred financing costs is $189,000 and is recorded as interest expense. | |||||
The net proceeds are primarily for the purchase of green coffee to accelerate the growth of the coffee segment green coffee business. As of March 31, 2015 the principal amount of $5,250,000 remains outstanding on the Notes. | |||||
Convertible Notes Payable | |||||
Note Purchase Agreement – July 2014 Private Placement | |||||
As of March 31, 2015, the Company had outstanding convertible notes payable of $633,000, net of unamortized discounts of $4,117,000. The outstanding convertible notes payable (“Offerings”) of the Company are secured by certain pledged Company assets, bear interest at a rate of eight percent (8%) per annum and paid quarterly in arrears with all principal and unpaid interest due at maturity between July 30, 2019 and September 9, 2019. As of March 31, 2015 the principal amount of $4,750,000 remains outstanding. | |||||
In connection with the issuance of these Offerings, the Company issued warrants that 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 Offerings 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 Offerings to interest expense. We revalue the derivative liability on each balance sheet date until the securities to which the derivatives liabilities relate are exercised or expire, in accordance with the Offerings (see Note 7, below.) | |||||
Additionally, upon issuance of the Offerings, the Company recorded the discount for the beneficial conversion feature of $1,053,000. The debt discount associated with the beneficial conversion feature is amortized to interest expense over the life of the Offerings. The Company recorded approximately $238,000 of interest expense for the amortization of the debt discounts during the three months ended March 31, 2015. | |||||
The following table summarizes information relative to the convertible note(s) outstanding (in thousands): | |||||
31-Mar-15 | |||||
Convertible notes | $ | 4,750 | |||
Less: detachable warrants discount | (3,697 | ) | |||
Less: conversion feature discount | (1,053 | ) | |||
Amortization of debt discounts | 633 | ||||
Convertible notes, net of discounts | $ | 633 | |||
Cash issuance costs related to the Offerings were approximately $490,000 and were recorded as deferred financing costs and are included in prepaid expenses and other current assets on the condensed consolidated balance sheets and are being amortized over the term of the Offerings. As of March 31, 2015 the remaining balance in deferred financing costs is approximately $425,000. The quarterly amortization of the deferred financing costs is approximately $25,000 and is recorded as interest expense. | |||||
Derivative_Liability
Derivative Liability | 3 Months Ended | ||||||||||||
Mar. 31, 2015 | |||||||||||||
Notes to Financial Statements | |||||||||||||
Disclosure - 7. 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 8, below) 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 Total Fair Value in Aggregate $ as of | Estimated Total Fair Value in Aggregate $ as of December 31, 2014 | ||||||||||
31-Mar-15 | |||||||||||||
July 31, 2014 Warrants | 19,966,768 | $ | 3,484,000 | $ | 3,398,000 | ||||||||
August 14, 2014 Warrants | 1,721,273 | 300,000 | 294,000 | ||||||||||
September 10, 2014 Warrants | 114,752 | 20,000 | 20,000 | ||||||||||
21,802,793 | $ | 3,804,000 | $ | 3,712,000 | |||||||||
The change in the fair value of the derivative liability between March 31, 2015 and December 31, 2014, resulted in an increase only to the derivate liability of approximately $92,000 which was recognized as other expense in the condensed consolidated statements of operations. 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 value of the warrants were computed as of March 31, 2015 and as of December 31, 2014 using a Black-Scholes and Monte Carlo option pricing model, respectively, using the following assumptions: | |||||||||||||
31-Mar-15 | 31-Dec-14 | ||||||||||||
Stock price volatility | 90 | % | 90% | ||||||||||
Risk-free interest rates | 1.37 | % | 1.65% | ||||||||||
Annual dividend yield | 0 | % | 0% | ||||||||||
Expected life | 4.3-4.4 years | 4.6-4.7 years | |||||||||||
In addition, Management assessed the probabilities of future financing assumptions in the valuation models. |
Fair_Value_of_Financial_Instru
Fair Value of Financial Instruments | 3 Months Ended | ||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||
Notes to Financial Statements | |||||||||||||||||
Disclosure - 8. 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 liabilities, capital lease obligations and deferred revenue 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 6 and 7, above.) 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. 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 March 31, 2015 | |||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | ||||||||||||||
Liabilities: | |||||||||||||||||
Contingent acquisition debt, current portion | $ | 2,703 | $ | - | $ | - | $ | 2,703 | |||||||||
Contingent acquisition debt, less current portion | 7,385 | - | - | 7,385 | |||||||||||||
Warrant derivative liability | 3,804 | - | - | 3,804 | |||||||||||||
Total liabilities | $ | 13,892 | $ | - | $ | - | $ | 13,892 | |||||||||
Fair Value at December 31, 2014 | |||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | ||||||||||||||
Liabilities: | |||||||||||||||||
Contingent acquisition debt, current portion | $ | 2,765 | $ | - | $ | - | $ | 2,765 | |||||||||
Contingent acquisition debt, less current portion | 7,707 | - | - | 7,707 | |||||||||||||
Warrant derivative liability | 3,712 | - | - | 3,712 | |||||||||||||
Total liabilities | $ | 14,184 | $ | - | $ | - | $ | 14,184 | |||||||||
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. There were no changes to the fair value of contingent acquisition liabilities during the three months ended March 31, 2015 and 2014. |
Stockholders_Equity
Stockholders' Equity | 3 Months Ended | ||||||||||||
Mar. 31, 2015 | |||||||||||||
Notes to Financial Statements | |||||||||||||
Disclosure - 9. 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”. | ||||||||||||
Convertible Preferred Stock | |||||||||||||
The Company had 161,135 shares of Series A Convertible Preferred Stock ("Series A Preferred") outstanding as of March 31, 2015 and December 31, 2014, and accrued dividends of approximately $89,000 and $86,000, respectively. 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. | |||||||||||||
Common Stock | |||||||||||||
The Company had 392,392,887 common shares outstanding as of March 31, 2015. The holders of Common Stock are entitled to one vote per share on matters brought before the shareholders. As of March 31, 2015, warrants to purchase 35,214,980 shares of Common Stock at prices ranging from $0.10 to $0.50 were outstanding, exercisable and expire at various dates through August 2019. | |||||||||||||
Repurchase of Common Stock | |||||||||||||
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 three months ended March 31, 2015, the Company repurchased a total of 359,675 shares at a weighted-average cost of $0.25. A total of 2,821,625 shares have been repurchased to-date at a weighted-average cost of $0.24. The remaining number of shares authorized for repurchase under the plan as of March 31, 2015 is 12,178,375. | |||||||||||||
Stock Options | |||||||||||||
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 March 31, 2015, the Company had 10,802,900 shares of Common Stock available for issuance under the Plan. | |||||||||||||
A summary of the Plan Options for the three months ended March 31, 2015 is presented in the following table: | |||||||||||||
Number of | Weighted | Aggregate | |||||||||||
Shares | Average | Intrinsic | |||||||||||
Exercise Price | Value | ||||||||||||
(in thousands) | |||||||||||||
Outstanding December 31, 2014 | 28,918,500 | $ | 0.21 | $ | 786 | ||||||||
Granted | 244,750 | 0.23 | |||||||||||
Canceled/expired | (5,400 | ) | 0.19 | ||||||||||
Exercised | (1,250 | ) | 0.24 | - | |||||||||
Outstanding March 31, 2015 | 29,156,600 | $ | 0.21 | $ | 1,069 | ||||||||
Exercisable March 31, 2015 | 17,228,600 | $ | 0.22 | $ | 530 | ||||||||
The weighted-average fair value per share of the granted options for the three months ended March 31, 2015 and 2014 was approximately $0.12 and $0.09, respectively. | |||||||||||||
Stock based compensation expense included in the condensed consolidated statements of operations was $144,000 and $148,000 for the three months ended March 31, 2015 and 2014, respectively. | |||||||||||||
As of March 31, 2015, there was approximately $1,758,000 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 5.12 years. | |||||||||||||
The Company uses the Black-Scholes option-pricing 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 expected term of the option. The expected life is based on the contractual life 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. | |||||||||||||
Shares Issued in Private Placement | |||||||||||||
On January 29, 2015, we completed our January 2015 Private Placement pursuant to which we entered into Notes Payable Agreements (see Note 6, above) and issued 2,450,000 shares of our common stock. The shares of common stock issued under the January 2015 Private Placement were offered and issued without registration under the Securities Act of 1933, as amended, (the “1933 Act”). The securities may not be sold, transferred or assigned in the absence of an effective registration statement for the securities under the 1933 Act, or an opinion of counsel, in form, substance and scope customary for opinions of counsel in comparable transaction, that registration in required under the 1933 Act or unless sold pursuant to Rule 144 under the 1933 Act. | |||||||||||||
Warrants to Purchase Common Stock | |||||||||||||
As of March 31, 2015, warrants to purchase 35,214,980 shares of the Company's common stock at prices ranging from $0.10 to $0.50 were outstanding. All warrants are exercisable as of March 31, 2015 expiring at various dates through August 2019, and have a weighted average remaining term of approximately 3.05 years as of March 31, 2015. |
Segment_and_Geographic_Informa
Segment and Geographic Information | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Notes to Financial Statements | |||||||||
Disclosure - 10. Segment and Geographic Information | The Company offers a wide variety of products to support a healthy lifestyle including; Nutritional Supplements, Sports and Energy Drinks, Health and Wellness, Weight Loss, Gourmet Coffee, Skincare and Cosmetics, Lifestyle Services, digital products including Scrap books and Memory books, Packaged Foods, Pharmacy Discount Cards, and Clothing and Jewelry line. 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. | |||||||||
The accounting policies of the segments are consistent with those described in the summary of significant accounting policies. Segment revenue excludes intercompany revenue eliminated in the consolidation. The following tables present certain financial information for each segment (in thousands): | |||||||||
Three Months Ended March 31, | |||||||||
2015 | 2014 | ||||||||
Revenues | |||||||||
Direct selling | $ | 31,623 | $ | 24,132 | |||||
Commercial coffee | 5,184 | 2,271 | |||||||
Total revenues | $ | 36,807 | $ | 26,403 | |||||
Gross profit | |||||||||
Direct selling | $ | 20,724 | $ | 15,842 | |||||
Commercial coffee | (442 | ) | (6 | ) | |||||
Total gross profit | $ | 20,282 | $ | 15,836 | |||||
Net income (loss) | |||||||||
Direct selling | $ | 215 | $ | 762 | |||||
Commercial coffee | (584 | ) | (335 | ) | |||||
Total net (loss) income | $ | (369 | ) | $ | 427 | ||||
Capital expenditures | |||||||||
Direct selling | $ | 384 | $ | 114 | |||||
Commercial coffee | 548 | 212 | |||||||
Total capital expenditures | $ | 932 | $ | 326 | |||||
As of | |||||||||
31-Mar-15 | 31-Dec-14 | ||||||||
Total assets | |||||||||
Direct selling | $ | 38,619 | $ | 36,149 | |||||
Commercial coffee | 22,834 | 19,583 | |||||||
Total assets | $ | 61,453 | $ | 55,732 | |||||
Total tangible assets located outside the United States are approximately $4.7 million as of March 31, 2015. For the year ended December 31, 2014, total assets located outside the United States were approximately $4.2 million. | |||||||||
The Company conducts its operations primarily in the United States. The Company also sells its products in 70 different countries. The following table displays revenues attributable to the geographic location of the customer (in thousands): | |||||||||
Three Months Ended March 31, | |||||||||
2015 | 2014 | ||||||||
United States | $ | 34,123 | $ | 24,821 | |||||
International | 2,684 | 1,582 | |||||||
Total revenues | $ | 36,807 | $ | 26,403 | |||||
Basis_of_Presentation_and_Desc1
Basis of Presentation and Description of Business (Policies) | 3 Months Ended |
Mar. 31, 2015 | |
Basis Of Presentation And Description Of Business Policies | |
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 March 31, 2015 and for the three months ended March 31, 2015 and 2014 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, 2014. 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. | |
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. | |
Nature of Business | Youngevity International, Inc. (the “Company”), founded in 1996, develops and distributes health and nutrition related products through its global independent direct selling network, also known as multi-level marketing, and sells coffee products to commercial customers. The Company operates in two business segments, its direct selling segment where products are offered through a global distribution network of preferred customers and distributors and its commercial coffee segment where products are sold directly to businesses. In the following text, the terms “we,” “our,” and “us” may refer, as the context requires, to the Company or collectively to the Company and its subsidiaries. |
The Company operates through the following domestic wholly-owned subsidiaries: AL Global Corporation, which operates our direct selling networks, CLR Roasters, LLC (“CLR”), our commercial coffee business, Financial Destinations, Inc., FDI Management, Inc., and MoneyTrax LLC (collectively referred to as “FDI”), 2400 Boswell LLC, MK Collaborative LLC, Youngevity Global LLC and the wholly-owned foreign subsidiaries Youngevity Australia Pty. Ltd. and Youngevity NZ, Ltd., Siles Plantation Family Group S.A. located in Nicaragua (subsidiary of CLR), Youngevity Mexico S.A. de CV, Youngevity Israel, Ltd., Youngevity Russia, LLC, Youngevity Colombia S.A.S and Youngevity International Singapore Pte. Ltd. | |
Plantation Costs | The Company’s commercial coffee segment CLR includes the results of the Siles Plantation Family Group (“Siles”), which is a 450 acre coffee plantation and a dry-processing facility located on 26 acres both located in Matagalpa, Nicaragua. Siles is a wholly-owned subsidiary of CLR, which includes the depreciation and amortization of capitalized costs, development and maintenance and harvesting costs. In accordance with US generally accepted accounting principles (“GAAP”), plantation maintenance and harvesting costs for commercially producing coffee farms are charged against earnings when sold. Deferred harvest costs accumulate throughout the year, and are expensed over the remainder of the year as the coffee is sold. The difference between actual harvest costs incurred and the amount of harvest costs recognized as expense is recorded as either an increase or decrease in deferred harvest costs, which is reported as an asset and included with prepaid expenses and other current assets in the condensed consolidated balance sheets. As of March 31, 2015 the harvest cost associated with the 2015 production is $697,000. |
Revenue Recognition | he Company recognizes revenue from product sales when the following four criteria are met: persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the selling price is fixed or determinable, and collectability is reasonably assured. The Company ships the majority of its direct selling segment products directly to the distributors via UPS or USPS and receives substantially all payments for these sales in the form of credit card transactions. The Company regularly monitors its use of credit card or merchant services to ensure that its financial risk related to credit quality and credit concentrations is actively managed. Revenue is recognized upon passage of title and risk of loss to customers when product is shipped from the fulfillment facility. The Company ships the majority of its coffee segment products via common carrier and invoices its customer for the products. Revenue is recognized when the title and risk of loss is passed to the customer under the terms of the shipping arrangement, typically, FOB shipping point. |
Sales revenue and a reserve for estimated returns are recorded net of sales tax when product is shipped. | |
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 March 31, 2015, the balance in deferred revenues attributable to Heritage Makers was approximately $4,656,000. |
Deferred costs relate to Heritage Makers prepaid commissions that are recognized in expense at the time the related revenue is recognized. As of March 31, 2015, the balance in deferred costs was approximately $1,725,000 and was included in prepaid expenses and current assets. | |
Use of Estimates | The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense for each reporting period. Estimates are used in accounting for, among other things, allowances for doubtful accounts, deferred taxes, and related valuation allowances, fair value of derivative liabilities, uncertain tax positions, loss contingencies, fair value of options granted under our stock based compensation plan, 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 sales returns. |
Actual results may differ from previously estimated amounts and such differences may be material to the consolidated financial statements. Estimates and assumptions are reviewed periodically and the effects of revisions are reflected prospectively in the period they occur. | |
Cash and Cash Equivalents | The Company considers only its monetary liquid assets with original maturities of three months or less as cash and cash equivalents. |
Earnings Per Share | Basic earnings (loss) per share is computed by dividing net income (loss) 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 in-the-money stock options, warrants and convertible preferred stock, based on the average stock price for each period using the treasury stock method. Since the Company incurred a loss for the three months ended March 31, 2015, 1,405,101 common share equivalents were excluded in the computation of diluted loss per share. |
Stock Based Compensation | The Company accounts for stock based compensation in accordance with 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. | |
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 segment. Under the terms of the Factoring Agreement, the Company effectively sold those identified accounts receivable to Crestmark with non-credit related recourse. The Company continues to be responsible for the servicing and administration of the receivables. The Company accounts for the sale of receivables under the Factoring Agreement as secured borrowings 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 $2,062,000 and $1,612,000 as of March 31, 2015 and December 31, 2014, respectively, reflects the related collateralized accounts. |
The Company's outstanding liability related to the Factoring Agreement was approximately $818,000 and $538,000 as of March 31, 2015 and December 31, 2014, respectively, and is included in other current liabilities on the condensed consolidated balance sheets. | |
Recently Issued Accounting Pronouncements | |
With the exception of those stated below, there have been no recent accounting pronouncements or changes in accounting pronouncements during the three months ended March 31, 2015, as compared to the recent accounting pronouncements described in the Annual Report that are of material significance, or have potential material significance, to the Company. | |
In February 2015, the FASB issued ASU No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis. ASU 2015-02 provides guidance on the consolidation evaluation for reporting organizations that are required to evaluate whether they should consolidate certain legal entities such as limited partnerships, limited liability corporations, and securitization structures (collateralized debt obligations, collateralized loan obligations, and mortgage-backed security transactions). ASU 2015-02 is effective for periods beginning after December 15, 2015. The adoption of ASU 2015-02 is not expected to have a material effect on the Company's consolidated financial statements. Early adoption is permitted. | |
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. On April 1, 2015 the FASB proposed a one year delay in the effective date. If approved, the proposal will also permit early adoption up to the original effective date for public companies. The Company is evaluating the potential impact of this adoption on its consolidated financial statements. |
Inventory_and_Cost_of_Sales_Ta
Inventory and Cost of Sales (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Inventory And Cost Of Sales Tables | |||||||||
Inventories | Inventories consist of the following (in thousands): | ||||||||
As of | |||||||||
March 31, | December 31, | ||||||||
2015 | 2014 | ||||||||
Finished goods | $ | 7,886 | $ | 7,817 | |||||
Raw materials | 6,511 | 4,444 | |||||||
14,397 | 12,261 | ||||||||
Reserve for excess and obsolete | (477 | ) | (478 | ) | |||||
Inventory, net | $ | 13,920 | $ | 11,783 |
Acquisitions_and_Business_Comb
Acquisitions and Business Combinations (Tables) | 3 Months Ended | ||||
Mar. 31, 2015 | |||||
Sta-Natural LLC [Member] | |||||
Assets acquired and liabilities assumed | The preliminary purchase price allocation for Sta-Natural is as follows (in thousands): | ||||
Distributor organization | $ | 140 | |||
Customer-related intangible | 110 | ||||
Trademarks and trade name | 60 | ||||
Initial cash payment | (25 | ) | |||
Total purchase price | $ | 285 | |||
JD Premium LLC [Member] | |||||
Assets acquired and liabilities assumed | The preliminary purchase price allocation for JD Premium is as follows (in thousands): | ||||
Distributor organization | $ | 110 | |||
Customer-related intangible | 85 | ||||
Total purchase price | $ | 195 |
Intangible_Assets_and_Goodwill
Intangible Assets and Goodwill (Tables) | 3 Months Ended | ||||||||||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||||||||||
Intangible Assets And Goodwill Tables | |||||||||||||||||||||||||
Intangible Assets and Goodwill | Intangible assets consist of the following (in thousands): | ||||||||||||||||||||||||
31-Mar-15 | 31-Dec-14 | ||||||||||||||||||||||||
Cost | Accumulated | Net | Cost | Accumulated | Net | ||||||||||||||||||||
Amortization | Amortization | ||||||||||||||||||||||||
Distributor organizations | $ | 10,760 | $ | 5,357 | $ | 5,403 | $ | 10,475 | $ | 5,126 | $ | 5,349 | |||||||||||||
Trademarks and trade names | 4,516 | 360 | 4,156 | 4,441 | 304 | 4,137 | |||||||||||||||||||
Customer relationships | 6,620 | 2,133 | 4,487 | 6,400 | 1,932 | 4,468 | |||||||||||||||||||
Internally developed software | 720 | 183 | 537 | 720 | 158 | 562 | |||||||||||||||||||
Intangible assets | $ | 22,616 | $ | 8,033 | $ | 14,583 | $ | 22,036 | $ | 7,520 | $ | 14,516 |
Debt_Tables
Debt (Tables) | 3 Months Ended | ||||
Mar. 31, 2015 | |||||
Debt Tables | |||||
Convertible note oustanding | The following table summarizes information relative to the convertible note(s) outstanding (in thousands): | ||||
31-Mar-15 | |||||
Convertible notes | $ | 4,750 | |||
Less: detachable warrants discount | (3,697 | ) | |||
Less: conversion feature discount | (1,053 | ) | |||
Amortization of debt discounts | 633 | ||||
Convertible notes, net of discounts | $ | 633 |
Derivative_Liability_Tables
Derivative Liability (Tables) | 3 Months Ended | ||||||||||||
Mar. 31, 2015 | |||||||||||||
Derivative Liability Tables | |||||||||||||
Warrants estimated fair value | 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 Total Fair Value in Aggregate $ as of | Estimated Total Fair Value in Aggregate $ as of December 31, 2014 | ||||||||||
31-Mar-15 | |||||||||||||
July 31, 2014 Warrants | 19,966,768 | $ | 3,484,000 | $ | 3,398,000 | ||||||||
August 14, 2014 Warrants | 1,721,273 | 300,000 | 294,000 | ||||||||||
September 10, 2014 Warrants | 114,752 | 20,000 | 20,000 | ||||||||||
21,802,793 | $ | 3,804,000 | $ | 3,712,000 | |||||||||
Monte Carlo fair value of warrants | Using the Black-Scholes and Monte Carlo option-pricing models, the warrants estimated fair values of March 31, 2015 and as of December 31, 2014, respectively; the following assumptions were used in the calculations: | ||||||||||||
31-Mar-15 | 31-Dec-14 | ||||||||||||
Stock price volatility | 90 | % | 90% | ||||||||||
Risk-free interest rates | 1.37 | % | 1.65% | ||||||||||
Annual dividend yield | 0 | % | 0% | ||||||||||
Expected life | 4.3-4.4 years | 4.6-4.7 years |
Fair_Value_of_Financial_Instru1
Fair Value of Financial Instruments (Tables) | 3 Months Ended | ||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||
Fair Value Of Financial Instruments Tables | |||||||||||||||||
Fair value measurement within the three levels of value hierarchy | 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 March 31, 2015 | |||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | ||||||||||||||
Liabilities: | |||||||||||||||||
Contingent acquisition debt, current portion | $ | 2,703 | $ | - | $ | - | $ | 2,703 | |||||||||
Contingent acquisition debt, less current portion | 7,385 | - | - | 7,385 | |||||||||||||
Warrant derivative liability | 3,804 | - | - | 3,804 | |||||||||||||
Total liabilities | $ | 13,892 | $ | - | $ | - | $ | 13,892 | |||||||||
Fair Value at December 31, 2014 | |||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | ||||||||||||||
Liabilities: | |||||||||||||||||
Contingent acquisition debt, current portion | $ | 2,765 | $ | - | $ | - | $ | 2,765 | |||||||||
Contingent acquisition debt, less current portion | 7,707 | - | - | 7,707 | |||||||||||||
Warrant derivative liability | 3,712 | - | - | 3,712 | |||||||||||||
Total liabilities | $ | 14,184 | $ | - | $ | - | $ | 14,184 |
Stockholders_Equity_Tables
Stockholder's Equity (Tables) | 3 Months Ended | ||||||||||||
Mar. 31, 2015 | |||||||||||||
Stock Option Plan Tables | |||||||||||||
Summary of Plan Options | A summary of the Plan Options for the three months ended March 31, 2015 is presented in the following table: | ||||||||||||
Number of | Weighted | Aggregate | |||||||||||
Shares | Average | Intrinsic | |||||||||||
Exercise Price | Value | ||||||||||||
(in thousands) | |||||||||||||
Outstanding December 31, 2014 | 28,918,500 | $ | 0.21 | $ | 786 | ||||||||
Granted | 244,750 | 0.23 | |||||||||||
Canceled/expired | (5,400 | ) | 0.19 | ||||||||||
Exercised | (1,250 | ) | 0.24 | - | |||||||||
Outstanding March 31, 2015 | 29,156,600 | $ | 0.21 | $ | 1,069 | ||||||||
Exercisable March 31, 2015 | 17,228,600 | $ | 0.22 | $ | 530 |
Recovered_Sheet1
Segment and Geographic information (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Segment And Geographical Information Tables | |||||||||
Segment information revenue | Three Months Ended March 31, | ||||||||
2015 | 2014 | ||||||||
Revenues | |||||||||
Direct selling | $ | 31,623 | $ | 24,132 | |||||
Commercial coffee | 5,184 | 2,271 | |||||||
Total revenues | $ | 36,807 | $ | 26,403 | |||||
Gross profit | |||||||||
Direct selling | $ | 20,724 | $ | 15,842 | |||||
Commercial coffee | (442 | ) | (6 | ) | |||||
Total gross profit | $ | 20,282 | $ | 15,836 | |||||
Net income (loss) | |||||||||
Direct selling | $ | 215 | $ | 762 | |||||
Commercial coffee | (584 | ) | (335 | ) | |||||
Total net (loss) income | $ | (369 | ) | $ | 427 | ||||
Capital expenditures | |||||||||
Direct selling | $ | 384 | $ | 114 | |||||
Commercial coffee | 548 | 212 | |||||||
Total capital expenditures | $ | 932 | $ | 326 | |||||
Segment information assets | |||||||||
As of | |||||||||
31-Mar-15 | 31-Dec-14 | ||||||||
Total assets | |||||||||
Direct selling | $ | 38,619 | $ | 36,149 | |||||
Commercial coffee | 22,834 | 19,583 | |||||||
Total assets | $ | 61,453 | $ | 55,732 | |||||
Segment information geographical | The following table displays revenues attributable to the geographic location of the customer (in thousands): | ||||||||
Three Months Ended March 31, | |||||||||
2015 | 2014 | ||||||||
United States | $ | 34,123 | $ | 24,821 | |||||
International | 2,684 | 1,582 | |||||||
Total revenues | $ | 36,807 | $ | 26,403 |
Basis_of_Presentation_and_Natu
Basis of Presentation and Nature of Business (Details Narrative) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Dec. 31, 2014 | |
Basis Of Presentation And Nature Of Business Details Narrative | ||
Other cash equivalents | $0 | $0 |
Accounts receivable, due from factoring company | 2,062,000 | 1,612,000 |
Other current liabilities | 818,000 | 538,000 |
Antidilutive securities | 1,405,101 | |
Production harvest costs | 697,000 | |
Deferred revenues | 4,656,000 | 5,075,000 |
Deferred costs | $1,725,000 |
Inventory_and_Cost_of_Sales_De
Inventory and Cost of Sales (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Inventory And Cost Of Sales Details | ||
Finished goods | $7,886 | $7,817 |
Raw materials | 6,511 | 4,444 |
Inventory, gross | 14,397 | 12,261 |
Reserve for excess and obsolete | -477 | -478 |
Inventory, net | $13,920 | $11,783 |
Acquisitions_and_Business_Comb1
Acquisitions and Business Combinations (Details) (USD $) | 3 Months Ended |
In Thousands, unless otherwise specified | Mar. 31, 2015 |
Total purchase price | $285 |
Sta-Natural LLC [Member] | Distributor organization [Member] | |
Total purchase price | 140 |
Sta-Natural LLC [Member] | Customer related intangible [Member] | |
Total purchase price | 110 |
Sta-Natural LLC [Member] | Trademarks and trade name [Member] | |
Total purchase price | 60 |
Sta-Natural LLC [Member] | Initial cash payment B assumed liabilities [Member] | |
Total purchase price | ($25) |
Acquisitions_and_Business_Comb2
Acquisitions and Business Combinations (Details 1) (USD $) | 3 Months Ended |
In Thousands, unless otherwise specified | Mar. 31, 2015 |
Total purchase price | $195 |
JD Premium LLC [Member] | Distributor organization [Member] | |
Total purchase price | 110 |
JD Premium LLC [Member] | Customer related intangible [Member] | |
Total purchase price | $85 |
Intangible_Assets_and_Goodwill1
Intangible Assets and Goodwill (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Distributor organization [Member] | ||
Cost | $10,760 | $10,475 |
Accumulated Amortization | 5,357 | 5,126 |
Net | 5,403 | 5,349 |
Trademarks and trade names [Member] | ||
Cost | 4,516 | 4,441 |
Accumulated Amortization | 360 | 304 |
Net | 4,156 | 4,137 |
Customer relationships [Member] | ||
Cost | 6,620 | 6,400 |
Accumulated Amortization | 2,133 | 1,932 |
Net | 4,487 | 4,468 |
Internally developed software [Member] | ||
Cost | 720 | 720 |
Accumulated Amortization | 183 | 158 |
Net | 537 | 562 |
Intangible assets [Member] | ||
Cost | 22,616 | 22,036 |
Accumulated Amortization | 8,033 | 7,520 |
Net | $14,583 | $14,516 |
Intangible_Assets_and_Goodwill2
Intangible Assets and Goodwill (Details Narrative) (USD $) | 3 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | |
Intangible Assets And Goodwill Details Narrative | |||
Amortization expense | $513,000 | $477,000 | |
Goodwill balance | $6,323,000 | $6,323,000 |
Debt_Details
Debt (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Debt Details | ||
Convertible notes | $4,750 | |
Less: detachable warrants discount | -3,697 | |
Less: conversion feature discount | -1,053 | |
Amortization of debt discounts | 633 | |
Convertible notes, net of discounts | $633 | $396 |
Debt_Details_Narrative
Debt (Details Narrative) (USD $) | 3 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | |
Convertible notes payable | $633,000 | $396,000 | |
January 2015 Private Placement [Member] | |||
Bearing interest rate | 8.00% | ||
Unpaid interest due at maturity date | January 5, 2016 and January 28, 2016 | ||
Deferred financing costs | 568,000 | ||
Principal outstanding amount remains | 5,250,000 | ||
Interest expense for the amortization of the debt discounts | 189,000 | ||
Note Purchase Agreement B 2014 Private Placement [Member] | |||
Bearing interest rate | 8.00% | ||
Unpaid interest due at maturity date | July 30, 2019 and September 9, 2019 | ||
Deferred financing costs | 425,000 | ||
Principal outstanding amount remains | 4,750,000 | 4,750,000 | |
Interest expense for the amortization of the debt discounts | 238,000 | ||
Convertible notes payable | 633,000 | ||
Net of unamortized discounts | 4,117,000 | ||
Fair value warrants | 3,697,000 | ||
Discount, conversion feature | $1,053,000 |
Derivative_Liability_Details
Derivative Liability (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Issued Warrants | 21,802,793 | |
Estimated total fair value in aggregate | $3,804,000 | $3,712,000 |
July warrants [Member] | ||
Issued Warrants | 19,966,768 | |
Estimated total fair value in aggregate | 3,484,000 | 3,398,000 |
August warrants [Member] | ||
Issued Warrants | 1,721,273 | |
Estimated total fair value in aggregate | 300,000 | 294,000 |
September warrants [Member] | ||
Issued Warrants | 114,752 | |
Estimated total fair value in aggregate | $20,000 | $20,000 |
Derivative_Liability_Details_1
Derivative Liability (Details 1) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2015 | Dec. 31, 2014 | |
Stock price volatility | 90.00% | 90.00% |
Risk-free interest rate | 1.37% | 1.65% |
Annual dividend yield | 0.00% | 0.00% |
Minimum [Member] | ||
Expected life | 4 years 3 months 18 days | 4 years 7 months 6 days |
Maximum [Member] | ||
Expected life | 4 years 4 months 24 days | 4 years 8 months 12 days |
Derivative_Liability_Details_N
Derivative Liability (Details Narrative) (USD $) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2015 | Dec. 31, 2014 | |
Derivative Liability Details Narrative | ||
Increase to derivative liability | $92,000 | $92,000 |
Fair_Value_of_Financial_Instru2
Fair Value of Financial Instruments (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Liabilities: | ||
Contingent acquisition debt, current portion | $2,703 | $2,765 |
Contingent acquisition debt, less current portion | 7,385 | 7,707 |
Warrant derivative liability | 3,804 | 3,712 |
Total liabilities | 13,892 | 14,184 |
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 | 2,703 | 2,765 |
Contingent acquisition debt, less current portion | 7,385 | 7,707 |
Warrant derivative liability | 3,804 | 3,712 |
Total liabilities | $13,892 | $14,184 |
Stockholders_Equity_Details
Stockholders' Equity (Details) (USD $) | 3 Months Ended |
In Thousands, except Share data, unless otherwise specified | Mar. 31, 2015 |
Number of Shares | |
Outstanding, beginning of period | 28,918,500 |
Granted | 244,750 |
Cancelled | -5,400 |
Exercised | -1,250 |
Outstanding, end of period | 29,156,600 |
Exercisable, end of period | 17,228,600 |
Weighted Average Exercise Price | |
Outstanding, beginning of period | $0.21 |
Granted | $0.23 |
Cancelled | $0.19 |
Exercised | $0.24 |
Outstanding, end of period | $0.21 |
Exercisable, end of period | $0.22 |
Aggregate Intrinsic Value | |
Outstanding, beginning of period | $786 |
Granted | |
Exercised | |
Outstanding, end of period | 1,069 |
Exercisable, end of period | $530 |
Stockholders_Equity_Details_Na
Stockholders' Equity (Details Narrative) (USD $) | 3 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | |
Convertible Preferred Stock, shares outstanding | 161,135 | 161,135 | |
Accrued dividends | $89,000 | $86,000 | |
Common Stock, shares outstanding | 392,392,887 | 390,301,312 | |
Outstanding Price | $0.21 | $0.21 | |
Repurchased shares | 359,675 | ||
Weighted-average cost | $0.25 | ||
Authorized shares for repurchase | 12,178,375 | ||
Weighted-average fair value per share of the granted options | $0.12 | $0.09 | |
Stock based compensation expense | 144,000 | 148,000 | |
Unrecognized compensation expense related to unvested share-based compensation arrangements | $1,758,000 | ||
Weighted-average period recognized | 5 years 1 month 13 days | ||
Common Stock [Member] | |||
Purchase warrant | 35,214,980 | ||
Expiry | 2019 | ||
Common Stock [Member] | Minimum [Member] | |||
Outstanding Price | $0.10 | ||
Common Stock [Member] | Maximum [Member] | |||
Outstanding Price | $0.50 | ||
Warrant [Member] | |||
Purchase warrant | 35,214,980 | ||
Expiry | 2019 | ||
Weighted-average period recognized | 3 years 13 days | ||
Warrant [Member] | Minimum [Member] | |||
Outstanding Price | $0.10 | ||
Warrant [Member] | Maximum [Member] | |||
Outstanding Price | $0.50 |
Segment_and_Geographic_Informa1
Segment and Geographic Information (Details) (USD $) | 3 Months Ended | 12 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 |
Revenues | $36,807 | $26,403 | $26,403 |
Gross profit | 20,282 | 15,836 | 15,836 |
Net income (loss) | -369 | 427 | 427 |
Capital expenditures | 932 | 326 | |
Direct Selling [Member] | |||
Revenues | 31,623 | 24,132 | |
Gross profit | 20,724 | 15,842 | |
Net income (loss) | 215 | 762 | |
Capital expenditures | 384 | 114 | |
Commercial Coffee [Member] | |||
Revenues | 5,184 | 2,271 | |
Gross profit | -442 | -6 | |
Net income (loss) | -584 | -335 | |
Capital expenditures | $548 | $212 |
Segment_and_Geographic_Informa2
Segment and Geographic Information (Details 1) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Total assets | $61,453 | $55,732 |
Direct Selling [Member] | ||
Total assets | 38,619 | 36,149 |
Commercial Coffee [Member] | ||
Total assets | $22,834 | $19,583 |
Segment_and_Geographic_Informa3
Segment and Geographic Information (Details 2) (USD $) | 3 Months Ended | 12 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 |
Total revenues | $36,807 | $26,403 | $26,403 |
United States [Member] | |||
Total revenues | 34,123 | 24,821 | |
International [Member] | |||
Total revenues | $2,684 | $1,582 |
Segment_and_Geographic_Informa4
Segment and Geographic Information (Details Narrative) (United States [Member], USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
United States [Member] | ||
Tangible assets | $4,700,000 | $4,200,000 |