Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2015 | Aug. 11, 2015 | |
Document And Entity Information | ||
Entity Registrant Name | Youngevity International, Inc. | |
Entity Central Index Key | 1,569,329 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2015 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Trading Symbol | YGYI | |
Entity Common Stock, Shares Outstanding | 391,948,723 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2,015 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
Current Assets: | ||
Cash and cash equivalents | $ 2,628,000 | $ 2,997,000 |
Accounts receivable, due from factoring company | 984,000 | 827,000 |
Accounts receivable, trade | 983,000 | 965,000 |
Income tax receivable | 1,130,000 | 308,000 |
Deferred tax assets, net current | 801,000 | 801,000 |
Inventory | 16,848,000 | 11,783,000 |
Prepaid expenses and other current assets | 4,842,000 | 3,753,000 |
Total current assets | 28,216,000 | 21,434,000 |
Property and equipment, net | 11,867,000 | 10,319,000 |
Deferred tax assets, long-term | 3,140,000 | 3,140,000 |
Intangible assets, net | 14,758,000 | 14,516,000 |
Goodwill | 6,323,000 | 6,323,000 |
Total assets | 64,304,000 | 55,732,000 |
Current Liabilities: | ||
Accounts payable | 6,600,000 | 5,407,000 |
Accrued distributor compensation | 4,216,000 | 4,177,000 |
Accrued expenses | 2,776,000 | 2,332,000 |
Deferred revenues | 4,320,000 | 5,075,000 |
Other current liabilities | 868,000 | 477,000 |
Capital lease payable, current portion | 38,000 | 24,000 |
Notes payable, current portion | 5,472,000 | 228,000 |
Warrant derivative liability | 6,013,000 | 3,712,000 |
Contingent acquisition debt, current portion | 2,646,000 | 2,765,000 |
Total current liabilities | 32,949,000 | 24,197,000 |
Capital lease payable, net of current portion | 81,000 | 4,000 |
Notes payable, net of current portion | 4,738,000 | 4,839,000 |
Convertible notes payable, net of debt discount | 871,000 | 396,000 |
Contingent acquisition debt, net of current portion | 7,342,000 | 7,707,000 |
Total liabilities | $ 45,981,000 | $ 37,143,000 |
Stockholders' Equity: | ||
Convertible Preferred Stock, $0.001 par value: 100,000,000 shares authorized; 161,135 shares issued and outstanding at June 30, 2015 and December 31, 2014 | ||
Common Stock, $0.001 par value: 600,000,000 shares authorized; 391,926,133 and 390,301,312 shares issued and outstanding at June 30, 2015 and December 31, 2014, respectively | $ 392,000 | $ 390,000 |
Additional paid-in capital | 167,976,000 | 167,386,000 |
Accumulated deficit | (149,689,000) | (148,912,000) |
Accumulated other comprehensive loss | (356,000) | (275,000) |
Total stockholders' equity | 18,323,000 | 18,589,000 |
Total Liabilities and Stockholders’ Equity | $ 64,304,000 | $ 55,732,000 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2015 | Dec. 31, 2014 |
Equity: | ||
Convertible Preferred Stock, par value | $ 0.001 | $ 0.001 |
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 | $ 0.001 | $ 0.001 |
Common Stock, shares authorized | 600,000,000 | 600,000,000 |
Common Stock, shares issued | 391,926,133 | 390,301,312 |
Common Stock, shares outstanding | 391,926,133 | 390,301,312 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Condensed Consolidated Statements Of Operations | ||||
Revenues | $ 38,743 | $ 32,718 | $ 75,550 | $ 59,121 |
Cost of revenues | 14,933 | 13,776 | 31,459 | 24,343 |
Gross profit | 23,810 | 18,942 | 44,091 | 34,778 |
Operating expenses | ||||
Distributor compensation | 15,736 | 12,753 | 29,874 | 23,702 |
Sales and marketing | 1,592 | 1,905 | 3,713 | 3,267 |
General and administrative | 4,193 | 3,042 | 7,841 | 5,609 |
Total operating expenses | 21,521 | 17,700 | 41,428 | 32,578 |
Operating income | 2,289 | 1,242 | 2,663 | 2,200 |
Interest expense, net | (1,097) | $ (503) | (2,179) | $ (883) |
Change in fair value of warrant derivative liability | (2,209) | (2,301) | ||
Total other expense | (3,306) | $ (503) | (4,480) | $ (883) |
Net (loss) income before income taxes | (1,017) | 739 | (1,817) | 1,317 |
Income tax (benefit) provision | (609) | 195 | (1,040) | 346 |
Net (loss) income | (408) | 544 | (777) | 971 |
Preferred stock dividends | (3) | (4) | (6) | (8) |
Net (loss) income available to common stockholders | $ (411) | $ 540 | $ (783) | $ 963 |
Net (loss) income per share, basic | $ 0 | $ 0 | $ 0 | $ 0 |
Net (loss) income per share, diluted | $ 0 | $ 0 | $ 0 | $ 0 |
Weighted average shares outstanding, basic | 392,204,724 | 388,981,597 | 391,631,939 | 388,743,483 |
Weighted average shares outstanding, diluted | 392,204,724 | 389,586,856 | 391,631,939 | 389,338,603 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Condensed Consolidated Statements Of Comprehensive Income Loss | ||||
Net (loss) income: | $ (408) | $ 544 | $ (777) | $ 971 |
Foreign currency translation | (65) | (57) | (81) | (55) |
Total other comprehensive loss (income) | (65) | (57) | (81) | (55) |
Comprehensive (loss) income | $ (473) | $ 487 | $ (858) | $ 916 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Cash Flows from Operating Activities: | ||
Net (loss) income | $ (777) | $ 971 |
Adjustments to reconcile net (loss) income to net cash (used) provided by operating activities: | ||
Depreciation and amortization | 1,608 | 1,265 |
Stock based compensation expense | 275 | $ 247 |
Amortization of deferred financing costs | 426 | |
Change in fair value of warrant derivative liability | 2,301 | |
Amortization of debt discount | 475 | $ 21 |
Expenses allocated in profit sharing agreement | $ (170) | |
Change in fair value of contingent acquisition debt | $ 6 | |
Gain on disposal of assets | (1) | |
Changes in operating assets and liabilities, net of effect from business combinations: | ||
Accounts receivable | $ (175) | (80) |
Inventory | (5,065) | (2,552) |
Prepaid expenses and other current assets | (758) | (1,256) |
Accounts payable | 782 | 2,003 |
Accrued distributor compensation | 39 | 1,061 |
Deferred revenues | (755) | 1,334 |
Accrued expenses and other liabilities | 704 | $ 481 |
Income taxes receivable | (822) | |
Net Cash (Used in) Provided by Operating Activities | (1,912) | $ 3,500 |
Cash Flows from Investing Activities: | ||
Acquisitions, net of cash acquired | (219) | (2,100) |
Purchases of property and equipment | (1,592) | (1,248) |
Net Cash Used in Investing Activities | (1,811) | $ (3,348) |
Cash Flows from Financing Activities: | ||
Proceeds from issuance of secured promissory notes and common stock, net of offering costs | 5,080 | |
Proceeds from the exercise of stock options and warrants, net | 8 | $ 351 |
Proceeds from factoring company, net | 125 | 553 |
Payments of notes payable, net | (107) | (115) |
Payments of contingent acquisition debt | (1,375) | (861) |
Payments of capital leases | (24) | (46) |
Repurchase of common stock | (272) | (155) |
Net Cash Provided by (Used) in Financing Activities | 3,435 | (273) |
Foreign Currency Effect on Cash | (81) | (55) |
Net decrease in cash and cash equivalents | (369) | (176) |
Cash and Cash Equivalents, Beginning of Period | 2,997 | 4,320 |
Cash and Cash Equivalents, End of Period | 2,628 | 4,144 |
Supplemental Disclosures of Cash Flow Information | ||
Cash paid during the period for: Interest | $ 1,112 | 924 |
Cash paid during the period for: Income taxes | 547 | |
Supplemental Disclosures of Noncash Investing and Financing Activities | ||
Acquisitions of net assets in exchange for contingent acquisition debt (see Note 4 for non-cash activity) | $ 1,255 | $ 5,532 |
Common stock issued in connection with financing | 587 | |
Capital lease and accounts payable agreements for manufacturing equipment | $ 526 |
Basis of Presentation and Descr
Basis of Presentation and Description of Business | 6 Months Ended |
Jun. 30, 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 June 30, 2015 and for the three and six months ended June 30, 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 Companys 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. We have reclassified the interest expense and the change in the derivative liability associated with our 2014 Private Placement from our direct selling segment to our commercial coffee segment within our condensed consolidated statements of operations to conform to our current period presentation. The proceeds related to the 2014 Private Placement have been primarily used to expand to commercial coffee segment. These reclassifications did not affect revenue, total costs and expenses, income (loss) from operations, or net income (loss). 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, 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 net loss for the three and six months ended June 30, 2015, 7,434,581 and 4,881,194, respectively, common share equivalents were not included in the weighted-average calculation since their effect would have been anti-dilutive. Stock Based Compensation The Company accounts for stock based compensation in accordance with ASC Topic 718, Compensation Stock Compensation, 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 Companys 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 $984,000 and $827,000 as of June 30, 2015 and December 31, 2014, respectively, reflects the related collateralized accounts. The Company's outstanding liability related to the Factoring Agreement was approximately $663,000 and $538,000 as of June 30, 2015 and December 31, 2014, respectively, and is included in other current liabilities on the condensed consolidated balance sheets. Plantation Costs The Companys 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. Once the harvest is complete, the harvest cost is then recognized as the inventory value. In April 2015, the Company completed the 2015 coffee harvest in Nicaragua and approximately $723,000 of deferred harvest costs and were reclassified as inventory as of April 30, 2015. The remaining inventory as of June 30, 2015 is $586,000. 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 Companys 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. The balance deferred revenues as of June 30, 2015 and December 31, 2014, is approximately $4,320,000 and $5,075,000, respectively. Deferred costs relate to prepaid commissions that are recognized in expense at the time the related revenue is recognized. The balance in deferred costs as of June 30, 2015 and December 31, 2014, is approximately $1,689,000 and $1,695,000, respectively, and is 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 six months ended June 30, 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 In August 2014, the FASB issued ASU 2014-15 Preparation of Financial Statements Going Concern (Subtopic 205-40), Disclosures of Uncertainties about an Entitys Ability to Continue as a Going Concern . In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) |
2. Income Taxes
2. Income Taxes | 6 Months Ended |
Jun. 30, 2015 | |
Notes to Financial Statements | |
Disclosure - 2. Income Taxes | The Company accounts for income taxes in accordance with ASC Topic 740, "Income Taxes," Income taxes for the interim periods are computed using the effective tax rates estimated to be applicable for the full fiscal year, as adjusted for any discrete taxable events that occur during the period. The Company files income tax returns in the United States (U.S.) on a federal basis and in many U.S. state and foreign jurisdictions. Certain tax years remain open to examination by the major taxing jurisdictions to which the Company is subject. |
3. Inventory and Cost of Sales
3. Inventory and Cost of Sales | 6 Months Ended |
Jun. 30, 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 six months ended June 30, 2015 and 2014. Inventories consist of the following (in thousands): As of June 30, 2015 December 31, 2014 Finished goods $ 8,646 $ 7,817 Raw materials 8,750 4,444 17,396 12,261 Reserve for excess and obsolete (548 ) (478 ) Inventory, net $ 16,848 $ 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 | 6 Months Ended |
Jun. 30, 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 Companys 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 Companys 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 six months ended June 30, 2015, the Company entered into three acquisitions, which are detailed below. The acquisitions were conducted in an effort to expand the Companys 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. Mialisia & Co., LLC On June 1, 2015, the Company acquired certain assets of Mialisia & Co., LLC, (Mialisia) a direct-sales jewelry company that specializes in interchangeable jewelry. As a result of this business combination, the Companys distributors and customers have access to the unique line of Mialisias patent-pending VersaStyle jewelry and Mialisias distributors and customers will gain access to products offered by the Company. The purchase price consisted of a maximum aggregate purchase price of $1,900,000. The Company agreed to pay initial cash payment of $118,988, for of which the Company received certain inventories, the initial cash payment will be applied against and reduce the maximum aggregate purchase price. The contingent considerations estimated fair value at the date of acquisition was $700,000 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 Mialisia is as follows (in thousands): Distributor organization $ 350 Customer-related intangible 200 Trademarks and trade name 150 Total purchase price $ 700 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 June 30, 2015 were minimal. The pro-forma effect assuming the business combination with Mialisia discussed above had occurred at the beginning of the current period is not presented as the information would not be significant to a user of the condensed consolidated financial statements. 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 Companys distributors and customers have access to Sta-Naturals unique line of products and Sta-Naturals 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 considerations 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 six months ending June 30, 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 Companys distributors and customers have access to JD Premiums unique line of products and JD Premiums 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 considerations 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 six months ending June 30, 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 | 6 Months Ended |
Jun. 30, 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): June 30, 2015 December 31, 2014 Cost Accumulated Amortization Net Cost Accumulated Amortization Net Distributor organizations $ 11,110 $ 5,596 $ 5,514 $ 10,475 $ 5,126 $ 5,349 Trademarks and trade names 4,666 417 4,249 4,441 304 4,137 Customer relationships 6,820 2,338 4,482 6,400 1,932 4,468 Internally developed software 720 207 513 720 158 562 Intangible assets $ 23,316 $ 8,558 $ 14,758 $ 22,036 $ 7,520 $ 14,516 Amortization expense related to intangible assets was approximately $525,000 and $482,000 for the three months ended June 30, 2015 and 2014, respectively. Amortization expense related to intangible assets was approximately $1,038,000 and $959,000 for the six months ended June 30, 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, 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 Companys 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 Companys 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 Companys 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 June 30, 2015 and December 31, 2014 was $6,323,000. There were no triggering events indicating impairment of goodwill or intangible assets during the three and six months ended June 30, 2015 and 2014. |
Debt
Debt | 6 Months Ended |
Jun. 30, 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 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 June 30, 2015 the remaining balance in deferred financing costs is approximately $378,000. 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 June 30, 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 June 30, 2015 and December 31, 2014 the Company had outstanding convertible notes payable of $871,000 and $396,000, net of unamortized discounts of $3,879,000 and $4,354,000, respectively. 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 June 30, 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. 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 $475,000 of interest expense for the amortization of the debt discounts during the six months ended June 30, 2015. The following table summarizes information relative to the convertible note(s) outstanding (in thousands): June 30, 2015 December 31, 2014 Convertible notes $ 4,750 $ 4,750 Less: detachable warrants discount (3,697 ) (3,697 ) Less: conversion feature discount (1,053 ) (1,053 ) Amortization of debt discounts 871 396 Convertible notes, net of discounts $ 871 $ 396 Paid in 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 June 30, 2015 and December 31, 2014 the remaining balance in deferred financing costs is approximately $400,000 and $449,000, respectively. The quarterly amortization of the deferred financing costs is approximately $25,000 and is recorded as interest expense. |
Derivative Liability
Derivative Liability | 6 Months Ended |
Jun. 30, 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 entitys 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 entitys own stock and (ii) classified in the stockholders equity section of the entitys 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 June 30, 2015 Estimated Total Fair Value in Aggregate $ as of December 31, 2014 July 31, 2014 Warrants 19,966,768 $ 5,506,000 $ 3,398,000 August 14, 2014 Warrants 1,721,273 475,000 294,000 September 10, 2014 Warrants 114,752 32,000 20,000 21,802,793 $ 6,013,000 $ 3,712,000 Increases or decreases in fair value of the derivative liability are included as a component of other income (expense) in the accompanying condensed consolidated statements of operations for the respective period. During the three and six months ending June 30, 2015, the liability for warrants increased $2,209,000 and $2,301,000, respectively, primarily due to the market price of $0.38 of the Companys stock as of June 30, 2015, compared to $0.24 as of December 31, 2014. Various factors are considered in the pricing models we use to value the warrants, including our current stock price, the remaining life of the warrants, the volatility of our stock price, and the risk free interest rate. Future changes in these factors may have a significant impact on the computed fair value of the warrant liability. As such, we expect future changes in the fair value of the warrants to continue and may vary significantly from year to year. The warrant liability and revaluations have not had a cash impact on our working capital, liquidity or business 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 June 30, 2015 and as of December 31, 2014 using a Black-Scholes and Monte Carlo option pricing model, respectively, using the following assumptions: June 30, 2015 December 31, 2014 Stock price volatility 86 % 90 % Risk-free interest rates 1.32 % 1.65 % Annual dividend yield 0 % 0 % Expected life 4.0-4.1 years 4.6-4.7 years In addition, Management assessed the probabilities of future financing assumptions in the valuation models. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 6 Months Ended |
Jun. 30, 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 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 Companys 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 Companys 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 Companys financial instruments, which includes the Level 3 liabilities (in thousands): Fair Value at June 30, 2015 Total Level 1 Level 2 Level 3 Liabilities: Contingent acquisition debt, current portion $ 2,646 $ - $ - $ 2,646 Contingent acquisition debt, less current portion 7,342 - - 7,342 Warrant derivative liability 6,013 - - 6,013 Total liabilities $ 16,001 $ - $ - $ 16,001 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 Companys 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 and six months ended June 30, 2015. During the three and six months ended June 30, 2014, the net adjustment to the fair value of the contingent acquisition liabilities was immaterial. |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Jun. 30, 2015 | |
Notes to Financial Statements | |
Disclosure - 9. Stockholders' Equity | The Companys 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 June 30, 2015 and December 31, 2014, and accrued dividends of approximately $92,000 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 391,926,133 common shares outstanding as of June 30, 2015. The holders of Common Stock are entitled to one vote per share on matters brought before the shareholders. As of June 30, 2015, warrants to purchase 35,114,980 shares of Common Stock at prices ranging from $0.10 to $0.50 were outstanding, exercisable and expire at various dates through August 2019, and have a weighted average remaining term of approximately 2.81 years as of June 30, 2015. 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 six months ended June 30, 2015, the Company repurchased a total of 865,479 shares at a weighted-average cost of $0.29. A total of 3,327,429 shares have been repurchased to-date at a weighted-average cost of $0.25. The remaining number of shares authorized for repurchase under the plan as of June 30, 2015 is 11,672,571. 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 June 30, 2015, the Company had 11,735,250 shares of Common Stock available for issuance under the Plan. A summary of the Plan Options for the six months ended June 30, 2015 is presented in the following table: Number of Shares Weighted Average Exercise Price Aggregate Intrinsic Value (in thousands) Outstanding December 31, 2014 28,918,500 $ 0.21 $ 786 Granted 461,000 0.30 Canceled/expired (1,154,000 ) 0.22 Exercised (40,300 ) 0.20 - Outstanding June 30, 2015 28,185,200 $ 0.22 $ 4,642 Exercisable June 30, 2015 16,286,200 $ 0.22 $ 2,558 The weighted-average fair value per share of the granted options for the six months ended June 30, 2015 and 2014 was approximately $0.15 and $0.09, respectively. Stock based compensation expense included in the condensed consolidated statements of operations was $131,000 and $100,000 for the three months ended June 30, 2015 and 2014, respectively, compared to $275,000 and $247,000 for the six months ended June 30, 2015 and 2014, respectively. As of June 30, 2015, there was approximately $1,652,000 of total unrecognized compensation expense related to unvested share-based compensation arrangements granted under the Plan. The expense is expected to be recognized over a weighted-average period of 4.87 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 Companys 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. |
Segment and Geographic Informat
Segment and Geographic Information | 6 Months Ended |
Jun. 30, 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 Companys business is classified by management into two reportable segments: direct selling and commercial coffee. The Companys segments reflect the manner in which the business is managed and how the Company allocates resources and assesses performance. The Companys chief operating decision maker is the Chief Executive Officer. The Companys 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 Six months ended June 30, June 30, 2015 2014 2015 2014 Revenues Direct selling $ 34,527 $ 28,655 $ 66,150 $ 52,786 Commercial coffee 4,216 4,063 9,400 6,335 Total revenues $ 38,743 $ 32,718 $ 75,550 $ 59,121 Gross profit Direct selling $ 23,754 $ 18,932 $ 44,477 $ 34,775 Commercial coffee 56 10 (386 ) 3 Total gross margin $ 23,810 $ 18,942 $ 44,091 $ 34,778 Net income (loss) Direct selling $ 2,128 $ 1,191 $ 2,343 $ 2,072 Commercial coffee (2,536 ) (647 ) (3,120 ) (1,101 ) Total net income $ (408 ) $ 544 $ (777 ) $ 971 Capital expenditures Direct selling $ 465 $ 222 $ 849 $ 336 Commercial coffee 706 4,066 1,254 4,278 Total capital expenditures $ 1,171 $ 4,288 $ 2,103 $ 4,614 As of June 30, 2015 December 31, 2014 Total assets Direct selling $ 41,051 $ 36,149 Commercial coffee 23,253 19,583 Total assets $ 64,304 $ 55,732 Total tangible assets, net located outside the United States are approximately $4.5 million as of June 30, 2015. For the year ended December 31, 2014, total assets, net 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 Six months ended June 30, June 30, 2015 2014 2015 2014 Revenues United States $ 35,833 $ 30,809 $ 69,956 $ 55,630 International 2,910 1,909 5,594 3,491 Total revenues $ 38,743 $ 32,718 $ 75,550 $ 59,121 |
Basis of Presentation and Des17
Basis of Presentation and Description of Business (Policies) | 6 Months Ended |
Jun. 30, 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 June 30, 2015 and for the three and six months ended June 30, 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 Companys 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. We have reclassified the interest expense and the change in the derivative liability associated with our 2014 Private Placement from our direct selling segment to our commercial coffee segment within our condensed consolidated statements of operations to conform to our current period presentation. The proceeds related to the 2014 Private Placement have been primarily used to expand to commercial coffee segment. These reclassifications did not affect revenue, total costs and expenses, income (loss) from operations, or net income (loss). 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, Youngevity Mexico S.A. d |
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 net loss for the three and six months ended June 30, 2015, 7,434,581 and 4,881,194, respectively, common share equivalents were not included in the weighted-average calculation since their effect would have been anti-dilutive. |
Stock Based Compensation | The Company accounts for stock based compensation in accordance with ASC Topic 718, Compensation Stock Compensation, 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 Companys 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 $984,000 and $827,000 as of June 30, 2015 and December 31, 2014, respectively, reflects the related collateralized accounts. The Company's outstanding liability related to the Factoring Agreement was approximately $663,000 and $538,000 as of June 30, 2015 and December 31, 2014, respectively, and is included in other current liabilities on the condensed consolidated balance sheets. |
Plantation Costs | The Companys 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. Once the harvest is complete, the harvest cost is then recognized as the inventory value. In April 2015, the Company completed the 2015 coffee harvest in Nicaragua and approximately $723,000 of deferred harvest costs and were reclassified as inventory as of April 30, 2015. The remaining inventory as of June 30, 2015 is $586,000. |
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 Companys 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. The balance deferred revenues as of June 30, 2015 and December 31, 2014, is approximately $4,320,000 and $5,075,000, respectively. Deferred costs relate to prepaid commissions that are recognized in expense at the time the related revenue is recognized. The balance in deferred costs as of June 30, 2015 and December 31, 2014, is approximately $1,689,000 and $1,695,000, respectively, and is 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 six months ended June 30, 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 In August 2014, the FASB issued ASU 2014-15 Preparation of Financial Statements Going Concern (Subtopic 205-40), Disclosures of Uncertainties about an Entitys Ability to Continue as a Going Concern . In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) |
Inventory and Cost of Sales (Ta
Inventory and Cost of Sales (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Inventory And Cost Of Sales Tables | |
Inventories | As of June 30, 2015 December 31, 2014 Finished goods $ 8,646 $ 7,817 Raw materials 8,750 4,444 17,396 12,261 Reserve for excess and obsolete (548 ) (478 ) Inventory, net $ 16,848 $ 11,783 |
Acquisitions and Business Combi
Acquisitions and Business Combinations (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Mialisia [Member] | |
Assets acquired and liabilities assumed | Distributor organization $ 350 Customer-related intangible 200 Trademarks and trade name 150 Total purchase price $ 700 |
Sta-Natural LLC [Member] | |
Assets acquired and liabilities assumed | 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 | Distributor organization $ 110 Customer-related intangible 85 Total purchase price $ 195 |
Intangible Assets and Goodwill
Intangible Assets and Goodwill (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Intangible Assets And Goodwill Tables | |
Intangible Assets and Goodwill | June 30, 2015 December 31, 2014 Cost Accumulated Amortization Net Cost Accumulated Amortization Net Distributor organizations $ 11,110 $ 5,596 $ 5,514 $ 10,475 $ 5,126 $ 5,349 Trademarks and trade names 4,666 417 4,249 4,441 304 4,137 Customer relationships 6,820 2,338 4,482 6,400 1,932 4,468 Internally developed software 720 207 513 720 158 562 Intangible assets $ 23,316 $ 8,558 $ 14,758 $ 22,036 $ 7,520 $ 14,516 |
Debt (Tables)
Debt (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Debt Tables | |
Convertible note oustanding | June 30, 2015 December 31, 2014 Convertible notes $ 4,750 $ 4,750 Less: detachable warrants discount (3,697 ) (3,697 ) Less: conversion feature discount (1,053 ) (1,053 ) Amortization of debt discounts 871 396 Convertible notes, net of discounts $ 871 $ 396 |
Derivative Liability (Tables)
Derivative Liability (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Derivative Liability Tables | |
Warrants estimated fair value | Closing Dates: Issued Warrants Estimated Total Fair Value in Aggregate $ as of June 30, 2015 Estimated Total Fair Value in Aggregate $ as of December 31, 2014 July 31, 2014 Warrants 19,966,768 $ 5,506,000 $ 3,398,000 August 14, 2014 Warrants 1,721,273 475,000 294,000 September 10, 2014 Warrants 114,752 32,000 20,000 21,802,793 $ 6,013,000 $ 3,712,000 |
Monte Carlo fair value of warrants | June 30, 2015 December 31, 2014 Stock price volatility 86 % 90 % Risk-free interest rates 1.32 % 1.65 % Annual dividend yield 0 % 0 % Expected life 4.0-4.1 years 4.6-4.7 years |
Fair Value of Financial Instr23
Fair Value of Financial Instruments (Tables) | 6 Months Ended |
Jun. 30, 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 Companys financial instruments, which includes the Level 3 liabilities (in thousands): Fair Value at June 30, 2015 Total Level 1 Level 2 Level 3 Liabilities: Contingent acquisition debt, current portion $ 2,646 $ - $ - $ 2,646 Contingent acquisition debt, less current portion 7,342 - - 7,342 Warrant derivative liability 6,013 - - 6,013 Total liabilities $ 16,001 $ - $ - $ 16,001 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 |
Stockholder's Equity (Tables)
Stockholder's Equity (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Stock Option Plan Tables | |
Summary of Plan Options | Number of Shares Weighted Average Exercise Price Aggregate Intrinsic Value (in thousands) Outstanding December 31, 2014 28,918,500 $ 0.21 $ 786 Granted 461,000 0.30 Canceled/expired (1,154,000 ) 0.22 Exercised (40,300 ) 0.20 - Outstanding June 30, 2015 28,185,200 $ 0.22 $ 4,642 Exercisable June 30, 2015 16,286,200 $ 0.22 $ 2,558 |
Segment and Geographic inform25
Segment and Geographic information (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Segment And Geographical Information Tables | |
Segment information revenue | Three months ended Six months ended June 30, June 30, 2015 2014 2015 2014 Revenues Direct selling $ 34,527 $ 28,655 $ 66,150 $ 52,786 Commercial coffee 4,216 4,063 9,400 6,335 Total revenues $ 38,743 $ 32,718 $ 75,550 $ 59,121 Gross profit Direct selling $ 23,754 $ 18,932 $ 44,477 $ 34,775 Commercial coffee 56 10 (386 ) 3 Total gross margin $ 23,810 $ 18,942 $ 44,091 $ 34,778 Net income (loss) Direct selling $ 2,128 $ 1,191 $ 2,343 $ 2,072 Commercial coffee (2,536 ) (647 ) (3,120 ) (1,101 ) Total net income $ (408 ) $ 544 $ (777 ) $ 971 Capital expenditures Direct selling $ 465 $ 222 $ 849 $ 336 Commercial coffee 706 4,066 1,254 4,278 Total capital expenditures $ 1,171 $ 4,288 $ 2,103 $ 4,614 |
Segment information assets | June 30, 2015 December 31, 2014 Total assets Direct selling $ 41,051 $ 36,149 Commercial coffee 23,253 19,583 Total assets $ 64,304 $ 55,732 |
Segment information geographical | Three months ended Six months ended June 30, June 30, 2015 2014 2015 2014 Revenues United States $ 35,833 $ 30,809 $ 69,956 $ 55,630 International 2,910 1,909 5,594 3,491 Total revenues $ 38,743 $ 32,718 $ 75,550 $ 59,121 |
Basis of Presentation and Natur
Basis of Presentation and Nature of Business (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2015 | Dec. 31, 2014 | |
Basis Of Presentation And Nature Of Business Details Narrative | |||
Other cash equivalents | $ 0 | $ 0 | $ 0 |
Accounts receivable, due from factoring company | 984,000 | 984,000 | 827,000 |
Other current liabilities | $ 663,000 | $ 663,000 | 538,000 |
Antidilutive securities | 7,434,581 | 488,194 | |
Production harvest costs | $ 102,000 | $ 102,000 | |
Deferred revenues | 4,320,000 | 4,320,000 | 5,075,000 |
Deferred costs | 1,689,000 | 1,689,000 | $ 1,695,000 |
Reclassification to inventory | 723,000 | ||
Inventory | $ 586,000 | $ 586,000 |
Inventory and Cost of Sales (De
Inventory and Cost of Sales (Details) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Inventory And Cost Of Sales Details | ||
Finished goods | $ 8,646 | $ 7,817 |
Raw materials | 8,750 | 4,444 |
Inventory, gross | 17,396 | 12,261 |
Reserve for excess and obsolete | (548) | (478) |
Inventory, net | $ 16,848 | $ 11,783 |
Acquisitions and Business Com28
Acquisitions and Business Combinations (Details) | 6 Months Ended |
Jun. 30, 2015USD ($) | |
Total purchase price | $ 700,000 |
Mialisia [Member] | |
Total purchase price | 700,000 |
Mialisia [Member] | Distributor organization [Member] | |
Total purchase price | 350,000 |
Mialisia [Member] | Customer related intangible [Member] | |
Total purchase price | 200,000 |
Mialisia [Member] | Trademarks and trade name [Member] | |
Total purchase price | $ 150,000 |
Acquisitions and Business Com29
Acquisitions and Business Combinations (Details 1) | 6 Months Ended |
Jun. 30, 2015USD ($) | |
Total purchase price | $ 700,000 |
Sta-Natural LLC [Member] | |
Total purchase price | 285,000 |
Sta-Natural LLC [Member] | Distributor organization [Member] | |
Total purchase price | 140,000 |
Sta-Natural LLC [Member] | Customer related intangible [Member] | |
Total purchase price | 110,000 |
Sta-Natural LLC [Member] | Trademarks and trade name [Member] | |
Total purchase price | 60,000 |
Sta-Natural LLC [Member] | Cash Payment [Member] | |
Total purchase price | $ (25,000) |
Acquisitions and Business Com30
Acquisitions and Business Combinations (Details 2) | 6 Months Ended |
Jun. 30, 2015USD ($) | |
Total purchase price | $ 700,000 |
JD Premium LLC [Member] | |
Total purchase price | 195,000 |
JD Premium LLC [Member] | Distributor organization [Member] | |
Total purchase price | 110,000 |
JD Premium LLC [Member] | Customer related intangible [Member] | |
Total purchase price | $ 85,000 |
Acquisitions and Business Com31
Acquisitions and Business Combinations (Details Narrative) - USD ($) | 2 Months Ended | 6 Months Ended | |
Mar. 04, 2015 | Feb. 23, 2015 | Jun. 30, 2015 | |
Fair value of contingent consideration | $ 700,000 | ||
Maximum [Member] | |||
Cash payment | 1,781,012 | ||
Fair value of contingent consideration | 1,900,000 | ||
Minimum [Member] | |||
Cash payment | 118,988 | ||
Fair value of contingent consideration | 1,650,000 | ||
Mialisia [Member] | |||
Cash payment | $ 118,988 | ||
Revenue payable | 7.00% | ||
Fair value of contingent consideration | $ 700,000 | ||
Sta-Natural [Member] | |||
Cash payment | $ 50,000 | ||
Revenue payable | 8.00% | ||
Fair value of contingent consideration | 500,000 | $ 285,000 | |
Inventories acquired | $ 25,000 | ||
Sta-Natural [Member] | Maximum [Member] | |||
Cash payment | 450,000 | ||
Sta-Natural [Member] | Minimum [Member] | |||
Revenue benchmark | $ 500,000 | ||
JD Premium [Member] | |||
Cash payment | $ 500,000 | ||
Revenue payable | 7.00% | ||
Fair value of contingent consideration | $ 195,000 | ||
Inventories acquired | 5,000 | ||
JD Premium [Member] | Maximum [Member] | |||
Cash payment | 50,000 | ||
JD Premium [Member] | Minimum [Member] | |||
Revenue benchmark | $ 300,000 |
Intangible Assets and Goodwil32
Intangible Assets and Goodwill (Details) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Distributor organization [Member] | ||
Cost | $ 11,110 | $ 10,475 |
Accumulated Amortization | 5,596 | 5,126 |
Net | 5,514 | 5,349 |
Trademarks and trade names [Member] | ||
Cost | 4,666 | 4,441 |
Accumulated Amortization | 417 | 304 |
Net | 4,249 | 4,137 |
Customer relationships [Member] | ||
Cost | 6,820 | 6,400 |
Accumulated Amortization | 2,338 | 1,932 |
Net | 4,482 | 4,468 |
Internally developed software [Member] | ||
Cost | 720 | 720 |
Accumulated Amortization | 207 | 158 |
Net | 513 | 562 |
Intangible assets [Member] | ||
Cost | 23,316 | 22,036 |
Accumulated Amortization | 8,558 | 7,520 |
Net | $ 14,758 | $ 14,516 |
Intangible Assets and Goodwil33
Intangible Assets and Goodwill (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | |
Intangible Assets And Goodwill Details Narrative | |||||
Amortization expense | $ 525,000 | $ 482,000 | $ 1,038,000 | $ 959,000 | |
Goodwill balance | 6,323,000 | 6,323,000 | $ 6,323,000 | ||
Trademarks | $ 2,267,000 | $ 2,267,000 |
Debt (Details)
Debt (Details) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Debt Details | ||
Convertible notes | $ 4,750 | $ 4,750 |
Less: detachable warrants discount | (3,697) | (3,697) |
Less: conversion feature discount | (1,053) | (1,053) |
Amortization of debt discounts | 871 | 396 |
Convertible notes, net of discounts | $ 871 | $ 396 |
Debt (Details Narrative)
Debt (Details Narrative) - USD ($) | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | |
Convertible notes payable | $ 871,000 | $ 396,000 | |
Fair value warrants | $ 6,013,000 | 3,712,000 | |
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 | $ 378,000 | ||
Principal outstanding amount remains | 5,250,000 | ||
Interest expense for the amortization of the debt discounts | 189,000 | ||
Note Purchase Agreement 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 | 400,000 | 449,000 | |
Principal outstanding amount remains | 4,750,000 | 4,750,000 | |
Interest expense for the amortization of the debt discounts | 475,000 | ||
Convertible notes payable | 871,000 | 396,000 | |
Net of unamortized discounts | 3,879,000 | 4,354,000 | |
Fair value warrants | $ 6,013,000 | ||
Discount, conversion feature | $ 1,053,000 |
Derivative Liability (Details)
Derivative Liability (Details) - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
Issued Warrants | 21,802,793 | |
Fair value warrants | $ 6,013,000 | $ 3,712,000 |
July warrants [Member] | ||
Issued Warrants | 19,966,768 | |
Fair value warrants | $ 5,506,000 | 3,398,000 |
August warrants [Member] | ||
Issued Warrants | 1,721,273 | |
Fair value warrants | $ 475,000 | 294,000 |
September warrants [Member] | ||
Issued Warrants | 114,752 | |
Fair value warrants | $ 32,000 | $ 20,000 |
Derivative Liability (Details 1
Derivative Liability (Details 1) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2015 | Dec. 31, 2014 | |
Stock price volatility | 86.00% | 90.00% |
Risk-free interest rate | 1.32% | 1.65% |
Annual dividend yield | 0.00% | 0.00% |
Minimum [Member] | ||
Expected life | 4 years | 4 years 7 months 6 days |
Maximum [Member] | ||
Expected life | 4 years 1 month 6 days | 4 years 8 months 12 days |
Derivative Liability (Details N
Derivative Liability (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2015 | Dec. 31, 2014 | |
Derivative Liability Details Narrative | |||
Increase to derivative liability | $ 2,209,000 | $ 2,301,000 | |
Stock price | $ .38 | $ .38 | $ .24 |
Fair Value of Financial Instr39
Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Liabilities: | ||
Contingent acquisition debt, current portion | $ 2,646 | $ 2,765 |
Contingent acquisition debt, less current portion | 7,342 | 7,707 |
Warrant derivative liability | 6,013 | 3,712 |
Total liabilities | $ 16,001 | $ 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 | $ 2,646 | $ 2,765 |
Contingent acquisition debt, less current portion | 7,342 | 7,707 |
Warrant derivative liability | 6,013 | 3,712 |
Total liabilities | $ 16,001 | $ 14,184 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - 6 months ended Jun. 30, 2015 - USD ($) $ / shares in Units, $ in Thousands | Total |
Number of Shares | |
Outstanding, beginning of period | 28,918,500 |
Granted | 461,000 |
Cancelled | (1,154,000) |
Exercised | (40,300) |
Outstanding, end of period | 28,185,200 |
Exercisable, end of period | 16,286,200 |
Weighted Average Exercise Price | |
Outstanding, beginning of period | $ 0.21 |
Granted | .30 |
Cancelled | .22 |
Exercised | .20 |
Outstanding, end of period | .22 |
Exercisable, end of period | $ 0.22 |
Aggregate Intrinsic Value | |
Outstanding, beginning of period | $ 786 |
Granted | |
Exercised | |
Outstanding, end of period | $ 4,642 |
Exercisable, end of period | $ 2,558 |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | 31 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Dec. 31, 2014 | |
Convertible Preferred Stock, shares outstanding | 161,135 | 161,135 | 161,135 | 161,135 | ||
Accrued dividends | $ 92,000 | $ 92,000 | $ 92,000 | $ 86,000 | ||
Common Stock, shares outstanding | 391,926,133 | 391,926,133 | 391,926,133 | 390,301,312 | ||
Outstanding Price | $ .22 | $ .22 | $ .22 | $ 0.21 | ||
Authorized shares for repurchase | 11,672,571 | |||||
Weighted-average fair value per share of the granted options | $ .15 | $ 0.09 | ||||
Stock based compensation expense | $ 131,000 | $ 100,000 | $ 275,000 | $ 148,000 | $ 247,000 | |
Unrecognized compensation expense related to unvested share-based compensation arrangements | $ 1,652,000 | $ 1,652,000 | $ 1,652,000 | |||
Weighted-average period recognized | 4 years 10 months 12 days | |||||
Shares repurchased | 865,479 | 3,327,429 | ||||
Repurchase weighted average cost | $ 0.29 | $ 0.25 | ||||
Shares available for issuance under plan | 11,735,250 | 11,735,250 | 11,735,250 | |||
Common Stock [Member] | ||||||
Purchase warrant | 35,114,980 | 35,114,980 | 35,114,980 | |||
Warrant [Member] | ||||||
Purchase warrant | 35,114,980 | 35,114,980 | 35,114,980 | |||
Weighted average remaining term | 2 years 9 months 22 days |
Segment and Geographic Inform42
Segment and Geographic Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Revenues | $ 38,743 | $ 32,718 | $ 75,550 | $ 59,121 |
Gross margin | 23,810 | 18,942 | 44,091 | 34,778 |
Net income (loss) | (408) | 544 | (777) | 971 |
Capital expenditures | 1,171 | 4,288 | 2,103 | 4,614 |
Direct Selling [Member] | ||||
Revenues | 34,527 | 28,655 | 66,150 | 52,786 |
Gross margin | 23,754 | 18,932 | 44,477 | 34,775 |
Net income (loss) | 2,128 | 1,191 | 2,343 | 2,072 |
Capital expenditures | 465 | 222 | 849 | 336 |
Commercial Coffee [Member] | ||||
Revenues | 4,216 | 4,063 | 9,400 | 6,335 |
Gross margin | 56 | 10 | (386) | 3 |
Net income (loss) | (2,586) | (647) | (3,120) | (1,101) |
Capital expenditures | $ 706 | $ 4,066 | $ 1,254 | $ 4,278 |
Segment and Geographic Inform43
Segment and Geographic Information (Details 1) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Total assets | $ 64,304 | $ 55,732 |
Direct Selling [Member] | ||
Total assets | 41,051 | 36,149 |
Commercial Coffee [Member] | ||
Total assets | $ 23,253 | $ 19,583 |
Segment and Geographic Inform44
Segment and Geographic Information (Details 2) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Total revenues | $ 38,743 | $ 32,718 | $ 75,550 | $ 59,121 |
United States [Member] | ||||
Total revenues | 35,833 | 30,809 | 69,956 | 55,630 |
International [Member] | ||||
Total revenues | $ 2,910 | $ 1,909 | $ 5,594 | $ 3,491 |
Segment and Geographic Inform45
Segment and Geographic Information (Details Narrative) - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
United States [Member] | ||
Tangible assets | $ 7,500,000 | $ 4,200,000 |