UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
Amendment No. 1
[X]
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2018
OR
[ ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934
For transition period ___ to ____
Commission file number: 000-26973
FOREVERGREEN WORLDWIDE CORPORATION
(Exact name of registrant as specified in its charter)
| NEVADA (State or other jurisdiction of incorporation or organization) | 87-0621709 (I.R.S. Employer Identification No.) |
| 632 NORTH 2000 WEST, SUITE 101, LINDON, UTAH (Address of principal executive offices) | 84042 (Zip Code) |
Registrant’s telephone number: (801) 655-5500
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| None |
|
|
Securities registered under Section 12(g) of the Act: Common Stock
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ] No [X]
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.
Yes [ ] No [X]
Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.
Yes [ ] No [X]
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes [ ] No [X]
Indicate by check mark if disclosure of delinquent filers pursuant to item 405 of Regulation S-K is not contained
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herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer [ ] Non-accelerated filer [X] | Accelerated filer [ ] Smaller reporting company [X] Emerging growth company [ ] |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
Indicate by checkmark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. [ ]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes [ ] No [X]
The aggregate market value of the 18,172,342 shares of the registrant’s voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold ($0.11) on the last business day of its most recently completed second fiscal quarter (June 30, 2018) was approximately $1,998,957.
As of September 10, 2020, the registrant had 30,779,786 outstanding shares of common stock, par value $0.001.
Documents incorporated by reference: None
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TABLE OF CONTENTS
PART I
| Item 1. | Business | 4 |
| Item 1A. | Risk Factors | 12 |
| Item 2. | Properties | 12 |
| Item 3. | Legal Proceedings | 13 |
| Item 4. | Mine Safety Disclosure | 13 |
PART II
| Item 5. | Market for Registrant’s Common Equity, Related Stockholder Matters And Issuer Purchases of Equity Securities | 14 |
| Item 6. | Selected Financial Data | 15 |
| Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 15 |
| Item 8. | Financial Statements and Supplementary Data | 20 |
| Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | 38 |
| Item 9A. | Controls and Procedures | 38 |
| Item 9B. | Other Information | 39 |
PART III
| Item 10. | Directors, Executive Officers and Corporate Governance | 39 |
| Item 11. | Executive Compensation | 41 |
| Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 42 |
| Item 13. | Certain Relationships and Related Transactions, and Director Independence | 43 |
| Item 14. | Principal Accounting Fees and Services | 43 |
PART IV
| Item 15. | Exhibits, Financial Statement Schedules | 45 |
| Signatures | 46 | |
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EXPLANATORY NOTE
ForeverGreen Worldwide Corporation (“the Company”) is filing this amendment to the Form 10-K filed on March 4, 2020, due to the fact that the Company filed its annual report on Form 10-K for the period ended December 31, 2018, without completing the independent public accountants review of the Form 10-K. The accountants had not yet received the management representation letter required to finish their audit of the consolidated financial statements under professional standards and procedures conducted for such audits, as established by generally accepted auditing standards. Accordingly, the Company’s management and the independent registered public accountants determined that the previously issued consolidated financial statements included in our annual report on Form 10-K for the period ended December 31, 2018 should not be relied upon.
This Form 10-K/A, Amendment No. 1, does not include any changes to the financial statements other than a currently dated auditors’ report. Item 9B. Other Information and Item 10. Directors, Executive Officers and Corporate Governance have been updated to reflect changes in our executive officers. Other than these changes, this Form 10-K, Amendment No. 1, does include subsequent events occurring after the original filing date of the Form 10-K.
We are filing this amendment and re-executed Section 305 and Section 906 certifications as required by the Sarbanes-Oxley Act of 2002.
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In this annual report references to “ForeverGreen,” “the Company,” “we,” “us,” and “our” refer to ForeverGreen Worldwide Corp. and its subsidiaries.
FORWARD LOOKING STATEMENTS
The Securities and Exchange Commission (“SEC”) encourages companies to disclose forward-looking information so that investors can better understand future prospects and make informed investment decisions. This report contains these types of statements. Words such as “may,” “expect,” “believe,” “anticipate,” “estimate,” “project,” or “continue” or comparable terminology used in connection with any discussion of future operating results or financial performance identify forward-looking statements. You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this report. All forward-looking statements reflect our present expectation of future events and are subject to a number of important factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements.
PART I
ITEM 1. BUSINESS
Historical Development
ForeverGreen Worldwide Corporation (“ForeverGreen Worldwide”), was incorporated in the state of Nevada on March 18, 1999 as Whole Living, Inc. Whole Living, Inc. changed the name of the corporation to “ForeverGreen Worldwide Corporation” on December 14, 2006 and acquired ForeverGreen International, LLC as a wholly-owned subsidiary.
ForeverGreen Worldwide is a holding company which operates through its wholly-owned subsidiaries ForeverGreen International, LLC; FVRG Bolivia S.R.L. (Bolivia); FVRG Colombia S.A.S. (Colombia); CR-3-101-607360 S.A (Costa Rica); ForeverGreen S.A. (Ecuador); ForeverGreen (HK) Limited (Hong Kong); Productos Naturales Forevergreen Internacional en Mexico S.A. de C.V. (Mexico); ForeverGreen Team B.V (Netherlands); ForeverGreen Peru S.A.C. (Peru); ForeverGreen SP z.o.o. (Poland); ForeverGreen Singapore (Singapore); ForeverGreen International Taiwan LTD (Taiwan); ForeverGreen Chile SpA (Chile); ForeverGreen Dominicana S.R.L. (Dominican Republic); Kabushikigaisya ForeverGreen Japan Inc. (Japan); ForeverGreen (Aust & NZ) Pty. Ltd. (Australia); ForeverGreen Marketing Corporation (Philippines); ForeverGreen Puerto Rico LLC (Puerto Rico); FGXpress do Brasil Comercio de Alimentos LTDA (Brazil); and ForeverGreen Team B.V. (Europe).
Our Business
ForeverGreen Worldwide (the Company, named alternately in this document as “ForeverGreen”) is a holding company that operates primarily through its wholly-owned subsidiary, ForeverGreen International, LLC (“FGI”). We rely on a network marketing system for the distribution of our products through our independent business owners, referred to as “Members”, and other customers. ForeverGreen has historically been known for the development, manufacturing and marketing of a comprehensive line of meal replacement shakes, nutritional beverages, and marine phytoplankton products using exclusive and proprietary processes. During 2016 ForeverGreen developed its global express envelope model which expanded our market in more than 200 countries and territories.
During the coming year, ForeverGreen intends to empower a health-conscious global community with emphasis on self-care that necessitates mindfulness. To achieve this objective, the Company is strengthening its focus on its domestic and international Membership and consumer base by maintaining sufficient inventories, paying commissions on time, and providing superior customer service.
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Products
During 2018 five key differentiators separated ForeverGreen from our competitors in the direct sales and traditional consumer spaces. One is our unique global express model delivery method, enabling the Company to deliver a number of its products to many countries around the world both economically and efficiently. The second is our top selling, patented, pain relief adhesive strip known as PowerStrips ™, listed as a class one medical device with the Food and Drug Administration. The third is our proprietary marine phytoplankton nutritional component which is sourced through exclusive strategic partnerships in both farming and processing. The fourth is our patent-pending Aqueous Molecular Partitioning (AMP ™) technology which renders ingredients water-soluble without the use of chemicals or heat which may compromise the nutritional value or health benefits of many processed foods. The fifth is our industry exclusive license agreement to the patented ingredients in KetonX™, the flagship product of the Ketopia weight management product line.
ForeverGreen’s mission is to produce and deliver products that improve total health through a diet of whole foods and beverages and high-quality natural products as an alternative to fractionated, processed pills and supplements. We take pride in our commitment to offer all natural, clean, and/or organic products, including:
Prodigy-5 is an all-in-one nutritional product which provides vitamins, minerals, antioxidants and energy, helping you to stay healthy, nourished, and energized. The Prodigy-5 formula contains specific nutrients based on 40 years of peer reviewed science. Prodigy-5 works as a catalyst for other nutrients you consume in your foods and other supplements. Prodigy-5 also works with the new, patent-pending, doctor-invented “TransArmor™ Nutrient Technology” (“TransArmor”) which prepares the body to better absorb and utilize the nutrients, especially those in Prodigy-5. The TransArmor nutrient technology is a scientific breakthrough created by Doctor Ambati, MD and Doctor Saucedo, MD. This technology uses natural processes of the body by ensuring that specific anatomic regions (mouth and small intestine) are optimized at the moment that nutrients are found in these regions to allow the body to better absorb a specific array of nutrients.
PowerStrips offer temporary relief of minor aches and pains. Utilizing the Global Express model, PowerStrips are currently shipped to over 40 countries and this product is still ForeverGreen’s number one selling product.
FrequenSea Pro is an instant, nutritional beverage that ships globally via the Global Express model. FrquenSea Pro utilizes TransArmor™ technology to deliver one of our core health technologies, open cell marine phytoplankton.
KetonX product line was launched in 2015 to address weight management. Many leading scientists, medical professionals, and nutrition experts agree the ketosis lifestyle is the pinnacle of health and well-being. Ketosis is a natural metabolic state where the body burns fat for energy rather than carbohydrates. The majority of people today have sugar-burning bodies instead of fat-burning bodies. Because of having more balanced blood sugar levels, those with fat-burning bodies typically experience better energy and fewer cravings with the use of KetonX products.
ForeverGreen also markets supplements, including AIM and Pulse-8.
Distribution
Our main corporate office and distribution center is located in Lindon, Utah. We also have fulfillment centers in Costa Rica, Colombia, Chile, Peru, Mexico, South Africa, West Africa, the Caribbean, and we are using a third party in Europe to service our Members in the European Union. We buy raw materials from third-party suppliers, manufacture our whole-food products through manufacturing partners and warehouse the bulk food product at our facilities. We service individual product orders and ship to individual customers and Members in the United States, and more than 200 countries and territories throughout the world.
Members and their customers pay for products prior to shipment, incurring minimal accounts receivable. Members and customers have access to place orders online through the ForeverGreen website or by phone through our in-
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house call center. Typically, Members and customers pay for their product orders by credit card. Less than 8% of our sales are paid with check or bank deposit.
The global express model has allowed ForeverGreen to broaden its global business reach to markets which would otherwise be inaccessible. All three global express products ship within our exclusive envelope model, bringing the power of the global economy to everyone’s doorstep. PowerStrips, Prodigy 5 and FrequenSea Pro have been well received by our Members due to the global express model.
Philosophy
While we relentlessly strive to improve our products, processes and profitability, what truly sets ForeverGreen apart is the value system that underlies every aspect of our operations. Our products and business practices are consciously crafted so that our employees and worldwide community Members will think of ForeverGreen as a lasting career home, not a “here-today, gone-tomorrow” profit opportunity to be consumed and discarded.
Kindness is more than a catch phrase at ForeverGreen. Our goal is for kindness to be at the core of how we treat everyone who comes in contact with our Company. Although we constantly aim for harmony and excellence, there are days when we disagree or make mistakes. When we discover a misalignment we deal with it directly, but in a respectful way that leaves our working relationships intact. We embrace the same growth and profit motives as any successful company, but we insist on using those profits to improve the world around us and touch as many lives as possible for the better. Every ForeverGreen Member and employee is encouraged to actively give back to their local communities through selfless acts of service. We model this expectation as a Company through various corporate outreach initiatives.
Competition
The market for products designed to enhance physical and mental performance is large and intensely competitive. Our primary competitors include other network marketing companies that manufacture and market herbal remedies, nutritional products and personal care products. We also compete with large traditional retail businesses that offer products in similar categories. To attract positive industry attention and hold sustainable market advantage, we emphasize differentiators such as our company culture, our exclusive access to unique ingredients, the quality and efficacy of our products and the reliability and convenience of our distribution system. We emphasize products that improve health through a diet of whole-food beverages and real, natural products rather than fractionated pills and supplements. We take pride in our commitment to offering clean, all natural, and/or organic products.
Herbal remedies, personal care, and nutritional products can be purchased in a wide variety of channels of distribution. While we believe that consumers appreciate the convenience of ordering products from home through a sales person they know and trust or through a catalog, the buying habits of many consumers indicate they may not wish to change their preference for purchasing products through traditional retail channels. We address this challenge directly in our marketing approach.
We also compete for Members (independent distributors) with other direct selling organizations, many of which have a longer operating history, higher visibility, name recognition, and financial resources. Some of the dominant network marketing companies in our existing markets are Amway Corporation, Herbalife and NuSkin Enterprises, to name a few. We also compete with many smaller network marketing companies that also offer personal care products, health and nutrition products. We compete for new Members on the strength of our product line, leadership training, compensation plan, marketing focus, corporate values and management leadership strengths.
Product Guarantees
Our 100% customer satisfaction policy allows product returns for all our products that are resalable, subject to a restocking fee. This policy improves our customer and Member satisfaction and brings us in line with Direct Selling Association recommendations. Product returns have averaged less than 2% of sales for the past several years.
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Sales and Marketing
We rely on a network marketing system for the distribution of our products through our independent business owners (referred to as “Members” by ForeverGreen) and customers. Our revenue depends directly upon the sales efforts of our Members around the world. We distribute our products exclusively through independent Members who have contracted directly with the Company. Members are entitled to purchase products from us for personal use or for resale, depending on their market, and the sales by our Members have the potential to earn the Member commissions. Individuals who join as Members may enroll and sponsor other Members and may further earn commissions from the resale of products. Our ForeverGreen compensation plan provides many different ways to earn income for our Members.
We provide exclusive, innovative nutritional and whole-food products that are eaten or consumed to achieve healthy results within the body. In addition, the functional foods and products we offer are experiencing favorable growth.
We offer our products online and each Membership purchased also includes a virtual online website. Known as a web office, this is where Members can manage, monitor, and operate their businesses 24 hours a day from any location with internet access. This site is password protected, exclusive to Members and provides access to Company news, order information, commission information, product tracking, product information, and a library of Company documents geared to help them with their business, such as frequently-asked questions and various forms and reference materials.
In addition, we offer a replicated website model to our Members allowing them to obtain an immediate online presence and personal URL for their business, which they can use as a place to direct potential new Members to learn about the Company and sign up as Members. Features on this website include Company information, video and flash presentations, prospect management and follow-up, online registration of new Members, online product ordering, online customer service and a “contact me” function that allows anyone visiting the site to contact the Member directly via email.
Member Enrollment and Sponsorship
Any person may join the Company as a Member to purchase products for personal use or to build a sales organization. Members are independent contractors and are thus prohibited from representing themselves as our agents or as employees of the Company. Enrollment and sponsorship activities are encouraged, but not required of our Members. Successful Members will both enroll and sponsor new Members. The sponsoring of new Members creates multiple levels in a network marketing structure. Individuals that a Member sponsors are referred to as “downline,” or “sponsored” Members. If downline Members also sponsor new Members, they create additional levels in the structure, but their downline Members remain in the same downline network as their original sponsoring Member.
Members assist their downline Members to successfully sponsor new Members. While we provide product and Company brochures, magazines, websites, videos and other sales and marketing materials, our greatest success and retention comes from Members who are accountable and responsible for educating and training new Members with respect to our products and how to build and maintain a successful business.
Generally, Members who are new to network marketing invite friends, family Members, and acquaintances to attend conference calls, review websites and marketing materials, or attend personal or company-sponsored meetings. Members with a history in direct sales are quick to invite their contacts within the industry to experience the difference that our Company brings to the network marketing profession. Some people are attracted to become Members after experiencing our products and desiring to enjoy the wholesale pricing that Members receive.
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Turnover is a typical aspect of the direct selling or network marketing industry. Our Members understand that to prevent a possible decline in their organization and sales volume, the enrollment, sponsoring and training of new Members is necessary to increase the overall Member force and motivate new and existing Members. We may experience seasonal decreases in Member sponsoring and product sales because of holidays and customary vacation periods. We cannot predict the timing or degree of these enrollment fluctuations because of the number of factors that impact the sponsoring of new Members. We cannot assure that the number, growth or productivity of our Members will be sustained at current levels or increase in the future.
Regular conference calls, the materials available online, training events, corporate events and Member Support offerings help to provide a duplicable business model that help new Members successfully begin their independent contractor business.
Member Contract
A potential Member must enter into a standard Member Agreement which governs the relationship between the Company and the Member in accord with our policies and procedures. In order to become a Member, a person may purchase a non-commissionable online digital Member Kit which includes all the business building websites, multi-language web office and online library. No product purchases are required to become a Member, and large inventory product purchases are discouraged. However, in order to receive compensation as a Member, personal or customer monthly purchases and/or personal customer sales of a certain amount of volume are required.
Our Member Agreement and Policies and Procedures, which outline the scope of permissible marketing activities, and information on the ForeverGreen compensation plan are posted on our website. Our Member rules and guidelines are designed to provide Members with maximum flexibility and opportunity within the bounds of governmental regulations regarding product claims, network marketing and prudent business policies and procedures. Members are obligated to present our products and business opportunity ethically and professionally. Members contractually agree to abide by all local, state and federal laws and regulations pertaining to the advertising, sale and distribution of our products. All advertising must be factual and not misleading and a Member’s account may be terminated for making false claims about the income potential, the compensation plan, or product efficacy.
Members must represent to potential Members that the receipt of commissions is based on sales and substantial efforts. Products may be promoted by personal contact or by literature produced or approved by the Company. In traditional retail environments, our products generally may not be sold, and the business opportunity may not be promoted.
We are not in a position to provide the same level of direction, motivation, and oversight to our Members as we would our own employees because the Members are independent contractors residing across the United States and in many other countries. We review alleged reports of Member misconduct or breach of contract to enforce contract compliance. If we determine that a Member has violated any of the Member Policies or Procedures, we may elect to educate the Member regarding the contract terms or impose sanctions such as warnings, probation, suspension of privileges of Membership, withholding commissions until specified conditions are satisfied, termination of the Member’s rights completely or other appropriate injunctive relief. A Member may voluntarily terminate their Membership at any time.
Compensation Plan
We believe the ForeverGreen Hybrid Compensation Plan brings together the best of uni-level and binary compensation plans. Each personally enrolled Member is part of two trees. The Enrollment Tree addresses the uni-level features of the plan, with no limit to how many Members can be enrolled per level. The Placement Tree addresses the binary features of the plan. Each Member can only have two organizational legs, so everyone contributes building their two legs by placing their enrollments underneath.
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ForeverGreen Member could begin their commissions earning when their personally invited Member makes the first purchase. Our intention is to ensure all new members know what to do to achieve success in this business; therefore, we introduced the Starter concept. We believe Starter is an easy road map to success in the ForeverGreen business. Each person begins the Starter program by enrolling a Member (PEM) in each of their binary legs. They then work to help and teach the Members they recruited and others in their organization do the same. The next step in the Starter program is to recruit two more PEMs, a total of four PEM’s recruited into their business. When a person has four active PEMs with a total of 1000 points within 2 levels of their group, they can earn $75 or $150 depending on their personal contribution. Starter is the way to keep the beginner engaged. We believe when everyone is following the same actions the result can be impressive.
ForeverGreen also promotes team building. We believe when people work as a team, they can be rewarded for their team actions. The Company pays 8% or 12% of their small leg organization’s purchases weekly. On top of the Team Bonus, leaders also can receive rewards from helping and leading their team. The Company pays a floating Matching Bonus from one to four levels to leaders who achieve various ranks. We also offer lucrative one-time cash bonuses to people who reach new ranks for the first time. These cash bonuses range from $500 to $100,000 depending on the level of their success.
Each Company product carries a specified number of commissionable volume, or “points”. Commissions or bonuses are based on a Member’s personal qualification, organizational, and leg commission volumes. A Member receives commissions based on a percentage of the sales volume of their downline weekly and monthly. Commission qualification volume points are essentially based upon a percentage of the product’s wholesale cost, net of any sales related taxes. As a Member’s retail business expands, and as they successfully sponsor other Members into the business, both of which expand their businesses, the Member can receive more commissions from the expanded sales volume of the downline. A Member receives weekly commission bonuses by remaining in good standing with the Company and by generating a minimum of 50 points of Personal Volume (PV).
The ForeverGreen compensation plan provides weekly payout. To be eligible to participate in the plan, receive bonuses, earn rank advancements, and to keep your carry-over from week to week, it is necessary to have an “active order” for 50 QV (qualifying volume) at all times. To maximize the plan, a member must be “fully qualified” at 100 QV per a four-week period. With every product purchase, this volume (QV) is “active” for the current weekly pay period plus three more (four weekly periods total). Without an active order, qualification expires after the fourth weekly pay period, which begins on Tuesday at 12 a.m. U.S Mountain Time and ends on Monday at 11:59 p.m. U.S. Mountain Time.
As with any business, individual results may vary, and will be based on the Member’s personal capacity, business experience, expertise and level of desire. There are no guarantees concerning the level of success ForeverGreen Members may experience. The examples used in the Company’s training materials are exceptional results, which may not apply to an average Member, and are not intended to represent or guarantee that anyone will achieve the same or similar results.
There are several ways for Members to get paid under the Company’s compensation plan. The Starter Bonuses reward duplication. The Team Bonus rewards Members for helping the leg that needs it most through training, mentoring and various forms of business support. There is no limit to how many PEMs can be enrolled. The Rank Advancement Bonus rewards leadership development as a leader. Achieve a new rank once and get the title, achieve it twice and get the bonus. The Matching Bonus rewards activity that supports the business growth of PEMs. ForeverGreen has published a detailed Compensation Plan Manual and supporting collateral training materials to assist Members in building their commission and bonus income.
Trademarks, Patents and Intellectual Property
We have secured, or are in the process of securing, trademark protection in the United States and around the world in markets where we currently do business or where we have a future strategic interest. The Company holds a variety of U.S. trademarks and no foreign trademarks. As we continue to expand internationally, trademark
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protection is increasingly important for brand recognition and Member and consumer loyalty. It is standard Company practice to follow through with ongoing trademark registration in the United States and other countries where we are experiencing growth.
A number of our products utilize proprietary formulations and processes. Although ForeverGreen does not directly hold any patents at this time, a number of our key vendors have secured or applied for patents to maintain exclusivity for the ingredients or integrated products they supply to us. To protect our own intellectual property and proprietary processes that are material to the long-term health and profitability of the Company, ForeverGreen makes it a disciplined business practice to manage trade secrets and various forms of confidentiality and non-disclosure agreements.
ForeverGreen exercises special vigilance in the area of compliance. For this reason, we employ a full-time compliance team that closely monitors all Company and Member messaging and is empowered to edit or remove all non-compliant language pertaining to our products.
Strategic Partnerships
In 2007, MLS acquired the worldwide rights to the exclusive blend of marine phytoplankton produced by Unique Sea Farms, Ltd. In 2008 FGI entered into a worldwide marketing agreement with MLS, and the parties reviewed the quotas and market conditions to ensure the long-term stability of this key vendor relationship. MLS continues to share research results and other product data with FGI and both parties have agreed to protect any proprietary information related to the product. The parties have further agreed to indemnify one another for any claims arising out of any action taken or omission by the other.
Although there are other providers in the world who claim to produce marine phytoplankton, our sourcing information indicates that the MLS product offers the best quality, the most ideal geographical location and the best harvesting and extraction methods. These factors contribute to the uniqueness and nutritional superiority of the marine phytoplankton component in our products.
We retain the freedom to use any competitive suppliers to garner control over our product costs, quality and lead times for manufacturing and delivery. Our inventory control system ensures appropriate volumes of finished product based on the anticipated movement of each item in our catalog.
Government Regulation
Direct Selling Activities
Direct selling activities are regulated by various federal, state and local governmental agencies in the United States and foreign countries. To our knowledge, the Company’s method of distribution is in compliance in all material respects with the laws and regulations relating to not-for-resale and direct selling activities in the United States, Mexico, Japan, Canada, Singapore, New Zealand, Australia, Germany, the Netherlands, the United Kingdom, and many other markets. These laws and regulations are generally intended to prevent fraudulent or deceptive schemes, often referred to as “pyramids,” “money games,” “business opportunity” or “chain sales” schemes that promise quick rewards for little or no effort, require high entry costs, use high pressure recruiting methods, and/or do not involve legitimate products. The laws and regulations in our current markets often impose certain cancellation or product return, inventory buy-backs and “cooling-off” rights for consumers and Members, require us or our Members to register with a governmental agency impose various regulatory requirements on us.
The purpose of these laws and regulations is to ensure that Members are being compensated for sales of products and not for recruitment of new Members. The extent and provisions of these laws vary from state to state and internationally. International laws may impose significant restrictions and limitations on our business operations. For example, in foreign countries where we have not yet established a local office, our Members and customers purchase product through a not-for-resale program enabling them to receive product for personal consumption, but
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not to retail the product to customers.
Any assertion or determination that we are not in compliance with existing laws or regulations could potentially have a material adverse effect on our business and results of operations. We cannot assure that regulatory authorities in our existing markets will not impose new legislation or change existing legislation that might adversely affect our business in those markets. Also, we cannot assure that new judicial interpretations of existing law will not be issued that adversely affect our business. Regulatory action, whether or not it results in a final determination adverse to us, has the potential to create negative publicity, with detrimental effects on the motivation and recruitment of our Members and, consequently, on our revenue and net income.
Regulation of Personal Care and Nutritional Food Products
Our products and related marketing and advertising are subject to governmental regulation by various domestic agencies and authorities, including the Food and Drug Administration, which regulates food, medical products and cosmetics. The advertising and marketing of our products are regulated by the Federal Trade Commission, which enforces consumer protection laws in regard to truth in advertising. The Consumer Product Safety Commission protects the public from unreasonable risk of injuries and death associated with consumer products, and the United States Department of Agriculture regulates food safety and quality. Similar types of agencies also exist in our foreign markets. To date, we have not experienced any governmental actions related to health or safety and food and drug regulations for our products.
Our markets have regulations concerning product formulation, labeling and packaging. These laws and regulations often require us to, among other things, conform product labeling to the language and regulations, and register or qualify products with the applicable government authority or obtain necessary approvals or file necessary notifications for the marketing of such products. Many of our existing markets also regulate product claims and advertising. These laws regulate the types of claims and representations that can be made regarding the capabilities of products. For example, in the United States we are unable to make any claim that our nutritional products will diagnose, cure, mitigate, treat, or prevent disease.
Employees
As of the date of this filing ForeverGreen Worldwide has 15 employees with some services, employee and management functions being performed by FGI employees. Many of these employees directly support the Member network. Our employees are not presently covered by any collective bargaining agreement. We believe our relationships with our employees are good, and we have not experienced any work stoppages.
Available Information
For more information please visit our website www.forevergreen.org.
ITEM 1A. RISK FACTORS
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and, as such, we are not required to provide the information for this Item.
ITEM 2. PROPERTIES
On September 29, 2015 the Company signed a ten-year lease with WI Commercial West Lindon, LLC, for our offices and warehouse located in Lindon, Utah. The current lease rate for that building is $23,573 per month and the Company is leasing 32,720 square feet. The Company currently subleases one half of the total square footage.
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During the year the Company leased office space in the countries of Mexico, Costa Rica and Bolivia.
ITEM 3. LEGAL PROCEEDINGS
On October 17, 2017, FGI entered into an agreement with Lindon CC, LLC, to settle a debt owed. The debt was $93,758. As part of the settlement agreement, FGI agreed to make regular payments. Additionally, FGI signed a Confession of Judgment that would allow Lindon CC to enter a judgment in the event of FGI’s default on payments required under the settlement agreement. On or about January 14, 2019, Lindon CC filed the Confession of Judgement with the Third Judicial District Court of Utah, claiming that FGI owed Lindon CC $28,758. The Court entered judgment in that amount on February 22, 2019. On or about October 31, 2019, FGI settled the debt with Lindon CC, and Lindon CC filed a Satisfaction of Judgment. The court has dismissed the action.
On February 19, 2019, Axcess Global Sciences, LLC and Pruvit Ventures, Inc. (collectively “AGS”), filed a complaint against FGI in the United States District Court for the Eastern District of Texas seeking damages and injunctive relief. The complaint alleges that FGI’s KetonX product infringes U.S. Patent Nos. 9,138,420 and 9,675,577 (collectively the “Patents in Suit”) and seeks damages and injunctive relief. AGS filed a motion for a preliminary injunction on March 21, 2019. FGI filed a motion to dismiss AGS’s complaint, based on a lack of standing and based on a license agreement granted by AGS for the Patents in Suit. At the same time, FGI filed an opposition to AGS’s motion for a preliminary injunction alleging, among other things, that AGS lacks standing to bring suit, that the Patents in Suit are invalid, that there is no irreparable harm to AGS based on the sale of the KetonX product, and that AGS is unlikely to prevail on the merits. On November 11, 2019, the parties settled the matter during mediation. FGI agreed to discontinue selling the KetonX product worldwide, and the court has dismissed the action.
On or about August 22, 2019, FGI received a notice from what appears to be the Polish Tax Office in Warsaw, which was addressed to ForeverGreen Team BV, claiming past due amounts of VAT for periods from June 2016 to February 2017. The total amount claimed is $827,533 Polish Zloty or approximately $217,000 USD. ForeverGreen is investigating the legitimacy of the claim and possible resolutions.
On or about June 6, 2018, Fybrands Corporation filed a complaint against FGI, in the Third District Court of Utah. Fybrands claimed ForeverGreen owed $103,924. On April 30, 2019, the court entered judgment against ForeverGreen in the amount of $103,924.
On March 20, 2019, KPMG Global sent FGI a claim for service of approximately $350,000. FGI and KPMG Global have agreed to settle the claim for $23,773.
ForeverGreen Worldwide is involved in various disputes and legal claims arising in the normal course of our business. In the opinion of management, these lawsuits will not have a material effect on our financial position and results of operations.
ITEM 4. MINE SAFETY DISCLOSURE
Not applicable to our operations.
13
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Market Information
Our common stock is quoted on the OTC Bulletin Board under the symbol “FVRG.” Any over-the-counter market quotations reflect inter-dealer prices, without retail mark-up, mark-downs or commissions, and may not necessarily represent actual transactions.
Our shares are subject to Section 15(g) and Rule 15g-9 of the Securities and Exchange Act, commonly referred to as the “penny stock” rule. The rule defines penny stock to be any equity security that has a market price less than $5.00 per share, subject to certain exceptions. Trading in the penny stocks is subject to additional sales practice requirements on broker-dealers who sell penny stocks to persons other than established customers and accredited investors. Accredited investors, in general, include certain institutional investors and individuals with assets in excess of $1,000,000, not including their primary residence, or annual income exceeding $200,000 or $300,000 together with their spouse.
For transactions covered by these rules, broker-dealers must make a special suitability determination for the purchase of our securities and must have received the purchaser’s written consent to the transaction prior to the purchase. Additionally, for any transaction involving a penny stock, the rules require the delivery, prior to the first transaction, of a risk disclosure document relating to the penny stock. A broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative, and current quotations for the security. Finally, monthly statements must be sent to the purchaser disclosing recent price information for the penny stocks. Consequently, these rules may restrict the ability of broker-dealers to trade or maintain a market in our common stock and may affect the ability of shareholders to sell their shares.
Holders
At December 31, 2018, and September 10, 2020 the Company had 155 shareholders of record, which does not include shareholders who hold shares in “street accounts” of securities brokers. Our transfer agent, Standard Registrar and Transfer Company, Inc., is located in Salt Lake City, Utah.
Dividends
We have not paid cash or stock dividends and have no present plan to pay any dividends, intending instead to reinvest our earnings, if any. For the foreseeable future, we expect to retain any earnings to finance the operation and expansion of our business and the payment of any cash dividends on our common stock is unlikely.
Recent Sales of Unregistered Securities
On July 25, 2018 the Company extinguished $240,000 of debt owed to Liberty Partners LLC for 1,200,000 shares of common stock. The effective exercise price was $0.20 per share, resulting in a gain on extinguishment of $12,000.
On July 27, 2018 the Company extinguished $200,000 of debt owed to Compass Equity Partners LLC for 1,000,000 shares of common stock. The effective exercise price was $0.20 per share.
On August 5, 2018 the Company extinguished $259,690 of debt owed to Compass Equity Partners LLC for 1,300,000 shares of common stock. The effective exercise price was $0.20 per share, resulting in a gain on extinguishment of $12,690.
14
On August 5, 2018 the Company converted $263,500 of debt owed to Bryan Development LLC for 1,320,000 shares of common stock. The effective exercise price was $0.20 per share.
On August 10, 2018 the Company converted $53,500 of debt owed to Captus Global Consulting LLC for 267,500 shares of commons stock. The effective exercise price was $0.20 per share.
All shares were privately issued with a restrictive legend in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933.
Issuer Purchase of Securities
None.
ITEM 6. SELECTED FINANCIAL DATA
Not applicable to smaller reporting companies.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Executive Overview
During the year ended December 31, 2018, the Company continued its planned consolidation and restructuring of the Company, including reducing overhead costs, streamlining the Company's product offerings, reducing shipping costs, reduction of personnel and consolidating domestic and foreign warehouse and office spaces. These strategies were directed to reduce overhead and debt, streamline domestic and international operations, improve distribution channels and consolidate the Company's product offerings.
Our gross profits have decreased for the year ended December 31, 2018, and we have recorded a net loss from operations. The Company continues to monitor its cost structure and implements cost saving measures deemed to be effective. The Company has initiated some new marketing initiatives to stimulate growth in its monthly revenues, which combined with some new financing, is allowing the Company to continue to invest in its expansion plan. New products have been and will continue to be considered to bolster Member recruiting and sales. Management will make improvements to the marketing plan to enhance the success that is developed. The Company intends to seek debt and equity financing as necessary.
Management anticipates that future additional capital needed for cash shortfalls will be provided by either debt or equity financing. We may pay these loans with cash, if available, or convert these loans into common stock. Any common stock issuance likely will rely upon exemptions from registration provided by federal and state securities laws. The purchasers and manner of issuance will be determined according to our financial needs and the available exemptions. We also note that if we issue more shares of our common stock our shareholders may experience dilution in the value per share of their common stock.
Results of Operations
The following chart summarizes the consolidated statements of operations of ForeverGreen Worldwide and Subsidiaries for the years ended December 31, 2018 and 2017.
15
|
| Year ended December 31 | ||
| SUMMARY OF OPERATING RESULTS | 2018 |
| 2017 |
| Revenues, net | $ 10,158,516 |
| $ 18,492,769 |
| Cost of sales | 3,302,543 |
| 4,571,724 |
| Gross profit | 6,855,973 |
| 13,921,045 |
| Selling and marketing expenses | 3,413,441 |
| 7,739,550 |
| General and administrative expenses | 4,145,368 |
| 6,680,890 |
| Depreciation and amortization | 924,831 |
| 942,572 |
| Total operating expenses | 8,483,640 |
| 15,363,012 |
| Net operating loss | (1,627,667) |
| (1,441,967) |
| Total other (expense) | (1,048,602) |
| (713,927) |
| Income tax provision (benefit) | -- |
| -- |
| Net loss | $ (2,676,269) |
| $ (2,155,894) |
| Net loss per share (basic and diluted) | $ (0.10) |
| $ (0.8) |
We recognized revenues of $10,158,516 for 2018 compared to revenues of $18,492,769 for 2017. Our source of revenues is from the sale of various supplements, other natural products, member sign up fees, kits, and freight and handling to deliver products to the members and customers.
The Company experienced a 45.1% decrease in revenues in 2018 compared to 2017 resulting from an overall Company strategy to restructure expenses. Some of the cost cutting initiatives implemented resulted in a loss of revenues, but the net effect of the changes was to put the Company in a position for improved profitability. Also, in 2018 active Members decreased to 19,006 compared to 31,821 active members in 2017. The decrease in Member activity is, in part, a result of some of the cost cutting measures.
Cost of sales consists primarily of the cost of procuring and packaging products, shipping product and credit card sales processing fees. Cost of sales was approximately 32.5% of revenues for 2018 compared to 24.7% of revenues for 2017. The 2018 increase is primarily due to the lower product revenue for products and shipping.
Management continues to negotiate better costs and terms with our key vendors to lower our cost of goods sold. New products have been and will continue to be introduced to bolster Member recruiting and product sales. As the TransArmor™ technology is implemented in additional products, the Company expects the global express product mix to become a larger part of its total revenues. With this shift to more envelope products, the Company will be able to deliver those products more inexpensively than a corresponding Farmer’s Market product. In addition, management intends to improve our marketing plan to enhance overall profitability. Our management will continue to scrutinize expenses related to our operating activities and order fulfillment to determine appropriate actions to take to reduce these costs.
Selling and marketing expenses include sales commissions paid to our Members, special incentives, costs for incentive trips and other rewards incentives. In 2018 selling and marketing expenses decreased to 33.6% of revenues compared to 41.9% in 2017. Selling and marketing expenses are commuted from the commission structure for the product sold and the commission tier the member receiving the commission is in.
16
General and administrative expense (inclusive of depreciation and amortization) decreased as a total expense, but increased as a percentage of revenues to 49.9% in 2018 from 41.2% in 2017.
Liquidity and Capital Resources
|
| Year ended December 31 | ||
| SUMMARY OF BALANCE SHEET | 2018 |
| 2017 |
| Cash and cash equivalents | $ 80,996 |
| $ 108,112 |
| Restricted cash | 27,336 |
| 56,976 |
| Total current assets | 683,826 |
| 1,226,647 |
| Total assets | 2,319,308 |
| 3,906,285 |
| Total current liabilities | 10,199,318 |
| 6,469,580 |
| Long-term debt | 1,458,000 |
| 5,792,768 |
| Total liabilities | 11,657,318 |
| 12,262,348 |
| Accumulated deficit | $ (47,578,632) |
| $ (44,902,363) |
| Total stockholders’ deficit | $ (9,338,010) |
| $ (8,356,063) |
Our total assets decreased to $2,319,308 at December 31, 2018 from $3,906,285 at December 31, 2017. The decrease is primarily due to a $291,464 decrease in inventory to keep inventory supply in line with the lower revenues, a net decrease of $1,044,156 in property plant and equipment, a $29,640 decrease in restricted cash, a $27,116 decrease in cash, a $75,884 decrease in prepaid expenses and other assets, and a $118,717 decrease in receivables. All of these decreases are due to the reduced revenues in 2018.
Our total liabilities at December 31, 2018 were $11,657,318 compared to $12,262,348 at December 31, 2017. The decrease consists of a decrease in accounts payables of $233,423 due to lower level of activity during the year and net convertible notes payable from related parties increased by $397,639, net convertible notes payable from non-related parties decreased by $607,594 and notes payable decreased by $301,247. The changes in all notes payable are from new note additions, note settlements and extinguishments for common stock and restructurings, and principal and interest payments made during 2018.
At December 31, 2018, the Company had cash and cash equivalents of $80,996, a working capital deficit of $9,515,492 and accumulated deficit of $47,578,632, negative cash flows from operations, and has experienced cash flow difficulties. The increase from the 2017 working capital deficit of $4,272,559 was due to a significant loss in assets and a reclassification of long term to short term of current liabilities. During 2018 the Company financed its operations with net cash flows from operations, and the issuance of promissory notes. These factors combined raise substantial doubt about the Company’s ability to continue as a going concern.
|
|
| Year ended December 31 | ||
| SUMMARY OF CASH FLOWS |
| 2018 |
| 2017 |
| Net cash used in operating activities |
| $ (512,705) |
| $ (1,321,130) |
| Net cash provided by ( used in) investing activities |
| -- |
| (175,651) |
17
|
|
| Year ended December 31 | ||
| SUMMARY OF CASH FLOWS |
| 2018 |
| 2017 |
| Net cash provided by (used in) financing activities |
| (246,373) |
| 607,787 |
| Effect of foreign currency on cash |
| 702,322 |
| 714,840 |
| Net decrease in cash equivalents and restricted cash |
| $ (56,756) |
| $ (174,154) |
The net cash used in operating activities decreased by $808,425 in 2018. This is attributable to significant reductions in revenues and management’s cost reduction initiatives not keeping pace with the decline. The initiatives included reductions in labor force, negotiating out of building leases, and paying one-time costs associated with the termination of certain contracts.
Net cash used in investing activities decreased by $175,651 in 2018 compared to 2017. This decrease is due to no fixed asset purchases in 2018.
Net cash provided by financing activities decreased by $854,160 compared to 2017. This decrease is due to less cash received from note issuances and no cash received from equity issuances in 2018.
Commitments and Obligations
The Company has an agreement with one vendor, Marine Life Sciences, LLC, that supplies 100% of the marine phytoplankton included in several top selling products. If that vendor were to discontinue the supply of this ingredient, our sales could decrease significantly. There are other providers of that ingredient in the world, however, the Company considers this provider to have the very best quality, which is nutritionally superior to other sources of this ingredient and has no intention of obtaining it from any other provider.
As of December 31, 2018, the Company has $5,670,146 in debt that will be due in the next twelve months. During 2017 and 2018 the Company has issued convertible promissory notes totaling $5,176,826 and $570,000, respectively, to related parties and third parties. The principal amount of the notes and accrued interest is due and payable on or before December 31, 2019. The notes also have a conversion feature for common shares.
Management anticipates it will satisfy these notes payable through increased revenues or negotiation of new payment due dates.
Off-balance Sheet Arrangements
We have not entered into any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources and would be considered material to investors.
Critical Accounting Estimates
The Company records impairment of long-lived assets to be held and used or to be disposed of when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the carrying amount. The Company did an annual analysis for the period ended December 31, 2018 and determined no adjustment to long-lived assets was needed.
The Company adjusts its inventories to lower of cost or market. Additionally, we adjust the carrying value of our inventory based on assumptions regarding future demand for our products and market conditions. If future demand
18
and market conditions are less favorable than management’s assumptions, additional inventory write-downs could be required. Likewise, favorable future demand and market conditions could positively impact future operating results if previously written down inventories are sold. We had obsolete and slow-moving inventories which were reserved against in the amount of $40,000 at December 31, 2018.
In determining the allowance for doubtful accounts, the Company evaluates the collectability of its accounts receivable and member advances based on a combination of factors. In circumstances where the Company is aware of a specific customer’s inability to meet its financial obligations to us (e.g., bankruptcy filings), the Company records a specific allowance for doubtful accounts against amounts due to reduce the net recognized receivable to the amount it reasonably believe will be collected. For all other customers, the Company recognizes allowances for doubtful accounts based on the length of time the receivables are past due. If circumstances change (e.g., unexpected material adverse changes in a major customer’s ability to meet its financial obligation to us or higher than expected customer defaults), the Company’s estimates of the recoverability of amounts could differ from the actual amounts recovered.
19
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
FOREVERGREEN WORLDWIDE CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2018 and 2017
INDEX
|
|
|
| Report of Independent Registered Public Accounting Firm | 21 |
|
|
|
| Consolidated Balance Sheets | 22 |
|
|
|
| Consolidated Statements of Operations and Comprehensive Loss | 23 |
|
|
|
| Consolidated Statements of Stockholders’ Deficit | 24 |
|
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|
| Consolidated Statements of Cash Flows | 25 |
|
|
|
| Notes to Consolidated Financial Statements | 27 |
20
![[fvrg201810ka1v42.gif]](fvrg201810ka1v42.gif)
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of ForeverGreen Worldwide Corp:
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of ForeverGreen Worldwide Corp (“the Company”) as of December 31, 2018 and 2017, and the related consolidated statements of operations, comprehensive loss, stockholders’ deficit, and cash flows for each of the years in the two-year period ended December 31, 2018 and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2018, in conformity with accounting principles generally accepted in the United States of America.
Explanatory Paragraph Regarding Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 11 to the financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency that raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 11. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ Sadler, Gibb & Associates, LLC
We have served as the Company’s auditor since 2011.
Salt Lake City, UT
September 10, 2020
21
| ForeverGreen Worldwide Corporation and Subsidiaries | |||||
| Consolidated Statements of Operations and Comprehensive Loss | |||||
|
| |||||
|
|
| December 31, 2018 |
| December 31, 2017 | |
|
|
|
|
|
| |
| TOTAL REVENUES, net | $ | 10,158,516 | $ | 18,492,769 | |
| COST OF SALES, net |
| 3,302,543 |
| 4,571,724 | |
|
|
|
|
|
| |
| GROSS PROFIT |
| 6,855,973 |
| 13,921,045 | |
|
|
|
|
|
| |
| OPERATING EXPENSES |
|
|
|
| |
|
| Sales and marketing |
| 3,413,441 |
| 7,739,550 |
|
| General and administrative |
| 4,145,368 |
| 6,680,890 |
|
| Depreciation and amortization |
| 924,831 |
| 942,572 |
|
| Total Operating Expenses |
| 8,483,640 |
| 15,363,012 |
|
|
|
|
|
| |
| NET OPERATING LOSS |
| (1,627,667) |
| (1,441,967) | |
|
|
|
|
|
| |
| OTHER INCOME (EXPENSE) |
|
|
|
| |
|
| Gain on settlement of debt |
| 24,690 |
| -- |
|
| Loss on disposal of assets |
| (119,325) |
| -- |
|
| Other income |
| 74,994 |
| 137,493 |
|
| Interest expense |
| (1,028,961) |
| (851,420) |
|
| Total Other Expense |
| (1,048,602) |
| (713,927) |
|
|
|
|
|
| |
| Income Taxes |
| -- |
| -- | |
|
|
|
|
|
| |
| NET LOSS | $ | (2,676,269) | $ | (2,155,894) | |
|
|
|
|
|
| |
| BASIC AND DILUTED LOSS PER COMMON SHARE | $ | (0.10) | $ | (0.08) | |
|
|
|
|
|
| |
| BASIC AND DILUTED WEIGHTED AVERAGE NUMBER |
|
|
|
| |
| OF COMMON SHARES OUTSTANDING |
| 27,826,259 |
| 25,692,286 | |
|
|
|
|
|
| |
| COMPREHENSIVE LOSS |
|
|
|
| |
| A summary of the components of other comprehensive loss for the fiscal years ended December 31, 2018 and 2017 is as follows: |
|
|
|
| |
|
| Net Loss | $ | (2,676,269) | $ | (2,155,894) |
|
|
|
|
|
| |
|
| Other Comprehensive Income – foreign currency translation |
| 702,322 |
| 714,840 |
|
|
|
|
|
| |
|
| Comprehensive Loss | $ | (1,973,947) |
| (1,441,054) |
|
|
|
|
|
| |
|
|
|
|
|
| |
| The accompanying notes are an integral part of these consolidated financial statements | |||||
23
| ForeverGreen Worldwide Corporation and Subsidiaries | |||||||||
| Consolidated Statements of Stockholders’ Deficit | |||||||||
| For the years ended December 31, 2018 and 2017 | |||||||||
|
| Preferred Stock | Common Stock | Treasury Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) | Stockholders’ Equity Deficit | ||
|
| Shares | Amount | Shares | Amount | Amount | ||||
| Balance, December 31, 2016 | -- | $ -- | 25,692,286 | $ 26,692 | $ (1,000,000) | $ 36,383,661 | $ (42,746,469) | $ (313,496) | $ (7,649,612) |
| Beneficial conversion feature | -- | -- | -- | -- | -- | 734,603 | -- | -- | 734,603 |
| Net loss for the period | -- | -- | -- | -- | -- | -- | (2,155,894) | -- | (2,155,894) |
| Foreign currency translation | -- | -- | -- | -- | -- | -- | -- | 714,840 | 714,840 |
| Balance, December 31, 2017 | -- | $ -- | 25,692,286 | $ 26,692 | $ (1,000,000) | $ 37,118,264 | $ (44,902,363) | $ 401,344 | $ (8,356,063) |
| Conversion of convertible notes | -- | -- | 1,587,500 | 1,588 | -- | 315,412 | -- | -- | 317,000 |
| Extinguishment of debt | -- | -- | 3,500,000 | 3,500 | -- | 671,500 | -- | -- | 675,000 |
| Retirement of treasury shares | -- | -- | -- | (1,000) | 1,000,000 | (999,000) | -- | -- | -- |
| Foreign currency translation | -- | -- | -- | -- | -- | -- | -- | 702,322 | 702,322 |
| Net loss for the period | -- | -- | -- | -- | -- | -- | (2,676,269) | -- | (2,676,269) |
| Balance, December 31, 2018 | -- | $ -- | 30,779,786 | $ 30,780 | $ -- | $ 37,106,176 | $ (47,578,632) | $ 1,103,666 | $ (9,338,010) |
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The accompanying notes are an integral part of these consolidated financial statements
24
| ForeverGreen Worldwide Corporation and Subsidiaries | ||||||
| Consolidated Statements of Cash Flows | ||||||
|
| ||||||
|
|
| December 31, 2018 |
| December 31, 2017 | ||
| CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
| ||
| Net loss | $ | (2,676,269) | $ | (2,155,894) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
| ||
|
| Depreciation and amortization |
| 924,831 |
| 942,572 | |
|
| Amortization of debt discount |
| 377,906 |
| 260,213 | |
|
| Expenses paid on behalf of Company |
| -- |
| 345,000 | |
|
| Gain on extinguishment of debt |
| (24,690) |
| -- | |
|
| Loss on disposal of assets |
| 119,325 |
| -- | |
|
|
|
|
|
| ||
| Changes in operating assets and liabilities: |
|
|
|
| ||
|
| Accounts receivable |
| 118,717 |
| (44,741) | |
|
| Prepaid expenses and other assets |
| 75,884 |
| 27,028 | |
|
| Other receivables |
| -- |
| 149,153 | |
|
| Inventory |
| 291,464 |
| 762,019 | |
|
| Accounts payable |
| (366,048) |
| (679,119) | |
|
| Accounts payable – related party |
| 132,625 |
| -- | |
|
| Deferred revenue |
| 216,193 |
| (67,330) | |
|
| Accrued expenses |
| 297,357 |
| (860,031) | |
|
| Net Cash Used in Operating Activities |
| (512,705) |
| (1,321,130) | |
|
|
|
|
|
| ||
| CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
| ||
|
| Purchases of property and equipment |
| -- |
| (175,651) | |
|
| Net Cash Provided by (Used in) Investing Activities |
| -- |
| (175,651) | |
|
|
|
|
|
| ||
| CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
| ||
|
| Repayments on notes payable |
| (301,247) |
| (515,753) | |
|
| Repayments on convertible notes payable |
| (75,126) |
| (116,460) | |
|
| Proceeds from convertible notes payable |
| 130,000 |
| 550,000 | |
|
| Proceeds from convertible notes payable, related parties |
| -- |
| 655,000 | |
|
| Proceeds from notes payable |
| -- |
| 35,000 | |
|
| Net Cash Provided by (Used in) Financing Activities |
| (246,373) |
| 607,787 | |
|
| Effect of Foreign Currency on Cash |
| 702,322 |
| 714,840 | |
|
|
|
|
|
| ||
| NET CHANGE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH |
| (56,756) |
| (174,154) | ||
|
|
|
|
|
| ||
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD |
| 165,088 |
| 339,242 | ||
|
|
|
|
|
| ||
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD | $ | 108,332 | $ | 165,088 | ||
|
|
|
|
|
| ||
| SUPPLEMENTAL CASH FLOW INFORMATION |
|
|
|
| ||
|
| Cash paid for interest | $ | 77,583 | $ | 112,908 | |
|
| Cash paid for income taxes |
| -- |
| -- | |
| (Continued) | ||||||
25
| ForeverGreen Worldwide Corporation and Subsidiaries | ||||||
| Consolidated Statements of Cash Flows - continued | ||||||
|
| ||||||
|
|
| December 31, 2018 |
| December 31, 2017 | ||
| NON-CASH INVESTING AND FINANCING ACTIVITIES |
|
|
|
| ||
|
|
|
|
|
|
| |
|
| Beneficial conversion feature | $ | -- | $ | 734,603 | |
|
| Extinguishment of convertible notes payable |
| -- |
| 1,908,826 | |
|
| Extinguishment of convertible notes payable, related parties |
| -- |
| 1,718,000 | |
|
| Retirement of treasury shares |
| 1,000,000 |
| -- | |
|
| Assignment of accrued interest to convertible notes payable |
| 247,265 |
| -- | |
|
| Conversion of convertible notes payable to common stock |
| 317,000 |
| -- | |
|
| Extinguishment of convertible notes payable to common stock |
| 675,000 |
| -- | |
The accompanying notes are an integral part of these consolidated financial statements
26
FOREVERGREEN WORLDWIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2018 and 2017
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
The Company was incorporated on March 18, 1999 in the state of Nevada. On December 30, 1999, Whole Living Inc. acquired the assets, leases, product line and name of Brain Garden, L.L.C., a Utah limited liability company engaged in the marketing and distribution of various natural food products, oils and bath salts. The Company maintained its headquarters in Lindon, Utah.
On October 15, 2006 the Company announced they would change the combined company name to ForeverGreen Worldwide Corporation. The combined company sells products in the United States, Canada, Australia, New Zealand, Singapore, Japan, and the European Union and currently has plans to expand in other areas of the world.
Principles of Consolidation
The consolidated balance sheets and statement of operations at December 31, 2018 include the books of ForeverGreen Worldwide Corporation (Nevada) and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in the consolidation.
Recognition of Revenue
In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-09, Revenue from Contracts with Customers (Topic 606), and has subsequently issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net), ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, ASU 2016-11, Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815), ASU 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients, and ASU 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers (collectively, Topic 606).
Topic 606 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The core principle of Topic 606 is for companies to recognize revenue to depict the transfer of goods or services to customers in amounts that reflect the consideration it expects to receive in exchange for those goods or services. The guidance also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to fulfill a contract. This guidance was effective for the Company beginning on January 1, 2018 with the option to adopt using either a full retrospective or a modified retrospective approach. The Company adopted Topic 606 using the modified retrospective approach, under which the cumulative effect of initially applying Topic 606 was recognized as an immaterial adjustment to the opening balance of retained earnings as of January 1, 2018.
The Company's sources of revenue are from the sale of various food and other natural product sales and royalties earned. The Company recognizes the sale upon shipment of such goods. The Company offers a 100% satisfaction guarantee against defects for 30 days after the sale of their product except for a few circumstances. The Company extends this return policy to its members for a 30-day period and the consumer has the same return policy in effect against the member. Returns are less than 2.0% of sales for both years presented.
27
FOREVERGREEN WORLDWIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2018 and 2017
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Revenues are reported net of returns. All conditions of ASC 606 are met, and the revenue is recorded upon sale, with an estimated allowance, for returns where material.
Accounts Receivable
All accounts receivable are now sales deposits processed by third parties from the prior one to three business days that have not posted to the Company's bank account. The Company evaluates the need for an allowance for doubtful accounts when it is determined that collection amounts owed is unlikely. An allowance of $0 had been recorded at December 31, 2018 and 2017, respectively.
Basic and Diluted Loss Per Share
Basic loss per share is computed by dividing net loss by the weighted-average number of common shares outstanding during the period. Diluted loss per share is computed by dividing net loss by the weighted-average number of common shares and dilutive potential common shares outstanding during the period. As of December 31, 2018, there were 37,083,833 common stock equivalents from convertible notes that were excluded from the diluted EPS (earnings per share) calculation as their effect is anti-dilutive.
Cash and Cash Equivalents and Restricted Cash
The Company considers all highly liquid investments with maturities of three months or less to be cash equivalent.
The Company is using a credit card processor that currently requires a reserve amount of $27,336 which the Company presents this as restricted cash. In 2016 the Company implemented a new credit card processor option to better serve our members world-wide. Due to the Company not having prior experience with this processor, an initial 10% reserve of all processed transactions was implemented. This is a six-month revolving reserve until the contract is modified. At December 31, 2018, the total amount of this reserve was $27,336.
Property and Equipment
Expenditures for property and equipment and for renewals and betterments, which extend the originally estimated economic life of assets or convert the assets to a new use, are capitalized at cost. Expenditures for maintenance, repairs and other renewals of items are charged to expense. When items are disposed of, the cost and accumulated depreciation are eliminated from the accounts, and any gain or loss is included in the results of operations.
It is our policy to capitalize certain costs incurred in connection with developing or obtaining internal use software. Capitalized software costs are included in "Property, Plant and Equipment" on our consolidated balance sheets all are primarily amortized over a 3-5 year period. Software costs that do not meet capitalization criteria are expense immediately.
Depreciation is calculated using the straight-line method over the estimated useful lives of the assets. Depreciable asset lives range from 3 to 7 years with leasehold improvements being depreciated over the lesser.
28
FOREVERGREEN WORLDWIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2018 and 2017
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
of the term of the lease or the life of the improvements. Depreciation expense for the period ended December 31, 2018 and 2017 is $924,831 and $942,572, respectively
Impairment of Long-Lived Assets
In accordance with ASC 360-10, the Company records impairment of long-lived assets to be held and used or to be disposed of when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the carrying amount. The Company determined no impairment adjustment was need based on the analysis for the years ended December 31, 2018 and 2017.
Inventory
Inventory is recorded at the lower of cost or market and valued on a first-in, first-out basis. Inventory consists primarily of consumable food products and ingredients. Food products are discarded as they reach the expiration dates, because the food products are made with natural foods containing a minimum of preservatives. Non-food products are reviewed periodically to determine any obsolescence and a reserve is booked when appropriate. The products have expiration dates that range from 3 months on some of the food products to 2 years for non-food products. On December 31, 2018 and 2017 there was a reserve for obsolete inventory in the amount of $40,000 and $40,000, respectively.
Fair Value of Financial Instruments
The carrying amounts reported in the balance sheets for accounts receivable, accounts payable and accrued liabilities approximate fair value because of the immediate or short-term nature of these financial instruments. The carrying amounts reported for notes payable approximate fair value because the underlying instruments are at interest rates which approximate current market rates.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make assumptions that affect the amounts reported in the financial statements and accompanying notes. In these financial statements, assets, liabilities and earnings involve extensive reliance on management’s estimates. Actual results could differ from those estimates.
Concentrations
Financial instruments that potentially subject the Company to concentrations of credit risks consist of cash and cash equivalents. The Company places its cash and cash equivalents at well-known, quality financial institutions. At times, such cash and investments may be in excess of the FDIC insurance limit. The accounts are insured by the Federal Deposit Insurance Corporation up to $250,000 each. The amounts held for the Company regularly exceed that amount.
The Company has an agreement with one vendor, owned 50% by a Company director that supplies 100% of a significant ingredient that is included in several top selling products. It could decrease sales significantly if that vendor were to discontinue the supply of this ingredient. There are other providers of that ingredient in the world,
29
FOREVERGREEN WORLDWIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2018 and 2017
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
however, the Company considers this provider to have the very best quality, which is nutritionally superior to other sources of this ingredient and has no intention of obtaining it from any other provider.
Deferred Revenue
The Company recognizes revenues upon the shipment of product. As of December 31, 2018, the Company had received payment of $230,602 for sales which were not shipped as of the period end compared to $14,409 for December 31, 2017.
Foreign Currency Translation
The Company’s functional currency is recorded in various currencies, corresponding to the various foreign subsidiaries and its reporting currency is the United States dollar. Management has adopted ASC 830-20, “Foreign Currency Matters – Foreign Currency Transactions.” All assets and liabilities denominated in foreign currencies are translated using the exchange rate prevailing at the balance sheet date. For revenues and expenses, the weighted average exchange rate for the period is used. Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in other comprehensive loss.
Advertising
Advertising cost are expensed as incurred and are presented as part of the general and administrative expense. Advertising expense totaled $17,320 in 2018 compared to $80,813 in 2017.
Shipping and Handling
The Company's shipping and handling costs are included in the cost of sales for all periods presented. Shipping and handling revenues are included in total revenues, net for all periods presented.
Sales and Marketing
Selling and marketing expenses include sales commissions paid to our members, special incentives, costs for incentive trips and other rewards incentives.
Accounting Pronouncements
In February 2016, FASB issued ASU No. 2016-02, Leases (Topic 842). For lessees, this standard requires that for all leases not considered to be short term, a company recognize both a right-of-use asset and lease liability on its balance sheet, representing the obligation to make payments and the right to use or control the use of a specified asset for the lease term. This standard is effective for annual periods beginning after December 15, 2018 and interim periods within those annual periods. The company is currently evaluating the impact of the adoption of ASU 2016-02 on its financial statements.
The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company
30
FOREVERGREEN WORLDWIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2018 and 2017
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
NOTE 2 - INVENTORIES
Inventories for December 31, 2018 and 2017 were classified as follows:
|
| 2018 |
| 2017 |
| Raw Materials | $ 298,869 |
| $ 433,463 |
| Finished Goods | 168,442 |
| 325,312 |
| Total Inventory | 467,311 |
| 758,775 |
| Less Reserve | (40,000) |
| (40,000) |
| Total Inventory (net of reserve) | $ 427,311 |
| $ 718,775 |
NOTE 3 - PROPERTY AND EQUIPMENT
Depreciation expense is computed using the straight-line method and is recognized over the estimated lives of the property and equipment. Depreciation expense was $924,831 and $942,572 for the years ended December 31, 2018 and 2017, respectively.
Property and equipment consist of the following at December 31, 2018 and 2017:
|
| 2018 |
|
| 2017 |
| Leasehold improvements | $ 542,845 |
|
| $ 600,691 |
| Office furniture & fixtures | 126,379 |
|
| 271,984 |
| Equipment | 86,679 |
|
| 619,567 |
| Vehicles | -- |
|
| 72,154 |
| Computer equipment | 481,998 |
|
| 973,944 |
| Computer software | 3,680,990 |
|
| 4,446,765 |
| Total Fixed Assets | 4,918,891 |
|
| 6,985,105 |
| Accumulated depreciation | (3,283,409) |
|
| (4,305,467) |
| Property and equipment, net | $ 1,635,482 |
|
| $ 2,679,638 |
During 2018 the company began to downsize and as a result disposed of unused and broken assets totaling approximately $2,066,214. Of these assets, approximately 1,946,889 had been depreciated. The end result is a loss on disposal of approximately $119,325.
31
FOREVERGREEN WORLDWIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2018 and 2017
NOTE 4 - ACCRUED EXPENSES
Accrued expenses consist of the following at December 31, 2018 and 2017:
|
| 2018 |
| 2017 |
| Accrued employee benefits | $ 49,792 |
| $ 103,206 |
| Accrued taxes | 959,087 |
| 1,082,008 |
| Accrued member commissions | 582,913 |
| 573,840 |
| Accrued Interest | 738,618 |
| 535,071 |
| Other accrued liabilities | 22,487 |
| 135,370 |
| Total | $ 2,352,897 |
| $ 2,429,495 |
NOTE 5 - DEBT
Notes Payable
Notes payable consisted of the following as of December 31, 2018 and December 31, 2017:
|
|
|
| Balance December 31, 2017 | $ 759,247 |
| Cash additions | -- |
| Cash payments | (301,247) |
| Balance December 31, 2018 | $ 458,000 |
| Less current portion December 31, 2018 | -- |
| Total long-term December 31, 2018 | $ 458,000 |
Convertible Notes Non-Related Parties
Convertible notes payable due to non-related parties consisted of the following as of December 31, 2018 and December 31, 2017:
|
|
|
| Balance December 31, 2017, net | $ 4,198,524 |
| Cash additions | 130,000 |
| Cash payments | (75,126) |
| Conversions to common stock | (890,000) |
| Assignment of interest | 131,049 |
| Amortization of debt discounts | 96,483 |
| Balance December 31, 2018, net | $ 3,590,930 |
| Less current portion December 31, 2018 | 2,590,930 |
| Total long-term December 31, 2018 | $ 1,000,000 |
Issued Notes
On April 16, 2018 the Company issued a convertible promissory note for $75,000 to a non-related party. The note has an interest rate of 10% and is secured by the Company’s inventory. The principal amount of the note and all accrued interest is due and payable on or before December 31, 2018. The default note rate is 15 %. The note has a conversion feature for common shares at $0.08 per share and is currently in default.
32
FOREVERGREEN WORLDWIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2018 and 2017
NOTE 5 – DEBT (continued)
On June 29, 2018 the Company issued a convertible promissory note for $55,000 to a non-related party. The note has an interest rate of 10% and is secured by the Company’s inventory. The principal amount of the note and all accrued interest is due and payable on or before September 30, 2018. The default note rate is 15%. The note has a conversion feature for common shares at $0.12 per share and is currently in default.
Converted Notes
On July 25, 2018, the Company extinguished an outstanding convertible note with a principal balance of $240,000 and no accrued interest. The principal amount of the note was due and payable on December 31, 2019. The note has a conversion feature for common shares of $0.20. The company issued 1,200,000 shares.
On July 27, 2018, the Company extinguished an outstanding convertible note with a principal balance of $200,000 and no accrued interest. The principal amount of the note was due and payable on December 31, 2019. The note has a conversion feature for common shares of $0.20. The company issued 1,000,000 shares.
On August 5, 2018, the Company extinguished an outstanding convertible note with a principal balance of $200,000 and $59,690 accrued interest. The principal amount of the note was due and payable on August 31, 2015. The note has a conversion feature for common shares of $0.20. The company issued 1,300,000 shares.
On August 5, 2018, the Company extinguished an outstanding convertible note with a principal balance of $200,000 and $63,500 accrued interest. The principal amount of the note was due and payable on December 31, 2019. The note has a conversion feature for common shares of $0.20. The company issued 1,320,000 shares.
On August 10, 2018, the Company extinguished an outstanding convertible note with a principal balance of $50,000 and $3,500 accrued interest. The principal amount of the note was due and payable on December 31, 2019. The note has a conversion feature for common shares of $0.20. The company issued 267,500 shares.
Convertible Notes Payable – Related Parties
Convertible notes payable due to related parties consisted of the following as of December 31, 2018 and December 31, 2017:
| Balance December 31, 2017, net | $ 2,681,577 |
| Cash additions | -- |
| Cash payments | -- |
| Conversions to common stock | -- |
| Assignment of interest | $ 116,216 |
| Amortization of debt discounts | $ 281,423 |
| Balance December 31, 2018, net | $ 3,079,216 |
| Less current portion December 31, 2018 | $ 3,079,216 |
| Total long-term December 31, 2018 | -- |
33
FOREVERGREEN WORLDWIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2018 and 2017
NOTE 6 - COMMON STOCK
On July 25, 2018 the Company extinguished $240,000 of debt for 1,200,000 shares of common stock. The effective exercise price was $0.20 per share, resulting in a gain on extinguishment of $12,000.
On July 27, 2018 the Company extinguished $200,000 of debt for 1,000,000 shares of common stock. The effective exercise price was $0.20 per share.
On August 5, 2018 the Company extinguished $259,690 of debt for 1,300,000 shares of common stock. The effective exercise price was $0.20 per share, resulting in a gain on extinguishment of $12,690.
On August 5, 2018 the Company converted $263,500 of debt for 1,320,000 shares of common stock. The effective exercise price was $0.20 per share.
On August 10, 2018 the Company converted $53,500 of debt for 267,500 shares of commons stock. The effective exercise price was $0.20 per share.
There were no stock issuances during the year ended December 31, 2017.
NOTE 7 - RELATED PARTY TRANSACTIONS
The Company has note payable agreements with related parties. See Note 5 and Item 13 for obligations under the agreements
NOTE 8 - PROVISION FOR INCOME TAXES
The Company provides for income taxes under ASC 740, Income Taxes. ASC 740 requires the use of an asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are record based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect when these differences are expected to reverse.
ASC 740 requires the reduction of deferred tax assets by a valuation allowance if, based on the weight of all available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.
Net deferred tax assets consist of the following components as of:
|
| December 31, | |||
|
| 2018 |
| 2017 | |
| Net operating loss carry forwards | $ | 10,240,462 | $ | 8,617,327 |
| Accrued commissions |
| 153,022 |
| 316,805 |
| Inventory differences |
| 40,000 |
| 40,000 |
| Employee accruals |
| 43,531 |
| 272,763 |
| Depreciation and amortization |
| (924,831) |
| (942,573) |
| U.S. federal credits |
| -- |
| 80,148 |
| Allowance for doubtful accounts |
| -- |
| 499,985 |
| Other |
| -- |
| -- |
| Valuation allowance |
| (9,552,184) |
| (8,884,455) |
| Net deferred taxes | $ | -- | $ | -- |
34
FOREVERGREEN WORLDWIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2018 and 2017
NOTE 8 - PROVISION FOR INCOME TAXES (continued)
The Company assesses the need for a valuation allowance against its deferred income tax assets at December 31, 2018. Factors considered in this assessment include recent and expected future earnings and the Company's liquidity and equity positions. As of December 31, 2018, and 2017, the Company has determined that a valuation allowance is necessary against the entire amount of its net deferred income tax asset.
Under FASB ASC 740-10-05-6, tax benefits are recognized only for the tax positions that are more likely than no to be sustained upon examination by tax authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely to be realized upon ultimate settlement. Unrecognized tax benefits are tax benefits claimed in the company's tax return that do not meet these recognition and measurement standards.
The Company had no liabilities for unrecognized tax benefits and the Company has recorded no additional interest or penalties.
NOTE 9 - COMMITMENTS AND CONTINGENCIES
The Company leases facilities and warehouses under operating leases with terms ranging from 12 months to 120 months. The total rent expense recorded in 2018 was $329,146. The future annual non-cancelable operating lease payments on these leases are as follows:
Total Lease Commitments:
| 2019 | 285,867 |
| 2020 | 292,093 |
| 2021 | 300,856 |
| 2022 | 309,881 |
| 2023 | 319,178 |
| Thereafter | 638,377 |
| Total | $ 2,146,252 |
The Company has evaluated commitments and contingencies from the balance sheet date through the date the financial statements were issued and has determined that there are no such commitments and contingencies that would be a material impact on the financial statements.
NOTE 10 - CONCENTRATION OF RISK
The Company purchases its signature product ingredient of Marine Phyto Plankton from an independent supplier during the years ended December 31, 2018 and 2017. This material is significant in several of our top selling products. If our vendor were to discontinue supplying those materials, it could decrease sales significantly. The Company recognizes there are other providers but consider this supplier to have the very best quality. This main vendor, Marine Life Science, is 50% owned by a director.
NOTE 11 - GOING CONCERN
The accompanying financial statements have been prepared using generally accepted accounting principles applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. As reported in the accompanying consolidated financial statements, the Company
35
FOREVERGREEN WORLDWIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2018 and 2017
NOTE 11 - GOING CONCERN (continued)
has working capital deficit of $9,515,492 and accumulated deficit of $47,578,632 at December 31, 2018, negative cash flows from operations, and has experienced cash flow difficulties. These factors combined, raise substantial doubt about the Company's ability to continue as a going concern. Management's plans to address and alleviate these concerns are as follows:
The Company continues to monitor its cost structure and implements cost saving measures deemed to be effective. The Company has initiated some new marketing initiatives to stimulate growth in its monthly revenues, which combined with some new equity financing is allowing the Company to continue to invest in its expansion plan. This plan has involved hosting a number of industry leaders who are performing their due diligence on our Company. Additionally, we expect we will take advantage of some international expansion opportunities. These expansion opportunities will continue to be evaluated and those which provide the best opportunity for success will be pursued on a priority basis. New products have been and will continue to be introduced to bolster Member recruiting and sales. Management will make improvements to the marketing plan to enhance the success that is developed. The Company intends to seek debt and equity financing as necessary.
NOTE 12 - SUBSEQUENT EVENTS
On May 20, 2019, the Company issued a convertible promissory note for $100,000 to a non-related party. The note has an annual interest rate of 10% and is secured by the Company's inventory. The principal amount of the note and all accrued interest is due and payable on or before December 31, 2020. The note has a conversion feature for common shares at $0.07 per share.
On May 20, 2019, the Company issued a convertible promissory note for $100,000 to a non-related party. The note has an annual interest rate of 10% and is secured by the Company's inventory. The principal amount of the note and all accrued interest is due and payable on or before December 31, 2020. The note has a conversion feature for common shares at $0.07 per share.
On August 30, 2019, the Company issued a convertible promissory note for $361,082 to a non-related party. The note has an annual interest rate of 10% and is secured by the Company’s inventory. The principal amount of the note and all accrued interest is due and payable on or before December 31, 2021. The note has a conversion feature for common shares at $0.06 per share.
On December 12, 2019, the Company issued a convertible promissory note for $171,407 to a non-related party. The note has an annual interest rate of 10% and is secured by the Company's inventory. The principal amount of the note and all accrued interest is due and payable on or before December 31, 2020. The note has a conversion feature for common shares at $0.06 per share.
On May 8, 2020, the Company receive a Small Business Administration loan for $236,996 as part of the United States government’s Paycheck Protection Program. The Paycheck Protection Program is a loan designed to provide a direct incentive for small businesses to keep their workers on the payroll. SBA will forgive loans if all employee retention criteria are met and the funds are used for eligible expenses. The Company believes that it has complied with the regulations of the Small Business Administration in order to receive forgiveness of the loan.
36
FOREVERGREEN WORLDWIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2018 and 2017
NOTE 12 - SUBSEQUENT EVENTS (continued)
On September 1, 2020, the Company issued a convertible promissory note for $100,000 to a non-related party. The note has an annual interest rate of 10% and is secured by the Company's inventory. The principal amount of the note and all accrued interest is due and payable on or before December 31, 2021. The note has a conversion feature for common shares at $0.05 per share.
37
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
We have not had a change in or disagreement with our independent registered public accounting firm on accounting financial disclosure during the past two fiscal years.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act) as of the end of the period covered by this report. The disclosure controls and procedures ensure that all information required to be disclosed by us in the reports that we file or submit under the Exchange Act is: (i) recorded, processed, summarized and reported, within the time periods specified in the SEC’s rule and forms; and (ii) accumulated and communicated to our management as appropriate to allow timely decisions regarding required disclosure. Based on that evaluation, management concluded that our controls were not effective as of December 31, 2018.
Notwithstanding this finding of ineffective disclosure controls and procedures, we concluded that the consolidated financial statements included in this Form 10-K present fairly, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with accounting principles generally accepted in the United States.
Management’s Annual Report on Internal Control over Financial Reporting
Our management is responsible to establish and maintain adequate internal control over financial reporting. Our Chief Executive Officer and Chief Financial Officer are responsible to design or supervise a process that provides reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The policies and procedures include:
•
maintenance of records in reasonable detail to accurately and fairly reflect the transactions and dispositions of assets,
•
reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and directors, and
•
reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on our financial statements.
Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations, including the possibility of human error and circumvention by collusion or overriding of controls. Accordingly, even an effective internal control system may not prevent or detect material misstatements on a timely basis. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.
For the year ended December 31, 2018, our management has relied on the Committee of Sponsoring Organizations of the Treadway Commission (COSO), “Internal Control - Integrated Framework,” to evaluate the effectiveness of our internal control over financial reporting. Based upon that framework, management concluded that our internal control over financial reporting had material weaknesses and was not effective as of December 31, 2018. A material weakness is a deficiency, or combination thereof, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company's annual or interim financial statements will
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not be prevented or detected on a timely basis.
The material weaknesses relate to the limited number of persons responsible for the recording and reporting of financial information, the lack of separation of financial reporting duties, and the limited size of our management team in general. We are in the process of evaluating methods of improving our internal control over financial reporting, including the possible addition of financial reporting staff and the increased separation of financial reporting responsibility, and intend to implement such steps as are necessary and possible to correct these material weaknesses.
Changes in Internal Controls over Financial Reporting
Our Chief Executive Officer has determined that there were no changes made in the implementation of our internal controls over financial reporting during the fourth quarter of the year ended December 31, 2018.
This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting because as a small reporting company we are not subject to that requirement.
ITEM 9B. OTHER INFORMATION
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
On May 13, 2020, the Company’s Board of Directors removed Jeanette K. Foss from the positions of Chief Financial Officer and Treasurer.
On May 13, 2020, the Board of Directors appointed John W. Haight as Principal Financial Officer and Controller of the Company. Mr. Haight is not related to any affiliate of the Company and prior to his appointment he has not been involved in any related party transactions involving the Company’s executive officers, directors, more than 5% stockholders, or immediate family members of these persons.
On May 13, 2020, the Board of Directors appointed John Clayton as Treasurer.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Directors and Executive Officers
Our current directors and executive officers and their respective ages and positions and biographical information are presented below. Our bylaws require three directors who serve until our next annual meeting or until each is succeeded by another qualified director. Our executive officers are chosen by our board of directors and serve at its discretion. There are no existing family relationships between or among any of our executive officers or directors.
| Name | Age | Position Held | Term of Director |
| Ronald K. Williams | 59 | Director | From January 2006 until our next annual meeting |
| George H. Brimhall II | 78 | Director | From April 2008 until our next annual meeting |
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| Name | Age | Position Held | Term of Director |
| John S. Clayton | 56 | Director Secretary and Treasurer | From April 2008 until our next annual meeting |
| Allen K. Davis | 57 | Chief Executive Officer |
|
| John W. Haight | 56 | Principal Financial Officer |
|
Ronald K. Williams – Mr. Williams was an original founder of Whole Living Inc. in 1998 and served as Director, President and CEO of Whole Living, Inc. from November 1998 to October 2002. Mr. Williams was appointed a Director of ForeverGreen Worldwide Corporation in 2006. He served as President and CEO from January 2006 to April 2017 and served as Secretary and Treasurer from March 2013 to February 2014. He formed, and he launched ForeverGreen International, LLC operations in May 2004. He started in the network marketing industry in the 1980's as a member for NuSkin International and learned the trade and business with them. He then went on to Neways International and became its Vice-President of Sales and Marketing. Then he served as a Senior Executive at Young Living Essential Oils.
George H. Brimhall II – Mr. Brimhall was appointed as a Director in April 2008. Since 1974 he has been self-employed with GNS Development Corporation which has a business plan focused on commercial recreational development.
John S. Clayton – Mr. Clayton was appointed as a Director in April 2008. He was appointed as Secretary in February 2014 and he was appointed Treasurer on May 13, 2020. Since 2002 he has been self-employed with First Equity Holdings Corp., an investment company.
Allen K. Davis – Mr. Davis was appointed as Chief Executive Officer on September 18, 2019. He has had over 25 years of experience as general counsel and/or compliance, operations and executive management in the direct selling industry. From June 2019 to September 2019 Mr. Davis served as Chief Operations Manager for the Company’s wholly-owned subsidiary, ForeverGreen International, LLC. In this position he managed operations, finance and IT. From November 2018 to June 2019 he was a consultant for Davis & Associates, which provided consulting services related to legal and operational issues of various companies. From October 2018 to the present he has been the owner and CEO of Qnigue, an online marketplace that markets and sells dietary supplements and personal care products. From September 2016 through October 2018, he was CEO of Tavala, a company which sold weight loss products and other dietary and personal care products. From November 2015 to August 2016 he was the CEO of Divvee.Social, a new affiliate-based marketing company with an online shopping experience. From February 2015 to November 2015 he served as General Counsel and VP Operations for TruVision Health. Mr. Davis received a Juris Doctorate from J. Reuben Clark Law School and a Bachelor of Arts – Economics from Brigham Young University.
John W. Haight – Mr. Haight has served as Accounting Manager for our wholly-owned subsidiary, ForeverGreen International, LLC, from December 2019 to the present. From March 2019 through December 2019 he was a Consultant for Robert Half S.P.S., a temporary agency for accounting services. He was unemployed due to a back injury from December 2017 through March 2019. From October 2016 to May 2017 he was employed as an accountant by PMBS/RPM-Wasatch and from January 2012 through February 2016 he was a controller at Stan Bonham Co.
During the past ten years none of our executive officers have been involved in any legal proceedings that are material to an evaluation of their ability or integrity; namely: (1) filed a petition under federal bankruptcy laws or any state insolvency laws, nor had a receiver, fiscal agent or similar officer appointed by a court for the business or property of such person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two
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years before the time of such filing; (2) been convicted in a criminal proceeding or named subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); (3) been the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him or her from or otherwise limiting his/her involvement in any type of business, securities or banking activities; or (4) been found by a court of competent jurisdiction in a civil action, by the SEC or the Commodity Futures Trading Commission to have violated any federal or state securities law, and the judgment in such civil action or finding by the SEC has not been subsequently reversed, suspended, or vacated.
Delinquent Section 16(a) Reports
Section 16(a) of the Securities Exchange Act of 1934 requires our directors, executive officers and persons who own more than ten percent of our common stock, to file with the SEC initial reports of ownership and reports of changes in ownership of common stock. Officers, directors and ten percent or greater beneficial owners are required by SEC regulations to furnish us with copies of all Section 16(a) reports they file. Based upon a review of those forms and representations regarding the need for filing for the year ended December 31, 2018, we believe former principal officers, Joseph Jensen and Blake Cloward, did not file Forms 3.
Code of Ethics
We have not adopted a code of ethics for our principal executive and financial officers. Until we establish a code of ethics, our management intends to continue to promote honest and ethical conduct, full and fair disclosure in our reports to the SEC, and compliance with applicable governmental laws and regulations.
Corporate Governance
We do not have a standing nominating committee for directors, nor do we have an audit committee with an audit committee financial expert serving on that committee. Our entire board of directors, including Messrs. Williams, Brimhall and Clayton, act as our nominating and audit committee.
ITEM 11. EXECUTIVE COMPENSATION
Executive Compensation
The following tables show the compensation paid to our named executive officers in all capacities during the fiscal years ended December 31, 2018 and 2017.
| SUMMARY COMPENSATION TABLE | ||||
| Name and Principal Position | Year | Salary | All Other Compensation (1) | Total |
| Joseph Jensen Former PEO | 2018 | $ 118,488 | -- | $ 118,488 |
| 2017 | $ 120,298 | -- | $ 120,298 | |
| Blake C. Cloward Former PFO | 2018 | $ 127,116 | -- | $ 127,116 |
| 2017 | $ 28,846 | -- | $ 28,846 | |
| John S. Clayton Secretary | 2018 | -- | -- | -- |
| 2017 | -- | -- | -- | |
| Patrick Redford Former CEO | 2018 | $ 94,511 | -- | $ 94,511 |
| 2017 | $ 134,581 | $ 28,989 | $ 163,570 | |
| Jack B Eldridge Former CFO | 2018 | -- | -- | -- |
| 2017 | $ 105,412 | -- | $ 105,412 | |
| (1) Represents sales and growth incentives and Company provided health benefits. | ||||
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We do not have any employment contracts with the above-named executive officers. We do not offer a retirement benefit plan to our executive officers, nor have we entered into any contract, agreement, plan or arrangement, whether written or unwritten, that provides for payments to a named executive officer at or in connection with the resignation, retirement or other termination of a named executive officer, or a change in control of the company or a change in the named executive officer’s responsibilities following a change in control.
Outstanding Equity Awards
The named executive officers did not have any outstanding equity awards at December 31, 2018.
Compensation of Directors
We do not have any standard arrangement for compensation of our directors for any services provided as director, including services for committee participation or for special assignments.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Securities Authorized under Equity Compensation Plans
We did not have any equity compensation plans in effect at December 31, 2018.
Beneficial Owners
The following tables set forth the current beneficial ownership of our management and any other person or group who beneficially owns more than 5% of our voting common stock. Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Except as indicated by footnote, the persons named in the table below have sole voting power and investment power with respect to the shares of common stock shown as beneficially owned by them. The percentage of beneficial ownership is based upon 30,779,786 shares of common stock outstanding as of March 4, 2020.
| MANAGEMENT | ||
| Name of beneficial owner | Amount and nature of beneficial ownership | Percent of class |
| Ronald K. Williams | 1,883,128 | 6.1 |
| George H. Brimhall II | 3,702,404 | 12.0 |
| John S. Clayton | 1,520,891 (1) | 4.9 |
| All executive officers and directors as a group | 7,106,423 | 23.0 |
| (1) Represents 394,388 shares held by Mr. Clayton and 1,126,503 shares held by his company, First Equity Holdings Corp. | ||
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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Related Party Transactions
The following information summarizes transactions we engaged in for the fiscal year ended December 31, 2018 involving our executive officers, directors, more than 5% stockholders, or immediate family members of these persons. These transactions were negotiated between related parties without “arm’s length” bargaining and, as a result, the terms of these transactions may be different than transactions negotiated between unrelated persons.
In December 2018, Joseph Jensen, our former Principal Executive Officer, loaned the Company $24,000 for payment of operating expenses. That loan has been documented as an account payable related party.
From June through December 2018, First Equity Holdings, owned by John S. Clayton, our Director, loaned the Company $108,625 for payment of operating expenses. Those loans have been documented as accounts payable related transactions.
Director Independence
We do not have an independent director, as defined under NASDAQ Stock Market Rule 5605(a)(2), serving on our board. This rule defines persons as “independent” who are neither officers nor employees of the company and have no relationships that, in the opinion of the board of directors, would interfere with the exercise of independent judgment in carrying out their responsibilities as directors.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Accountant Fees
The following table presents the aggregate fees billed for each of the last two fiscal years by our independent registered public accounting firm, Sadler, Gibb & Associates, LLC in connection with the audit of our financial statements and other professional services rendered by the accounting firm.
|
| 2018 |
| 2017 |
| Audit fees | $ 97,500 |
| $ 97,500 |
| Audit-related fees | -- |
| -- |
| Tax fees | -- |
| -- |
| All other fees | -- |
| -- |
Audit fees represent fees for professional services rendered by our independent registered public accounting firm for the audit of our annual financial statements and review of the financial statements included in our Forms 10-Q or services that are normally provided by our principal accountants in connection with statutory and regulatory filings or engagements.
Audit-related fees represent professional services rendered for assurance and related services by the accounting firm that are reasonably related to the performance of the audit or review of our financial statements that are not reported under audit fees.
Tax fees represent professional services rendered by the accounting firm for tax compliance, tax advice, and tax planning.
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All other fees represent fees billed for products and services provided by the accounting firm, other than the services reported for the other three categories.
Pre-approval Policies
We do not have a standing audit committee currently serving and as a result our board of directors performs the duties of an audit committee. Our board of directors will evaluate and approve in advance, the scope and cost of the engagement of an accounting firm before the accounting firm renders audit and non-audit services. We do not rely on pre-approval policies and procedures.
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PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(a)(1)
Financial Statements
The audited financial statements of ForeverGreen Worldwide Corp. are included in this report under Item 8 on pages 20 through 36.
(a)(2) Financial Statement Schedules
All financial statement schedules are included in the footnotes to the financial statements or are inapplicable or not required.
(a)(3)
Exhibits
| Articles of incorporation, as revised (Incorporated by reference to exhibit 3.1 for Form 8-K, as amended, filed December 18, 2006) | |
| Bylaws, as revised (Incorporated by reference to exhibit 3.2 for Form 8-K, as amended, filed December 19, 2006) | |
| Description of Securities (Incorporated by reference to exhibit 4.6 for Form 10-K, filed March 4, 2020) | |
| Lease agreement between ForeverGreen International LLC and WI Commercial West Lindon LLC, dated September 29, 2015 (Incorporated by reference to exhibit 10.1 to Form 10-Q, filed November 14, 2016) | |
| Subsidiaries of ForeverGreen (Incorporated by reference to exhibit 21.1 for Form 10-K, filed March 4, 2020) | |
| Chief Executive Officer Certification | |
| Principal Financial Officer Certification | |
| Section 1350 Certification | |
| 101.INS | XBRL Instance Document |
| 101.SCH | XBRL Taxonomy Extension Schema Document |
| 101.CAL | XBRL Taxonomy Calculation Linkbase Document |
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document |
| 101.LAB | XBRL Taxonomy Label Linkbase Document |
| 101.PRE | XBRL Taxonomy Presentation Linkbase Document |
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SIGNATURES
Pursuant to the requirements of the Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, there unto duly authorized
| FOREVERGREEN WORLDWIDE CORPORATION By: /s/ Allen K. Davis Allen K. Davis Chief Executive Officer | Date: September 10, 2020 |
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