10-Q/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A

Amendment No. 1

    x     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2012.

or

    ¨     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from          to        

Commission File Number: 000-30559

eDiets.com, Inc.

(Exact name of registrant as specified in its charter)

Delaware	56-0952883
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1000 Corporate Drive, Suite 600 Fort Lauderdale, Florida	33334
(Address of principal executive offices)	(Zip Code)

(954) 360-9022

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the past 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  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller-reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨  (do not check if a smaller reporting company)	Smaller reporting company	x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of August 10, 2012:

Common Stock, $.001 par value per share 14,310,534 shares

Explanatory Note

This Amendment No. 1 on Form 10-Q/A amends the Quarterly Report on Form 10-Q of eDiets.com, Inc. for the quarter ended June 30, 2012 filed on August 16, 2012 (the “Form 10-Q”) for the sole purpose of furnishing the interactive data files as Exhibit 101 in accordance with Rule 405(a)(2) of Regulation S-T.

No other changes have been made to the Form 10-Q. This Form 10-Q/A speaks as of the original filing date of the Form 10-Q, does not reflect events that may have occurred subsequent to the original filing date, and does not modify or update in any way disclosures made in the Form 10-Q.

PART II. OTHER INFORMATION

Item 6. Exhibits

10.67*	Letter of Intent dated August 10, 2012 by and between As Seen On TV, Inc. and eDiets.com, Inc.
31.1*	Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) (17 CFR 240.13a-14(a)).
31.2*	Certification of Principal Financial and Accounting Officer Pursuant to Rule 13a-14(a) (17 CFR 240.13a-14(a)).
32.1†	Section 1350 Certification of Chief Executive Officer of the Company.
32.2†	Section 1350 Certification of Principal Financial and Accounting Officer of the Company.
101.INS¯	XBRL Instance Document.
101.SCH¯	XBRL Taxonomy Extension Schema Document.
101.CAL¯	XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF¯	XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB¯	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE¯	XBRL Taxonomy Extension Presentation Linkbase Document.

* Previously filed.

† Previously furnished.

¯ Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability under those sections.

2

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

eDiets.com, Inc.

/s/ Kevin A. Richardson, II

Kevin A. Richardson, II

Principal Financial and Accounting Officer

(Duly Authorized Officer)

DATE: September 5, 2012

3

Exhibit Index

Exhibit No.	Description
10.67*	Letter of Intent dated August 10, 2012 by and between As Seen On TV, Inc. and eDiets.com, Inc.
31.1*	Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) (17 CFR 240.13a-14(a)).
31.2*	Certification of Principal Financial and Accounting Officer Pursuant to Rule 13a-14(a) (17 CFR 240.13a-14(a)).
32.1†	Section 1350 Certification of Chief Executive Officer of the Company.
32.2†	Section 1350 Certification of Principal Financial and Accounting Officer of the Company.
101.INS¯	XBRL Instance Document.
101.SCH¯	XBRL Taxonomy Extension Schema Document.
101.CAL¯	XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF¯	XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB¯	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE¯	XBRL Taxonomy Extension Presentation Linkbase Document.

* Previously filed.

† Previously furnished.

¯ Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability under those sections.

4

XML

Subsequent Events (Details) (USD $)		6 Months Ended
	Aug. 06, 2012	Jun. 30, 2012 Nutrio, LLC [Member]	Aug. 06, 2012 Nutrio, LLC [Member]	Aug. 10, 2012 ASTV [Member]
Subsequent Events (Textual) [Abstract]
Purchase price	$ 255,000		$ 255,000
Cash purchase price payment			$ 70,000
Collection term		45 days
Common stock shares				16,185,392
Acquisition price per share				$ 0.80

XML

Stock-Based Compensation (Details 1) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Stock-based compensation expense per line item on condensed consolidated statements of operations
Stock-based compensation	$ 152	$ 593	$ 292	$ 876
Cost of revenue [Member]
Stock-based compensation expense per line item on condensed consolidated statements of operations
Stock-based compensation	4	17	9	25
Technology and development [Member]
Stock-based compensation expense per line item on condensed consolidated statements of operations
Stock-based compensation	8	57	23	99
Sales, marketing and support [Member]
Stock-based compensation expense per line item on condensed consolidated statements of operations
Stock-based compensation	26	113	80	196
General and administrative [Member]
Stock-based compensation expense per line item on condensed consolidated statements of operations
Stock-based compensation	107	355	162	490
Stock compensation related to discontinued operations [Member]
Stock-based compensation expense per line item on condensed consolidated statements of operations
Stock-based compensation	$ 7	$ 51	$ 18	$ 66

XML

Summary of Significant Accounting Policies (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011	Dec. 31, 2011	Dec. 31, 2010	Jul. 31, 2009
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Net loss	$ (144,000)	$ (851,000)	$ (1,214,000)	$ (1,234,000)
Cash from operating activities			(472,000)	(596,000)
Unrestricted cash balance	127,000	3,084,000	127,000	3,084,000	603,000	468,000
Total stockholders' deficit	1,994,000		1,994,000		2,696,000
Accumulated deficit	(108,994,000)		(108,994,000)		(107,780,000)
Summary of Significant Accounting Policies (Textual) [Abstract]
Principal of related party notes included in debt	1,000,000		1,000,000
Period of licensing agreement terminated							15 years
Period of non-exclusive rights included in terminated agreement							3 years
Promissory notes debt	0		0
Interest accrued on Directors Notes	5.00%		5.00%
Maximum [Member]
Schedule of Available-for-sale Securities [Line Items]
Reserve for refunds	3.00%		3.00%
Minimum [Member]
Schedule of Available-for-sale Securities [Line Items]
Reserve for refunds	1.00%		1.00%
Going Concern [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Net loss	100,000		1,200,000
Cash from operating activities			500,000
Unrestricted cash balance	109,000,000		109,000,000
Total stockholders' deficit	2,300,000		2,300,000
Accumulated deficit	$ 100,000		$ 100,000

XML

Loss Per Common Share (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Loss Per Common Share (Textual) [Abstract]
Antidilutive Securities	0	100,000	11,000	158,000

XML

Revenue Recognition

6 Months Ended

Jun. 30, 2012

Revenue Recognition [Abstract]

REVENUE RECOGNITION

4. REVENUE RECOGNITION

Revenue by type is as follows (in thousands):

	Three months ended June  30,				Six months ended June 30,
	2012		2011		2012		2011
Meal delivery	$	5,081	$	4,755	$	11,424	$	10,301
Digital plans		413		669		858		1,439
Royalties		138		154		278		301
Advertising and Ecommerce		2		52		19		124
		5,634		5,630		12,579		12,165

XML

Deferred Revenue (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Deferred revenue
Unearned meal delivery revenue and digital plans revenue	$ 223	$ 260
Deferred royalty	0	278
Total deferred revenue	$ 223	$ 538

XML

Revenue Recognition [Details] (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Revenue Recognition type
Meals Delivery	$ 5,081	$ 4,755	$ 11,424	$ 10,301
Digital Plans	413	669	858	1,439
Royalties	138	154	278	301
Advertising and Ecommerce	2	52	19	124
TOTAL REVENUE	$ 5,634	$ 5,630	$ 12,579	$ 12,165

XML

Warrants (Details) (USD $)	6 Months Ended
	Jun. 30, 2012
Warrants Outstanding
Warrants to Purchase Shares of Common Stock	719,058
Exercise Price	$ 1.7675
2009 Prides Warrants [Member]
Warrants Outstanding
Warrants to Purchase Shares of Common Stock	241,931
Exercise Price	$ 6.00
2009 Private Placement Warrants [Member]
Warrants Outstanding
Warrants to Purchase Shares of Common Stock	95,944
Exercise Price	$ 6.00
2011 Private Placement Warrants [Member]
Warrants Outstanding
Warrants to Purchase Shares of Common Stock	381,183
Exercise Price	$ 1.7675

XML

Warrants (Details Textual) (USD $)	6 Months Ended
	Jun. 30, 2012
Warrants (Textual) [Abstract]
Number of shares to be acquired by issuance of warrants	381,183
Warrants, exercise price to purchase common shares	$ 1.7675
Warrants Issued To Related Parties	628,605
Total warrants outstanding	719,058
2009 Private Placement Warrants [Member]
Class of Warrant or Right [Line Items]
Warrants Expiration Period in years	10 years
Warrants (Textual) [Abstract]
Warrants, exercise price to purchase common shares	$ 6.00
Total warrants outstanding	95,944
2011 Private Placement Warrants [Member]
Class of Warrant or Right [Line Items]
Warrants Expiration Period in years	3 years
Warrants (Textual) [Abstract]
Warrants, exercise price to purchase common shares	$ 1.7675
Total warrants outstanding	381,183

XML

Discontinued Operations

6 Months Ended

Jun. 30, 2012

Discontinued Operations [Abstract]

DISCONTINUED OPERATIONS

3. DISCONTINUED OPERATIONS

On August 6, 2012, the Company and its wholly-owned subsidiary, Nutrio.com, Inc. (together “the Sellers”), entered into an Asset Purchase Agreement (“Purchase Agreement”) with Nutrio, LLC. Pursuant to the terms of the Purchase Agreement, Nutrio, LLC purchased all of the Sellers’ right, title and interest in and to certain assets relating to the Sellers’ corporate services business (the “Nutrio Business”) for an aggregate purchase price of $255,000.

The Nutrio Business provides private label online nutrition, fitness and wellness programs to companies mainly in the health insurance, pharmaceutical and food industries, and has been referred to as “eDiets Corporate Services” and “business-to-business” in the Company’s Annual Report on Form 10-K. The Company previously reported Nutrio Business revenue and cost of revenue separately on its consolidated statements of operations. The Nutrio Business generates three types of business-to-business revenue. Licensing and development revenues are accounted for in accordance with (“ASU”) 2009-13, Multiple-Deliverable Revenue Arrangements (amendments to FASB ASC 605, Revenue Recognition). Development revenue relates to the planning, design and development of websites for customers. Both licensing and development revenues are recognized on a straight-line basis over the license period once the website is launched. Consulting revenue relates to consulting services provided to customers and revenue is recognized when services and/or deliverables are completed and collection is probable.

Pursuant to ASC 360, Accounting for the Impairment or Disposal of Long-Lived Assets, and ASC 205, Presentation of Financial Statements, the operating results of the Nutrio Business have been included in “Income from discontinued operations, net of tax” within the accompanying Condensed Consolidated Statements of Operations, and certain assets and liabilities have been reclassified as assets and liabilities held for sale within the accompanying Condensed Consolidated Balance Sheets. As a result, prior period comparative financial statements have been restated. The Company has combined cash flows from discontinued operations with cash flows from continuing operations in the accompanying Condensed Consolidated Statement of Cash Flows for all periods presented.

Nutrio Business revenue and the income from discontinued operations are as follows:

	Three months  ended June 30,				Six months  ended June 30,
	2012		2011		2012		2011
Revenue	$	173	$	319	$	351	$	714
Income from discontinued operations, net of tax		9		73		23		324

Assets and liabilities held for sale in the accompanying Condensed Consolidated Balance Sheets consist of the following:

	June 30, 2012		December 31, 2011
Accounts receivable, net	$	100	$	119
Prepaid expenses and other current assets		—		1
Current assets held for sale	$	100	$	120
Accounts payable	$	11	$	8
Accrued liabilities		17		16
Deferred revenue		111		60
Current liabilities held for sale	$	139	$	84

XML

Stock-Based Compensation (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Stock-based compensation plans
Expected term (in years)	4 years	4 years	3 years 10 months 24 days	3 years 9 months 18 days
Risk-free interest rate	0.62%	1.70%	0.62%	1.40%
Expected volatility	1.20%	0.854%	1.18%	0.745%
Expected dividend yield

XML

Condensed Consolidated Balance Sheets (Unaudited) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
CURRENT ASSETS:
Cash and cash equivalents	$ 127	$ 603
Accounts receivable, net	4	26
Inventory	62	70
Prepaid expenses and other current assets	203	344
Current assets held for sale	100	120
Total current assets	496	1,163
Restricted cash	994	884
Property and office equipment, net	460	598
Intangible assets, net	3	4
Other assets	41	47
Total assets	1,994	2,696
CURRENT LIABILITIES:
Accounts payable	2,198	1,473
Accrued liabilities	691	924
Current portion of capital lease obligations	12	23
Deferred revenue	223	538
Related party debt - current	1,000	1,000
Current liabilities held for sale	139	84
Total current liabilities	4,263	4,042
Commitments and contingencies
STOCKHOLDERS' DEFICIT:
Common stock	14	14
Additional paid-in capital	106,702	106,410
Accumulated deficit	(108,994)	(107,780)
Accumulated other comprehensive income (loss)	9	10
Total stockholders' deficit	(2,269)	(1,346)
Total liabilities and stockholders' deficit	$ 1,994	$ 2,696

XML

Organization

6 Months Ended

Jun. 30, 2012

Organization [Abstract]

ORGANIZATION

1. ORGANIZATION

www.ediets.com, Inc. (the “Company”) was incorporated in the State of Delaware on March 18, 1996 for the purpose of developing and marketing Internet-based diet and fitness programs. The Company markets its products both to consumers and to businesses primarily in North America.

XML

Stock-Based Compensation (Details Textual) (USD $)	3 Months Ended			6 Months Ended
	Jun. 30, 2012	Mar. 31, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012 Incentive Plan [Member]	Dec. 31, 2011 Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options outstanding Beginning		1,857,135		1,857,135		51,046	52,250
Options outstanding Ending	2,862,811			2,862,811		51,046	52,250
Stock based compensation (Textual) [Abstract]
Maximum number of common stock may be delivered under the incentive plan		$ 4,000,000
Maximum number of shares granted under the Incentive Plan		800,000
Percentage of voting power of all class of stock				10.00%
Options granted under the Incentive Plan vest period		3 years
Maximum number of shares vested unrestricted stock		360,000
Grant of ISOs and NSOs to purchase shares				1,000,000
Stock based compensation expense	200,000		600,000	300,000	900,000
Options outstanding Beginning		1,857,135		1,857,135		51,046	52,250
Weighted-average fair value of stock options granted	$ 0.23		$ 1.37	$ 0.33	$ 1.33
Number of stock option exercised during the period				0	0
Unrecognized compensation cost related to the stock options granted	$ 200,000			$ 200,000
Weighted-average period expected to be recognize compensation cost				1 year 6 months

XML

Warrants (Tables)

6 Months Ended

Jun. 30, 2012

Warrants [Abstract]

Warrants outstanding

Warrants outstanding as of June 30, 2012 are as follows:

	Warrants to Purchase Shares of Common Stock		Exercise Price
2009 Prides Warrants		241,931	$	6.00
2009 Private Placement Warrants		95,944	$	6.00
2011 Private Placement Warrants		381,183	$	1.7675
Total warrants outstanding		719,058

XML

Debt (Details) (USD $)	6 Months Ended
	Jun. 30, 2012
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
Interest accrued on Directors Notes	5.00%
Debt Instrument Effective Percentage Resulting From Default	10.00%
Promissory Note [Member]
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
Debt Instrument Maturity Date	Dec 31,2012
Interest accrued on Directors Notes	5.00%
Director Notes [Member]
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
Due period for the payment of outstanding principal	Three business days
Board of Directors Chairman [Member] | Promissory Note [Member]
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
Promissory note	600,000
Director [Member] | Promissory Note [Member]
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
Promissory note	200,000
President and Chief Executive Officer [Member] | Promissory Note [Member]
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
Promissory note	200,000

XML

Segment Information (Tables)

6 Months Ended

Jun. 30, 2012

Segment Information [Abstract]

Net revenues and segment loss reports

Net revenues and segment loss of the Company’s two reportable segments are as follows (in thousands):

	Three Months  Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
Total revenues:
U.S. business-to-consumer	$	5,496		$	5,476		$	12,300		$	11,864
Total U.S.		5,496			5,476			12,300			11,864
Europe		138			154			279			301
Total revenues	$	5,634		$	5,630		$	12,579		$	12,165
Segment (loss) income:
U.S. business-to-consumer	$	(278	)	$	(1,070	)	$	(1,490	)	$	(1,859	)
Total U.S.		(278	)		(1,070	)		(1,490	)		(1,859	)
Europe		138			155			279			323
Loss from operations	$	(140	)	$	(915	)	$	(1,211	)	$	(1,536	)

XML

Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2012

Summary of Significant Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and note disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to those rules and regulations. The Company believes that the disclosures made are adequate to make the information presented not misleading. All the adjustments which, in the opinion of management, are considered necessary for a fair presentation of the results of operations for the periods shown are of a normal recurring nature and have been reflected in the unaudited condensed consolidated financial statements. Results from continuing operations for the three and six months ended June 30, 2012 are not necessarily indicative of the results that may be expected for the year ending December 31, 2012. The Company’s Nutrio.com, Inc. subsidiary, also known as eDiets Corporate Services, has been classified as a discontinued operation. See Note 3 for further information regarding discontinued operations. The information included in these unaudited condensed consolidated financial statements should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in this report and the consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2011.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. While the Company believes that such estimates are fair when considered in conjunction with the condensed consolidated financial position and results of operations taken as a whole, the actual amount of such estimates, when known, may vary from these estimates.

Going Concern

The Company’s condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern. For the three and six months ended June 30, 2012, the Company had a net loss of approximately $0.1 million and $1.2 million, and for the six months ended June 30, 2012, the Company used approximately $0.5 million of cash in its operating activities. As of June 30, 2012, the Company has an accumulated deficit of approximately $109.0 million and total stockholders’ deficit of approximately $2.3 million. As of June 30, 2012, the Company’s unrestricted cash balance was approximately $0.1 million.

Due to uncertainty about the Company’s ability to meet its current operating expenses, debt obligations and capital expenditures, the Company’s independent registered public accounting firm included an explanatory paragraph regarding the Company’s ability to continue as a going concern in their report on our annual financial statements for the year ended December 31, 2011. The Company’s debt consists of $1.0 million of principal of related party notes (the “Director Notes”) as of June 30, 2012. The entire outstanding principal balance of the Director Notes, together with all accrued and unpaid interest, is due and payable on December 31, 2012.

The continuation of the Company’s business is dependent upon raising additional financial support. In light of the Company’s results of continuing operations, management has and intends to continue to evaluate various possibilities. These possibilities include: raising additional capital through the issuance of common or preferred stock, securities convertible into common stock, or secured or unsecured debt, selling one or more lines of business, or all or a portion of the Company’s assets, entering into a business combination, reducing or eliminating operations, liquidating assets, or seeking relief through a filing under the U.S. Bankruptcy Code. These possibilities, to the extent available, may be on terms that result in significant dilution to the Company’s existing stockholders or that result in the Company’s existing stockholders losing all of their investment in the Company. There can be no assurances that the Company will be successful in raising adequate additional financial support. If not, the Company will be required to reduce operations and/or liquidate assets and/or seek relief through a filing under the U.S. Bankruptcy Code. The Company’s condensed consolidated financial statements do not include any adjustments relating to the recoverability of assets and classification of assets and liabilities that might be necessary should the Company be unable to continue as a going concern.

Significant Accounting Policies

Meal delivery revenue is recognized when the earnings process is complete, which is upon transfer of title of the product. This transfer occurs upon shipment from the Company’s fulfillment center to the end-customer. Meal delivery revenue includes amounts billed for shipping. In accordance with Accounting Standards Codification (“ASC”) 605-45 (formerly Emerging Issues Task Force (EITF) 99-19), Revenue Recognition – Principal Agent Considerations, the Company recognizes gross meal delivery revenues based on the relevant fact that the Company is the primary obligor and has assumed asset risk when the customers place orders. Beginning in January 2008, the Company began offering two promotions: a) buy seven weeks of meal delivery and get the 8 ^th week for free and b) buy a meal delivery program and get a free non-cash gift. For the first promotion and in accordance with ASC 605-50 (formerly EITF 01-09), Revenue Recognition – Customer Payments and Incentives, the Company recognizes the cost of the free offer as cost of revenue proportionally over the term of the meal delivery subscription or until the customer cancels and no longer is entitled to the free offer. During 2011, the Company began offering various “free offer” promotions whereby the Company recognizes the cost of the free offer as cost of revenue proportionally over the term of the meal delivery subscription or until the customer cancels and is no longer entitled to the free offer. For the second promotion and in accordance with ASC 605-50, the Company recognizes meal delivery revenue when the meals are shipped and the cost of the free non-cash gift as cost of sales when the non-cash gift is shipped.

Digital plan revenue is generated by the Company offering membership subscriptions to the proprietary content contained in its websites. Subscriptions to the Company’s digital plans are paid in advance, mainly via credit/debit cards and cash receipts are deferred and recognized as revenue on a straight-line basis over the period of the digital plan subscription. Beginning in January 2008, the Company began to offer a guarantee to all customers, under which if a customer did not meet their weight loss goal upon completion of six consecutive months of digital subscription and met the guarantee requirements they would receive the next six months of digital subscription for free. Consequently, the Company recognizes digital subscription revenue over the potential term of twelve months of digital subscription or until the subscriber no longer meets the guarantee requirements, whichever comes first.

In accordance with ASC605-45, the Company recognizes gross digital subscription revenues associated with licensed diet and fitness plans based on the relevant facts of the related license agreements, while the license fee incurred to the licensor is included in cost of revenues.

Other revenue relates primarily to royalty revenue and also includes advertising revenue and ecommerce revenue. Royalty revenue is derived from the exclusive technology licensing agreement related to the Company’s operations in the United Kingdom and Ireland and is being recognized on a straight-line basis. On July 31, 2009 the Company terminated the 15-year exclusive licensing agreement with Tesco Ireland Limited (“Tesco”) which provided Tesco with exclusive rights to use the Company’s personalized diet technology in the United Kingdom and Ireland, with an effective date of July 1, 2009. The termination agreement provides Tesco with certain continuing rights in the Company technology used by or incorporated into Tesco’s diet website prior to termination, including a three-year non-exclusive right to use such technology and, thereafter, an assignment of certain intellectual property rights relating to such technology.

ASC 820 (formerly SFAS 157), Fair Value Measurements and Disclosures, defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:

Level 1 – Quoted prices in active markets for identical assets or liabilities.

Level 2 – Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The Company’s debt consists of $1.0 million of principal of the Director Notes. During November 2010, the Company issued the Director Notes, consisting of (i) a promissory note to Kevin A. Richardson II, chairman of the Company’s board of directors and controlling member of Prides Capital Fund, L.P. (“Prides”), the Company’s largest stockholder, (ii) a promissory note to Lee S. Isgur, one of the Company’s directors and (iii) a promissory note to Kevin N. McGrath, who at that time was one of the Company’s directors and the Company’s President and Chief Executive Officer. Interest accrues on the Director Notes at a rate of five percent (5%) per annum. These Director Notes are not traded in an active market. As a result of the volatility of substantially all domestic credit markets that currently exist and the difficulty of the Company obtaining similar financing from an unrelated party, the Company is unable, as of June 30, 2012, to determine the fair value of such debt.

The Company establishes a reserve for refunds for meal delivery and digital plan sales. Meal delivery refunds mainly result from late shipments or packaging issues. Based on historical experience, a range of between approximately 1%-3% of prior month’s meal delivery sales will result in a refund, accordingly the Company estimates a reserve based on that assumption for future refunds. Since all digital plan subscriber payments are deferred upon receipt, at the end of each month a portion of the deferred revenue is reclassified as a reserve for refunds. Based on historical experience, a range of between approximately 1%-3% of digital plan subscriber sales will result in a refund issued in the subsequent month after sale. All other refunds issued relate to current month digital plan subscriber sales. Because the revenue has not been recognized, refunds do not result in a reversal of digital plan subscription revenue. Instead, refunds result in a decrease to the amounts maintained in deferred revenue.

The Company does not believe there is a reasonable likelihood that there will be a material change in the future estimates or assumptions used to calculate the reserve for refunds. However, if actual results are not consistent with the estimates or assumptions stated above, the Company may be exposed to income or losses that could be material to the condensed consolidated financial statements.

Recent Accounting Pronouncements

In June 2011, the Financial Accounting Standards Board (“FASB”) issued an amendment to ASC 220, Comprehensive Income, which requires companies to present net income and other comprehensive income in one continuous statement or in two separate, but consecutive, statements. The Company adopted this guidance effective January 1, 2012.

XML

Condensed Consolidated Statements of Operations (Unaudited) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
REVENUE
Meal delivery	$ 5,081	$ 4,755	$ 11,424	$ 10,301
Digital plans	413	669	858	1,439
Other	140	206	297	425
TOTAL REVENUE	5,634	5,630	12,579	12,165
Cost of revenue
Meal delivery	2,756	2,739	6,089	5,890
Digital plans	42	63	87	150
Other	27	25	61	75
Total cost of revenue	2,825	2,827	6,237	6,115
Technology and development	144	202	315	492
Sales, marketing and support	2,118	2,345	5,689	5,025
General and administrative	684	1,168	1,543	2,063
Amortization of intangibles assets	3	3	6	6
Total costs and expenses	5,774	6,545	13,790	13,701
Loss from operations	(140)	(915)	(1,211)	(1,536)
Interest expense, net	(13)	(13)	(26)	(26)
Loss from continuing operations before income tax benefit (provision)	(153)	(928)	(1,237)	(1,562)
Income tax benefit (provision)		4		4
Loss from continuing operations	(153)	(924)	(1,237)	(1,558)
Income from discontinued operations, net of tax	9	73	23	324
Net loss	$ (144)	$ (851)	$ (1,214)	$ (1,234)
Basic and diluted loss per common share:
Continuing operations	$ (0.01)	$ (0.07)	$ (0.09)	$ (0.13)
Discontinued operations				$ (0.03)
Net loss per common share	$ (0.01)	$ (0.07)	$ (0.09)	$ (0.10)
Weighted average common and common equivalent shares outstanding:
Basic and diluted	14,311	12,755	14,311	12,342

XML

Subsequent Events

6 Months Ended

Jun. 30, 2012

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

12. SUBSEQUENT EVENTS

As described in Note 3, the Company and its wholly-owned subsidiary, Nutrio.com, Inc. (together “the Sellers”), entered into a Purchase Agreement with Nutrio, LLC on August 6, 2012. Pursuant to the terms of the Purchase Agreement, Nutrio, LLC purchased all of the Sellers’ right, title and interest in and to certain assets relating to the Sellers’ corporate services business for an aggregate purchase price of $255,000.

Pursuant to the Purchase Agreement, Nutrio, LLC had the right to reduce the cash purchase price payment by the amount of previously billed receivables that relate to post-closing periods. Nutrio, LLC reduced the amount of the cash purchase price payment by approximately $70,000 on August 6, 2012. The Company expects to collect the amount in accordance with the collection terms as invoiced, which is generally within 45 days. In the event that any portion of the $70,000 is not collected, the Company would seek collection from Nutrio, LLC to collect the full amount of the $255,000 purchase price.

On August 10, 2012, the Company entered into a letter of intent (the “Letter of Intent”) with As Seen On TV, Inc. (“ASTV”), a direct response marketing company, whereby ASTV agreed to acquire all of the Company’s outstanding shares of common stock in exchange for 16,185,392 newly issued shares of ASTV common stock, representing an acquisition price of approximately $0.80 per share of the Company’s common stock. Under the Letter of Intent, all other outstanding securities of the Company exercisable or exchangeable for, or convertible into, capital stock of the Company would be deemed converted into, and exchanged for securities of ASTV on an as converted basis immediately prior to the record date of the acquisition.

The Letter of Intent is subject to numerous conditions, including satisfactory completion of due diligence, negotiation of a definitive purchase agreement and closing of the acquisition on or before November 1, 2012.

XML

Document and Entity Information	6 Months Ended
	Jun. 30, 2012	Aug. 10, 2012
Document and Entity Information [Abstract]
Entity Registrant Name	EDIETS COM INC
Entity Central Index Key	0001094058
Document Type	10-Q/A
Amendment Flag	false
Document Period End Date	Jun. 30, 2012
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q2
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		14,310,534

XML

Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2012

Summary of Significant Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and note disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to those rules and regulations. The Company believes that the disclosures made are adequate to make the information presented not misleading. All the adjustments which, in the opinion of management, are considered necessary for a fair presentation of the results of operations for the periods shown are of a normal recurring nature and have been reflected in the unaudited condensed consolidated financial statements. Results from continuing operations for the three and six months ended June 30, 2012 are not necessarily indicative of the results that may be expected for the year ending December 31, 2012. The Company’s Nutrio.com, Inc. subsidiary, also known as eDiets Corporate Services, has been classified as a discontinued operation. See Note 3 for further information regarding discontinued operations. The information included in these unaudited condensed consolidated financial statements should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in this report and the consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2011.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. While the Company believes that such estimates are fair when considered in conjunction with the condensed consolidated financial position and results of operations taken as a whole, the actual amount of such estimates, when known, may vary from these estimates.

Going Concern

Going Concern

The Company’s condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern. For the three and six months ended June 30, 2012, the Company had a net loss of approximately $0.1 million and $1.2 million, and for the six months ended June 30, 2012, the Company used approximately $0.5 million of cash in its operating activities. As of June 30, 2012, the Company has an accumulated deficit of approximately $109.0 million and total stockholders’ deficit of approximately $2.3 million. As of June 30, 2012, the Company’s unrestricted cash balance was approximately $0.1 million.

Due to uncertainty about the Company’s ability to meet its current operating expenses, debt obligations and capital expenditures, the Company’s independent registered public accounting firm included an explanatory paragraph regarding the Company’s ability to continue as a going concern in their report on our annual financial statements for the year ended December 31, 2011. The Company’s debt consists of $1.0 million of principal of related party notes (the “Director Notes”) as of June 30, 2012. The entire outstanding principal balance of the Director Notes, together with all accrued and unpaid interest, is due and payable on December 31, 2012.

The continuation of the Company’s business is dependent upon raising additional financial support. In light of the Company’s results of continuing operations, management has and intends to continue to evaluate various possibilities. These possibilities include: raising additional capital through the issuance of common or preferred stock, securities convertible into common stock, or secured or unsecured debt, selling one or more lines of business, or all or a portion of the Company’s assets, entering into a business combination, reducing or eliminating operations, liquidating assets, or seeking relief through a filing under the U.S. Bankruptcy Code. These possibilities, to the extent available, may be on terms that result in significant dilution to the Company’s existing stockholders or that result in the Company’s existing stockholders losing all of their investment in the Company. There can be no assurances that the Company will be successful in raising adequate additional financial support. If not, the Company will be required to reduce operations and/or liquidate assets and/or seek relief through a filing under the U.S. Bankruptcy Code. The Company’s condensed consolidated financial statements do not include any adjustments relating to the recoverability of assets and classification of assets and liabilities that might be necessary should the Company be unable to continue as a going concern.

Significant Accounting Policies

Significant Accounting Policies

Meal delivery revenue is recognized when the earnings process is complete, which is upon transfer of title of the product. This transfer occurs upon shipment from the Company’s fulfillment center to the end-customer. Meal delivery revenue includes amounts billed for shipping. In accordance with Accounting Standards Codification (“ASC”) 605-45 (formerly Emerging Issues Task Force (EITF) 99-19), Revenue Recognition – Principal Agent Considerations, the Company recognizes gross meal delivery revenues based on the relevant fact that the Company is the primary obligor and has assumed asset risk when the customers place orders. Beginning in January 2008, the Company began offering two promotions: a) buy seven weeks of meal delivery and get the 8 ^th week for free and b) buy a meal delivery program and get a free non-cash gift. For the first promotion and in accordance with ASC 605-50 (formerly EITF 01-09), Revenue Recognition – Customer Payments and Incentives, the Company recognizes the cost of the free offer as cost of revenue proportionally over the term of the meal delivery subscription or until the customer cancels and no longer is entitled to the free offer. During 2011, the Company began offering various “free offer” promotions whereby the Company recognizes the cost of the free offer as cost of revenue proportionally over the term of the meal delivery subscription or until the customer cancels and is no longer entitled to the free offer. For the second promotion and in accordance with ASC 605-50, the Company recognizes meal delivery revenue when the meals are shipped and the cost of the free non-cash gift as cost of sales when the non-cash gift is shipped.

Digital plan revenue is generated by the Company offering membership subscriptions to the proprietary content contained in its websites. Subscriptions to the Company’s digital plans are paid in advance, mainly via credit/debit cards and cash receipts are deferred and recognized as revenue on a straight-line basis over the period of the digital plan subscription. Beginning in January 2008, the Company began to offer a guarantee to all customers, under which if a customer did not meet their weight loss goal upon completion of six consecutive months of digital subscription and met the guarantee requirements they would receive the next six months of digital subscription for free. Consequently, the Company recognizes digital subscription revenue over the potential term of twelve months of digital subscription or until the subscriber no longer meets the guarantee requirements, whichever comes first.

In accordance with ASC605-45, the Company recognizes gross digital subscription revenues associated with licensed diet and fitness plans based on the relevant facts of the related license agreements, while the license fee incurred to the licensor is included in cost of revenues.

Other revenue relates primarily to royalty revenue and also includes advertising revenue and ecommerce revenue. Royalty revenue is derived from the exclusive technology licensing agreement related to the Company’s operations in the United Kingdom and Ireland and is being recognized on a straight-line basis. On July 31, 2009 the Company terminated the 15-year exclusive licensing agreement with Tesco Ireland Limited (“Tesco”) which provided Tesco with exclusive rights to use the Company’s personalized diet technology in the United Kingdom and Ireland, with an effective date of July 1, 2009. The termination agreement provides Tesco with certain continuing rights in the Company technology used by or incorporated into Tesco’s diet website prior to termination, including a three-year non-exclusive right to use such technology and, thereafter, an assignment of certain intellectual property rights relating to such technology.

ASC 820 (formerly SFAS 157), Fair Value Measurements and Disclosures, defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:

Level 1 – Quoted prices in active markets for identical assets or liabilities.

Level 2 – Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The Company’s debt consists of $1.0 million of principal of the Director Notes. During November 2010, the Company issued the Director Notes, consisting of (i) a promissory note to Kevin A. Richardson II, chairman of the Company’s board of directors and controlling member of Prides Capital Fund, L.P. (“Prides”), the Company’s largest stockholder, (ii) a promissory note to Lee S. Isgur, one of the Company’s directors and (iii) a promissory note to Kevin N. McGrath, who at that time was one of the Company’s directors and the Company’s President and Chief Executive Officer. Interest accrues on the Director Notes at a rate of five percent (5%) per annum. These Director Notes are not traded in an active market. As a result of the volatility of substantially all domestic credit markets that currently exist and the difficulty of the Company obtaining similar financing from an unrelated party, the Company is unable, as of June 30, 2012, to determine the fair value of such debt.

The Company establishes a reserve for refunds for meal delivery and digital plan sales. Meal delivery refunds mainly result from late shipments or packaging issues. Based on historical experience, a range of between approximately 1%-3% of prior month’s meal delivery sales will result in a refund, accordingly the Company estimates a reserve based on that assumption for future refunds. Since all digital plan subscriber payments are deferred upon receipt, at the end of each month a portion of the deferred revenue is reclassified as a reserve for refunds. Based on historical experience, a range of between approximately 1%-3% of digital plan subscriber sales will result in a refund issued in the subsequent month after sale. All other refunds issued relate to current month digital plan subscriber sales. Because the revenue has not been recognized, refunds do not result in a reversal of digital plan subscription revenue. Instead, refunds result in a decrease to the amounts maintained in deferred revenue.

The Company does not believe there is a reasonable likelihood that there will be a material change in the future estimates or assumptions used to calculate the reserve for refunds. However, if actual results are not consistent with the estimates or assumptions stated above, the Company may be exposed to income or losses that could be material to the condensed consolidated financial statements.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In June 2011, the Financial Accounting Standards Board (“FASB”) issued an amendment to ASC 220, Comprehensive Income, which requires companies to present net income and other comprehensive income in one continuous statement or in two separate, but consecutive, statements. The Company adopted this guidance effective January 1, 2012.

XML

Condensed Consolidated Statements of Comprehensive Loss (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Condensed Consolidated Statements of Comprehensive Loss [Abstract]
Net loss	$ (144)	$ (851)	$ (1,214)	$ (1,234)
Other comprehensive loss:
Foreign currency translation adjustments	5	(17)	(1)	(67)
Comprehensive loss	$ (139)	$ (868)	$ (1,215)	$ (1,301)

XML

Stock-Based Compensation

6 Months Ended

Jun. 30, 2012

Stock-Based Compensation [Abstract]

STOCK-BASED COMPENSATION

7. STOCK-BASED COMPENSATION

The Company grants stock options, restricted stock units and restricted stock awards to its employees, officers, directors and consultants. In November 2004, the Company adopted the www.ediets.com, Inc. 2004 Equity Incentive Plan, as amended and restated in May 2010 (as subsequently amended, the “Incentive Plan”). The Incentive Plan provides for the grant of incentive stock options or “ISOs”, non-qualified stock options or “NSOs”, stock appreciation rights or “SARs”, restricted stock, restricted stock units (“RSUs”), performance awards, deferred stock and unrestricted stock. The Incentive Plan is administered by the Compensation Committee of the Board of Directors (the “Committee”). A maximum of 4,000,000 shares of common stock may be delivered in satisfaction of awards made under the Incentive Plan. The maximum number of shares subject to performance awards granted under the Incentive Plan in any calendar year is 800,000 shares. The term of any ISO granted under the Incentive Plan may not exceed ten years, or five years if granted to a person that owns common stock representing more than 10% of the voting power of all class of stock of the Company. Options granted under the Incentive Plan generally vest ratably over a three-year period. SARs may be granted either in tandem with or independent of stock options. The Incentive Plan also provides for awards of fully vested unrestricted stock, but no more than 360,000 shares in the aggregate may be granted at less than fair market value unless granted in lieu of cash compensation equal to such fair market value. The Incentive Plan also provides for deferred grants entitling the recipient to receive common stock upon satisfaction of conditions determined by the Committee in its discretion. The Incentive Plan provides for performance award grants which may be linked to the market value, book value, net profits or other measure of the value of common stock or other specific performance criteria determined appropriate by the Committee, or may be based upon the appreciation in the market value, book value, net profits or other measure of the value of a specified number of shares of common stock over a fixed period or periods determined by the Committee.

As of June 30, 2012 and December 31, 2011, there were 2,862,811 and 1,857,135 options outstanding, respectively, under the Incentive Plan.

In November 1999, the Company adopted the www.ediets.com, Inc. Stock Option Plan (as subsequently amended, the “Plan”). The Plan terminated in November 2009 pursuant to the Plan provisions and therefore, the Company will not grant any additional shares or options under the Plan. The Plan provided for the grant of ISOs and NSOs to purchase up to 1,000,000 shares of the Company’s common stock to employees, directors and consultants to the Company. Options granted to employees under the Plan generally vest ratably over a two- or three-year period and expire five or ten years from the date of grant. Such options generally have an exercise price equal to the fair market value of the underlying common stock at the grant date and are fully exercisable on the date of grant for a period of up to five to ten years.

As of June 30, 2012 and December 31, 2011, 51,046 and 52,250 options, respectively, were outstanding under the Plan.

The Company accounts for its stock-based compensation plans in accordance with ASC 718-10 (formerly SFAS 123R), Compensation – Stock Compensation. Under the provisions of ASC 718-10, the Company estimates the fair value of each stock option on the date of grant using a Black-Scholes-Merton (BSM) option-pricing formula, applying the following assumptions, and amortizes that value to expense over the option’s vesting period using the straight-line attribution method.

	Three Months  Ended June 30,						Six Months  Ended June 30,
	2012			2011			2012			2011
Expected term (in years)		4.0			4.0			3.9			3.8
Risk-free interest rate		0.62	%		1.7	%		0.62	%		1.4	%
Expected volatility		1.20			.854			1.18			.745
Expected dividend yield		—	%		—	%		—	%		—	%

Expected Term: The expected term represents the period over which the share-based awards are expected to be outstanding for employees, officers and directors. The Company uses the historical exercise experience in determining the expected term. For consultants, the expected term is equal to the remaining contractual term of the share-based awards.

Risk-Free Interest Rate: The Company bases the risk-free interest rate used in its assumptions on the implied yield currently available on U.S. Treasury zero-coupon issues with a remaining term equivalent to the stock option award’s expected term.

Expected Volatility: The volatility factor used in the Company’s assumptions is based on the historical price of its stock from 2001 to the current period because the Company believes that this extended period reflects the true Company history.

Expected Dividend Yield: The Company does not intend to pay dividends on its common stock for the foreseeable future. Accordingly, the Company uses a dividend yield of zero in its assumptions.

As required by ASC 718-10, the Company estimates forfeitures of employee stock options, RSUs and restricted stock awards and recognizes compensation cost only for those awards expected to vest. Forfeiture rates are determined for three groups (employees, officers and directors) based on historical experience. Estimated forfeitures are adjusted to the actual forfeiture experience as needed.

During the quarters ended June 30, 2012 and 2011, the Company recognized stock-based compensation expense under ASC 718-10 (related to stock options, RSUs and restricted stock awards) of $0.2 million and $0.6 million, respectively. During the six months ended June 30, 2012 and 2011, the Company recognized stock-based compensation expense under ASC 718-10 (related to stock options, RSUs and restricted stock awards) of $0.3 million and $0.9 million, respectively.

The breakdown of stock-based compensation expense per line item on the accompanying condensed consolidated statements of operations for the three months ended June 30, 2012 and 2011 is as follows (in thousands):

	Three Months  Ended June 30,				Six Months  Ended June 30,
	2012		2011		2012		2011
Cost of revenue	$	4	$	17	$	9	$	25
Technology and development		8		57		23		99
Sales, marketing and support		26		113		80		196
General and administrative		107		355		162		490
Stock compensation related to discontinued operations		7		51		18		66
	$	152	$	593	$	292	$	876

A summary of option activity under the Company’s stock plans for the three months ended June 30, 2012 is as follows (shares in thousands):

	Number  of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (yrs)		Aggregate Intrinsic Value ($000)
Outstanding at December 31, 2011		1,909		$	5.62		7.90	$	11
Granted		1,086			0.51
Exercised		—			—
Forfeited		(34	)		4.76
Expired		(47	)		17.69
Outstanding at June 30, 2012		2,914		$	3.53		7.97	$	19
Vested or expected to vest at June 30, 2012		2,507		$	3.76		7.83	$	13
Exercisable at June 30, 2012		1,703		$	5.53		6.90	$	—

The weighted-average fair value of stock options granted during the quarters ended June 30, 2012 and 2011 was $0.23 and $1.37, respectively. The weighted-average fair value of stock options granted during the six months ended June 30, 2012 and 2011 was $0.33 and $1.33, respectively.

There were no stock option exercises during 2012 and 2011. As of June 30, 2012, there was $0.2 million of total unrecognized compensation cost related to the stock options granted under the Company’s stock plans. That cost is expected to be recognized over a weighted-average period of 1.5 years.

XML

Warrants

6 Months Ended

Jun. 30, 2012

Warrants [Abstract]

WARRANTS

6. WARRANTS

During February 2011, the Company issued warrants in connection with private placement subscription agreements, entitling the investors in the private placement to acquire a total of 381,183 shares of common stock at an exercise price of $1.7675 per share (the “2011 Private Placement Warrants”). Each warrant has a three-year expiration date and is exercisable beginning immediately.

During 2009, the Company issued warrants (the “2009 Prides Warrants”) to Prides and issued warrants (the “2009 Private Placement Warrants”) to investors in connection with a private placement transaction. The 2009 Prides Warrants and the 2009 Private Placement Warrants all have a 10-year expiration date and are exercisable immediately.

Warrants outstanding as of June 30, 2012 are as follows:

	Warrants to Purchase Shares of Common Stock		Exercise Price
2009 Prides Warrants		241,931	$	6.00
2009 Private Placement Warrants		95,944	$	6.00
2011 Private Placement Warrants		381,183	$	1.7675
Total warrants outstanding		719,058

Warrants issued to related parties as of June 30, 2012 totaled 628,605 of the total 719,058 warrants outstanding in the table above.

XML

Stock-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2012

Stock-Based Compensation [Abstract]

Stock-based compensation plans

	Three Months  Ended June 30,						Six Months  Ended June 30,
	2012			2011			2012			2011
Expected term (in years)		4.0			4.0			3.9			3.8
Risk-free interest rate		0.62	%		1.7	%		0.62	%		1.4	%
Expected volatility		1.20			.854			1.18			.745
Expected dividend yield		—	%		—	%		—	%		—	%

Stock-based compensation expense per line item on condensed consolidated statements of operations

The breakdown of stock-based compensation expense per line item on the accompanying condensed consolidated statements of operations for the three months ended June 30, 2012 and 2011 is as follows (in thousands):

	Three Months  Ended June 30,				Six Months  Ended June 30,
	2012		2011		2012		2011
Cost of revenue	$	4	$	17	$	9	$	25
Technology and development		8		57		23		99
Sales, marketing and support		26		113		80		196
General and administrative		107		355		162		490
Stock compensation related to discontinued operations		7		51		18		66
	$	152	$	593	$	292	$	876

Summary of option activity

A summary of option activity under the Company’s stock plans for the three months ended June 30, 2012 is as follows (shares in thousands):

	Number  of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (yrs)		Aggregate Intrinsic Value ($000)
Outstanding at December 31, 2011		1,909		$	5.62		7.90	$	11
Granted		1,086			0.51
Exercised		—			—
Forfeited		(34	)		4.76
Expired		(47	)		17.69
Outstanding at June 30, 2012		2,914		$	3.53		7.97	$	19
Vested or expected to vest at June 30, 2012		2,507		$	3.76		7.83	$	13
Exercisable at June 30, 2012		1,703		$	5.53		6.90	$	—

XML

Discontinued Operations (Tables)

6 Months Ended

Jun. 30, 2012

Income Statement [Member]

Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]

Summary of revenue and income, assets and liabilities from discontinued operations

Nutrio Business revenue and the income from discontinued operations are as follows:

	Three months  ended June 30,				Six months  ended June 30,
	2012		2011		2012		2011
Revenue	$	173	$	319	$	351	$	714
Income from discontinued operations, net of tax		9		73		23		324

Balance Sheets [Member]

Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]

Summary of revenue and income, assets and liabilities from discontinued operations

Assets and liabilities held for sale in the accompanying Condensed Consolidated Balance Sheets consist of the following:

	June 30, 2012		December 31, 2011
Accounts receivable, net	$	100	$	119
Prepaid expenses and other current assets		—		1
Current assets held for sale	$	100	$	120
Accounts payable	$	11	$	8
Accrued liabilities		17		16
Deferred revenue		111		60
Current liabilities held for sale	$	139	$	84

XML

Segment Information

6 Months Ended

Jun. 30, 2012

Segment Information [Abstract]

SEGMENT INFORMATION

10. SEGMENT INFORMATION

ASC 280 (formerly SFAS 131), Segment Reporting, designates the internal reporting that is used by management for making operating decisions and assessing performance as the source of the Company’s reportable segments.

The Company operates in a single market consisting of the sale of services, information and products (ecommerce and meal delivery) related to nutrition, fitness and motivation. The Company has two reportable segments: the U.S. business-to-consumer segment and the European business segment. Meal delivery and Digital plans operations are included in the U.S. business-to-consumer segment.

The Company does not engage in inter-company revenue transfers between segments. The Company’s management evaluates performance based primarily on business segment. Accounting policies of the reportable segments are the same as the Company’s consolidated accounting policies.

Net revenues and segment loss of the Company’s two reportable segments are as follows (in thousands):

	Three Months  Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
Total revenues:
U.S. business-to-consumer	$	5,496		$	5,476		$	12,300		$	11,864
Total U.S.		5,496			5,476			12,300			11,864
Europe		138			154			279			301
Total revenues	$	5,634		$	5,630		$	12,579		$	12,165
Segment (loss) income:
U.S. business-to-consumer	$	(278	)	$	(1,070	)	$	(1,490	)	$	(1,859	)
Total U.S.		(278	)		(1,070	)		(1,490	)		(1,859	)
Europe		138			155			279			323
Loss from operations	$	(140	)	$	(915	)	$	(1,211	)	$	(1,536	)

XML

Debt

6 Months Ended

Jun. 30, 2012

Debt [Abstract]

DEBT

8. DEBT

On November 12, 2010, the Company issued the following promissory notes (the “Director Notes”): (i) a promissory note to Kevin A. Richardson II, one of the Company’s directors and an officer of Prides, pursuant to which the Company borrowed $600,000, (ii) a promissory note to Lee S. Isgur, one of the Company’s directors, pursuant to which the Company borrowed $200,000 and (iii) a promissory note to Kevin N. McGrath, who at that time was one of the Company’s directors and the Company’s President and Chief Executive Officer pursuant to which the Company borrowed $200,000. The entire outstanding principal balance of the Director Notes, together with all accrued and unpaid interest, is due and payable on December 31, 2012. Interest accrues on the Director Notes at a rate of five percent (5%) per annum. In the event the principal is not paid in full within three business days of the due date, or any other default occurs thereunder, then interest shall accrue on the outstanding principal balance of the Director Notes at a rate of ten percent (10%) per annum.

XML

Loss Per Common Share

6 Months Ended

Jun. 30, 2012

Loss Per Common Share [Abstract]

LOSS PER COMMON SHARE

9. LOSS PER COMMON SHARE

Basic loss per common share is computed using the weighted average number of common shares outstanding during the period. Diluted loss per share is computed using the weighted average number of common and dilutive potential common shares outstanding during the period. Dilutive potential common shares consist of the incremental common shares issuable upon exercise of stock options and warrants (using the treasury stock method), which were not included in diluted loss per share as they would have been anti-dilutive and were approximately zero and 11,000, respectively, for the three and six months ended June 30, 2012, and approximately 100,000 and 158,000, respectively, for the three and six months ended June 30, 2011. The Company did not have any dilutive potential common shares related to convertible debt.

XML

Legal Proceedings

6 Months Ended

Jun. 30, 2012

Legal Proceedings [Abstract]

LEGAL PROCEEDINGS

11. LEGAL PROCEEDINGS

In the ordinary course of business, the Company and/or its subsidiaries may be parties to legal proceedings and regulatory inquiries, the outcome of which, either singly or in the aggregate, is not expected to have a material adverse effect on the Company’s financial condition or results of operations.

XML

Stock-Based Compensation (Details 2) (USD $) In Thousands, except Share data, unless otherwise specified	0 Months Ended	6 Months Ended
	Dec. 31, 2011	Jun. 30, 2012	Jun. 30, 2011
Summary of option activity
Number of options granted		1,086
Weighted average exercise price granted		$ 0.51
Number of stock option exercised during the period		0	0
Weighted average exercise price exercised
Number of options forfeited		(34)
Weighted average exercise price forfeited		$ 4.76
Number of options expired		(47)
Weighted average exercise price expired		$ 17.69
Number of options outstanding beginning balance		1,909
Number of options outstanding ending balance	1,909	2,914
Weighted average exercise price outstanding beginning balance		$ 5.62
Weighted average exercise price outstanding ending balance	$ 5.62	$ 3.53
Weighted Average Remaining Contractual term outstanding beginning balance	7 years 10 months 24 days	7 years 11 months 19 days
Weighted Average Remaining Contractual term outstanding ending balance	7 years 10 months 24 days	7 years 11 months 19 days
Aggregate intrinsic value outstanding beginning balance		$ 11
Aggregate intrinsic value outstanding ending balance	11	19
Number of options vested or expected to vest		2,507
Weighted average exercise price vested or expected to vest		$ 3.76
Weighted average remaining contractual term vested or expected to vest		7 years 9 months 29 days
Aggregate intrinsic value vested or expected to vest		13
Number of options exercisable		1,703
Weighted average exercise price exercisable		$ 5.53
Weighted average remaining contractual term exercisable		6 years 10 months 24 days
Aggregate intrinsic value exercisable

XML

Deferred Revenue (Tables)

6 Months Ended

Jun. 30, 2012

Deferred Revenue [Abstract]

Deferred revenue

Deferred revenue consists of the following at June 30, 2012 and December 31, 2011 (in thousands):

	June 30, 2012		December 31, 2011
Deferred revenue
Unearned meal delivery revenue and digital plans revenue	$	223	$	260
Deferred royalty		—		278
Total deferred revenue	$	223	$	538

XML

Discontinued Operations (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011	Dec. 31, 2011
Nutrio Business revenue and the income from discontinued operations.
Revenue	$ 5,634	$ 5,630	$ 12,579	$ 12,165
Income from discontinued operations, net of tax	9	73	23	324
Accounts receivable, net	4		4		26
Prepaid expenses and other current assets	203		203		344
Current assets held for sale	100		100		120
Accounts payable	2,198		2,198		1,473
Accrued liabilities	691		691		924
Deferred revenue	223		223		538
Current liabilities held for sale	139		139		84
Income Statement [Member]
Nutrio Business revenue and the income from discontinued operations.
Revenue	173	319	351	714
Income from discontinued operations, net of tax	9	73	23	324
Balance Sheets [Member]
Nutrio Business revenue and the income from discontinued operations.
Accounts receivable, net	100		100		119
Prepaid expenses and other current assets					1
Current assets held for sale	100		100		120
Accounts payable	11		11		8
Accrued liabilities	17		17		16
Deferred revenue	111		111		60
Current liabilities held for sale	$ 139		$ 139		$ 84

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (1,214)	$ (1,234)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	140	416
Amortization of intangibles assets	6	6
Provision for (recovery of) bad debt	25	(7)
Stock-based compensation	292	876
Non-cash severance charges		67
Changes in operating assets and liabilities
Accounts receivable	16	223
Inventory, prepaid expenses and other assets	150	307
Restricted cash	(110)	(80)
Accounts payable and accrued liabilities	488	(687)
Deferred revenue	(265)	(484)
Net cash (used in) provided by operating activities	(472)	(596)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and office equipment	(2)	(12)
Net cash used in investing activities	(2)	(12)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock under private placement		1,572
Proceeds from issuance of common stock- private placement		1,962
Common stock issuance costs		(300)
Repayment of capital lease obligations	(2)	(10)
Net cash used in financing activities	(2)	3,224
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	(476)	2,616
Cash and cash equivalents, beginning of period	603	468
Cash and cash equivalents, end of period	127	3,084
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for interest		$ 2

XML

Deferred Revenue

6 Months Ended

Jun. 30, 2012

Deferred Revenue [Abstract]

DEFERRED REVENUE

5. DEFERRED REVENUE

Deferred revenue consists of the following at June 30, 2012 and December 31, 2011 (in thousands):

	June 30, 2012		December 31, 2011
Deferred revenue
Unearned meal delivery revenue and digital plans revenue	$	223	$	260
Deferred royalty		—		278
Total deferred revenue	$	223	$	538

XML

Discontinued Operations (Details Textual) (USD $)	Aug. 06, 2012
Discontinued Operations [Abstract]
Purchase price	$ 255,000

XML

Segment Information (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Revenues from External Customers and Long-Lived Assets [Line Items]
TOTAL REVENUE	$ 5,634	$ 5,630	$ 12,579	$ 12,165
Consolidated loss from operations	(140)	(915)	(1,211)	(1,536)
United states [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
TOTAL REVENUE	5,496	5,476	12,300	11,864
Consolidated loss from operations	(278)	(1,070)	(1,490)	(1,859)
Europe [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
TOTAL REVENUE	138	154	279	301
Consolidated loss from operations	138	155	279	323
U.S. business-to-consumer [Member] | United states [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
TOTAL REVENUE	5,496	5,476	12,300	11,864
Consolidated loss from operations	$ (278)	$ (1,070)	$ (1,490)	$ (1,859)

XML

Revenue Recognition (Tables)

6 Months Ended

Jun. 30, 2012

Revenue Recognition [Abstract]

Revenue Recognition type

Revenue by type is as follows (in thousands):

	Three months ended June  30,				Six months ended June 30,
	2012		2011		2012		2011
Meal delivery	$	5,081	$	4,755	$	11,424	$	10,301
Digital plans		413		669		858		1,439
Royalties		138		154		278		301
Advertising and Ecommerce		2		52		19		124
		5,634		5,630		12,579		12,165