10-Q

United States

Securities and Exchange Commission

Washington, D.C.  20549

FORM 10-Q

þ 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

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to _____________.

001-35067

Commission File Number

SWISHER HYGIENE INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware	27-3819646
(State or Other Jurisdiction of	(I.R.S. Employer Identification No.)
Incorporation or Organization)
4725 Piedmont Row Drive, Suite 400
Charlotte, North Carolina	28210
(Address of Principal Executive Offices)	(Zip Code)

(704) 364-7707

(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 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  o     No þ

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  þ     No o

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. Check one:

Larger Accelerated filer	o	Accelerated filer	o
Non-accelerated filer	þ	Smaller reporting company	o

(Do not check if a smaller reporting company)

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

Number of shares outstanding of each of the registrant's classes of Common Stock at March 11, 2013: 175,157,404 shares of Common Stock, $0.001 par value per share.

SWISHER HYGIENE INC.

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2012

TABLE OF CONTENTS

		Page
PART I.  FINANCIAL INFORMATION
ITEM 1.	Financial Statements		1
	Condensed Consolidated Balance Sheets (Unaudited) at June 30, 2012 and December 31, 2011		1
	Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) for the Three and Six Months Ended June 30, 2012 and 2011		2
	Condensed Consolidated Statement of Stockholders' Equity (Unaudited) for the Six Months Ended June 30, 2012		3
	Condensed Consolidated Statements of Cash Flows (Unaudited) for the Six Months Ended June 30, 2012 and 2011		4
	Notes to Condensed Consolidated Financial Statements (Unaudited)		5
ITEM 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations		17
ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk		31
ITEM 4	Controls and Procedures		32
PART II.  OTHER INFORMATION
ITEM 1.	Legal Proceedings		34
ITEM 1A.	Risk Factors		35
ITEM 6.	Exhibits		37

ii

PART I. FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS

SWISHER HYGIENE INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except share data)

	June 30,			December 31,
	2012			2011
ASSETS
Current assets
Cash and cash equivalents	$	28,857		$	70,508
Accounts receivable (net of allowance for doubtful accounts of $2,463
at June 30, 2012 and $2,185 at December 31, 2011)		24,813			27,747
Inventory		15,779			15,689
Assets of discontinued operations		138,725			141,726
Other assets		4,011			2,619
Total current assets		212,185			258,289
Property and equipment, net		46,346			38,954
Goodwill		107,586			106,036
Other intangibles, net		54,172			56,958
Deferred income tax assets		14,705			14,579
Other noncurrent assets		3,903			3,588
Total assets	$	438,897		$	478,404
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses	$	29,095		$	34,450
Long-term debt and obligations due within one year		13,813			13,566
Advances from shareholder		2,000			2,000
Liabilities of discontinued operations		34,694			33,588
Total current liabilities		79,602			83,604
Long-term debt and obligations		41,251			47,267
Other long-term liabilities		3,516			3,677
Total noncurrent liabilities		44,767			50,944
Commitments and contingencies (Note 15)
Stockholders' equity
Swisher Hygiene Inc. stockholders’ equity
Preferred stock, par value $0.001, authorized 10,000,000 shares, no shares issued and outstanding
at June 30, 3012 and December 31, 2011		-			-
Common stock, par value $0.001, authorized 600,000,000 shares; 175,018,157 and 174,810,082
shares issued and outstanding at June 30, 2012 and December 31, 2011, respectively		175			175
Additional paid-in capital		381,685			378,824
Accumulated deficit		(66,502	)		(34,330	)
Accumulated other comprehensive loss		(852	)		(835	)
Total Swisher Hygiene Inc. stockholders’ equity		314,506			343,834
Non-controlling interest		22			22
Total stockholders' equity		314,528			343,856
Total liabilities and stockholders' equity	$	438,897		$	478,404

See Notes to Condensed Consolidated Financial Statements

1

SWISHER HYGIENE INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS 

 (Unaudited)

(In thousands, except share and per share data)

	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
Revenue
Products	$	53,169		$	26,350		$	104,019		$	41,063
Services		6,744			6,618			13,753			11,986
Franchise and other		269			1,276			563			2,669
Total revenue		60,182			34,244			118,335			55,718
Costs and expenses
Cost of sales		26,832			13,152			52,079			21,394
Route expenses		10,171			7,603			20,766			12,758
Selling, general, and administrative expenses		35,597			17,366			65,566			30,901
Acquisition and merger expenses		42			2,734			162			3,998
Depreciation and amortization		5,188			2,482			10,165			4,604
Total costs and expenses		77,830			43,337			148,738			73,655
Loss from continuing operations		(17,648	)		(9,093	)		(30,403	)		(17,937	)
Other expense, net		(373	)		(3,676	)		(799	)		(5,936	)
Net loss from continuing operations before income taxes		(18,021	)		(12,769	)		(31,202	)		(23,873	)
Income tax (expense) benefit		(8	)		4,403			(87	)		10,133
Net loss from continuing operations		(18,029	)		(8,366	)		(31,289	)		(13,740	)
(Loss) Income from discontinued operations, net of tax		(882	)		275			(883	)		(350	)
Net loss		(18,911	)		(8,091	)		(32,172	)		(14,090	)
Net income attributable to non-controlling interest		-			(1	)		-			(1	)
Net loss attributable to Swisher Hygiene Inc.		(18,911	)		(8,092	)		(32,172	)		(14,091	)
Comprehensive loss
Foreign currency translation adjustment		(13	)		(270	)		(17	)		(28	)
Comprehensive loss	$	(18,924	)	$	(8,362	)	$	(32,189	)	$	(14,119	)
Loss per share from continuing operations
Basic and diluted	$	(0.10	)	$	(0.05	)	$	(0.18	)	$	(0.10	)
Weighted-average common shares used in the
computation of loss per share
Basic and diluted		174,996,323			164,972,640			174,913,264			144,097,478

See Notes to Condensed Consolidated Financial Statements

2

SWISHER HYGIENE INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

(Unaudited)

(In thousands, except share data)

	Common Stock				Additional Paid-in		Accumulated			Accumulated Other Comprehensive			Swisher Hygiene Inc. Stockholders'			Non- Controlling		Total Stockholders'
	Shares		Amount		Capital		Deficit			Loss			Equity			Interest		Equity
Balance at
December 31, 2011		174,810,082	$	175	$	378,824	$	(34,330	)	$	(835	)	$	343,834		$	22	$	343,856
Shares issued for non-controlling interest		10,000		0		37		-			-			37			-		37
Conversion of convertible promissory											-
note payable		10,047		0		37		-						37			-		37
Stock based compensation		-		-		2,617		-			-			2,617			-		2,617
Issuance of contingent earnout shares		90,909		0		170		-			-			170			-		170
Issuance of common stock issued under stock based payment plans		97,119		0		0		-			-			-			-		-
Foreign currency translation adjustment		-		-		-		-			(17	)		(17	)		-		(17	)
Net loss		-		-		-		(32,172	)		-			(32,172	)		0		(32,172	)
Balance at
June 30, 2012		175,018,157	$	175	$	381,685	$	(66,502	)	$	(852	)	$	314,506		$	22	$	314,528

Preferred stock, par value $0.001, authorized 10,000,000 shares, no shares issued and outstanding at June 30, 3012 and December 31, 2011

See Notes to Condensed Consolidated Financial Statements

3

SWISHER HYGIENE INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

	Six Months Ended June 30,
	2012			2011
Cash used in operating activities of continuing operations
Net loss from continuing operations	$	(31,289	)	$	(13,740	)
Adjustments to reconcile net loss from continuing operations to net cash used in operating activities of continuing operations:
Depreciation and amortization		10,165			4,604
Provision for doubtful accounts		2,242			396
Stock based compensation		2,617			1,846
Realized and unrealized net (gain) loss on fair value of financial instruments		(199	)		5,586
Deferred income tax liabilities		(125	)		(10,163	)
Changes in working capital components:
Accounts receivable		961			(3,924	)
Inventory		(4	)		(2,587	)
Other assets and noncurrent assets		(1,706	)		(1,793	)
Accounts payable, accrued expenses, and other current liabilities		(5,267	)		2,899
Cash used in operating activities of continuing operations		(22,605	)		(16,876	)
Cash used in investing activities of continuing operations
Purchases of property and equipment		(11,141	)		(5,234	)
Acquisitions, net of cash acquired		(4,310	)		(85,896	)
Restricted cash		-			5,193
Cash used in investing activities of continuing operations		(15,451	)		(85,937	)
Cash (used in) provided by financing activities of continuing operations
Proceeds from private placements, net of issuance costs		-			191,181
Proceeds from line of credit, net of issuance costs		-			27,661
Payoff of lines of credit		-			(27,779	)
Principal payments on long-term debt and obligations		(6,819	)		(1,177	)
Proceeds from exercise of stock options		-			3,366
Cash (used in) provided by financing activities of continuing operations		(6,819	)		193,252
Discontinued operations:
Net cash provided by operating activities		4,960			4,359
Net cash used in investing activities		(2,260	)		(21,057	)
Net cash provided by (used in) financing activities		524			(205	)
Cash provided by (used in) discontinued operations		3,224			(16,903	)
Net (decrease) increase in cash and cash equivalents		(41,651	)		73,536
Cash and cash equivalents at the beginning of the period		70,508			38,932
Cash and cash equivalents at the end of the period	$	28,857		$	112,468

See Notes to Condensed Consolidated Financial Statements

4

SWISHER HYGIENE INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

NOTE 1 — BUSINESS DESCRIPTION

Principal Operations

Swisher Hygiene Inc. and its wholly-owned subsidiaries (the “Company” or “We” or “Our”) provide essential hygiene and sanitizing solutions to customers throughout much of North America and internationally through its global network of company owned operations, franchises and master licensees. These solutions include essential products and services that are designed to promote superior cleanliness and sanitation in commercial environments, while enhancing the safety, satisfaction and well-being of employees and patrons. These solutions are typically delivered by employees on a regularly scheduled basis and involve providing our customers with: (i) consumable products such as soap, paper, cleaning chemicals, detergents, and supplies, together with the rental and servicing of dish machines and other equipment for the dispensing of those products; (ii) the rental of facility service items requiring regular maintenance and cleaning, such as floor mats, mops, bar towels, and linens; and (iii) manual cleaning of their facilities. The Company serves customers in a wide range of end-markets, with a particular emphasis on the foodservice, hospitality, retail, industrial, and healthcare industries.

Prospectively, we intend to grow in both existing and new geographic markets through a combination of organic and acquisition growth. However, we will continue to focus our investments towards those opportunities which will most benefit our core businesses; chemical and linen processing services. Subsequent to the sale of our Waste segment in November 2012, we will outsource waste and recycling services only through third-party providers. See Note 16, "Subsequent Events" for additional information concerning the sale of our Waste segment.

We have Company-owned operations and franchise operations located throughout the United States and Canada and have entered into seven Master License Agreements covering the United Kingdom, the Netherlands, Singapore, the Philippines, Taiwan, Hong Kong/Macau/China, and Mexico. Franchise revenue from these Master Licensees was $0.5 million for the six months ended June 30, 2012.

NOTE 2 —  DISCONTINUED OPERATIONS

During the quarter ended June 30, 2012, the Company’s Board of Directors determined that the Company would sell its Waste segment. As a result, at June 30, 2012, the Waste segment’s net assets met the “held for sale” criteria in accordance with generally accepted accounting principles, and as a result the Company has disclosed the Waste segment as discontinued operations. The Company has elected to continue the depreciation and amortization of assets pertaining to the discontinued operations since the assets were in use during the periods presented. Accordingly, the Company recorded depreciation expense on these assets within discontinued operations.

Upon the disposition of the Waste segment in the fourth quarter of 2012, the Company realized a gain, which will be recognized in the fourth quarter of 2012. The results of operations and the cash flows related to this segment have been reclassified to discontinued operations in our Condensed Consolidated Statements of Operations and Comprehensive Loss and Condensed Consolidated Statement of Cash Flows for all periods presented. The assets and liabilities of this segment have been reclassified to “Assets of discontinued operations” and “Liabilities of discontinued operations” in our Condensed Consolidated Balance Sheets as of June 30, 2012 and December 31, 2011. The following table presents summarized operating results for these discontinued operations for the three and six months ended June 30, 2012 and 2011:

	Three Months Ended June 30,					Six Months Ended June 30,
	(in thousands)
	2012			2011		2012			2011
Revenue	$	17,470		$	17,672	$	35,395		$	23,482
(Loss) income, net of tax	$	(882	)	$	275	$	(883	)	$	(350	)

5

Any corporate management overhead charged to the Waste segment in prior year filings has been included in continuing operations as the amounts are not expected to change as a result of the sale of the Waste segment.

On March 1, 2011, we closed the acquisition of Choice Environmental Services, Inc. ("Choice") and issued 8,281,920 shares of our common stock to the former shareholders of Choice, assumed $1.7 million of debt, and paid off $39.2 million of Choice debt. In paying the balance on this Choice debt, we incurred a prepayment penalty of $1.5 million which is included in loss from discontinued operations in the Condensed Consolidated Statements of Operations and Comprehensive Loss.

Components of Assets and Liabilities from discontinued operations consist of the following as of June 30, 2012 and December 31, 2011:

	2012		2011
	(in thousands, except per share data)
Current assets:
Accounts Receivable	$	5,839	$	5,646
Inventory		28		88
Other		1,472		803
Total current assets from discontinued operations	$	7,339	$	6,537
Noncurrent assets:
Property and equipment, net	$	31,825	$	32,663
Goodwill		53,324		53,324
Other intangibles, net		45,073		48,308
Other		1,164		894
Total noncurrent assets from discontinued operations	$	131,386	$	135,189
Total assets from discontinued operations	$	138,725	$	141,726
Current liabilities:
Accounts payable, accrued expenses and other current liabilities	$	8,005	$	7,276
Short term obligations		1,038		530
Total current liabilities from discontinued operations	$	9,043	$	7,806
Noncurrent liabilities:
Long term obligations	$	3,856	$	3,991
Deferred tax liabilities		21,795		21,791
Total noncurrent liabilities from discontinued operations	$	25,651	$	25,782
Total liabilities from discontinued operations	$	34,694	$	33,588

Loss per share from discontinued operations for the three and six months ended June 30, 2012 and 2011 is as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012				2011
Loss per share from discontinued operations
Basic and diluted	$	(0.01	)	$	(0.00	)		$	(0.01	)		$	(0.00	)

In connection with the acquisition of Choice, we entered into capital leases that have initial terms of five or ten years with companies owned by the former shareholders of Choice, to finance the cost of leasing office buildings and properties, including warehouses. The fair value of these leased properties and the related capital lease obligations of $2.9 million and $2.3 million are included in assets from discontinued operations and liabilities from discontinued operations, respectively.

The Company completed the sale of its Waste segment on November 15, 2012. See further discussion of this transaction in Note 16, “Subsequent Events.”

6

NOTE 3 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

The accompanying Condensed Consolidated Financial Statements have been prepared in accordance with United States generally accepted accounting principles ("GAAP") for interim financial information and in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X promulgated by the Securities and Exchange Commission ("SEC") and therefore do not contain all of the information and footnotes required by GAAP and the SEC for annual financial statements. The Company's Condensed Consolidated Financial Statements reflect all adjustments that management believes are necessary for the fair presentation of their financial condition, results of operations, and cash flows for the periods presented. The information at December 31, 2011 in the Company's Condensed Consolidated Balance Sheets included in this quarterly report was derived from the audited Consolidated Balance Sheets included in the Company's Annual Report on Form 10-K for the year ended December 31, 2011 filed with the SEC on February 26, 2013 (the "2011 Form 10-K"). This quarterly report should be read in conjunction with the 2011 Form 10-K.

All material intercompany balances and transactions have been eliminated in consolidation. Certain reclassifications have been made to conform prior periods to the current year presentation, with no effect on net income.

Tabular information, other than share and per share data, is presented in thousands of dollars.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses and disclosure of contingent assets and liabilities at the date of the Condensed Consolidated Financial Statements. Actual results could differ from those estimates and such differences could affect the results of operations reported in future periods.

The Company's significant accounting policies are discussed in Note 2 of the Notes to Consolidated Financial Statements in our 2011 Form 10-K. Any significant changes to those policies or new significant policies are described below.

Adoption of Newly Issued Accounting Pronouncements

Fair Value:  In May 2011, the FASB issued updated accounting guidance on fair value measurements. The updated guidance resulted in common fair value measurement and disclosure requirements between GAAP and International Financial Reporting Standards ("IFRS"). The Company adopted this guidance effective January 1, 2012. The adoption did not have a material impact on the disclosures of the Company’s consolidated financial information.

Comprehensive Income:  In June 2011 and subsequently amended in December 2011, the FASB issued final guidance on the presentation of comprehensive income. Under the newly issued guidance, net income and comprehensive income may only be presented either as one continuous statement or in two separate but consecutive statements. The Company adopted this guidance effective January 1, 2012, with net loss and comprehensive loss shown as one continuous statement.

NOTE 4 — ACQUISITIONS

During the six months ended June 30, 2012, the Company acquired four independent businesses and purchased the remaining non-controlling interest in one of its subsidiaries. The results of operations of these acquisitions have been included in the Company's Condensed Consolidated Statements of Operations and Comprehensive Loss since their respective acquisition dates. None of these acquisitions were significant individually or in the aggregate to the Company's consolidated financial results and therefore, supplemental pro forma financial information is not presented.

7

The following table summarizes the preliminary allocation of the purchase price of these acquisitions based on the fair value of the acquired assets and assumed liabilities:

Net assets acquired:
Accounts receivable	$	263
Inventory		86
Property and equipment		2,079
Other intangibles		1,532
Accounts payable, accrued expenses and other liabilities		(42	)
Total net assets acquired		3,918
Goodwill		1,550
Total purchase price		5,468
Less: debt issued or assumed		(1,121	)
Less: issuance of shares		(37	)
Cash Paid	$	4,310

Acquisition and merger expenses include costs for third party due diligence, legal, accounting and other professional services fees directly-related to the acquisition of four independent companies and the remaining non-controlling interest in one subsidiary during the six months ended June 30, 2012.

The purchase price allocations for these acquisitions are preliminary and subject to changes in the fair value of assets and liabilities as of the effective dates.

The Company made no acquisitions during the three months ended June 30, 2012.

NOTE 5 — GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill and other intangible assets have been recognized in connection with the Company's acquisitions and substantially all of the balance is expected to be fully deductible for income tax purposes over 15 years. Changes in the carrying amount of goodwill and other intangibles during the six months ended June 30, 2012 were as follows:

	Goodwill			Customer Relationships			Non-Compete Agreements			Trademarks			Formulas
Balance at
December 31, 2011	$	106,906		$	43,140		$	6,947		$	1,977		$	4,894
Accumulated Impairment Losses		(870	)		-			-			-			-
Total		106,036			43,140			6,947			1,977			4,894
Acquisition/Additions		1,550			1,276			126			130			-
Amortization		-			(3,040	)		(1,023	)		(114	)		(125	)
Foreign currency translation					(11	)		(5	)		-
Balance at
June 30, 2012	$	107,586		$	41,365		$	6,045		$	1,993		$	4,769

The fair value of the customer relationships acquired were originally valued using future discounted cash flows expected to be generated from those customers. These customer relationships and contracts will be amortized on a straight-line basis over five to ten years, which is primarily based on historical customer attrition rates and lengths of contracts. The fair value of the non-compete agreements will be amortized on a straight-line basis over the length of the agreements, typically not exceeding five years. The fair value of formulas is amortized on a straight-line basis over twenty years. Trademarks and tradenames are generally indefinite lived intangibles with no amortization. In instances where there is a finite life remaining on a particular trademark or tradename, the Company amortizes them on a straight-line basis over this period. Total accumulated amortization of intangibles was $17.5 million and $13.2 million as of June 30, 2012 and December 31, 2011, respectively.

8

NOTE 6 — INVENTORY

Inventory is comprised of the following components at June 30, 2012 and December 31, 2011:

Finished goods	$	11,867	$	12,231
Raw materials		3,374		3,105
Work in process		538		353
Total	$	15,779	$	15,689

NOTE 7 — STOCKHOLDERS’ EQUITY

Changes in stockholders’ equity for the six months ended June 30, 2012 consisted of the following:

Balance at December 31, 2011	$	343,856
Conversion of convertible promissory note payable		37
Stock based compensation		2,617
Shares issued for non-controlling interest		37
Issuance of contingent earnout shares		170
Foreign currency translation adjustment		(17	)
Net loss		(32,172	)
Balance at June 30, 2012	$	314,528

Acquisitions and Asset Purchases

We issued a total of 10,000 shares of our common stock in connection with the purchase of the remaining non-controlling interest in a subsidiary during the six months ended June 30, 2012. Our stock price was at a weighted-average price of $3.68 at the time these shares were issued.

Stock Based Compensation

Stock based compensation is the result of the recognition of the fair value of stock based compensation on the date of grant over the service period for which the awards are expected to vest.

NOTE 8 — LONG-TERM DEBT AND OBLIGATIONS

Long-term obligations consisted of the following as of June 30, 2012 and December 31, 2011:

	June 30,			December 31,
	2012			2011
Line of credit agreement dated March 2011 and maturing in July 2013,
interest rate of 2.7% at June 30, 2012.	$	25,000		$	25,000
Acquisition notes payables		5,867			7,675
Convertible promissory notes, 4.0% and matures at various dates through 2016		11,069			12,596
Capitalized lease obligations		13,128			15,562
Total debt and obligations		55,064			60,833
Long-term debt and obligations due within one year		(13,813	)		(13,566	)
Long-term debt and obligations	$	41,251		$	47,267

9

Revolving Credit Facilities

In March 2011, we entered into a $100.0 million senior secured revolving Credit Facility (the "Credit Facility"), which replaced the Company’s former credit facilities. Under the Credit Facility, the Company had an initial borrowing availability of $32.5 million, which increased to the fully committed $100.0 million upon delivery of our unaudited quarterly financial statements for the quarter ended March 31, 2011 and satisfaction of certain financial covenants regarding leverage and coverage ratios and a minimum liquidity requirement, which requirements we met as of March 31, 2011.

Borrowings under the Credit Facility were secured by a first priority lien on substantially all of our existing and thereafter acquired assets, including $25.0 million of cash on borrowings in excess of $75.0 million. Furthermore, borrowings under the facility were guaranteed by all of our domestic subsidiaries and secured by substantially all the assets and stock of our domestic subsidiaries and substantially all of the stock of our foreign subsidiaries. Interest on borrowings under the Credit Facility would typically accrue at London Interbank Offered Rate ("LIBOR") plus 2.5% to 4.0%, depending on the ratio of senior debt to consolidated earnings before interest, taxes, depreciation and amortization ("EBITDA") (as such term is defined in the new Credit Facility, which includes specified adjustments and allowances authorized by the lender, as provided for in such definition). We also had the option to request swingline loans and borrowings using a base rate. Interest was payable monthly or quarterly on all outstanding borrowings. The Credit Facility was set to mature on July 31, 2013.

Borrowings and availability under the Credit Facility were subject to compliance with financial covenants, including achieving specified consolidated EBITDA levels, which depends on the success of our acquisition strategy, and maintaining leverage and coverage ratios and a minimum liquidity requirement. The Credit Facility also placed restrictions on our ability to incur additional indebtedness, make certain acquisitions, create liens or other encumbrances, sell or otherwise dispose of assets, and merge or consolidate with other entities or enter into a change of control transaction. Failure to achieve or maintain the financial covenants in the Credit Facility or failure to comply with one or more of the operational covenants could have adversely affected our ability to borrow monies and could have resulted in a default under the Credit Facility. The Credit Facility was subject to other standard default provisions.

In August 2011, the Company entered into an amendment to the Credit Facility that modified the covenants, including an increase in permitted indebtedness to $40.0 million. Failure to achieve or maintain the financial covenants in the Credit Facility or failure to comply with one or more of the operational covenants could have adversely affected our ability to borrow monies and could have resulted in a default under the Credit Facility. The Credit Facility was subject to other standard default provisions.

During 2012, we amended our Credit Facility with Wells Fargo Bank, National Association on each of April 12, 2012, May 15, 2012, June 28, 2012, July 30, 2012, August 31, 2012, September 27, 2012, and October 31, 2012, in each case, primarily to extend the dates by which we were required to file our 2011 Form 10-K and Forms 10-Q for the quarters ended March 31, 2012, June 30, 2012, and September 30, 2012 and to avoid potential defaults for not timely filing these reports. In addition, the August 31, 2012 amendment reduced the Company’s maximum borrowing limit to $50.0 million, provided that the Company met certain borrowing base requirements. The September 27, 2012 amendment further reduced the Company’s maximum borrowing limit to $25.0 million, provided that the Company met certain borrowing base requirements. The October 31, 2012 amendment required the Company to place certain amounts in the collateral account under the sole control of the administrative agent to meet the Company’s unencumbered liquidity requirements. In connection with the sale of our Waste segment on November 15, 2012, we paid off and terminated the Credit Facility.

Convertible Promissory Notes

During the six months ended June 30, 2012 and in connection with certain acquisitions, the Company issued convertible promissory notes with an aggregate principal value of $1.1 million. The notes have a four percent interest rate and are convertible by the Company based on the trading price the day before conversion limited to a maximum aggregate of 320,352 shares of our common stock. The Company may convert the principal and interest into shares of common stock at any time subject to the listing of the common stock on NASDAQ or another national exchange.

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NOTE 9 — FAIR VALUE MEASUREMENTS AND FINANCIAL INSTRUMENTS

The Company determines the fair value of certain assets and liabilities based on assumptions that market participants would use in pricing the assets or liabilities. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, or the "exit price." The Company utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value and gives precedence to observable inputs in determining fair value. The following levels were established for each input:

Level 1: "Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets."

Level 2: "Include other inputs that are observable for the asset or liability either directly or indirectly in the marketplace."

Level 3: "Unobservable inputs for the asset or liability."

The fair value of the above convertible promissory notes issued as a part of business combinations is based primarily on a Black-Scholes pricing model. The significant management assumptions and estimates used in determining the fair value included the expected term and volatility of our common stock. The expected volatility was based on an analysis of industry peer's historical stock price over the term of the notes as the Company did not have sufficient history of its own stock volatility, which was estimated at approximately 25%. Subsequent changes in the fair value of these instruments were recorded in other expense, net on the Condensed Consolidated Statements of Operations and Comprehensive Loss. Future movement in the market price of our stock could significantly change the fair value of these instruments and impact our earnings.

The convertible promissory notes are Level 3 financial instruments. The Company has no Level 1 or Level 2 financial instruments.

In addition, during 2011, the Company issued an earn out that was to be settled in up to 90,909 shares held in escrow within one year from the date of acquisition or once the acquired business’s revenue achieved an agreed upon level. The number of shares that would be released from escrow varied based on the achievement of agreed upon revenue metrics. In April 2012, the Company released from escrow all 90,909 shares to the sellers.

The following table is a reconciliation of changes in fair value of the notes that are marked to market each subsequent reporting period for the six months ended June 30, 2012:

Balance at December 31, 2011	$	3,129
Issuance of convertible promissory notes		-
Settlement/conversion of convertible promissory notes		(998	)
Net gains included in earnings		(199	)
Balance at June 30, 2012	$	1,932
The amount of gains included in earnings attributable to liabilities still held at the end of the period	$	66

The above balance represents the value of convertible notes that are subject to continual remeasurement and mark to market accounting and is included in the $11.0million balance for all of the Company’s convertible promissory notes at June 30, 2012.

Financial Instruments

The Company’s financial instruments, which may expose the Company to concentrations of credit risk, include cash and cash equivalents, accounts receivable, accounts payable, and debt. Cash and cash equivalents are maintained at financial institutions. The carrying amounts of cash and the current portion of accounts receivable and accounts payable approximate fair value due to the short maturity of these instruments. The fair value of the Company’s debt is estimated based on the current borrowing rates available to the Company for bank loans with similar terms and maturities, and approximates the carrying value of these liabilities.

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NOTE 10 — OTHER EXPENSE, NET

Other expense, net consisted of the following:

	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
Interest income	$	0		$	81		$	0		$	97
Interest expense		(531	)		(334	)		(1,112	)		(684	)
Realized and unrealized net gain (loss) on fair value instruments		170			(3,625	)		199			(5,586	)
Foreign currency		(43	)		128			(40	)		163
Other		31			74			154			74
Total other expense, net	$	(373	)	$	(3,676	)	$	(799	)	$	(5,936	)

NOTE 11 — SUPPLEMENTAL CASH FLOW INFORMATION

The following table includes supplemental cash flow information, including non-cash investing and financing activity for the six months ended June 30, 2012 and 2011.

	2012		2011
Cash paid for interest	$	1,236	$	464
Cash received from interest	$	-	$	167
Conversion of promissory notes	$	37	$	21,195
Issuance of shares for acquisitions,
property and equipment	$	37	$	94,027
Debt issued and assumed in business combinations	$	1,121	$	10,321

NOTE 12 — LOSS PER SHARE

Net loss attributable per share is computed by dividing net loss by the weighted-average number of common shares outstanding during the period. The following were not included in the computation of diluted loss per share for the six months ended June 30, 2012 and 2011 as their inclusion would be anti-dilutive:

●   Warrants to purchase 5.5 million shares of common stock at $0.50 per share that were exercised in May 2011 for the period prior to exercise during 2011.

●   5,975,866 shares of common stock underlying outstanding stock options and restricted stock units.

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NOTE 13 — INCOME TAXES

As a result of the merger with CoolBrands International, Inc. on November 2, 2010, the Company converted from a corporation taxed under the provisions of Subchapter S of the Internal Revenue Code to a tax-paying entity and accounts for income taxes under the asset and liability method. For the six months ended June 30, 2012, the Company has recorded an estimate for income taxes based on the Company's projected net loss for the full twelve month period ending December 31, 2012 and an effective income tax rate of approximately 1.0%. The amount of income tax expense recorded for the period is based on the pre-tax net loss for the six months ended June 30, 2012.

In addition, during the six months ended June 30, 2012, management has concluded that it is not likely that the Company will realize the benefits of all of its deferred tax assets and as a result, believes a full valuation allowance will be required at December 31, 2012. This is primarily due to the projected net operating losses and the projected net deferred tax asset position created by the sale of the Waste segment on November 15, 2012. Therefore, the Company has not recognized a tax benefit as it relates to the current loss for the period ended June 30, 2012. It should also be noted that the Company does not consider the tax deferred liabilities related to indefinite lived intangible assets when determining the need for a valuation allowance.

NOTE 14 — RELATED PARTY TRANSACTIONS

For the six months ended June 30, 2012 and 2011, the Company incurred $0.1 million and $0.0 million, respectively, for training course development and utilization of the delivery platform from a company, the majority of which is owned by a partnership in which a shareholder and another director have a controlling interest.

In August 2010, the Company borrowed $2.0 million for working capital purposes, pursuant to an unsecured note payable to one of its shareholders that bears interest at the short-term Applicable Federal Rate. The balance as of June 30, 2012 and December 31, 2011 is $2.0 million. The note was paid in full following the sale of Choice in November 2012, which is discussed more fully in Note 16 “Subsequent Events.”

During the three months ended June 30, 2012 and 2011, the Company purchased $2.0 million and $0.0 million, respectively, of chemical products from an entity owned, in part, by a Company employee. During the six months ended June 30, 2012 and 2011, purchases were $3.8 million and $0, respectively. At June 30, 2012 and December 31, 2011, the Company has $0.5 million and $1.1 million included in accounts payable to this entity.

At June 30, 2012 and December 31, 2011, the Company had receivable balances of $0.3 million and $2.1 million, respectively, from former owners of two acquired businesses. Subsequent to June 30, 2012, a substantial majority of this balance has been collected.

The Company is obligated to make lease payments pursuant to certain real property and equipment lease agreements with employees that were former owners of acquired companies. Payments during the three months ended June 30, 2012 and 2011 to these companies totaled $0.4 million and $0.2 million, respectively. Payments during the six months ended June 30, 2012 and 2011 were $0.8 million and $0.3 million, respectively.

At December 31, 2011, the Company had a liability of $0.2 million related to the funding of the 401(k) Profit Sharing Plan of an acquisition. The amount was paid in full by June 30, 2012.

In connection with the acquisition of Choice, we entered into capital leases that have initial terms of five or ten years with companies owned by shareholders of Choice, to finance the cost of leasing office buildings and properties, including warehouses. The fair value of these leased properties of $2.9 million is included in assets from discontinued operations and is being depreciated over the terms of the respective leases. Capital lease obligations of $2.3 million are included in liabilities from discontinued operations as of June 30, 2012 and December 31, 2011, respectively. The Company sold its Waste segment during the fourth quarter of 2012, as more fully described in Note 16 “Subsequent Events” and in connection therewith, transferred all remaining capital lease obligations to the buyers.

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NOTE 15 — COMMITMENTS AND CONTINGENCIES

The Company is subject to legal proceedings and claims which arise in the ordinary course of its business. Although occasional adverse decisions (or settlements) may occur, the Company believes that the final disposition of such matters will not have a material adverse effect on the Company's financial position, results of operations or cash flows.

Securities Litigation

There have been six shareholder lawsuits filed in federal courts in North Carolina and New York asserting claims relating to the Company's March 28, 2012 announcement regarding the Company's Board conclusion that the Company's previously issued interim financial statements for the quarterly periods ended March 31, 2011, June 30, 2011 and September 30, 2011, and the other financial information in the Company's quarterly reports on Form 10-Q for the periods then ended, should no longer be relied upon and that an internal review by the Company's Audit Committee primarily relating to possible adjustments to the Company's financial statements was ongoing.

On March 30, 2012, a purported Company shareholder commenced a putative securities class action on behalf of purchasers and sellers of the Company's common stock in the U.S. District Court for the Southern District of New York against the Company, the former President and Chief Executive Officer ("former CEO"), and the former Vice President and Chief Financial Officer ("former CFO"). The plaintiff asserted claims alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 based on alleged false and misleading disclosures in the Company's public filings. In April and May 2012, four more putative securities class actions were filed by purported Company shareholders in the U.S. District Court for the Western District of North Carolina against the same set of defendants. The plaintiffs in these cases have asserted claims alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") based on alleged false and misleading disclosures in the Company's public filings. In each of the putative securities class actions, the plaintiffs seek damages for losses suffered by the putative class of investors who purchased Swisher common stock.

On May 21, 2012, a shareholder derivative action was brought against the Company's former CEO and former CFO and the Company's directors for alleged breaches of fiduciary duty by another purported Company shareholder in the U.S. District Court for the Southern District of New York. In this derivative action, the plaintiff seeks to recover for the Company damages arising out of a possible restatement of the Company's financial statements.

On May 30, 2012, the Company, and its former CEO and former CFO filed a motion with the United States Judicial Panel on Multidistrict Litigation ("MDL Panel") to centralize all of the cases in the Western District of North Carolina by requesting that the actions filed in the Southern District of New York be transferred to the Western District of North Carolina.

In light of the motion to centralize the cases in the Western District of North Carolina, the Company, and its former CEO and former CFO requested from both courts a stay of all proceedings pending the MDL Panel's ruling. On June 4, 2012, the U.S. District Court for the Southern District of New York adjourned all pending dates in the cases in light of the motion to transfer filed before the MDL Panel. On June 13, 2012, the U.S. District Court for the Western District of North Carolina issued a stay of proceedings pending a ruling by the MDL Panel.

On August 13, 2012, the MDL Panel granted the motion to centralize, transferring the actions filed in the Southern District of New York to the Western District of North Carolina. In response, on August 21, 2012, the Western District of North Carolina issued an order governing the practice and procedure in the actions transferred to the Western District of North Carolina as well as the actions originally filed there.

On October 18, 2012, the Western District of North Carolina held an Initial Pretrial Conference at which it appointed lead counsel and lead plaintiffs for the securities class actions, and set a schedule for the filing of a consolidated class action complaint and defendants' time to answer or otherwise respond to the consolidated class action complaint. The Western District of North Carolina stayed the derivative action pending the outcome of the securities class actions.

Derivative Litigation

On April 11, 2012 and May 11, 2012, the Board received demand letters (the “Demands”) from two of the Company’s purported stockholders. In general, the Demands ask the Board to undertake an independent investigation into potential violations of Delaware and federal law relating to the Company's March 28, 2012 disclosure that its previously issued financial results for the first, second and third fiscal quarters of 2011 should no longer be relied upon, and to initiate claims against responsible parties and/or implement therapeutic changes as needed. The Board has not yet made a determination regarding its response to the Demands.

Other Related Matters

The Company has been contacted by the staff of the Atlanta Regional Office of the SEC and by the United States Attorney's Office for the Western District of North Carolina (the "U.S. Attorney's Office") after publicly announcing the Audit Committee's internal review and the delays in filing our periodic reports. The Company has been asked to provide information about these matters on a voluntary basis to the SEC and the U.S. Attorney's Office. The Company is fully cooperating with the SEC and the U.S. Attorney's Office. Any action by the SEC, the U.S. Attorney's Office or other government agency could result in criminal or civil sanctions against the Company and/or certain of its current or former officers, directors or employees.

During 2011, we entered into a series of arm's length securities purchase agreements to sell an aggregate of 21,857,143 shares of our common stock to certain funds of a global financial institution (the "Private Placements"). We agreed to use our commercially reasonable efforts to file a resale registration statement with the SEC relating to the shares of common stock sold in the Private Placements. If the registration statement was not filed or declared effective within specified time periods, the investors would have been, or if the registration statement ceased to remain effective for a period of time exceeding a sixty day grace period, the investors would be entitled to receive monthly liquidated damages in cash equal to one percent of the original offering price for each share purchased in the private placement that at such time could not be sold by the investor, with an interest rate of one percent per month accruing daily for liquidated damages not paid in full within ten business days. On August 12, 2011, the SEC declared effective, a resale registration statement relating to the 21,857,143 shares issued in the Private Placements. The registration statement, including post-effective amendments to the registration statement, remained effective through April 12, 2012. As a result of not timely filing our 2011 Form 10-K, the registration statement relating to shares issued in the Private Placements is not effective, and as such we may be subject to liability under the penalty provision.

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In connection with a distribution agreement entered into in December 2010, the Company provided a guarantee that the distributor's operating cash flows associated with the agreement would not fall below certain agreed-to minimums, subject to certain pre-defined conditions, over the ten year term of the distribution agreement. If the distributor's annual operating cash flow does fall below the agreed-to annual minimums, the Company will reimburse the distributor for any such short fall up to a pre-designated amount. No value was assigned to the fair value of the guarantee at June 30, 2012 and December 31, 2011 based on a probability assessment of the projected cash flows. Management currently does not believe that it is probable that any amounts will be paid under this agreement and thus there is no amount accrued for the guarantee in the Condensed Consolidated Financial Statements. This liability would be considered a Level 3 financial instruments given the unobservable inputs used in the projected cash flow model. See Note 9, "Fair Value Measurements and Financial Instruments" for the fair value hierarchy.

The Company also entered into a Manufacturing and Supply Agreement (the "Cavalier Agreement") with another plant in conjunction with its acquisition of Sanolite and Cavalier in July of 2011. The agreement, which was scheduled to expire on December 31, 2012, was extended for an additional two year period with an automatic 18-month term. The agreement provides for pricing adjustments, up or down, on the first of each month based on the vendor's actual average product costs incurred during the prior month. Additional product payments made by the Company due to the vendors pricing adjustment as a result of this agreement have not been significant and have not represented costs materially above the going market price for such product.

In June 2012, a fire occurred at a linen warehouse of one of the Company’s subsidiaries in Tampa, Florida.  The fire heavily damaged the leased building and its contents, requiring the building to be demolished.  Shortly after the fire, we were able to resume services to our customers through outsourcing arrangements and business interruption was minimal.  We maintain comprehensive general liability and property insurance, including business interruption insurance.  In November 2012, we reached agreement with our insurance carrier and settled the claims.  In accordance with generally accepted accounting principles, we expect to record a gain in other income (expense) on the involuntary conversion of assets in the fourth quarter of 2012. At June 30, 2012, the above events resulted in a receivable of $0.7 million recorded in other current assets.

NOTE 16 — AUDIT COMMITTEE REVIEW AND SUBSEQUENT EVENTS

Audit Committee Review and Restatements

On March 21, 2012, Swisher's Board of Directors (the "Board") determined that the Company's previously issued interim financial statements for the quarterly periods ended June 30, 2011 and September 30, 2011, and the other financial information in the Company's quarterly reports on Form 10-Q for the periods then ended should no longer be relied upon. Subsequently, on March 27, 2012, the Audit Committee concluded that the Company's previously issued interim financial statements for the quarterly period ended March 31, 2011 should no longer be relied upon. The Board and Audit Committee made these determinations in connection with the Audit Committee's then ongoing review into certain accounting matters. We refer to the interim financial statements and the other financial information described above as the "Prior Financial Information."

The Audit Committee initiated its review after an informal inquiry by the Company and its independent auditor regarding a former employee's concerns with the application of certain accounting policies. The Company first initiated the informal inquiry by requesting that both the Audit Committee and the Company’s independent auditor look into the matters raised by the former employee. Following this informal inquiry, the Company’s senior management and its independent auditor advised the Chairman of the Company’s Audit Committee regarding the matters. Subsequently, the Audit Committee determined that an independent review of the matters presented by the former employee should be conducted. During the course of its independent review, and due in part to the significant number of acquisitions made by the Company, the Audit Committee determined that it would be in the best interest of the Company and its stockholders to review the accounting entries relating to each of the 63 acquisitions made by the Company during the year ended December 31, 2011.

On May 17, 2012, Swisher announced that the Audit Committee had substantially completed the investigative portion of its internal review. In connection with substantial completion of its internal review, the Audit Committee recommended to the Board that the Company's Chief Financial Officer and two additional senior accounting personnel be separated from the Company as a result of their conduct in connection with the preparation of the Prior Financial Information. Following this recommendation, the Board determined that these three accounting personnel be separated from the Company, effective immediately. In making these employment determinations, the Board did not identify any conduct by these employees intended for or resulting in any personal benefit.

On May 17, 2012, the Company further announced that it had commenced a search process for a new Chief Financial Officer and that Steven Berrard, then the Company’s President and Chief Executive Officer, would also serve as the Company’s interim Chief Financial Officer.

On February 19, 20, and 21, 2013, respectively, the Company filed amended quarterly reports on Form 10-Q/A for the quarterly periods ended March 31, 2011, June 20, 2011, and September 30, 2011 (the "Affected Periods"), including restated financial statements for the Affected Periods, to reflect adjustments to previously reported financial information.

On February 27, 2013, the Company provided the NASDAQ Hearings Panel (the "Panel") an update on the Company’s compliance efforts and requested a further extension of time to become current in the filing of its periodic reports. The Company requested an extension through March 15, 2013 to file its Form 10-Qs for the quarterly periods ended March 31, 2012, June 30, 2012 and September 31, 2012 (collectively, the “2012 Form 10-Qs”). Additionally, the Company requested an extension through April 30, 2013 to file its Form 10-K for the year ended December 31, 2012 (the “2012 Form 10-K”).

On February 28, 2013, the Company received a letter from the Panel granting the Company continued listing on NASDAQ through March 15, 2013, provided the Company files the 2012 Form 10-Qs by March 15, 2013. The Panel also advised the Company that it will retain jurisdiction to make a determination whether to continue listing the Company through the filing of the 2012 Form 10-K.

During 2012, we incurred costs in excess of $6.0 million directly attributable to the Audit Committee’s investigation process. In addition, during 2012 and through February 15, 2013, we have incurred approximately $12.0 million in additional review-related expenses, including fees for additional audit work, accounting review, IT consulting, legal representation, and valuation services.

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Sale of Waste Segment

On November 15, 2012, the Company completed a stock sale of Choice and other acquired businesses that comprise the Waste segment, to Waste Services of Florida, Inc. for $123.3 million. The stock purchase agreement contains earn-out provisions that could provide additional sale proceeds to the Company of $1.8 million upon achievement of a predetermined revenue target and is also subject to customary purchase price adjustments, including revenue and EBITDA metrics. Ten percent of the purchase price is subject to a holdback and adjustment upon delivery of audited financial statements to the buyer.

As a result of the sale of Choice and all of its operations in the Waste segment, the Company operates in one business segment, Hygiene, for fiscal year 2012 filings. In connection with the acquisition of Choice on March 1, 2011, the Company recorded deferred tax liabilities that allowed the Company to make a determination that the valuation allowance for the deferred tax asset of $2.4 million recorded at December 31, 2010 was no longer necessary at March 31, 2011. Upon the sale of Choice in the fourth quarter of 2012 and with our history of operating losses, a valuation allowance is projected to be necessary in 2012 as discussed in Note 13, "Income Taxes."

Revolving Credit Facility

During 2012, we amended our Credit Facility with Wells Fargo Bank, National Association on each of April 12, 2012, May 15, 2012, June 28, 2012, July 30, 2012, August 31, 2012, September 27, 2012, and October 31, 2012, in each case, primarily to extend the dates by which we were required to file our 2011 Form 10-K and Forms 10-Q for the quarters ended March 31, 2012, June 30, 2012 and September 30, 2012 and to avoid potential defaults for not timely filing these reports. In addition, the August 31, 2012 amendment reduced the Company’s maximum borrowing limit to $50.0 million, provided that the Company met certain borrowing base requirements. The September 27, 2012 amendment further reduced the Company’s maximum borrowing limit to $25.0 million, provided that the Company met certain modified borrowing base requirements. The October 31, 2012 amendment required the Company to place certain amounts in a collateral account under the sole control of the administrative agent to meet the Company’s unencumbered liquidity requirements. In connection with the sale of our Waste segment on November 15, 2012, we paid off the Credit Facility, which resulted in the termination of the Credit Facility.

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ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 

You should read the following discussion and analysis in conjunction with our unaudited Condensed Consolidated Financial Statements and the related notes thereto included in Item 1 of this Quarterly Report on Form 10-Q as well as our "Selected Financial Data" and our audited Consolidated Financial Statements and the related notes thereto included in Item 6 and Item 8, respectively, of our Annual Report on Form 10-K for the year ended December 31, 2011 (the "2011 Form 10-K"). In addition to historical consolidated financial information, this discussion and analysis contains forward-looking statements that reflect our plans, estimates, and beliefs. Actual results could differ from these expectations as a result of certain risk factors, including those described under Item 1A, "Risk Factors," of our 2011 Form 10-K.

Business Overview and Outlook

Swisher Hygiene Inc. provides essential hygiene and sanitizing solutions to customers throughout much of North America and internationally through its global network of company owned operations, franchises and master licensees. These solutions include essential products and services that are designed to promote superior cleanliness and sanitation in commercial environments, while enhancing the safety, satisfaction and well-being of employees and patrons. These solutions are typically delivered by employees on a regularly scheduled basis and involve providing our customers with: (i) consumable products such as soap, paper, cleaning chemicals, detergents, and supplies, together with the rental and servicing of dish machines and other equipment for the dispensing of those products; (ii) the rental of facility service items requiring regular maintenance and cleaning, such as floor mats, mops, bar towels, and linens; and (iii) manual cleaning of their facilities. We serve customers in a wide range of end-markets, with a particular emphasis on the foodservice, hospitality, retail, industrial, and healthcare industries.

Prospectively, we intend to grow in both existing and new geographic markets through a combination of organic and acquisition growth. However, we will continue to focus our investments towards those opportunities which will most benefit our core businesses, chemical and linen processing services. Subsequent to the sale of our Waste segment in November 2012, we will offer outsourced waste and recycling services only through third-party providers.

See Note 16, “Subsequent Events” in the Notes to Condensed Consolidated Financial Statements for significant developments subsequent to June 30, 2012.

Segments

On March 1, 2011, the Company completed its acquisition of Choice, a Florida based company that provides a complete range of solid waste and recycling collection, transportation, processing and disposal services. As a result of the acquisition of Choice, the Company operated in two segments: Hygiene and Waste. During the quarter ended June 30, 2012, the Company’s Board of Directors determined to sell its Waste segment. On November 15, 2012, the Company completed a stock sale of Choice and other acquired businesses that comprise the Waste segment to Waste Services of Florida, Inc. for $123.3 million. As discussed in Note 2 to the Condensed Consolidated Financial Statements, the Company has applied discontinued operations accounting treatment and disclosures for this transaction. See Note 2, “Discontinued Operations” and Note 16, “Subsequent Events” of the Notes to the Condensed Consolidated Financial Statements for further information. As a result of the sale of the Waste segment, the Company’s continuing operations are classified in one business segment, Hygiene, for fiscal year 2012.

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Acquisitions

During the six months ended June 30, 2012, the Company acquired four independent businesses and the remaining non-controlling interest in one of its subsidiaries. Aggregate consideration included cash of $4.3 million, the issuance of common stock at a fair value of $37,000 and assumed debt of $1.1 million. The Company made no acquisitions during the three months ended June 30, 2012.

See Note 4, "Acquisitions" of the Notes to Condensed Consolidated Financial Statements for a further description of the acquisitions.

Sale of Waste Segment

On November 15, 2012, the Company completed a stock sale of Choice and other acquired businesses that comprise the Waste segment to Waste Services of Florida, Inc. for $123.3 million. The stock purchase agreement contains earn-out provisions that could provide additional sale proceeds to the Company of $1.8 million upon achievement of a predetermined revenue target and is also subject to customary purchase price adjustments, including revenue and EBITDA metrics. Ten percent of the purchase price is subject to a holdback and adjustment upon delivery of audited financial statements to the buyer.

As a result of the sale of Choice and all of its operations in the Waste segment, the Company operates in one business segment, Hygiene, for fiscal year 2012 filings. In connection with the acquisition of Choice on March 1, 2011, the Company recorded deferred tax liabilities that allowed the Company to make a determination that the valuation allowance for the deferred tax asset of $2.4 million recorded at December 31, 2010 was no longer necessary at March 31, 2011. Upon the sale of Choice in the fourth quarter of 2012 and with our history of operating losses, a valuation allowance is projected to be necessary in 2012, as discussed in Note 13 "Income Taxes" of the Notes to Condensed Consolidated Financial Statements.

Acquisition and Merger Expenses

Acquisition and merger expenses include costs directly-related to the acquisition of four independent companies and the remaining non-controlling interest in one of its subsidiaries during the six months ended June 30, 2012. These costs include costs directly related to acquisitions and the merger and include third party due diligence, legal, accounting and professional service expenses.

Critical Accounting Policies and Estimates

The preparation of condensed consolidated financial statements in conformity with United States generally accepted accounting principles involves the use of estimates and assumptions that affect the recorded amounts of assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. As such, management is required to make certain estimates, judgments and assumptions that are believed to be reasonable based on the information available. These estimates and assumptions affect the reported amount of assets and liabilities, revenue and expenses, and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements. Actual results may differ from these estimates under different assumptions or conditions. These critical accounting policies have not changed since the filing of our 2011 Form 10-K.

Critical accounting policies are defined as those that are reflective of significant judgments and uncertainties, the most important and pervasive accounting policies used and areas most sensitive to material changes from external factors.

Adoption of Newly Issued Accounting Pronouncements

Fair Value:  In May 2011, the FASB issued updated accounting guidance on fair value measurements. The updated guidance resulted in common fair value measurement and disclosure requirements between U.S. GAAP and IFRS. The Company adopted this guidance effective January 1, 2012. The adoption did not have a material impact on the disclosures of the Company’s consolidated financial information.

Comprehensive Income:  In June 2011 and subsequently amended in December 2011, the FASB issued final guidance on the presentation of comprehensive income. Under the newly issued guidance, net income and comprehensive income may only be presented either as one continuous statement or in two separate but consecutive statements. The Company adopted this guidance effective January 1, 2012, with net loss and comprehensive loss shown as one continuous statement.

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RESULTS OF CONTINUING OPERATIONS

Impact of Acquisitions

During the year ended December 31, 2011, we acquired nine franchisees and 54 independent businesses, including four in our Waste segment. We acquired four independent businesses during the six months ended June 30, 2012. The term "Acquisitions" refers to the nine franchisees and 54 independent businesses acquired during the year ended December 31, 2011 and the four independent businesses and remaining non-controlling interest in one of subsidiaries acquired during the six months ended June 30, 2012, including the subsequent growth in existing customer revenue at the time of acquisition as well as revenue from new customer relationships created by the acquired business. See Note 16, "Subsequent Events" of the Notes to Condensed Consolidated Financial Statements for information concerning the sale of businesses subsequent to June 30, 2012.

FOR THE THREE MONTHS ENDED JUNE 30, 2012

Revenue

We derive our revenue from the delivery of a wide variety of hygiene and sanitation products and services. We deliver these products and services on a regularly scheduled basis which include providing our customers with (i) consumable products such as soap, paper, cleaning chemicals, detergents, and supplies, together with the rental and servicing of dish machines and other equipment for the dispensing of those products; (ii) the rental of facility service items requiring regular maintenance and cleaning, such as floor mats, mops, bar towels, and linens; and (iii) manual cleaning of their facilities. We serve customers in a wide range of end-markets with a particular emphasis on the foodservice, hospitality, retail, industrial, and healthcare industries.

Total revenue and the revenue derived from each revenue type for the three months ended June 30, 2012 and 2011 are as follows:

	2012		%			2011		%
Revenue	(In thousands)
Company-owned operations:
Chemical products	$	41,846		69.5	%	$	19,968		58.4	%
Hygiene product and services		11,616		19.4			10,930		31.9
Rental and other		6,451		10.7			2,070		6.0
Total Company-owned operations		59,913		99.6			32,968		96.3
Franchise products and fees:		269		0.4			1,276		3.7
Total revenue	$	60,182		100.0	%	$	34,244		100.0	%

Consolidated revenue increased $25.9 million to $60.2 million for the three month period ending June 30, 2012 as compared to $34.2 million for the same period in 2011. The components of the revenue growth were a $26.9 million increase in revenue from Company-owned operations offset by a $1.0 million reduction in revenue from franchise products and fees. These amounts represented revenue changes of 75.7% for total revenue, 81.7% for Company-owned operations, and (78.9%) for franchise revenue.

Excluding Acquisitions, for the three months ended June 30, 2012, the $2.1million in revenue growth from the same period in 2011 was comprised of growth in chemical products of $3.4 million, partially offset by reductions in hygiene, rental and other of $0.3 million and franchises of $1.0 million. The amounts represent changes of 29.7%, (1.3)%, and (78.9)%, respectively. Throughout our product lines, increases in revenue were primarily attributable to Acquisitions totaling $23.8 million. Excluding the impact of Acquisitions, revenue from Company-owned operations increased by 9.2%.

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The change in revenue mix as well as the growth of the Company-owned operations was primarily attributable to (i) acquisition efforts focused on chemical product and service companies to round out our North American operating footprint, (ii) our emphasis on the expansion of our core ware-washing and laundry chemical offerings both through direct sales efforts and via distributors, (iii) a reduction in focus on our legacy hygiene services offering, and (iv) strategic expansion in the linen rental marketplace.

Cost of Sales

Cost of sales consists primarily of paper, air freshener, chemical and other consumable products sold to our customers, franchisees and international licensees. Cost of sales for the three months ended June 30, 2012 and 2011 are as follows:

	2012		%(1)			2011		%(1)
	(In thousands)
Cost of Sales
Company-owned operations	$	26,706		44.6	%	$	12,657		38.2	%
Franchise products and fees		126		46.8			495		46.8
Total cost of sales	$	26,832		44.6	%	$	13,152		38.5	%

(1)            Represents cost as a percentage of the respective product line revenue.

Cost of sales increased $13.7 million or 104.0% for the three months ended June 30, 2012 as compared to the same period in 2011, which includes $16.6 million of total cost of sales related to Acquisitions. Excluding the impact of Acquisitions, cost of sales increased $1.3 million or 14.3% for the three months ended June 30, 2012 as compared to the same period in 2011.

Company-owned operations cost of sales increased $14.0 million or 111.0% to $26.7 million for the three months ended June 30, 2012 as compared to the same period in 2011 and includes $12.4 million related to Acquisitions. Excluding the impact of Acquisitions, Company-owned cost of sales increased $1.8 million to $10.2 million or 38.8% of related revenue for the three months ended June 30, 2012 as compared to $8.5 million or 36.8% of related revenue for the same period in 2011. The increase in the amount and the percentage of Company-owned cost of sales for the three months ended June 30, 2012, is a result of the increased revenue from chemical products, including direct and wholesale chemical sales, which have a higher cost to produce versus other Company-owned products, off set by efficiencies from the Company's shift to internal manufacturing.

Route Expenses

Route expenses consist of costs incurred by the Company for the delivery of products and providing services to customers. The details of route expenses for the three months ended June 30, 2012 and 2011 are as follows:

	2012		%(1)			2011	%(1)
Route Expenses
Company-owned operations:
Compensation	$	7,305	12.2	%	$	5,618	17.0	%
Vehicle and other expenses		2,866	4.8			1,985	6.0
Total route expenses	$	10,171	17.0	%	$	7,603	23.0	%

(1) Represents route expenses as a percentage of total revenue from Company-owned operations.

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Route expenses increased $2.6 million or 33.8% to $10.2 million for the three months ended June 30, 2012 as compared to $7.6 million in the same period in 2011, including $4.4 million or 43.7% of total route expenses related to Acquisitions. Excluding the impact of Acquisitions, route expenses decreased $0.3 million or 4.5% for the three months ended June 30, 2012 and 2011 compared to the same period in 2011 as a result of a decrease in compensation costs. As a percentage of revenue, route expenses decreased 6.1% to 17.0% due to the Company's ability to leverage its revenue growth in Company-owned operations.

Selling, General and Administrative Expenses

Selling, general and administrative expenses consist primarily of the costs incurred for:

●   Branch office and field management support costs that are related to field operations. These costs include compensation, occupancy expense and other general and administrative expenses.

●   Selling expenses, which include marketing expenses and compensation and commission for branch sales representatives and corporate account executives.

●   Corporate office expenses that are related to general support services, which include executive management compensation and related costs, as well as department cost for information technology, human resources, accounting, purchasing and other support functions.

The details of selling, general and administrative expenses for the three months ended June 30, 2012 and 2011 are as follows:

	2012		%(1)			2011	%(1)
	(In thousands)
Selling, General & Administrative Expenses
Compensation	$	15,733	26.3	%	$	10,327	31.3	%
Occupancy		2,559	4.3			1,016	3.1
Other		17,305	28.9			6,023	18.3
Total selling, general & administrative expenses	$	35,597	59.4	%	$	17,366	52.7	%

(1)           Represents expenses as a percentage of the related revenue.

Selling, general, and administrative expenses increased $18.2 million or 105.0% to $35.6 million for the three months ended June 30, 2012 as compared to $17.4 million in the same period of 2011 and includes $11.4 million from Acquisitions. Excluding the impact from Acquisitions, selling, general, and administrative expenses increased $9.5 million or 64.2%.

Compensation expenses increased $5.4 million or 52.4% to $15.7 million for the three months ended June 30, 2012 as compared to $10.3 million in the same period of 2011 and includes $5.4 million related to Acquisitions. Excluding the impact of these Acquisitions, hygiene compensation expense decreased $0.03 million or 0.4% to $8.5 million for the three months ended June 30, 2012 as compared to the same period in 2011. This decrease is primarily due to a planned reduction in compensation.

Occupancy expenses increased $1.5 million or 151.9% to $2.6 million for the three months ended June 30, 2012 as compared to $1.0 million in the same period of 2011 and is primarily a result of Acquisitions.

Other selling, general and administrative expenses increased $11.3 million or 187.3% to $17.3 million for the three months ended June 30, 2012 as compared to $6.0 million in the same period in 2011 and includes an increase of $2.2 million for Acquisitions.  Excluding the impact from Acquisitions, other expenses increased $9.1 million or 165.0% to $14.6 million primarily due to the expansion of our business that included increases in expenses for professional fees, including $9.5 million in investigation and review-related expenses, reserve for allowance for bad debt, utilities, office equipment, and other office and administrative expenses, many of which relate to our transition from a private company to a public company.

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Depreciation and Amortization

Depreciation and amortization consists of depreciation of property and equipment and the amortization of intangible assets. Depreciation and amortization increased $2.7 million or 109.0% to $5.2 million for the three months ended June 30, 2012 as compared to $2.5 million during the same period of 2011. The remaining increase is primarily related to depreciation on capital expenditures unrelated to business combinations of $11.8 million made since June 30, 2011.

Other Expense, Net

Details of other expense, net for the three months ended June 30, 2012 and 2011 follows:

	2012			2011
Interest income	$	-		$	81
Interest expense		(531	)		(334	)
Realized and unrealized net gain (loss) on fair value of convertible notes		170			(3,625	)
Foreign currency		(43	)		128
Other		31			74
Total other expense, net	$	(373	)	$	(3,676	)

The net loss on debt related fair value measurements for the three months ended June 30, 2011 is the result of the required adjustment to fair value of the convertible promissory notes that were issued during the second half of 2011. The fair value of these convertible promissory notes is impacted by the market price of our stock. See Note 8, "Long-term Debt and Obligations" of the Notes to Condensed Consolidated Financial Statements.

FOR THE SIX MONTHS ENDED JUNE 30, 2012

Revenue

Total revenue and the revenue derived from each revenue type for the six months ended June 30, 2012 and 2011 are as follows:

	2012		%			2011		%
	(In thousands)
Revenue
Company-owned operations:
Chemical products	$	81,875		69.2	%	$	29,442		52.8	%
Hygiene product and services		23,348		19.7			19,984		35.9
Rental and other		12,549		10.6			3,623		6.5
Total Company-owned operations		117,772		99.5			53,049		95.2
Franchise products and fees:		563		0.5			2,669		4.8
Total revenue	$	118,335		100.0	%	$	55,718		100.0	%

Consolidated revenue increased $62.6 million to $118.3 million for the six month period ending June 30, 2012 as compared to $55.7 million for the same period in 2011. The components of the revenue growth were a $64.7 million increase in revenue from Company-owned operations offset by a $2.1 million reduction in revenue from franchise products and fees. These amounts represented revenue changes of 112.4% for total revenue, 122.0% for Company-owned operations, and (78.9)% for franchise revenue.

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Excluding Acquisitions, for the six months ended June 30, 2012, the $6.0 million in revenue growth from the same period in 2011 was comprised of growth in chemical products of $7.8 million, offset by reductions in franchise revenue of $2.1 million. The amounts represent increases of 11.2%, 38.8%, and (78.9)%, respectively. Throughout our product lines, increases in revenue were primarily attributable to Acquisitions totaling $56.7 million.Excluding the impact of Acquisitions, revenue increased by 10.7%.

The change in revenue mix as well as the growth of the Company-owned operations was primarily attributable to (i) acquisition efforts focused on chemical product and service companies to round out our North American operating footprint, (ii) our emphasis on the expansion of our core ware-washing and laundry chemical offerings both through direct sales efforts and via distributors, (iii) a reduction in focus on our legacy hygiene services offering, and (iv) strategic expansion in the linen rental marketplace.

Cost of Sales

Cost of sales for the six months ended June 30, 2012 and 2011 are as follows:

	2012		%			2011	%
	(In thousands)
Cost of Sales
Company-owned operations	$	51,721	43.9	%	$	19,800	37.4	%
Franchise products and fees		358	63.5			1,594	59.7
Total cost of sales	$	52,079	44.0	%	$	21,394	38.4	%

(1)           Represents cost as a percentage of the respective product line revenue.

Cost of sales increased $30.7 million or 143.4% for the six months ended June 30, 2012 as compared to the same period in 2011, which includes $27.0 million of total cost of sales related to Acquisitions. Excluding the impact of Acquisitions, cost of sales increased $4.6 million or 27.8% for the six months ended June 30, 2012 as compared to the same period in 2011.

Company-owned operations cost of sales increased $31.9 million or 161.2% to $51.7 million for the six months ended June 30, 2012 as compared to the same period in 2011 and includes $32.0 million related to Acquisitions. Excluding the impact of Acquisitions, Company-owned cost of sales increased $5.0 million to $19.8 million or 37.3% of related revenue for the six months ended June 30, 2012 as compared to $14.7 million or 35.2% of related revenue for the same period in 2011. The increase in the amount and the percentage of Company-owned cost of sales for the six months ended June 30, 2012, is a result of the increased revenue from chemical products, including direct and wholesale chemical sales, which have a higher cost to produce versus other Company-owned products, offset by efficiencies from the Company's shift to internal manufacturing.

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Route Expenses

The details of route expenses for the six months ended June 30, 2012 and 2011 are as follows:

	2012		%(1)			2011	%(1)
Route Expenses
Company-owned operations:
Compensation	$	14,815	12.6	%	$	9,517	17.9	%
Vehicle and other expenses		5,951	5.0			3,241	6.1
Total route expenses	$	20,766	17.6	%	$	12,758	24.0	%

(1) Represents route expenses as a percentage of total revenue from Company-owned operations.

Route expenses increased $8.0 million or 62.8% to $20.8 million for the six months ended June 30, 2012 as compared to $12.8 million in the same period in 2011, including $9.2 million or 44.5% of total route expenses related to Acquisitions. Excluding the impact of Acquisitions, route expenses increased $0.6 million or 4.7% for the six months ended June 30, 2012 and 2011 compared to the same period in 2011 due to an increase in vehicle costs totaling $0.6 million. As a percentage of revenue, route expenses decreased 32.5% to 17.6% due to the Company's ability to leverage its revenue growth in Company-owned operations.

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Selling, General and Administrative Expenses

The details of selling, general and administrative expenses for the six months ended June 30, 2012 and 2011 are as follows:

	2012		%(1)			2011	%(1)
	(In thousands)
Selling, General & Administrative Expenses
Compensation	$	33,358	28.3	%	$	18,533	34.9	%
Occupancy		4,978	4.2			2,203	4.2
Other		27,230	23.1			10,165	19.2
Total selling, general & administrative expenses	$	65,566	55.7	%	$	30,901	58.2	%

(1)            Represents expenses as a percentage of the related revenue.

Selling, general, and administrative expenses increased $34.7 million or 112.2% to $65.6 million for the six months ended June 30, 2012 as compared to $30.9 million in the same period of 2011 and includes $23.1 million from Acquisitions. Excluding the impact from Acquisitions, selling, general, and administrative expenses increased $14.5 million or 46.8%.

Compensation expenses increased $14.8 million or 80.0% to $34.0 million for the six months ended June 30, 2012 as compared to $18.5 million in the same period of 2011 and includes $15.2 million related to Acquisitions. Excluding the impact of these Acquisitions, hygiene compensation expense increased $1.8 million or 10.6% to $18.2 million for the six months ended June 30, 2012 as compared to the same period in 2011. This increase is primarily the result of costs related to the expansion of our corporate, field and distribution sales organizations that began in 2009 and has continued into 2012 to accelerate the growth in our core chemical program.

Occupancy expenses increased $2.8 million or 125.9% to $5.0 million for the six months ended June 30, 2012 as compared to $2.2 million in the same period of 2011 and is primarily a result of Acquisitions.

Other selling, general and administrative expenses increased $17.1 million or 167.9% to $26.6 million for the six months ended June 30, 2012 as compared to $10.1 million in the same period in 2011 and includes an increase of $4.7 million for Acquisitions. Excluding the impact from Acquisitions, other expenses increased $12.4 million or 129.0% to $22.0 million primarily due to the expansion of our business that included increases in expenses for professional fees, including $11.4 million in investigation and review-related expenses, reserve for allowance for bad debt, utilities, office equipment, and other office and administrative expenses, many of which relate to our transition from a private company to a public company.

Depreciation and Amortization

Depreciation and amortization increased $5.6 million or 120.8% to $10.2 million for the six months ended June 30, 2012 as compared to $4.6 million during the same period of 2011. This increase includes $2.5 million for Acquisitions and is primarily the result of amortization for acquired other intangible assets including customer contracts and relationships and non-compete agreements obtained as part of these acquisitions. The remaining increase is primarily related to depreciation on capital expenditures unrelated to business combinations of $11.8 million made since June 30, 2011.

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Other Expense, Net

Details of other expense, net for the six months ended June 30, 2012 and 2011 follows:

	2012			2011
Interest income	$	0		$	97
Interest expense		(1,112	)		(684	)
Realized and unrealized net gain (loss) on fair value of convertible notes		199			(5,586	)
Foreign currency		(40	)		163
Other		155			74
Total other expense, net	$	(799	)	$	(5,936	)

The net loss on debt related fair value measurements for the six months ended June 30, 2011 is the result of the required adjustment to fair value of the convertible promissory notes that were issued during the second half of 2011 and first three months of 2012. The fair value of these convertible promissory notes is impacted by the market price of our stock. See Note 8, "Long-term Debt and Obligations" of the Notes to Condensed Consolidated Financial Statements.

Cash Flows Summary

The following table summarizes cash flows from continuing operations for the six months ended June 30, 2012 and 2011:

	2012			2011
	(In thousands)
Cash Flows Summary
Net cash used in operating activities	$	(22,605	)	$	(16,876	)
Net cash used in investing activities		(15,451	)		(85,937	)
Net cash (used in) provided by financing activities		(6,819	)		193,252
Net decrease (increase) in cash from continuing operations		(44,875	)		90,439
Net increase in cash from discontinued operations		3,224			(16,903	)
Net decrease (increase) in cash and cash equivalents	$	(41,651	)	$	73,536

Net cash used in operating activities for the six months ended June 30, 2012 was $22.6 million compared to $16.9 million in the same period of 2011. The increase of $5.7 million is primarily due to an increase in the net loss of $17.5 million which is primarily offset by an increase in depreciation of $5.6 million and a change in deferred income tax liability of $10.0 million.

Net cash used in investing activities decreased $70.5 million to $15.5 million for the six months ended June 30, 2012 compared with net cash used in investing activities of $85.9 million for the same period of 2011. This decrease is due to a decrease in acquisitions of $81.6 million, partially offset by an increase in purchases of property and equipment of $5.9 million, and the release of 2011 restricted cash of $5.2 million in 2012.

Cash used in financing activities was $6.8 million for the six months ended June 30, 2012, compared with net cash provided by financing activities of $193.3 million during the same period in 2011. This change of $200.1 million was due primarily to $191.2 million of proceeds from private placements of our common stock in 2011.

Liquidity and Capital Resources

We fund the development and growth of our business with cash generated from operations, bank credit facilities, the sale of equity, third party financing for acquisitions, and capital leases for equipment.

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Revolving Credit Facilities

In March 2011, we entered into a $100.0 million senior secured revolving Credit Facility (the "Credit Facility"), which replaced the Company’s former credit facilities. Under the Credit Facility, the Company had an initial borrowing availability of $32.5 million, which increased to the fully committed $100.0 million upon delivery of our unaudited quarterly financial statements for the quarter ended March 31, 2011 and satisfaction of certain financial covenants regarding leverage and coverage ratios and a minimum liquidity requirement, which requirements we met as of March 31, 2011.

Borrowings under the Credit Facility were secured by a first priority lien on substantially all of our existing and thereafter acquired assets, including $25.0 million of cash on borrowings in excess of $75.0 million. Furthermore, borrowings under the facility were guaranteed by all of our domestic subsidiaries and secured by substantially all the assets and stock of our domestic subsidiaries and substantially all of the stock of our foreign subsidiaries. Interest on borrowings under the Credit Facility would typically accrue at London Interbank Offered Rate ("LIBOR") plus 2.5% to 4.0%, depending on the ratio of senior debt to consolidated earnings before interest, taxes, depreciation and amortization ("EBITDA") (as such term is defined in the new Credit Facility, which includes specified adjustments and allowances authorized by the lender, as provided for in such definition). We also had the option to request swingline loans and borrowings using a base rate. Interest was payable monthly or quarterly on all outstanding borrowings. The Credit Facility was set to mature on July 31, 2013.

Borrowings and availability under the Credit Facility were subject to compliance with financial covenants, including achieving specified consolidated EBITDA levels, which depends on the success of our acquisition strategy, and maintaining leverage and coverage ratios and a minimum liquidity requirement. The Credit Facility also placed restrictions on our ability to incur additional indebtedness, make certain acquisitions, create liens or other encumbrances, sell or otherwise dispose of assets, and merge or consolidate with other entities or enter into a change of control transaction. Failure to achieve or maintain the financial covenants in the Credit Facility or failure to comply with one or more of the operational covenants could have adversely affected our ability to borrow monies and could have resulted in a default under the Credit Facility. The Credit Facility was subject to other standard default provisions.

In August 2011, the Company entered into an amendment to the Credit Facility that modified the covenants, including an increase in permitted indebtedness to $40.0 million. Failure to achieve or maintain the financial covenants in the Credit Facility or failure to comply with one or more of the operational covenants could have adversely affected our ability to borrow monies and could have resulted in a default under the Credit Facility. The Credit Facility was subject to other standard default provisions.

During 2012, we amended our Credit Facility with Wells Fargo Bank, National Association on each of April 12, 2012, May 15, 2012, June 28, 2012, July 30, 2012, August 31, 2012, September 27, 2012, and October 31, 2012, in each case, primarily to extend the dates by which we were required to file our 2011 Form 10-K and Forms 10-Q for the quarters ended March 31, 2012, June 30, 2012, and September 30, 2012 and to avoid potential defaults for not timely filing these reports. In addition, the August 31, 2012 amendment reduced the Company’s maximum borrowing limit to $50.0 million, provided that the Company met certain borrowing base requirements. The September 27, 2012 amendment further reduced the Company’s maximum borrowing limit to $25.0 million, provided that the Company met certain borrowing base requirements. The October 31, 2012 amendment required the Company to place certain amounts in the collateral account under the sole control of the administrative agent to meet the Company’s unencumbered liquidity requirements. In connection with the sale of our Waste segment on November 15, 2012, we paid off and terminated the Credit Facility.

Acquisitions and Sales

During the three month period ended June 30, 2012, we made no business acquisitions. During the six month period ended June 30, 2012, we paid cash of $4.3 million for four independent businesses and one non-controlling interest in one of our subsidiaries.

On November 15, 2012, we completed a stock sale of Choice and other acquired businesses in the Waste segment to Waste Services of Florida, Inc. for $123.3 million in cash.

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See Note 16, "Subsequent Events" of the Notes to Condensed Consolidated Financial Statements.

Cash Requirements

Our cash requirements for the next twelve months consist primarily of: (i) capital expenditures associated with dispensing equipment, dish machines and other items in service at customer locations, equipment, vehicles, and software; (ii) financing for acquisitions; (iii) working capital; and (iv) payment of principal and interest on borrowings under our credit facilities, debt obligations incurred or assumed in connection with acquisitions, and other notes payable for equipment and software.

During the six months ended June 30, 2012, our cash and cash equivalents decreased by $41.7 million. We expect that our cash on hand and the cash flow provided by operating activities will be sufficient to fund working capital, general corporate needs and planned capital expenditures for the next twelve months. However, there is no assurance that these sources of liquidity will be sufficient to fund our internal growth initiatives or the investments and acquisition activities that we may wish to pursue. If we pursue significant internal growth initiatives or if we wish to acquire additional businesses in transactions that include cash payments as part of the purchase price, we may pursue additional debt or equity sources to finance such transactions and activities, depending on market conditions.

As discussed above, we sold the Waste segment, which consisted principally of Choice, for $123.3 million in cash on November 15, 2012. In conjunction with the closing of the transaction, Swisher paid off a Credit Facility of $17.2 million, equipment leases associated with the operations of Choice totaling $13.2 million, and an outstanding note in the amount of $2.0 million.

See Note 16, "Subsequent Events" of the Notes to Condensed Consolidated Financial Statements.

Financial Instruments — Convertible Promissory Notes

We determine the fair value of certain convertible debt instruments issued as part of business combinations based on assumptions that market participants would use in pricing the liabilities. We have used a Black Scholes pricing model to estimate fair value of our convertible promissory notes, which requires the use of certain assumptions such as expected term and volatility of our common stock. The expected volatility was based on an analysis of industry peer's historical stock price over the term of the notes as we currently do not have our own stock price history. The expected volatility was estimated at approximately 25%. Changes in the fair value of convertible debt instruments are recorded in other expense, net on the Condensed Consolidated Statement of Operations and Comprehensive Loss.

Subsequent to June 30, 2012, none of these convertible promissory notes were converted. In addition, for the remaining convertible promissory notes that have not been converted subsequent to June 30, 2012, we would record approximately $0.2 million of expense for every $1.00 increase in our stock price. Increases or decreases in the market value of our stock price could affect the fair value of these instruments and our earnings.

Income Taxes

As a result of the merger with CoolBrands International, Inc. on November 2, 2010, the Company converted from a corporation taxed under the provisions of Subchapter S of the Internal Revenue Code to a tax-paying entity and accounts for income taxes under the asset and liability method. Therefore, for the three and six months ended June 30, 2012, the Company has recorded an estimate for income taxes based on the Company's projected net income for the year ending December 31, 2012 and an effective income tax rate of 1%. The amount of income tax expense or benefit to be recorded in future periods is based on the full year’s net income.

In addition, during the six months ended June 30, 2012, management has concluded that it is not likely that the Company will realize the benefits of all of its deferred tax assets and as a result, believes a full valuation allowance will be required at December 31, 2012. This is primarily due to the projected net operating losses and the projected net deferred tax asset position created by the sale of the Waste segment on November 15, 2012. Therefore, the Company has not recognized a tax benefit as it relates to the current loss for the period ended June 30, 2012. It should also be noted that the Company does not consider the tax deferred liabilities related to indefinite lived intangible assets when determining the need for a valuation allowance.

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Off-Balance Sheet Arrangements

Other than operating leases, there are no significant off-balance sheet financing arrangements or relationships with unconsolidated entities or financial partnerships, which are often referred to as "special purpose entities." Therefore, there is no exposure to any financing, liquidity, market or credit risk that could arise, had we engaged in such relationships.

In connection with a distribution agreement entered into in December 2010 between the Company and a distributor of Company-owned products, we provided a guarantee that the distributor's operating cash flows associated with the agreement would not fall below certain agreed-to minimums, subject to certain pre-defined conditions, over the ten year term of the distribution agreement. If the distributor's annual operating cash flow does fall below the agreed-to annual minimums, we will reimburse the distributor for any such short fall up to a pre-designated amount. No value was assigned to the fair value of the guarantee at June 30, 2012 and December 31, 2011 based on a probability assessment of the projected cash flows. Management currently does not believe that it is probable that any amounts will be paid under this agreement and thus there is no amount accrued for the guarantee in the Condensed Consolidated Financial Statements.

Adjusted EBITDA

In addition to net income determined in accordance with GAAP, we use certain non-GAAP measures, such as "Adjusted EBITDA," in assessing our operating performance. We believe the non-GAAP measure serves as an appropriate measure to be used in evaluating the performance of our business. We define Adjusted EBITDA as net loss excluding the impact of income taxes, depreciation and amortization expense, investigation and review related expenses, net interest expense, foreign currency gain and other income, net loss on debt related fair value measurements, stock based compensation, third party costs directly related to merger and acquisitions, including the debt prepayment penalty, and a gain from bargain purchase related to mergers and acquisitions. We present Adjusted EBITDA because we consider it an important supplemental measure of our operating performance and believe it is frequently used by securities analysts, investors and other interested parties in the evaluation of our results. Management uses this non-GAAP financial measure frequently in our decision-making because it provides supplemental information that facilitates internal comparisons to the historical operating performance of prior periods and gives a better indication of our core operating performance. We include this non-GAAP financial measure in our earnings announcement and guidance in order to provide transparency to our investors and enable investors to better compare our operating performance with the operating performance of our competitors. Adjusted EBITDA should not be considered in isolation from, and is not intended to represent an alternative measure of, operating results or of cash flows from operating activities, as determined in accordance with GAAP. Additionally, our definition of Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies.

Under SEC rules, we are required to provide a reconciliation of non-GAAP measures to the most directly comparable GAAP measures. Accordingly, the following is a reconciliation of our net loss reported in the Condensed Consolidated Statements of Operations and Comprehensive Loss to Adjusted EBITDA for the three and six month periods ended June 30, 2012 and 2011:

	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
	(In thousands)
Net loss from continuing operations	$	(18,029	)	$	(8,366	)	$	(31,289	)	$	(13,740	)
Income tax (benefit) expense		8			(4,403	)		87			(10,133	)
Depreciation and amortization expense		5,188			2,482			10,165			4,604
Interest expense, net		531			253			1,112			587
Loss (gain) on foreign currency		43			(128	)		40			(163	)
Realized and unrealized (gain) loss on convertible debt		(170	)		3,625			(199	)		5,586
Stock based compensation		1,034			1,044			2,617			1,846
Investigation and Review-related expenses		9,511			-			11,385			-
Acquisition and merger expenses		42			2,734			162			3,998
Adjusted EBITDA	$	(1,842	)	$	(2,759	)	$	(5,920	)	$	(7,415	)

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FORWARD-LOOKING STATEMENTS

Our business, financial condition, results of operations, cash flows and prospects, and the prevailing market price and performance of our common stock, may be adversely affected by a number of factors, including the matters discussed below. Certain statements and information set forth in this Form 10-Q, as well as other written or oral statements made from time to time by us or by our authorized executive officers on our behalf, constitute "forward-looking statements" within the meaning of the Federal Private Securities Litigation Reform Act of 1995. We intend for our forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and we set forth this statement and these risk factors in order to comply with such safe harbor provisions. You should note that our forward-looking statements speak only as of the date of this Form 10-Q or when made and we undertake no duty or obligation to update or revise our forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Although we believe that the expectations, plans, intentions and projections reflected in our forward-looking statements are reasonable, such statements are subject to risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. The risks, uncertainties and other factors that our stockholders and prospective investors should consider include the following:

●   We have a history of significant operating losses and as such our future revenue and operating profitability are uncertain;

●   Matters relating to or arising from our recent restatement could have a material adverse effect on our business, operating results and financial condition;

●   We may fail to maintain our listing on The NASDAQ Stock Market and the Toronto Stock Exchange;

●   We may be harmed if we do not penetrate markets and grow our current business operations;

●   We may require additional capital in the future and no assurance can be given that such capital will be available on terms acceptable to us, or at all;

●   Failure to attract, train, and retain personnel to manage our growth could adversely impact our operating results;

●   We may not be able to properly integrate the operations of acquired businesses and achieve anticipated benefits of cost savings or revenue enhancements;

●   We may incur unexpected costs, expenses, or liabilities relating to undisclosed liabilities of our acquired businesses;

●   We may recognize impairment charges which could adversely affect our results of operations and financial condition;

●   Goodwill and other intangible assets resulting from acquisitions may adversely affect our results of operations;

●   Future issuances of shares of our common stock in connection with acquisitions or pursuant to our stock incentive plan could have a dilutive effect;

●   Future sales of Swisher Hygiene shares by our stockholders could affect the market price of our shares;

●   Failure to retain our current customers and renew existing customer contracts could adversely affect our business;

●   The pricing, terms, and length of customer service agreements may constrain our ability to recover costs and to make a profit on our contracts;

●   Changes in economic conditions that impact the industries in which our end-users primarily operate in could adversely affect our business;

●   Our solid waste collection operations are geographically concentrated and are therefore subject to regional economic downturns and other regional factors;

●   If we are required to change the pricing models for our products or services to compete successfully, our margins and operating results may be adversely affected;

●   Several members of our senior management team are critical to our business and if these individuals do not remain with us in the future, it could have a material adverse impact on our business, financial condition, results of operations, and cash flows;

●   The financial condition and operating ability of third parties may adversely affect our business;

●   The availability of our raw materials and the volatility of their costs may adversely affect our operations;

●   Increases in fuel and energy costs could adversely affect our results of operations and financial condition;

●   Our products contain hazardous materials and chemicals, which could result in claims against us;

●   We are subject to environmental, health and safety regulations, and may be adversely affected by new and changing laws and regulations, that generate ongoing environmental costs and could subject us to liability;

●   Future changes in laws or renewed enforcement of laws regulating the flow of solid waste in interstate commerce could adversely affect our operating results;

●   If our products are improperly manufactured, packaged, or labeled or become adulterated, those items may need to be recalled;

●   Changes in the types or variety of our service offerings could affect our financial performance;

●   An inability to open new, cost effective processing facilities may adversely affect our expansion efforts;

●   We may not be able to adequately protect our intellectual property and other proprietary rights that are material to our business;

●   If we are unable to protect our information and telecommunication systems against disruptions or failures, our operations could be disrupted;

●   Insurance policies may not cover all operating risks and a casualty loss beyond the limits of our coverage could adversely impact our business;

●   Our current size and growth strategy could cause our revenue and operating results to fluctuate more than some of our larger, more established competitors or other public companies;

●   Certain stockholders may exert significant influence over corporate action requiring stockholder approval; and

●   Provisions of Delaware law and our organizational documents may delay or prevent an acquisition of our company, even if the acquisition would be beneficial to our stockholders.

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ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risks, including changes in interest rates and fuel prices. We do not use financial instruments for speculative trading purposes and we do not hold derivative financial instruments that could expose us to significant market risk. We do not currently have any contract with vendors where we have exposure to the underlying commodity prices. In such event, we would consider implementing price increases and pursue cost reduction initiatives; however, we may not be able to pass on these increases in whole or in part to our customers or realize costs savings needed to offset these increases. The following discussion does not consider the effects that may have an adverse change on the overall economy, and it also does not consider actions we may take to mitigate our exposure to these changes. We cannot guarantee that the action we take to mitigate these exposures will be successful.

Interest Rate Risk

At June 30, 2012, we had variable rate debt of $25.0 million under two lines of credit with an average periodic interest rate on outstanding balances that fluctuates based on LIBOR plus 2.5% to 4.0%. At the above level of borrowings, for every 50 basis point change in LIBOR, quarterly interest expense associated with such borrowings would correspondingly increase or decrease by approximately $0.1 million annually. This analysis does not consider the effects of any other changes to our capital structure. A 10% change in interest rates would have an immaterial effect on the fair value of our final rate debt.

Fuel

Fuel costs represent a significant operating expense. To date, we have not entered into any contracts or employed any strategies to mitigate our exposure to fuel costs. Historically, we have made limited use of fuel surcharges or delivery fees to help offset rises in fuel costs. Such charges have not been in the past, and we believe will not be going forward, applicable to all customers. Consequently, an increase in fuel costs results in a decrease in our operating margin percentage. At current consumption level, a $0.50 change in the price of fuel changes our fuel costs by approximately $0.7 million on an annual basis.

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ITEM 4.  CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures, as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission rules and forms, and, include controls and procedures designed to ensure that such information is accumulated and communicated to our management, including our Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), as appropriate, to allow timely decisions regarding required disclosure.

We carried out an evaluation, under the supervision and with the participation of our management, including our former CEO and former CFO, of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of June 30, 2012. Based upon that evaluation, management concluded that our disclosure controls and procedures were not effective as of June 30, 2012 because of the deficiencies in our internal control over financial reporting discussed below.

●   The effectiveness of our entity-level control environment, including placing an undue emphasis on internal anticipated financial results in communications during the financial statement close process, communication regarding the high standards for internal control over financial reporting, in maintaining effective communication within the reporting department and with our independent registered public accounting firm, and segregation of job responsibilities within the financial reporting department.

●   The effectiveness of our control over the financial reporting close process allowing for override of entity-level controls resulting in a number of journal entries having either insufficient or no support.

●   The effectiveness of our financial statement review process, including application of formal written policies and procedures governing our financial statement close process, and control in the preparation, documentation, review, and approval of journal entries, and in the preparation, review, and approval of account reconciliations.

●   The effectiveness of our accounting department resulting from the insufficient number of qualified accounting personnel with the required proficiency to apply purchase accounting policies in accordance with GAAP, including with respect to acquisitions, the significant number of acquisitions made during the year ended December 31, 2011, and the difficulty of integrating the accounting systems of acquired entities into our internal control system.

●   The effectiveness of transactional level controls designed to ensure the proper recording and elimination of inter-company transactions for GAAP reporting purposes, appropriate cut-off procedures, proper tracking of the physical movement of fixed assets and inventory and the maintenance of cash accounts, proper customer invoicing and payments, and accurate recording of accrued liabilities and stock based compensation expense.

●   The effectiveness of certain information technology controls regarding inaccurate system generated reports, such as control over the input, calculation, and review of spreadsheet software, user access rights to the software, and changes in and testing to system software and infrastructure technology.

A deficiency in internal control over financial reporting exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, 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 not be prevented or detected on a timely basis. The control deficiencies identified above contributed to the restatements of our condensed consolidated financial statements for the quarters ended March 31, 2011, June 30, 2011, and September 30, 2011, and contributed to the delays in filing of our 2011 Form 10-K and our Forms 10-Q for the quarter ended March 31, 2012, June 30, 2012, and September 30, 2012.

32

The deficiencies describe above were identified in connection with the restatements of our financial statements for the quarterly periods ended March 31, 2011, June 30, 2011, and September 30, 2011 and the preparation of our financial statements for the year ended December 31, 2011 and disclosed in the corresponding amended quarterly reports on Forms 10-Q/A and 2011 Form 10-K (collectively the "2011 Reports"). As further disclosed in the 2011 Reports and as set forth below, management has taken and continues to take steps to remediate each of the control deficiencies identified above. Notwithstanding the control deficiencies described above, we have performed additional analyses and other procedures to enable management to conclude that our condensed consolidated financial statements included in this report fairly present, in all material respects, our financial condition and results of operations as of and for the quarter ended June 30, 2012.

Management's Remediation Plan

Following the Audit Committee's independent review, and in response to the deficiencies discussed above, we plan to continue efforts already underway to improve internal control over financial reporting, which include the following:

●   We have further enhanced open and timely communication with our independent registered public accounting firm and our Audit Committee in order to ensure the effective review and audit of our accounts. We continue to upgrade, monitor, and evaluate our compliance functions in order to improve control consciousness and minimize errors in financial reporting. We are also focused on improving the education and training of employees involved in the financial reporting process, including with respect to the appropriateness and frequency of communications.

●   We have hired a new CFO, a Director of Financial Planning and Analysis, and a Corporate Controller. We have also hired a Vice President of Internal Audit, a senior level position reporting to the Audit Committee to oversee a newly established Internal Audit Department. The Department has developed and is implementing an internal audit program which will provide an independent risk-based evaluation of the Company's control environment on an ongoing basis. We have also filled other key accounting positions with qualified personnel and will continue to augment our accounting staff as needed.

●   We have restructured the accounting organization in accordance with our new policies and enhanced control environment. We have also enhanced the segregation of duties and certain operational functions within Information Technology, Human Resources, Financial Planning and Analysis, and Accounting, including payroll and treasury. The restructuring resulted in defined review and approval levels by positions.

●   We have enhanced our journal entry policy, including a more stringent review and approval process. We have acquired and are implementing new software for recording asset acquisitions movement and disposal, and computing depreciation expense for financial and tax reporting. We have reduced the complexity of the Company's legal entities and have consolidated accounting data bases. We are implementing an automated process that uploads the trial balances of acquired entities' ERP systems into our corporate ERP system on a monthly basis with a standardized, centrally controlled chart of accounts mapping across the Company. By reducing complexity in this regard, we have also eliminated a significant portion of intercompany transactions.

●   We have substantially completed the implementation of the use of hand-held devices by route service and customer facing team members which provides greater transaction level controls over customer invoicing and inventory.

Management and our Audit Committee will continue to monitor these remedial measures and the effectiveness of our internal control over financial reporting and our disclosure controls and procedures. Other than as described above, there were no changes in our internal control over financial reporting during the quarter ended June 30, 2012 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

33

PART II. OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS

We may be involved in litigation from time to time in the ordinary course of business. We do not believe that the ultimate resolution of these matters will have a material adverse effect on our business, financial condition or results of operations. However, the results of these matters cannot be predicted with certainty and we cannot assure you that the ultimate resolution of any legal or administrative proceedings or disputes will not have a material adverse effect on our business, financial condition and results of operations.

Securities Litigation

There have been six shareholder lawsuits filed in federal courts in North Carolina and New York asserting claims relating to the Company's March 28, 2012 announcement regarding the Company's Board conclusion that the Company's previously issued interim financial statements for the quarterly periods ended March 31, 2011, June 30, 2011 and September 30, 2011, and the other financial information in the Company's quarterly reports on Form 10-Q for the periods then ended, should no longer be relied upon and that an internal review by the Company's Audit Committee primarily relating to possible adjustments to the Company's financial statements was ongoing.

On March 30, 2012, a purported Company shareholder commenced a putative securities class action on behalf of purchasers and sellers of the Company's common stock in the U.S. District Court for the Southern District of New York against the Company, the former President and Chief Executive Officer ("former CEO"), and the former Vice President and Chief Financial Officer ("former CFO"). The plaintiff asserted claims alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 based on alleged false and misleading disclosures in the Company's public filings. In April and May 2012, four more putative securities class actions were filed by purported Company shareholders in the U.S. District Court for the Western District of North Carolina against the same set of defendants. The plaintiffs in these cases have asserted claims alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") based on alleged false and misleading disclosures in the Company's public filings. In each of the putative securities class actions, the plaintiffs seek damages for losses suffered by the putative class of investors who purchased Swisher common stock.

On May 21, 2012, a shareholder derivative action was brought against the Company's former CEO and former CFO and the Company's directors for alleged breaches of fiduciary duty by another purported Company shareholder in the U.S. District Court for the Southern District of New York. In this derivative action, the plaintiff seeks to recover for the Company damages arising out of a possible restatement of the Company's financial statements.

On May 30, 2012, the Company, and its former CEO and former CFO filed a motion with the United States Judicial Panel on Multidistrict Litigation ("MDL Panel") to centralize all of the cases in the Western District of North Carolina by requesting that the actions filed in the Southern District of New York be transferred to the Western District of North Carolina.

In light of the motion to centralize the cases in the Western District of North Carolina, the Company, and its former CEO and former CFO requested from both courts a stay of all proceedings pending the MDL Panel's ruling. On June 4, 2012, the U.S. District Court for the Southern District of New York adjourned all pending dates in the cases in light of the motion to transfer filed before the MDL Panel. On June 13, 2012, the U.S. District Court for the Western District of North Carolina issued a stay of proceedings pending a ruling by the MDL Panel.

On August 13, 2012, the MDL Panel granted the motion to centralize, transferring the actions filed in the Southern District of New York to the Western District of North Carolina. In response, on August 21, 2012, the Western District of North Carolina issued an order governing the practice and procedure in the actions transferred to the Western District of North Carolina as well as the actions originally filed there.

34

On October 18, 2012, the Western District of North Carolina held an Initial Pretrial Conference at which it appointed lead counsel and lead plaintiffs for the securities class actions, and set a schedule for the filing of a consolidated class action complaint and defendants' time to answer or otherwise respond to the consolidated class action complaint. The Western District of North Carolina stayed the derivative action pending the outcome of the securities class actions.

Derivative Litigation

On April 11, 2012 and May 11, 2012, the Board of Directors of the Company received demand letters (the “Demands”) from two of the Company’s purported stockholders. In general, the Demands ask the Board to undertake an independent investigation into potential violations of Delaware and federal law relating to the Company's March 28, 2012 disclosure that its previously issued financial results for the first, second and third fiscal quarters of 2011 should no longer be relied upon, and to initiate claims against responsible parties and/or implement therapeutic changes as needed. The Board has not yet made a determination regarding its response to these Demands.

Other Related Matter

The Company has been contacted by the staff of the Atlanta Regional Office of the SEC and by the United States Attorney's Office for the Western District of North Carolina (the "U.S. Attorney's Office") after publicly announcing the Audit Committee's internal review and the delays in filing our periodic reports. The Company has been asked to provide information about these matters on a voluntary basis to the SEC and the U.S. Attorney's Office. The Company is fully cooperating with the SEC and the U.S. Attorney's Office. Any action by the SEC, the U.S. Attorney's Office or other government agency could result in criminal or civil sanctions against the Company and/or certain of its current or former officers, directors or employees.

ITEM 1A.  RISK FACTORS

In addition to the other information set forth in this report, you should carefully consider the risk factors discussed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2011, which could materially affect our business, financial condition, or future results. There have been no material changes to the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2011.

ITEM 6.  EXHIBITS

Exhibit
Number	Description
10.1	Second Amendment to Credit Agreement, dated April 12, 2012, by and among Swisher Hygiene, Inc., the Subsidiary Guarantors party thereto, the Required Lenders and Wells Fargo Bank, National Association (incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on April 12, 2012).
10.2	Third Amendment to Credit Agreement, dated May 15, 2012, by and among Swisher Hygiene, Inc., the Subsidiary Guarantors party thereto, the Required Lenders and Wells Fargo Bank, National Association (incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on May 17, 2012).
10.3	Fourth Amendment to Credit Agreement, dated May 30, 2012, by and among Swisher Hygiene, Inc., the Subsidiary Guarantors party thereto, the Required Lenders and Wells Fargo Bank, National Association (incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on June 5, 2012).
10.4	Employment Letter, dated June 1, 2012, by and between Swisher Hygiene, Inc. and Brian Krass.
10.5	Fifth Amendment to Credit Agreement, dated June 28, 2012, by and among Swisher Hygiene, Inc., the Subsidiary Guarantors party thereto, the Required Lenders and Wells Fargo Bank, National Association (incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on June 29, 2012).
31.1	Section 302 Certification of Chief Executive Officer.
31.2	Section 302 Certification of Chief Financial Officer.
32.1	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**
32.2	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**
101.INS	XBRL Instance Document.***
101.SCH	XBRL Taxonomy Extension Schema.***
101.CAL	XBRL Taxonomy Extension Calculation Linkbase.***
101.LAB	XBRL Taxonomy Extension Label Linkbase.***
101.PRE	XBRL Taxonomy Extension Presentation Linkbase.***
101.DEF	XBRL Taxonomy Extension Definition Linkbase.***

____________________________

**  Furnished herewith.

*** 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

35

SIGNATURES

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.

	SWISHER HYGIENE INC. (Registrant)
Date: March 14, 2013	By:	/s/ Thomas C. Byrne
		Thomas C. Byrne
		President and Chief Executive Officer (Principal Executive Officer)

Date: March 14, 2013	By:	/s/ William T. Nanovsky
		William T. Nanovsky
		Senior Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)

36

SWISHER HYGIENE INC. AND SUBSIDIARIES

EXHIBIT INDEX

Exhibit
Number	Description
10.4	Employment Letter, dated June 1, 2012, by and between Swisher Hygiene, Inc. and Brian Krass.
31.1	Section 302 Certification of Chief Executive Officer.
31.2	Section 302 Certification of Chief Financial Officer.
32.1	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the   Sarbanes-Oxley Act of 2002.**
32.2	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**
101.INS	XBRL Instance Document.***
101.SCH	XBRL Taxonomy Extension Schema.***
101.CAL	XBRL Taxonomy Extension Calculation Linkbase.***
101.LAB	XBRL Taxonomy Extension Label Linkbase.***
101.PRE	XBRL Taxonomy Extension Presentation Linkbase.***

____________________________

**  Furnished herewith.

*** 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.

37

EX-10.4

EXHIBIT 10.4

  Kim Dziuk Vice President Human Resources Swisher International Inc. 4725 Piedmont Row Drive Suite 400 Charlotte, NC  28210 704-602-7135 Phone 877-7-SWISHER Toll Free 704-602-7980 Fax kdziuk@swisherhygiene.com

June 1, 2012

Mr. Brian Krass

Dear Mr. Krass:

I am pleased to offer you employment as Senior Vice President and Chief Financial Officer for Swisher International Inc.   The Chief Financial Officer currently reports to Steven Berrard, Chief Executive Officer.  We would like for you to begin employment as soon as possible but no later than June 11, 2012.

By accepting this position, you agree to work for Swisher International Inc. full-time and follow company guidelines including signing a confidentiality and non-compete agreement.  Please note that this offer is contingent upon a successful background check including references, education, criminal, DMV, drug testing, etc.

As an express condition of employment with Swisher International Inc., you are not to violate any non-compete, non-disclosure or non-solicitation provisions of any Agreement that you may have with former employers. No one from Swisher has the authority to give you contrary instructions and any violation of the terms of the Agreement would be cause for disciplinary action.  Since there is uncertainty as to the enforceability or applicability of the applicable provisions of any agreements that restrict your ability to work for a competitor, you acknowledge that, in the event of a legal challenge to your employment with Swisher, Swisher will have the unconditional rights to choose whether or not to defend such an action against you, and well as whether or not to modify or discontinue your employment.

The compensation for this position is as follows:

Base Salary

$235,000 annually

Bonus

You will be eligible to participate in any bonus plan/program offered by the company to employees of similar title.

Stock Incentive Plan

You will be eligible to participate in the Company’s Stock Incentive Plan as of your first day of employment and shall be entitled to periodic grants consistent with the Company’s policies generally applicable to its employees of comparable rank and status.  You will initially receive a grant of Restricted Stock Units and Non-Qualified Stock Options of two-times base salary; eighty (80) percent of which will be Non-Qualified Stock Options, and twenty (20) percent Restricted Stock Units.  The initial grant will be determined based on the closing price of the stock on the day prior to your employment.   For example, if you started on May 29, 2012, your initial grant would be 235,000 times 2 divided by $2.02 (the close price of the stock as of 05/30/2012) = 232673 shares of stock; approximately 186,138 of Stock Options and 46,535 of Restricted Stock Units.   All stock awards are subject to the consent and approval of the compensation committee.

Benefits

You will be eligible to participate in the Swisher sponsored benefit plans on the first day of the month following 60 days of employment.

This offer is neither a contract of employment nor a legal document.  Employment at Swisher International Inc. is voluntary.  Accordingly, you or Swisher can terminate the relationship at will, with or without cause, at any time so long as there is no violation of applicable federal or state law.

Chemical Programs                                Restroom Sanitation                                Soap and Paper                                          Floor Mats                                Warewashing

We are excited about the prospect of you joining the SWISHER TEAM.  Please complete the second page of this letter and return to me at kdziuk@swisherhygiene.com.  Please call me if you have any further questions.

Sincerely,

Kim Dziuk

Vice President Human Resources

I accept                       X           decline __________________ the offer of Senior Vice President and Chief Financial Officer made by Swisher International Inc.

I am available to begin employment on  June 6, 2012                                                                                                                                .

/s/ Brian Krass	June 1, 2012
Brian Krass	Date

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Thomas C. Byrne, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Swisher Hygiene Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: March 14, 2013	By:	/s/ Thomas C. Byrne
		Thomas C. Byrne
		President and Chief Executive Officer (Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, William T. Nanovsky, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Swisher Hygiene Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: March 14, 2013	By:	/s/ William T. Nanovsky
		William T. Nanovsky
		Senior Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Swisher Hygiene Inc. (the "Company") for the quarter ended June 30, 2012, as filed with the Securities and Exchange Commission (the "Report"), I, Thomas C. Byrne, President and Chief Executive Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1)           the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2)           the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: March 14, 2013	By:	/s/ Thomas C. Byrne
		Thomas C. Byrne
		President and Chief Executive Officer (Principal Executive Officer)

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Swisher Hygiene Inc. (the "Company") for the quarter ended June 30, 2012, as filed with the Securities and Exchange Commission (the "Report"), I, William T. Nanovsky, Senior Vice President and Chief Financial Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1)           the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2)           the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: March 14, 2013	By:	/s/ William T. Nanovsky
		William T. Nanovsky
		Senior Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)

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5. Goodwill And Other Intangible Assets (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Foreign currency translation	$ (43,000)	$ 128,000	$ (40,000)	$ 163,000
Goodwill
Beginning Balance — December 31			106,906,000
Accumulated impairment losses			(870,000)
Total			106,036,000
Acquisition/Additions			1,550,000
Amortization
Ending Balance — June 30			107,586,000
Customer Relationships
Beginning Balance — December 31			43,140,000
Accumulated impairment losses
Total			43,140,000
Acquisition/Additions			1,276,000
Amortization			(3,040,000)
Foreign currency translation			(11,000)
Ending Balance — June 30			41,365,000
Non Compete Agreements
Beginning Balance — December 31			6,947,000
Accumulated impairment losses
Total			6,947,000
Acquisition/Additions			126,000
Amortization			(1,023,000)
Foreign currency translation			(5,000)
Ending Balance — June 30			6,045,000
Trademarks
Beginning Balance — December 31			1,977,000
Accumulated impairment losses
Total			1,977,000
Acquisition/Additions			130,000
Amortization			(114,000)
Foreign currency translation
Ending Balance — June 30			1,993,000
Formulas
Beginning Balance — December 31			4,894,000
Accumulated impairment losses
Total			4,894,000
Acquisition/Additions
Amortization			(125,000)
Ending Balance — June 30			$ 4,769,000

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1. Business Description (Details Narrative) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2012
Business Description Details Narrative
Franchise revenue	$ 500

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4. Acquisitions (Tables)

6 Months Ended

Jun. 30, 2012

Acquisitions Tables

Schedule of preliminary allocation of the purchase price

Net assets acquired:
Accounts receivable	$	263
Inventory		86
Property and equipment		2,079
Other intangibles		1,532
Accounts payable, accrued expenses and other liabilities		(42	)
Total net assets acquired		3,918
Goodwill		1,550
Total purchase price		5,468
Less: debt issued or assumed		(1,121	)
Less: issuance of shares		(37	)
Cash Paid	$	4,310

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8. Long Term Obligations (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Long Term Obligations Details
Line of credit agreement dated March 2011 and maturing in July 2013, interest rate of 2.7% at June 30, 2012.	$ 25,000	$ 25,000
Acquisition notes payables	5,867	7,675
Convertible promissory notes, 4.0% and matures at various dates through 2016	11,069	12,596
Capitalized lease obligations	13,128	15,562
Total debt and obligations	55,064	60,833
Long-term debt and obligations due within one year	(13,813)	(13,566)
Long-term debt and obligations	$ 41,251	$ 47,267

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5. Goodwill And Other Intangible Assets (Details Narrative) (USD $)	Jun. 30, 2012	Dec. 31, 2011
Goodwill And Other Intangible Assets Details Narrative
Accumulated amortization of intangibles	$ 17,500	$ 13,200

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3. Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2012

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

The accompanying Condensed Consolidated Financial Statements have been prepared in accordance with United States generally accepted accounting principles ("GAAP") for interim financial information and in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X promulgated by the Securities and Exchange Commission ("SEC") and therefore do not contain all of the information and footnotes required by GAAP and the SEC for annual financial statements. The Company's Condensed Consolidated Financial Statements reflect all adjustments that management believes are necessary for the fair presentation of their financial condition, results of operations, and cash flows for the periods presented. The information at December 31, 2011 in the Company's Condensed Consolidated Balance Sheets included in this quarterly report was derived from the audited Consolidated Balance Sheets included in the Company's Annual Report on Form 10-K for the year ended December 31, 2011 filed with the SEC on February 26, 2013 (the "2011 Form 10-K"). This quarterly report should be read in conjunction with the 2011 Annual Report.

All material intercompany balances and transactions have been eliminated in consolidation. Certain reclassifications have been made to conform prior periods to the current year presentation, with no effect on net income.

Tabular information, other than share and per share data, is presented in thousands of dollars.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses and disclosure of contingent assets and liabilities at the date of the Condensed Consolidated Financial Statements. Actual results could differ from those estimates and such differences could affect the results of operations reported in future periods.

The Company's significant accounting policies are discussed in Note 2 of the Notes to Consolidated Financial Statements in our 2011 Form 10-K. Any significant changes to those policies or new significant policies are described below.

Adoption of Newly Issued Accounting Pronouncements

Fair Value:  In May 2011, the FASB issued updated accounting guidance on fair value measurements. The updated guidance resulted in common fair value measurement and disclosure requirements between GAAP and International Financial Reporting Standards ("IFRS"). The Company adopted this guidance effective January 1, 2012. The adoption did not have a material impact on the disclosures of the Company’s consolidated financial information.

Comprehensive Income:  In June 2011 and subsequently amended in December 2011, the FASB issued final guidance on the presentation of comprehensive income. Under the newly issued guidance, net income and comprehensive income may only be presented either as one continuous statement or in two separate but consecutive statements. The Company adopted this guidance effective January 1, 2012, with net loss and comprehensive loss shown as one continuous statement.

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9. Fair Value Measurements And Financial Instruments (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2012
Fair Value Measurements And Financial Instruments Details
Beginning Balance	$ 3,129
Issuance of convertible promissory notes
Settlement/conversion of convertible promissory notes	(998)
Net gains included in earnings	(199)
Ending Balance	1,932
The amount of gains included in earnings attributable to liabilities still held at the end of the period	$ 66

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8. Long Term Obligations (Tables)

6 Months Ended

Jun. 30, 2012

Long Term Obligations Tables

Schedule of long term obligations

	June 30,		December 31,
	2012		2011
Line of credit agreement dated March 2011 and maturing in July 2013,
interest rate of 2.7% at June 30, 2012.	$	25,000	$	25,000
Acquisition notes payables		5,867		7,675
Convertible promissory notes, 4.0% and matures at various dates through 2016		11,069		12,596
Capitalized lease obligations		13,128		15,562
Total debt and obligations		55,064		60,833
Long-term debt and obligations due within one year		(13,813)		(13,566	)
Long-term debt and obligations	$	41,251	$	47,267

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7. Stockholders' Equity (Tables)

6 Months Ended

Jun. 30, 2012

Stockholders Equity Tables

Schedule of changes in stockholders equity

Balance at December 31, 2011	$	343,856
Conversion of convertible promissory note payable		37
Stock based compensation		2,617
Shares issued for non-controlling interest		37
Foreign currency translation adjustment		(17	)
Net loss		(32,872	)
Balance at June 30, 2012	$	314,528

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10. Other Expense, Net (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
Other Expense Net Details
Interest income	$ 0	$ 81	$ 0	$ 97
Interest expense	(531)	(334)	(1,112)	(684)
Realized and unrealized net gain (loss) on fair value instruments	170	(3,625)	199	(5,586)
Foreign currency (loss) / gain	(43)	128	(40)	163
Other	31	74	154	74
Total Other Expense	$ (373)	$ (3,676)	$ (799)	$ (5,936)

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9. Fair Value Measurements And Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2012

Fair Value Measurements And Financial Instruments Tables

Schedule of reconciliation of changes in fair value

Balance at December 31, 2011	$	3,129
Issuance of convertible promissory notes		-
Settlement/conversion of convertible promissory notes		(998	)
Net gains included in earnings		(199	)
Balance at June 30, 2012	$	1,932
The amount of gains included in earnings attributable to liabilities still held at the end of the period	$	66

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10. Other Expense, Net (Tables)

6 Months Ended

Jun. 30, 2012

Other Expense Net Tables

Schedule of other expense

	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
Interest income	$	0		$	81		$	0		$	97
Interest expense		(531	)		(334	)		(1,112	)		(684	)
Realized and unrealized net gain (loss) on fair value instruments		170			(3,625	)		199			(5,586	)
Foreign currency		(43	)		128			(40	)		163
Other		31			74			154			74
Total other expense, net	$	(373	)	$	(3,676	)	$	(799	)	$	(5,936	)

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2. Discontinued Operations

6 Months Ended

Jun. 30, 2012

Discontinued Operations and Disposal Groups [Abstract]

DISCONTINUED OPERATIONS

During the quarter ended June 30, 2012, the Company’s Board of Directors determined that the Company would sell its Waste segment. As a result, at June 30, 2012, the Waste segment’s net assets met the “held for sale” criteria in accordance with generally accepted accounting principles, and as a result the Company has disclosed the Waste segment as discontinued operations. The Company has elected to continue the depreciation and amortization of assets pertaining to the discontinued operations since the assets were in use during the periods presented. Accordingly, the Company recorded depreciation expense on these assets within discontinued operations.

Upon the disposition of the Waste segment in the fourth quarter of 2012, the Company realized a gain, which will be recognized in the fourth quarter of 2012. The results of operations and the cash flows related to this segment have been reclassified to discontinued operations in our Condensed Consolidated Statements of Operations and Comprehensive Loss and Condensed Consolidated Statement of Cash Flows for all periods presented. The assets and liabilities of this segment have been reclassified to “Assets of discontinued operations” and “Liabilities of discontinued operations” in our Condensed Consolidated Balance Sheets as of June 30, 2012 and December 31, 2011. The following table presents summarized operating results for these discontinued operations for the three and six months ended June 30, 2012 and 2011:

	Three Months Ended June 30,					Six Months Ended June 30,
	(in thousands)
	2012			2011		2012			2011
Revenue	$	17,470		$	17,672	$	35,395		$	23,482
(Loss) income, net of tax	$	(882	)	$	275	$	(884	)	$	(350	)

Any corporate management overhead charged to the Waste segment in prior year filings has been included in continuing operations as the amounts are not expected to change as a result of the sale of the Waste segment.

On March 1, 2011, we closed the acquisition of Choice Environmental Services, Inc. ("Choice") and issued 8,281,920 shares of our common stock to the former shareholders of Choice, assumed $1.7 million of debt, and paid off $39.2 million of Choice debt. In paying the balance on this Choice debt, we incurred a prepayment penalty of $1.5 million which is included in loss from discontinued operations in the Condensed Consolidated Statements of Operations and Comprehensive Loss.

Components of Assets and Liabilities from discontinued operations consist of the following as of June 30, 2012 and December 31, 2011:

	2012		2011
	(in thousands, except per share data)
Current assets:
Accounts Receivable	$	5,839	$	5,646
Inventory		28		88
Other		1,472		803
Total current assets from discontinued operations	$	7,339	$	6,537
Noncurrent assets:
Property and equipment, net	$	31,825	$	32,663
Goodwill		53,324		53,324
Other intangibles, net		45,623		48,308
Other		614		894
Total noncurrent assets from discontinued operations	$	131,386	$	135,189
Total assets from discontinued operations	$	138,725	$	141,726
Current liabilities:
Accounts payable, accrued expenses and other current liabilities	$	8,005	$	7,276
Short term obligations		1,038		530
Total current liabilities from discontinued operations	$	9,043	$	7,806
Noncurrent liabilities:
Long term obligations	$	3,856	$	3,991
Deferred tax liabilities		21,795		21,791
Total noncurrent liabilities from discontinued operations	$	25,651	$	25,782
Total liabilities from discontinued operations	$	34,694	$	33,588

Loss per share from discontinued operations for the three and six months ended June 30, 2012 and 2011 is as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012				2011
Loss per share from discontinued operations
Basic and diluted	$	(0.01	)	$	(0.00	)		$	(0.01	)		$	(0.00	)

In connection with the acquisition of Choice, we entered into capital leases that have initial terms of five or ten years with companies owned by the former shareholders of Choice, to finance the cost of leasing office buildings and properties, including warehouses. The fair value of these leased properties and the related capital lease obligations of $2.9 million and $2.3 million are included in assets from discontinued operations and liabilities from discontinued operations, respectively.

The Company completed the sale of its Waste segment on November 15, 2012. See further discussion of this transaction in Note 16, “Subsequent Events.”

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11. Supplemental Cash Flow Information (Tables)

6 Months Ended

Jun. 30, 2012

Supplemental Cash Flow Information Tables

Schedule of supplemental cash flow information

	2012		2011
Cash paid for interest	$	1,236	$	464
Cash received from interest	$	-	$	167
Conversion of promissory notes	$	37	$	21,195
Issuance of shares for acquisitions,
property and equipment	$	37	$	94,027
Debt issued and assumed in business combinations	$	1,121	$	10,321

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6. Inventory (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Inventory Details
Finished goods	$ 11,867	$ 12,231
Raw materials	3,374	3,105
Work in progress	538	353
Inventory, net	$ 15,779	$ 15,689

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Condensed Consolidated Balance Sheets (Unaudited) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Current assets
Cash and cash equivalents	$ 28,857	$ 70,508
Accounts receivable (net of allowance for doubtful accounts of $2,463 at June 30, 2012 and $2,500 at December 31, 2011)	24,813	27,747
Inventory	15,779	15,689
Assets of discontinued operations	138,725	141,726
Other assets	4,011	2,619
Total current assets	212,185	258,289
Property and equipment, net	46,346	38,954
Goodwill	107,586	106,036
Deferred income tax assets	54,172	56,958
Other intangibles, net	14,705	14,579
Other noncurrent assets	3,903	3,588
Total assets	438,897	478,404
Current liabilities
Accounts payable, accrued expenses, and other current liabilities	29,095	34,450
Long-term debt and obligations due within one year	13,813	13,566
Advances from shareholder	2,000	2,000
Liabilities of discontinued operations	34,694	33,588
Total current liabilities	79,602	83,604
Long term obligations	41,251	47,267
Other long term liabilities	3,516	3,677
Total noncurrent liabilities	44,767	50,944
Swisher Hygiene Inc. stockholders' equity
Preferred stock, par value $0.001, authorized 10,000,000 shares; no shares issued or outstanding at June 30, 3012 and December 31, 2011
Common stock, par value $0.001, authorized 600,000,000 shares; 175,018,157 and 174,810,082 shares issued and outstanding at June 30, 2012 and December 31, 2011, respectively	175	175
Additional paid-in capital	381,685	378,824
Accumulated deficit	(66,502)	(34,330)
Accumulated other comprehensive income	(852)	(835)
Total Swisher Hygiene Inc. stockholders' equity	314,506	343,834
Non-controlling interest	22	22
Total stockholders' equity	314,528	343,856
Total liabilities and stockholders' equity	$ 438,897	$ 478,404

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11. Supplemental Cash Flow Information (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Supplemental Cash Flow Information Details
Cash paid for interest		$ 167
Cash received from interest		167
Conversion of promissory notes	37	21,195
Issuance of shares for acquistions, property and equipment	37	94,027
Debt issued and assumed in business combinations	$ 1,121	$ 10,321

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Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Cash used in operating activities
Net loss from continuing operations	$ (31,289)	$ (13,740)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	10,165	4,604
Provision for doubtful accounts	2,242	396
Stock based compensation	2,617	1,846
Realized and unrealized net (gain) loss on fair value of financial instruments	(199)	5,586
Deferred income tax liabilities	(125)	(10,163)
Changes in working capital components:
Accounts receivable	961	(3,924)
Inventory	(4)	(2,587)
Other assets and noncurrent assets	(1,706)	(1,793)
Accounts payable, accrued expenses, and other current liabilities	(5,267)	2,898
Cash used in operating activities of continuing operations	(22,605)	(16,876)
Cash used in investing activities of continuing operations
Purchases of property and equipment	(11,141)	(5,234)
Acquisitions, net of cash acquired	(4,310)	(85,896)
Restricted cash		5,193
Cash used in investing activities of continuing operations	(15,451)	(85,937)
Cash (used in) provided by financing activities of continuing operations
Proceeds from private placements, net of issuance costs		191,181
Proceeds from line of credit, net of issuance costs		27,661
Payoff of lines of credit		(27,779)
Principal payments on long-term debt and obligations	(6,819)	(1,177)
Proceeds from exercise of stock options		3,366
Cash (used in) provided by financing activities of continuing operations	(6,819)	193,252
Discontinued operations:
Net cash provided by operating activities	4,960	4,359
Net cash used in investing activities	(2,260)	(21,057)
Net cash provided by (used in) financing activities	524	(205)
Cash provided by (used in) discontinued operations	3,224	(16,903)
Net (decrease) increase in cash and cash equivalents	(41,651)	73,536
Cash and cash equivalents at the beginning of the period	70,508	38,932
Cash and cash equivalents at the end of the period	$ 28,857	$ 112,468

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2. Discontinued Operations (Details 1) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011	Jun. 30, 2012 Discontinued Operations	Jun. 30, 2011 Discontinued Operations
Current assets:
Accounts Receivable	$ 24,813	$ 27,747	$ 5,839	$ 5,646
Inventory	15,779	15,689	28	88
Other	4,011	2,619	1,472	803
Total current assets from discontinued operations	212,185	258,289	7,339	6,537
Property and equipment, net	46,346	38,954	31,825	32,663
Goodwill	107,586	106,036	53,324	53,324
Other intangibles, net	14,705	14,579	45,623	48,308
Other	3,903	3,588	614	894
Total noncurrent assets from discontinued operations			131,386	135,189
Total assets from discontinued operations	438,897	478,404	138,725	141,726
Current liabilities:
Accounts payable, accrued expenses and other current liabilities	29,095	34,450	8,005	7,276
Short term obligations			1,038	530
Total current liabilities from discontinued operations	79,602	83,604	9,043	7,806
Noncurrent liabilities:
Long term obligations	41,251	47,267	3,856	3,991
Deferred tax liabilities			21,795	21,791
Total noncurrent liabilities from discontinued operations	44,767	50,944	25,651	25,782
Total liabilities from discontinued operations			$ 34,694	$ 33,588

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16. Subsequent Events

6 Months Ended

Jun. 30, 2012

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

Sale of Waste Segment

On November 15, 2012, the Company completed a stock sale of Choice and other acquired businesses that comprise the Waste segment, to Waste Services of Florida, Inc. for $123.3 million. The stock purchase agreement contains earn-out provisions that could provide additional sale proceeds to the Company of $1.8 million upon achievement of a predetermined revenue target and is also subject to customary purchase price adjustments, including revenue and EBITDA metrics. Ten percent of the purchase price is subject to a holdback and adjustment upon delivery of audited financial statements to the buyer.

As a result of the sale of Choice and all of its operations in the Waste segment, the Company operates in one business segment, Hygiene, for fiscal year 2012 filings. In connection with the acquisition of Choice on March 1, 2011, the Company recorded deferred tax liabilities that allowed the Company to make a determination that the valuation allowance for the deferred tax asset of $2.4 million recorded at December 31, 2010 was no longer necessary at March 31, 2011. Upon the sale of Choice in the fourth quarter of 2012 and with our history of operating losses, a valuation allowance is projected to be necessary in 2012 as discussed in Note 13, "Income Taxes."

Revolving Credit Facility

During 2012, we amended our Credit Facility with Wells Fargo Bank, National Association on each of April 12, 2012, May 15, 2012, June 28, 2012, July 30, 2012, August 31, 2012, September 27, 2012, and October 31, 2012, in each case, primarily to extend the dates by which we were required to file our 2011 Form 10-K and Forms 10-Q for the quarters ended March 31, 2012, June 30, 2012 and September 30, 2012 and to avoid potential defaults for not timely filing these reports. In addition, the August 31, 2012 amendment reduced the Company’s maximum borrowing limit to $50.0 million, provided that the Company met certain borrowing base requirements. The September 27, 2012 amendment further reduced the Company’s maximum borrowing limit to $25.0 million, provided that the Company met certain modified borrowing base requirements. The October 31, 2012 amendment required the Company to place certain amounts in a collateral account under the sole control of the administrative agent to meet the Company’s unencumbered liquidity requirements. In connection with the sale of our Waste segment on November 15, 2012, we paid off the Credit Facility, which resulted in the termination of the Credit Facility.

Audit Committee Review and Restatements

On March 21, 2012, Swisher's Board of Directors (the "Board") determined that the Company's previously issued interim financial statements for the quarterly periods ended June 30, 2011 and September 30, 2011, and the other financial information in the Company's quarterly reports on Form 10-Q for the periods then ended should no longer be relied upon. Subsequently, on March 27, 2012, the Audit Committee concluded that the Company's previously issued interim financial statements for the quarterly period ended March 31, 2011 should no longer be relied upon. The Board and Audit Committee made these determinations in connection with the Audit Committee's then ongoing review into certain accounting matters. We refer to the interim financial statements and the other financial information described above as the "Prior Financial Information."

The Audit Committee initiated its review after an informal inquiry by the Company and its independent auditor regarding a former employee's concerns with the application of certain accounting policies. The Company first initiated the informal inquiry by requesting that both the Audit Committee and the Company’s independent auditor look into the matters raised by the former employee. Following this informal inquiry, the Company’s senior management and its independent auditor advised the Chairman of the Company’s Audit Committee regarding the matters. Subsequently, the Audit Committee determined that an independent review of the matters presented by the former employee should be conducted. During the course of its independent review, and due in part to the significant number of acquisitions made by the Company, the Audit Committee determined that it would be in the best interest of the Company and its stockholders to review the accounting entries relating to each of the 63 acquisitions made by the Company during the year ended December 31, 2011.

On May 17, 2012, Swisher announced that the Audit Committee had substantially completed the investigative portion of its internal review. In connection with substantial completion of its internal review, the Audit Committee recommended to the Board that the Company's Chief Financial Officer and two additional senior accounting personnel be separated from the Company as a result of their conduct in connection with the preparation of the Prior Financial Information. Following this recommendation, the Board determined that these three accounting personnel be separated from the Company, effective immediately. In making these employment determinations, the Board did not identify any conduct by these employees intended for or resulting in any personal benefit.

On May 17, 2012, the Company further announced that it had commenced a search process for a new Chief Financial Officer and that Steven Berrard, then the Company’s President and Chief Executive Officer, would also serve as the Company’s interim Chief Financial Officer.

On February 19, 20, and 21, 2013, respectively, the Company filed amended quarterly reports on Form 10-Q/A for the quarterly periods ended March 31, 2011, June 20, 2011, and September 30, 2011 (the "Affected Periods"), including restated financial statements for the Affected Periods, to reflect adjustments to previously reported financial information.

On February 27, 2013, the Company provided the NASDAQ Hearings Panel (the "Panel") an update on the Company’s compliance efforts and requested a further extension of time to become current in the filing of its periodic reports. The Company requested an extension through March 15, 2013 to file its Form 10-Qs for the quarterly periods ended March 31, 2012, June 30, 2012 and September 31, 2012 (collectively, the “2012 Form 10-Qs”). Additionally, the Company requested an extension through April 30, 2013 to file its Form 10-K for the year ended December 31, 2012 (the “2012 Form 10-K”).

On February 28, 2013, the Company received a letter from the Panel granting the Company continued listing on NASDAQ through March 15, 2013, provided the Company files the 2012 Form 10-Qs by March 15, 2013. The Panel also advised the Company that it will retain jurisdiction to make a determination whether to continue listing the Company through the filing of the 2012 Form 10-K.

During 2012, we incurred costs in excess of $6.0 million directly attributable to the Audit Committee’s investigation process. In addition, during 2012 and through February 15, 2013, we have incurred approximately $12.0 million in additional review-related expenses, including fees for additional audit work, accounting review, IT consulting, legal representation, and valuation services.

Securities Litigation

There have been six shareholder lawsuits filed in federal courts in North Carolina and New York asserting claims relating to the Company's March 28, 2012 announcement regarding the Company's Board conclusion that the Company's previously issued interim financial statements for the quarterly periods ended March 31, 2011, June 30, 2011 and September 30, 2011, and the other financial information in the Company's quarterly reports on Form 10-Q for the periods then ended, should no longer be relied upon and that an internal review by the Company's Audit Committee primarily relating to possible adjustments to the Company's financial statements was ongoing.

On March 30, 2012, a purported Company shareholder commenced a putative securities class action on behalf of purchasers and sellers of the Company's common stock in the U.S. District Court for the Southern District of New York against the Company, the former President and Chief Executive Officer ("former CEO"), and the former Vice President and Chief Financial Officer ("former CFO"). The plaintiff asserted claims alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 based on alleged false and misleading disclosures in the Company's public filings. In April and May 2012, four more putative securities class actions were filed by purported Company shareholders in the U.S. District Court for the Western District of North Carolina against the same set of defendants. The plaintiffs in these cases have asserted claims alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") based on alleged false and misleading disclosures in the Company's public filings. In each of the putative securities class actions, the plaintiffs seek damages for losses suffered by the putative class of investors who purchased Swisher common stock.

On May 21, 2012, a shareholder derivative action was brought against the Company's former CEO and former CFO and the Company's directors for alleged breaches of fiduciary duty by another purported Company shareholder in the U.S. District Court for the Southern District of New York. In this derivative action, the plaintiff seeks to recover for the Company damages arising out of a possible restatement of the Company's financial statements.

On May 30, 2012, the Company, and its former CEO and former CFO filed a motion with the United States Judicial Panel on Multidistrict Litigation ("MDL Panel") to centralize all of the cases in the Western District of North Carolina by requesting that the actions filed in the Southern District of New York be transferred to the Western District of North Carolina.

In light of the motion to centralize the cases in the Western District of North Carolina, the Company, and its former CEO and former CFO requested from both courts a stay of all proceedings pending the MDL Panel's ruling. On June 4, 2012, the U.S. District Court for the Southern District of New York adjourned all pending dates in the cases in light of the motion to transfer filed before the MDL Panel. On June 13, 2012, the U.S. District Court for the Western District of North Carolina issued a stay of proceedings pending a ruling by the MDL Panel.

On August 13, 2012, the MDL Panel granted the motion to centralize, transferring the actions filed in the Southern District of New York to the Western District of North Carolina. In response, on August 21, 2012, the Western District of North Carolina issued an order governing the practice and procedure in the actions transferred to the Western District of North Carolina as well as the actions originally filed there.

On October 18, 2012, the Western District of North Carolina held an Initial Pretrial Conference at which it appointed lead counsel and lead plaintiffs for the securities class actions, and set a schedule for the filing of a consolidated class action complaint and defendant's time to answer or otherwise respond to the consolidated class action complaint. The Western District of North Carolina stayed the derivative action pending the outcome of the securities class actions.

Derivative Litigation

On April 11, 2012 and May 11, 2012, the Board received demand letters (the “Demands”) from two of the Company’s purported stockholders. In general, the Demands ask the Board to undertake an independent investigation into potential violations of Delaware and federal law relating to the Company's March 28, 2012 disclosure that its previously issued financial results for the first, second and third fiscal quarters of 2011 should no longer be relied upon, and to initiate claims against responsible parties and/or implement therapeutic changes as needed. The Board has not yet made a determination regarding its response to the Demands.

Other Related Matters

The Company has been contacted by the staff of the Atlanta Regional Office of the SEC and by the United States Attorney's Office for the Western District of North Carolina (the "U.S. Attorney's Office") after publicly announcing the Audit Committee's internal review and the delays in filing our periodic reports. The Company has been asked to provide information about these matters on a voluntary basis to the SEC and the U.S. Attorney's Office. The Company is fully cooperating with the SEC and the U.S. Attorney's Office. Any action by the SEC, the U.S. Attorney's Office or other government agency could result in criminal or civil sanctions against the Company and/or certain of its current or former officers, directors or employees.

During 2011, we entered into a series of arm's length securities purchase agreements to sell an aggregate of 21,857,143 shares of our common stock to certain funds of a global financial institution (the "Private Placements"). We agreed to use our commercially reasonable efforts to file a resale registration statement with the SEC relating to the shares of common stock sold in the Private Placements. If the registration statement was not filed or declared effective within specified time periods, the investors would have been, or if the registration statement ceased to remain effective for a period of time exceeding a sixty day grace period, the investors would be entitled to receive monthly liquidated damages in cash equal to one percent of the original offering price for each share purchased in the private placement that at such time could not be sold by the investor, with an interest rate of one percent per month accruing daily for liquidated damages not paid in full within ten business days. On August 12, 2011, the SEC declared effective, a resale registration statement relating to the 21,857,143 shares issued in the Private Placements. The registration statement, including post-effective amendments to the registration statement, remained effective through April 12, 2012. As a result of not timely filing our 2011 Form 10-K, the registration statement relating to shares issued in the Private Placements is not effective, and as such we may be subject to liability under the penalty provision.

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2. Discontinued Operations (Details 2) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Loss per share from discontinued operations
Basic and diluted	$ (0.18)	$ (0.05)	$ (0.10)	$ (0.10)
Discontinued Operations
Loss per share from discontinued operations
Basic and diluted	$ (0.01)	$ 0.00	$ (0.01)	$ 0.00

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2. Discontinued Operations (Tables)

6 Months Ended

Jun. 30, 2012

Discontinued Operations Tables

Schedule of discontinued operations

	Three Months Ended June 30,					Six Months Ended June 30,
	(in thousands)
	2012			2011		2012			2011
Revenue	$	17,470		$	17,672	$	35,395		$	23,482
(Loss) income, net of tax	$	(882	)	$	275	$	(884	)	$	(350	)

Schedule of components of assets and liabilities from discontinued operations

	2012		2011
	(in thousands, except per share data)
Current assets:
Accounts Receivable	$	5,839	$	5,646
Inventory		28		88
Other		1,472		803
Total current assets from discontinued operations	$	7,339	$	6,537
Noncurrent assets:
Property and equipment, net	$	31,825	$	32,663
Goodwill		53,324		53,324
Other intangibles, net		45,623		48,308
Other		614		894
Total noncurrent assets from discontinued operations	$	131,386	$	135,189
Total assets from discontinued operations	$	138,725	$	141,726
Current liabilities:
Accounts payable, accrued expenses and other current liabilities	$	8,005	$	7,276
Short term obligations		1,038		530
Total current liabilities from discontinued operations	$	9,043	$	7,806
Noncurrent liabilities:
Long term obligations	$	3,856	$	3,991
Deferred tax liabilities		21,795		21,791
Total noncurrent liabilities from discontinued operations	$	25,651	$	25,782
Total liabilities from discontinued operations	$	34,694	$	33,588

Schedule of loss per share from discontinued operations

	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012				2011
Loss per share from discontinued operations
Basic and diluted	$	(0.01	)	$	(0.00	)		$	(0.01	)		$	(0.00	)

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1. Business Description

6 Months Ended

Jun. 30, 2012

Organization, Consolidation and Presentation of Financial Statements [Abstract]

BUSINESS DESCRIPTION

Principal Operations

Swisher Hygiene Inc. and its wholly-owned subsidiaries (the “Company” or “We” or “Our”) provide essential hygiene and sanitizing solutions to customers throughout much of North America and internationally through its global network of company owned operations, franchises and master licensees. These solutions include essential products and services that are designed to promote superior cleanliness and sanitation in commercial environments, while enhancing the safety, satisfaction and well-being of employees and patrons. These solutions are typically delivered by employees on a regularly scheduled basis and involve providing our customers with: (i) consumable products such as soap, paper, cleaning chemicals, detergents, and supplies, together with the rental and servicing of dish machines and other equipment for the dispensing of those products; (ii) the rental of facility service items requiring regular maintenance and cleaning, such as floor mats, mops, bar towels, and linens; (iii) manual cleaning of their facilities; and (iv) solid waste collection services. The Company serves customers in a wide range of end-markets, with a particular emphasis on the foodservice, hospitality, retail, industrial, and healthcare industries. In addition, our solid waste collection services provide services primarily to commercial and residential customers through contracts with municipalities or other agencies.

Prospectively, we intend to grow in both existing and new geographic markets through a combination of organic and acquisition growth. However, we will continue to focus our investments towards those opportunities which will most benefit our core businesses; chemical and linen processing services. Subsequent to the sale of our Waste segment in November 2012, we will outsource waste and recycling services only through third-party providers. See Note 16, "Subsequent Events" for additional information concerning the sale of our Waste segment.

We have Company-owned operations and franchise operations located throughout the United States and Canada and have entered into seven Master License Agreements covering the United Kingdom, the Netherlands, Singapore, the Philippines, Taiwan, Hong Kong/Macau/China, and Mexico. Franchise revenue from these Master Licensees was $0.5 million for the six months ended June 30, 2012.

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Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Current assets
Net of allowance for doubtful accounts, accounts receivable	$ 2,463	$ 2,500
Swisher Hygiene Inc. stockholders' equity
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	600,000,000	600,000,000
Common stock, shares issued	175,018,157	174,810,082
Common stock, shares outstanding	175,018,157	174,810,082

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11. Supplemental Cash Flow Information

6 Months Ended

Jun. 30, 2012

Supplemental Cash Flow Elements [Abstract]

SUPPLEMENTAL CASH FLOW INFORMATION

The following table includes supplemental cash flow information, including non-cash investing and financing activity for the six months ended June 30, 2012 and 2011.

	2012		2011
Cash paid for interest	$	1,236	$	464
Cash received from interest	$	-	$	167
Conversion of promissory notes	$	37	$	21,195
Issuance of shares for acquisitions,
property and equipment	$	37	$	94,027
Debt issued and assumed in business combinations	$	1,121	$	10,321

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Document and Entity Information	6 Months Ended
	Jun. 30, 2012	Mar. 11, 2013
Document and Entity Information [Abstract]
Entity Registrant Name	Swisher Hygiene Inc.
Entity Central Index Key	0001504747
Document Type	10-Q
Document Period End Date	Jun. 30, 2012
Amendment Flag	false
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q2
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		175,157,404

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12. Loss Per Share

6 Months Ended

Jun. 30, 2012

Earnings Per Share [Abstract]

LOSS PER SHARE

Net loss attributable per share is computed by dividing net loss by the weighted-average number of common shares outstanding during the period. The following were not included in the computation of diluted loss per share for the six months ended June 30, 2012 and 2011 as their inclusion would be anti-dilutive:

·   Warrants to purchase 5.5 million shares of common stock at $0.50 per share that were exercised in May 2011 for the period prior to exercise during 2011.

·   5,975,866 shares of common stock underlying outstanding stock options and restricted stock units.

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Condensed Consolidated Statements of Operations (Unaudited) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Revenue
Product	$ 104,019	$ 26,350	$ 53,169	$ 41,063
Service	13,753	6,618	6,744	11,986
Franchise and other	563	1,276	269	2,669
Total revenue	118,335	34,244	60,182	55,718
Costs and expenses
Cost of sales	52,079	13,152	26,832	21,394
Route expenses	20,766	7,603	10,171	12,758
Selling, general, and administrative	65,662	17,366	35,597	30,901
Acquisition and merger expenses	162	2,734	42	3,998
Depreciation and amortization	10,165	2,482	5,188	4,604
Total costs and expenses	148,738	43,337	77,830	73,655
Loss from continuing operations	(30,403)	(9,093)	(17,648)	(17,937)
Other expense, net	(799)	(3,676)	(373)	(5,936)
Net loss from continuing operations before income taxes	(31,202)	(12,769)	(18,021)	(23,873)
Income tax (expense) benefit	(87)	4,403	(8)	10,133
Net loss from continuing operations	(31,289)	(8,366)	(31,289,000)	(13,740,000)
(Loss) Income from discontinued operations, net of tax	(884)	275	(882)	(350)
Net loss			(31,289)	(13,740)
Net loss attributable to Swisher Hygiene Inc.		(1)		(1)
Comprehensive loss
Foreign currency translation adjustment	$ (17)	$ (270)	$ (13)	$ (28)
Loss per share from continuing operations
Basic and diluted	$ (0.18)	$ (0.05)	$ (0.10)	$ (0.10)
Weighted-average common shares used in the computation of loss per share
Basic and diluted	174,913,264	164,972,640	174,996,323	144,097,478

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6. Inventory

6 Months Ended

Jun. 30, 2012

Inventory, Net [Abstract]

INVENTORY

Inventory is comprised of the following components at June 30, 2012 and December 31, 2011:

Finished goods	$	11,867	$	12,231
Raw materials		3,374		3,105
Work in process		538		353
Total	$	15,779	$	15,689

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5. Goodwill And Other Intangible Assets

6 Months Ended

Jun. 30, 2012

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill and other intangible assets have been recognized in connection with the Company's acquisitions and substantially all of the balance is expected to be fully deductible for income tax purposes over 15 years. Changes in the carrying amount of goodwill and other intangibles during the six months ended June 30, 2012 were as follows:

	Goodwill			Customer Relationships			Non-Compete Agreements			Trademarks			Formulas
Balance at
December 31, 2011	$	106,906		$	43,140		$	6,947		$	1,977		$	4,894
Accumulated Impairment Losses		(870	)		-			-			-			-
Total		106,036			43,140			6,947			1,977			4,894
Acquisition/Additions		1,550			1,276			126			130			-
Amortization		-			(3,040	)		(1,023	)		(114	)		(125	)
Foreign currency translation					(11	)		(5	)		-
Balance at
June 30, 2012	$	107,586		$	41,365		$	6,045		$	1,993		$	4,769

The fair value of the customer relationships acquired were originally valued using future discounted cash flows expected to be generated from those customers. These customer relationships and contracts will be amortized on a straight-line basis over five to ten years, which is primarily based on historical customer attrition rates and lengths of contracts. The fair value of the non-compete agreements will be amortized on a straight-line basis over the length of the agreements, typically not exceeding five years. The fair value of formulas is amortized on a straight-line basis over twenty years. Trademarks and tradenames are generally indefinite lived intangibles with no amortization. In instances where there is a finite life remaining on a particular trademark or tradename, the Company amortizes them on a straight-line basis over this period. Total accumulated amortization of intangibles was $17.5 million and $13.2 million as of June 30, 2012 and December 31, 2011, respectively.

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3. Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2012

Summary Of Significant Accounting Policies Policies

Basis of Presentation and Principles of Consolidation

The accompanying Condensed Consolidated Financial Statements have been prepared in accordance with United States generally accepted accounting principles ("GAAP") for interim financial information and in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X promulgated by the Securities and Exchange Commission ("SEC") and therefore do not contain all of the information and footnotes required by GAAP and the SEC for annual financial statements. The Company's Condensed Consolidated Financial Statements reflect all adjustments that management believes are necessary for the fair presentation of their financial condition, results of operations, and cash flows for the periods presented. The information at December 31, 2011 in the Company's Condensed Consolidated Balance Sheets included in this quarterly report was derived from the audited Consolidated Balance Sheets included in the Company's Annual Report on Form 10-K for the year ended December 31, 2011 filed with the SEC on February 26, 2013 (the "2011 Form 10-K"). This quarterly report should be read in conjunction with the 2011 Annual Report.

All material intercompany balances and transactions have been eliminated in consolidation. Certain reclassifications have been made to conform prior periods to the current year presentation, with no effect on net income.

Tabular information, other than share and per share data, is presented in thousands of dollars.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses and disclosure of contingent assets and liabilities at the date of the Condensed Consolidated Financial Statements. Actual results could differ from those estimates and such differences could affect the results of operations reported in future periods.

The Company's significant accounting policies are discussed in Note 2 of the Notes to Consolidated Financial Statements in our 2011 Form 10-K. Any significant changes to those policies or new significant policies are described below.

Adoption of Newly Issued Accounting Pronouncements

Fair Value:  In May 2011, the FASB issued updated accounting guidance on fair value measurements. The updated guidance resulted in common fair value measurement and disclosure requirements between GAAP and International Financial Reporting Standards ("IFRS"). The Company adopted this guidance effective January 1, 2012. The adoption did not have a material impact on the disclosures of the Company’s consolidated financial information.

Comprehensive Income:  In June 2011 and subsequently amended in December 2011, the FASB issued final guidance on the presentation of comprehensive income. Under the newly issued guidance, net income and comprehensive income may only be presented either as one continuous statement or in two separate but consecutive statements. The Company adopted this guidance effective January 1, 2012, with net loss and comprehensive loss shown as one continuous statement.

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13. Income Taxes

6 Months Ended

Jun. 30, 2012

Income Tax Disclosure [Abstract]

INCOME TAXES

As a result of the merger with CoolBrands International, Inc. on November 2, 2010, the Company converted from a corporation taxed under the provisions of Subchapter S of the Internal Revenue Code to a tax-paying entity and accounts for income taxes under the asset and liability method. For the six months ended June 30, 2012, the Company has recorded an estimate for income taxes based on the Company's projected net loss for the full twelve month period ending December 31, 2012 and an effective income tax rate of approximately 1.0%. The amount of income tax expense recorded for the period is based on the pre-tax net loss for the six months ended June 30, 2012.

In addition, during the six months ended June 30, 2012, management has concluded that it is not likely that the Company will realize the benefits of all of its deferred tax assets and as a result, believes a full valuation allowance will be required at December 31, 2012. This is primarily due to the projected net operating losses and the projected net deferred tax asset position created by the sale of the Waste segment on November 14, 2012. Therefore, the Company has not recognized a tax benefit as it relates to the current loss for the period ended June 30, 2012. It should also be noted that the Company does not consider the tax deferred liabilities related to indefinite lived intangible assets when determining the need for a valuation allowance.

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9. Fair Value Measurements And Financial Instruments

6 Months Ended

Jun. 30, 2012

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS AND FINANCIAL INSTRUMENTS

The Company determines the fair value of certain assets and liabilities based on assumptions that market participants would use in pricing the assets or liabilities. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, or the "exit price." The Company utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value and gives precedence to observable inputs in determining fair value. The following levels were established for each input:

Level 1: "Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets."

Level 2: "Include other inputs that are observable for the asset or liability either directly or indirectly in the marketplace."

Level 3: "Unobservable inputs for the asset or liability."

The fair value of the above convertible promissory notes issued as a part of business combinations is based primarily on a Black-Scholes pricing model. The significant management assumptions and estimates used in determining the fair value included the expected term and volatility of our common stock. The expected volatility was based on an analysis of industry peer's historical stock price over the term of the notes as the Company did not have sufficient history of its own stock volatility, which was estimated at approximately [25]%. Subsequent changes in the fair value of these instruments were recorded in other expense, net on the Condensed Consolidated Statements of Operations and Comprehensive Loss. Future movement in the market price of our stock could significantly change the fair value of these instruments and impact our earnings.

The convertible promissory notes are Level 3 financial instruments. The Company has no Level 1 or Level 2 financial instruments.

In addition, during 2011, the Company issued an earn out that was to be settled in up to 90,909 shares held in escrow within one year from the date of acquisition or once the acquired business’s revenue achieved an agreed upon level. The number of shares that would be released from escrow varied based on the achievement of agreed upon revenue metrics. In April 2012, the Company released from escrow all 90,909 shares to the sellers.

The following table is a reconciliation of changes in fair value of the notes that are marked to market each subsequent reporting period for the six months ended June 30, 2012:

Balance at December 31, 2011	$	3,129
Issuance of convertible promissory notes		-
Settlement/conversion of convertible promissory notes		(998	)
Net gains included in earnings		(199	)
Balance at June 30, 2012	$	1,932
The amount of gains included in earnings attributable to liabilities still held at the end of the period	$	66

The above balance represents the value of convertible notes that are subject to continual remeasurement and mark to market accounting and is included in the $11.0 million balance for all of the Company’s convertible promissory notes at June 30, 2012.

Financial Instruments

The Company’s financial instruments, which may expose the Company to concentrations of credit risk, include cash and cash equivalents, accounts receivable, accounts payable, and debt. Cash and cash equivalents are maintained at financial institutions. The carrying amounts of cash and the current portion of accounts receivable and accounts payable approximate fair value due to the short maturity of these instruments. The fair value of the Company’s debt is estimated based on the current borrowing rates available to the Company for bank loans with similar terms and maturities, and approximates the carrying value of these liabilities.

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7. Stockholders' Equity

6 Months Ended

Jun. 30, 2012

Equity [Abstract]

STOCKHOLDERS' EQUITY

Changes in stockholders’ equity for the six months ended June 30, 2012 consisted of the following:

Balance at December 31, 2011	$	343,856
Conversion of convertible promissory note payable		37
Stock based compensation		2,617
Shares issued for non-controlling interest		37
Foreign currency translation adjustment		(17	)
Net loss		(32,872	)
Balance at June 30, 2012	$	314,528

Acquisitions and Asset Purchases

We issued a total of 10,000 shares of our common stock in connection with the purchase of the remaining non-controlling interest in a subsidiary during the six months ended June 30, 2012. Our stock price was at a weighted-average price of $3.68 at the time these shares were issued.

Stock Based Compensation

Stock based compensation is the result of the recognition of the fair value of stock based compensation on the date of grant over the service period for which the awards are expected to vest.

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8. Long Term Debt and Obligations

6 Months Ended

Jun. 30, 2012

Long-term Debt, Unclassified [Abstract]

LONG TERM DEBT AND OBLIGATIONS

Long-term obligations consisted of the following as of June 30, 2012 and December 31, 2011:

	June 30,		December 31,
	2012		2011
Line of credit agreement dated March 2011 and maturing in July 2013,
interest rate of 2.7% at June 30, 2012.	$	25,000	$	25,000
Acquisition notes payables		5,867		7,675
Convertible promissory notes, 4.0% and matures at various dates through 2016		11,069		12,596
Capitalized lease obligations		13,128		15,562
Total debt and obligations		55,064		60,833
Long-term debt and obligations due within one year		(13,813)		(13,566	)
Long-term debt and obligations	$	41,251	$	47,267

Revolving Credit Facilities

In March 2011, we entered into a $100.0 million senior secured revolving Credit Facility (the "Credit Facility"), which replaced the Company’s former credit facilities. Under the Credit Facility, the Company had an initial borrowing availability of $32.5 million, which increased to the fully committed $100.0 million upon delivery of our unaudited quarterly financial statements for the quarter ended March 31, 2011 and satisfaction of certain financial covenants regarding leverage and coverage ratios and a minimum liquidity requirement, which requirements we met as of March 31, 2011.

Borrowings under the Credit Facility were secured by a first priority lien on substantially all of our existing and thereafter acquired assets, including $25.0 million of cash on borrowings in excess of $75.0 million. Furthermore, borrowings under the facility were guaranteed by all of our domestic subsidiaries and secured by substantially all the assets and stock of our domestic subsidiaries and substantially all of the stock of our foreign subsidiaries. Interest on borrowings under the Credit Facility would typically accrue at London Interbank Offered Rate ("LIBOR") plus 2.5% to 4.0%, depending on the ratio of senior debt to consolidated earnings before interest, taxes, depreciation and amortization ("EBITDA") (as such term is defined in the new Credit Facility, which includes specified adjustments and allowances authorized by the lender, as provided for in such definition). We also had the option to request swingline loans and borrowings using a base rate. Interest was payable monthly or quarterly on all outstanding borrowings. The Credit Facility was set to mature on July 31, 2013.

Borrowings and availability under the Credit Facility were subject to compliance with financial covenants, including achieving specified consolidated EBITDA levels, which depends on the success of our acquisition strategy, and maintaining leverage and coverage ratios and a minimum liquidity requirement. The Credit Facility also placed restrictions on our ability to incur additional indebtedness, make certain acquisitions, create liens or other encumbrances, sell or otherwise dispose of assets, and merge or consolidate with other entities or enter into a change of control transaction. Failure to achieve or maintain the financial covenants in the Credit Facility or failure to comply with one or more of the operational covenants could have adversely affected our ability to borrow monies and could have resulted in a default under the Credit Facility. The Credit Facility was subject to other standard default provisions.

In August 2011, the Company entered into an amendment to the Credit Facility that modified the covenants, including an increase in permitted indebtedness to $40.0 million. Failure to achieve or maintain the financial covenants in the Credit Facility or failure to comply with one or more of the operational covenants could have adversely affected our ability to borrow monies and could have resulted in a default under the Credit Facility. The Credit Facility was subject to other standard default provisions.

During 2012, we amended our Credit Facility with Wells Fargo Bank, National Association on each of April 12, 2012, May 15, 2012, June 28, 2012, July 30, 2012, August 31, 2012, September 27, 2012, and October 31, 2012, in each case, primarily to extend the dates by which we were required to file our 2011 Form 10-K and Forms 10-Q for the quarters ended March 31, 2012, June 30, 2012, and September 30, 2012 and to avoid potential defaults for not timely filing these reports. In addition, the August 31, 2012 amendment reduced the Company’s maximum borrowing limit to $50.0 million, provided that the Company met certain borrowing base requirements. The September 27, 2012 amendment further reduced the Company’s maximum borrowing limit to $25.0 million, provided that the Company met certain borrowing base requirements. The October 31, 2012 amendment required the Company to place certain amounts in the collateral account under the sole control of the administrative agent to meet the Company’s unencumbered liquidity requirements. In connection with the sale of our Waste segment on November 15, 2012, we paid off and terminated the Credit Facility.

Convertible Promissory Notes

During the six months ended June 30, 2012 and in connection with certain acquisitions, the Company issued convertible promissory notes with an aggregate principal value of $1.1 million. The notes have a four percent interest rate and are convertible by the Company based on the trading price the day before conversion limited to a maximum aggregate of 320,352 shares of our common stock. The Company may convert the principal and interest into shares of common stock at any time subject to the listing of the common stock on NASDAQ or another national exchange.

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10. Other Expense, Net

6 Months Ended

Jun. 30, 2012

Other Income and Expenses [Abstract]

OTHER EXPENSE, NET

Other expense, net consisted of the following:

	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
Interest income	$	0		$	81		$	0		$	97
Interest expense		(531	)		(334	)		(1,112	)		(684	)
Realized and unrealized net gain (loss) on fair value instruments		170			(3,625	)		199			(5,586	)
Foreign currency		(43	)		128			(40	)		163
Other		31			74			154			74
Total other expense, net	$	(373	)	$	(3,676	)	$	(799	)	$	(5,936	)

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2. Discontinued Operations (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended		3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011	Mar. 31, 2012 Discontinued Operations	Mar. 31, 2011 Discontinued Operations	Jun. 30, 2012 Discontinued Operations	Jun. 30, 2011 Discontinued Operations
Revenue	$ 118,335	$ 34,244	$ 60,182	$ 55,718	$ 17,470	$ 17,672	$ 35,395	$ 23,482
(Loss) income, net of tax			$ (31,289)	$ (13,740)	$ (882)	$ 275	$ (884)	$ (350)

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15. Commitments And Contingencies

6 Months Ended

Jun. 30, 2012

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

The Company is subject to legal proceedings and claims which arise in the ordinary course of its business. Although occasional adverse decisions (or settlements) may occur, the Company believes that the final disposition of such matters will not have a material adverse effect on the Company's financial position, results of operations or cash flows.

In connection with a distribution agreement entered into in December 2010, the Company provided a guarantee that the distributor's operating cash flows associated with the agreement would not fall below certain agreed-to minimums, subject to certain pre-defined conditions, over the ten year term of the distribution agreement. If the distributor's annual operating cash flow does fall below the agreed-to annual minimums, the Company will reimburse the distributor for any such short fall up to a pre-designated amount. No value was assigned to the fair value of the guarantee at June 30, 2012 and December 31, 2011 based on a probability assessment of the projected cash flows. Management currently does not believe that it is probable that any amounts will be paid under this agreement and thus there is no amount accrued for the guarantee in the Condensed Consolidated Financial Statements. This liability would be considered a Level 3 financial instruments given the unobservable inputs used in the projected cash flow model. See Note 9, "Fair Value Measurements and Financial Instruments" for the fair value hierarchy.

The Company also entered into a Manufacturing and Supply Agreement (the "Cavalier Agreement") with another plant in conjunction with its acquisition of Sanolite and Cavalier in July of 2011. The agreement, which was scheduled to expire on December 31, 2012, was extended for an additional two year period with an automatic 18-month term. The agreement provides for pricing adjustments, up or down, on the first of each month based on the vendor's actual average product costs incurred during the prior month. Additional product payments made by the Company due to the vendors pricing adjustment as a result of this agreement have not been significant and have not represented costs materially above the going market price for such product.

In June of 2012, a fire occurred at a linen warehouse of one of the Company’s subsidiaries in Tampa, Florida.  The fire heavily damaged the leased building and its contents, requiring the building to be demolished.  Shortly after the fire, we were able to resume services to our customers through outsourcing arrangements and business interruption was minimal.  We maintain comprehensive general liability and property insurance, including business interruption insurance.  In November 2012, we reached agreement with our insurance carrier and settled the claims.  In accordance with generally accepted accounting principles, we expect to record a gain in other income (expense) on the involuntary conversion of assets in the fourth quarter of 2012.

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5. Goodwill And Other Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2012

Goodwill And Other Intangible Assets Tables

Schedule of goodwill and other intangibles

	Goodwill			Customer Relationships			Non-Compete Agreements			Trademarks			Formulas
Balance at
December 31, 2011	$	106,906		$	43,140		$	6,947		$	1,977		$	4,894
Accumulated Impairment Losses		(870	)		-			-			-			-
Total		106,036			43,140			6,947			1,977			4,894
Acquisition/Additions		1,550			1,276			126			130			-
Amortization		-			(3,040	)		(1,023	)		(114	)		(125	)
Foreign currency translation					(11	)		(5	)		-
Balance at
June 30, 2012	$	107,586		$	41,365		$	6,045		$	1,993		$	4,769

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7. Stockholders' Equity (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2012
Stockholders Equity Details
Balance at December 31, 2011	$ 343,856
Conversion of convertible promissory note payable	37
Stock based compensation	2,617
Shares issued for non-controlling interest	37
Foreign currency translation adjustment	(17)
Net loss	(32,872)
Balance at June 30, 2012	$ 314,528

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Condensed Consolidated Statements of Equity (Unaudited) (USD $) In Thousands, except Share data	Common Stock USD ($)	Additional Paid-In Capital USD ($)	Accumulated Deficit USD ($)	Accumulated Other Comprehensive Income USD ($)	Swisher Hygiene Inc. Shareholders' Equity USD ($)	Non- controlling Interest	Total USD ($)
Beginning balance at Dec. 31, 2010	$ 174,810,082
Beginning balance, shares at Dec. 31, 2010	175	378,824	(34,330)	(835)	343,834	22	343,856
Shares issued for non-controlling interest, shares	10,000
Shares issued for non-controlling interest		37			37		37
Conversion of convertible promissory notes payable, shares	10,047
Conversion of convetible promissory notes payable		37			37		37
Stock based compensation		2,617					2,617
Issuance of contingent earnout shares, shares	90,909
Issuance of contingent earnout shares, amount		170			170		170
Issuance of common stock issued under stock based payment plans, shares	97,119
Foreign currency translation adjustment			(32,172)		(32,172)		(32,172)
Net loss				(17)	(17)		(17)
Ending balance at Jun. 30, 2012	$ 175,018,157						$ 314,528
Ending balance, shares at Jun. 30, 2012	175	381,685	(66,502)	(852)	314,506	22	314,528

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4. Acquisitions

6 Months Ended

Jun. 30, 2012

Business Combinations [Abstract]

ACQUISITIONS

During the six months ended June 30, 2012, the Company acquired four independent businesses and purchased the remaining non-controlling interest in one of its subsidiaries. The results of operations of these acquisitions have been included in the Company's Condensed Consolidated Statements of Operations and Comprehensive Loss since their respective acquisition dates. None of these acquisitions were significant individually or in the aggregate to the Company's consolidated financial results and therefore, supplemental pro forma financial information is not presented.

The following table summarizes the preliminary allocation of the purchase price of these acquisitions based on the fair value of the acquired assets and assumed liabilities:

Net assets acquired:
Accounts receivable	$	263
Inventory		86
Property and equipment		2,079
Other intangibles		1,532
Accounts payable, accrued expenses and other liabilities		(42	)
Total net assets acquired		3,918
Goodwill		1,550
Total purchase price		5,468
Less: debt issued or assumed		(1,121	)
Less: issuance of shares		(37	)
Cash Paid	$	4,310

Acquisition and merger expenses include costs for third party due diligence, legal, accounting and other professional services fees directly-related to the acquisition of four independent companies and the remaining non-controlling interest in one subsidiary during the six months ended June 30, 2012.

The purchase price allocations for these acquisitions are preliminary and subject to changes in the fair value of assets and liabilities as of the effective dates.

The Company made no acquisitions during the three months ended June 30, 2012.

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6. Inventory (Tables)

6 Months Ended

Jun. 30, 2012

Inventory Tables

Schedule of inventory

Inventory is comprised of the following components at June 30, 2012 and December 31, 2011:

Finished goods	$	11,867	$	12,231
Raw materials		3,374		3,105
Work in process		538		353
Total	$	15,779	$	15,689

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4. Acquisitons (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Other intangibles	$ 14,705	$ 14,579
Acquisition
AccountsReceivables	263
Inventory	86
Property and equipment	2,079
Other intangibles	1,532
Accounts payable, accrued expenses and other liabilities	(42)
Total identifiable assets acquired	3,918
Goodwill	1,550
Total purchase price	5,468
Less: Debt assumed	(1,121)
Less: Issuance of shares	(37)
Cash paid (including prepayment penalty of $1,853,784)	$ 4,310

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14. Related Party Transactions

6 Months Ended

Jun. 30, 2012

Related Party Transactions [Abstract]

14. Related Party Transactions

The Company agreed to pay an entity, related by common ownership with shareholders of the Company, a fee for services provided, including product development, marketing and branding strategy, and management advisory services.  During the three and six months ended June 30, 2012 and 2011 the Company paid this entity $0.1 million and $0.0 million, respectively for these services.

In August 2010, the Company borrowed $2.0 million for working capital purposes, pursuant to an unsecured note payable to one of its shareholders that bears interest at the short-term Applicable Federal Rate. The balance as of June 30, 2012 and December 31, 2011 is $2.0 million. The note was paid in full following the sale of Choice in November 2012, which is discussed more fully in Note 16 “Subsequent Events.”

During the three months ended June 30, 2012 and 2011, the Company purchased $2.0 million and $0.0 million, respectively, of chemical products from an entity owned, in part, by a Company employee. During the six months ended June 30, 2012 and 2011, purchases were $3.8 million and $0, respectively. At June 30, 2012 and December 31, 2011, the Company has $0.5 million and $1.1 million included in accounts payable to this entity.

At June 30, 2012 and December 31, 2011, the Company had receivable balances of $0.3 million and $2.1 million, respectively, from former owners of two acquired businesses. Subsequent to June 30, 2012, a substantial majority of this balance has been collected.

The Company is obligated to make lease payments pursuant to certain real property and equipment lease agreements with employees that were former owners of acquired companies. Payments during the three months ended June 30, 2012 and 2011 to these companies totaled $0.4 million and $0.2 million, respectively. Payments during the six months ended June 30, 2012 and 2011 were $0.8 million and $0.3 million, respectively.

At December 31, 2011, the Company had a liability of $0.2 million related to the funding of the 401(k) Profit Sharing Plan of an acquisition. The amount was paid in full by June 30, 2012.

In connection with the acquisition of Choice, we entered into capital leases that have initial terms of five or ten years with companies owned by shareholders of Choice, to finance the cost of leasing office buildings and properties, including warehouses. The fair value of these leased properties of $2.9 million is included in assets from discontinued operations and is being depreciated over the terms of the respective leases. Capital lease obligations of $2.3 million are included in liabilities from discontinued operations as of June 30, 2012 and December 31, 2011, respectively.

The Company sold its Waste segment during the fourth quarter of 2012, as more fully described in Note 16 “Subsequent Events” and in connection therewith, transferred all remaining capital lease obligations to the buyers.