[X]
|
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the quarterly period ended June 30, 2013
|
[ ]
|
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
90-0890517
|
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
2400 Boswell Road, Chula Vista, CA 91914
|
|
(Address of principal executive offices)
|
(Zip Code)
|
Large accelerated filer
|
[ ]
|
Accelerated filer
|
[ ]
|
Non-accelerated filer
|
[ ]
|
Smaller reporting company
|
[X]
|
Page
|
||
PART I. FINANCIAL INFORMATION
|
||
Item 1.
|
1 | |
1 | ||
For the three and six months ended June 30, 2013 & 2012 (unaudited)
|
2 | |
For the three and six months ended June 30, 2013 & 2012 (unaudited)
|
3 | |
For the six months ended June 30, 2013 & 2012 (unaudited)
|
4 | |
5 | ||
Item 2.
|
14 | |
Item 3.
|
19 | |
Item 4.
|
19 | |
PART II. OTHER INFORMATION
|
||
Item 1.
|
20 | |
Item 1A.
|
20 | |
Item 2.
|
20 | |
Item 3.
|
20 | |
Item 4.
|
20 | |
Item 5.
|
20 | |
Item 6.
|
20 | |
As of,
|
||||||||
June 30,
2013
|
December 31,
2012
|
|||||||
(Unaudited)
|
||||||||
ASSETS
|
||||||||
Current Assets:
|
||||||||
Cash and cash equivalents
|
$ | 3,642 | $ | 3,025 | ||||
Accounts receivable, due from factoring company
|
793 | 836 | ||||||
Note receivable, related party
|
- | 330 | ||||||
Inventory
|
5,400 | 4,675 | ||||||
Prepaid expenses and other current assets
|
456 | 430 | ||||||
Total current assets
|
10,291 | 9,296 | ||||||
Property and equipment, net
|
4,667 | 1,343 | ||||||
Intangible assets, net
|
8,357 | 9,114 | ||||||
Goodwill
|
5,154 | 5,154 | ||||||
$ | 28,469 | $ | 24,907 | |||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
Current Liabilities:
|
||||||||
Accounts payable
|
$ | 2,554 | $ | 2,144 | ||||
Accrued distributor compensation
|
2,623 | 2,992 | ||||||
Accrued expenses
|
1,296 | 1,426 | ||||||
Other current liabilities
|
219 | 238 | ||||||
Capital lease payable, current portion
|
106 | 71 | ||||||
Notes payable, current portion
|
391 | 366 | ||||||
Contingent acquisition debt, current portion
|
587 | 619 | ||||||
Total current liabilites
|
7,776 | 7,856 | ||||||
Other liabilities
|
16 | 75 | ||||||
Capital lease payable, less current portion
|
61 | 101 | ||||||
Deferred tax liability
|
742 | 742 | ||||||
Notes payable, less current portion
|
5,015 | 1,189 | ||||||
Contingent acquisition debt, less current portion
|
4,784 | 5,065 | ||||||
Total liabilities
|
18,394 | 15,028 | ||||||
Commitments and contingencies
|
||||||||
Equity:
|
||||||||
Youngevity International, Inc. stockholders' equity:
|
||||||||
Convertible Preferred Stock, $0.001 par value: 100,000,000 shares authorized; 211,135 shares issued and outstanding at June 30, 2013 and December 31, 2012
|
- | - | ||||||
Common Stock, $0.001 par value: 600,000,000 share authorized; 389,117,848 and 389,599,848 shares issued and outstanding at June 30, 2013 and December 31, 2012, respectively
|
389 | 389 | ||||||
Note receivable for stock purchase
|
- | (62 | ) | |||||
Additional paid-in capital
|
165,319 | 165,017 | ||||||
Accumulated deficit
|
(155,315 | ) | (155,266 | ) | ||||
Accumulated other comprehensive loss
|
(144 | ) | (123 | ) | ||||
Total Youngevity International, Inc. stockholders' equity
|
10,249 | 9,955 | ||||||
Noncontrolling interest
|
(174 | ) | (76 | ) | ||||
Total equity
|
10,075 | 9,879 | ||||||
$ | 28,469 | $ | 24,907 |
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
2013
|
2012
|
2013
|
2012
|
|||||||||||||
Revenues
|
$ | 20,893 | $ | 19,242 | $ | 41,720 | $ | 35,180 | ||||||||
Cost of revenues
|
8,195 | 8,227 | 16,605 | 15,142 | ||||||||||||
Gross profit
|
12,698 | 11,015 | 25,115 | 20,038 | ||||||||||||
Operating expenses
|
||||||||||||||||
Distributor compensation
|
8,313 | 8,178 | 16,044 | 14,730 | ||||||||||||
Sales and marketing
|
1,416 | 834 | 2,196 | 1,996 | ||||||||||||
General and adminstrative
|
1,888 | 2,013 | 4,347 | 3,889 | ||||||||||||
Total operating expenses
|
11,617 | 11,025 | 22,587 | 20,615 | ||||||||||||
Operating income (loss)
|
1,081 | (10 | ) | 2,528 | (577 | ) | ||||||||||
Other income (loss)
|
(1 | ) | 227 | (1 | ) | 227 | ||||||||||
Interest expense, net
|
(299 | ) | (245 | ) | (555 | ) | (521 | ) | ||||||||
Total other expense
|
(300 | ) | (18 | ) | (556 | ) | (294 | ) | ||||||||
Income (loss) before income taxes
|
781 | (28 | ) | 1,972 | (871 | ) | ||||||||||
Income tax provision
|
119 | 8 | 317 | 16 | ||||||||||||
Net income (loss)
|
662 | (36 | ) | 1,655 | (887 | ) | ||||||||||
Net loss attributable to noncontrolling interest
|
(14 | ) | (4 | ) | (81 | ) | (4 | ) | ||||||||
Net income (loss) attributable to Youngevity International
|
676 | (32 | ) | 1,736 | (883 | ) | ||||||||||
Preferred stock dividends
|
4 | 5 | 8 | 9 | ||||||||||||
Net income (loss) available to common stockholders
|
$ | 672 | $ | (37 | ) | $ | 1,728 | $ | (892 | ) | ||||||
Net income (loss) per share, basic
|
$ | 0.00 | $ | (0.00 | ) | $ | 0.00 | $ | (0.00 | ) | ||||||
Net income (loss) per share, diluted
|
$ | 0.00 | $ | (0.00 | ) | $ | 0.00 | $ | (0.00 | ) | ||||||
Weighted average shares outstanding, basic
|
389,218,930 | 385,573,848 | 389,299,395 | 385,484,943 | ||||||||||||
Weighted average shares outstanding, diluted
|
394,045,715 | 385,573,848 | 392,240,983 | 385,484,943 |
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
2013
|
2012
|
2013
|
2012
|
|||||||||||||
Net income (loss):
|
$ | 662 | $ | (36 | ) | $ | 1,655 | $ | (887 | ) | ||||||
Foreign currency translation
|
(22 | ) | - | (21 | ) | (23 | ) | |||||||||
Total other comprehensive loss
|
(22 | ) | - | (21 | ) | (23 | ) | |||||||||
Comprehensive income (loss)
|
$ | 640 | $ | (36 | ) | $ | 1,634 | $ | (910 | ) |
Six Months Ended June 30,
|
||||||||
2013
|
2012
|
|||||||
Cash Flows from Operating Activities:
|
||||||||
Net Income (loss)
|
$ | 1,655 | $ | (887 | ) | |||
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
||||||||
Depreciation and amortization
|
955 | 900 | ||||||
Stock based compensation expense
|
427 | 182 | ||||||
Amortization of debt discount
|
25 | 40 | ||||||
Interest income accrued on note receivable, related party
|
(3 | ) | - | |||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable
|
43 | 271 | ||||||
Inventory
|
(725 | ) | 946 | |||||
Prepaid expenses and other current assets
|
(44 | ) | 4 | |||||
Accounts payable
|
410 | 372 | ||||||
Accrued distributor compensation
|
(369 | ) | 1,353 | |||||
Accrued expenses and other liabilities
|
(179 | ) | (107 | ) | ||||
Net Cash Provided by Operating Activities
|
2,195 | 3,074 | ||||||
Cash Flows from Investing Activities:
|
||||||||
Purchases of property and equipment
|
(956 | ) | (370 | ) | ||||
Net Cash Used in Investing Activities
|
(956 | ) | (370 | ) | ||||
Cash Flows from Financing Activities:
|
||||||||
Payments to factoring company, net
|
- | (436 | ) | |||||
Payments of notes payable, net
|
(192 | ) | (298 | ) | ||||
Payments for note receivable, related party, net
|
62 | - | ||||||
Payments of contingent acquisition debt
|
(313 | ) | (190 | ) | ||||
Payments of capital leases
|
(40 | ) | (38 | ) | ||||
Repurchase of common stock
|
(118 | ) | - | |||||
Net Cash Used in Financing Activities
|
(601 | ) | (962 | ) | ||||
Foreign Currency Effect on Cash
|
(21 | ) | (23 | ) | ||||
Net increase in cash and cash equivalents
|
617 | 1,719 | ||||||
Cash and Cash Equivalents, Beginning of Period
|
3,025 | 1,390 | ||||||
Cash and Cash Equivalents, End of Period
|
$ | 3,642 | $ | 3,109 | ||||
Supplemental Disclosures of Cash Flow Information | ||||||||
Cash paid during the period for:
|
||||||||
Interest
|
$ | 530 | $ | 481 | ||||
Income taxes
|
$ | 467 | $ | 6 |
As of
|
||||||||
June 30,
2013
|
December 31,
2012
|
|||||||
Finished goods
|
$
|
4,282
|
$
|
3,213
|
||||
Raw materials
|
1,531
|
1,828
|
||||||
5,813
|
5,041
|
|||||||
Reserve for excess and obsolete
|
(413
|
)
|
(366
|
)
|
||||
Inventory, net
|
$
|
5,400
|
$
|
4,675
|
As of June 30, 2013
|
As of December 31, 2012
|
|||||||||||||||
Gross Amount
|
Accumulated Amortization
|
Gross Amount
|
Accumulated Amortization
|
|||||||||||||
Distributor organizations
|
$
|
6,825
|
$
|
(3,641
|
)
|
$
|
6,825
|
$
|
(3,157
|
)
|
||||||
Trademarks
|
2,741
|
(89
|
)
|
2,741
|
(66
|
)
|
||||||||||
Customer relationships
|
3,500
|
(979
|
)
|
3,500
|
(729
|
)
|
||||||||||
Other
|
20
|
(20
|
)
|
20
|
(20
|
)
|
||||||||||
Intangible assets, net
|
$
|
13,086
|
$
|
(4,729
|
)
|
$
|
13,086
|
$
|
(3,972
|
)
|
|
Level 1 – Quoted prices in active markets for identical assets or liabilities that an entity has the ability to access.
|
|
Level 2 – Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
|
|
Level 3 – Unobservable inputs that are supportable by little or no market activity and that are significant to the fair value of the asset or liability.
|
Fair Value at June 30, 2013
|
||||||||||||||||
Total
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||
Liabilities:
|
||||||||||||||||
Contingent acquisition debt
|
$
|
5,371
|
$
|
-
|
$
|
-
|
$
|
5,371
|
||||||||
Total liabilities
|
$
|
5,371
|
$
|
-
|
$
|
-
|
$
|
5,371
|
||||||||
Fair Value at December 31, 2012
|
||||||||||||||||
Total
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||
Liabilities:
|
||||||||||||||||
Contingent acquisition debt
|
$
|
5,684
|
$
|
-
|
$
|
-
|
$
|
5,684
|
||||||||
Total liabilities
|
$
|
5,684
|
$
|
-
|
$
|
-
|
$
|
5,684
|
Number of
Shares
|
Weighted
Average
Exercise Price
|
Aggregate
Intrinsic
Value
(in thousands)
|
||||||||||
Outstanding December 31, 2012
|
13,728,000
|
$
|
0.22
|
$
|
5
|
|||||||
Granted
|
476,000
|
0.29
|
||||||||||
Exercised
|
(3,750
|
) |
0.20
|
-
|
||||||||
Outstanding June 30, 2013
|
14,200,250
|
0.22
|
1,396
|
|||||||||
Exercisable June 30, 2013
|
8,600,250
|
$
|
0.22
|
$
|
836
|
Weighted
|
Weighted
|
Weighted
|
||||||||||||
Average
|
Average
|
Average
|
||||||||||||
Exercise Price
|
Options
|
Exercise Price
|
Remaining Life
|
|||||||||||
Outstanding:
|
||||||||||||||
$
|
0.16 - $0.21
|
450,750
|
$
|
0.17
|
2.34
|
|||||||||
$
|
0.21 - $0.23
|
12,942,000
|
$
|
0.22
|
4.01
|
|||||||||
$
|
0.23 - $0.32
|
807,500
|
$
|
0.28
|
2.48
|
|||||||||
14,200,250
|
$
|
0.22
|
3.87
|
|||||||||||
Exercisable:
|
||||||||||||||
$
|
0.16 - $0.21
|
450,750
|
$
|
0.17
|
2.34
|
|||||||||
$
|
0.21 - $0.23
|
7,342,000
|
$
|
0.22
|
4.08
|
|||||||||
$
|
0.23 - $0.32
|
807,500
|
$
|
0.28
|
2.48
|
|||||||||
8,600,250
|
$
|
0.22
|
3.84
|
Three months ended
June 30,
|
Six months ended
June 30,
|
|||||||||||||||
2013
|
2012
|
2013
|
2012
|
|||||||||||||
Revenues
|
||||||||||||||||
Direct selling
|
$ | 18,898 | $ | 17,363 | $ | 37,326 | $ | 31,442 | ||||||||
Commercial coffee
|
1,995 | 1,879 | 4,394 | 3,738 | ||||||||||||
Total revenues
|
$ | 20,893 | $ | 19,242 | $ | 41,720 | $ | 35,180 | ||||||||
Gross margin
|
||||||||||||||||
Direct selling
|
$ | 12,516 | $ | 10,813 | $ | 24,642 | $ | 19,591 | ||||||||
Commercial coffee
|
182 | 202 | 473 | 447 | ||||||||||||
Total gross margin
|
$ | 12,698 | $ | 11,015 | $ | 25,115 | $ | 20,038 | ||||||||
Net income (loss)
|
||||||||||||||||
Direct selling
|
$ | 936 | $ | 193 | $ | 2,061 | $ | (464 | ) | |||||||
Commercial coffee
|
(274 | ) | (229 | ) | (406 | ) | (423 | ) | ||||||||
Total net income (loss)
|
$ | 662 | $ | (36 | ) | $ | 1,655 | $ | (887 | ) | ||||||
Capital expenditures
|
||||||||||||||||
Direct selling
|
$ | 33 | $ | 253 | $ | 2,850 | $ | 267 | ||||||||
Commercial coffee
|
437 | 286 | 673 | 315 | ||||||||||||
Total capital expenditures
|
$ | 470 | $ | 539 | $ | 3,523 | $ | 582 |
As of
|
||||||||
June 30, 2013
|
December 31, 2012
|
|||||||
Total assets
|
||||||||
Direct selling
|
$ | 18,500 | $ | 17,403 | ||||
Commercial coffee
|
9,969 | (1) | 7,504 | |||||
Total assets
|
$ | 28,469 | $ | 24,907 |
Three months ended
|
Six months ended
|
|||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
2013
|
2012
|
2013
|
2012
|
|||||||||||||
Revenues
|
||||||||||||||||
United States
|
$ | 19,285 | $ | 17,605 | $ | 38,540 | $ | 32,266 | ||||||||
International
|
1,608 | 1,637 | 3,180 | 2,914 | ||||||||||||
Total revenues
|
$ | 20,893 | $ | 19,242 | $ | 41,720 | $ | 35,180 |
A.
|
Overview
|
B.
|
Results of Operations
|
For the six months ended
June 30,
|
Percentage change
|
|||||||||||
Segment
|
2013
|
2012
|
||||||||||
Direct selling
|
$
|
37,326
|
$
|
31,442
|
18.7%
|
|
||||||
Commercial coffee
|
4,394
|
3,738
|
17.5%
|
|
||||||||
Total
|
$
|
41,720
|
$
|
35,180
|
18.6%
|
|
Gross Profit %
For the six months
ended June 30,
|
||||||||
Segment
|
2013
|
2012
|
||||||
Direct selling
|
66.0%
|
|
62.3%
|
|
||||
Commercial coffee
|
10.8%
|
|
12.0%
|
|
||||
Combined
|
60.2%
|
|
57.0%
|
|
Six months ended
June 30,
|
||||||||
2013 |
2012
|
|||||||
Net income (loss)
|
$ | 1,655,000 | $ | (887,000 | ) | |||
Add
|
||||||||
Interest
|
555,000 | 521,000 | ||||||
Taxes
|
317,000 | 16,000 | ||||||
Depreciation
|
197,000 | 144,000 | ||||||
Amortization
|
758,000 | 756,000 | ||||||
EBITDA
|
3,482,000 | 550,000 | ||||||
Add
|
||||||||
Stock based compensation
|
427,000 | 182,000 | ||||||
Adjusted EBITDA
|
$ | 3,909,000 | $ | 732,000 |
For the three months ended
June 30,
|
Percentage | |||||||||||
Segment
|
2013
|
2012
|
change | |||||||||
Direct selling
|
$
|
18,898
|
$
|
17,363
|
8.8%
|
|
||||||
Commercial coffee
|
1,995
|
1,879
|
6.2%
|
|
||||||||
Total
|
$
|
20,893
|
$
|
19,242
|
8.6%
|
|
Gross Profit %
For the three months ended June 30,
|
||||||||
Segment
|
2013
|
2012
|
||||||
Direct selling
|
66.2 | % | 62.3 | % | ||||
Commercial coffee
|
9.1 | % | 10.8 | % | ||||
Combined
|
60.8 | % | 57.2 | % |
|
Current
|
Long-Term
|
||||||||||||||||||||||||||
Contractual Obligations
|
Total
|
2013-14
|
2014 | 2015 | 2016 | 2017 |
Thereafter
|
|||||||||||||||||||||
Operating Lease
|
$ | 3,792 | $ | 584 | $ | 173 | $ | 319 | $ | 319 | $ | 340 | $ | 2,057 | ||||||||||||||
Capital Leases
|
183 | 106 | 49 | 24 | 4 | - | - | |||||||||||||||||||||
Capital Commitments
|
- | - | - | - | - | - | - | |||||||||||||||||||||
Purchase Obligations
|
7,785 | 7,785 | - | - | - | - | - | |||||||||||||||||||||
Notes Payable
|
5,406 | 391 | 144 | 335 | 349 | 360 | 3,827 | |||||||||||||||||||||
Contingent Acquisition Debt
|
5,371 | 587 | 293 | 640 | 494 | 452 | 2,905 | |||||||||||||||||||||
Total
|
$ | 22,537 | $ | 9,453 | $ | 659 | $ | 1,318 | $ | 1,166 | $ | 1,152 | $ | 8,789 |
C.
|
Off-Balance Sheet Arrangements
|
D.
|
Customer Concentrations
|
(a)
|
Evaluation of Disclosure Controls and Procedures
|
(b)
|
Changes in Internal Control Over Financial Reporting
|
Issuer Purchases of Equity Securities | ||||||||||||||||
Period ending
June 30, 2013
|
Total Number of Shares Purchased (*)
|
Average Price
Paid per Share
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs | ||||||||||||
April 1 to April 30, 2013 | 33,150 | 0.28 | 33,150 | 14,586,350 | ||||||||||||
May 1 to May 31, 2013 | 75,600 | 0.32 | 75,600 | 14,510,750 | ||||||||||||
June 1 to June 30, 2013 | 71,500 | 0.34 | 71,500 | 14,439,250 | ||||||||||||
Total | 180,250 | 0.32 | 180,250 | 14,439,250 |
(*)
|
On December 11, 2012, the Company authorized a share repurchase program to repurchase up to 15 million of the Company's issued and outstanding common shares from time to time on the open market or via private transactions through block trades. This program, according to its terms, will expire on December 31, 2013 unless revoked earlier by the Board.
|
YOUNGEVITY INTERNATIONAL, INC.
|
|
(Registrant)
|
|
/s/ Stephan Wallach
|
|
Stephan Wallach
|
|
Chief Executive Officer
|
|
Date: August 14, 2013 |
(Principal Executive Officer)
|
/s/ David Briskie
|
|
David Briskie
|
|
Chief Financial Officer
|
|
Date: August 14, 2013 |
(Principal Financial Officer)
|
Exhibit No.
|
Exhibit
|
|
31.01
|
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
31.02
|
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
32.01
|
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
32.02
|
Certification of Chief Financial Officer 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 Document
|
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Youngevity International, 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 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 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.
|
August 14, 2013 |
/s/ Stephan Wallach
|
Stephan Wallach,
|
|
Chief Executive Officer
|
|
(Principal Executive Officer)
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Youngevity International, 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 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 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.
|
August 14, 2013 |
/s/ David Briskie
|
David Briskie,
|
|
Chief Financial Officer
|
|
(Principal Financial Officer)
|
August 14, 2013
|
/s/ Stephan Wallach
|
Stephan Wallach,
|
|
Chief Executive Officer
|
|
(Principal Executive Officer)
|
August 14, 2013
|
/s/ David Briskie
|
David Briskie,
|
|
Chief Financial Officer
|
|
(Principal Financial Officer)
|
11. Equity
|
6 Months Ended |
---|---|
Jun. 30, 2013
|
|
Notes to Financial Statements | |
11. Equity | The Companys Articles of Incorporation, as amended, authorize the issuance of two classes of stock to be designated Common Stock and Preferred Stock.
The Company had 211,135 shares of Series A Convertible Preferred Stock ("Series A Preferred") outstanding as of June 30, 2013 and December 31, 2012. The holders of the Series A Preferred Stock are entitled to receive a cumulative dividend at a rate of 8.0% per year, payable annually either in cash or shares of the Company's Common Stock at the Company's election. Shares of Common Stock paid as accrued dividends are valued at $.50 per share. Each share of Series A Preferred is convertible into two shares of the Company's Common Stock. The holders of Series A Preferred are entitled to receive payments upon liquidation, dissolution or winding up of the Company before any amount is paid to the holders of Common Stock. The holders of Series A Preferred shall have no voting rights, except as required by law. As of June 30, 2013, warrants to purchase 90,000 shares of Preferred Stock at a price of $1.00 per share were outstanding. All warrants were exercisable as of June 30, 2013 and expire at various dates through November 2013. The warrants were issued to replace similar instruments outstanding from the Javalution business.
The Company had 389,117,848 common shares outstanding as of June 30, 2013. The holders of Common Stock are entitled to one vote per share on matters brought before the shareholders. As of June 30, 2013, warrants to purchase 17,254,389 shares of Common Stock at prices ranging from $0.10 to $1.00 were outstanding. All warrants are exercisable as of June 30, 2013 and expire at various dates through May 2017. 1,380,215 and 2,904,434 warrants expired during the three and six months ended June 30, 2013, respectively.
On December 11, 2012, the Company authorized a share repurchase program to repurchase up to 15 million of the Company's issued and outstanding common shares from time to time on the open market or via private transactions through block trades. Under this program, the Company repurchased a total of 180,250 shares and 485,750 shares at a weighted-average cost of $0.33 and $0.24 for the three and six months ended June 30, 2013, respectively. A total of 560,750 shares have been repurchased to date. The remaining number of shares authorized for repurchase under the plan as of June 30, 2013 is 14,439,250. |
Condensed Consolidated Statements of Operations (Unaudited) (USD $)
In Thousands, except Share data, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
|
Condensed Consolidated Statements Of Operations | ||||
Revenues | $ 20,893 | $ 19,242 | $ 41,720 | $ 35,180 |
Cost of revenues | (8,195) | (8,227) | (16,605) | (15,142) |
Gross profit | 12,698 | 11,015 | 25,115 | 20,038 |
Operating expenses | ||||
Distributor compensation | 8,313 | 8,178 | 16,044 | 14,730 |
Sales and marketing | 1,416 | 834 | 2,196 | 1,996 |
General and administrative | 1,888 | 2,013 | 4,347 | 3,889 |
Total operating expenses | 11,617 | 11,025 | 22,587 | 20,615 |
Operating income (loss) | 1,081 | (10) | 2,528 | (577) |
Other income (loss) | (1) | 227 | (1) | 227 |
Interest expense, net | (299) | (245) | (555) | (521) |
Total other expense | (300) | (18) | (556) | (294) |
Income (loss) before income taxes | 781 | (28) | 1,972 | (871) |
Income tax provision | 119 | 8 | 317 | 16 |
Net income (loss) | 662 | (36) | 1,655 | (887) |
Net income (loss) attributable to noncontrolling interest | (14) | (4) | (81) | (4) |
Net income (loss) attributable to Youngevity International | 676 | (32) | 1,736 | (883) |
Preferred stock dividends | 4 | 5 | 8 | 9 |
Net income (loss) available to common stockholders | $ 672 | $ (37) | $ 1,728 | $ (892) |
Net income (loss) per share, basic | $ 0.00 | $ 0.00 | $ 0.00 | $ 0.00 |
Net income (loss) per share, diluted | $ 0.00 | $ 0.00 | $ 0.00 | $ 0.00 |
Weighted average shares outstanding, basic | 389,218,930 | 385,573,848 | 389,299,395 | 385,484,943 |
Weighted average shares outstanding, diluted | 394,045,715 | 385,573,848 | 392,240,983 | 385,484,943 |
4. Business Combinations
|
6 Months Ended |
---|---|
Jun. 30, 2013
|
|
Notes to Financial Statements | |
4. Business Combinations | The Company accounts for business combinations under the acquisition method and allocates the total purchase price for acquired businesses to the tangible and identified intangible assets acquired and liabilities assumed, based on their estimated fair values. When a business combination includes the exchange of the Companys Common Stock, the value of the Common Stock is determined using the closing market price as of the date such shares were tendered to the selling parties. The fair values assigned to tangible and identified intangible assets acquired and liabilities assumed are based on management or third party estimates and assumptions that utilize established valuation techniques appropriate for the Companys industry and each acquired business. Goodwill is recorded as the excess, if any, of the aggregate fair value of consideration exchanged for an acquired business over the fair value (measured as of the acquisition date) of total net tangible and identified intangible assets acquired. A liability for contingent consideration, if applicable, is recorded at fair value as of the acquisition date. In determining the fair value of such contingent consideration, management estimates the amount to be paid based on probable outcomes and expectations of the financial performance of the related acquired business. The fair value of contingent consideration is reassessed quarterly, with any change in the estimated value charged to operations in the period of the change. Increases or decreases in the fair value of the contingent consideration obligations can result from changes in actual or estimated revenue streams, discount periods, discount rates and probabilities that contingencies will be met. |
5. Intangible Assets and Goodwill (Tables)
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets And Goodwill Tables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets and Goodwill | Intangible assets consist of the following (in thousands):
|
12. Stock Option Plan
|
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes to Financial Statements | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
12. Stock Option Plan | On May 16, 2012, the Company established the 2012 Stock Option Plan (Plan) authorizing the granting of options for up to 40,000,000 shares of Common Stock. The purpose of the Plan is to promote the long-term growth and profitability of the Company by (i) providing key people and consultants with incentives to improve stockholder value and to contribute to the growth and financial success of the Company and (ii) enabling the Company to attract, retain and reward the best available persons for positions of substantial responsibility. The Plan permits the granting of stock options, including non-qualified stock options and incentive stock options qualifying under Section 422 of the Code, in any combination (collectively, "Options").
The Company uses the Black-Scholes option-pricing model (Black-Scholes model) to estimate the fair value of stock option grants. The use of a valuation model requires the Company to make certain assumptions with respect to selected model inputs. Expected volatility is calculated based on the historical volatility of the Companys stock price over the contractual term of the option. The expected life is based on the contractual term of the option and expected employee exercise and post-vesting employment termination behavior. The risk-free interest rate is based on U.S. Treasury zero-coupon issues with a remaining term equal to the expected life assumed at the date of the grant.
A summary of the Plan Options for the six months ended June 30, 2013 is presented in the following table:
The weighted-average fair value per share of the granted options for the six months ended June 30, 2013 was $0.14.
The following table sets forth the exercise price range, number of shares, weighted-average exercise price and remaining contractual lives at June 30, 2013:
At June 30, 2013, the Company had 25,795,000 shares of Common Stock available for issuance under the Plan.
Stock based compensation expense was $128,000 and $427,000 for the three and six months ended June 30, 2013, respectively, and $182,000 for both the three and six months ended June 30, 2012. As of June 30, 2013, there was approximately $520,000 of total unrecognized compensation expense related to unvested share-based compensation arrangements granted under the Plan. The expense is expected to be recognized over a weighted-average period of 1.06 years. |
13. Factoring Agreement (Details Narrative) (USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2013
|
Dec. 31, 2012
|
---|---|---|
Factoring Agreement Details Narrative | ||
Minimum annual factoring commission payable | $ 90,000 | $ 90,000 |
Accounts receivable, due | $ 793 | $ 836 |
14. Segment and geographical information (Tables)
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment And Geographical Information Tables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment information revenue | The following tables present certain financial information for each segment (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment information assets |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment information geographical |
|
12. Stock Option Plan (Tables)
|
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Option Plan Tables | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Plan Options |
A summary of the Plan Options for the six months ended June 30, 2013 is presented in the following table:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Exercise price range, number of shares, weighted-average exercise price and remaining contractual lives | The following table sets forth the exercise price range, number of shares, weighted-average exercise price and remaining contractual lives at June 30, 2013:
|
14. Segment and geographical information (Details 1) (USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2013
|
Dec. 31, 2012
|
|||
---|---|---|---|---|---|
Total assets | $ 28,469 | $ 24,907 | |||
Direct Selling
|
|||||
Total assets | 18,500 | 17,403 | |||
Commercial Coffee
|
|||||
Total assets | 9,969 | [1] | 7,504 | ||
Segment Information
|
|||||
Total assets | $ 28,469 | $ 24,907 | |||
|
Acquisition of 2400 Boswell, LLC (Details Narrative) (USD $)
|
6 Months Ended |
---|---|
Jun. 30, 2013
|
|
Acquisition Of 2400 Boswell Llc Details Narrative | |
Related party ownership greater than percent | 5.00% |
2400 Boswell acquistion price | $ 4,600,000 |
Cash paid in acquisition | 248,000 |
Debt forgiveness and accrued interest | 334,000 |
Promissory note issued | 393,000 |
Promissory note term | 5 years |
Promissory note interest rate | 5.00% |
Mortgage assumed | 3,625,000 |
Mortgage term | 25 years |
Mortgage interest rate | 5.75% |
Mortgage interest rate, excluding prime | 2.50% |
Carrying costs of land and building | 2,814,000 |
Carrying cost, net of consideration amount | 1,786,000 |
Deemed dividend | 1,786,000 |
As is fee simple market value | $ 5,150,000 |
9. Fair Value of Financial Instruments (Tables)
|
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Of Financial Instruments Tables | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value measurement within the three levels of value hierarchy | The following table details the fair value measurement within the three levels of the value hierarchy of the Companys financial instruments, which includes the Level 3 liabilities related to contingent consideration on acquisitions (in thousands):
|
2. Income Taxes
|
6 Months Ended |
---|---|
Jun. 30, 2013
|
|
Notes to Financial Statements | |
2. Income Taxes | Income taxes for the interim periods are computed using the effective tax rates estimated to be applicable for the full fiscal year, as adjusted for any discrete taxable events that occur during the period.
The Company files income tax returns in the United States (U.S.) on a federal basis and in many U.S. state and foreign jurisdictions. Certain tax years remain open to examination by the major taxing jurisdictions to which the Company is subject. |
5. Intangible Assets and Goodwill
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes to Financial Statements | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
5. Intangible Assets and Goodwill | Intangible assets are comprised of distributor organizations, customer relationships and trademarks. The Company's acquired intangible assets, which are subject to amortization over their estimated useful lives, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an intangible asset may not be recoverable. An impairment loss is recognized when the carrying amount of an intangible asset exceeds its fair value.
Intangible assets consist of the following (in thousands):
Amortization expense related to intangible assets was approximately $379,000 and $382,000 for the three months ended June 30, 2013 and 2012, respectively. Amortization expense was approximately $758,000 and $756,000 for the six months ended June 30, 2013 and 2012, respectively.
Goodwill is recorded as the excess, if any, of the aggregate fair value of consideration exchanged for an acquired business over the fair value (measured as of the acquisition date) of total net tangible and identified intangible assets acquired. In accordance with Accounting Standards Codification (ASC) 350, Intangibles Goodwill and Other, goodwill and other intangible assets with indefinite lives are not amortized but are tested for impairment on an annual basis or whenever events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable. The Company conducts annual reviews for goodwill and indefinite-lived intangible assets in the fourth quarter or whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be fully recoverable. The goodwill balance as of June 30, 2013 was $5,154,000. There were no triggering events indicating impairment of goodwill or intangible assets during the six months ended June 30, 2013 and 2012. |
3. Inventory and Cost of Sales
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes to Financial Statements | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3. Inventory and Cost of Sales | Inventory is stated at the lower of cost or market value. Cost is determined using the first-in, first-out method. The Company records an inventory reserve for estimated excess and obsolete inventory based upon historical turnover, market conditions and assumptions about future demand for its products. When applicable, expiration dates of certain inventory items with a definite life are taken into consideration.
Inventories consist of the following (in thousands):
Cost of revenues includes the cost of inventory, shipping and handling costs incurred by the Company in connection with shipments to customers, royalties associated with certain products, transaction banking costs and depreciation on certain assets. |
14. Segment and geographical information (Details 2) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
|
Total revenues | $ 20,893 | $ 19,242 | $ 41,720 | $ 35,180 |
Segment Information
|
||||
Total revenues | 20,893 | 19,242 | 41,720 | 35,180 |
United States [Member]
|
||||
Total revenues | 19,285 | 17,605 | 38,540 | 32,266 |
International [Member]
|
||||
Total revenues | 1,608 | 1,637 | 3,180 | 2,914 |
Segment Information [Member]
|
||||
Total revenues | $ 20,893 | $ 19,242 |
3. Inventory and Cost of Sales (Details) (USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2013
|
Dec. 31, 2012
|
---|---|---|
Notes to Financial Statements | ||
Finished goods | $ 4,282 | $ 3,213 |
Raw materials | 1,531 | 1,828 |
Inventory, gross | 5,813 | 5,041 |
Reserve for excess and obsolete | (413) | (366) |
Inventory, net | $ 5,400 | $ 4,675 |
9. Fair Value of Financial Instruments (Details) (USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2013
|
Dec. 31, 2012
|
---|---|---|
Liabilities: | ||
Contingent acquisition debt | $ 5,371 | $ 5,684 |
Total liabilities | 5,371 | 5,684 |
Level 1 [Member]
|
||
Liabilities: | ||
Contingent acquisition debt | ||
Total liabilities | ||
Level 2 [Member]
|
||
Liabilities: | ||
Contingent acquisition debt | ||
Total liabilities | ||
Level 3 [Member]
|
||
Liabilities: | ||
Contingent acquisition debt | 5,371 | 5,684 |
Total liabilities | $ 5,371 | $ 5,684 |
12. Stock Option Plan (Details Narrative) (USD $)
In Thousands, except Share data, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
|
Notes to Financial Statements | ||||
Weighted-average fair value per share of the granted options | $ 0.14 | |||
Common stock options authorized | 40,000,000 | 40,000,000 | ||
Common stock available for issuance | 25,795,000 | 25,795,000 | ||
Stock based compensation expense | $ 128,000 | $ 182,000 | $ 427,000 | $ 182,000 |
Unrecognized compensation expense related to unvested share-based compensation arrangements | $ 520,000 | $ 520,000 | ||
Weighted-average period recognized | 1 year 22 days |