10-Q

FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

(Mark One)

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

For the quarterly period ended June 30, 2017

OR

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

For the transition period from ________ to __________

Commission file number 000-55181

TWINLAB CONSOLIDATED HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

Nevada	46-3951742
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

4800 T-Rex Avenue, Suite 305 Boca Raton, Florida	33431
(Address of principal executive offices)	(Zip Code)

(561) 443-5301

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report) 

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 ☒    No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes ☒    No ☐

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

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☐ (Do not check if a smaller reporting company)	Smaller reporting company ☒
Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐   No ☒

The number of shares of common stock, $0.001 par value, outstanding on August 11, 2017 was 252,924,027 shares.

TABLE OF CONTENTS

		Page No.
Part I - FINANCIAL INFORMATION
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets (Unaudited)	1
	Condensed Consolidated Statements of Comprehensive Loss (Unaudited)	2
	Condensed Consolidated Statements of Cash Flows (Unaudited)	3
	Notes to Condensed Consolidated Financial Statements (Unaudited)	5
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	25
Item 4.	Controls and Procedures	25
Part II - OTHER INFORMATION
Item 1.	Legal Proceedings	27
Item1A.	Risk Factors	27
Item 6.	Exhibits	28
	Signatures	29

PART I – FINANCIAL INFORMATION

Item 1.     Financial Statements.

TWINLAB CONSOLIDATED HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

	June 30,			December 31,
	2017			2016
ASSETS
Current assets:
Cash	$	487		$	5,097
Accounts receivable, net of allowance of $1,602 and $2,365, respectively		9,275			7,768
Inventories, net		21,545			17,601
Prepaid expenses and other current assets		2,570			2,870
Total current assets		33,877			33,336
Property and equipment, net		3,109			3,528
Intangible assets, net		29,032			30,197
Goodwill		24,098			24,098
Other assets		1,767			1,667
Total assets	$	91,883		$	92,826
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable	$	7,648		$	7,866
Accrued expenses and other current liabilities		8,030			11,434
Derivative liabilities		7,750			6,455
Notes payable and current portion of long-term debt, net of discount of $1,952 and $2,297, respectively		17,609			11,631
Total current liabilities		41,037			37,386
Long-term liabilities:
Deferred gain on sale of assets		1,646			1,727
Deferred tax liability		959			959
Notes payable and long-term debt, net of current portion and discount of $2,551 and $3,451, respectively		53,612			50,988
Total long-term liabilities		56,217			53,674
Total liabilities		97,254			91,060
Commitments and contingencies
Stockholders’ equity (deficit):
Preferred stock, $0.001 par value, 500,000,000 shares authorized, no shares issued and outstanding		-			-
Common stock, $0.001 par value, 5,000,000,000 shares authorized, 387,730,078 shares issued		388			388
Additional paid-in capital		226,680			226,380
Stock subscriptions receivable		(30	)		(30	)
Treasury stock, 134,806,051 and 134,163,685 shares at cost, respectively		(500	)		(500	)
Accumulated deficit		(231,909	)		(224,472	)
Total stockholders’ equity (deficit)		(5,371	)		1,766
Total liabilities and stockholders' equity (deficit)	$	91,883		$	92,826

The accompanying notes are an integral part of the condensed consolidated financial statements.

1

TWINLAB CONSOLIDATED HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF

COMPREHENSIVE LOSS (UNAUDITED)

(AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2017			2016			2017			2016
Net sales	$	21,419		$	22,222		$	45,518		$	42,839
Cost of sales		15,766			16,247			33,265			33,442
Gross profit		5,653			5,975			12,253			9,397
Selling, general and administrative expenses		7,333			8,567			13,928			18,489
Loss from operations		(1,680	)		(2,592	)		(1,675	)		(9,092	)
Other income (expense):
Interest expense, net		(2,478	)		(2,147	)		(4,442	)		(4,107	)
Loss on stock purchase guarantee		-			-			-			(3,210	)
Gain (loss) on change in derivative liabilities		(297	)		1,072			(1,295	)		14,063
Other expense, net		(25	)		(23	)		(24	)		(21	)
Total other income (expense)		(2,800	)		(1,098	)		(5,761	)		6,725
Loss before income taxes		(4,480	)		(3,690	)		(7,436	)		(2,367	)
Provision for income taxes		-			(13	)		-			(17	)
Total comprehensive loss	$	(4,480	)	$	(3,703	)	$	(7,436	)	$	(2,384	)
Weighted average number of common shares outstanding – basic		252,959,714			250,762,072			252,941,772			271,783,852
Net loss per common share – basic	$	(0.02	)	$	(0.01	)	$	(0.03	)	$	(0.01	)
Weighted average number of common shares outstanding – diluted (2016 corrected - see Note 1)		252,959,714			266,753,987			252,941,772			285,936,529
Net loss per common share – diluted (2016 corrected - see Note 1)	$	(0.02	)	$	(0.02	)	$	(0.03	)	$	(0.06	)

The accompanying notes are an integral part of the condensed consolidated financial statements.

2

TWINLAB CONSOLIDATED HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(AMOUNTS IN THOUSANDS)

	Six Months Ended
	June 30,
	2017			2016
Cash flows from operating activities:
Net loss	$	(7,436	)	$	(2,384	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		1,612			1,352
Amortization of debt discount		1,244			1,129
Stock-based compensation		301			358
Provision for obsolete inventory		119			816
Provision for losses on accounts receivable		185			1,064
Loss on stock purchase price guarantee		-			3,210
(Gain) loss on change in derivative liabilities		1,295			(14,063	)
Other non-cash items		(81	)		-
Changes in operating assets and liabilities:
Accounts receivable		(1,692	)		(1,518	)
Inventories		(4,063	)		(952	)
Prepaid expenses and other current assets		300			(1,037	)
Other assets		(102	)		97
Accounts payable		(218	)		(3,515	)
Accrued expenses and other current liabilities		(204	)		2,461
Net cash used in operating activities		(8,740	)		(12,982	)
Cash flows from investing activities:
Purchase of property and equipment		(29	)		(110	)
Cash flows from financing activities:
Proceeds from the exercise of warrants		-			1
Proceeds from the issuance of debt		3,267			19,500
Repayment of debt		(1,057	)		(2,479	)
Net borrowings from revolving credit facility		1,949			755
Decrease in security deposits		-			27
Net cash provided by financing activities		4,159			17,804
Net increase (decrease) in cash		(4,610	)		4,712
Cash at the beginning of the period		5,097			1,240
Cash at the end of the period	$	487		$	5,952

The accompanying notes are an integral part of the condensed consolidated financial statements.

3

TWINLAB CONSOLIDATED HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(AMOUNTS IN THOUSANDS) - Continued

	Six Months Ended
	June 30,
	2017			2016
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest	$	3,198		$	2,094
Cash paid for income taxes		-			27
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING TRANSACTIONS:
Decrease in derivative liabilities and increase in common stock and additional paid-in capital on exercise of warrants	$	-		$	1,975
Issuance of other liability for purchase of treasury shares		-			500
Relief of stock subscription accrual through long-term debt		(3,200	)		-
Issuance of new long-term debt as payment of existing prepaid stock subscription		3,200			-

The accompanying notes are an integral part of the condensed consolidated financial statements.

4

TWINLAB CONSOLIDATED HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

NOTE 1 – NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization

Twinlab Consolidated Holdings, Inc. (the “Company”, “Twinlab,” “we,” “our” and “us”) was incorporated on October 24, 2013 under the laws of the State of Nevada as Mirror Me, Inc. On August 7, 2014, we amended our articles of incorporation and changed our name to Twinlab Consolidated Holdings, Inc.

Nature of Operations

We are an integrated manufacturer, marketer, distributor and retailer of branded nutritional supplements and other natural products sold to and through domestic health and natural food stores, mass market retailers, specialty stores retailers, on-line retailers and websites. Internationally, we market and distribute branded nutritional supplements and other natural products to and through health and natural product distributors and retailers.

Our products include vitamins, minerals, specialty supplements and sports nutrition products sold under the Twinlab® brand name (including the Twinlab® Fuel brand of sports nutrition products); a market leader in the healthy aging and beauty from within categories sold under the Reserveage™ Nutrition and ResVitale® brand names; diet and energy products sold under the Metabolife® brand name; the Re-Body® brand name; and a full line of herbal teas sold under the Alvita® brand name. To accommodate consumer preferences, our products come in various formulations and delivery forms, including capsules, tablets, softgels, chewables, liquids, sprays, powders and whole herbs. These products are sold primarily through health and natural food stores and on-line retailers, supermarkets, and mass-market retailers.

We also perform contract manufacturing services for private label products.  Our contract manufacturing business involves the manufacture of custom products to the specifications of a customer who requires finished product under the customer’s own brand name.  We do not market these private label products as our business is to manufacture and sell the products to the customer, who then markets and sells the products to retailers or end consumers.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.

Basis of Presentation and Unaudited Information

The condensed consolidated interim financial statements included herein have been prepared by the Company in accordance with United States generally accepted accounting principles, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although we believe that the disclosures are adequate to make the information presented not misleading. These statements reflect all adjustments, consisting of normal recurring adjustments, which in the opinion of management, are necessary for fair presentation of the information contained herein. Financial results for any interim period are not necessarily indicative of financial results that may be expected for the fiscal year. The unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 filed with the SEC on March 31, 2017.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Actual results could differ from those estimates. Significant management estimates include those with respect to returns and allowances, allowance for doubtful accounts, reserves for inventory obsolescence, the recoverability of long-lived assets, intangibles and goodwill and the estimated value of warrants and derivative liabilities.

Revenue Recognition

Revenue from product sales, net of estimated returns and allowances, is recognized when evidence of an arrangement is in place, related prices are fixed and determinable, contractual obligations have been satisfied, title and risk of loss have been transferred to the customer and collection of the resulting receivable is reasonably assured. Shipping terms are generally freight on board shipping point. We sell predominately in the North American and European markets, with international sales transacted in U.S. dollars.

5

Fair Value of Financial Instruments

We apply the following fair value hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:

Level 1 – inputs are quoted prices in active markets for identical assets that the reporting entity has the ability to access at the measurement date.

Level 2 – inputs are other than quoted prices included within Level 1 that are observable for the asset, either directly or indirectly.

Level 3 – inputs are unobservable inputs for the asset that are supported by little or no market activity and that are significant to the fair value of the underlying asset or liability.

The following table summarizes our financial instruments that are measured at fair value on a recurring basis as of June 30, 2017 and December 31, 2016:

June 30, 2017	Total		Level 1		Level 2		Level 3
Derivative liabilities	$	7,750	$	-	$	-	$	7,750

December 31, 2016	Total		Level 1		Level 2		Level 3
Derivative liabilities	$	6,455	$	-	$	-	$	6,455

Accounts Receivable and Allowances

We grant credit to customers and generally do not require collateral or other security. We perform credit evaluations of our customers and provide for expected claims related to promotional items; customer discounts; shipping shortages; damages; and doubtful accounts based upon historical bad debt and claims experience. As of June 30, 2017, total allowances amounted to $1,602, of which $296 was related to doubtful accounts receivable. As of December 31, 2016, total allowances amounted to $2,365, of which $481 was related to doubtful accounts receivable.

Inventories

Inventories are stated at the lower of cost or net realizable value and are reduced by an estimated reserve for obsolete inventory.

Property and Equipment

Property and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation, including amounts amortized under capital leases, is calculated on the straight-line method over the estimated useful lives of the related assets, which are 7 to 10 years for machinery and equipment, 8 years for furniture and fixtures and 3 years for computers. Leasehold improvements are amortized over the shorter of the useful life of the asset or the term of the lease.

Normal repairs and maintenance are expensed as incurred. When assets are retired or otherwise disposed of, the related cost and accumulated depreciation or amortization is removed from the accounts and any gain or loss is included in the results of operations.

Intangible Assets

Intangible assets consist primarily of trademarks and customer relationships, which are amortized on a straight-line basis over their estimated useful lives ranging from 3 to 30 years. The valuation and classification of these assets and the assignment of amortizable lives involve significant judgment and the use of estimates.

6

We believe that our long-term growth strategy supports our fair value conclusions. For intangible assets, the recoverability of these amounts is dependent upon achievement of our projections and the execution of key initiatives related to revenue growth and improved profitability.

Goodwill

Goodwill is not subject to amortization, but is reviewed for impairment annually, or more frequently whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable. An impairment charge would be recorded to the extent the carrying value of goodwill exceeds its estimated fair value. The testing of goodwill under established guidelines for impairment requires significant use of judgment and assumptions. Changes in forecasted operations and other assumptions could materially affect the estimated fair values. Changes in business conditions could potentially require adjustments to these asset valuations.

Impairment of Long-Lived Assets

Long-lived assets, including intangible assets subject to amortization, are reviewed for impairment when changes in circumstances indicate that the carrying amount of the asset may not be recoverable. If the carrying amount of the asset exceeds the expected undiscounted cash flows of the asset, an impairment charge is recognized equal to the amount by which the carrying amount exceeds fair value. The testing of these intangibles under established guidelines for impairment requires significant use of judgment and assumptions. Changes in forecasted operations and other assumptions could materially affect the estimated fair values. Changes in business conditions could potentially require adjustments to these asset valuations.

Indefinite-Lived Intangible Assets

Indefinite-lived intangible assets relating to the asset acquisition of Organic Holdings, LLC (“Organic Holdings”), a market leader in the healthy aging and beauty from within categories and owner of the award-winning Reserveage^TM Nutrition brand, are determined to have an indefinite useful economic life and as such are not amortized. Indefinite-lived intangible assets are tested for impairment annually which consists of a comparison of the fair value of the asset with its carrying value. The total indefinite-lived intangible assets as of June 30, 2017 and December 31, 2016 was $5,900.

Value of Warrants Issued with Debt

We estimate the grant date value of certain warrants issued with debt, using an outside professional valuation firm, which uses the Monte Carlo option lattice model. We record the amounts as interest expense or debt discount, depending on the terms of the agreement. These estimates involve multiple inputs and assumptions, including the market price of the Company’s common stock, stock price volatility and other assumptions to project earnings before interest, taxes, depreciation and amortization (“EBITDA”) and other reset events. These inputs and assumptions are subject to management’s judgment and can vary materially from period to period.

Derivative Liabilities

We have recorded certain warrants as derivative liabilities at estimated fair value, as determined based on our use of an outside professional valuation firm, due to the variable terms of the warrant agreements. The value of the derivative liabilities is generally estimated using the Monte Carlo option lattice model with multiple inputs and assumptions, including the market price of the Company’s common stock, stock price volatility and other assumptions to project EBITDA and other reset events. These inputs and assumptions are subject to management’s judgment and can vary materially from period to period.

Deferred gain on sale of assets

We entered into a sale-leaseback arrangement relating to our office facilities in 2013. Under the terms of the arrangement, we sold an office building and surrounding land and then leased the property back under a 15-year operating lease. We recorded a deferred gain for the amount of the gain on the sale of the asset, to be recognized as a reduction of rent expense over the life of the lease. Accordingly, we recorded amortization of deferred gain as a reduction of rental expense of $41 for the three months ended June 30, 2017 and 2016. For the six months ended June 30, 2017 and 2016, we recorded amortization of $81 and $82, respectively. As of June 30, 2017 and December 31, 2016, unamortized deferred gain on sale of assets was $1,646 and $1,727, respectively.

Net Loss per Common Share

Basic net income or loss per common share (Basic EPS) is computed by dividing net income or loss by the weighted average number of common shares outstanding. Diluted net income or loss per common share (Diluted EPS) is computed by dividing net income or loss by the sum of the weighted average number of common shares outstanding and the dilutive potential common shares then outstanding. Potential dilutive common share equivalents consist of total shares issuable upon the exercise of outstanding stock options and warrants to acquire common stock using the treasury stock method and the average market price per share during the period.

7

The common shares used in the computation of our basic and diluted net loss per share are reconciled as follows:

 

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2017			2016			2017			2016
										(as corrected)
Numerator:
Net loss	$	(4,480	)	$	(3,703	)	$	(7,436	)	$	(2,384	)
Effect of dilutive securities on net loss:
Common stock warrants		-			(1,072	)		-			(14,063	)
Total net loss for purpose of calculating diluted net loss per common share	$	(4,480	)	$	(4,775	)	$	(7,436	)	$	(16,447	)
Number of shares used in per common share calculations:
Total shares for purposes of calculating basic net loss per common share		252,959,714			250,762,072			252,941,772			271,783,852
Weighted-average effect of dilutive securities:
Common stock warrants		-			15,991,915			-			14,152,677
Total shares for purpose of calculating diluted net loss per common share		252,959,714			266,753,987			252,941,772			285,936,529
Net loss per common share:
Basic	$	(0.02	)	$	(0.01	)	$	(0.03	)	$	(0.01	)
Diluted	$	(0.02	)	$	(0.02	)	$	(0.03	)	$	(0.06	)

Correction of 2016 Diluted Net Loss Per Share

The diluted net loss per share for the period ended June 30, 2016 has been corrected. In accordance with U.S. generally accepted accounting principles, when calculating diluted earnings or loss per share, if the effects are dilutive, companies are required to add back to net income or loss the effects of the change in derivative liabilities related to warrants. Additionally, if the effects of the change in derivative liabilities are added back to net income or loss, companies are required to include the warrants outstanding related to the derivative liability in the calculation of the weighted average dilutive shares.

For the period ended June 30, 2016, as originally reported, we did not add back the effects of the change in the derivative liability in computing dilutive income or loss per share. The dilutive loss per share for the three and six months ended June 30, 2016 in the table above has been revised to correct this error.

The table below reflects the diluted net loss per share as originally reported and net loss per share as corrected for the three and six months ended June 30, 2016.

  

	As originally reported			As corrected
Diluted net loss per shares (three months)	$	(0.01	)	$	(0.02	)
Diluted net loss per shares (six months)	$	(0.01	)	$	(0.06	)
Weighted average shares outstanding - diluted (three months)		250,762,072			266,753,987
Weighted average shares oustanding - diluted (six months)		271,783,852			285,936,529

Additionally, the diluted loss per share for the period ended September 30, 2016 will be reflected as corrected in the Form 10-Q for the quarter ending September 30, 2017. The corrected diluted loss per share for the three and nine months ended September 30, 2016 was $(0.01) and $(0.07), respectively.

The errors were corrected as of December 31, 2016, but since the adjustments were not material to any of the quarters previously reported, the Form 10-Qs for those periods were not amended. Management has determined the effects to be neither quantitatively or qualitatively material to the financial statements included in any of the Form 10-Qs filed during 2016.

8

Significant Concentration of Credit Risk

Sales to our top three customers aggregated to approximately 22% and 26% of total sales for the three months ended June 30, 2017 and 2016, respectively, and 26% of total sales for the six months ended June 30, 2017 and 2016. Sales to one of those customers were approximately 10% and 9% of total sales for the three months ended June 30, 2017 and 2016, respectively, and 12% and 10% of total sales for the six months ended June 30, 2017 and 2016, respectively. Accounts receivable from these customers were approximately 39% and 29% of total accounts receivable as of June 30, 2017 and December 31, 2016, respectively.

Recent Accounting Pronouncements

In July 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-11, “Derivatives and Hedging (Topic 815)” which addresses the complexity of accounting for certain financial instruements with down round features. The amendments of this update change the determination of whether certain financial instruments should be classified as liabilities or equity instruments, a down round feature no longer precludes equity classification when assessing whether the instrument is indexed to an entity’s own stock. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018. We have not yet determined the impact on our consolidated financial statements of the adoption of this new accounting pronouncement.

In January 2017, the FASB issued ASU No. 2017-04, “Simplifying the Test for Goodwill Impairment (Topic 350)” which removes Step 2 of the goodwill impairment test that requires a hypothetical purchase price allocation.  A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill.  The amendments in this ASU are effective for fiscal years beginning after December 15, 2019.  Early adoption is permitted after January 1, 2017.  We do not expect the new guidance to have a significant impact on our condensed consolidated financial statements or related disclosures.

In March 2016, the FASB issued ASU No. 2016-09, “Stock Compensation (Topic 718)”, which is intended to simplify several aspects of the accounting for share-based payment award transactions, including the income tax impacts, the classification on the statement of cash flows, and forfeitures. The amendments in this ASU are effective for fiscal years beginning after December 15, 2016, including interim periods. We have not yet determined the impact on our consolidated financial statements of the adoption of this new accounting pronouncement.

In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)”. The amendments in this ASU revise the accounting related to lessee accounting. Under the new guidance, lessees will be required to recognize a lease liability and a right-of-use asset for all leases. The new lease guidance also simplifies the accounting for sale and leaseback transactions primarily because lessees must recognize lease assets and lease liabilities. The amendments in this ASU are effective for public companies for fiscal years beginning after December 15, 2018 and are to be applied through a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. Early adoption is permitted. We have not yet determined the impact on our consolidated financial statements of the adoption of this new accounting pronouncement.

Although there are several other new accounting pronouncements issued or proposed by the FASB, which we have adopted or will adopt, as applicable, we do not believe any of these accounting pronouncements has had or will have a material impact on our condensed consolidated financial position or results of operations.

NOTE 2 – GOING CONCERN

The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which assumes continuity of operations and realization of assets and liabilities in the ordinary course of business. In most periods since our formation, we have generated losses from operations. At June 30, 2017, we had an accumulated deficit of $231,909. Historical losses are primarily attributable to lower than planned sales resulting from low fill rates on demand due to limitations of our working capital, delayed product introductions and postponed marketing activities, merger-related and other restructuring costs, and interest and refinancing charges associated with our debt refinancing. Losses have been funded primarily through issuance of common stock and third-party or related party debt.

Because of our history of operating losses, significant interest expense on our debt, and the recording of significant derivative liabilities, we have a working capital deficiency of $7,160 at June 30, 2017. We also have $17,609 of debt, net of discount, due within the next 12 months. These continuing conditions, among others, raise substantial doubt about our ability to continue as a going concern.

Management has addressed operating issues through the following actions: focusing on growing the core business and brands; continuing emphasis on major customers and key products; reducing manufacturing and operating costs and continuing to negotiate lower prices from major suppliers. We believe that we may need additional capital to execute our business plan. If additional funding is required, there can be no assurance that sources of funding will be available when needed on acceptable terms or at all.

NOTE 3 – INVENTORIES

Inventories consisted of the following at:

	June 30,			December 31,
	2017			2016
Raw materials	$	7,020		$	4,912
Work in process		1,448			1,189
Finished goods		15,134			13,438
		23,602			19,539
Reserve for obsolete inventory		(2,057	)		(1,938	)
	$	21,545		$	17,601

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NOTE 4 – PROPERTY AND EQUIPMENT

Property and equipment consisted of the following at:

	June 30,			December 31,
	2017			2016
Machinery and equipment	$	12,155		$	10,885
Computers and other		9,148			9,119
Aquifer		482			482
Leasehold improvements		1,518			1,518
		23,303			22,004
Accumulated depreciation and amortization		(20,194	)		(18,476	)
	$	3,109		$	3,528

Assets held under capital leases are included in machinery and equipment and amounted to $1,116 and $1,142 as of June 30, 2017 and December 31, 2016, respectively.

Depreciation and amortization expense totaled $220 and $162 for the three months ended June 30, 2017 and 2016, respectively, and totaled $447 and $346 for the six months ended June 30, 2017 and 2016, respectively.

NOTE 5 – INTANGIBLE ASSETS

Intangible assets consisted of the following at:

	June 30,			December 31,
	2017			2016
Trademarks	$	12,166		$	12,166
Indefinite-lived intangible assets		5,900			5,900
Customer relationships		19,110			19,110
Other		753			753
		37,929			37,929
Accumulated amortization		(8,897	)		(7,732	)
	$	29,032		$	30,197

Trademarks are amortized over periods ranging from 3 to 30 years, customer relationships are amortized over periods ranging from 15 to 16 years, and other intangible assets are amortized over 3 years. Amortization expense was $582 for the three months ended June 30, 2017 and 2016 and was $1,165 and $1,088 for the six months ended June 30, 2017 and 2016, respectively.

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NOTE 6 – DEBT

Debt consisted of the following at:

	June 30,			December 31,
	2017			2016
Related-Party Debt:
July 2014 note payable to Little Harbor, LLC, net of unamortized discount of $7 and $206 as of June 30, 2017 and December 31 2016, respectively.	$	3,259		$	3,061
July 2016 note payable to Little Harbor, LLC		4,770			4,770
January 2016 note payable to Great Harbor Capital, LLC		2,500			2,500
March 2016 note payable to Great Harbor Capital, LLC		7,000			7,000
December 2016 note payable to Great Harbor Capital, LLC		2,500			2,500
January 2016 note payable to Golisano Holdings LLC		2,500			2,500
March 2016 note payable to Golisano Holdings LLC		7,000			7,000
July 2016 note payable to Golisano Holdings LLC		4,770			4,770
December 2016 note payable to Golisano Holdings LLC		2,500			2,500
March 2017 note payable to Golisano Holdings LLC		3,267			-
November 2014 note payable to Golisano Holdings LLC (formerly payble to Penta Mezzanine SBIC Fund I, L.P.), net of discount and unamortized loan fees in the aggregate of $1,898 and $2,304 as of June 30, 2017 and December 31, 2016, respectively		6,102			5,696
January 2015 note payable to Golisano Holdings LLC (formerly payable to JL-BBNC Mezz Utah, LLC), net of discount and unamortized loan fees in the aggregate of $2,286 as of June 30, 2017		2,714			-
February 2015 note payable to Golisano Holdings LLC (formerly payable to Penta Mezzanine SBIC Fund I, L.P.), net of discount and unamortized loan fees in the aggregate of $166 and $201 as of June 30, 2017 and December 31, 2016, respectively		1,834			1,799
Total related-party debt		50,716			44,096
Senior Credit Facility with Midcap, net of unamortized loan fees of $146 and $293 as of June 30, 2017 and December 31, 2016, respectively		15,131			13,035
Other Debt:
January 2015 note payable to JL-BBNC Mezz Utah, LLC, net of discount and unamortized loan fees in the aggregate of $2,744 as of December 31, 2016		-			2,256
April 2016 note payable to JL-Utah Sub, LLC		437			500
Capital lease obligations		1,737			2,732
Huntington Holdings		3,200			-
Total other debt		5,374			5,488
Total debt		71,221			62,619
Less current portion		(17,609	)		(11,631	)
Long-term debt	$	53,612		$	50,988

Related-Party Debt

July 2014 Note Payable to Little Harbor, LLC

Pursuant to a July 2014 Debt Repayment Agreement with Little Harbor, LLC (“Little Harbor”), an entity owned by certain stockholders of the Company, we are obligated to pay such party $4,900 per year in structured monthly payments for 3 years provided that such payment obligations will terminate at such earlier time as the trailing ninety day volume weighted average closing sales price of the Company’s common stock on all domestic securities exchanges on which such stock is listed equals or exceeds $5.06 per share. This note is unsecured and matured on July 25, 2017. This note was non-interest bearing, accordingly, using an imputed interest rate of 16.2%, we recorded a note discount in July 2014, which has been amortized into interest expense based on the effective interest rate method over the term of the note.

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July 2016 Note Payable to Little Harbor, LLC

On July 21, 2016, we issued an Unsecured Delayed Draw Promissory Note in favor of Little Harbor, pursuant to which Little Harbor may, in its sole discretion and pursuant to draw requests made by the Company, loan us up to the maximum principal amount of $4,770. This note is unsecured and matures on January 28, 2019. This note bears interest at an annual rate of 8.5%, with the principal payable at maturity. If Little Harbor, in its discretion, accepts a draw request made by the Company under this note, Little Harbor shall not transfer cash to the Company, but rather Little Harbor shall irrevocably agree to accept the principal amount of any monthly delayed draw under this note in lieu and in complete satisfaction of the obligation to make an equivalent dollar amount of periodic cash payments otherwise due to Little Harbor under the July 2014 note payable. During the year ended December 31, 2016, we requested and Little Harbor LLC approved, draws totaling $4,770. We issued a warrant into escrow in connection with this loan (see Little Harbor Escrow Warrants in Note 7).

January 2016 Note Payable to Great Harbor Capital, LLC

Pursuant to a January 28, 2016 Unsecured Promissory Note with Great Harbor Capital, LLC (“GH”), an affiliate of a member of our Board of Directors, GH lent us $2,500. The note matures on January 28, 2019, bears interest at an annual rate of 8.5%, with the principal payable in 24 monthly installments of $104 which was to commence on February 28, 2017 but has been deferred to January 28, 2018. We issued a warrant into escrow in connection with this loan (see GH Escrow Warrants in Note 7).

March 2016 Note Payable to Great Harbor Capital, LLC

Pursuant to a March 21, 2016 Unsecured Promissory Note, GH lent us $7,000. The note matures on March 21, 2019, bears interest at an annual rate of 8.5%, with the principal payable in 24 monthly installments of $292 which was to commence on April 21, 2017 but has been deferred to January 21, 2018. We issued a warrant into escrow in connection with this loan (see GH Escrow Warrants in Note 7).

December 2016 Note Payable to Great Harbor Capital, LLC

Pursuant to a December 31, 2016 Unsecured Promissory Note, GH lent us $2,500. The note matures on December 30, 2019, bears interest at an annual rate of 8.5%, with the principal payable at maturity. We issued a warrant into escrow in connection with this loan (see GH Escrow Warrants in Note 7).

November 2014 Note Payable to Golisano Holdings LLC (formerly payable to Penta Mezzanine SBIC Fund I, L.P.)

On November 13, 2014, we raised proceeds of $8,000, less certain fees and expenses, from the issuance of a secured note to Penta Mezzanine SBIC Fund I, L.P. (“Penta”). The Managing Director of Penta, an institutional investor, is also a Director of our Company. We granted Penta a security interest in our assets and pledged the shares of our subsidiaries as security for the note. This note matures on November 13, 2019 with payments of principal due on a quarterly basis which was to commence on November 13, 2017 in installments of (i) $360 per quarter for the first four quarters, (ii) $440 per quarter for the next four quarters and (iii) $520 per quarter for each quarter thereafter but has been deferred to January 13, 2018. This note bears interest of 12% per annum, payable monthly. We issued a warrant to Penta to purchase 4,960,740 shares of the Company’s common stock in connection with this loan (see Penta Warrants in Note 7). The estimated fair value of the warrant at the date of issuance was $3,770, which was recorded as a note discount and is being amortized into interest expense over the term of this loan. Additionally, we had incurred loan fees of $273, which is also being amortized into interest expense over the term of this loan. On March 8, 2017, Golisano Holdings LLC (“Golisano LLC”) acquired this note payable from Penta. Our terms of this note payable remain the same with the only change for us being the holder of the promissory note.

January 2015 Note Payable to Golisano Holdings LLC (formerly payable to JL-Mezz Utah, LLC-f/k/a JL-BBNC Mezz Utah, LLC)

On January 22, 2015, we raised proceeds of $5,000, less certain fees and expenses, from the sale of a note to JL-Mezz Utah, LLC (f/k/a JL-BBNC Mezz Utah, LLC) (“JL”). The proceeds were restricted to pay a portion of the Nutricap Labs, LLC (“Nutricap”) asset acquisition. We granted JL a security interest in the Company’s assets, including real estate and pledged the shares of our subsidiaries as security for the note. The note matures on February 13, 2020 with payments of principal due on a quarterly basis which was to commence on March 1, 2017 in installments starting at $250 per quarter and increasing to $350 per quarter but has been deferred to January 1, 2018. This note bears interest of 12% per annum, payable monthly. We issued a warrant to JL to purchase 2,329,400 shares of the Company’s common stock on January 22, 2015 and 434,809 shares of the Company’s common stock on February 4, 2015 (see JL Warrants in Note 7). The estimated fair value of these warrants at the date of issuances was $4,389, which was recorded as a note discount and is being amortized into interest expense over the term of these loans. Additionally, we had incurred loan fees of $152 relating to this loan, which is also being amortized into interest expense over the term of these loans. On March 8, 2017, Golisano LLC acquired this note payable from JL. Our terms of this note payable remain the same with the only change for us being the holder of the promissory note.

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February 2015 Note Payable to Golisano Holdings LLC (formerly payable to Penta Mezzanine SBIC Fund I, L.P.)

On February 6, 2015, we raised proceeds of $2,000, less certain fees and expenses, from the issuance of a secured note payable to Penta. The proceeds were restricted to pay a portion of the acquisition of the customer relationships of Nutricap. This note matures on November 13, 2019 with payments of principal due on a quarterly basis which was to commence on November 13, 2017 in installments of (i) $90 per quarter for the first four quarters, (ii) $110 per quarter for the next four quarters and (iii) $130 per quarter for each quarter thereafter but has been deferred to January 13, 2018. This note bears interest of 12% per annum, payable monthly. We issued a warrant to Penta to purchase 869,618 shares of the Company’s common stock in connection with this loan (see Penta Warrants in Note 7). The estimated fair value of these warrants at the date of issuances totaled $250, which was recorded as a note discount and is being amortized into interest expense over the term of this loan. Additionally, we had incurred loan fees of $90, which is also being amortized into interest expense over the term of these loans. On March 8, 2017, Golisano LLC acquired this note payable from Penta. Our terms of this note payable remain the same with the only change for us being the holder of the promissory note.

January 2016 Note Payable to Golisano Holdings LLC

Pursuant to a January 28, 2016 Unsecured Promissory Note with Golisano LLC, an affiliate of a member of our Board of Directors, Golisano LLC lent us $2,500. The note matures on January 28, 2019, bears interest at an annual rate of 8.5%, with the principal payable in 24 monthly installments of $104 which was to commence on February 28, 2017 but has been deferred to January 28, 2018. We issued a warrant into escrow in connection with this loan (see Golisano Escrow Warrants in Note 7).

March 2016 Note Payable to Golisano Holdings LLC

Pursuant to a March 21, 2016 Unsecured Promissory Note, Golisano LLC lent us $7,000. The note matures on March 21, 2019, bears interest at an annual rate of 8.5%, with the principal payable in 24 monthly installments of $292 which was to commence on April 21, 2017 but has been deferred to January 21, 2018. We issued a warrant into escrow in connection with this loan (see Golisano Escrow Warrants in Note 7).

July 2016 Note Payable to Golisano Holdings LLC

On July 21, 2016, we issued an Unsecured Delayed Draw Promissory Note in favor of Golisano LLC pursuant to which Golisano LLC may, in its sole discretion and pursuant to draw requests made by the Company, loan the Company up to the maximum principal amount of $4,770 (the “Golisano LLC July 2016 Note”). The Golisano LLC July 2016 Note matures on January 28, 2019. Interest on the outstanding principal accrues at a rate of 8.5% per year. The principal of the Golisano LLC July 2016 Note is payable at maturity. We issued a warrant into escrow in connection with this loan (see Golisano Escrow Warrants in Note 7). During the year ended December 31, 2016, we requested and Golisano LLC approved, draws totaling $4,770.

December 2016 Note Payable to Golisano Holdings LLC

Pursuant to a December 31, 2016 Unsecured Promissory Note, Golisano LLC lent us $2,500. The note matures on December 30, 2019, bears interest at an annual rate of 8.5%, with the principal payable at maturity. We issued a warrant into escrow in connection with this loan (see Golisano Escrow Warrants in Note 7).

March 2017 Note Payable to Golisano Holdings LLC

Pursuant to a March 14, 2017 Unsecured Promissory Note, Golisano LLC lent us $3,267. The note matures on December 30, 2019, bears interest at an annual rate of 8.5%, with the principal payable at maturity. We issued a warrant into escrow in connection with this loan (see Golisano Escrow Warrants in Note 7).

Senior Credit Facility

On January 22, 2015, we entered into a three-year $15,000 revolving credit facility (the “Senior Credit Facility”) based on our accounts receivable and inventory, increasable to up to $20,000, with MidCap Financial Trust, which subsequently assigned the agreement to an affiliate, Midcap Funding X Trust (“MidCap”). On September 2, 2016, we entered into an amendment with Midcap to increase the Senior Credit Facility to $17,000 and extend our facility an additional 12 months. We granted MidCap a first priority security interest in certain of our assets and pledged the shares of our subsidiaries as security for amounts owed under the credit facility. We are required to pay Midcap an unused line fee of 0.50% per annum, a collateral management fee of 1.20% per month and interest of LIBOR plus 5% per annum, which was 6.05% per annum as of June 30, 2017. We issued a warrant to Midcap to purchase 500,000 shares of the Company’s common stock (see Midcap Warrant in Note 7). The estimated fair value of these warrants at the date of issuance was $130, which was recorded as a note discount and is being amortized into interest expense over the term of the Senior Credit Facility. Additionally, we have incurred loan fees totaling $540 relating to the Senior Credit Facility and any subsequent amendments, which is also being amortized into interest expense over the term of the Senior Credit Facility.

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Other Debt 

April 2016 Note Payable to JL-Utah Sub, LLC

Pursuant to an April 5, 2016 Unsecured Promissory Note, JL-Utah Sub, LLC lent us $500. The note matures on March 21, 2019, bears interest at an annual rate of 8.5%, with the principal payable in 24 monthly installments of $21 commencing on April 21, 2017.

Capital Lease Obligations

Our capital lease obligations pertain to various leasing agreements with Essex Capital Corporation (“Essex”), a related party to the Company as Essex’s principal owner is a director of the Company.

Huntington Holdings, LLC

On August 6, 2016, the 18-month anniversary of the closing of a share purchase agreement, we were required to pay the purchaser of the common stock the difference between $2.29 per share and either a defined market price or a price per share determined by a valuation firm acceptable to both parties. Based on an outside professional valuation performed on the Company’s common stock, the Company estimated the stock price guarantee payment to be $3,210. Accordingly, the Company recorded a loss on the stock purchase price guarantee of $3,210 and a corresponding liability for the same amount in 2016, which was included in accrued expenses and other current liabilities in the accompanying condensed consolidated balance sheet as of December 31, 2016. On June 2, 2017, the two parties came to an agreement in which we were required to issue an Unsecured Promissory Note (“Huntington Note”) in favor of Huntington Holdings, LLC (“Huntington”). The Huntington Note matures on June 2, 2019 with the principal amount of $3,200 payable at maturity. Interest on the outstanding principal accrues at a rate of 8.5% per year from August 6, 2016 to August 15, 2017, and increases to 10% per year thereafter. We paid $50 to Huntington related to accrued interest from August 6, 2016 through the date of issuance of the Huntington Note. Huntington was required to return 778,385 shares of the Company’s common stock which were issued into escrow. We were required to provide certain piggyback registration rights to Huntington in regards to the remaining 749,999 shares of the Company’s common stock held by Huntington. If the Huntington Note is paid off prior to August 14, 2017, the 778,385 shares held in escrow will be released from escrow and transferred to the Company for no additional consideration. If the note remains outstanding on August 15, 2017, we shall have the right, but not the obligation, to pay $140 to Huntington to purchase 764,192 of the shares held in escrow (the “Subject Shares”). Upon the exercise of this purchase option, the Subject Shares will be released from escrow and transferred to the Company. If the Huntington Note remains outstanding on August 15, 2017 and we do not exercise the option to purchase the shares, the shares will be returned from escrow to Huntington and we will no longer have repurchase rights. Pursuant to the agreement, we were also required to enter into a four-year lease agreement with the purchaser related to our premises occupied by Nutricap.

Financial Covenants

Certain of the foregoing debt agreements, as amended, require us to meet certain affirmative and negative covenants, including maintenance of specified ratios. We amended our debt agreements with MidCap, Penta and JL, effective July 29, 2016, to, among other things, reset the financial covenants of each debt agreement. As of June 30, 2017, management believes we are in compliance with our financial covenants for each debt agreement.

NOTE 7 – WARRANTS AND REGISTRATION RIGHTS AGREEMENTS

The following table presents a summary of the status of our issued warrants as of June 30, 2017, and changes during the six months then ended:

			Weighted Average
	Shares		Exercise Price
Outstanding, December 31, 2016		15,855,017		0.18
Granted		-		-
Canceled / Expired		-		-
Exercised		-		-
Outstanding, June 30, 2017		15,855,017		0.18

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Warrants Issued

Midcap Warrant

In connection with the line of credit agreement with MidCap described in Note 6, we issued MidCap a warrant, exercisable through January 22, 2018, for an aggregate of 500,000 shares of the Company’s common stock at an exercise price of $0.76 per share (the “MidCap Warrant”). We entered into a Registration Rights Agreement with Midcap, dated as of January 22, 2015, granting MidCap certain registration rights, commencing October 1, 2015, for the shares of common stock issuable on exercise of the MidCap Warrant.

Penta Warrants

Pursuant to a Stock Purchase Agreement dated June 30, 2015, a warrant was issued to Penta to purchase an aggregate 807,018 shares of our common stock at a price of $0.01 per share at any time prior to the close of business on June 30, 2020. We granted Penta certain registration rights, commencing October 1, 2015, for the shares of common stock issuable upon exercise of the warrant.

JL Warrants

Pursuant to a June 30, 2015 Stock Purchase Agreement, a warrant was issued to JL to purchase an aggregate 403,509 shares of the Company’s common stock at a price of $0.01 per share at any time prior to the close of business on June 30, 2020, subject to certain adjustments. We granted JL certain registration rights, commencing October 1, 2015, for the shares of common stock issuable upon exercise of the warrant. The warrant was subsequently assigned by JL to two individuals.

Essex Warrants

In connection with the guarantee of a note payable issued in the Nutricap asset acquisition and equipment financing by Essex discussed in Note 6, Essex was issued a warrant exercisable for an aggregate 1,428,571 shares of the Company’s common stock at a purchase price of $0.77 per share, at any time prior to the close of business on June 30, 2020. The number of shares issuable upon the exercise of the warrant is subject to adjustment on terms and conditions customary for a transaction of this nature in the event of (i) reorganization, recapitalization, stock split-up, combination of shares, mergers, consolidations and (ii) sale of all or substantially all of our assets or property. Essex subsequently assigned warrants for 350,649 shares to another company.

JL Properties, Inc. Warrants

In April 2015, we entered into an office lease agreement which requires a $1,000 security deposit, subject to reduction if we achieve certain market capitalization metrics at certain dates. On April 30, 2015, we entered into a Reimbursement Agreement with JL Properties, Inc. (“JL Properties”) pursuant to which JL Properties agreed to arrange for and provide an unconditional, irrevocable, transferable, and negotiable commercial letter of credit to serve as the security deposit. As partial consideration for the entry by JL Properties into the Reimbursement Agreement and the provision of the letter of credit, we issued JL Properties two warrants to purchase shares of the Company’s common stock.

The first warrant is exercisable for an aggregate of 465,880 shares of common stock, subject to certain adjustments, at an aggregate purchase price of $0.01, at any time prior to April 30, 2020. In addition to adjustments on terms and conditions customary for a transaction of this nature in the event of (i) reorganization, recapitalization, stock split-up, combination of shares, mergers, consolidations and (ii) sale of all or substantially all of our assets or property, the number of shares of common stock issuable pursuant to the warrant will be increased in the event our consolidated audited adjusted EBITDA (as defined in the warrant agreement) for the fiscal year ending December 31, 2018 does not equal or exceed $19,250. JL Properties subsequently assigned the warrant to two individuals.

The second warrant is exercisable for an aggregate of 86,962 shares of common stock, at a per share purchase price of $1.00, at any time prior to April 30, 2020. The number of shares issuable upon exercise of the second warrant is subject to adjustment on terms and conditions customary for a transaction of this nature in the event of (i) reorganization, recapitalization, stock split-up, combination of shares, mergers, consolidations and (ii) sale of all or substantially all of our assets or property.

We have granted JL Properties certain registration rights, commencing October 1, 2015, for the shares of common stock issuable on exercise of the two warrants.

Golisano LLC Warrants (formerly Penta Warrants)

In connection with the November 13, 2014 note for $8,000 (see Note 6), Penta was issued a warrant to acquire 4,960,740 shares of the Company’s common stock at an aggregate exercise price of $0.01, through November 13, 2019. In connection with Penta’s consent to the terms of additional debt obtained by us, we also granted Penta a warrant to acquire a total of 869,618 shares of common stock at a purchase price of $1.00 per share, through November 13, 2019. Both warrant agreements grant Penta certain registration rights, commencing October 1, 2015, for the shares of common stock issuable on exercise of the warrants. Penta has the right, under certain circumstances, to require us to purchase all or any portion of the equity interest in the Company issued or represented by the warrant to acquire 4,960,740 shares at a price based on the greater of (i) the product of (x) ten times our adjusted EBITDA with respect to the twelve months preceding the exercise of the put right times (y) the investor’s percentage ownership in the Company assuming full exercise of the warrant; or (ii) the fair market value of the investor’s equity interest underlying the warrant. In the event (i) we do not have the funds available to repurchase the equity interest under the warrant or (ii) such repurchase is not lawful, adjustments to the principal of the note purchased by Penta will be made or, under certain circumstances, interest will be charged on the amount otherwise due for such repurchase. We have the right, under certain circumstances, to require Penta to sell to us all or any portion of the equity interest issued or represented by the warrant to acquire 4,960,740 shares. The price for such repurchase will be the greater of (i) the product of (x) eleven times our adjusted EBITDA with respect to the twelve months preceding the exercise of the call right times (y) the investor’s percentage ownership in the company assuming full exercise of the warrant; or (ii) the fair market value of the equity interests underlying the warrant; or (iii) $3,750. In connection with Golisano LLC’s acquisition of the note payable from Penta on March 8, 2017 (see Note 6 above for additional information), these warrants were assigned to Golisano LLC.

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Golisano LLC Warrants (formerly JL Warrants)

In connection with the January 22, 2015 note payable to JL, we issued JL warrants to purchase an aggregate of 2,329,400 shares of the Company’s common stock, at an aggregate exercise price of $0.01, through February 13, 2020. On February 4, 2015, we also granted to JL a warrant to acquire a total of 434,809 shares of common stock at a purchase price of $1.00 per share, through February 13, 2020. Both warrant agreements grant JL certain registration rights, commencing October 1, 2015, for the shares of common stock issuable upon exercise of the warrants. These warrants were subsequently assigned to two individuals. During the year ended December 31, 2016, these individuals exercised warrants for a total of 1,187,995 shares of the Company’s common stock for total proceeds to the Company of less than $1. In connection with Golisano LLC’s acquisition of the note payable from JL on March 8, 2017 (see Note 6 above for additional information), the remaining portions of these warrants were assigned to Golisano LLC.

Golisano LLC Warrants

Pursuant to an October 2015 Securities Purchase Agreement with Golisano LLC, we issued Golisano LLC a warrant (the “Golisano Warrant”), which Golisano Warrant is intended to maintain, following each future issuance of shares of common stock pursuant to the conversion, exercise or exchange of certain currently outstanding warrants to purchase shares of common stock held by third-parties (the “Outstanding Warrants”), Golisano LLC’s proportional ownership of our issued and outstanding common stock so that it is the same thereafter as on October 5, 2015. We have reserved 12,697,977 shares of common stock for issuance under the Golisano Warrant. The purchase price for any shares of common stock issuable upon exercise of the Golisano Warrant is $.001 per share. The Golisano Warrant is exercisable immediately and up to and including the date which is sixty days after the later to occur of the termination, expiration, conversion, exercise or exchange of all of the Outstanding Warrants and our delivery of notice thereof to Golisano LLC. The Golisano Warrant is also subject to customary adjustments upon any recapitalization, capital reorganization or reclassification, consolidation, merger or transfer of all or substantially all of our assets. In addition, if any payments are made to a holder of an Outstanding Warrant in consideration for the termination of or agreement not to exercise such Outstanding Warrant, Golisano LLC will be entitled to equal treatment. We have entered into a Registration Rights Agreement with Golisano LLC, dated as of October 5, 2015, granting Golisano LLC certain registration rights for the shares of common stock issuable on exercise of the Golisano Warrant. On February 6, 2016, Golisano LLC exercised the Golisano Warrant in part for 509,141 shares of the Company’s common stock for an aggregate purchase price of $1. During the year ended December 31, 2016, the Golisano Warrant was cancelled in part for 6,857,143 shares pursuant to the cancellation of a portion of the Outstanding Warrants. As of June 30, 2017, we have reserved 4,756,505 shares of its common stock for issuance under the Golisano Warrant.

Warrants Issued into Escrow

Golisano Escrow Warrants

In connection with a January 28, 2016 Unsecured Promissory Note, we issued into escrow in the name of Golisano LLC a warrant to purchase an aggregate of 1,136,363 shares of the Company’s common stock at an exercise price of $0.01 per share (the “January 2016 Golisano Warrant”). The January 2016 Golisano Warrant will not be released from escrow or be exercisable unless and until we fail to pay Golisano LLC the entire unamortized principal amount of the related promissory note and any accrued and unpaid interest thereon as of January 28, 2019 or such earlier date as is required pursuant to an Acceleration Notice (as defined in the related note agreement). We have reserved 1,136,363 shares of the Company’s common stock for issuance under the January 2016 Golisano Warrant. The January 2016 Golisano Warrant, if exercisable, expires on February 28, 2022. The January 2016 Golisano Warrant is also subject to customary adjustments upon any recapitalization, capital reorganization or reclassification, consolidation, merger or transfer of all or substantially all of our assets.

In connection with a March 21, 2016 Unsecured Promissory Note, we issued into escrow in the name of Golisano LLC a warrant to purchase an aggregate of 3,181,816 shares of the Company’s common stock at an exercise price of $0.01 per share (the “March 2016 Golisano Warrant”). The March 2016 Golisano Warrant will not be released from escrow or be exercisable unless and until we fail to pay Golisano LLC the entire unamortized principal amount of the related promissory note and any accrued and unpaid interest thereon as of March 21, 2019 or such earlier date as is required pursuant to an Acceleration Notice (as defined in the related note agreement). We have reserved 3,181,816 shares of the Company’s common stock for issuance under the March 2016 Golisano Warrant. The March 2016 Golisano Warrant, if exercisable, expires on March 21, 2022. The March 2016 Golisano Warrant is also subject to customary adjustments upon any recapitalization, capital reorganization or reclassification, consolidation, merger or transfer of all or substantially all of our assets.

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In connection with the Golisano LLC July 2016 Note, we issued into escrow in the name of Golisano LLC a warrant to purchase an aggregate of 2,168,178 shares of the Company’s common stock, at an exercise price of $0.01 per share (the “Golisano July 2016 Warrant”). The Golisano July 2016 Warrant will not be released from escrow or be exercisable unless and until we fail to pay Golisano LLC the entire unamortized principal amount of the Golisano July 2016 Note and any accrued and unpaid interest thereon as of January 28, 2019 or such earlier date as is required pursuant to an Acceleration Notice (as defined in the Golisano LLC July 2016 Note). We have reserved 2,168,178 shares of the Company’s common stock for issuance under the Golisano July 2016 Warrant. The Golisano July 2016 Warrant, if exercisable, expires on July 21, 2022. The Golisano July 2016 Warrant is also subject to customary adjustments upon any recapitalization, capital reorganization or reclassification, consolidation, merger or transfer of all or substantially all of our assets.

In connection with the Golisano LLC December 2016 Note, we issued into escrow in the name of Golisano LLC a warrant to purchase an aggregate of 1,136,363 shares of the Company’s common stock, at an exercise price of $0.01 per share (the “Golisano December 2016 Warrant”). The Golisano December 2016 Warrant will not be released from escrow or be exercisable unless and until we fail to pay Golisano LLC the entire unamortized principal amount of the Golisano December 2016 Note and any accrued and unpaid interest thereon as of December 30, 2019 or such earlier date as is required pursuant to an Acceleration Notice (as defined in the Golisano LLC December 2016 Note). We have reserved 1,136,363 shares of the Company’s common stock for issuance under the Golisano December 2016 Warrant. The Golisano December 2016 Warrant, if exercisable, expires on December 30, 2022. The Golisano December 2016 Warrant is also subject to customary adjustments upon any recapitalization, capital reorganization or reclassification, consolidation, merger or transfer of all or substantially all of our assets.

In connection with the Golisano LLC March 2017 Note, we issued into escrow in the name of Golisano LLC a warrant to purchase an aggregate of 1,484,847 shares of the Company’s common stock, at an exercise price of $0.01 per share (the “Golisano March 2017 Warrant”). The Golisano March 2017 Warrant will not be released from escrow or be exercisable unless and until we fail to pay Golisano LLC the entire unamortized principal amount of the Golisano March 2017 Note and any accrued and unpaid interest thereon as of December 30, 2019 or such earlier date as is required pursuant to an Acceleration Notice (as defined in the Golisano LLC March 2017 Note). We have reserved 1,484,847 shares of the Company’s common stock for issuance under the Golisano March 2017 Warrant. The Golisano March 2017 Warrant, if exercisable, expires on March 14, 2023. The Golisano March 2017 Warrant is also subject to customary adjustments upon any recapitalization, capital reorganization or reclassification, consolidation, merger or transfer of all or substantially all of our assets.

We previously entered into a Registration Rights Agreement with Golisano LLC, dated as of October 5, 2015 (the “Registration Rights Agreement”), granting Golisano LLC certain registration rights for certain shares of the Company’s common stock. The shares of common stock issuable pursuant to the above warrants are also entitled to the benefits of the Registration Rights Agreement.

GH Escrow Warrants

In connection with a January 28, 2016 Unsecured Promissory Note, we issued into escrow in the name of GH a warrant to purchase an aggregate of 1,136,363 shares of the Company’s common stock at an exercise price of $0.01 per share (the “January 2016 GH Warrant”). The January 2016 GH Warrant will not be released from escrow or be exercisable unless and until we fail to pay GH the entire unamortized principal amount of the related promissory note and any accrued and unpaid interest thereon as of January 28, 2019 or such earlier date as is required pursuant to an Acceleration Notice (as defined in the related note agreement). We have reserved 1,136,363 shares of the Company’s common stock for issuance under the January 2016 GH warrant. The January 2016 GH Warrant, if exercisable, expires on February 28, 2022. The January 2016 GH Warrant is also subject to customary adjustments upon any recapitalization, capital reorganization or reclassification, consolidation, merger or transfer of all or substantially all of our assets.

In connection with a March 21, 2016 Unsecured Promissory Note, we issued into escrow in the name of GH a warrant to purchase an aggregate of 3,181,816 shares of the Company’s common stock at an exercise price of $0.01 per share (the “March 2016 GH Warrant”). The March 2016 GH Warrant will not be released from escrow or be exercisable unless and until we fail to pay GH the entire unamortized principal amount of the related promissory note and any accrued and unpaid interest thereon as of March 21, 2019 or such earlier date as is required pursuant to an Acceleration Notice (as defined in the related note agreement). We have reserved 3,181,816 shares of the Company’s common stock for issuance under the March 2016 GH Warrant. The March 2016 GH Warrant, if exercisable, expires on March 21, 2022. The March 2016 GH Warrant is also subject to customary adjustments upon any recapitalization, capital reorganization or reclassification, consolidation, merger or transfer of all or substantially all of our assets.

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In connection with the GH December 2016 Note, we issued into escrow in the name of GH a warrant to purchase an aggregate of 1,136,363 shares of the Company’s common stock, at an exercise price of $0.01 per share (the “December 2016 GH Warrant”). The December 2016 GH Warrant will not be released from escrow or be exercisable unless and until we fail to pay GH the entire unamortized principal amount of the December 2016 GH Warrant and any accrued and unpaid interest thereon as of December 30, 2019 or such earlier date as is required pursuant to an Acceleration Notice (as defined in the December 2016 GH Warrant). We have reserved 1,136,363 shares of common stock for issuance under the December 2016 GH Warrant. The December 2016 GH Warrant, if exercisable, expires on December 30, 2022. The December 2016 GH Warrant is also subject to customary adjustments upon any recapitalization, capital reorganization or reclassification, consolidation, merger or transfer of all or substantially all of our assets.

JL-US Escrow Warrant

In connection with an April 5, 2016 Unsecured Promissory Note, we issued into escrow in the name of JL-US a warrant to purchase an aggregate of 227,273 shares of the Company’s common stock at an exercise price of $0.01 per share (the “JL-US Warrant”). The JL-US Warrant will not be released from escrow or be exercisable unless and until we fail to pay JL-US the entire unamortized principal amount of the JL-US Note and any accrued and unpaid interest thereon as of March 21, 2019 or such earlier date as is required pursuant to an Acceleration Notice (as defined in the JL-US Note). We have reserved 227,273 shares of the Company’s common stock for issuance under the JL-US Warrant. The JL-US Warrant, if exercisable, expires on March 21, 2022. The JL-US Warrant is also subject to customary adjustments upon any recapitalization, capital reorganization or reclassification, consolidation, merger or transfer of all or substantially all of our assets.

Little Harbor Escrow Warrant

The Little Harbor July 2016 Note provides that we issue into escrow in the name of Little Harbor a warrant to purchase an aggregate of 2,168,178 shares of common stock at an exercise price of $0.01 per share (the “Little Harbor July 2016 Warrant”). The Little Harbor July 2016 Warrant will not be released from escrow or be exercisable unless and until we fail to pay Little Harbor the entire unamortized principal amount of the Little Harbor July 2016 Note and any accrued and unpaid interest thereon as of January 28, 2019 or such earlier date as is required pursuant to an Acceleration Notice (as defined in the Little Harbor July 2016 Note). We have reserved 2,168,178 shares of the Company’s common stock for issuance under the Little Harbor July 2016 Warrant. The Little Harbor July 2016 Warrant, if exercisable, expires on July 21, 2022. The Little Harbor July 2016 Warrant is also subject to customary adjustments upon any recapitalization, capital reorganization or reclassification, consolidation, merger or transfer of all or substantially all of our assets. The Little Harbor July 2016 Warrant grants Little Harbor certain registration rights for the shares of the Company’s common stock issuable upon exercise of the Little Harbor July 2016 Warrant.

NOTE 8 – DERIVATIVE LIABILITIES

The number of shares of common stock issuable pursuant to certain warrants issued in 2015 will be increased if our adjusted EBITDA or the market price of the Company’s common stock do not meet certain defined amounts. We have recorded the estimated fair value of the warrants as of the date of issuance. Due to the variable terms of the warrant agreements, the warrants are recorded as derivative liabilities with a corresponding charge to our consolidated statements of comprehensive loss for changes in the estimated fair value of the warrants from the date of issuance to each balance sheet reporting date. As of June 30, 2017, we have estimated the total fair value of the derivative liabilities to be $7,750 as compared to $6,455 as of December 31, 2016. We had the following activity in our derivative liabilities account since December 31, 2016:

	Six Months Ended
	June 30,
	2017
Derivative liabilities at December 31, 2016	$	6,455
Loss on change in fair value of derivative liabilities		1,295
Derivative liabilities at June 30, 2017	$	7,750

The value of the derivative liabilities is generally estimated using an options lattice model with multiple inputs and assumptions, including the market price of the Company’s common stock, stock price volatility and other assumptions to project EBITDA and other reset events. These inputs and assumptions are subject to management’s judgment and can vary materially from period to period.

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NOTE 9 – STOCKHOLDERS’ EQUITY (DEFICIT)

Preferred Stock

The Company has authorized 500,000,000 shares of preferred stock with a par value of $0.001 per share. No shares of the preferred stock have been issued.

Twinlab Consolidation Corporation 2013 Stock Incentive Plan

The only equity compensation plan currently in effect is the Twinlab Consolidation Corporation 2013 Stock Incentive Plan (the “TCC Plan”), which was assumed by the Company on September 16, 2014. The TCC Plan originally established a pool of 20,000,000 shares of common stock for issuance as incentive awards to employees for the purposes of attracting and retaining qualified employees who will aid in the success of the Company. From January through December 2015, the Company granted Restricted Stock Units to certain employees of the Company pursuant to the TCC Plan. Each Restricted Stock Unit relates to one share of the Company’s common stock. The Restricted Stock Unit awards vest 25% each annually on various dates through 2019. The Company estimated the grant date fair market value per share of the Restricted Stock Units and is amortizing the total estimated grant date value over the vesting periods. During the six months ended June 30, 2017, there were not any shares of common stock issued to employees pursuant to the vesting of Restricted Stock Units. As of June 30, 2017, 5,635,626 shares remain available for use in the TCC Plan.

Common Stock Repurchase

On January 5, 2017, pursuant to a Repurchase Agreement 642,366 shares of the Company’s common stock were repurchased for an aggregate repurchase price of less than $1.

Stock Subscription Receivable and Loss on Stock Price Guarantee

At June 30, 2017, the stock subscription receivable dated August 1, 2014 for the purchase of 1,528,384 shares of the Company’s common stock had a principal balance of $30 and bears interest at an annual rate of 5%.

On August 6, 2016, the 18-month anniversary of the closing of a share purchase agreement, we were required to pay the purchaser of the common stock the difference between $2.29 per share and either a defined market price or a price per share determined by a valuation firm acceptable to both parties. Based on an outside professional valuation performed on the Company’s common stock, the Company estimated the stock price guarantee payment to be $3,210. Accordingly, the Company recorded a loss on the stock purchase price guarantee of $3,210 and a corresponding liability for the same amount in 2016, which was included in accrued expenses and other current liabilities in the accompanying condensed consolidated balance sheet as of December 31, 2016. On June 2, 2017, the two parties came to an agreement in which we were required to issue the Huntington Note in favor of Huntington. The Huntington Note matures on June 2, 2019 with the principal amount of $3,200 payable at maturity. Interest on the outstanding principal accrues at a rate of 8.5% per year from August 6, 2016 to August 15, 2017, and increases to 10% per year thereafter. We paid $50 to Huntington related to accrued interest from August 6, 2016 through the date of issuance of the Huntington Note. Huntington was required to return 778,385 shares of the Company’s common stock which were issued into escrow. We were required to provide certain piggyback registration rights to Huntington in regards to the remaining 749,999 shares of the Company’s common stock held by Huntington. If the Huntington Note is paid off prior to August 14, 2017, the 778,385 shares held in escrow will be released from escrow and transferred to the Company for no additional consideration. If the note remains outstanding on August 15, 2017, we shall have the right, but not the obligation, to pay $140 to Huntington to purchase 764,192 of the Subject Shares held in escrow. Upon the exercise of this purchase option, the Subject Shares will be released from escrow and transferred to the Company. If the note remains outstanding on August 15, 2017 and we do not exercise the option to purchase the shares, the shares will be returned from escrow to Huntington and we will no longer have repurchase rights. Pursuant to the agreement, we were also required to enter into a four-year lease agreement with the purchaser related to our premises occupied by Nutricap.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
(Amounts in thousands, except share and per share amounts and number of employees)

Overview

This Quarterly Report on Form 10-Q contains forward-looking statements. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The words “believes,” “anticipates,” “plans,” “expects,” “intends” and similar expressions identify some of the forward-looking statements. Forward-looking statements are not guarantees of performance or future results and involve risks, uncertainties and assumptions. The factors discussed elsewhere in this Form 10-Q and in subsequent Quarterly Reports on Form 10-Q and Annual Reports on Form 10-K, could also cause actual results to differ materially from those indicated by our forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements.

Our Operations

We are an integrated manufacturer, marketer, distributor and retailer of branded nutritional supplements and other natural products sold to and through domestic health and natural food stores, mass market retailers, specialty stores retailers, on-line retailers and websites. Internationally, we market and distribute branded nutritional supplements and other natural products to and through health and natural product distributors and retailers.

Our products include vitamins, minerals, specialty supplements and sports nutrition products primarily under the Twinlab® (including the Twinlab® Fuel brand of sports nutrition products), Reserveage™ and ResVitale® brands. We also manufacture and sell diet and energy products under the Metabolife® and Re-Body® brands and a full line of herbal teas under the Alvita® brand. To accommodate consumer preferences, our products come in various formulations and delivery forms, including capsules, tablets, softgels, chewables, liquids, sprays, powders and whole herbs. These products are sold primarily through health and natural food stores and on-line retailers, supermarkets, and mass-market retailers.

We also perform contract manufacturing services for private label products.  Our contract manufacturing business involves the manufacture of custom products to the specifications of a customer who requires finished products under the customer’s own brand name.  We do not market these private label products as our business is to manufacture and sell the products to the customer, who then markets and sells the products to retailers or end consumers.

We manufacture and/or distribute one of the broadest branded product lines in the industry with approximately 260 stock keeping units, or SKUs. We believe that as a result of our emphasis on innovation, quality, loyalty, education and customer service, our brands are widely recognized in health and natural food stores and among their customers.

We continue to focus on integrating our two 2015 acquisitions. The first was the acquisition of the customer relationships of Nutricap, a provider of dietary supplement contract manufacturing services, into our subsidiary, NutraScience, in February 2015, and the second was the acquisition of 100% of the equity interests of Organic Holdings, a market leader in the healthy aging and beauty from within categories and owner of the award-winning Reserveage™ Nutrition brand, in October 2015. Progress has been made in consolidating manufacturing operations and we continue to believe that these acquisitions significantly strengthened our product offerings, contract manufacturing services and our sales and marketing capabilities, providing us with opportunities to improve our market position in addition to adding to supply chain efficiencies.

Going Concern Uncertainty

The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which assumes continuity of operations and realization of assets and liabilities in the ordinary course of business. In most periods since our formation, we have generated losses from operations. At June 30, 2017, we had an accumulated deficit of $231,909. Historical losses are primarily attributable to lower than planned sales resulting from low fill rates on demand due to limitations of our working capital, delayed product introductions and postponed marketing activities, merger-related and other restructuring costs, and interest and refinancing charges associated with our debt refinancing. Losses have been funded primarily through issuance of common stock and third-party or related party debt.

Because of this history of operating losses, significant interest expense on our debt, and the recording of significant derivative liabilities, we have a working capital deficiency of $7,160 at June 30, 2017. We also have $17,609 of debt, net of discount, due within the next 12 months. These continuing conditions, among others, raise substantial doubt about our ability to continue as a going concern.

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Management has addressed operating issues through the following actions: focusing on growing the core business and brands; continuing emphasis on major customers and key products; reducing manufacturing and operating costs and continuing to negotiate lower prices from major suppliers. During the six months ended June 30, 2017, we obtained debt funding totaling $3,267 to execute the new supply chain initiatives and increase inventory levels. It is possible that we may need additional capital to execute our business plan. If additional funding is required, there can be no assurance that sources of funding will be available when needed on acceptable terms or at all.

Critical Accounting Policies and Estimates

This discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements, which we have prepared in accordance with the U.S. generally accepted accounting principles. The preparation of our financial statements required us to make estimates and assumptions that affected the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of net sales and expenses during the reported periods. Significant estimates include values and lives assigned to acquired intangible assets, reserves for customer returns and allowances, uncollectible accounts receivable, valuation adjustments for slow moving, obsolete and/or damaged inventory and valuation, recoverability of long-lived assets, intangibles and goodwill, estimated values of stock options and warrants, share-based compensation, and the identification and valuation of derivatives. Actual results may differ from these estimates.

Our critical accounting policies and estimates include the following:

Revenue Recognition

Revenue from product sales, net of estimated returns and allowances, is recognized when evidence of an arrangement is in place, related prices are fixed and determinable, contractual obligations have been satisfied, title and risk of loss have been transferred to the customer and collection of the resulting receivable is reasonably assured. Shipping terms are generally freight on board shipping point. We sell predominately in the North American and European markets, with international sales transacted in U.S. Dollars.

Accounts Receivable and Allowances

We grant credit to customers and generally do not require collateral or other security. We perform credit evaluations of our customers and provide for expected claims, related to promotional items; customer discounts; shipping shortages and damages; and doubtful accounts based upon historical bad debt and claims experience.

Inventories

Inventories are stated at the lower of cost or net realizable value and are reduced by an estimated reserve for obsolete inventory.

Intangible Assets

Intangible assets consist primarily of trademarks and customer relationships, which are amortized on a straight-line basis over their estimated useful lives ranging from 3 to 30 years. The valuation and classification of these assets and the assignment of amortizable lives involve significant judgment and the use of estimates.

We believe that our long-term growth strategy supports our fair value conclusions. For intangible assets, the recoverability of these amounts is dependent upon achievement of our projections and the execution of key initiatives related to revenue growth and improved profitability.

Goodwill

Goodwill is not subject to amortization, but is reviewed for impairment annually, or more frequently whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable. An impairment charge would be recorded to the extent the carrying value of goodwill exceeds its estimated fair value. The testing of goodwill under established guidelines for impairment requires significant use of judgment and assumptions. Changes in forecasted operations and other assumptions could materially affect the estimated fair values. Changes in business conditions could potentially require adjustments to these asset valuations.

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Impairment of Long-Lived Assets

Long-lived assets, including intangible assets subject to amortization, are reviewed for impairment when changes in circumstances indicate that the carrying amount of the asset may not be recoverable. If the carrying amount of the asset exceeds the expected undiscounted cash flows of the asset, an impairment charge is recognized equal to the amount by which the carrying amount exceeds fair value. The testing of these intangibles under established guidelines for impairment requires significant use of judgment and assumptions. Changes in forecasted operations and other assumptions could materially affect the estimated fair values. Changes in business conditions could potentially require adjustments to these asset valuations.

Indefinite-Lived Intangible Assets

Indefinite-lived intangible assets relating to the asset acquisition of Organic Holdings are determined to have an indefinite useful economic life and as such are not amortized. Indefinite-lived intangible assets are tested for impairment annually which consists of a comparison of the fair value of the asset with its carrying value.

Value of Warrants Issued with Debt

We estimate the grant date value of certain warrants issued with debt, using an outside professional valuation firm, which uses the Monte Carlo option lattice model. We record the amounts as interest expense or debt discount, depending on the terms of the agreement. These estimates involve multiple inputs and assumptions, including the market price of the Company’s common stock, stock price volatility and other assumptions to project earnings before interest, taxes, depreciation and amortization (“EBITDA”) and other reset events. These inputs and assumptions are subject to management’s judgment and can vary materially from period to period.

Derivative Liabilities

We have recorded certain warrants as derivative liabilities at estimated fair value, as determined based on the Company’s use of an outside professional valuation firm, due to the variable terms of the warrant agreements. The value of the derivative liabilities is generally estimated using Monte Carlo option lattice model with multiple inputs and assumptions, including the market price of the Company’s common stock, stock price volatility and other assumptions to project EBITDA and other reset events. These inputs and assumptions are subject to management’s judgment and can vary materially from period to period.

Share-Based Compensation

We record share-based compensation, including grants of restricted stock units, based on their grant date fair values and record compensation expense over the vesting period of the restricted stock awards.

Income Taxes

We account for income taxes using an asset and liability approach. Deferred income taxes are determined by applying currently enacted tax laws and rates to the cumulative temporary differences between the carrying values of assets and liabilities for financial statement and income tax purposes. Valuation allowances against deferred tax assets are recorded when we are unable to conclude that it is more likely than not that such deferred tax assets will be realized.

Results of Operations

Net Sales

Our net sales decreased $803, or 4%, to $21,419 for the three months ended June 30, 2017 from $22,222 for the three months ended June 30, 2016. On a year-to-date basis, our net sales increased $2,679, or 6%, to $45,518 for the six months ended June 30, 2017 from $42,839 for the six months ended June 30, 2016. The increase in our net sales for the six months reflects the organic growth in our contract manufacturing business. In addition, we have increased sales of our Twinlab products due to improved stock levels, and have increased Organic Holdings sales through additional airtime and higher performance of sales through QVC channel.

Gross Profit

Our gross profit decreased $322, or 5%, to $5,653 for the three months ended June 30, 2017 from $5,975 for the three months ended June 30, 2016.  On a year-to-date basis, our gross profit increased $2,856, or 30%, to $12,253 for the six months ended June 30, 2017 from $9,397 for the six months ended June 30, 2016.  The increase in our gross profit for the six months is derived from higher sales volumes combined with increased sales of profitable products. In addition, compared to last year, there have been reductions to our manufacturing related general and administrative expenses that have positively affected our margins.

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Selling, General and Administrative Expenses

Our selling, general and administrative expenses decreased $1,234, or 14%, to $7,333 for the three months ended June 30, 2017 from $8,567 for the three months ended June 30, 2016. On a year-to-date basis, our selling, general and administrative expenses decreased $4,561, or approximately 25%, to $13,928 for the six months ended June 30, 2017 from $18,489 for the six months ended June 30, 2016. The decreases in our selling, general and administrative expenses are primarily due to our reduction in force to right-size the number of employees against the needs of current operations in 2017.

Loss on Stock Purchase Price Guarantee

On August 6, 2016, the 18-month anniversary of the closing of a share purchase agreement, we were required to pay the purchaser of the common stock the difference between $2.29 per share and either a defined market price or a price per share determined by a valuation firm acceptable to both parties. Based on an outside professional valuation performed on the Company’s common stock, the Company estimated the stock price guarantee payment to be $3,210. Accordingly, the Company recorded a loss on the stock purchase price guarantee of $3,210 and a corresponding liability for the same amount in 2016, which was included in accrued expenses and other current liabilities in the accompanying condensed consolidated balance sheet as of December 31, 2016. On June 2, 2017, the two parties came to an agreement in which we were required to issue an Unsecured Promissory Note (“Huntington Note”) in favor of Huntington Holdings, LLC (“Huntington”). The Huntington Note matures on June 2, 2019 with the principal amount of $3,200 payable at maturity. Interest on the outstanding principal accrues at a rate of 8.5% per year from August 6, 2016 to August 15, 2017, and increases to 10% per year thereafter. We paid $50 to Huntington related to accrued interest from August 6, 2016 through the date of issuance of the Huntington Note. Huntington was required to return 778,385 shares of the Company’s common stock which were issued into escrow. We were required to provide certain piggyback registration rights to Huntington in regards to the remaining 749,999 shares of the Company’s common stock held by Huntington. If the Huntington Note is paid off prior to August 14, 2017, the 778,385 shares held in escrow will be released from escrow and transferred to the Company for no additional consideration. If the note remains outstanding on August 15, 2017, we shall have the right, but not the obligation, to pay $140 to Huntington to purchase 764,192 of the shares held in escrow (the “Subject Shares”). Upon the exercise of this purchase option, the Subject Shares will be released from escrow and transferred to the Company. If the Huntington Note remains outstanding on August 15, 2017 and we do not exercise the option to purchase the shares, the shares will be returned from escrow to Huntington and we will no longer have repurchase rights. Pursuant to the agreement we were also required to enter into a four-year lease agreement with the purchaser related to our premises occupied by Nutricap.

Interest Expense, Net

Our interest expense increased $331, or 15%, to $2,478 for the three months ended June 30, 2017 from $2,147 for the three months ended June 30, 2016.  On a year-to-date basis, our interest expense increased $335, or 8%, to $4,442 for the six months ended June 30, 2017 from $4,107 for the six months ended June 30, 2016. The increase in our interest expense is primarily due to increases in our third-party or related party debt.

Gain (Loss) on Change in Derivative Liabilities

The number of shares of common stock issuable pursuant to certain warrants issued in 2015 will be increased if our audited adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”) or the market price of the Company’s common stock do not meet certain defined amounts. We have recorded the estimated fair value of the warrants as of the date of issuance and each subsequent balance sheet reporting date. Due to the variable terms of the warrant agreements, changes in the estimated fair value of the warrants from the date of issuance to each balance sheet reporting date are recorded as gain (loss) on change in derivative liabilities in our consolidated statements of comprehensive loss. During the three months and six months ended June 30, 2017, we reported a loss on change in derivative liabilities of $297 and $1,295, respectively. During the three and six months ended June 30, 2016, we reported a gain on change in derivative liabilities of $1,072 and $14,063, respectively.

Liquidity and Capital Resources

At June 30, 2017, we had an accumulated deficit of $231,909, primarily because of our history of operating losses and our recording of derivative liabilities and loss on stock purchase price guarantee. We have a working capital deficiency of $7,160 at June 30, 2017. Losses have been funded primarily through issuance of common stock, borrowings from our stockholders and third-party or related party debt and proceeds from the exercise of warrants. As of June 30, 2017, we had cash of $487. On an ongoing basis, we also seek to improve operating cash through trade receivables and payables management as well as inventory stocking levels. We used net cash in operating activities of $8,740 for the six months ended June 30, 2017. During the six months ended June 30, 2017, we incurred new debt of $3,267, had a net increase in borrowings on our senior credit facility of $1,949 to fund our operations and debt repayment of $1,057.

 

Our total liabilities increased by $6,194 to $97,254 at June 30, 2017 from $91,060 at December 31, 2016. This increase in our total liabilities was primarily due to an increase in our non-cash derivative liabilities of $1,295, a non-cash increase in our debt of $3,200, a decrease in our liabilities related to operations of $3,703 and a net increase of $5,402 in debt. For discussion of our debt financings completed to date during 2017, see Notes 6 and 7 in the Notes to Condensed Consolidated Financial Statements included in this Report.

Cash Flows from Operating, Investing and Financing Activities

Net cash used in operating activities was $8,740 for the six months ended June 30, 2017 as a result of our net loss of $7,436, a non-cash loss on change in derivative liabilities of $1,295, as well as non-cash expenses totaling $3,380 and an increase in net operating assets and liabilities of $5,979. By comparison, for the six months ended June 30, 2016, net cash used in operating activities was $12,982 as a result of our net loss of $2,384, a non-cash gain on change in derivative liabilities of $14,063 as well as other non-cash expenses totaling $7,929 and a decrease in net operating assets and liabilities of $4,464. See Condensed Consolidated Statements of Cash Flows included in this Report for additional information.

 

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Net cash used in investing activities for the six months ended June 30, 2017 and 2016 was $29 and $110, respectively, consisting of the purchase of property and equipment.

Net cash provided by financing activities was $4,159 for the six months ended June 30, 2017, primarily consisting of proceeds from the issuance of debt of $3,267, net borrowings of $1,949 under our revolving credit facilities, partially offset by repayment of debt of $1,057. Net cash provided by financing activities was $17,804 for the six months ended June 30, 2016, consisting of proceeds from the exercise of warrants of $1, proceeds from the issuance of debt of $19,500, net borrowings of $755 under our revolving credit facilities, and a decrease in security deposits of $27, partially offset by repayment of debt of $2,479.

Ongoing Funding Requirements

As set forth above, we have obtained additional debt financing to date in 2017 to support operations. It is possible that we may need additional funding to enable us to fund our operating expenses and capital expenditure requirements.

Until such time, if ever, as we can generate substantial product revenues, we intend to finance our cash needs through a combination of equity offerings, debt financings, collaborations, strategic alliances and licensing arrangements. There can be no assurance that any of those sources of funding will be available when needed on acceptable terms or at all. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interests of existing stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of existing stockholders. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise funds through collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or to grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings or relationships with third parties when needed or on acceptable terms, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts; abandon our business strategy of growth through acquisitions; or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

Recent Accounting Pronouncements

In July 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-11, “Derivatives and Hedging (Topic 815)” which addresses the complexity of accounting for certain financial instruements with down round features. The amendments of this update change the determination of whether certain financial instruments should be classified as liabilities or equity instruments, a down round feature no longer precludes equity classification when assessing whether the instrument is indexed to an entity’s own stock. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018. We have not yet determined the impact on our consolidated financial statements of the adoption of this new accounting pronouncement.

In January 2017, the FASB issued ASU No. 2017-04, “Simplifying the Test for Goodwill Impairment (Topic 350)” which removes Step 2 of the goodwill impairment test that requires a hypothetical purchase price allocation.  A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill.  The amendments in this ASU are effective for fiscal years beginning after December 15, 2019.  Early adoption is permitted after January 1, 2017.  We do not expect the new guidance to have a significant impact on our condensed consolidated financial statements or related disclosures.

In March 2016, the FASB issued ASU No. 2016-09, “Stock Compensation (Topic 718)”, which is intended to simplify several aspects of the accounting for share-based payment award transactions, including the income tax impacts, the classification on the statement of cash flows, and forfeitures. The amendments in this ASU are effective for fiscal years beginning after December 15, 2016, including interim periods. We have not yet determined the impact on our consolidated financial statements of the adoption of this new accounting pronouncement.

In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)”. The amendments in this ASU revise the accounting related to lessee accounting. Under the new guidance, lessees will be required to recognize a lease liability and a right-of-use asset for all leases. The new lease guidance also simplifies the accounting for sale and leaseback transactions primarily because lessees must recognize lease assets and lease liabilities. The amendments in this ASU are effective for public companies for fiscal years beginning after December 15, 2018 and are to be applied through a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. Early adoption is permitted. We have not yet determined the impact on our consolidated financial statements of the adoption of this new accounting pronouncement.

Although there are several other new accounting pronouncements issued or proposed by the FASB, which we have adopted or will adopt, as applicable, we do not believe any of these accounting pronouncements has had or will have a material impact on our consolidated financial position or results of operations.

Material Contractual Obligations

On December 15, 2016, we entered into an operating lease agreement for approximately 13,000 square feet of office space in Boca Raton, Florida. The agreement expires 103 months after the commencement, which occued in August 2017, and has a monthly base rent of $17.

As of June 30, 2017, we have total debt of $71,221, of which $50,716 is considered to be related-party debt. For discussion of our debt financings, see Notes 6 and 7 in the Notes to Condensed Consolidated Financial Statements included in this Report.

Effective February 6, 2013, we entered into an operating lease agreement for approximately 170,000 square feet of manufacturing, research and development, warehousing and shipping space, which includes roughly 30,000 square feet of office space, in American Fork, Utah. The agreement expires in February 2028 and has a monthly base rent of $60, provided that commencing on the five-year anniversary date thereafter, the base rent shall be increased by 10% over the base rent for the preceding five-year period.

Effective April 7, 2015, we entered into an operating lease agreement for approximately 31,000 square feet of office space in St. Petersburg, Florida. The agreement expires in April 2027 and has a monthly base rent of $59 for year 1 to $76 for year 12.

24

Off-Balance Sheet Arrangements

None.

Item 3.          Quantitative and Qualitative Disclosures About Market Risk.

This item is not applicable as we are currently considered a smaller reporting company.

Item 4.          Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our chief executive officer and our chief financial officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2017, pursuant to Rule 13a-15(b) under the Exchange Act. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

Based on the evaluation of our disclosure controls and procedures as of June 30, 2017, our management concluded that, as a result of material weaknesses in our internal control over financial reporting discussed below, our disclosure controls and procedures were not effective as of June 30, 2017. 

Management’s Remediation Initiatives

Management plans and has initiated actions to implement a number of initiatives that address the ineffective design of the system of internal control over financial reporting and plans to initiate further actions to implement a number of initiatives, including but not limited to the following:

Work throughout the year with our independent Sarbanes-Oxley Act consultant to help improve the overall design of our system of internal control over financial reporting, so we promptly identify and refine prior to year-end.

Continue to evaluate control procedures on an ongoing basis, and, where possible modify those control procedures to improve management oversight.

Implement and improve systems to automate certain financial reporting processes and to improve information accuracy.

We made various staff changes during 2016 and during our most recent fiscal quarter in our finance and accounting department and we believe these changes have enabled us to broaden the scope and quality of our controls relating to the oversight and review of financial statements and to properly apply all relevant accounting. Furthermore, we plan to implement and improve systems to automate certain financial reporting processes and to improve information accuracy.

Management will continue the process of reviewing existing controls, procedures and responsibilities to more closely identify financial reporting risks and the required controls to address them. Key control and compensating control procedures will be developed to ensure that weaknesses are properly addressed and related financial reporting risks are mitigated. Periodic control validation and testing will also be implemented to ensure that controls continue to operate consistently and as designed. Management plans to complete this remediation process as quickly as possible. Although we expect it will take at least a year, we cannot estimate how long it will take to remediate the material weaknesses in our system of internal control over financial reporting. In addition, the remediation steps we have taken, are taking and expect to take may not effectively remediate the material weaknesses, in which case our internal control over financial reporting would continue to be ineffective. Even if we are able to complete these actions successfully, these measures may not adequately address our material weaknesses and may take more than a year to complete. In addition, it is possible that we will discover additional material weaknesses in our internal control over financial reporting or that our existing material weaknesses will result in additional errors in or restatements of our financial statements. 

25

Changes in Internal Control over Financial Reporting

Other than the items discussed above, there were no changes in our internal control over financial reporting during our most recent fiscal quarter that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on Effectiveness of Controls and Procedures

In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

26

PART II—OTHER INFORMATION

Item 1.          Legal Proceedings

In re: Herbal Supplements Marketing and Sales Practice Litigation, MDL No. 2619, Case No. 1:15-cv-5070, U.S. District Court for the Northern District of Illinois, filed on June 9, 2015. We are not a party to this matter, which joined in a multidistrict litigation a number of purported class actions arising from allegations raised by a state attorney general claiming that DNA barcoding testing conducted on behalf of the attorney general indicated that certain herbal supplement products did not contain the herbal ingredients stated on the label. We do, however, pursuant to contractual obligations, provide indemnity and defense with respect to certain of the claims in this litigation. The defendants in this litigation intend to take all necessary steps to vigorously defend this matter.

Amy Mathews v. Wal-Mart Stores, Inc. and Wal-Mart Stores Arkansas LLC, Case No. CV-2015-0294, in the Circuit Court of Independence County, Arkansas, Civil Division. This purported class action alleges a violation of the Arkansas Deceptive Trade Practices Act based on the same allegations of the state attorney general that serve as the basis for the claims in the Herbal Supplements multidistrict litigation referenced above, and seeks certification of a class of Arkansas residents purportedly impacted by the allegations. We are not a party to this litigation but provide indemnity and defense with respect to certain of the claims in this litigation.

Rite Aid Hdqrts. Corp v. Twinlab Corporation, Case No. 2016-05532, in the Cumberland Court of Common Pleas, Pennsylvania, filed on October 11, 2016. The plaintiff in this matter alleges that we are in breach of contract related to the return of damaged, defective, outdated or discontinued goods, and further alleges that we are in breach of contract related to certain temporary price reductions or mark-downs of Twinlab products in Rite Aid Stores. On April 25, 2017, we entered into a confidential settlement of this matter with the Plaintiff, which does not have a material adverse effect on our financial condition/results of operations or cash flows.

Wilk Auslander LLP v. Twinlab Consolidation Corporation and Twinlab Corporation, Index No. 652339/2017, in the Supreme Court of the State of New York, County of New York, filed on May 1, 2017. The plaintiff in this matter alleged that we were in breach of a retainer agreement related to the payment of certain legal fees and expenses. On June 1, 2017, we entered into a settlement of this matter with the plaintiff, which does not have material adverse effect on our financial conditions/results of operations or cash flows.

Corr-Jensen Inc. v. Mark Walsh and Twinlab Corporation, Case No. 1:17-cv-01473-CBS, in the U.S. District Court for the District of Colorado, filed on June 16, 2017. The plaintiff, Corr-Jensen Inc., alleges Twinlab Corporation intentionally and improperly interfered with Mr. Walsh’s employment agreement and release with the plaintiff by allegedly engaging Mr. Walsh or continuing to engage him. The plaintiff is seeking an injunction to enjoin Twinlab from employing or engaging Mr. Walsh for a period of six months and for such damages to be determined at trial, attorney’s fees, costs and expenses, interest and any other relief the court deems proper. The Company intends to take necessary steps to vigorously defend itself.

Winn-Dixie Stores, Inc., BI-LO, LLC and Sampson Merger Sub, LLC v. Twinlab Corporation, Case No.: 16-2017-CA-004367, in the Circuit Court of the Fourth Judicial District in and for Duval County, Florida, filed on July 11, 2017. The plaintiffs in this matter allege Twinlab Corporation is in breach of a contract agreement related to unpaid invoices. We are reviewing the plaintiffs’ claims and we plan on responding timely to the plaintiffs’ lawsuit.

  

Item 1A.     Risk Factors.

Risks and uncertainties that, if they were to occur, could materially adversely affect our business or cause our actual results to differ materially from the results contemplated by the forward-looking statements contained in this report and other public statements were set forth in the “Item 1A Risk Factors” section of our Annual Report on Form 10-K filed with the SEC on March 31, 2017.

Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial conditions and/or operating results.

27

Item 6.          Exhibits.

Exhibit Number	Exhibit Description
10.1	Settlement Agreement, dated June 2, 2017, by and among Twinlab Consolidated Corporation, Twinlab Consolidated Holdings, Inc., Nutrascience Labs, Inc., 2014 Huntington Holdings, LLC, Carolyn Holdings, LLC, NCL Holding Company, LLC and Vitacap Labs, LLC.(1)
10.2	Unsecured Promissory Note, dated June 2. 2017, issued by Twinlab Consolidated Holdings, Inc. in favor of 2014 Huntington Holdings, LLC.(2)
10.3	Subordination Agreement, dated June 2, 2017, by and among 2014 Huntington Holdings, LLC, Twinlab Consolidated Holdings, Inc., Twinlab Consolidation Corporation, Twinlab Holdings, Inc., ISI Brands Inc., Twinlab Coporation, Nutrascience Labs, Inc., Nutrascience Labs IP Corporation, Organic Holdings LLC, Reserve Life Organics, LLC, Resvitale, LLC, Re-Body, LLC, Innovitamin Organics, LLC, Organics Management LLC, Cocoawell, LLC, Fembody, LLC, Reserve Life Nutrition, L.L.C., Innovita Speciality Distribution, LLC, Joie Essance, LLC, and Midcap Funding X Trust.(3)
10.4	Agreement of Lease, dated June 2, 2017, between Carolyn Holdings, LLC and Twinlab Consolidated Holdings, Inc.(4)
10.5	Rider to the Lease, dated June 2, 2017, by and between Carolyn Holdings, LLC and Twinlab Consolidated Holdings, Inc.(5)
10.6	Landlord’s Agreement, dated June 2, 2017, by an damong Carolyn Holdings LLC, Twinlab Consolidated Holdings, Inc. and Midcap Funding X Trust.(6)
31.1	Rule 13a-14(a)/15d-14(a) Certification.
31.2	Rule 13a-14(a)/15d-14(a) Certification.
32.1	Certification Pursuant to 18 U.S.C. Section 1350.
32.2	Certification Pursuant to 18 U.S.C. Section 1350.
101.INS	XBRL Instance
101.SCH	XBRL Taxonomy Extension Schema.
101.CA	XBRL Taxonomy Extension Calculation.
101.DEF	XBRL Taxonomy Extension Definition.
101.LAB	XBRL Taxonomy Extension Label.
101.PRE	XBRL Taxonomy Extension Presentation.
(1)	Incorporated by reference from the Company’s Current Report on Form 8-K filed on June 8, 2017 (filed as Exhibit 10.165 therein).
(2)	Incorporated by reference from the Company’s Current Report on Form 8-K filed on June 8, 2017 (filed as Exhibit 10.166 therein).
(3)	Incorporated by reference from the Company’s Current Report on Form 8-K filed on June 8, 2017 (filed as Exhibit 10.167 therein).
(4)	Incorporated by reference from the Company’s Current Report on Form 8-K filed on June 8, 2017 (filed as Exhibit 10.168 therein).
(5)	Incorporated by reference from the Company’s Current Report on Form 8-K filed on June 8, 2017 (filed as Exhibit 10.169 therein).
(6)	Incorporated by reference from the Company’s Current Report on Form 8-K filed on June 8, 2017 (filed as Exhibit 10.170 therein).

28

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.

	TWINLAB CONSOLIDATED HOLDINGS, INC.
Date: August 11, 2017	By:	/s/ Naomi L. Whittel
		Naomi L. Whittel
		Chief Executive Officer
Date: August 11, 2017	By:	/s/ Alan S. Gever
		Alan S. Gever
		Chief Financial Officer and Chief Operating Officer

29 

EX-31.1

EXHIBIT31.1

CERTIFICATION

I, Naomi L. Whittel, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Twinlab Consolidated Holdings, 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: August 11, 2017

/s/ Naomi L. Whittel

Naomi L. Whittel

Chief Executive Officer

EX-31.2

EXHIBIT31.2

CERTIFICATION

I, Alan S. Gever, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Twinlab Consolidated Holdings, 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: August 11, 2017

/s/ Alan S. Gever

Alan S. Gever

Chief Financial Officer and Chief Operating 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 of Twinlab Consolidated Holdings, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2017 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Naomi L. Whittel, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. s.s. 1350, as adopted pursuant to s.s. 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; 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: August 11, 2017	/s/ Naomi L. Whittel
	Naomi L. Whittel
	Chief Executive Officer

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Twinlab Consolidated Holdings, Inc. and will be retained by Twinlab Consolidated Holdings, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

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 of Twinlab Consolidated Holdings, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2017 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Alan S. Gever, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. s.s. 1350, as adopted pursuant to s.s. 906 of the Sarbanes-Oxley Act of 2002, that:

(3) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

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

Date: August 11, 2017	/s/ Alan S. Gever
	Alan S. Gever
	Chief Financial Officer and Chief Operating Officer

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Twinlab Consolidated Holdings, Inc. and will be retained by Twinlab Consolidated Holdings, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document And Entity Information - shares	6 Months Ended
	Jun. 30, 2017	Aug. 11, 2017
Document Information [Line Items]
Entity Registrant Name	Twinlab Consolidated Holdings, Inc.
Entity Central Index Key	0001590695
Trading Symbol	tlcc
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Entity Common Stock, Shares Outstanding (in shares)		252,924,027
Document Type	10-Q
Document Period End Date	Jun. 30, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q2
Amendment Flag	false

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($)	Jun. 30, 2017	Dec. 31, 2016
Current assets:
Cash	$ 487,000	$ 5,097,000
Accounts receivable, net of allowance of $1,602 and $2,365, respectively	9,275,000	7,768,000
Inventories, net	21,545,000	17,601,000
Prepaid expenses and other current assets	2,570,000	2,870,000
Total current assets	33,877,000	33,336,000
Property and equipment, net	3,109,000	3,528,000
Intangible assets, net	29,032,000	30,197,000
Goodwill	24,098,000	24,098,000
Other assets	1,767,000	1,667,000
Total assets	91,883,000	92,826,000
Current liabilities:
Accounts payable	7,648,000	7,866,000
Accrued expenses and other current liabilities	8,030,000	11,434,000
Derivative liabilities	7,750,000	6,455,000
Notes payable and current portion of long-term debt, net of discount of $1,952 and $2,297, respectively	17,609,000	11,631,000
Total current liabilities	41,037,000	37,386,000
Long-term liabilities:
Deferred gain on sale of assets	1,646,000	1,727,000
Deferred tax liability	959,000	959,000
Notes payable and long-term debt, net of current portion and discount of $2,551 and $3,451, respectively	53,612,000	50,988,000
Total long-term liabilities	56,217,000	53,674,000
Total liabilities	97,254,000	91,060,000
Commitments and contingencies
Stockholders’ equity (deficit):
Preferred stock, $0.001 par value, 500,000,000 shares authorized, no shares issued and outstanding	0	0
Common stock, $0.001 par value, 5,000,000,000 shares authorized, 387,730,078 shares issued	388,000	388,000
Additional paid-in capital	226,680,000	226,380,000
Stock subscriptions receivable	(30,000)	(30,000)
Treasury stock, 134,806,051 and 134,163,685 shares at cost, respectively	(500,000)	(500,000)
Accumulated deficit	(231,909,000)	(224,472,000)
Total stockholders’ equity (deficit)	(5,371,000)	1,766,000
Total liabilities and stockholders' equity (deficit)	$ 91,883,000	$ 92,826,000

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Accounts receivable, allowance	$ 1,602	$ 2,365
Notes payable and current portion of long-term debt, unamortized discount	1,952	2,297
Notes payable and long-term debt, net of current portion, unamortized discount	$ 2,551	$ 3,451
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized (in shares)	500,000,000	500,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	5,000,000,000	5,000,000,000
Common stock, shares issued (in shares)	387,730,078	387,730,078
Treasury stock, shares (in shares)	134,806,051	134,163,685

XML

Condensed Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Net sales	$ 21,419	$ 22,222	$ 45,518	$ 42,839
Cost of sales	15,766	16,247	33,265	33,442
Gross profit	5,653	5,975	12,253	9,397
Selling, general and administrative expenses	7,333	8,567	13,928	18,489
Loss from operations	(1,680)	(2,592)	(1,675)	(9,092)
Other income (expense):
Interest expense, net	(2,478)	(2,147)	(4,442)	(4,107)
Loss on stock purchase guarantee				(3,210)
Gain (loss) on change in derivative liabilities	(297)	1,072	(1,295)	14,063
Other expense, net	(25)	(23)	(24)	(21)
Total other income (expense)	(2,800)	(1,098)	(5,761)	6,725
Loss before income taxes	(4,480)	(3,690)	(7,436)	(2,367)
Provision for income taxes		(13)		(17)
Total comprehensive loss	$ (4,480)	$ (3,703)	$ (7,436)	$ (2,384)
Weighted average number of common shares outstanding – basic (in shares)	252,959,714	250,762,072	252,941,772	271,783,852
Net loss per common share – basic (in dollars per share)	$ (0.02)	$ (0.01)	$ (0.03)	$ (0.01)
Weighted average number of common shares outstanding – diluted (2016 corrected - see Note 1) (in shares)	252,959,714	266,753,987	252,941,772	285,936,529
Net loss per common share – diluted (2016 corrected - see Note 1) (in dollars per share)	$ (0.02)	$ (0.02)	$ (0.03)	$ (0.06)

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Cash flows from operating activities:
Net loss	$ (7,436)	$ (2,384)
Depreciation and amortization	1,612	1,352
Amortization of debt discount	1,244	1,129
Stock-based compensation	301	358
Provision for obsolete inventory	119	816
Provision for losses on accounts receivable	(296)	1,064
Loss on stock purchase price guarantee		3,210
(Gain) loss on change in derivative liabilities	1,295	(14,063)
Other non-cash items	(81)
Accounts receivable	(1,692)	(1,518)
Inventories	(4,063)	(952)
Prepaid expenses and other current assets	300	(1,037)
Other assets	(102)	97
Accounts payable	(218)	(3,515)
Accrued expenses and other current liabilities	(204)	2,461
Net cash used in operating activities	(8,740)	(12,982)
Purchase of property and equipment	(29)	(110)
Proceeds from the exercise of warrants		1
Proceeds from the issuance of debt	3,267	19,500
Repayment of debt	(1,057)	(2,479)
Net borrowings from revolving credit facility	1,949	755
Decrease in security deposits		27
Net cash provided by financing activities	4,159	17,804
Net increase (decrease) in cash	(4,610)	4,712
Cash at the beginning of the period	5,097	1,240
Cash at the end of the period	487	5,952
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest	3,198	2,094
Cash paid for income taxes		27
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING TRANSACTIONS:
Decrease in derivative liabilities and increase in common stock and additional paid-in capital on exercise of warrants		1,975
Issuance of other liability for purchase of treasury shares		500
Relief of stock subscription accrual through long-term debt	(3,200)
Issuance of new long-term debt as payment of existing prepaid stock subscription	$ 3,200

XML

Note 1 - Nature of Operations and Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Significant Accounting Policies [Text Block]

NOTE

1

– NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization

Twinlab Consolidated Holdings, Inc. (the “Company”, “Twinlab,” “we,” “our” and “us”) was incorporated on

October 24, 2013

under the laws of the State of Nevada as Mirror Me, Inc. On

August 7, 2014,

we amended our articles of incorporation and changed our name to Twinlab Consolidated Holdings, Inc.

Nature of Operations

We are an integrated manufacturer, marketer, distributor and retailer of branded nutritional supplements and other natural products sold to and through domestic health and natural food stores, mass market retailers, specialty stores retailers, on-line retailers and websites. Internationally, we market and distribute branded nutritional supplements and other natural products to and through health and natural product distributors and retailers.

Our products include vitamins, minerals, specialty supplements and sports nutrition products sold under the Twinlab® brand name (including the Twinlab® Fuel brand of sports nutrition products); a market leader in the healthy aging and beauty from within categories sold under the Reserveage™ Nutrition and ResVitale® brand names; diet and energy products sold under the Metabolife® brand name; the Re-Body® brand name; and a full line of herbal teas sold under the Alvita® brand name. To accommodate consumer preferences, our products come in various formulations and delivery forms, including capsules, tablets, softgels, chewables, liquids, sprays, powders and whole herbs. These products are sold primarily through health and natural food stores and on-line retailers, supermarkets, and mass-market retailers.

We also perform contract manufacturing services for private label products.  Our contract manufacturing business involves the manufacture of custom products to the specifications of a customer who requires finished product under the customer’s own brand name.  We do

not

market these private label products as our business is to manufacture and sell the products to the customer, who then markets and sells the products to retailers or end consumers.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.

Basis of Presentation and Unaudited Information

The condensed consolidated interim financial statements included herein have been prepared by the Company in accordance with United States generally accepted accounting principles, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although we believe that the disclosures are adequate to make the information presented

not

misleading. These statements reflect all adjustments, consisting of normal recurring adjustments, which in the opinion of management, are necessary for fair presentation of the information contained herein. Financial results for any interim period are

not

necessarily indicative of financial results that

may

be expected for the fiscal year. The unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form

10

-K for the year ended

December 31, 2016

filed with the SEC on

March 31, 2017.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Actual results could differ from those estimates. Significant management estimates include those with respect to returns and allowances, allowance for doubtful accounts, reserves for inventory obsolescence, the recoverability of long-lived assets, intangibles and goodwill and the estimated value of warrants and derivative liabilities.

Revenue Recognition

Revenue from product sales, net of estimated returns and allowances, is recognized when evidence of an arrangement is in place, related prices are fixed and determinable, contractual obligations have been satisfied, title and risk of loss have been transferred to the customer and collection of the resulting receivable is reasonably assured. Shipping terms are generally freight on board shipping point. We sell predominately in the North American and European markets, with international sales transacted in U.S. dollars.

Fair Value of Financial Instruments

We apply the following fair value hierarchy, which prioritizes the inputs used to measure fair value into

three

levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:

Level

1

– inputs are quoted prices in active markets for identical assets that the reporting entity has the ability to access at the measurement date.

Level

2

– inputs are other than quoted prices included within Level

1

that are observable for the asset, either directly or indirectly.

Level

3

– inputs are unobservable inputs for the asset that are supported by little or

no

market activity and that are significant to the fair value of the underlying asset or liability.

The following table summarizes our financial instruments that are measured at fair value on a recurring basis as of

June 30, 2017

and

December 31, 2016:

June 30, 2017	Total		Level 1		Level 2		Level 3
Derivative liabilities	$	7,750	$	-	$	-	$	7,750

December 31, 2016	Total		Level 1		Level 2		Level 3
Derivative liabilities	$	6,455	$	-	$	-	$	6,455

Accounts Receivable and Allowances

We grant credit to customers and generally do

not

require collateral or other security. We perform credit evaluations of our customers and provide for expected claims related to promotional items; customer discounts; shipping shortages; damages; and doubtful accounts based upon historical bad debt and claims experience. As of

June 30, 2017,

total allowances amounted to

$1,602,

of which

$296

was related to doubtful accounts receivable. As of

December 31, 2016,

total allowances amounted to

$2,365,

of which

$481

was related to doubtful accounts receivable.

Inventories

Inventories are stated at the lower of cost or net realizable value and are reduced by an estimated reserve for obsolete inventory.

Property and Equipment

Property and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation, including amounts amortized under capital leases, is calculated on the straight-line method over the estimated useful lives of the related assets, which are

7

to

10

years for machinery and equipment,

8

years for furniture and fixtures and

3

years for computers. Leasehold improvements are amortized over the shorter of the useful life of the asset or the term of the lease.

Normal repairs and maintenance are expensed as incurred. When assets are retired or otherwise disposed of, the related cost and accumulated depreciation or amortization is removed from the accounts and any gain or loss is included in the results of operations.

Intangible Assets

Intangible assets consist primarily of trademarks and customer relationships, which are amortized on a straight-line basis over their estimated useful lives ranging from

3

to

30

years. The valuation and classification of these assets and the assignment of amortizable lives involve significant judgment and the use of estimates.

We believe that our long-term growth strategy supports our fair value conclusions. For intangible assets, the recoverability of these amounts is dependent upon achievement of our projections and the execution of key initiatives related to revenue growth and improved profitability.

Goodwill

Goodwill is

not

subject to amortization, but is reviewed for impairment annually, or more frequently whenever events or changes in circumstances indicate the carrying value of goodwill

may

not

be recoverable. An impairment charge would be recorded to the extent the carrying value of goodwill exceeds its estimated fair value. The testing of goodwill under established guidelines for impairment requires significant use of judgment and assumptions. Changes in forecasted operations and other assumptions could materially affect the estimated fair values. Changes in business conditions could potentially require adjustments to these asset valuations.

Impairment of Long-Lived Assets

Long-lived assets, including intangible assets subject to amortization, are reviewed for impairment when changes in circumstances indicate that the carrying amount of the asset

may

not

be recoverable. If the carrying amount of the asset exceeds the expected undiscounted cash flows of the asset, an impairment charge is recognized equal to the amount by which the carrying amount exceeds fair value. The testing of these intangibles under established guidelines for impairment requires significant use of judgment and assumptions. Changes in forecasted operations and other assumptions could materially affect the estimated fair values. Changes in business conditions could potentially require adjustments to these asset valuations.

Indefinite-Lived Intangible Assets

Indefinite-lived intangible assets relating to the asset acquisition of Organic Holdings, LLC (“Organic Holdings”), a market leader in the healthy aging and beauty from within categories and owner of the award-winning Reserveage

TM

 Nutrition brand, are determined to have an indefinite useful economic life and as such are

not

amortized. Indefinite-lived intangible assets are tested for impairment annually which consists of a comparison of the fair value of the asset with its carrying value. The total indefinite-lived intangible assets as of

June 30, 2017

and

December 31, 2016

was

$5,900.

Value of Warrants Issued with Debt

We estimate the grant date value of certain warrants issued with debt, using an outside professional valuation firm, which uses the Monte Carlo option lattice model. We record

the amounts as interest expense or debt discount, depending on the terms of the agreement. These estimates involve multiple inputs and assumptions, including the market price of the Company’s common stock, stock price volatility and other assumptions to project

earnings before interest, taxes, depreciation and amortization (“EBITDA”) and other reset events. These inputs and assumptions are subject to management’s judgment and can vary materially from period to period.

Derivative Liabilities

We have recorded certain warrants as derivative liabilities at estimated fair value, as determined based on our use of an outside professional valuation firm, due to the variable terms of the warrant agreements. The value of the derivative liabilities is generally estimated using the Monte Carlo option lattice model with multiple inputs and assumptions, including the market price of the Company’s common stock, stock price volatility and other assumptions to project EBITDA and other reset events. These inputs and assumptions are subject to management’s judgment and can vary materially from period to period.

Deferred gain on sale of assets

We entered into a sale-leaseback arrangement relating to our office facilities in

2013.

Under the terms of the arrangement, we sold an office building and surrounding land and then leased the property back under a

15

-year operating lease. We recorded a deferred gain for the amount of the gain on the sale of the asset, to be recognized as a reduction of rent expense over the life of the lease. Accordingly, we recorded amortization of deferred gain as a reduction of rental expense of

$41

for the

three

months ended

June 30, 2017

and

2016.

For the

six

months ended

June 30, 2017

and

2016,

we recorded amortization of

$81

and

$82,

respectively. As of

June 30, 2017

and

December 31, 2016,

unamortized deferred gain on sale of assets was

$1,646

and

$1,727,

respectively.

Net Loss per Common Share

Basic net income or loss per common share (Basic EPS) is computed by dividing net income or loss by the weighted average number of common shares outstanding. Diluted net income or loss per common share (Diluted EPS) is computed by dividing net income or loss by the sum of the weighted average number of common shares outstanding and the dilutive potential common shares then outstanding. Potential dilutive common share equivalents consist of total shares issuable upon the exercise of outstanding stock options and warrants to acquire common stock using the treasury stock method and the average market price per share during the period.

The common shares used in the computation of our basic and diluted net loss per share are reconciled as follows:

 

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2017			2016			2017			2016
										(as corrected)
Numerator:
Net loss	$	(4,480	)	$	(3,703	)	$	(7,436	)	$	(2,384	)
Effect of dilutive securities on net loss:
Common stock warrants		-			(1,072	)		-			(14,063	)
Total net loss for purpose of calculating diluted net loss per common share	$	(4,480	)	$	(4,775	)	$	(7,436	)	$	(16,447	)
Number of shares used in per common share calculations:
Total shares for purposes of calculating basic net loss per common share		252,959,714			250,762,072			252,941,772			271,783,852
Weighted-average effect of dilutive securities:
Common stock warrants		-			15,991,915			-			14,152,677
Total shares for purpose of calculating diluted net loss per common share		252,959,714			266,753,987			252,941,772			285,936,529
Net loss per common share:
Basic	$	(0.02	)	$	(0.01	)	$	(0.03	)	$	(0.01	)
Diluted	$	(0.02	)	$	(0.02	)	$	(0.03	)	$	(0.06	)

Correction of

2016

Diluted Net Loss Per Share

The diluted net loss per share for the period ended

June 30, 2016

has been corrected. In accordance with U.S. generally accepted accounting principles, when calculating diluted earnings or loss per share, if the effects are dilutive, companies are required to add back to net income or loss the effects of the change in derivative liabilities related to warrants. Additionally, if the effects of the change in derivative liabilities are added back to net income or loss, companies are required to include the warrants outstanding related to the derivative liability in the calculation of the weighted average dilutive shares.

For the period ended

June 30, 2016,

as originally reported, we did

not

add back the effects of the change in the derivative liability in computing dilutive income or loss per share. The dilutive loss per share for the

three

and

six

months ended

June 30, 2016

in the table above has been revised to correct this error.

The table below reflects the diluted net loss per share as originally reported and net loss per share as corrected for the

three

and

six

months ended

June 30, 2016.

  

	As originally reported			As corrected
Diluted net loss per shares (three months)	$	(0.01	)	$	(0.02	)
Diluted net loss per shares (six months)	$	(0.01	)	$	(0.06	)
Weighted average shares outstanding - diluted (three months)		250,762,072			266,753,987
Weighted average shares oustanding - diluted (six months)		271,783,852			285,936,529

Additionally, the diluted loss per share for the period ended

September 30, 2016

will be reflected as corrected in the Form

10

-Q for the quarter ending

September 30, 2017.

The corrected diluted loss per share for the

three

and

nine

months ended

September 30, 2016

was $(

0.01

) and $(

0.07

), respectively.

The errors were corrected as of

December 31, 2016,

but since the adjustments were

not

material to any of the quarters previously reported, the Form

10

-Qs for those periods were

not

amended. Management has determined the effects to be neither quantitatively or qualitatively material to the financial statements included in any of the Form

10

-Qs filed during

2016.

Significant Concentration of Credit Risk

Sales to our top

three

customers aggregated to approximately

22%

and

26%

of total sales for the

three

months ended

June 30, 2017

and

2016,

respectively, and

26%

of total sales for the

six

months ended

June 30, 2017

and

2016.

Sales to

one

of those customers were approximately

10%

and

9%

of total sales for the

three

months ended

June 30, 2017

and

2016,

respectively, and

12%

and

10%

of total sales for the

six

months ended

June 30, 2017

and

2016,

respectively. Accounts receivable from these customers were approximately

39%

and

29%

of total accounts receivable as of

June 30, 2017

and

December 31, 2016,

respectively.

Recent Accounting Pronouncements

In

July 2017,

the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)

No.

2017

-

11,

“Derivatives and Hedging (Topic

815

)” which addresses the complexity of accounting for certain financial instruements with down round features.

The amendments of this update change the determination of whether certain financial instruments should be classified as liabilities or equity instruments, a down round feature

no

longer precludes equity classification when assessing whether the instrument is indexed to an entity’s own stock. The amendments in this ASU are effective for fiscal years beginning after

December 15, 2018. 

We have

not

yet determined the impact on our consolidated financial statements of the adoption of this new accounting pronouncement.

In

January 2017,

the FASB issued ASU

No.

2017

-

04,

“Simplifying the Test for Goodwill Impairment (Topic

350

)” which removes Step

2

of the goodwill impairment test that requires a hypothetical purchase price allocation.  A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value,

not

to exceed the carrying amount of goodwill.  The amendments in this ASU are effective for fiscal years beginning after

December 15, 2019.  

Early adoption is permitted after

January 1, 2017.  

We do

not

expect the new guidance to have a significant impact on our condensed consolidated financial statements or related disclosures.

In

March 2016,

the FASB issued ASU

No.

2016

-

09,

 “Stock Compensation (Topic

718

)”, which is intended to simplify several aspects of the accounting for share-based payment award transactions, including the income tax impacts, the classification on the statement of cash flows, and forfeitures. The amendments in this ASU are effective for fiscal years beginning after

December 15, 2016,

including interim periods. We have

not

yet determined the impact on our consolidated financial statements of the adoption of this new accounting pronouncement.

In

February 2016,

the FASB issued ASU

No.

2016

-

02,

“Leases (Topic

842

)”. The amendments in this ASU revise the accounting related to lessee accounting. Under the new guidance, lessees will be required to recognize a lease liability and a right-of-use asset for all leases. The new lease guidance also simplifies the accounting for sale and leaseback transactions primarily because lessees must recognize lease assets and lease liabilities. The amendments in this ASU are effective for public companies for fiscal years beginning after

December 15, 2018

and are to be applied through a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. Early adoption is permitted. We have

not

yet determined the impact on our consolidated financial statements of the adoption of this new accounting pronouncement.

Although there are several other new accounting pronouncements issued or proposed by the FASB, which we have adopted or will adopt, as applicable, we do

not

believe any of these accounting pronouncements has had or will have a material impact on our condensed consolidated financial position or results of operations.

XML

Note 2 - Going Concern

6 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Substantial Doubt about Going Concern [Text Block]

NOTE

2

– GOING CONCERN

The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which assumes continuity of operations and realization of assets and liabilities in the ordinary course of business. In most periods since our formation, we have generated losses from operations. At

June 30, 2017,

we had an accumulated deficit of

$231,909.

Historical losses are primarily attributable to lower than planned sales resulting from low fill rates on demand due to limitations of our working capital, delayed product introductions and postponed marketing activities, merger-related and other restructuring costs, and interest and refinancing charges associated with our debt refinancing. Losses have been funded primarily through issuance of common stock and

third

-party or related party debt.

Because of our history of operating losses, significant interest expense on our debt, and the recording of significant derivative liabilities, we have a working capital deficiency of

$7,160

at

June 30, 2017.

We also have

$17,609

of debt, net of discount, due within the next

12

months. These continuing conditions, among others, raise substantial doubt about our ability to continue as a going concern.

Management has addressed operating issues through the following actions: focusing on growing the core business and brands; continuing emphasis on major customers and key products; reducing manufacturing and operating costs and continuing to negotiate lower prices from major suppliers. We believe that we

may

need additional capital to execute our business plan. If additional funding is required, there can be

no

assurance that sources of funding will be available when needed on acceptable terms or at all.

XML

Note 3 - Inventories

6 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Inventory Disclosure [Text Block]

NOTE

3

– INVENTORIES

Inventories consisted of the following at:

	June 30,			December 31,
	2017			2016
Raw materials	$	7,020		$	4,912
Work in process		1,448			1,189
Finished goods		15,134			13,438
		23,602			19,539
Reserve for obsolete inventory		(2,057	)		(1,938	)
	$	21,545		$	17,601

XML

Note 4 - Property and Equipment

6 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Property, Plant and Equipment Disclosure [Text Block]

NOTE

4

– PROPERTY AND EQUIPMENT

Property and equipment consisted of the following at:

	June 30,			December 31,
	2017			2016
Machinery and equipment	$	12,155		$	10,885
Computers and other		9,148			9,119
Aquifer		482			482
Leasehold improvements		1,518			1,518
		23,303			22,004
Accumulated depreciation and amortization		(20,194	)		(18,476	)
	$	3,109		$	3,528

Assets held under capital leases are included in machinery and equipment and amounted to

$1,116

and

$1,142

as of

June 30, 2017

and

December 31, 2016,

respectively.

Depreciation and amortization expense totaled

$220

and

$162

for the

three

months ended

June 30, 2017

and

2016,

respectively, and totaled

$447

and

$346

for the

six

months ended

June 30, 2017

and

2016,

respectively

.

XML

Note 5 - Intangible Assets

6 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Intangible Assets Disclosure [Text Block]

NOTE

5

– INTANGIBLE ASSETS

Intangible assets consisted of the following at:

	June 30,			December 31,
	2017			2016
Trademarks	$	12,166		$	12,166
Indefinite-lived intangible assets		5,900			5,900
Customer relationships		19,110			19,110
Other		753			753
		37,929			37,929
Accumulated amortization		(8,897	)		(7,732	)
	$	29,032		$	30,197

Trademarks are amortized over periods ranging from

3

to

30

years, customer relationships are amortized over periods ranging from

15

to

16

years, and other intangible assets are amortized over

3

years. Amortization expense was

$582

for the

three

months ended

June 30, 2017

and

2016

and was

$1,165

and

$1,088

for the

six

months ended

June 30, 2017

and

2016,

respectively.

XML

Note 6 - Debt

6 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Debt Disclosure [Text Block]

NOTE

6

– DEBT

Debt consisted of the following at:

	June 30,			December 31,
	2017			2016
Related-Party Debt:
July 2014 note payable to Little Harbor, LLC, net of unamortized discount of $7 and $206 as of June 30, 2017 and December 31 2016, respectively.	$	3,259		$	3,061
July 2016 note payable to Little Harbor, LLC		4,770			4,770
January 2016 note payable to Great Harbor Capital, LLC		2,500			2,500
March 2016 note payable to Great Harbor Capital, LLC		7,000			7,000
December 2016 note payable to Great Harbor Capital, LLC		2,500			2,500
January 2016 note payable to Golisano Holdings LLC		2,500			2,500
March 2016 note payable to Golisano Holdings LLC		7,000			7,000
July 2016 note payable to Golisano Holdings LLC		4,770			4,770
December 2016 note payable to Golisano Holdings LLC		2,500			2,500
March 2017 note payable to Golisano Holdings LLC		3,267			-
November 2014 note payable to Golisano Holdings LLC (formerly payble to Penta Mezzanine SBIC Fund I, L.P.), net of discount and unamortized loan fees in the aggregate of $1,898 and $2,304 as of June 30, 2017 and December 31, 2016, respectively		6,102			5,696
January 2015 note payable to Golisano Holdings LLC (formerly payable to JL-BBNC Mezz Utah, LLC), net of discount and unamortized loan fees in the aggregate of $2,286 as of June 30, 2017		2,714			-
February 2015 note payable to Golisano Holdings LLC (formerly payable to Penta Mezzanine SBIC Fund I, L.P.), net of discount and unamortized loan fees in the aggregate of $166 and $201 as of June 30, 2017 and December 31, 2016, respectively		1,834			1,799
Total related-party debt		50,716			44,096
Senior Credit Facility with Midcap, net of unamortized loan fees of $146 and $293 as of June 30, 2017 and December 31, 2016, respectively		15,131			13,035
Other Debt:
January 2015 note payable to JL-BBNC Mezz Utah, LLC, net of discount and unamortized loan fees in the aggregate of $2,744 as of December 31, 2016		-			2,256
April 2016 note payable to JL-Utah Sub, LLC		437			500
Capital lease obligations		1,737			2,732
Huntington Holdings		3,200			-
Total other debt		5,374			5,488
Total debt		71,221			62,619
Less current portion		(17,609	)		(11,631	)
Long-term debt	$	53,612		$	50,988

Related-Party Debt

July 2014

Note Payable to Little Harbor, LLC

Pursuant to a

July 2014

Debt Repayment Agreement with Little Harbor, LLC (“Little Harbor”), an entity owned by certain stockholders of the Company, we are obligated to pay such party

$4,900

per year in structured monthly payments for

3

years provided that such payment obligations will terminate at such earlier time as the trailing

ninety

day volume weighted average closing sales price of the Company’s common stock on all domestic securities exchanges on which such stock is listed equals or exceeds

$5.06

per share. This note is unsecured and matured on

July 25, 2017.

This note was non-interest bearing, accordingly, using an imputed interest rate of

16.2%,

we recorded a note discount in

July 2014,

which has been amortized into interest expense based on the effective interest rate method over the term of the note.

July 2016

Note Payable to Little Harbor, LLC

On

July 21, 2016,

we issued an Unsecured Delayed Draw Promissory Note in favor of Little Harbor, pursuant to which Little Harbor

may,

in its sole discretion and pursuant to draw requests made by the Company, loan us up to the maximum principal amount of

$4,770.

This note is unsecured and matures on

January 28, 2019

.

This note bears interest at an annual rate of

8.5%,

with the principal payable at maturity. If Little Harbor, in its discretion, accepts a draw request made by the Company under this note, Little Harbor shall

not

transfer cash to the Company, but rather Little Harbor shall irrevocably agree to accept the principal amount of any monthly delayed draw under this note in lieu and in complete satisfaction of the obligation to make an equivalent dollar amount of periodic cash payments otherwise due to Little Harbor under the

July 2014

note payable. During the year ended

December 31, 2016,

we requested and Little Harbor LLC approved, draws totaling

$4,770.

We issued a warrant into escrow in connection with this loan (see Little Harbor Escrow Warrants in Note

7

).

January 2016

Note Payable to Great Harbor Capital, LLC

Pursuant to a

January 28, 2016

Unsecured Promissory Note with Great Harbor Capital, LLC (“GH”), an affiliate of a member of our Board of Directors, GH lent us

$2,500.

The note matures on

January 28, 2019,

bears interest at an annual rate of

8.5%,

with the principal payable in

24

monthly installments of

$104

which was to commence on

February 28, 2017

but has been deferred to

January 28, 2018.

We issued a warrant into escrow in connection with this loan (see GH Escrow Warrants in Note

7

).

March 2016

Note Payable to Great Harbor Capital, LLC

Pursuant to a

March 21, 2016

Unsecured Promissory Note, GH lent us

$7,000.

The note matures on

March 21, 2019

,

bears interest at an annual rate of

8.5%,

with the principal payable in

24

monthly installments of

$292

which was to commence on

April 21, 2017

but has been deferred to

January 21, 2018

.

We issued a warrant into escrow in connection with this loan (see GH Escrow Warrants in Note

7

).

December 2016

Note Payable to Great Harbor Capital, LLC

Pursuant to a

December 31, 2016

Unsecured Promissory Note, GH lent us

$2,500.

The note matures on

December 30, 2019

,

bears interest at an annual rate of

8.5%,

with the principal payable at maturity. We issued a warrant into escrow in connection with this loan (see GH Escrow Warrants in Note

7

).

November 2014

Note Payable to Golisano Holdings LLC (formerly payable to Penta Mezzanine SBIC Fund I, L.P.)

On

November 13, 2014,

we raised proceeds of

$8,000,

less certain fees and expenses, from the issuance of a secured note to Penta Mezzanine SBIC Fund I, L.P. (“Penta”). The Managing Director of Penta, an institutional investor, is also a Director of our Company. We granted Penta a security interest in our assets and pledged the shares of our subsidiaries as security for the note. This note matures on

November 13, 2019

with payments of principal due on a quarterly basis which was to commence on

November 13, 2017

in installments of (i)

$360

per quarter for the

first

four

quarters, (ii)

$440

per quarter for the next

four

quarters and (iii)

$520

per quarter for each quarter thereafter but has been deferred to

January 13, 2018

.

This note bears interest of

12%

per annum, payable monthly. We issued a warrant to Penta to purchase

4,960,740

shares of the Company’s common stock in connection with this loan (see Penta Warrants in Note

7

). The estimated fair value of the warrant at the date of issuance was

$3,770,

which was recorded as a note discount and is being amortized into interest expense over the term of this loan. Additionally, we had incurred loan fees of

$273,

which is also being amortized into interest expense over the term of this loan. On

March 8, 2017,

Golisano Holdings LLC (“Golisano LLC”) acquired this note payable from Penta. Our terms of this note payable remain the same with the only change for us being the holder of the promissory note.

January 2015

Note Payable to Golisano Holdings LLC (formerly payable to JL-Mezz Utah, LLC-f/k/a JL-BBNC Mezz Utah, LLC)

On

January 22, 2015,

we raised proceeds of

$5,000,

less certain fees and expenses, from the sale of a note to JL-Mezz Utah, LLC (f/k/a JL-BBNC Mezz Utah, LLC) (“JL”). The proceeds were restricted to pay a portion of the Nutricap Labs, LLC (“Nutricap”) asset acquisition. We granted JL a security interest in the Company’s assets, including real estate and pledged the shares of our subsidiaries as security for the note. The note matures on

February 13, 2020

with payments of principal due on a quarterly basis which was to commence on

March 1, 2017

in installments starting at

$250

per quarter and increasing to

$350

per quarter but has been deferred to

January 1, 2018

.

This note bears interest of

12%

per annum, payable monthly. We issued a warrant to JL to purchase

2,329,400

shares of the Company’s common stock on

January 22, 2015

and

434,809

shares of the Company’s common stock on

February 4, 2015 (

see JL Warrants in Note

7

). The estimated fair value of these warrants at the date of issuances was

$4,389,

which was recorded as a note discount and is being amortized into interest expense over the term of these loans. Additionally, we had incurred loan fees of

$152

relating to this loan, which is also being amortized into interest expense over the term of these loans. On

March 8, 2017

,

Golisano LLC acquired this note payable from JL. Our terms of this note payable remain the same with the only change for us being the holder of the promissory note.

February 2015

Note Payable to Golisano Holdings LLC (formerly payable to Penta Mezzanine SBIC Fund I, L.P.)

On

February 6, 2015,

we raised proceeds of

$2,000,

less certain fees and expenses, from the issuance of a secured note payable to Penta. The proceeds were restricted to pay a portion of the acquisition of the customer relationships of Nutricap. This note matures on

November 13, 2019

with payments of principal due on a quarterly basis which was to commence on

November 13, 2017

in installments of (i)

$90

per quarter for the

first

four

quarters, (ii)

$110

per quarter for the next

four

quarters and (iii)

$130

per quarter for each quarter thereafter but has been deferred to

January 13, 2018

.

This note bears interest of

12%

per annum, payable monthly. We issued a warrant to Penta to purchase

869,618

shares of the Company’s common stock in connection with this loan (see Penta Warrants in Note

7

). The estimated fair value of these warrants at the date of issuances totaled

$250,

which was recorded as a note discount and is being amortized into interest expense over the term of this loan. Additionally, we had incurred loan fees of

$90,

which is also being amortized into interest expense over the term of these loans. On

March 8, 2017,

Golisano LLC acquired this note payable from Penta. Our terms of this note payable remain the same with the only change for us being the holder of the promissory note.

January 2016

Note Payable to Golisano Holdings LLC

Pursuant to a

January 28, 2016

Unsecured Promissory Note with Golisano LLC, an affiliate of a member of our Board of Directors, Golisano LLC lent us

$2,500.

The note matures on

January 28, 2019

,

bears interest at an annual rate of

8.5%,

with the principal payable in

24

monthly installments of

$104

which was to commence on

February 28, 2017

but has been deferred to

January 28, 2018

.

We issued a warrant into escrow in connection with this loan (see Golisano Escrow Warrants in Note

7

).

March 2016

Note Payable to Golisano Holdings LLC

Pursuant to a

March 21, 2016

Unsecured Promissory Note, Golisano LLC lent us

$7,000.

The note matures on

March 21, 2019

,

bears interest at an annual rate of

8.5%,

with the principal payable in

24

monthly installments of

$292

which was to commence on

April 21, 2017

but has been deferred to

January 21, 2018

.

We issued a warrant into escrow in connection with this loan (see Golisano Escrow Warrants in Note

7

).

July 2016

Note Payable to Golisano Holdings LLC

On

July 21, 2016,

we issued an Unsecured Delayed Draw Promissory Note in favor of Golisano LLC pursuant to which Golisano LLC

may,

in its sole discretion and pursuant to draw requests made by the Company, loan the Company up to the maximum principal amount of

$4,770

(the “Golisano LLC

July 2016

Note”). The Golisano LLC

July 2016

Note matures on

January 28, 2019

.

Interest on the outstanding principal accrues at a rate of

8.5%

per year. The principal of the Golisano LLC

July 2016

Note is payable at maturity. We issued a warrant into escrow in connection with this loan (see Golisano Escrow Warrants in Note

7

). During the year ended

December 31, 2016,

we requested and Golisano LLC approved, draws totaling

$4,770.

December 2016

Note Payable to Golisano Holdings LLC

Pursuant to a

December 31, 2016

Unsecured Promissory Note, Golisano LLC lent us

$2,500.

The note matures on

December 30, 2019

,

bears interest at an annual rate of

8.5%,

with the principal payable at maturity. We issued a warrant into escrow in connection with this loan (see Golisano Escrow Warrants in Note

7

).

March

201

7

Note Payable to Golisano Holdings LLC

Pursuant to a

March 14, 2017

Unsecured Promissory Note, Golisano LLC lent us

$3,267.

The note matures on

December 30, 2019

,

bears interest at an annual rate of

8.5%,

with the principal payable at maturity. We issued a warrant into escrow in connection with this loan (see Golisano Escrow Warrants in Note

7

).

Senior Credit Facility

On

January 22, 2015,

we entered into a

three

-year

$15,000

revolving credit facility (the “Senior Credit Facility”) based on our accounts receivable and inventory, increasable to up to

$20,000,

with MidCap Financial Trust, which subsequently assigned the agreement to an affiliate, Midcap Funding

X

Trust (“MidCap”). On

September 2, 2016,

we entered into an amendment with Midcap to increase the Senior Credit Facility to

$17,000

and extend our facility an additional

12

months. We granted MidCap a

first

priority security interest in certain of our assets and pledged the shares of our subsidiaries as security for amounts owed under the credit facility. We are required to pay Midcap an unused line fee of

0.50%

per annum, a collateral management fee of

1.20%

per month and interest of LIBOR plus

5%

per annum, which was

6.05%

per annum as of

June 30, 2017.

We issued a warrant to Midcap to purchase

500,000

shares of the Company’s common stock (see Midcap Warrant in Note

7

). The estimated fair value of these warrants at the date of issuance was

$130,

which was recorded as a note discount and is being amortized into interest expense over the term of the Senior Credit Facility. Additionally, we have incurred loan fees totaling

$540

relating to the Senior Credit Facility and any subsequent amendments, which is also being amortized into interest expense over the term of the Senior Credit Facility.

Other Debt

April 2016

Note Payable to

JL-Utah Sub, LLC

Pursuant to an

April 5, 2016

Unsecured Promissory Note, JL-Utah Sub, LLC lent us

$500.

The note matures on

March 21, 2019

,

bears interest at an annual rate of

8.5%,

with the principal payable in

24

monthly installments of

$21

commencing on

April 21, 2017

.

Capital Lease Obligations

Our capital lease obligations pertain to various leasing agreements with Essex Capital Corporation (“Essex”), a related party to the Company as Essex’s principal owner is a director of the Company.

Huntington Holdings, LLC

On

August 6, 2016,

the

18

-month anniversary of the closing of a share purchase agreement, we were required to pay the purchaser of the common stock the difference between

$2.29

per share and either a defined market price or a price per share determined by a valuation firm acceptable to both parties. Based on an outside professional valuation performed on the Company’s common stock, the Company estimated the stock price guarantee payment to be

$3,210.

Accordingly, the Company recorded a loss on the stock purchase price guarantee of

$3,210

and a corresponding liability for the same amount in

2016,

which was included in accrued expenses and other current liabilities in the accompanying condensed consolidated balance sheet as of

December 31, 2016.

On

June 2, 2017,

the

two

parties came to an agreement in which we were required to issue an Unsecured Promissory Note (“Huntington Note”) in favor of Huntington Holdings, LLC (“Huntington”). The Huntington Note matures on

June 2, 2019

with the principal amount of

$3,200

payable at maturity. Interest on the outstanding principal accrues at a rate of

8.5%

per year from

August 6, 2016

to

August 15, 2017,

and increases to

10%

per year thereafter. We paid

$50

to Huntington related to accrued interest from

August 6, 2016

through the date of issuance of the Huntington Note.

Huntington was required to return

778,385

shares of the Company’s common stock which were issued into escrow. We were required to provide certain piggyback registration rights to Huntington in regards to the remaining

749,999

shares of the Company’s common stock held by Huntington. If the Huntington Note is paid off prior to

August 14, 2017,

the

778,385

shares held in escrow will be released from escrow and transferred to the Company for

no

additional consideration. If the note remains outstanding on

August 15, 2017,

we shall have the right, but

not

the obligation, to pay

$140

to Huntington to purchase

764,192

of the shares held in escrow (the “Subject Shares”). Upon the exercise of this purchase option, the Subject Shares will be released from escrow and transferred to the Company. If the Huntington Note remains outstanding on

August 15, 2017

and we do

not

exercise the option to purchase the shares, the shares will be returned from escrow to Huntington and we will

no

longer have repurchase rights. Pursuant to the agreement, we were also required to enter into a

four

-year lease agreement with the purchaser related to our premises occupied by Nutricap.

Financial Covenants

Certain of the foregoing debt agreements, as amended, require us to meet certain affirmative and negative covenants, including maintenance of specified ratios. We amended our debt agreements with MidCap, Penta and JL, effective

July 29, 2016,

to, among other things, reset the financial covenants of each debt agreement. As of

June 30, 2017,

management believes we are in compliance with our financial covenants for each debt agreement.

XML

Note 7 - Warrants and Registration Rights Agreements

6 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Warrants Disclosure [Text Block]

NOTE

7

– WARRANTS AND REGISTRATION RIGHTS AGREEMENTS

The following table presents a summary of the status of our issued warrants as of

June 30, 2017,

and changes during the

six

months then ended:

			Weighted Average
	Shares		Exercise Price
Outstanding, December 31, 2016		15,855,017		0.18
Granted		-		-
Canceled / Expired		-		-
Exercised		-		-
Outstanding, June 30, 2017		15,855,017		0.18

Warrants Issued

Midcap Warrant

In connection with the line of credit agreement with MidCap described in Note

6,

we issued MidCap a warrant, exercisable through

January 22, 2018,

for an aggregate of

500,000

shares of the Company’s common stock at an exercise price of

$0.76

per share (the “MidCap Warrant”). We entered into a Registration Rights Agreement with Midcap, dated as of

January 22, 2015,

granting MidCap certain registration rights, commencing

October 1, 2015,

for the shares of common stock issuable on exercise of the MidCap Warrant.

Penta Warrants

Pursuant to a Stock Purchase Agreement dated

June 30, 2015,

a warrant was issued to Penta to purchase an aggregate

807,018

shares of our common stock at a price of

$0.01

per share at any time prior to the close of business on

June 30, 2020.

We granted Penta certain registration rights, commencing

October 1, 2015,

for the shares of common stock issuable upon exercise of the warrant.

JL Warrants

Pursuant to a

June 30, 2015

Stock Purchase Agreement, a warrant was issued to JL to purchase an aggregate

403,509

shares of the Company’s common stock at a price of

$0.01

per share at any time prior to the close of business on

June 30, 2020,

subject to certain adjustments. We granted JL certain registration rights, commencing

October 1, 2015,

for the shares of common stock issuable upon exercise of the warrant. The warrant was subsequently assigned by JL to

two

individuals.

Essex Warrants

In connection with the guarantee of a note payable issued in the Nutricap asset acquisition and equipment financing by Essex discussed in Note

6,

Essex was issued a warrant exercisable for an aggregate

1,428,571

shares of the Company’s common stock at a purchase price of

$0.77

per share, at any time prior to the close of business on

June 30, 2020.

The number of shares issuable upon the exercise of the warrant is subject to adjustment on terms and conditions customary for a transaction of this nature in the event of (i) reorganization, recapitalization, stock split-up, combination of shares, mergers, consolidations and (ii) sale of all or substantially all of our assets or property. Essex subsequently assigned warrants for

350,649

shares to another company.

JL Properties, Inc. Warrants

In

April 2015,

we entered into an office lease agreement which requires a

$1,000

security deposit, subject to reduction if we achieve certain market capitalization metrics at certain dates. On

April 30, 2015,

we entered into a Reimbursement Agreement with JL Properties, Inc. (“JL Properties”) pursuant to which JL Properties agreed to arrange for and provide an unconditional, irrevocable, transferable, and negotiable commercial letter of credit to serve as the security deposit. As partial consideration for the entry by JL Properties into the Reimbursement Agreement and the provision of the letter of credit, we issued JL Properties

two

warrants to purchase shares of the Company’s common stock.

The

first

warrant is exercisable for an aggregate of

465,880

shares of common stock, subject to certain adjustments, at an aggregate purchase price of

$0.01,

at any time prior to

April 30, 2020.

In addition to adjustments on terms and conditions customary for a transaction of this nature in the event of (i) reorganization, recapitalization, stock split-up, combination of shares, mergers, consolidations and (ii) sale of all or substantially all of our assets or property, the number of shares of common stock issuable pursuant to the warrant will be increased in the event our consolidated audited adjusted EBITDA (as defined in the warrant agreement) for the fiscal year ending

December 31, 2018

does

not

equal or exceed

$19,250.

JL Properties subsequently assigned the warrant to

two

individuals.

The

second

warrant is exercisable for an aggregate of

86,962

shares of common stock, at a per share purchase price of

$1.00,

at any time prior to

April 30, 2020.

The number of shares issuable upon exercise of the

second

warrant is subject to adjustment on terms and conditions customary for a transaction of this nature in the event of (i) reorganization, recapitalization, stock split-up, combination of shares, mergers, consolidations and (ii) sale of all or substantially all of our assets or property.

We have granted JL Properties certain registration rights, commencing

October 1, 2015,

for the shares of common stock issuable on exercise of the

two

warrants.

Golisano LLC Warrants (formerly

Penta Warrants

)

In connection with the

November 13, 2014

note for

$8,000

(see Note

6

), Penta was issued a warrant to acquire

4,960,740

shares of the Company’s common stock at an aggregate exercise price of

$0.01,

through

November 13, 2019.

In connection with Penta’s consent to the terms of additional debt obtained by us, we also granted Penta a warrant to acquire a total of

869,618

shares of common stock at a purchase price of

$1.00

per share, through

November 13, 2019.

Both warrant agreements grant Penta certain registration rights, commencing

October 1, 2015,

for the shares of common stock issuable on exercise of the warrants. Penta has the right, under certain circumstances, to require us to purchase all or any portion of the equity interest in the Company issued or represented by the warrant to acquire

4,960,740

shares at a price based on the greater of (i) the product of (

x

)

ten

times our adjusted EBITDA with respect to the

twelve

months preceding the exercise of the put right times (y) the investor’s percentage ownership in the Company assuming full exercise of the warrant; or (ii) the fair market value of the investor’s equity interest underlying the warrant. In the event (i) we do

not

have the funds available to repurchase the equity interest under the warrant or (ii) such repurchase is

not

lawful, adjustments to the principal of the note purchased by Penta will be made or, under certain circumstances, interest will be charged on the amount otherwise due for such repurchase. We have the right, under certain circumstances, to require Penta to sell to us all or any portion of the equity interest issued or represented by the warrant to acquire

4,960,740

shares. The price for such repurchase will be the greater of (i) the product of (

x

)

eleven

times our adjusted EBITDA with respect to the

twelve

months preceding the exercise of the call right times (y) the investor’s percentage ownership in the company assuming full exercise of the warrant; or (ii) the fair market value of the equity interests underlying the warrant; or (iii)

$3,750.

In connection with Golisano LLC’s acquisition of the note payable from Penta on

March 8, 2017 (

see Note

6

above for additional information), these warrants were assigned to Golisano LLC.

Golisano LLC Warrants (formerly

JL Warrants

)

In connection with the

January 22, 2015

note payable to JL, we issued JL warrants to purchase an aggregate of

2,329,400

shares of the Company’s common stock, at an aggregate exercise price of

$0.01,

through

February 13, 2020.

On

February 4, 2015,

we also granted to JL a warrant to acquire a total of

434,809

shares of common stock at a purchase price of

$1.00

per share, through

February 13, 2020.

Both warrant agreements grant JL certain registration rights, commencing

October 1, 2015,

for the shares of common stock issuable upon exercise of the warrants. These warrants were subsequently assigned to

two

individuals. During the year ended

December 31, 2016,

these individuals exercised warrants for a total of

1,187,995

shares of the Company’s common stock for total proceeds to the Company of less than

$1.

In connection with Golisano LLC’s acquisition of the note payable from JL on

March 8, 2017 (

see Note

6

above for additional information), the remaining portions of these warrants were assigned to Golisano LLC.

Golisano LLC

Warrants

Pursuant to an

October 2015

Securities Purchase Agreement with Golisano LLC, we issued Golisano LLC a warrant (the “Golisano Warrant”), which Golisano Warrant is intended to maintain, following each future issuance of shares of common stock pursuant to the conversion, exercise or exchange of certain currently outstanding warrants to purchase shares of common stock held by

third

-parties (the “Outstanding Warrants”), Golisano LLC’s proportional ownership of our issued and outstanding common stock so that it is the same thereafter as on

October 5, 2015.

We have reserved

12,697,977

shares of common stock for issuance under the Golisano Warrant. The purchase price for any shares of common stock issuable upon exercise of the Golisano Warrant is

$.001

per share. The Golisano Warrant is exercisable immediately and up to and including the date which is

sixty

days after the later to occur of the termination, expiration, conversion, exercise or exchange of all of the Outstanding Warrants and our delivery of notice thereof to Golisano LLC. The Golisano Warrant is also subject to customary adjustments upon any recapitalization, capital reorganization or reclassification, consolidation, merger or transfer of all or substantially all of our assets. In addition, if any payments are made to a holder of an Outstanding Warrant in consideration for the termination of or agreement

not

to exercise such Outstanding Warrant, Golisano LLC will be entitled to equal treatment. We have entered into a Registration Rights Agreement with Golisano LLC, dated as of

October 5, 2015,

granting Golisano LLC certain registration rights for the shares of common stock issuable on exercise of the Golisano Warrant. On

February 6, 2016,

Golisano LLC exercised the Golisano Warrant in part for

509,141

shares of the Company’s common stock for an aggregate purchase price of

$1.

During the year ended

December 31, 2016,

the Golisano Warrant was cancelled in part for

6,857,143

shares pursuant to the cancellation of a portion of the Outstanding Warrants. As of

June 30, 2017,

we have reserved

4,756,505

shares of its common stock for issuance under the Golisano Warrant.

Warrants Issued into Escrow

Golisano

Escrow

Warrants

In connection with a

January 28, 2016

Unsecured Promissory Note, we issued into escrow in the name of Golisano LLC a warrant to purchase an aggregate of

1,136,363

shares of the Company’s common stock at an exercise price of

$0.01

per share (the

“January 2016

Golisano Warrant”). The

January 2016

Golisano Warrant will

not

be released from escrow or be exercisable unless and until we fail to pay Golisano LLC the entire unamortized principal amount of the related promissory note and any accrued and unpaid interest thereon as of

January 28, 2019

or such earlier date as is required pursuant to an Acceleration Notice (as defined in the related note agreement). We have reserved

1,136,363

shares of the Company’s common stock for issuance under the

January 2016

Golisano Warrant. The

January 2016

Golisano Warrant, if exercisable, expires on

February 28, 2022.

The

January 2016

Golisano Warrant is also subject to customary adjustments upon any recapitalization, capital reorganization or reclassification, consolidation, merger or transfer of all or substantially all of our assets.

In connection with a

March 21, 2016

Unsecured Promissory Note, we issued into escrow in the name of Golisano LLC a warrant to purchase an aggregate of

3,181,816

shares of the Company’s common stock at an exercise price of

$0.01

per share (the

“March 2016

Golisano Warrant”). The

March 2016

Golisano Warrant will

not

be released from escrow or be exercisable unless and until we fail to pay Golisano LLC the entire unamortized principal amount of the related promissory note and any accrued and unpaid interest thereon as of

March 21, 2019

or such earlier date as is required pursuant to an Acceleration Notice (as defined in the related note agreement). We have reserved

3,181,816

shares of the Company’s common stock for issuance under the

March 2016

Golisano Warrant. The

March 2016

Golisano Warrant, if exercisable, expires on

March 21, 2022

.

The

March 2016

Golisano Warrant is also subject to customary adjustments upon any recapitalization, capital reorganization or reclassification, consolidation, merger or transfer of all or substantially all of our assets.

In connection with the Golisano LLC

July 2016

Note, we issued into escrow in the name of Golisano LLC a warrant to purchase an aggregate of

2,168,178

shares of the Company’s common stock, at an exercise price of

$0.01

per share (the “Golisano

July 2016

Warrant”). The Golisano

July 2016

Warrant will

not

be released from escrow or be exercisable unless and until we fail to pay Golisano LLC the entire unamortized principal amount of the Golisano

July 2016

Note and any accrued and unpaid interest thereon as of

January 28, 2019

or such earlier date as is required pursuant to an Acceleration Notice (as defined in the Golisano LLC

July 2016

Note). We have reserved

2,168,178

shares of the Company’s common stock for issuance under the Golisano

July 2016

Warrant. The Golisano

July 2016

Warrant, if exercisable, expires on

July 21, 2022

.

The Golisano

July 2016

Warrant is also subject to customary adjustments upon any recapitalization, capital reorganization or reclassification, consolidation, merger or transfer of all or substantially all of our assets.

In connection with the Golisano LLC

December 2016

Note, we issued into escrow in the name of Golisano LLC a warrant to purchase an aggregate of

1,136,363

shares of the Company’s common stock, at an exercise price of

$0.01

per share (the “Golisano

December 2016

Warrant”). The Golisano

December 2016

Warrant will

not

be released from escrow or be exercisable unless and until we fail to pay Golisano LLC the entire unamortized principal amount of the Golisano

December 2016

Note and any accrued and unpaid interest thereon as of

December 30, 2019

or such earlier date as is required pursuant to an Acceleration Notice (as defined in the Golisano LLC

December 2016

Note). We have reserved

1,136,363

shares of the Company’s common stock for issuance under the Golisano

December 2016

Warrant. The Golisano

December 2016

Warrant, if exercisable, expires on

December 30, 2022

.

The Golisano

December 2016

Warrant is also subject to customary adjustments upon any recapitalization, capital reorganization or reclassification, consolidation, merger or transfer of all or substantially all of our assets.

In connection with the Golisano LLC

March 2017

Note, we issued into escrow in the name of Golisano LLC a warrant to purchase an aggregate of

1,484,847

shares of the Company’s common stock, at an exercise price of

$0.01

per share (the “Golisano

March 2017

Warrant”). The Golisano

March 2017

Warrant will

not

be released from escrow or be exercisable unless and until we fail to pay Golisano LLC the entire unamortized principal amount of the Golisano

March 2017

Note and any accrued and unpaid interest thereon as of

December 30, 2019

or such earlier date as is required pursuant to an Acceleration Notice (as defined in the Golisano LLC

March 2017

Note). We have reserved

1,484,847

shares of the Company’s common stock for issuance under the Golisano

March 2017

Warrant. The Golisano

March 2017

Warrant, if exercisable, expires on

March 14, 2023

.

The Golisano

March 2017

Warrant is also subject to customary adjustments upon any recapitalization, capital reorganization or reclassification, consolidation, merger or transfer of all or substantially all of our assets.

We previously entered into a Registration Rights Agreement with Golisano LLC, dated as of

October 5, 2015 (

the “Registration Rights Agreement”), granting Golisano LLC certain registration rights for certain shares of the Company’s common stock. The shares of common stock issuable pursuant to the above warrants are also entitled to the benefits of the Registration Rights Agreement.

GH Escrow Warrants

In connection with a

January 28, 2016

Unsecured Promissory Note, we issued into escrow in the name of GH a warrant to purchase an aggregate of

1,136,363

shares of the Company’s common stock at an exercise price of

$0.01

per share (the

“January 2016

GH Warrant”). The

January 2016

GH Warrant will

not

be released from escrow or be exercisable unless and until we fail to pay GH the entire unamortized principal amount of the related promissory note and any accrued and unpaid interest thereon as of

January 28, 2019

or such earlier date as is required pursuant to an Acceleration Notice (as defined in the related note agreement). We have reserved

1,136,363

shares of the Company’s common stock for issuance under the

January 2016

GH warrant. The

January 2016

GH Warrant, if exercisable, expires on

February 28, 2022

.

The

January 2016

GH Warrant is also subject to customary adjustments upon any recapitalization, capital reorganization or reclassification, consolidation, merger or transfer of all or substantially all of our assets.

In connection with a

March 21, 2016

Unsecured Promissory Note, we issued into escrow in the name of GH a warrant to purchase an aggregate of

3,181,816

shares of the Company’s common stock at an exercise price of

$0.01

per share (the

“March 2016

GH Warrant”). The

March 2016

GH Warrant will

not

be released from escrow or be exercisable unless and until we fail to pay GH the entire unamortized principal amount of the related promissory note and any accrued and unpaid interest thereon as of

March 21, 2019

or such earlier date as is required pursuant to an Acceleration Notice (as defined in the related note agreement). We have reserved

3,181,816

shares of the Company’s common stock for issuance under the

March 2016

GH Warrant. The

March 2016

GH Warrant, if exercisable, expires on

March 21, 2022

.

The

March 2016

GH Warrant is also subject to customary adjustments upon any recapitalization, capital reorganization or reclassification, consolidation, merger or transfer of all or substantially all of our assets.

In connection with the GH

December 2016

Note, we issued into escrow in the name of GH a warrant to purchase an aggregate of

1,136,363

shares of the Company’s common stock, at an exercise price of

$0.01

per share (the

“December 2016

GH Warrant”). The

December 2016

GH Warrant will

not

be released from escrow or be exercisable unless and until we fail to pay GH the entire unamortized principal amount of the

December 2016

GH Warrant and any accrued and unpaid interest thereon as of

December 30, 2019

or such earlier date as is required pursuant to an Acceleration Notice (as defined in the

December 2016

GH Warrant). We have reserved

1,136,363

shares of common stock for issuance under the

December 2016

GH Warrant. The

December 2016

GH Warrant, if exercisable, expires on

December 30, 2022

.

The

December 2016

GH Warrant is also subject to customary adjustments upon any recapitalization, capital reorganization or reclassification, consolidation, merger or transfer of all or substantially all of our assets.

JL-US Escrow Warrant

In connection with an

April 5, 2016

Unsecured Promissory Note, we issued into escrow in the name of JL-US a warrant to purchase an aggregate of

227,273

shares of the Company’s common stock at an exercise price of

$0.01

per share (the “JL-US Warrant”). The JL-US Warrant will

not

be released from escrow or be exercisable unless and until we fail to pay JL-US the entire unamortized principal amount of the JL-US Note and any accrued and unpaid interest thereon as of

March 21, 2019

or such earlier date as is required pursuant to an Acceleration Notice (as defined in the JL-US Note). We have reserved

227,273

shares of the Company’s common stock for issuance under the JL-US Warrant. The JL-US Warrant, if exercisable, expires on

March 21, 2022.

The JL-US Warrant is also subject to customary adjustments upon any recapitalization, capital reorganization or reclassification, consolidation, merger or transfer of all or substantially all of our assets.

Little Harbor Escrow Warrant

The Little Harbor

July 2016

Note provides that we issue into escrow in the name of Little Harbor a warrant to purchase an aggregate of

2,168,178

shares of common stock at an exercise price of

$0.01

per share (the “Little Harbor

July 2016

Warrant”). The Little Harbor

July 2016

Warrant will

not

be released from escrow or be exercisable unless and until we fail to pay Little Harbor the entire unamortized principal amount of the Little Harbor

July 2016

Note and any accrued and unpaid interest thereon as of

January 28, 2019

or such earlier date as is required pursuant to an Acceleration Notice (as defined in the Little Harbor

July 2016

Note). We have reserved

2,168,178

shares of the Company’s common stock for issuance under the Little Harbor

July 2016

Warrant. The Little Harbor

July 2016

Warrant, if exercisable, expires on

July 21, 2022

.

The Little Harbor

July 2016

Warrant is also subject to customary adjustments upon any recapitalization, capital reorganization or reclassification, consolidation, merger or transfer of all or substantially all of our assets. The Little Harbor

July 2016

Warrant grants Little Harbor certain registration rights for the shares of the Company’s common stock issuable upon exercise of the Little Harbor

July 2016

Warrant.

XML

Note 8 - Derivative Liabilities

6 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Derivatives and Fair Value [Text Block]

NOTE

8

– DERIVATIVE LIABILITIES

The number of shares of common stock issuable pursuant to certain warrants issued in

2015

will be increased if our adjusted EBITDA or the market price of the Company’s common stock do

not

meet certain defined amounts. We have recorded the estimated fair value of the warrants as of the date of issuance. Due to the variable terms of the warrant agreements, the warrants are recorded as derivative liabilities with a corresponding charge to our consolidated statements of comprehensive loss for changes in the estimated fair value of the warrants from the date of issuance to each balance sheet reporting date. As of

June 30, 2017,

we have estimated the total fair value of the derivative liabilities to be

$7,750

as compared to

$6,455

as of

December 31, 2016.

We had the following activity in our derivative liabilities account since

December 31, 2016:

	Six Months Ended
	June 30,
	2017
Derivative liabilities at December 31, 2016	$	6,455
Loss on change in fair value of derivative liabilities		1,295
Derivative liabilities at June 30, 2017	$	7,750

The value of the derivative liabilities is generally estimated using an options lattice model with multiple inputs and assumptions, including the market price of the Company’s common stock, stock price volatility and other assumptions to project EBITDA and other reset events. These inputs and assumptions are subject to management’s judgment and can vary materially from period to period.

XML

Note 9 - Stockholders' Equity (Deficit)

6 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Stockholders' Equity Note Disclosure [Text Block]

NOTE

9

– STOCKHOLDERS’ EQUITY (DEFICIT)

Preferred Stock

The Company has authorized

500,000,000

shares of preferred stock with a par value of

$0.001

per share.

No

shares of the preferred stock have been issued.

Twinlab Consolidation Corporation

2013

Stock Incentive Plan

The only equity compensation plan currently in effect is the Twinlab Consolidation Corporation

2013

Stock Incentive Plan (the “TCC Plan”), which was assumed by the Company on

September 16, 2014.

The TCC Plan originally established a pool of

20,000,000

shares of common stock for issuance as incentive awards to employees for the purposes of attracting and retaining qualified employees who will aid in the success of the Company. From

January

through

December 2015,

the Company granted Restricted Stock Units to certain employees of the Company pursuant to the TCC Plan. Each Restricted Stock Unit relates to

one

share of the Company’s common stock. The Restricted Stock Unit awards vest

25%

each annually on various dates through

2019.

The Company estimated the grant date fair market value per share of the Restricted Stock Units and is amortizing the total estimated grant date value over the vesting periods. During the

six

months ended

June 30, 2017,

there were

not

any shares of common stock issued to employees pursuant to the vesting of Restricted Stock Units.

As of

June 30, 2017,

5,635,626

shares remain available for use in the TCC Plan.

Common Stock Repurchase

On

January 5, 2017,

pursuant to a Repurchase Agreement

642,366

shares of the Company’s common stock were repurchased for an aggregate repurchase price of less than

$1.

Stock Subscription Receivable and Loss on Stock Price Guarantee

At

June 30, 2017,

the stock subscription receivable dated

August 1, 2014

for the purchase of

1,528,384

shares of the Company’s common stock had a principal balance of

$30

and bears interest at an annual rate of

5%.

On

August 6, 2016,

the

18

-month anniversary of the closing of a share purchase agreement, we were required to pay the purchaser of the common stock the difference between

$2.29

per share and either a defined market price or a price per share determined by a valuation firm acceptable to both parties. Based on an outside professional valuation performed on the Company’s common stock, the Company estimated the stock price guarantee payment to be

$3,210.

Accordingly, the Company recorded a loss on the stock purchase price guarantee of

$3,210

and a corresponding liability for the same amount in

2016,

which was included in accrued expenses and other current liabilities in the accompanying condensed consolidated balance sheet as of

December 31, 2016.

On

June 2, 2017,

the

two

parties came to an agreement in which we were required to issue the Huntington Note in favor of Huntington. The Huntington Note matures on

June 2, 2019

with the principal amount of

$3,200

payable at maturity. Interest on the outstanding principal accrues at a rate of

8.5%

per year from

August 6, 2016

to

August 15, 2017,

and increases to

10%

per year thereafter. We paid

$50

to Huntington related to accrued interest from

August 6, 2016

through the date of issuance of the Huntington Note.

Huntington was required to return

778,385

shares of the Company’s common stock which were issued into escrow. We were required to provide certain piggyback registration rights to Huntington in regards to the remaining

749,999

shares of the Company’s common stock held by Huntington. If the Huntington Note is paid off prior to

August 14, 2017,

the

778,385

shares held in escrow will be released from escrow and transferred to the Company for

no

additional consideration. If the note remains outstanding on

August 15, 2017,

we shall have the right, but

not

the obligation, to pay

$140

to Huntington to purchase

764,192

of the Subject Shares held in escrow. Upon the exercise of this purchase option, the Subject Shares will be released from escrow and transferred to the Company. If the note remains outstanding on

August 15, 2017

and we do

not

exercise the option to purchase the shares, the shares will be returned from escrow to Huntington and we will

no

longer have repurchase rights. Pursuant to the agreement, we were also required to enter into a

four

-year lease agreement with the purchaser related to our premises occupied by Nutricap.

XML

Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2017

Accounting Policies [Abstract]

Organization [Policy Text Block]

Organization

Twinlab Consolidated Holdings, Inc. (the “Company”, “Twinlab,” “we,” “our” and “us”) was incorporated on

October 24, 2013

under the laws of the State of Nevada as Mirror Me, Inc. On

August 7, 2014,

we amended our articles of incorporation and changed our name to Twinlab Consolidated Holdings, Inc.

Nature of Operations [Policy Text Block]

Nature of Operations

We are an integrated manufacturer, marketer, distributor and retailer of branded nutritional supplements and other natural products sold to and through domestic health and natural food stores, mass market retailers, specialty stores retailers, on-line retailers and websites. Internationally, we market and distribute branded nutritional supplements and other natural products to and through health and natural product distributors and retailers.

Our products include vitamins, minerals, specialty supplements and sports nutrition products sold under the Twinlab® brand name (including the Twinlab® Fuel brand of sports nutrition products); a market leader in the healthy aging and beauty from within categories sold under the Reserveage™ Nutrition and ResVitale® brand names; diet and energy products sold under the Metabolife® brand name; the Re-Body® brand name; and a full line of herbal teas sold under the Alvita® brand name. To accommodate consumer preferences, our products come in various formulations and delivery forms, including capsules, tablets, softgels, chewables, liquids, sprays, powders and whole herbs. These products are sold primarily through health and natural food stores and on-line retailers, supermarkets, and mass-market retailers.

We also perform contract manufacturing services for private label products.  Our contract manufacturing business involves the manufacture of custom products to the specifications of a customer who requires finished product under the customer’s own brand name.  We do

not

market these private label product s as our business is to manufacture and sell the products to the customer, who then markets and sells the products to retailers or end consumers.

Consolidation, Policy [Policy Text Block]

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.

Basis of Accounting, Policy [Policy Text Block]

Basis of Presentation and Unaudited Information

The condensed consolidated interim financial statements included herein have been prepared by the Company in accordance with United States generally accepted accounting principles, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although we believe that the disclosures are adequate to make the information presented

not

misleading. These statements reflect all adjustments, consisting of normal recurring adjustments, which in the opinion of management, are necessary for fair presentation of the information contained therein. Financial results for any interim period are

not

necessarily indicative of financial results that

may

be expected for the fiscal year. The unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form

10

-K for the year ended

December 31, 2016

filed with the SEC on

March 31, 2017.

Use of Estimates, Policy [Policy Text Block]

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Actual results could differ from those estimates. Significant management estimates include those with respect to returns and allowances, allowance for doubtful accounts, reserves for inventory obsolescence, the recoverability of long-lived assets, intangibles and goodwill and the estimated value of warrants and derivative liabilities.

Revenue Recognition, Policy [Policy Text Block]

Revenue Recognition

Revenue from product sales, net of estimated returns and allowances, is recognized when evidence of an arrangement is in place, related prices are fixed and determinable, contractual obligations have been satisfied, title and risk of loss have been transferred to the customer and collection of the resulting receivable is reasonably assured. Shipping terms are generally freight on board shipping point. We sell predominately in the North American and European markets, with international sales transacted in U.S. dollars.

Fair Value of Financial Instruments, Policy [Policy Text Block]

Fair Value of Financial Instruments

We apply the following fair value hierarchy, which prioritizes the inputs used to measure fair value into

three

levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:

Level

1

– inputs are quoted prices in active markets for identical assets that the reporting entity has the ability to access at the measurement date.

Level

2

– inputs are other than quoted prices included within Level

1

that are observable for the asset, either directly or indirectly.

Level

3

– inputs are unobservable inputs for the asset that are supported by little or

no

market activity and that are significant to the fair value of the underlying asset or liability.

The following table summarizes our financial instruments that are measured at fair value on a recurring basis as of

June 30, 2017

and

December 31, 2016:

June 30, 2017	Total		Level 1		Level 2		Level 3
Derivative liabilities	$	7,750	$	-	$	-	$	7,750

December 31, 2016	Total		Level 1		Level 2		Level 3
Derivative liabilities	$	6,455	$	-	$	-	$	6,455

Receivables, Trade and Other Accounts Receivable, Allowance for Doubtful Accounts, Policy [Policy Text Block]

Accounts Receivable and Allowances

We grant credit to customers and generally do

not

require collateral or other security. We perform credit evaluations of our customers and provide for expected claims related to promotional items; customer discounts; shipping shortages; damages; and doubtful accounts based upon historical bad debt and claims experience. As of

June 30, 2017,

total allowances amounted to

$1,602,

of which

$296

was related to doubtful accounts receivable. As of

December 31, 2016,

total allowances amounted to

$2,365,

of which

$481

was related to doubtful accounts receivable.

Inventory, Policy [Policy Text Block]

Inventories

Inventories are stated at the lower of cost or net realizable value and are reduced by an estimated reserve for obsolete inventory.

Property, Plant and Equipment, Policy [Policy Text Block]

Property and Equipment

Property and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation, including amounts amortized under capital leases, is calculated on the straight-line method over the estimated useful lives of the related assets, which are

7

to

10

years for machinery and equipment,

8

years for furniture and fixtures and

3

years for computers. Leasehold improvements are amortized over the shorter of the useful life of the asset or the term of the lease.

Normal repairs and maintenance are expensed as incurred. When assets are retired or otherwise disposed of, the related cost and accumulated depreciation or amortization is removed from the accounts and any gain or loss is included in the results of operations.

Goodwill and Intangible Assets, Intangible Assets, Policy [Policy Text Block]

Intangible Assets

Intangible assets consist primarily of trademarks and customer relationships, which are amortized on a straight-line basis over their estimated useful lives ranging from

3

to

30

years. The valuation and classification of these assets and the assignment of amortizable lives involve significant judgment and the use of estimates.

We believe that our long-term growth strategy supports our fair value conclusions. For intangible assets, the recoverability of these amounts is dependent upon achievement of our projections and the execution of key initiatives related to revenue growth and improved profitability.

Goodwill and Intangible Assets, Goodwill, Policy [Policy Text Block]

Goodwill

Goodwill is

not

subject to amortization, but is reviewed for impairment annually, or more frequently whenever events or changes in circumstances indicate the carrying value of goodwill

may

not

be recoverable. An impairment charge would be recorded to the extent the carrying value of goodwill exceeds its estimated fair value. The testing of goodwill under established guidelines for impairment requires significant use of judgment and assumptions. Changes in forecasted operations and other assumptions could materially affect the estimated fair values. Changes in business conditions could potentially require adjustments to these asset valuations.

Impairment or Disposal of Long-Lived Assets, Policy [Policy Text Block]

Impairment of Long-Lived Assets

Long-lived assets, including intangible assets subject to amortization, are reviewed for impairment when changes in circumstances indicate that the carrying amount of the asset

may

not

be recoverable. If the carrying amount of the asset exceeds the expected undiscounted cash flows of the asset, an impairment charge is recognized equal to the amount by which the carrying amount exceeds fair value. The testing of these intangibles under established guidelines for impairment requires significant use of judgment and assumptions. Changes in forecasted operations and other assumptions could materially affect the estimated fair values. Changes in business conditions could potentially require adjustments to these asset valuations.

Goodwill and Intangible Assets, Intangible Assets, Indefinite-Lived, Policy [Policy Text Block]

Indefinite-Lived Intangible Assets

Indefinite-lived intangible assets relating to the asset acquisition of Organic Holdings are determined to have an indefinite useful economic life and as such are

not

amortized. Indefinite-lived intangible assets are tested for impairment annually which consists of a comparison of the fair value of the asset with its carrying value. The total indefinite-lived intangible assets as of

June 30, 2017

and

December 31, 2016

was

$5,900.

Fair Value of Warrants Issued, Policy [Policy Text Block]

Value of Warrants Issued with Debt

We estimate the grant date value of certain warrants issued with debt, using an outside professional valuation firm, which uses the Monte Carlo option lattice model. We record

the amounts as interest expense or debt discount, depending on the terms of the agreement. These estimates involve multiple inputs and assumptions, including the market price of the Company’s common stock, stock price volatility and other assumptions to project

earnings before interest, taxes, depreciation and amortization (“EBITDA”) and other reset events. These inputs and assumptions are subject to management’s judgment and can vary materially from period to period.

Derivatives, Policy [Policy Text Block]

Derivative Liabilities

We have recorded certain warrants as derivative liabilities at estimated fair value, as determined based on our use of an outside professional valuation firm, due to the variable terms of the warrant agreements. The value of the derivative liabilities is generally estimated using the Monte Carlo option lattice model with multiple inputs and assumptions, including the market price of the Company’s common stock, stock price volatility and other assumptions to project EBITDA and other reset events. These inputs and assumptions are subject to management’s judgment and can vary materially from period to period.

Sale Leaseback Transactions, Policy [Policy Text Block]

Deferred gain on sale of assets

We entered into a sale-leaseback arrangement relating to our office facilities in

2013.

Under the terms of the arrangement, we sold an office building and surrounding land and then leased the property back under a

15

-year operating lease. We recorded a deferred gain for the amount of the gain on the sale of the asset, to be recognized as a reduction of rent expense over the life of the lease. Accordingly, we recorded amortization of deferred gain as a reduction of rental expense of

$41

for the

three

months ended

June 30, 2017

and

2016.

For the

six

months ended

June 30, 2017

and

2016,

we recorded amortization of

$81

and

$82,

respectively. As of

June 30, 2017

and

December 31, 2016,

unamortized deferred gain on sale of assets was

$1,646

and

$1,727,

respectively.

Earnings Per Share, Policy [Policy Text Block]

Net Loss per Common Share

Basic net income or loss per common share (Basic EPS) is computed by dividing net income or loss by the weighted average number of common shares outstanding. Diluted net income or loss per common share (Diluted EPS) is computed by dividing net income or loss by the sum of the weighted average number of common shares outstanding and the dilutive potential common shares then outstanding. Potential dilutive common share equivalents consist of total shares issuable upon the exercise of outstanding stock options and warrants to acquire common stock using the treasury stock method and the average market price per share during the period.

The common shares used in the computation of our basic and diluted net loss per share are reconciled as follows:

 

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2017			2016			2017			2016
										(as corrected)
Numerator:
Net loss	$	(4,480	)	$	(3,703	)	$	(7,436	)	$	(2,384	)
Effect of dilutive securities on net loss:
Common stock warrants		-			(1,072	)		-			(14,063	)
Total net loss for purpose of calculating diluted net loss per common share	$	(4,480	)	$	(4,775	)	$	(7,436	)	$	(16,447	)
Number of shares used in per common share calculations:
Total shares for purposes of calculating basic net loss per common share		252,959,714			250,762,072			252,941,772			271,783,852
Weighted-average effect of dilutive securities:
Common stock warrants		-			15,991,915			-			14,152,677
Total shares for purpose of calculating diluted net loss per common share		252,959,714			266,753,987			252,941,772			285,936,529
Net loss per common share:
Basic	$	(0.02	)	$	(0.01	)	$	(0.03	)	$	(0.01	)
Diluted	$	(0.02	)	$	(0.02	)	$	(0.03	)	$	(0.06	)

Correction of

2016

Diluted Net Loss Per Share

The diluted net loss per share for the period ended

June 30, 2016

has been corrected. In accordance with U.S. generally accepted accounting principles, when calculating diluted earnings or loss per share, if the effects are dilutive, companies are required to add back to net income or loss the effects of the change in derivative liabilities related to warrants. Additionally, if the effects of the change in derivative liabilities are added back to net income or loss, companies are required to include the warrants outstanding related to the derivative liability in the calculation of the weighted average dilutive shares.

For the period ended

June 30, 2016,

as originally reported, we did

not

add back the effects of the change in the derivative liability in computing dilutive income or loss per share. The dilutive loss per share for the

three

and

six

months ended

June 30, 2016

in the table above has been revised to correct this error.

The table below reflects the diluted net loss per share as originally reported and net loss per share as corrected for the

three

and

six

months ended

June 30, 2016.

  

	As originally reported			As corrected
Diluted net loss per shares (three months)	$	(0.01	)	$	(0.02	)
Diluted net loss per shares (six months)	$	(0.01	)	$	(0.06	)
Weighted average shares outstanding - diluted (three months)		250,762,072			266,753,987
Weighted average shares oustanding - diluted (six months)		271,783,852			285,936,529

Additionally, the diluted loss per share for the period ended

September 30, 2016

will be reflected as corrected in the Form

10

-Q for the quarter ending

September 30, 2017.

The corrected diluted loss per share for the

three

and

nine

months ended

September 30, 2016

was $(

0.01

) and $(

0.07

), respectively.

The errors were corrected as of

December 31, 2016,

but since the adjustments were

not

material to any of the quarters previously reported the Form

10

-Qs for those periods were

not

amended. Management has determined the effects to be neither quantitatively or qualitatively material to the financial statements included in any of the Form

10

-Qs filed during

2016.

Concentration Risk, Credit Risk, Policy [Policy Text Block]

Significant Concentration of Credit Risk

Sales to our top

three

customers aggregated to approximately

22%

and

26%

of total sales for the

three

months ended

June 30, 2017

and

2016,

respectively, and

26%

of total sales for the

six

months ended

June 30, 2017

and

2016.

Sales to

one

of those customers were approximately

10%

and

9%

of total sales for the

three

months ended

June 30, 2017

and

2016,

respectively, and

12%

and

10%

of total sales for the

six

months ended

June 30, 2017

and

2016,

respectively. Accounts receivable from these customers were approximately

39%

and

29%

of total accounts receivable as of

June 30, 2017

and

December 31, 2016,

respectively.

New Accounting Pronouncements, Policy [Policy Text Block]

Recent Accounting Pronouncements

In

January 2017,

the FASB issued ASU

No.

2017

-

04,

“Simplifying the Test for Goodwill Impairment (Topic

350

)” which removes Step

2

of the goodwill impairment test that requires a hypothetical purchase price allocation.  A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value,

not

to exceed the carrying amount of goodwill.  The amendments in this ASU are effective for fiscal years beginning after

December 15, 2019.  

Early adoption is permitted after

January 1, 2017.  

We do

not

expect the new guidance to have a significant impact on our condensed consolidated financial statements or related disclosures.

  

In

March 2016,

the FASB issued ASU

No.

2016

-

09,

 “Stock Compensation (Topic

718

)”, which is intended to simplify several aspects of the accounting for share-based payment award transactions, including the income tax impacts, the classification on the statement of cash flows, and forfeitures. The amendments in this ASU are effective for fiscal years beginning after

December 15, 2016,

including interim periods. We have

not

yet determined the impact on our consolidated financial statements of the adoption of this new accounting pronouncement.

In

February 2016,

the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)

No.

2016

-

02,

“Leases (Topic

842

)”. The amendments in this ASU revise the accounting related to lessee accounting. Under the new guidance, lessees will be required to recognize a lease liability and a right-of-use asset for all leases. The new lease guidance also simplifies the accounting for sale and leaseback transactions primarily because lessees must recognize lease assets and lease liabilities. The amendments in this ASU are effective for public companies for fiscal years beginning after

December 15, 2018

and are to be applied through a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. Early adoption is permitted. We have

not

yet determined the impact on our consolidated financial statements of the adoption of this new accounting pronouncement.

Although there are several other new accounting pronouncements issued or proposed by the FASB, which we have adopted or will adopt, as applicable, we do

not

believe any of these accounting pronouncements has had or will have a material impact on our condensed consolidated financial position or results of operations.

XML

Note 1 - Nature of Operations and Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2017

Notes Tables

Fair Value, Assets Measured on Recurring Basis [Table Text Block]

June 30, 2017	Total		Level 1		Level 2		Level 3
Derivative liabilities	$	7,750	$	-	$	-	$	7,750

December 31, 2016	Total		Level 1		Level 2		Level 3
Derivative liabilities	$	6,455	$	-	$	-	$	6,455

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2017			2016			2017			2016
										(as corrected)
Numerator:
Net loss	$	(4,480	)	$	(3,703	)	$	(7,436	)	$	(2,384	)
Effect of dilutive securities on net loss:
Common stock warrants		-			(1,072	)		-			(14,063	)
Total net loss for purpose of calculating diluted net loss per common share	$	(4,480	)	$	(4,775	)	$	(7,436	)	$	(16,447	)
Number of shares used in per common share calculations:
Total shares for purposes of calculating basic net loss per common share		252,959,714			250,762,072			252,941,772			271,783,852
Weighted-average effect of dilutive securities:
Common stock warrants		-			15,991,915			-			14,152,677
Total shares for purpose of calculating diluted net loss per common share		252,959,714			266,753,987			252,941,772			285,936,529
Net loss per common share:
Basic	$	(0.02	)	$	(0.01	)	$	(0.03	)	$	(0.01	)
Diluted	$	(0.02	)	$	(0.02	)	$	(0.03	)	$	(0.06	)

Schedule of Error Corrections and Prior Period Adjustments [Table Text Block]

	As originally reported			As corrected
Diluted net loss per shares (three months)	$	(0.01	)	$	(0.02	)
Diluted net loss per shares (six months)	$	(0.01	)	$	(0.06	)
Weighted average shares outstanding - diluted (three months)		250,762,072			266,753,987
Weighted average shares oustanding - diluted (six months)		271,783,852			285,936,529

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Note 3 - Inventories (Tables)

6 Months Ended

Jun. 30, 2017

Notes Tables

Schedule of Inventory, Current [Table Text Block]

	June 30,			December 31,
	2017			2016
Raw materials	$	7,020		$	4,912
Work in process		1,448			1,189
Finished goods		15,134			13,438
		23,602			19,539
Reserve for obsolete inventory		(2,057	)		(1,938	)
	$	21,545		$	17,601

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Note 4 - Property and Equipment (Tables)

6 Months Ended

Jun. 30, 2017

Notes Tables

Property, Plant and Equipment [Table Text Block]

	June 30,			December 31,
	2017			2016
Machinery and equipment	$	12,155		$	10,885
Computers and other		9,148			9,119
Aquifer		482			482
Leasehold improvements		1,518			1,518
		23,303			22,004
Accumulated depreciation and amortization		(20,194	)		(18,476	)
	$	3,109		$	3,528

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Note 5 - Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2017

Notes Tables

Schedule of Finite-Lived Intangible Assets [Table Text Block]

	June 30,			December 31,
	2017			2016
Trademarks	$	12,166		$	12,166
Indefinite-lived intangible assets		5,900			5,900
Customer relationships		19,110			19,110
Other		753			753
		37,929			37,929
Accumulated amortization		(8,897	)		(7,732	)
	$	29,032		$	30,197

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Note 6 - Debt (Tables)

6 Months Ended

Jun. 30, 2017

Notes Tables

Schedule of Debt [Table Text Block]

	June 30,			December 31,
	2017			2016
Related-Party Debt:
July 2014 note payable to Little Harbor, LLC, net of unamortized discount of $7 and $206 as of June 30, 2017 and December 31 2016, respectively.	$	3,259		$	3,061
July 2016 note payable to Little Harbor, LLC		4,770			4,770
January 2016 note payable to Great Harbor Capital, LLC		2,500			2,500
March 2016 note payable to Great Harbor Capital, LLC		7,000			7,000
December 2016 note payable to Great Harbor Capital, LLC		2,500			2,500
January 2016 note payable to Golisano Holdings LLC		2,500			2,500
March 2016 note payable to Golisano Holdings LLC		7,000			7,000
July 2016 note payable to Golisano Holdings LLC		4,770			4,770
December 2016 note payable to Golisano Holdings LLC		2,500			2,500
March 2017 note payable to Golisano Holdings LLC		3,267			-
November 2014 note payable to Golisano Holdings LLC (formerly payble to Penta Mezzanine SBIC Fund I, L.P.), net of discount and unamortized loan fees in the aggregate of $1,898 and $2,304 as of June 30, 2017 and December 31, 2016, respectively		6,102			5,696
January 2015 note payable to Golisano Holdings LLC (formerly payable to JL-BBNC Mezz Utah, LLC), net of discount and unamortized loan fees in the aggregate of $2,286 as of June 30, 2017		2,714			-
February 2015 note payable to Golisano Holdings LLC (formerly payable to Penta Mezzanine SBIC Fund I, L.P.), net of discount and unamortized loan fees in the aggregate of $166 and $201 as of June 30, 2017 and December 31, 2016, respectively		1,834			1,799
Total related-party debt		50,716			44,096
Senior Credit Facility with Midcap, net of unamortized loan fees of $146 and $293 as of June 30, 2017 and December 31, 2016, respectively		15,131			13,035
Other Debt:
January 2015 note payable to JL-BBNC Mezz Utah, LLC, net of discount and unamortized loan fees in the aggregate of $2,744 as of December 31, 2016		-			2,256
April 2016 note payable to JL-Utah Sub, LLC		437			500
Capital lease obligations		1,737			2,732
Huntington Holdings		3,200			-
Total other debt		5,374			5,488
Total debt		71,221			62,619
Less current portion		(17,609	)		(11,631	)
Long-term debt	$	53,612		$	50,988

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Note 7 - Warrants and Registration Rights Agreements (Tables)

6 Months Ended

Jun. 30, 2017

Notes Tables

Schedule of Stockholders' Equity Note, Warrants or Rights [Table Text Block]

			Weighted Average
	Shares		Exercise Price
Outstanding, December 31, 2016		15,855,017		0.18
Granted		-		-
Canceled / Expired		-		-
Exercised		-		-
Outstanding, June 30, 2017		15,855,017		0.18

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Note 8 - Derivative Liabilities (Tables)

6 Months Ended

Jun. 30, 2017

Notes Tables

Schedule of Derivative Liabilities at Fair Value [Table Text Block]

	Six Months Ended
	June 30,
	2017
Derivative liabilities at December 31, 2016	$	6,455
Loss on change in fair value of derivative liabilities		1,295
Derivative liabilities at June 30, 2017	$	7,750

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Note 1 - Nature of Operations and Summary of Significant Accounting Policies (Details Textual) $ / shares in Units, $ in Thousands	3 Months Ended			6 Months Ended		9 Months Ended	12 Months Ended
	Jun. 30, 2017 USD ($) $ / shares	Sep. 30, 2016 $ / shares	Jun. 30, 2016 USD ($) $ / shares	Jun. 30, 2017 USD ($) $ / shares	Jun. 30, 2016 USD ($) $ / shares	Sep. 30, 2016 $ / shares	Dec. 31, 2016 USD ($)
Allowance for Doubtful Accounts Receivable, Current	$ 1,602			$ 1,602			$ 2,365
Provision for Doubtful Accounts				$ (296)	$ 1,064		(481)
Earnings Per Share, Diluted | $ / shares	$ (0.02)		$ (0.02)	$ (0.03)	$ (0.06)
Indefinite-Lived Intangible Assets (Excluding Goodwill)	$ 5,900			$ 5,900			5,900
Lessor, Operating Lease, Term of Contract				15 years
Amortization of Deferred Gain on Sale of Assets	41		$ 41	$ 81	$ 82
Deferred Gain on Sale of Property	$ 1,646			$ 1,646			$ 1,727
Sales Revenue, Net [Member] | Top Three Customers [Member] | Customer Concentration Risk [Member]
Concentration Risk, Percentage	22.00%		26.00%	26.00%	26.00%
Number of Major Customers	3		1
Sales Revenue, Net [Member] | One of Top Three Customers [Member] | Customer Concentration Risk [Member]
Concentration Risk, Percentage	10.00%		9.00%	12.00%	10.00%
Number of Major Customers	1		3
Accounts Receivable [Member] | Customer Concentration Risk [Member]
Concentration Risk, Percentage				39.00%	29.00%
Restatement Adjustment [Member]
Earnings Per Share, Diluted | $ / shares		$ (0.01)				$ (0.07)
Minimum [Member] | Trademarks and Customer Relationships [Member]
Finite-Lived Intangible Asset, Useful Life				3 years
Maximum [Member] | Trademarks and Customer Relationships [Member]
Finite-Lived Intangible Asset, Useful Life				30 years
Machinery and Equipment [Member] | Minimum [Member]
Property, Plant and Equipment, Useful Life				7 years
Machinery and Equipment [Member] | Maximum [Member]
Property, Plant and Equipment, Useful Life				10 years
Furniture and Fixtures [Member]
Property, Plant and Equipment, Useful Life				8 years
Computer Equipment [Member]
Property, Plant and Equipment, Useful Life				3 years

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Note 1 - Nature of Operations and Summary of Significant Accounting Policies - Financial Instruments Measured at Fair Value on a Recurring Basis (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Derivative liabilities	$ 7,750	$ 6,455
Fair Value, Measurements, Recurring [Member]
Derivative liabilities	7,750	6,455
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Derivative liabilities	0	0
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Derivative liabilities	0	0
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Derivative liabilities	$ 7,750	$ 6,455

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Note 1 - Nature of Operations and Summary of Significant Accounting Policies - Basic and Diluted Net Loss Per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Net loss	$ (4,480)	$ (3,703)	$ (7,436)	$ (2,384)
Common stock warrants		(1,072)		(14,063)
Total net loss for purpose of calculating diluted net loss per common share	$ (4,480)	$ (4,775)	$ (7,436)	$ (16,447)
Total shares for purposes of calculating basic net loss per common share (in shares)	252,959,714	250,762,072	252,941,772	271,783,852
Common stock warrants (in shares)		15,991,915		14,152,677
Total shares for purpose of calculating diluted net loss per common share (in shares)	252,959,714	266,753,987	252,941,772	285,936,529
Basic (in dollars per share)	$ (0.02)	$ (0.01)	$ (0.03)	$ (0.01)
Diluted (in dollars per share)	$ (0.02)	$ (0.02)	$ (0.03)	$ (0.06)

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Note 1 - Nature of Operations and Summary of Significant Accounting Policies - Restatement of 2016 Diluted Net Loss Per Share (Details) - $ / shares	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Earnings Per Share, Diluted	$ (0.02)	$ (0.02)	$ (0.03)	$ (0.06)
Weighted average shares outstanding - diluted (three months) (in shares)	252,959,714	266,753,987	252,941,772	285,936,529
Scenario, Previously Reported [Member]
Earnings Per Share, Diluted		$ (0.01)		$ (0.01)
Weighted average shares outstanding - diluted (three months) (in shares)		250,762,072		271,783,852

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Note 2 - Going Concern (Details Textual) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Retained Earnings (Accumulated Deficit)	$ (231,909)	$ (224,472)
Working Capital Deficiency	7,160
Long-term Debt, Current Maturities	$ 17,609	$ 11,631

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Note 3 - Inventories - Summary of Inventories (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Raw materials	$ 7,020	$ 4,912
Work in process	1,448	1,189
Finished goods	15,134	13,438
	23,602	19,539
Reserve for obsolete inventory	(2,057)	(1,938)
	$ 21,545	$ 17,601

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Note 4 - Property and Equipment (Details Textual) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2016
Depreciation	$ 220	$ 162	$ 447	$ 346
Machinery and Equipment [Member]
Capital Leased Assets, Gross	$ 1,116		$ 1,116		$ 1,142

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Note 4 - Property and Equipment - Summary of Property and Equipment (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Property and equipment	$ 23,303	$ 22,004
Accumulated depreciation and amortization	(20,194)	(18,476)
	3,109	3,528
Machinery and Equipment [Member]
Property and equipment	12,155	10,885
Computers and Other [Member]
Property and equipment	9,148	9,119
Aquifer [Member]
Property and equipment	482	482
Leasehold Improvements [Member]
Property and equipment	$ 1,518	$ 1,518

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Note 5 - Intangible Assets (Details Textual) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Amortization of Intangible Assets	$ 582	$ 582	$ 1,165	$ 1,088
Other Intangible Assets [Member]
Finite-Lived Intangible Asset, Useful Life			3 years
Minimum [Member] | Trademarks [Member]
Finite-Lived Intangible Asset, Useful Life			3 years
Minimum [Member] | Customer Relationships [Member]
Finite-Lived Intangible Asset, Useful Life			15 years
Maximum [Member] | Trademarks [Member]
Finite-Lived Intangible Asset, Useful Life			30 years
Maximum [Member] | Customer Relationships [Member]
Finite-Lived Intangible Asset, Useful Life			16 years

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Note 5 - Intangible Assets - Summary of Intangible Assets (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Indefinite-lived intangible assets	$ 5,900	$ 5,900
	37,929	37,929
Accumulated amortization	(8,897)	(7,732)
	29,032	30,197
Trademarks [Member]
Intangible assets	12,166	12,166
Customer Relationships [Member]
Intangible assets	19,110	19,110
Other Intangible Assets [Member]
Intangible assets	$ 753	$ 753

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Note 6 - Debt (Details Textual) - USD ($)														3 Months Ended		6 Months Ended			10 Months Ended	12 Months Ended
	Jun. 02, 2019	Jun. 02, 2017	Mar. 14, 2017	Dec. 31, 2016	Sep. 02, 2016	Aug. 06, 2016	Jul. 21, 2016	Apr. 05, 2016	Mar. 21, 2016	Jan. 28, 2016	Feb. 06, 2015	Jan. 22, 2015	Nov. 13, 2014	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 29, 2017	Jun. 30, 2016	Jun. 02, 2017	Dec. 31, 2016	Aug. 15, 2017	Mar. 31, 2017	Feb. 04, 2015
Loss on Stock Purchase Guarantees																		$ 3,210,000		$ 3,210,000
Class of Warrant or Right, Number of Securities Called by Warrants or Rights				15,855,017										15,855,017		15,855,017				15,855,017
Interest Paid																$ 3,198,000		$ 2,094,000
Common Stock, Shares Subscribed but Unissued														1,528,384		1,528,384
Revolving Credit Facility [Member] | Midcap Funding X Trust [Member]
Debt Instrument, Fee Amount												$ 540,000
Debt Instrument, Term												3 years
Line of Credit Facility, Potential Maximum Borrowing Capacity					$ 20,000,000
Line of Credit Facility, Maximum Borrowing Capacity					$ 17,000,000							$ 15,000,000
Percentage of Unused Line Fee Per Month					0.50%
Percentage of Management Fee Per Month												1.20%
Debt Instrument, Basis Spread on Variable Rate												5.00%				6.05%
Class of Warrant or Right, Number of Securities Called by Warrants or Rights												500,000
Warrants Not Settleable in Cash, Fair Value Disclosure												$ 130,000
Related Party Debt July 2016 Note Payable to Little Harbor LLC [Member]
Proceeds from Related Party Debt																				$ 4,770,000
Debt Instrument, Face Amount							$ 4,770,000
Debt Instrument, Interest Rate, Stated Percentage							8.50%
Debt Instrument, Maturity Date							Jan. 28, 2019
Little Harbor [Member]
Debt Instrument, Periodic Payment																$ 4,900,000
Debt Instrument, Term																3 years
Debt Instrument, Obligation Termination, Stock Price Trigger														5.06		5.06
Debt Instrument, Interest Rate, Stated Percentage														16.20%		16.20%
Great Harbor Capital, LLC [Member] | Notes Payable, Other Payables [Member]
Debt Instrument, Face Amount				$ 2,500,000					$ 7,000,000	$ 2,500,000										$ 2,500,000
Debt Instrument, Periodic Payment, Principal									$ 292,000	$ 104,000
Debt Instrument, Interest Rate, Stated Percentage				8.50%					8.50%	8.50%										8.50%
Debt Instrument, Date of First Required Payment									Apr. 21, 2017	Feb. 28, 2017						Jan. 21, 2018	Jan. 28, 2018
Debt Instrument, Maturity Date				Dec. 30, 2019					Mar. 21, 2019	Jan. 28, 2019
Golisano Holdings LLC [Member]
Debt Instrument, Fee Amount											$ 90,000	152,000	$ 273,000
Proceeds from Notes Payable												5,000,000	8,000,000
Debt Instrument, Periodic Payment												250,000	360,000
Increased Debt Instrument Periodic Payment												$ 350,000
Debt Instrument, Face Amount											2,000,000
Debt Instrument, Periodic Payment, Principal											90,000
Debt Instrument Periodic Principal Payments Due in Next Four Quarters											110,000		440,000
Debt Instrument Periodic Principal Payments Due Thereafter											$ 130,000		$ 520,000
Debt Instrument, Interest Rate, Stated Percentage											12.00%	12.00%	12.00%
Class of Warrant or Right, Number of Securities Called by Warrants or Rights												2,329,400	4,960,740										434,809
Warrants Not Settleable in Cash, Fair Value Disclosure											$ 250,000	$ 4,389,000	$ 3,770,000
Debt Instrument, Date of First Required Payment												Mar. 01, 2017	Nov. 13, 2017			Jan. 01, 2018	Jan. 13, 2018
Debt Instrument, Maturity Date											Nov. 13, 2019		Nov. 13, 2019
Golisano Holdings LLC [Member] | Warrants Issued on January 22, 2015[Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights											869,618
Golisano Holdings LLC [Member] | Unsecured Promissory Note [Member]
Debt Instrument, Face Amount			$ 3,267,000	$ 2,500,000					$ 7,000,000	$ 2,500,000										$ 2,500,000
Debt Instrument, Periodic Payment, Principal									$ 292,000	$ 104,000
Debt Instrument, Interest Rate, Stated Percentage			8.50%	8.50%					8.50%	8.50%										8.50%
Debt Instrument, Date of First Required Payment									Apr. 21, 2017	Feb. 28, 2017						Jan. 21, 2018	Jan. 28, 2018
Debt Instrument, Maturity Date			Dec. 30, 2019	Dec. 30, 2019					Mar. 21, 2019	Jan. 28, 2019
Golisano Holdings LLC [Member] | Unsecured Delayed Draw Promissory Note [Member]
Proceeds from Related Party Debt																				$ 4,770,000
Debt Instrument, Face Amount							$ 4,770,000
Debt Instrument, Interest Rate, Stated Percentage							8.50%
Debt Instrument, Maturity Date							Jan. 28, 2019
JL [Member]
Debt Instrument, Date of First Required Payment												Mar. 08, 2017
Debt Instrument, Maturity Date												Feb. 13, 2020
JL [Member] | Notes Payable Maturing in March 2019 [Member]
Notes Payable to Bank, Noncurrent								$ 500,000
Debt Instrument, Periodic Payment, Principal								$ 21,000
Debt Instrument, Interest Rate, Stated Percentage								8.50%
Debt Instrument, Date of First Required Payment								Apr. 21, 2017
Debt Instrument, Maturity Date								Mar. 21, 2019
Huntington Holdings, LLC [Member]
Common Stock Subscription Price Per Share						$ 2.29
Stock Price Guarantee Payment						$ 3,210,000
Common Stock, Shares Subscribed but Unissued, Return														778,385		778,385
Common Stock, Shares Subscribed but Unissued														749,999		749,999
Common Stock, Shares Subscribed but Unissued, Option to Purchase Shares Price														$ 140,000		$ 140,000
Common Stock, Shares Subscribed but Unissued, Option to Purchase Shares														764,192		764,192
Lessee, Operating Lease, Term of Contract																4 years
Huntington Holdings, LLC [Member] | Unsecured Promissory Note [Member]
Debt Instrument, Face Amount		$ 3,200,000																	$ 3,200,000
Interest Paid						$ 50													$ 50,000
Debt Instrument, Maturity Date		Jun. 02, 2019
Huntington Holdings, LLC [Member] | Unsecured Promissory Note [Member] | Scenario, Forecast [Member]
Debt Instrument, Interest Rate, Stated Percentage																					8.50%
Debt Instrument, Interest Rate, Increase (Decrease)	10.00%
Penta Mezzanine SBIC Fund I, L.P. [Member]
Proceeds from Notes Payable													$ 8,000,000
Class of Warrant or Right, Number of Securities Called by Warrants or Rights											4,960,740											4,960,740
Debt Instrument, Date of First Required Payment											Nov. 13, 2017					Jan. 13, 2018
Penta Mezzanine SBIC Fund I, L.P. [Member] | Warrants Issued on January 22, 2015[Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights												869,618

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Note 6 - Debt - Summary of Debt (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Capital lease obligations	$ 1,737	$ 2,732
Long-term debt, net	50,716	44,096
Other debt	5,374	5,488
Total debt	71,221	62,619
Less current portion	(17,609)	(11,631)
Long-term debt	53,612	50,988
January, 2015 Note Payable to JL-BBNC Mezz Utah, LLC [Member]
Other debt		2,256
April 2016 Note Payable To JL-Utah Sub, LLC [Member]
Other debt	437	500
Senior Credit Facility With Midcap [Member]
Long-term debt, net	15,131	13,035
Related Party July 2014 Note Payable to Little Harbor, LLC, [Member]
Long-term debt, net	3,259	3,061
Related Party Debt July 2016 Note Payable to Little Harbor LLC [Member]
Long-term debt, net	4,770	4,770
Related-Party Debt January 2016 Note Payable to Great Harbor Hospital, LLC [Member]
Long-term debt, net	2,500	2,500
Related-Party Debt March 2016 Note Payable to Great Harbor Capital, LLC [Member]
Long-term debt, net	7,000	7,000
Related-Party Debt December 2016 Note Payable to Great Harbor Hospital, LLC [Member]
Long-term debt, net	2,500	2,500
Related-Party Debt January 2016 Note payable to Golisano Holdings LLC [Member]
Long-term debt, net	2,500	2,500
Related-Party Debt March 2016 note payable to Golisano Holdings LLC [Member]
Long-term debt, net	7,000	7,000
Related Part Debt July 2016 Note Payable To Golisano Holdings LLC [Member]
Long-term debt, net	4,770	4,770
Related Part Debt December 2016 Note Payable To Golisano Holdings LLC [Member]
Long-term debt, net	2,500	2,500
Related-party Debt March 2017 Note payable to Golisano Holdings LLC [Member]
Long-term debt, net	3,267
Related Party Debt November 2014 Note Payable to Golisano Holdings LLC (Formerly Penta Mezzanine SBIC Fund I, L.P.) [Member]
Long-term debt, net	6,102	5,696
Related-Party Debt January 2015 Note Payable to Golisano Holdings LLC (Formerly Payable to JL-BBNC Mezz Utah, LLC) [Member]
Long-term debt, net	2,714
February 2015 Note Payable to Golisano Holdings LLC (Formerly Payable to Penta Mezzanine SBIC Fund I, L.P.) [Member]
Long-term debt, net	1,834	1,799
Unsecured Promissory Note with Huntington Holdings, LLC [Member]
Long-term debt, net	$ 3,200

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Note 6 - Debt - Summary of Debt (Details) (Parentheticals) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Senior Credit Facility With Midcap [Member]
Debt instrument, unamortized discount	$ 146	$ 293
Related Party July 2014 Note Payable to Little Harbor, LLC, [Member]
Debt instrument, unamortized discount	7	206
Related Party Debt November 2014 Note Payable to Golisano Holdings LLC (Formerly Penta Mezzanine SBIC Fund I, L.P.) [Member]
Debt instrument, unamortized discount	1,898	2,304
Related-Party Debt January 2015 Note Payable to Golisano Holdings LLC (Formerly Payable to JL-BBNC Mezz Utah, LLC) [Member]
Debt instrument, unamortized discount	2,286	2,744
February 2015 Note Payable to Golisano Holdings LLC (Formerly Payable to Penta Mezzanine SBIC Fund I, L.P.) [Member]
Debt instrument, unamortized discount	$ 166	$ 201

XML

Note 7 - Warrants and Registration Rights Agreements (Details Textual) - USD ($)								1 Months Ended	3 Months Ended	6 Months Ended		12 Months Ended
	Dec. 31, 2016	Jul. 31, 2016	Apr. 05, 2016	Mar. 21, 2016	Feb. 06, 2016	Jan. 28, 2016	Nov. 13, 2014	Apr. 30, 2015	Mar. 31, 2017	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2016	Oct. 31, 2015	Jun. 30, 2015	Feb. 06, 2015	Feb. 04, 2015	Jan. 22, 2015
Class of Warrant or Right, Number of Securities Called by Warrants or Rights	15,855,017									15,855,017		15,855,017
Class of Warrant or Right, Exercise Price of Warrants or Rights	$ 0.18									$ 0.18		$ 0.18
Class of Warrant or Right, Exercised During Period, Number of Securities Called by Warrants or Rights
Proceeds from Warrant Exercises											$ 1,000
Essex Capital Corporation [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights														1,428,571
Class of Warrant or Right, Exercise Price of Warrants or Rights														$ 0.77
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right									350,649
Golisano Holdings LLC [Member]
Number of Warrants Expired					509,141
Class of Warrant or Right, Exercise Price of Warrants or Rights					$ 1								$ 0.001
Number of Warrants Cancelled												6,857,143
Common Stock, Capital Shares Reserved for Future Issuance									4,756,505				12,697,977
January 2016 Golisano Warrant [Member]
Class of Warrant or Right, Exercise Price of Warrants or Rights						$ 0.01
Common Stock, Capital Shares Reserved for Future Issuance						1,136,363
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right						1,136,363
Class of Warrant or Right, Expiration Date						Feb. 28, 2022
March 2016 Golisano Warrant [Member]
Class of Warrant or Right, Exercise Price of Warrants or Rights				$ 0.01
Common Stock, Capital Shares Reserved for Future Issuance				3,181,816
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right				3,181,816
Class of Warrant or Right, Expiration Date				Mar. 21, 2022
Little Harbor July 2016 Warrant [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights		2,168,178
Class of Warrant or Right, Exercise Price of Warrants or Rights		$ 0.01
Common Stock, Capital Shares Reserved for Future Issuance		2,168,178
Class of Warrant or Right, Expiration Date		Jul. 21, 2022
Golisano LLC December 2016 Warrant [Member]
Class of Warrant or Right, Exercise Price of Warrants or Rights	$ 0.01											$ 0.01
Common Stock, Capital Shares Reserved for Future Issuance	1,136,363											1,136,363
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right	1,136,363											1,136,363
Class of Warrant or Right, Expiration Date	Dec. 30, 2022
Golisano LLC March 2017 Warrant [Member]
Class of Warrant or Right, Exercise Price of Warrants or Rights									$ 0.01
Common Stock, Capital Shares Reserved for Future Issuance									1,484,847
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right									1,484,847
Class of Warrant or Right, Expiration Date									Mar. 14, 2023
December 2016 GH Warrant [Member]
Class of Warrant or Right, Exercise Price of Warrants or Rights	$ 0.01											$ 0.01
Common Stock, Capital Shares Reserved for Future Issuance	1,136,363											1,136,363
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right	1,136,363											1,136,363
Class of Warrant or Right, Expiration Date	Dec. 30, 2022
JL Warrants [Member]
Class of Warrant or Right, Exercise Price of Warrants or Rights			$ 0.01
Common Stock, Capital Shares Reserved for Future Issuance			227,273
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right			227,273
Class of Warrant or Right, Expiration Date			Mar. 21, 2022
Golisano Warrants [Member]
Class of Warrant or Right, Exercise Price of Warrants or Rights		$ 0.01
Common Stock, Capital Shares Reserved for Future Issuance		2,168,178
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right		2,168,178
Class of Warrant or Right, Expiration Date		Jul. 21, 2022
Midcap Funding X Trust [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights																	500,000
Class of Warrant or Right, Exercise Price of Warrants or Rights																	$ 0.76
Penta Mezzanine SBIC Fund I, L.P. [Member]
Proceeds from Notes Payable							$ 8,000,000
Class of Warrant or Right, Minimum Repurchase Price, Under Agreement									$ 3,750,000
Class of Warrant or Right, Number of Securities Called by Warrants or Rights									4,960,740						4,960,740
Class of Warrant or Right, Exercise Price of Warrants or Rights															$ 0.01
Penta Mezzanine SBIC Fund I, L.P. [Member] | Warrants Issued on June 30, 2015 [Member]
Class of Warrant or Right, Cancelled, Number of Securities Called by Warrants or Rights														807,018
Class of Warrant or Right, Exercise Price of Warrants or Rights														$ 0.01
Penta Mezzanine SBIC Fund I, L.P. [Member] | Warrants Issued on January 22, 2015[Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights																	869,618
Class of Warrant or Right, Exercise Price of Warrants or Rights																	$ 1
JL-BBNC Mezz Utah, LLC [Member]
Class of Warrant or Right, Exercised During Period, Number of Securities Called by Warrants or Rights												1,187,995
Proceeds from Warrant Exercises												$ 1
JL-BBNC Mezz Utah, LLC [Member] | Warrants Issued on June 30, 2015 [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights														403,509
Class of Warrant or Right, Exercise Price of Warrants or Rights														$ 0.01
JL-BBNC Mezz Utah, LLC [Member] | Warrants Issued on January 22, 2015[Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights																	2,329,400
Class of Warrant or Right, Exercise Price of Warrants or Rights																	$ 0.01
JL-BBNC Mezz Utah, LLC [Member] | Warrants Issued on February 4, 2015 [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights																434,809
Class of Warrant or Right, Exercise Price of Warrants or Rights																$ 1
JL Properties, Inc. [Member]
Deposits Assets								$ 1,000,000
JL Properties, Inc. [Member] | First Warrant [Member]
Adjustments on Warrants Trigger Event, Minimum Adjusted EBITDA								$ 19,250
Class of Warrant or Right, Number of Securities Called by Warrants or Rights								465,880
Class of Warrant or Right, Exercise Price of Warrants or Rights								$ 0.01
JL Properties, Inc. [Member] | Second Warrant [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights								86,962
Class of Warrant or Right, Exercise Price of Warrants or Rights								$ 1

XML

Note 7 - Warrants and Registration Rights Agreements - Summary of the Warrants Issued and Changes (Details)	6 Months Ended
	Jun. 30, 2017 $ / shares shares
Outstanding, beginning balance (in shares) | shares	15,855,017
Outstanding, weighted average exercise price (in dollars per share) | $ / shares	$ 0.18
Granted (in shares) | shares
Granted, , weighted average exercise price (in dollars per share) | $ / shares
Canceled / Expired (in shares) | shares
Canceled / expired, , weighted average exercise price (in dollars per share) | $ / shares
Exercised (in shares) | shares
Outstanding, weighted average exercise price (in dollars per share) | $ / shares	$ 0.18
Exercised, weighted average exercise price (in dollars per share) | $ / shares
Outstanding, ending balance (in shares) | shares	15,855,017

XML

Note 8 - Derivative Liabilities (Details Textual) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Derivative Liability	$ 7,750	$ 6,455

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Note 8 - Derivative Liabilities - Activity in Derivative Liabilities Account (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Derivative liabilities			$ 6,455
Loss on change in fair value of derivative liabilities	$ 297	$ (1,072)	1,295	$ (14,063)
Derivative liabilities	$ 7,750		$ 7,750

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Note 9 - Stockholders' Equity (Deficit) (Details Textual) - USD ($)				3 Months Ended		6 Months Ended		10 Months Ended	12 Months Ended
	Jun. 02, 2019	Jan. 05, 2017	Aug. 06, 2016	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Jun. 02, 2017	Dec. 31, 2016	Aug. 15, 2017
Preferred Stock, Shares Authorized				500,000,000		500,000,000			500,000,000
Preferred Stock, Par or Stated Value Per Share				$ 0.001		$ 0.001			$ 0.001
Preferred Stock, Shares Issued				0		0			0
Stock Issued During Period, Shares, Restricted Stock Award, Gross						0
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant				5,635,626		5,635,626
Stock Issued During Period Shares Warrants Exercised		642,366
Stock Issued During Period Value Warrants Exercised		$ 1
Loss on Stock Purchase Guarantees							$ 3,210,000		$ 3,210,000
Interest Paid						$ 3,198,000	$ 2,094,000
Common Stock, Shares Subscribed but Unissued				1,528,384		1,528,384
Common Stock, Share Subscribed but Unissued, Subscriptions Receivable				$ 30,000		$ 30,000			$ 30,000
Subscription Receivable Annual Interest Rate				5.00%		5.00%
Huntington Holdings, LLC [Member]
Stock Price Guarantee Payment			$ 3,210,000
Common Stock, Shares Subscribed but Unissued, Return				778,385		778,385
Common Stock, Shares Subscribed but Unissued				749,999		749,999
Common Stock Subscription Price Per Share			$ 2.29
Common Stock, Shares Subscribed but Unissued, Option to Purchase Shares Price				$ 140,000		$ 140,000
Common Stock, Shares Subscribed but Unissued, Option to Purchase Shares				764,192		764,192
Lessee, Operating Lease, Term of Contract						4 years
Huntington Holdings, LLC [Member] | Unsecured Promissory Note [Member]
Debt Instrument, Face Amount								$ 3,200,000
Interest Paid			$ 50					$ 50,000
Huntington Holdings, LLC [Member] | Unsecured Promissory Note [Member] | Scenario, Forecast [Member]
Debt Instrument, Interest Rate, Stated Percentage										8.50%
Debt Instrument, Interest Rate, Increase (Decrease)	10.00%
TCC Plan [Member]
Common Stock, Capital Shares Reserved for Future Issuance				20,000,000		20,000,000
TCC Plan [Member] | Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage						25.00%