**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**FORM 10-K/A**

**Amendment No. 2**

[**X]**

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

 

For the fiscal year ended December 31, 2009

OR

**[  ]**

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

For transition period ___ to ____

Commission file number: 000-26973

**FOREVERGREEN WORLDWIDE CORPORATION**

(Exact name of registrant as specified in its charter)

| Nevada                                                                                    

(State or other jurisdiction of incorporation or organization)

87-0621709                                        

(I.R.S. Employer Identification No.)

972 North 1430 West, Orem, Utah           

(Address of principal executive offices)

84057         

(Zip Code)

Registrant’s telephone number:  (801) 655-5500

Securities registered under Section 12(b) of the Exchange Act:  None

Securities registered under Section 12(g) of the Exchange Act:  Common Stock

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes [   ]   No [X]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act.  Yes [   ]   No [X]

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.  

Yes [X]   No [  ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   Yes  [  ]   No [  ]

1

Indicate by check mark if disclosure of delinquent filers pursuant to item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  [X]

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

Large accelerated filer [  ]

Non-accelerated filer [  ]

Accelerated filed [  ]

Smaller reporting company [X]

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

The aggregate market value of the registrant’s shares of voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold as of the last business day of its most recently completed second fiscal quarter (June 30, 2009) was  approximately $1,176,286.

The number of shares outstanding of the registrant’s common stock as of June 3, 2011 was 14,892,141.

Documents incorporated by reference:  None

**TABLE OF CONTENTS**

PART II

Item 7.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

3

Item 8.  Financial Statements and Supplementary Data

7

PART IV

Item 15.  Exhibits, Financial Statement Schedules

31

Signatures

32

**EXPLANATORY NOTE**

Pursuant to a limited review of our reports by the Securities and Exchange Commission (“SEC”), the SEC has requested that we amend this annual report for the year ended December 31, 2009 to recognize an impairment of goodwill for the years ended December 31, 2008 and 2009 and to include audited financial statements for all periods presented.  Other than the changes resulting from that impairment, this report does not include subsequent events.

2

*In this annual report references to “ForeverGreen,” “we,” “us,” and “our” refer to ForeverGreen Worldwide Corp. and its subsidiaries.*

**FORWARD LOOKING STATEMENTS**

The Securities and Exchange Commission (“SEC”) encourages companies to disclose forward-looking information so that investors can better understand future prospects and make informed investment decisions.  This report contains these types of statements.  Words such as “may,” “expect,” “believe,” “anticipate,” “estimate,” “project,” or “continue” or comparable terminology used in connection with any discussion of future operating results or financial performance identify forward-looking statements.  You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this report.  All forward-looking statements reflect our present expectation of future events and are subject to a number of important factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. 

**PART II**

**ITEM 7.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**

***Executive Overview***

ForeverGreen Worldwide is a holding company which operates through its wholly-owned subsidiary, ForeverGreen International, LLC.  We intend to continue our emphasis as a total lifestyle company focused on bringing our domestic and international Members and customers the exclusive FrequenSeaTM product, any new products and ForeverGreen Compensation Plan earnings and commissions.   In addition, our focus is to assist prospective Members in creating a home based business with home business training, mentorship and accountability to promote our residual income stream opportunities.  We also intend to provide organic chocolates, weight management products, convenient whole foods for meals and snacks, personal care products and essential oils to our domestic Members and customers.  As our international markets mature, additional ForeverGreen products may also be introduced in each international market.  We will seek relations with key vendors to continue developing cutting edge products that are exclusive to our Members.

Our major challenge for the next twelve months will be to respond to the economic conditions and properly manage our systems and logistics centers around the world to support the demand for our products and the business opportunity.  Included in this challenge is the need to continue to create a customer service and Member satisfaction level at the highest quality.  Overcoming economic down turns will require skilled personnel, and manufacturing and shipping facilities.  Management intends to modify our operating activities, especially production and order fulfillment, for the current economic environment as well as prepare the Company for the upturn of demand as people continue to look for other income opportunities and choose ForeverGreen as the company they can align with for their future.

We are expanding our markets and exclusive products and we anticipate the need to expand our international logistics centers.  The rewards include increased sales and diversified market incomes.  International expansion is very expensive and key Members are required to experience rapid growth to be profitable in a foreign country. 

***Liquidity and Capital Resources***

At December 31, 2009 we had cash of $256,200, with a working capital deficit of $3,038,535.  We recorded revenues of $12,090,051 for 2009, but recorded a net loss of $3,391,669 of which $2,052,621 was a non-cash write off of goodwill (See “Critical Accounting Estimates,” below).  During 2009 we financed our operations with revenues, proceeds from bank loans and loans from related parties totaling $685,000.  Based on these factors, our 

3

independent accounting firm has expressed an opinion that there is substantial doubt as to our ability to continue as a going concern.  However, management has reduced our operating costs by reducing overhead and staff, and we have made salary adjustments.  Management is also negotiating with our key vendors to reduce costs.  During 2009 we have introduced new logistic, sales and distribution software that will reduce computer costs going forward.   New products have been and will continue to be introduced to bolster Member recruiting and product sales.  In addition, management intends to improve our marketing plan to enhance overall profitability.  Our management will continue to scrutinize expenses related to our operating activities and order fulfillment to determine appropriate actions to take to reduce these costs; however, we cannot guarantee that we will be able to return to profitability in the short term.  

Our total assets decreased to $9,386,722 at December 31, 2009 compared to $12,733,797 at December 31, 2008. The decrease is primarily due to an impairment of goodwill of $2,052,621 (See “Critical Accounting Estimates,” below).  

Management anticipates that any future additional capital needed for cash shortfalls will be provided by debt financing.  We may pay these loans with cash, if available, or convert these loans into common stock.  We may also issue private placements of stock to raise additional funding.  Any private placement likely will rely upon exemptions from registration provided by federal and state securities laws.  The purchasers and manner of issuance will be determined according to our financial needs and the available exemptions.  We also note that if we issue more shares of our common stock then our shareholders may experience dilution in the value per share of their common stock.  

***Commitments and Contingent Liabilities***

In August of 2009 we combined our warehouse and production operations into one building. This has reduced our monthly lease payments by $6,320, leaving aggregate monthly payments of $20,824 for our office and production warehouse. We have lease commitments for our production warehouse of $356,121 through 2112.  We are currently on a month-to-month rental for our office space.

Our total liabilities at December 31, 2009 were $4,193,409 compared to $4,096,024 at December 31, 2008.  The changes were primarily due to accounts payable decreasing by $700,255 which is a direct reflection of our decrease in inventory as stated earlier and current notes payable increased by $551,694 as a result of loans provided by related parties totaling $685,000, of which $157,500 was repaid in 2009 along with an addition of accrued interest totaling $24,234.  ForeverGreen International borrowed these funds from these related parties during 2009 to support the introduction of new product launches, develop and bring in house our own logistic, sales and distributor software and systems, and operating expenses to manage through the worldwide economic downturn.

Accounts payable also includes a monetary settlement agreed to in a legal action which will require the Company to make payments to a third party.  We are obligated to pay $40,000 as of June 2011 and will make eight $5,000 monthly payments to resolve this litigation. 

***Results of Operations***

The following chart summarizes the consolidated financial statements of ForeverGreen Worldwide for the years ended December 31, 2009 and 2008.  The consolidated balance sheets and statements of operations include the books of ForeverGreen Worldwide and its wholly-owned subsidiary ForeverGreen International, LLC.  The following chart is a summary of our financial statements for those periods and should be read in conjunction with the financial statements, and notes thereto, included with this report at Part II, Item 8, below.

4

 

Year ended December 31

 

2009

2008

SUMMARY OF BALANCE SHEET

 

 

Cash and cash equivalents

$

256,200 

$

142,704 

Total current assets

1,131,000 

2,095,907 

Total assets

9,386,722 

12,733,797 

Total current liabilities

4,169,535 

4,069,845 

Long-term debt

23,874 

26,179 

Total liabilities

4,193,409 

4,096,024 

Accumulated deficit

(25,469,706)

(22,078,037)

Total stockholders’ equity

$

5,193,313 

$

8,637,773 

 

 

 

SUMMARY OF OPERATING RESULTS

 

 

Revenues, net

$

12,090,051 

$

21,749,773 

Cost of sales

8,586,553 

16,406,581 

Gross profit

3,503,498 

5,343,192 

Total operating expenses

6,795,786 

10,116,499 

Net operating loss

(3,292,287)

(4,773,307)

Total other income (expense)

(99,381)

(24,201)

Income tax provision (benefit)

– 

-- 

Net earnings (loss)

$

(3,391,669)

$

(4,797,508)

Net earnings (loss) per share (basic)

$

(0.24)

$

(0.34)

Our source of revenue is from the sale of various foods, other natural products, distributor sign ups and kits and freight and handling to delivery products to the distributor and customer.  We recognize revenue upon shipment of a sales order.  Sales are net of returns, which have historically been less than 0.2% of sales; however in 2009 returns increase significantly to approximately 2.3%.  Sales for 2009 decreased in comparison to 2008.  This decrease in sales is attributable to the worldwide economic downturn.  During 2008 over 90% of ForeverGreen’s revenues were based in the United States which has been particularly hurt by the economic downturn.  

Cost of sales consists primarily of sales commissions paid to our Members, the cost of procuring and packaging products, and the cost of shipping product to Members, plus credit card sales processing fees.  Cost of sales was approximately 71.0% of revenues for 2009 compared to 75.4% of revenues for 2008.  Sales commissions are paid to several levels of Members on each product sold.  Sales commissions are paid to Members on a monthly basis 

5

based upon personal and group sales volume.  Additional bonuses are paid weekly to Members.  The overall payout average for sales commissions decreased by approximately 5% for 2009 compared to 2008.  The decrease is attributed to two key factors: special promotions were introduced in the fourth quarter of 2008 to manage the economic downturn and move additional inventory; plus additional payments were made in a transitional phase in the first quarter of 2008 as the plan was adjusted and enhanced.  Freight cost decreased approximately 0.6% as price adjustments were made in 2009 to correct for the fuel and transportation cost increased by our carriers that occurred in 2008.

Total operating expenses decreased for 2009 compared to 2008 by $3,320,713 primarily as the result of recognizing impairments of goodwill of $3,725,006 in 2008 and $2,052,621 in 2009.  General and administrative expenses decreased by $704,788 as management reduced its marketing, travel, and administrative expenses like supplies, insurance, and telephone costs

Salaries and wages decreased in 2009 compared to 2008 by $893,187 as a result of the executives and higher management taking an average salary reduction of more than 15% in 2009. Also, as revenues continued to be slower in 2009 compared to 2008, necessary layoffs were made in 2009.

  

Professional fees decreased for 2009 compared to 2008 by $94,508 due to the introduction of our own in-house logistic, sales and distributor software and systems that was introduced in August of 2009. Professional fees include payments to third-party operators in foreign offices, legal and accounting fees, programming and maintenance of our distributor and sales software, and other services

Depreciation and amortization increased in 2009 compared to 2008 by $44,154 due to the addition of the assets of ForeverGreen and their related depreciation associated with its new in-house system.

Total other expense for the 2009 year was related to interest expense on loans.

As a result of decreased revenues and a worldwide economic downturn in 2009, combined with a recognition of impairment of goodwill, we recorded a net loss for 2009 of $3,391,669 and a net loss per share of $0.24, as compared to a net loss of $4,797,508 in 2008 and $0.34 net loss per share.

***Off-balance Sheet Arrangements***

None.

***Critical Accounting Estimates***

Intangible Assets.  We account for our investments in our subsidiaries using the purchase method of accounting.  The excess of the consideration paid for subsidiaries over the fair value of acquired tangible assets less the fair value of acquired liabilities is assigned to intangible assets.  We rely on an independent third party valuation to ascertain the amount to allocate to identifiable intangible assets, and the useful lives of those assets.  We amortize identifiable intangible assets over their useful life unless that life is determined to be indefinite.  The useful life of an intangible asset that is being amortized is evaluated each reporting period as to whether events and circumstances warrant a revision to the remaining period of amortization.  

We calculated ForeverGreen International’s customer base intangible using a percentage of the gross margin of ForeverGreen International.  We will amortize the customer base over a period of ten years.  The amortization for 2009 was $85,590 compared to $85,590 for 2008.

We recorded impairment of long-lived assets to be held and used or to be disposed of when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the carrying amount. The company did an annual analysis for the period ended December 31, 2009 and determined no 

6

adjustment to long-lived assets was needed.

Goodwill - Goodwill is assessed annually for impairment by comparing the fair values of the Company to its carrying amount, including goodwill.  In testing for a potential impairment of goodwill, the estimated fair value of the Company is compared with book value, including goodwill.  If the estimated fair value exceeds book value, goodwill is considered not to be impaired and no additional steps are necessary.  If, however, the fair value of the Company is less than book value, then the carrying amount of the goodwill is compared with its implied fair value.  

The estimate of implied fair value of goodwill may require independent valuations of certain internally generated and unrecognized intangible assets such as customer lists and proprietary formulas. If the carrying amount of our goodwill exceeds the implied fair value of that goodwill, an impairment loss would be recognized in an amount equal to the excess.  In the event that an impairment indicator arises prior to our annual impairment test of goodwill, we will provide a full test relative to the indicator in the period that the indicator is present.  For the year ended December 2009 we recognized a $2,052,621 impairment of goodwill compared to $3,725,006 for the year ended December 31, 2008.

**ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA**

**FOREVERGREEN WORLDWIDE CORPORATION**

CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2009 and 2008

INDEX

Report of Independent Registered Public Accounting Firm 

8

Consolidated Balance Sheets

9

Consolidated Statements of Operations and Comprehensive Income

10

Consolidated Statements of Stockholders’ Equity

11

Consolidated Statements of Cash Flows

12-13

Notes to the Consolidated Financial Statements

14-30

7

**MORRILL & ASSOCIATES, LLC**

CERTIFIED PUBLIC ACCOUNTANTS

563 WEST 500 SOUTH, SUITE 425

BOUNTIFUL, UTAH 84010

801-292-8756 PHONE; 801-292-3558 FAX

**_________________________________________________________________________________________________**

**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

To the Board of Directors and Shareholders

ForeverGreen Worldwide Corp

Orem, Utah

We have audited the accompanying consolidated balance sheets of ForeverGreen Worldwide Corporation as of December 31, 2009 and 2008, and the related consolidated statements of operations and comprehensive income, stockholders' equity and cash flows for the years ended December 31, 2009 and 2008.  These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatements. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by management, as well as evaluating the overall financial statements presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of ForeverGreen Worldwide Corporation as of December 31, 2009 and 2008, and the consolidated results of its operations and its cash flows for the years ended December 31, 2009 and 2008 in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming the Company will continue as a going concern.  As discussed in Note 12 to the financial statements, the Company has a working capital deficiency, and has had negative cash flows from operations and recurring operating losses substantially since inception which raises substantial doubt about its ability to continue as a going concern.  Management’s plans in those matters are also described in Note 12.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

As discussed in Note 14, the accompanying consolidated financial statements have been restated.

*/s/ Morrill & Associates*

Morrill & Associates

Bountiful, Utah 84010

June 3, 2011

8

**ForeverGreen Worldwide Corporation**

Consolidated Balance Sheets

 

 

 

 

 

 

December 31,

 

December 31,

 

 

 

2009

 

2008

**ASSETS**

 

 

(Restated)

 

(Restated)

CURRENT ASSETS

 

 

 

 

 

 

   Cash and cash equivalents

 

 

$

256,200 

 

$

142,704 

 

   Accounts receivable, net

 

 

13,448 

 

- 

 

   Prepaid expenses and other

 

 

60,458 

 

85,962 

 

   Inventory

 

 

800,894 

 

1,867,241 

 

 

      Total Current Assets

 

 

1,131,000 

 

2,095,907 

 

 

 

 

 

 

 

 

PROPERTY AND EQUIPMENT, net

 

 

481,426 

 

719,058 

 

 

 

 

 

 

 

 

OTHER ASSETS

 

 

 

 

 

 

   Deposits and other assets

 

 

98,898 

 

99,486 

 

   Trademarks, net of amortization

 

 

54,814 

 

60,551 

 

   Customer base - net of amortization

 

599,130 

 

684,720 

 

   Goodwill

 

 

7,021,454 

 

9,074,075 

 

 

      Total Other Assets

 

 

7,774,296 

 

9,918,832 

 

 

TOTAL ASSETS

 

 

$

9,386,722 

 

$

12,733,797 

 

 

 

 

 

 

 

 

 

 

**LIABILITIES AND STOCKHOLDERS' EQUITY**

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

   Bank overdraft

 

 

$

189,822 

 

$

238,475 

 

   Accounts payable

 

 

1,158,896 

 

1,859,151 

 

   Accrued expenses

 

 

1,423,467 

 

1,260,605 

 

   Due to related parties

 

 

132,209 

 

- 

 

   Banking line of credit

 

 

100,368 

 

100,000 

 

   Current portion of long-term debt 

 

 

3,079 

 

1,614 

 

   Notes payable, related parties

 

 

1,161,694 

 

610,000 

 

 

      Total Current Liabilities

 

 

4,169,535 

 

4,069,845 

 

 

 

 

 

 

 

 

LONG-TERM DEBT

 

 

 

 

 

 

   Notes payable

 

 

23,874 

 

26,179 

 

 

      Total Long-Term Debt

 

 

23,874 

 

26,179 

 

 

 

 

 

 

 

 

 

 

    Total Liabilities

 

 

4,193,409 

 

4,096,024 

 

COMMITMENTS

 

 

 

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS' EQUITY

 

 

 

 

 

 

   Preferred stock;  no stated par value; authorized 10,000,000

 

 

 

 

 

 

     shares; no shares issued or outstanding

 

 

--

 

--

 

   Common stock, par value $0.001 per share; authorized 

 

 

 

 

 

 

     100,000,000 shares; 14,342,141 and 13,992,141

 

 

 

 

 

 

     shares respectively issued and outstanding

 

14,342 

 

13,992 

 

   Additional paid-in capital

 

 

30,806,346 

 

30,742,153 

 

   Prepaid equity expense

 

 

(45,807)

 

(19,245)

 

   Other comprehensive  loss

 

 

(111,862)

 

(21,090)

 

   Accumulated deficit

 

 

(25,469,706)

 

(22,078,037)

 

 

      Total Stockholders' Equity

 

 

5,193,313 

 

8,637,773 

 

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

 

$

9,386,722 

 

$

12,733,797 

 

 

The accompanying notes are an integral part of these financial statements

9

**ForeverGreen Worldwide Corporation**

Consolidated Statements of Operations and Comprehensive Loss

 

 

 

 

 

For the Year Ended 

 

 

 

 

 December 31, 

 

 

 

 

2009

 

2008

 

 

 

 

(Restated)

 

(Restated)

 

 

 

 

 

 

 

REVENUES, net

 

$

12,090,051

 

$

21,749,773 

COST OF SALES, net

 

8,586,553

 

16,406,581 

 

 

 

 

 

 

 

GROSS PROFIT

 

3,503,498

 

5,343,192 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

   Salaries and wages

 

2,755,117 

 

3,648,304 

 

   Professional fees

 

544,182 

 

638,690 

 

   General and administrative

 

1,106,114 

 

1,810,902 

 

   Depreciation and amortization

 

337,751 

 

293,597 

 

   Impairment to goodwill

 

2,052,621 

 

3,725,006 

 

 

 

 

 

 

 

 

 

      Total Operating Expenses

 

6,795,785 

 

10,116,499 

 

 

 

 

 

 

 

NET OPERATING LOSS

 

(3,292,287)

 

(4,773,307)

 

 

 

 

 

 

 

OTHER INCOME (EXPENSE)

 

 

 

 

 

   Gain on sale of assets

 

10,492 

 

5,835 

 

   Other income and (expense), net

 

46 

 

-- 

 

   Interest income (expense), net

 

(109,920)

 

(30,036)

 

 

 

 

 

 

 

 

 

      Total Other Income (Expense)

 

(99,382)

 

(24,201)

 

 

 

 

 

 

 

Loss from continuing operations before income tax provision

 

(3,391,669)

 

(4,797,508)

 

 

 

 

 

Income Tax Provision (Benefit)

 

- 

 

- 

 

 

 

 

 

 

 

NET LOSS

 

$

(3,391,669)

 

$

(4,797,508)

 

 

 

 

 

 

 

BASIC AND DILUTED LOSS

 

 

 

 

 PER COMMON SHARE

 

$

(0.24)

 

$

(0.34)

 

 

 

 

 

 

 

WEIGHTED AVERAGE NUMBER OF

 

 

 

 

 COMMON SHARES OUTSTANDING

 

14,040,468 

 

13,924,006 

 

 

 

 

 

 

 

COMPREHENSIVE LOSS

 

 

 

 

 

   A Summary of the components of other comprehensive (loss) 

   for the fiscal years ended December 31, 2009 and 2008 are as follows:

 

 

 

 

 

 

 

 

 

 

 

Net Loss

 

(3,391,669)

 

(4,797,508)

 

 

 

 

 

 

 

 

Other Comprehensive Income Loss

 

(90,772)

 

(31,398)

 

 

 

 

 

 

 

 

 

   Comprehensive Loss

 

(3,482,441)

 

(4,828,906)

 

 

The accompanying notes are an integral part of these financial statements

10

**ForeverGreen Worldwide Corporation**

Consolidated Statements of Stockholders' Equity

For the years ended December 31, 2008 and 2009 (Restated)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Additional 

 

 

 

 Other 

 

 

 

 Preferred Stock 

 

 Common Stock 

 

 Paid-in 

 

Accumulated

 

Comprehensive 

 

 Prepaid 

 

 Shares 

 

 Amount 

 

 Shares 

 

 Amount 

 

 Capital 

 

Deficit

 

 Income 

 

 Expenses 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2007

--

 

$

--

 

13,904,014

 

$

13,904

 

$

30,668,761

 

$

(17,280,529)

 

$

10,308 

 

$

-- 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares issued for services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  at $1.42 per share

--

 

--

 

25,127

 

25

 

35,655

 

-- 

 

-- 

 

(15,124)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares issued for services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  at $0.60 per share

--

 

--

 

63,000

 

63

 

37,737

 

-- 

 

-- 

 

(31,500)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of prepaid expenses

--

 

--

 

--

 

--

 

--

 

-- 

 

-- 

 

27,379 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation

--

 

--

 

--

 

--

 

--

 

-- 

 

(31,398)

 

-- 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss for the period ended

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  December 31, 2008

--

 

--

 

--

 

--

 

--

 

(4,797,508)

 

-- 

 

-- 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Balance, December 31, 2008 

--

 

--

 

13,992,141

 

13,992

 

30,742,153

 

(22,078,037)

 

(21,090)

 

(19,245)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares issued for services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

at $.20 per share

--

 

--

 

180,000

 

180

 

35,392

 

-- 

 

-- 

 

(35,572)

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares issued for services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

at $.17 per share

--

 

--

 

170,000

 

170

 

28,801

 

-- 

 

-- 

 

(28,971)

 

Amortization of prepaid expenses

--

 

--

 

--

 

--

 

--

 

-- 

 

-- 

 

37,981 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation

--

 

--

 

--

 

--

 

--

 

-- 

 

(90,772)

 

-- 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss for the period ended

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  December 31, 2009

--

 

--

 

--

 

--

 

--

 

(3,391,669)

 

-- 

 

-- 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Balance, December 31, 2009 

--

 

$

--

 

14,342,141

 

$

14,342

 

$

30,806,346

 

$

(25,469,706)

 

$

(111,862)

 

$

(45,807)

 

 

The accompanying notes are an integral part of these financial statements

11

**ForeverGreen Worldwide Corporation**

Consolidated Statements of Cash Flows

 

 

 

 

 

 For the Year Ended 

 

 

 

 

 

 December 31, 

 

 

 

 

 

2009

 

2008

 

 

(Restated)

 

(Restated)

**CASH FLOWS FROM OPERATING ACTIVITIES**:

 

 

 

 

Net Loss

 

 

$

(3,391,669)

 

$

(4,797,508)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

     Depreciation and amortization

 

337,751 

 

293,597 

     Amortization of prepaid expenses (equity)

 

19,378 

 

- 

     Common stock issued for services rendered

 

64,543 

 

42,216 

     Gain on sale of property and equipment

 

10,492 

 

- 

Changes in operating assets and liabilities:

 

 

 

 

     (Increase) decrease in operating assets

 

 

 

 

     Prepaid expenses

 

 

1,029 

 

191,223 

     Inventory

 

1,066,346 

 

(920,914)

     Deposits

 

14,036 

 

(1,004)

     Impairment of goodwill

 

2,052,621 

 

3,725,006 

     Increase (decrease) in operating liabilities

 

 

 

 

     Accounts payable and accrued expenses

 

(708,334)

 

1,208,182 

     Net Cash Used in Operating Activities

 

(533,807)

 

(259,202)

 

 

 

 

 

 

 

 

**CASH FLOWS FROM INVESTING ACTIVITIES:**

 

 

 

 

     Cash paid for trademarks

 

 

(1,102)

 

(20,519)

     Purchases of property and equipment

 

(3,619)

 

(389,468)

     Net Cash Used in Investing Activities

 

(4,721)

 

(409,987)

 

 

 

 

 

 

 

 

**CASH FLOWS FROM FINANCING ACTIVITIES:**

 

 

 

 

     Bank overdraft

 

189,822 

 

114,644 

     Proceeds from revolving bank line of credit

 

885,044 

 

1,880,043 

     Payments on revolving bank line of credit

 

(882,923)

 

(1,780,043)

     Payments on notes payable 

 

(881)

 

(1,735)

     Accrued interest included in related party note consolidation

 

24,234 

 

- 

     Proceeds from notes payable - Related Parties

 

685,000 

 

850,000 

     Payments on notes payable -related parties

 

(157,500)

 

(240,000)

     Net Cash Provided by Financing Activities

 

742,796 

 

822,909 

 

 

 

 

 

 

 

 

Effect of Foreign Currency on Cash

 

(90,772)

 

(31,398)

 

 

 

 

 

 

 

 

NET INCREASE IN CASH

 

113,496 

 

122,322 

 

 

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

 

142,704 

 

20,382 

 

 

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS AT END OF PERIOD

 

$

256,200 

 

$

142,704 

 

 

 

The accompanying notes are an integral part of these financial statements

12

**ForeverGreen Worldwide Corporation**

Consolidated Statements of Cash Flows (Continued**)**

 

 

 

 

 

 

 

 

 

 

 

For the Year Ended 

 

 

 

 

 

 December 31, 

 

 

 

 

 

2009

 

2008

 

 

 

 

 

(Restated)

 

(Restated)

SUPPLEMENTAL CASH FLOW INFORMATION

 

 

 

 

 

CASH PAID FOR:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest

 

 

$

38,344

 

$

7,670

 

 

Income taxes

 

 

$

-

 

$

-

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these financial statements

13

**FOREVERGREEN WORLDWIDE CORPORATION**

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2009 and 2008 

(Restated)

NOTE 1 -   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Organization

The Company was incorporated on November 25, 1998 in the state of Utah.  On November 30, 1998, Whole Living, Inc. acquired the assets, leases, product line and name of Brain Garden, L.L.C., a Utah limited liability company engaged in the marketing and distribution of various natural food products, oils and bath salts.  The Company did business under the name of Brain Garden, and maintained its headquarters in Provo, Utah.

On November 30, 1998, the Company acquired many of the assets, lease obligations and much of the product line of Brain Garden.  The acquisition was recorded using the purchase method of a business combination.  Intangible assets such as distributor down lines, customer lists and product name identifications were recorded in the acquisition in the amount of $43,294 and were amortized over 60 months.  The Company paid $283,800 for the purchase of Brain Garden assets, and assumed leases in the amount of $14,500.  The Company also assumed an operating lease for office space which expired during 1999.  

On May 24, 1999 the Company entered into an agreement to merge with Whole Living, Inc. a Nevada Corporation (WLN) which was a non-operating public company with cash of $150,000 and a note receivable of $650,000 from Whole Living, Inc. (Utah) for funds advanced in contemplation of the merger.  Pursuant to the merger, WLN issued 6,000,000 shares of common stock to the shareholders of the Company for all outstanding stock of the Company.  The merger was recorded as a reverse merger, with Whole Living, Inc. (Utah) being the accounting survivor.  A reverse merger adjustment was made to the books of the Company to reflect the change in capital to that of WLN.  No goodwill or intangible assets were recorded in the reverse acquisition.   

In March 2002, the Company incorporated Brain Garden, Inc. as a wholly owned subsidiary.  The assets of the Company were subsequently transferred to Brain Garden.

On January 13, 2006 the Company entered into an agreement whereby it exchanged 1,266,667 shares of its post-reverse split common stock for a 23% interest in ForeverGreen International, LLC. a privately held company.  This acquisition is accounted for on the equity method of accounting.  As part of this reorganization the officers and directors of the Company resigned and officers of ForeverGreen International, LLC were appointed as officers of the Company.

ForeverGreen International, LLC was organized on February 19, 2003 in the state of Utah.  The Company engages in the marketing and distribution of chocolate and various natural food products, oils and bath salts.  In August 2005 the Company introduced FrequenSea, a nutritional beverage which includes marine phytoplankton, which helped the Company to increase sales dramatically.  ForeverGreen International, LLC does business under the name of ForeverGreen International, and maintains its headquarters in Orem, Utah.

In conjunction with the January 13, 2006 acquisition the Board of Directors of the Company approved a 15:1 reverse split of its common shares, which was subsequently completed in February, 2006.

The companies operated under common management to distribute the products of both companies jointly as though from one company. The combined operation subsequently combined their product lines and created a new unified catalog.

14

**FOREVERGREEN WORLDWIDE CORPORATION**

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2009 and 2008 

(Restated)

NOTE 1 -   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

a. Organization - continued

On October 15, 2006, Whole Living, Inc. entered into an agreement to purchase the remaining 77% interest of ForeverGreen International, LLC and to formally merge with Brain Garden Inc., a wholly owned subsidiary of Whole Living, Inc., to become effective December 31, 2006.  They announced they would change the combined company name to ForeverGreen Worldwide Corporation.  The combined company sells products in the United States, Canada, Australia, New Zealand, Singapore, Japan, United Kingdom, the Netherlands, and Germany and currently has plans to expand into other areas of the world.   Whole Living, Inc. changed its name to ForeverGreen Worldwide Corporation in December 2006.

During the last quarter of 2007, the company began operations in Mexico. In 2009 the company introduced a program to make its products available to many more international countries. This program is called “the NFR program” NFR means not for resale and supports consumer in many countries to enjoy limited ForeverGreen products for personal use in these countries include Argentina, Austria, Barbados, Bolivia, Chile, China, Curacao Island, Colombia, Ecuador, Dominican Republic, Ghana, Greece, Gaum, Hungry, Indonesia, Ireland, Israel, Ivory Coast, Italy, Kenya, Korea, Malaysia, Morocco, Pakistan, Peru, Philippines, Poland, Portugal, Puerto Rico, South Africa, Spain, Sweden, Switzerland, Taiwan, and Trinidad.

b. Recognition of Revenue

Revenues and costs of revenues from services are recognized during the period in which the services are provided.  The Company applies the provisions of FASB ASC 605-10, Revenue Recognition in Financial Statements FASB ASC 605-10, which provides guidance on the recognition, presentation, and disclosure of revenue in financial statements filed with the SEC.  FASB ASC 605-10 outlines the basic criteria that must be met to recognize revenue and provides guidance for disclosure related to revenue recognition policies. In general, the Company recognizes revenue related to monthly contracted amounts for services provided when (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred or services have been rendered, (iii) the fee is fixed or determinable, and (iv) collectability is reasonably assured.

The Company’s source of revenue is from the sale of various food and other natural products.  The Company recognizes the sale upon shipment of such goods.  The Company offers a 100% satisfaction guarantee against defects for 30 days after the sale of their product except for a few circumstances.  The Company extends this return policy to its distributors for a 30 day period and the consumer has the same return policy in effect against the distributor.  Returns are less than 2.5% of sales for both periods presented.  Revenues are reported net of returns.  All conditions of FASB 48 are met and the revenue is recorded upon sale, with an estimated accrual for returns where material.   

Members are required to pay for products prior to shipment. Accordingly, we seldom carry accounts receivable and any balances carried would be minimal. Distributors typically pay for products in cash, by wire transfer or by credit card. 

c. Principles of Consolidation

The consolidated balance sheets and statement of operations for the periods ended December 31, 2008 and 2009 include the books of ForeverGreen Worldwide Corporation (Nevada) and its wholly owned subsidiaries ForeverGreen International LLC (Utah) and Brain Garden.  All intercompany transactions and balances have been eliminated in the consolidation.

15

**FOREVERGREEN WORLDWIDE CORPORATION**

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2009 and 2008 

(Restated)

NOTE 1 -   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

d. Earnings (Loss) Per Share

The computation of earnings per share of common stock is based on the weighted average number of shares outstanding at the date of the financial statements.

 

December 31,

 

2009 

 

2008 

Income (Loss) Numerator

$

(3,391,669)

 

$

(4,797,508)

Shares (Denominator)

14,040,468 

 

13,924,006 

 

 

 

 

Per Share Amount

$

(0.24)

 

$

(0.34)

There are no reconciling items to net income for the computation of earnings per share at December 31, 2009 and 2008

e. Provision for Income Taxes  

The Financial Accounting Standards Board (FASB) has issued FASB ASC 740-10 (Prior authoritative literature: Financial Interpretation No. 48, "Accounting for Uncertainty in Income Taxes - An Interpretation of FASB Statement No. 109 (FIN 48)).  FASB ASC 740-10 clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements in accordance with prior literature FASB Statement No. 109, Accounting for Income Taxes.  This standard requires a company to determine whether it is more likely than not that a tax position will be sustained will be sustained upon examination based upon the technical merits of the position.  If the more-likely-than- not threshold is met, a company must measure the tax position to determine the amount to recognize in the financial statements.  As a result of the implementation of this standard, the Company performed a review of its material tax positions in accordance with recognition and measurement standards established by FASB ASC 740-10.  

Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards and deferred tax liabilities are recognized for taxable temporary differences.  Temporary differences are the differences between the reported amounts of assets and liabilities and their tax basis.  Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.  Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

The provision for income taxes consists of the following:

 

2009

 

2008

Current

 

 

 

  Federal

$

-

 

$

-

  State

-

 

-

 

$

-

 

$

-

 

 

 

 

Deferred

 

 

 

  Federal

$

-

 

$

-

  State

-

 

-

 

-

 

-

    Total income tax expense (benefit)

$

-

 

$

-

16

**FOREVERGREEN WORLDWIDE CORPORATION**

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2009 and 2008 

(Restated)

NOTE 1 -  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED

e. Provision for Income Taxes - continued

The income tax provision reconciled to the tax computed at the federal statutory rate of 34% as follows:

 

2009

 

2008

Income Tax at federal statutory rate

$

(1,153,167)

 

$

(1,631,152)

State income tax benefit

(111,538)

 

(157,729)

Non-deductible expenses

11,731 

 

39,247 

Change in estimate from prior year

0 

 

(62,493)

Change in valuation allowance

149,267 

 

455,481 

 

$

(1,103,707)

 

$

(1,356,646)

 

 

 

 

Deferred tax assets (liabilities) are as follows:

 

 

 

 

 

 

 

Current

 

 

 

  Inventory reserves

$

10,100 

 

$

47,165 

  Accrued vacation

26,668 

 

38,717 

 

$

36,768 

 

$

85,882 

 

 

 

 

Long-term

 

 

 

  Depreciation and amortization

$

(65,549)

 

$

50,780 

  Net operating loss carryforwards

6,643,529 

 

6,328,819 

 

$

6,577,980 

 

$

6,379,599 

 

 

 

 

    Total deferred tax assets

6,614,748 

 

6,465,481 

 

 

 

 

    Valuation Allowance

$

(6,614,748)

 

$

(6,465,481)

 

$

-- 

 

$

-- 

The Company assesses the need for a valuation allowance against its deferred income tax assets at December 31, 2009 and 2008.  Factors considered in this assessment include recent and expected future earnings and the Company’s liquidity and equity positions.  As of December 31, 2009 and 2008, the Company has determined that a valuation allowance is necessary against the entire amount of its net deferred income tax asset.

As of December 31, 2009, the Company has net operating loss carryforwards of approximately $17,811,070.  These carryforwards are available to offset future taxable income, if any, and begin to expire in 2019.  The utilization of the net operating loss carryforwards is dependent upon the tax laws in effect at the time the net operating loss carryforwards can be utilized and may be significantly limited based on ownership changes as set forth in the Internal Revenue Code.

17

**FOREVERGREEN WORLDWIDE CORPORATION**

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2009 and 2008 

(Restated)

NOTE 1 -  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED

f. Cash and Cash Equivalents

The Company considers all highly liquid investments with maturities of three months or less to be cash equivalents.

g. Property and Equipment

Expenditures for property and equipment and for renewals and betterments, which extend the originally estimated economic life of assets or convert the assets to a new use, are capitalized at cost. Expenditures for maintenance, repairs and other renewals of items are charged to expense. When items are disposed of, the cost and accumulated depreciation are eliminated from the accounts, and any gain or loss is included in the results of operations.

The provision for depreciation is calculated using the straight-line method over the estimated useful lives of the assets.  Depreciable asset lives range from 3 to 7 years with leasehold improvements being depreciated over the lesser of the term of the lease or the life of the improvements.  Depreciation expense for the period ended December 31, 2009 and 2008 is $245,323, and $204,399, respectively.

In accordance with Financial Accounting Standards Board FASB ASC 360-10 Statement, the Company records impairment of long-lived assets to be held and used or to be disposed of when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the carrying amount.   At December 31, 2006, the company did an analysis of the combined assets and made an adjustment to the property and equipment for assets that no-longer had value to the corporation and which were fully depreciated.  The aggregate amount of this adjustment is $963,097 for both the fixed assets and accumulated depreciation to remove those assets and the applicable accumulated depreciation associated with them.  There was no affect on the income statement or the net value of the fixed assets or total assets as a result of this adjustment.  The company did continuing analysis for the period ended December 31, 2009 and determined no adjustment to long term assets was needed.

h. Inventory

Inventory is recorded at the lower of cost or market and valued on a first-in, first-out basis. Inventory consists primarily of consumable food products and ingredients.  Food products are discarded as they reach the expiration dates, because the food products are made with natural foods containing a minimum of preservatives.  Non-food products are reviewed periodically to determine any obsolescence and a reserve is booked when appropriate.  The products have expiration dates that range from 3 months on some of the food products to 2 years for non-food products.  On December 31, 2009 and 2008 there was an allowance for obsolete inventory in the amount of $27,079 and $126,448 respectively.

i. Fair Value of Financial Instruments

On January 1, 2008, the Company adopted FASB ASC 820-10-50, “*Fair Value Measurements.*This guidance defines fair value, establishes a three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosure requirements for fair value measures. The three levels are defined as follows:

•

Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

18

**FOREVERGREEN WORLDWIDE CORPORATION**

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2009 and 2008

(Restated)

NOTE 1 -  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED

i. Fair Value of Financial Instruments – continued

•

Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

•

Level 3 inputs to valuation methodology are unobservable and significant to the fair measurement.

The carrying amounts reported in the balance sheets for the cash and cash equivalents, receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of fair value because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The carrying value of convertible notes payable approximates fair value because negotiated terms and conditions are consistent with current market rates as of December 31, 2009 and 2008.

j.  Goodwill

In accordance with FASB ASC 350-10, goodwill is not amortized and is tested for impairment on an annual basis.  Goodwill is tested for impairment at a reporting unit level on an annual basis and between annual tests, goodwill is tested if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount.  For purposes of financial reporting and impairment testing in accordance with FASB ASC 350-10, the Company’s ForeverGreen International LLC business unit operates in one principal business segment, a provider of whole foods and natural products.

Events or circumstances which could trigger an additional impairment review include a significant adverse change in legal factors or in the business climate, an adverse action or assessment by a regulator, unanticipated competition, a loss of key personnel, significant changes in the manner of our use of the acquired assets or the strategy for our overall business, significant negative industry or economic trends or projected future results of operations.

In testing for a potential impairment of goodwill, the estimated fair value of the business unit is compared with book value, including goodwill.  If the estimated fair value exceeds book value, goodwill is considered not to be impaired and no additional steps are necessary. If, however, the fair value of the business unit is less than book value, then the carrying amount of the goodwill is compared with its implied fair value. The estimate of implied fair value of goodwill may require valuations of certain internally generated and unrecognized intangible assets, such as customer lists and proprietary formulas.  If the carrying amount of goodwill exceeds the implied fair value of that goodwill, an impairment loss would be recognized in an amount equal to the excess.  In accordance with FASB ASC 350-20, the Company performed a goodwill impairment test for 2008 and 2009 and concluded that the current implied fair value of the Company was $7,021,454 for 2009, which exceeds the recorded value of goodwill of $9,074,075 for 2008.  Therefore, a $2,052,621 impairment of goodwill is required in 2009 and a $3,725,006 was required for 2008.

k. Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make assumptions that affect the amounts reported in the financial statements and accompanying notes.  In these financial statements, assets, liabilities and earnings involve extensive reliance on management’s estimates. Actual results could differ from those estimates.

19

**FOREVERGREEN WORLDWIDE CORPORATION**

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2009 and 2008

(Restated)

NOTE 1 -  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED

l. Concentrations

Financial instruments that potentially subject the Company to concentrations of credit risks consist of cash and cash equivalents.  The Company places its cash and cash equivalents at well-known, quality financial institutions.  At times, such cash and investments may be in excess of the FDIC insurance limit.  The accounts are insured by the Federal Deposit Insurance Corporation up to $250,000 each.  The amounts held for the Company regularly exceed that amount.

The company has an agreement with one vendor that supplies 100% of a significant ingredient that is included in several top selling products.  It could decrease sales significantly if that vendor were to discontinue the supply of this ingredient.  There are other providers of that ingredient in the world, however, the Company considers this provider to have the very best quality, which is nutritionally superior to other sources of this ingredient, and has no intention of obtaining it from any other provider.

m. Equity Instruments

The Company's accounting policy for equity instruments issued to consultants and vendors in exchange for goods and services follows the provisions the current accounting literature, "Accounting for Equity Instruments. "Accounting Recognition for Certain Transactions Involving Equity Instruments Granted to Other Than Employees." The measurement date for the fair value of the equity instruments issued is determined at the earlier of (i) the date at which a commitment for performance by the consultant or vendor is reached or (ii) the date at which the consultant or vendor's performance is complete.  In the case of equity instruments issued to consultants, the fair value of the equity instrument is recognized over the term of the consulting agreement. In accordance with FASB ASC 505-50, an asset acquired in exchange for the issuance of fully vested, non-forfeitable equity instruments should not be presented or classified as an offset to equity on the grantor's balance sheet once the equity instrument is granted for accounting purposes. The Company recognized $64,543 and $54,235 for the periods ended December 31, 2009 and 2008 respectively.

n. Intangible Assets

Intangible assets consist of patent and trademark costs.  Patent costs are costs incurred to develop and file patent applications.  Trademark costs are costs incurred to develop and file trademark applications.  If the patents or trademarks are approved, the costs are amortized using the straight-line method over the estimated lives of 7 years for patents and 10 years for trademarks.  Unsuccessful patent and trademark application costs are expensed at the time the application is denied.  Management assesses the carrying values of long-lived assets for impairment when circumstances warrant such a review.  In performing this assessment, management considers current market analysis and appraisal of the technology, along with estimates of future cash flows.  The Company recognizes impairment losses when undiscounted cash flows estimated to be generated from long-lived assets are less than the amount of unamortized assets.  

The Company capitalizes legal fees incurred to register trademarks for its products.  Trademarks consist of the following for the period ended December 31, 2009 and 2008:

 

2009

 

2008

Trademarks

$

68,769 

 

$

67,666 

Less accumulated amortization

(13,955)

 

(7,116)

Net trademarks

$

54,814 

 

$

60,550 

20

**FOREVERGREEN WORLDWIDE CORPORATION**

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2009 and 2008

(Restated)

NOTE 1 -  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED

n. Intangible Assets - continued

There was amortization expense for the years ended December 31, 2009 and 2008 were $6,839 and $3,608, respectively.

 

o. Advertising

Advertising expense for the years ended December 31, 2009 and 2008 were $192,844 and $564,309 respectively.

 

NOTE 2 - PROPERTY AND EQUIPMENT

The Company capitalizes the purchase of equipment and fixtures for major purchases in excess of $1,000 per item.  Property and equipment consists of the following at December 31, 2009 and 2008:

 

2009

 

2008

Leasehold improvements    

$

77,268 

 

$

76,767 

Office furniture & fixtures

174,929 

 

180,162 

Equipment

458,414 

 

470,414 

Vehicles

56,548 

 

56,548 

Computer equipment

507,869 

 

507,178 

Computer software

633,085 

 

633,084 

 

 

 

 

    Total Assets

1,908,113 

 

1,924,153 

Accumulated depreciation

(1,426,687)

 

(1,205,095)

     Total Property &   Equipment

$

481,426 

 

$

719,058 

Depreciation expense for the years ended December 31, 2009 and 2008 were $245,323 and $204,399, respectively.

NOTE 3 – ACCRUED EXPENSES

Accrued expenses consist of the following at December 31, 2009 and 2008:

 

2009

 

2008

Distributor liabilities

$

315,567

 

$

589,609

Accrued employee benefits

410,349

 

134,193

 

 

 

 

Accrued audit fees

68,000

 

48,000

Accrued bank charges

-

 

32,300

Accrued taxes

478,643

 

388,740

Other accrued liabilities

150,907

 

67,763

     Total

$

1,423,466

 

$

1,260,605

21

**FOREVERGREEN WORLDWIDE CORPORATION**

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2009 and 2008 

(Restated)

NOTE 4 - LONG-TERM LIABILITIES

Long term liabilities are detailed in the following schedules as of December 31, 2009 and 2008: 

Note payable to Wells Fargo Bank bearing interest 

2009

 

2008

 At 7%, principle and interest due monthly, matures

 

 

 

 August, 2019, secured by asset

$

26,953 

 

$

27,793 

Less current portion of Notes payable

(3,079)

 

(1,614)

     Net Long-Term Liabilities

$

23,874 

 

$

26,179 

 

Accrued interest for the periods ended December 31, 2009 and 2008 were $92,101 and $36,685, respectively, of which $1,805 was related to the above note.  The remaining portion is due on the notes described in note 9.

Future minimum principal payments on notes payable and notes payable-related party are as follows at December 31, 2009:

2010

$

1,805

2011

1,945

2012

2,097

2013

2,259

Thereafter

18,073

   Total

$

26,179

NOTE 5 – OPERATING LEASES

The Company has two building leases for office, warehouse/production space in Orem, Utah.  The office lease for $6,941 per month began January 1, 2005 and expires January 31, 2010.  The Company is currently on a month to month lease basis at the existing rate. The warehouse/production lease for $8,531 per month began September 1, 2006 and expires August 31, 2013 with provisions for an automatic 5 year extension.   All leases have a provision for an annual increase of 3%.   The buildings the Company leases are sufficiently large enough to accommodate all of its administrative and warehouse and production needs.   The company leased an office building in Mexico on a 24 month lease beginning April 1, 2008 for approximately $2,217 USD per month.  The Company leased an office building in Singapore on a one year lease beginning April 2008 for approximately $3,950 USD per month.

Total Lease Commitments:

 

 

2010

$

157,934

2011

117,579

2012

117,579

Thereafter

78,386

     Total

$

471,478

Rent expense for operating leases for December 31, 2009 and 2008 was $431,261, and $486,368, respectively.

22

**FOREVERGREEN WORLDWIDE CORPORATION**

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2009 and 2008

(Restated)

NOTE 6 - COMMITMENTS AND CONTINGENCIES 

On February 5, 2009 Frank R. Spindler, an individual, filed a claim against ForeverGreen International, LLC in Magistrates Court of Queensland - Southport. The claim alleges breach of contract related to the incorporation of ForeverGreen Pty Ltd, an Australian company, and seeks AU$30,100 in damages for costs of incorporating such entity.  This complaint has been settled between the parties. As of March 15, 2010 the settled amount has been paid in full and expensed.

On April 14, 2009 Wellosophy Corporation, a Florida corporation with its principal place of business in Folsom, California, (“Wellosophy”) filed a civil action against ForeverGreen Worldwide Corporation in the United States District Court, for the District of Nevada.  This action was based upon a supply agreement between Wellosophy and ForeverGreen. Wellosophy alleged unfair competition, trademark infringement and intentional interference with prospective economic advantage and copyright infringement of the SWELLTM and “Pree” marks.  Wellosophy sought a preliminary and permanent injunction against trademark and copyright infringement, along with compensatory and punitive damages and interest, costs and attorneys’ fees.  On July 27, 2009 the Company entered into a settlement agreement and release with Wellosophy, which upon satisfaction of a monetary payment of $91,100 will result in the dismissal of the litigation with prejudice.  As of the date of December 31, 2009 this report this litigation has not been dismissed.

On September 18, 2009 R&L Publishing, Ltd., d/b/a Plus Publishing, filed a civil action in the United States District Court for the Eastern District of Texas, Sherman Division, against ForeverGreen International, L.L.C.  The complaint alleges that Plus Publishing provided advertising and publishing services valued at $195,953 to ForeverGreen International and ForeverGreen International failed to pay for those services.  The parties have reached a settlement in this case. The settlement consists of paying 24 monthly payments of $5,000 totaling $120,000.

UTI United States, Inc. (“UTI”) filed a complaint against ForeverGreen International, L.L.C. on August 27, 2009 in the Third District Court, State of Utah Salt Lake County, West Jordan Department.  UTI alleges that it has not been paid $31,172 for shipping and freight services provided to ForeverGreen International and is seeking that amount, plus interest and costs of the action.   ForeverGreen International has answered the complaint and is challenging the amount due.

NOTE 7 – STOCKHOLDERS’ EQUITY 

On April 28, 2008 the Company issued 25,127 shares valued at $1.42 per share of restricted common stock to vendor for services rendered. On November 25, 2008 the Company issued an additional 63,000 shares valued at $.60 per share of restricted common stock to the same vendor for additional services rendered.

On August 11, 2009 the Company issued 180,000 shares valued at $.20 per share of restricted common stock to a vendor for services rendered.

On November 25, 2009 the Company issued 170,000 shares valued at $.17 per share of restricted common stock to a vendor for services rendered.

NOTE 8 – ALLOCATION OF PURCHASE CONSIDERATION IN BUSINESS COMBINATIONS

The Company accounts for its investments in its subsidiaries using the equity method of accounting.  The excess of the consideration paid for subsidiaries over the fair value of acquired tangible assets less the fair value of acquired liabilities is assigned to intangible assets and goodwill.  On January 15, 2006 the Company purchased a 23% share of ForeverGreen International LLC, by issuing 1,266,667 post split 

23

**FOREVERGREEN WORLDWIDE CORPORATION**

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2009 and 2008 

(Restated)

NOTE 8 – ALLOCATION OF PURCHASE CONSIDERATION IN BUSINESS COMBINATIONS - continued

shares of common stock at $1.80 per share for a value of $2,280,000.  On December 31, 2007 the Company purchased the remaining 77% of ForeverGreen International LLC, by issuing 5,240,549 post split shares at $1.75 per share for a value of $9,170,961.

The Customer Base intangible was calculated using a percentage of the gross margin of ForeverGreen International LLC.  The Company will amortize the customer base over a period of ten years.  The 23% ownership in ForeverGreen International LLC, for the year resulted in an entry to other expense in the 

amount of $53,933.  The Company obtained an independent third party valuation to ascertain the amount to allocate to identifiable intangible assets, and the useful lives of those assets.  The useful life of an intangible asset that is being amortized is evaluated each reporting period as to whether events and circumstances warrant a revision to the remaining period of amortization. In accordance with FASB ASC 350-10, goodwill is not amortized and is tested for impairment on an annual basis.  The implied fair value of goodwill is determined by allocating fair value to all assets and liabilities acquired; the excess of the price paid over the amounts assigned to assets and liabilities acquired is the implied fair value of goodwill. 

NOTE 9 - RELATED PARTY TRANSACTIONS

The Company accounts for its investments in its subsidiaries using the equity method of accounting.  The excess of the consideration paid for subsidiaries over the fair value of acquired tangible assets less the fair value of acquired liabilities is assigned to intangible assets and goodwill.  On January 15, 2006 the Company purchased a 23% share of ForeverGreen International LLC, by issuing 1,266,667 post split shares of common stock at $1.80 per share for a value of $2,280,000.  On December 31, 2007 the Company purchased the remaining 77% of ForeverGreen International LLC, by issuing 5,240,549 post split shares at $1.75 per share for a value of $9,170,961.   

The Customer Base intangible was calculated using a percentage of the gross margin of ForeverGreen International LLC.  The Company will amortize the customer base over a period of ten years.  The 23% ownership in ForeverGreen International LLC, for the year resulted in an entry to other expense in the amount of $53,933.  The Company obtained an independent third party valuation to ascertain the amount to allocate to identifiable intangible assets, and the useful lives of those assets.  The useful life of an intangible asset that is being amortized is evaluated each reporting period as to whether events and circumstances warrant a revision to the remaining period of amortization. In accordance with FASB ASC 350-10, goodwill is not amortized and is tested for impairment on an annual basis.  The implied fair value of goodwill is determined by allocating fair value to all assets and liabilities acquired; the excess of the price paid over the amounts assigned to assets and liabilities acquired is the implied fair value of goodwill. 

The Company borrowed $50,000 from a director on Feb 28, 2008 which was paid back on March 3, 2008. The Company borrowed $150,000 from the director on March 7, 2008 secured by a note that carries interest at 8% per annum and was payable on May 7, 2008.   On July 1, 2008 the Company amended this note from the director to postpone the due date to November 5, 2008 and borrowed an additional $100,000 on that note. On November 10, 2008 the Company executed a third amendment of this note from the director to postpone the due date with a new payment schedule and borrowed an additional $200,000. On December 10, 2008 the Company did a fourth amendment of this note from the director that increased interest to 10% and postponed the payment schedule through September 2009 and borrowed an additional $150,000. Throughout the year $115,000 in payments were made on these notes.  The Company borrowed $75,000 from the director on August 11, 2008 secured by a note that carries interest at 9% per annum that is payable on October 31, 2008 which was paid off according to the terms of the note.   The Company borrowed $62,500 from the board member and another $62,500 from a different director on June

24

 **FOREVERGREEN WORLDWIDE CORPORATION**

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2009 and 2008

(Restated)

NOTE 9 - RELATED PARTY TRANSACTIONS – CONTINUED

2, 2008 secured by notes that carry interest at 9% per annum and are payable on March 31, 2009.  At December 31, 2008 accrued interest on these notes amounted to $15,427.   The unpaid balance due at December 31, 2008 for all the above notes is $610,000.

The Company borrowed several notes from two directors during 2009.  From one director a note on January 28, 2009 for $60,000 at 9% interest payable on July 31, 2009; this note and the note of $62,500 from June 1, 2008 were consolidated on July 31, 2009 with accrued interest of $9,256 totaling $131,756 at 10% interest payable on July 31, 2011. On February 10, 2010 the note totaling $131,756 was assigned to a non-related party and this non-related party loaned to the company an additional $100,000. (See subsequent events note)

From the other director the table below shows the loans made during 2009;  

  

AMOUNT

ORIGINATION DATE

INTEREST RATE

DUE DATE

$60,000

January 28, 2009

9%

Consolidated July 31, 200

$50,000

April 10, 2009

9%

Repaid April 23, 2009      

$50,000

April 16, 2009

9%

Repaid April 23, 2009      

$50,000

May 14, 2009

12%

Consolidated July 31, 2009

$60,000

May 18, 2009

12%

Consolidated July 31, 2009

$80,000

May 20, 2009

12%

Consolidated July 31, 2009

$60,000

May 28, 2009

12%

Consolidated July 31, 2009

$50,000

June 2, 2009

12%

Consolidated July 31, 2009

$45,000

July 22, 2009

10%

November 30, 2009

Consolidated Note

$422,500

(Includes note of $62,500 from June 1, 2008, plus accrued interest of $14,978)

 

$437,478

July 31, 2009

10%

July 31, 2011

$35,000

August 21, 2009

10%

September 28, 2009

Repaid $17,500 on Oct 30, 2009

$45,000

August 21, 2009

10%

November 30, 2009

During 2009 and 2008, directors loaned the Company $685,000 and $810,000, respectively.  The balance payable to the directors at December 31, 2009 and 2008 was $1,161,694 and $610,000, respectively. These notes had accrued interest at a rates ranging from 8% to 10% that totaled $92,101 and $26,545 for the periods ended December 31, 2009 and 2008. 

NOTE 10 – INVENTORY

Inventories for December 31, 2009 and 2008 were classified as follows:

 

2009 

 

2008 

Raw Materials 

$

259,296 

 

$

865,376 

Finished Goods

568,677 

 

1,128,313 

     Total Inventory 

827,973 

 

1,993.689 

Less Reserve for Obsolete Inventory

(27,079)

 

(126,448)

     Total Inventory (net of  reserve)

$

800,894 

 

$

1,867,241 

25

**FOREVERGREEN WORLDWIDE CORPORATION**

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2009 and 2008

(Restated)

NOTE 11 - NEW TECHNICAL PRONOUNCEMENTS 

FASB ASC 105-10 “THE HIERARCHY OF GENERALLY ACCEPTED ACCOUNTING PRINCIPLES”

In May 2008, FASB issued ASC 105-10"The Hierarchy of Generally AcceptedAccounting Principles" FASB ASC 105-1- identifies the sources ofgenerally accepted accounting principles in the United States. ASC 105-1- iseffective sixty days following the SEC's approval of PCAOB amendments to AU Section 411, "The

Meaning of 'Present fairly in conformity with generallyaccepted accounting principles'". The Company is currently evaluating thepotential impact, if any, of the adoption of ASC 105-10 on its financialstatements.

In March 2008, the FASB issued FASB ASC 815-10 (Prior authoritative literature: SFAS No. 161, “*Disclosures about Derivative Instruments and Hedging Activities*”), which is effective January 1, 2009. FASB ASC 815-10 requires enhanced disclosures about derivative instruments and hedging activities to allow for a better understanding of their effects on an entity’s financial position, financial performance, and cash flows. Among other things, this standard requires disclosures of the fair values of derivative instruments and associated gains and losses in a tabular formant. This standard is not currently applicable to the Company since we do not have derivative instruments or engage in hedging activity.

In May 2008, the FASB issued FASB ASC 944 (Prior authoritative literature: SFAS No. 163, *"Accounting for Financial Guarantee Insurance Contracts - an interpretation of FASB Statement No. 60"). FASB ASC 944* interprets Statement 60 and amends existing accounting pronouncements to clarify their application to the financial guarantee insurance contracts included within the scope of that Statement.  This standard is effective for financial statements issued for fiscal years beginning after December 15, 2008, and all interim periods within those fiscal years.   As such, the Company is required to adopt these provisions at the beginning of the fiscal year ended March 31, 2009.  The Company does not believe this standard will have any impact on the financial statements.

In April, 2009, the FASB issued FASB ASC 810-10-65 (Prior authoritative literature: SFAS No. 164, *“Not-for-Profit Entities: Mergers and Acquisitions”) *which governs the information that a not-for-profit entity should provide in its financial reports about a combination with one or more other not-for-profit entities, businesses or nonprofit activities and sets out the principles and requirements for how a not-for-profit entity should determine whether a combination is in fact a merger or an acquisition. This standard is effective for mergers occurring on or after Dec. 15, 2009 and for acquisitions where the acquisition date is on or after the beginning of the first annual reporting period, beginning on or after Dec. 15, 2009. This standard does not apply to the Company since the Company is considered a for-profit entity

 In May 2009, FASB issued FASB ASC 855-10 (Prior authoritative literature:  SFAS No. 165, *"Subsequent Events").* FASB ASC 855-10 establishes principles and requirements for the reporting of events or transactions that occur after the balance sheet date, but before financial statements are issued or are available to be issued. FASB ASC 855-10 is effective for financial statements issued for fiscal years and interim periods ending after June 15, 2009. As such, the Company adopted these provisions at the beginning of the interim period ended June 30, 2009. Adoption of FASB ASC 855-10 did not have a material effect on our financial statements.

In June 2009, the FASB ASC 860-10 (Prior authoritative literature: issued SFAS No. 166, “*Accounting for Transfers of Financial Assets, an Amendment of FASB Statement No. 140*”), which eliminates the concept of a qualifying special-purpose entity (“QSPE”), clarifies and amends the de-recognition criteria for a transfer to be accounted for as a sale, amends and clarifies the unit of account eligible for sale accounting and requires that a transferor initially measure at fair value and recognize all assets obtained and liabilities incurred as a result of a transfer of an entire financial asset or group of financial assets accounted for as a sale. This standard is effective for fiscal years beginning after November 15, 2009. The Company is currently evaluating the potential impact of this standard on its financial statements, but does not expect it 

26

**FOREVERGREEN WORLDWIDE CORPORATION**

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2009 and 2008 

(Restated)

NOTE 11 - NEW TECHNICAL PRONOUNCEMENTS - CONTINUED

to have a material effect.

In June 2009, the FASB issued FASB ASC 810-10-65 (Prior authoritative literature:  SFAS No. 167, 

“*Amendments to FASB Interpretation No. 46(R)*”) which amends the consolidation guidance applicable to a variable interest entity (“VIE”). This standard also amends the guidance governing the determination of whether an enterprise is the primary beneficiary of a VIE, and is therefore required to consolidate an entity, by requiring a qualitative analysis rather than a quantitative analysis. Previously, the standard required reconsideration of whether an enterprise was the primary beneficiary of a VIE only when specific events had occurred. This standard is effective for fiscal years beginning after November 15, 2009, and for interim periods within those fiscal years. Early adoption is prohibited. The Company is currently evaluating the 

potential impact of the adoption of this standard on its financial statements, but does not expect it to have a material effect.

In June 2009, FASB issued ASC 105-10 (Prior authoritative literature:  SFAS No. 168, *"The FASB Accounting Standards Codification TM and the Hierarchy of Generally Accepted Accounting Principles - a replacement of FASB Statement No. 162"*).FASB ASC 105-10 establishes the FASB Accounting Standards Codification TM (Codification) as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with GAAP. FASB ASC 105-10 is effective for financial statements issued for fiscal years and interim periods ending after September 15, 2009. As such, the Company is required to adopt these provisions at the beginning of the fiscal year ending September 30, 2009.  Adoption of FASB ASC 105-10 did not have a material effect on the Company’s financial statements.

NOTE 12 – GOING CONCERN

The accompanying financial statements have been prepared using generally accepted accounting principles applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business.  As reported in the accompanying consolidated financial statements the Company has a working capital deficit of $3,038,535 a net operating loss of $3,391,669 and accumulated deficit of $25,469,706 (excluding other comprehensive loss) at December 31, 2009, negative cash flows from operations, and has experienced periodic cash flow difficulties.  These factors combined, raise substantial doubt about the Company’s ability to continue as a going concern.  Management’s plans to address and alleviate these concerns are as follows: 

The Company is reviewing the cost structure and has implemented cost saving measures that have begun to reduce overhead which have included staff reductions and salary adjustments.  The Company is negotiating with its key vendors and is gaining cooperation and concessions.   The Company has introduced our own in house logistic, sales and distributor software system that will reduce computer costs going forward.   New products have been and will continue to be introduced to bolster Distributor recruiting and sales, and management will make improvements to the marketing plan to enhance the success that is developed.  The Company intends to seek debt and equity financing as necessary.

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually attain profitable operations.  The accompanying consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

27

**FOREVERGREEN WORLDWIDE CORPORATION**

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2009 and 2008 

(Restated)

NOTE 13 – SUBSEQUENT EVENTS

We have evaluated events occurring after the date of our accompanying balance sheets through the date of the filing of this Annual Report on Form 10-K.  Other than the events described below, we did not identify any material subsequent events requiring adjustment to our accompanying condensed financial statements.

The Company borrowed several additional notes from directors as follows:

AMOUNT

ORIGINATION DATE

INTEREST RATE

DUE DATE

$40,000

January 7, 2010

10%

February 20, 2010

$40,000

January 29, 2010

10%

March 15, 2010

$50,000

March 4, 2010

10%

April 30, 2010

A director assigned his note of $131,756 on February 10, 2010 to a third party, the third party loaned the Company an additional $100,000 at 10% due on January 31, 2012. 

On January 4, 2010 the Company settled on an agreement to pay Plus Publishing a total of $120,000 making twenty four $5,000 monthly payments.

NOTE 14 – RESTATED FINANCIAL STATEMENTS

The financial statements for the year ended December 31, 2008 and 2009 were restated to reflect issues identified during a regulatory review of the financial statements.  Management and the board of directors concluded these restatements were necessary to reflect the changes described below.

Pursuant to FASB ASC 350-20 the Company performed a two step analysis to determine the value of goodwill.  The Company did not satisfy step one of the analysis and is required to rely upon step two of the analysis.  The step two analysis determines the implied fair market value of the Company by subtracting the unrecognized in-house intangible asset valuation, based upon the value of customer lists and proprietary formulas, from the net book value of the Company.  This analysis resulted in an implied fair market value of $9,074,075 which is less than the $12,799,081 goodwill recorded.  Accordingly, the Company recognized an impairment of $3,725,006 for the year ended December 31, 2008. The restatement in 2008 required an additional restatement in 2009 and this analysis resulted in an implied fair market value of $7,021,454 which is less than the $9,074,075 restate goodwill recorded for 2008.  Accordingly, the Company recognized a restated impairment of $2,052,621 for the year ended December 31, 2009.

The Company has expanded or changed footnote disclosures included in Note 1 and Note 12.

28

**FOREVERGREEN WORLDWIDE CORPORATION**

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2009 and 2008 

(Restated)

NOTE 14 – RESTATED FINANCIAL STATEMENTS - CONTINUED

**RESTATEMENT CHANGES**

 

 

For the year ended

December 31,

 

 

 

 

2009

 

2009

 

Change

 

 

(Restated)

 

(As previously

 

 

 

 

 

 

filed)

 

 

 

 

 

 

 

 

 

**STATEMENTS OF OPERATIONS**

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

     Impairment to goodwill

$

2,052,621

$

5,777,627

$

(3,725,006)

 

 

 

 

 

 

 

NET LOSS

$

(3,391,669)

$

(7,116,675)

$

3,725,006

 

 

 

 

 

 

 

BASIC AND DILUTED LOSS

 

 

 

 

 

 

 PER COMMON SHARE

$

(0.24)

$

(0.51)

$

(0.27)

 

 

 

 

 

 

 

COMPREHENSIVE LOSS

 

 

 

 

 

 

   A summary of the components of other comprehensive (loss) for the

   fiscal years ended December 31, 2009 are as follows:

 

 

 

 

 

 

 

 

 

 

 

Net Loss

$

(3,391,669)

$

(7,116,675)

$

(3,725,006)

 

 

 

 

 

 

 

Other Comprehensive Income Loss

 

(90,722)

 

(90,722)

 

0

 

 

 

 

 

 

 

Comprehensive Loss

$

(3,482,441)

$

(7,207,447)

$

(3,725,006)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

29

**FOREVERGREEN WORLDWIDE CORPORATION**

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2009 and 2008 

(Restated)

NOTE 14 – RESTATED FINANCIAL STATEMENTS - CONTINUED

 

 

For the year ended

December 31,

 

 

 

 

2008

 

2008

 

Change

 

 

(Restated)

 

(As previously

 

 

**BALANCE SHEETS**

 

 

 

filed)

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

   OTHER ASSETS

 

 

 

 

 

 

      Goodwill

$

9,074,075

$

12,799,081

$

(3,725,006)

 

 

 

 

 

 

 

           TOTAL ASSETS

$

12,733,797

$

16,458,803

$

(3,725,006)

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS' EQUITY

 

 

 

 

 

 

   Accumulated deficit

$

(22,078,037)

$

(18,353,031)

$

(3,725,006)

      Total Stockholders' Equity

 

8,637,773

 

12,362,779

 

(3,725,006)

 

 

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

12,733,797

$

16,458,803

$

(3,725,006)

 

 

 

 

 

 

 

**STATEMENTS OF OPERATIONS**

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

     Impairment to goodwill

$

3,725,006

$

0

$

3,725,006

 

 

 

 

 

 

 

NET LOSS

$

(4,797,508)

$

(1,072,502)

$

(3,725,006)

 

 

 

 

 

 

 

BASIC AND DILUTED LOSS

 

 

 

 

 

 

 PER COMMON SHARE

$

(0.34)

$

(0.08)

$

(0.26)

 

 

 

 

 

 

 

COMPREHENSIVE LOSS

 

 

 

 

 

 

   A summary of the components of other comprehensive (loss) for the

   fiscal years ended December 31, 2008 are as follows:

 

 

 

 

 

 

 

 

 

 

 

Net Loss

$

(4,797,508)

$

(1,072,502)

$

(3,725,006)

 

 

 

 

 

 

 

Other Comprehensive Income Loss

 

(31,398)

 

(31,398)

 

0

 

 

 

 

 

 

 

Comprehensive Loss

$

(4,828,906)

$

(1,103,900)

$

(3,725,006)

 

 

 

 

 

 

 

30

**PART IV**

**ITEM 15.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES**

***(a)(1)***

***Financial Statements***

The audited financial statements of ForeverGreen Worldwide Corp. are included in this report under Item 8 on pages 7 through 29.  

 

***(a)(2) Financial Statement Schedules***

All financial statement schedules are included in the footnotes to the financial statements or are inapplicable or not required.

***(a)(3)***

***Exhibits***

The following documents have been filed as part of this report.  Exhibits denoted with an “*” are management contracts or compensatory plans or arrangements. 

No.

Description

3.1

Articles of incorporation, as revised (Incorporated by reference to exhibit 3.1 for Form 8-K, as amended, filed December 18, 2006)

3.2

Bylaws, as revised (Incorporated by reference to exhibit 3.2 for Form 8-K, as amended, filed December 18, 2006)

10.1

Lease agreement between Whole Living and C & R Fiveplex, LLC, dated April 7, 2006 (Incorporated by reference to exhibit 10.3 to Form 10-QSB, filed November 14, 2006)

10.2*

Paul Frampton Employment Agreement, dated March 1, 2007 (Incorporated by reference to exhibit 10.3 of Form 10-QSB, filed August 14, 2007)

10.3

Agreement between ForeverGreen International LLC and Marine Life Sciences LLC, dated March 28, 2008 (Incorporated by reference to exhibit 10.4 of Form 10-K, filed April 7, 2008)

10.4

Personal Care Exclusive Sales and Marketing Agreement between ForeverGreen International and Marine Life Sciences, LLC, dated April 23, 2008 (Incorporated by reference to exhibit 10.1 to Form 8-K filed April 29, 2008)

10.5

Form of Promissory Note (Filed April 15, 2010)

21.1

Subsidiaries of ForeverGreen (Incorporated by reference to exhibit 21.1 to Form 10-KSB, filed April 17, 2007)

31.1

Chief Executive Officer Certification

31.2

Chief Financial Officer Certification

32.1

Section 1350 Certification

31

**SIGNATURES**

Pursuant to the requirements of the Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, there unto duly authorized

FOREVERGREEN WORLDWIDE CORPORATION

By:     */s/ Ronald K Williams*

          Ronald K. Williams, President 

Date:  June 6, 2011

32 |
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