(EDGAR Online via COMTEX) -- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
ForeverGreen Worldwide is a holding company which operates through its wholly-owned subsidiaries ForeverGreen International, LLC, Productos Naturales Forevergreen Internacional en Mexico S.A. de C.V., FVGR Colombia S.A.S., 3-101-607360 S.A. (a Costa Rican corporation), ForeverGreen Chile SpA, Forevergreen (Aust & NZ) Pty, Ltd, ForeverGreen Singapore Pte Ltd, ForeverGreen Taiwan, ForeverGreen Japan (KK), ForeverGreen Peru SAC, ForeverGreen (HK) Limited (Hong Kong), ForeverGreen Marketing Corporation (Philippines), FG International LLP (India), Forevergreen Puerto Rico LLC, Forevergreen Dominicana S.R.L. (Dominican Republic), and Forevergreen Peru, SAC.
We intend to continue our emphasis as a total lifestyle company focused on bringing our domestic and international Members and customers our exclusive FGXpress products, PowerStrips(TM) SolarStrips(TM) and BeautyStrips(TM) and our newly announced Ketopia weight management line for North America. In addition through the Farmers Market, we will continue to share FrequenSea(TM), supplements, whole foods and meal replacement shakes to our Members and customers. In addition, our focus is to assist prospective Members in creating a home-based business with home business training, mentorship and accountability so that they can benefit from the residual income stream opportunities we offer. 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 innovative new products that are exclusive to our Members.
During the third quarter of 2015 the Company experienced exciting updates and international expansion that included:
New Anti-doping Certification for PowerStrips. The Company received an anti-doping certification from the Banned Substances Control Group (BSCG) for PowerStrips, indicating the product is free of banned substances. This significantly increased ForeverGreen's target market opening up the world of sports and athletes who are very careful about the products they use on or in their bodies.
ForeverGreen Receives $1 Million of Ketopia Pre-launch Orders in First Twelve Days. Within twelve days of the Ketopia pre-launch, over 7,000 orders were received. ForeverGreen's Ketopia is a three-product regimen consisting of KetonX, Dough Bites, and FIXX. KetonX is a drink that shifts the body into a state of nutritional ketosis within hours. KetonX is seen as a new growth offering launched first in North America, and then throughout other markets in the fourth quarter. The immediate demand for this product far exceeded company expectations
which caused a delay in product delivery to customers. The Company has invested a significant amount of time and efforts this quarter ramping up the supply chain to be prepared to supply a much larger quantity of this product. As a result of the lack of product availability, the Company was unable to deliver all the orders for Ketopia received during the quarter. As of the date of this filing, the Company has fulfilled all the Ketopia backorders and is currently shipping new orders as received.
Business Expansion in Africa. In the Ivory Coast the Company received a Regulatory License for all ForeverGreen products. Members in Africa are now looking forward to having local pick-up centers and the opportunity to receive their product the same day it is ordered. Launching local pick-up centers and having product registration seriously legitimizes the Company in key African regions.
ForeverGreen Appoints New European President and COO. In September 2015 ForeverGreen announced the appointment of Tomasz Stanislawski as the President of Europe. Blake Schroeder, the former President, Europe, took on the role of Chief Operating Officer.
The major challenges for ForeverGreen over the next twelve months will be to respond to current economic conditions and to properly manage its systems and logistics centers around the world to support the demand for its products and business opportunity. Included in this challenge is the need to continue to meet a high standard of quality and customer service and maintain the highest levels of Member satisfaction.
Overcoming periodic economic downturns will require skilled personnel and responsive manufacturing and shipping facilities. Management intends to continue ongoing process improvement initiatives, especially in the areas of production and order fulfillment. These new operating efficiencies are targeted to address the current economic environment as well as prepare the Company for the upturn in demand as people continue to look for alternative income opportunities. ForeverGreen is being actively positioned as the company people can align with for the future as traditional employment options.
To keep pace with the market and product growth, ForeverGreen anticipates the need to expand its international logistics centers. The rewards of this strategy include increased sales performance and diversified market incomes. International expansion is very expensive and profitability in a given foreign country depends on key Members who can rapidly ramp up their business growth and volume in the target region.
Results of Operations The following chart summarizes the consolidated statements of operations of ForeverGreen Worldwide and Subsidiaries for the three and nine month periods ending September 30, 2015 and 2014. Three month period ended Nine month period ended SUMMARY OF OPERATIONS September 30, September 30, (Unaudited) (Unaudited) 2015 2014 2015 2014 Revenues, net $ 16,606,907 $ 15,880,244 $ 49,884,864 $ 40,544,486 Cost of sales 3,882,920 3,380,458 12,115,664 8,833,971 Gross profit 12,723,987 12,499,786 37,769,200 31,710,515 Selling and marketing expenses 7,825,701 8,213,093 23,904,165 20,663,790 General and administrative expenses 5,176,748 3,969,430 14,904,798 10,050,101
SUMMARY OF OPERATIONS - Three month period ended Nine month period ended continued September 30, September 30, (Unaudited) (Unaudited) 2015 2014 2015 2014 Total operating expenses 13,002,449 12,182,523 38,808,963 30,713,891 Net operating income (loss) (278,462) 317,263 (1,039,763) 996,624 Total other income (expense) (92,939) (113,920) (443,057) (157,374) Income tax provision -- -- -- -- Net earnings (loss) $ (371,401) $ 203,343 $ (1,482,820) $ 839,250 Net earnings (loss) per share both (basic) and diluted $ (0.01) $ 0.01 $ (0.06) $ 0.04
The Company recognized product revenues of $46,130,346 and shipping and other revenues of $3,754,518, for the nine month period of 2015 compared to product revenues of $38,213,771 and shipping and other revenues of $2,330,715 for the same period of 2014. The Company recognized product revenues of $14,824,317 and shipping and other revenues of $1,782,590, for the third quarter of 2015 compared to product revenues of $14,875,641, and shipping and other revenues of $1,004,603 for the 2014 third quarter.
The Company experienced a 23.0% increase in revenues for the 2015 nine month period over the 2014 nine month period and experienced a 4.6% increase in revenues for the 2015 third quarter over the 2014 third quarter. Our source of revenue is from the sale of various foods, other natural products, kits, and freight and handling to deliver products to the Members and customers. This increase in revenues is directly related to the increased number of Members and their business. We recognize revenue upon shipment of a sales order.
Cost of sales consists primarily of the cost of procuring and packaging products, the cost of shipping product to our international subsidiaries, warehouses and to our Members, plus credit card processing fees. Cost of sales was approximately 24.3% of revenues for the nine month period of 2015 compared to 21.8% of revenues for 2014. Cost of sales was approximately 23.4% of revenues for the third quarter of 2015 compared to 21.3% of revenues for third quarter of 2014. These increases are primarily attributable to our newest product, Ketopia, as it has a higher product costs, higher shipping costs, and royalty fees.
Management continues to negotiate better costs and terms with our key vendors to lower our cost of goods sold. 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.
Sales and marketing expenses for the nine month period of 2015 were 47.9% of revenues compared to 50.9% for the nine month period 2014 and were 47.1% of revenues for the 2015 third quarter compared to 51.7% for 2014 third quarter.
General and administrative expenses for the nine month period of 2015 were 29.9% of revenues compared to 24.8% for the nine month period 2014 and were 31.1% of revenues for the 2015 third quarter compared to 25% for 2014 third quarter.
which brings consistency across the various FGXpress and Farmers Market products. This initiative also involved a facelift to the Company's website.
For more information on ForeverGreen's products, visit www.xtremearno.fgxpress.com.
For more information on Farmer´s Market products, visitwww.xtremearno.farmersmarketproducts.com
The total other expense for the nine month period of 2015 was up at .9% of revenues compared to .4% for the same period in 2014. This increase is due to the write off of expenses from the dissolution of a former entity in India. For the three month period the total other expense was down at .6% of revenues for 2015 compared to .7 % for 2014 third quarter. This decrease is due to lower interest expense in 2015 versus 2014.
The Company experienced a net loss of $371,401 and net income of $203,343 for the three months ended September 30, 2015 and September 30, 2014, respectively and net loss of $1,482,820 and net earnings of $839,250 for the nine months ended September 30, 2015 and September 30, 2014, respectively. The loss is attributable to the Company's global launch convention in May, the Company's rebranding and image campaign, which was revealed at the convention, and the increased costs associated with the fraudulent activity occurring during the second quarter of 2015.
Nov 16, 2015
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