UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[X]

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

For the quarterly period ended March 31, 2011

[  ]

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

For the transition period from ___ to ___

Commission file number: 000-26973

FOREVERGREEN WORLDWIDE CORPORATION

(Exact name of registrant as specified in its charter)

(801) 655-5500

(Registrant’s telephone number, including area code)

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

Yes [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 [   ]

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.:

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 number of shares outstanding of the registrant’s common stock as of May 18, 2011 was 14,892,141.

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION

Item 1.  Financial Statements

2

Consolidated Balance Sheets

3

Consolidated Statements of Operations and Comprehensive Income (Loss)

4

Consolidated Statements of Cash Flows

5

Notes to the Consolidated Financial Statements

6

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

9

Item 3.  Quantitative and Qualitative Disclosures about Market Risk

11

Item 4.  Controls and Procedures

13

PART II – OTHER INFORMATION

Item 1A.  Risk Factors

13

Item 6.  Exhibits

14

Signatures

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PART I – FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

The financial information set forth below with respect to our statements of operations for the three month periods ended March 31, 2011 and 2010 is unaudited.  This financial information, in the opinion of management, includes all adjustments consisting of normal recurring entries necessary for the fair presentation of such data.  The results of operations for the three month period ended March 31, 2011, are not necessarily indicative of results to be expected for any subsequent period.  

FOREVERGREEN WORLDWIDE CORPORATION

Consolidated Financial Statements

March 31, 2011 and 2010

(Unaudited)

2

ForeverGreen Worldwide Corporation

Consolidated Balance Sheets

The accompanying notes are an integral part of these consolidated financial statements

3

ForeverGreen Worldwide Corporation

Consolidated Statement of Operations and Comprehensive Loss

(Unaudited)

The accompanying notes are an integral part of these consolidated financial statements

4

ForeverGreen Worldwide Corporation

Consolidated Statement of Cash Flows

(Unaudited)

The accompanying notes are an integral part of these consolidated financial statements

5

FOREVERGREEN WORLDWIDE CORPORATION

Notes to the Consolidated Financial Statements

March 31, 2011 and 2010

(Unaudited)

NOTE 1 – BASIS OF PRESENTATION

The unaudited consolidated financial statements of ForeverGreen Worldwide Corporation (the Company) have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q.  Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.  The unaudited consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany accounts and transactions are eliminated in consolidation.  In the opinion of management, the accompanying unaudited interim consolidated financial information contains all adjustments, consisting of normal recurring adjustments, necessary to present fairly the Company’s financial position as of March 31, 2011, and results of the three month period ended March 31, 2011 and 2010.  These unaudited financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010.  The results of operations for the three months ended March 31, 2011 may not be indicative of results that may be expected for the fiscal year ending December 31, 2011.

NOTE 2 – INVENTORIES

Inventory is recorded at the lower of cost or market and valued on a first-in, first-out basis.   Inventories for March 31, 2011 and 2010 were classified as follows:

NOTE 3 – EARNINGS (LOSS) PER SHARE

The computation of loss per common share is based on the weighted average number of shares outstanding during the quarter plus the common stock equivalents which would arise from the exercise of stock options and warrants outstanding using the treasury stock method and the average market price per share during the quarter.  The Company had no common stock equivalents at March 31, 2011 and 2010.

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FOREVERGREEN WORLDWIDE CORPORATION

Notes to the Consolidated Financial Statements

March 31, 2011 and 2010

(Unaudited)

NOTE 4 – RELATED PARTIES

On January 19, 2011 the Company set up a line of credit with a limit of $200,000 from a director with an interest rate of 10% and an expiration date of July 31, 2012. The Company borrowed $100,000 of the line of credit on January 19, 2011.

On January 19, 2011 the Company borrowed $394,962 from an unrelated party that paid off loans of $267,500 and accrued interest of $27,462 to a director leaving $100,000 available for operations.

NOTE 5 – UNRELATED PARTIES

During the current quarter the Company borrowed additional funds and issued notes to unrelated third parties as follows:

NOTE 6 – 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 Annual Report on Form 10-K for the year ended December 31, 2010 the Company has a working capital deficit of $3,084,184 a net operating loss of $399,106.  The Company also has an accumulated deficit as of March 31, 2011 of $26,211,595 (excluding other comprehensive loss), 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.

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FOREVERGREEN WORLDWIDE CORPORATION

Notes to the Consolidated Financial Statements

March 31, 2011 and 2010

(Unaudited)

NOTE 7 – SUBSEQUENT EVENTS

We have evaluated events occurring after the date of our accompanying balance sheets through the date the financial statements were issued.  Other than the events described below, we did not identify any material subsequent events requiring adjustment to our accompanying condensed financial statements.

On January 19, 2011 the Company set up a line of credit with a limit of $200,000 (Note 4) from a director with an interest rate of 10% and an expiration date of July 31, 2012. The Company borrowed the remaining $100,000 available in the line of credit on April 19, 2011.

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In this report references to “ForeverGreen,” “we,” “us,” “our” and “the Company” refer to ForeverGreen Worldwide Corp. and its subsidiary.

NOTE REGARDING FORWARD LOOKING STATEMENTS

The Securities and Exchange Commission (“SEC”) encourages reporting 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.

ITEM 2.  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 FrequenSea™ 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.

During the first quarter of 2011 we experienced a sales growth trend that is continuing into the second quarter of 2011.  We have experienced a significant increase in sales in March 2011 as compared to February 2011 primarily as the result of the introduction of our new brand line “VERSATIVA” which is designed to improve our business opportunity for our independent distributors. The new brand line introduction “VERSATIVA” was critical to the enrollment of several experienced entrepreneurs in our industry.  We anticipate that the increase in sales will continue in the short term.

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.

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Liquidity and Capital Resources

During the three month period ended March 31, 2011 we invested in marketing and advertising to facilitate our expected growth.  At March 31, 2011, cash decreased to $161,910 and we recorded a net loss of $342,783 for the 2011 three month period.  We also had negative working capital of $3,357,921 at March 31, 2011.  Our net loss increase for March 31, 2011 compared to March 31, 2010 was directly related to the additional expenses related to our growth plan for 2011. The losses and negative working capital raise doubt as to our ability to continue as a going concern.  In this regard, management intends to continue to increase revenues and manage expenses, improving profitability and the liquidity of ForeverGreen.

During the first quarter of 2011 we relied on our revenues and additional funding to fund operations along with a line of credit of $100,000, which is secured with the guarantee of two stockholders, and we also relied upon loans from related and third parties.  We are currently looking forward to and investing in the growth of our company thanks to the signing of several top industry leading entrepreneurs and their down-lines.  Management will continue to scrutinize expenses related to our operating activities and order fulfillment to determine appropriate actions to take to reduce these costs.

Management anticipates that any cash shortfalls will be covered 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 or to pay for services provided to us.  Any private placement likely will rely upon exemptions from the registration requirements provided by federal and state securities laws.  The purchasers and manner of issuance will be determined according to our financial needs and the available options.  We also note that if we issue more shares of our common stock, our shareholders may experience dilution in the value per share of their common stock.

Commitments and Contingent Liabilities

Our total liabilities at March 31, 2011 were $4,820,683 compared to $4,212,340 at December 31, 2010.  The majority of the increase is reflected in notes payable increasing by $327,462, the remaining increases are in the bank overdraft, accounts payable and accrued expenses.  ForeverGreen International used these funds from these parties during 2011 to increase inventory and pay additional operational costs needed to support our expected growth.

ForeverGreen has two building leases for office, production warehouse space in Orem, Utah.  We are currently on a month to month lease for our office space at a monthly rent of $1,500.  The production warehouse lease for $8,531 per month began September 1, 2006 and expires August 31, 2013 with provisions for an automatic five year extension.  All leases have a provision for an annual increase of 3%.  The buildings ForeverGreen leases are sufficiently large enough to accommodate all of our administrative, warehouse and production needs. ForeverGreen also has an office in Mexico with a one year lease paying $2,000 per month and an office in Colombia with a one year lease paying $840 per month. In 2011 ForeverGreen added an office in Costa Rica with a one year lease paying $1,500 per month. In April 2011 we added an office in Chile with a one year lease and monthly payments of $1,390.

Our total current liabilities at March 31, 2011 reflect the continued use of a line of credit and bank overdraft, along with accounts payable and notes payable.   Our accounts payable of $849,982 are primarily related to vendor purchases.  Our accrued expenses of $1,856,814 are related to commissions payable, sales tax payable, foreign GST and VAT taxes payable, interest payable and payroll taxes payable.  We also carry notes payable of $1,794,196 related to loans from related parties as well as third parties.  These notes carry 10% interest and have due dates through January 31, 2012. (See Exhibit 10.5)

Accounts payable also include monetary settlements agreed to in two legal actions which will require the Company to make payments to third parties.  We are obligated to pay $120,000; twenty–four $5,000 monthly payments to resolve the settled litigation.

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Results of Operations

The following chart summarizes the unaudited consolidated financial statements of ForeverGreen Worldwide at March 31, 2011 and 2010.  The consolidated unaudited balance sheets and unaudited 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 the periods noted and should be read in conjunction with the financial statements, and notes thereto, included with this report at Part I, Item 1, above.

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, for the first

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quarter of 2011 net returns were .94%, down from 1.4% in 2010.  Sales for the first quarter of 2011 increased 9.84% compared to the same period in 2010. We attribute this increase to the signing of several top industry leaders.

Cost of sales consists primarily of sales commissions paid to our Distributors, 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 78% of revenues for the first quarter of 2011 compared to 69% of revenues for 2010.  The 2011

increase in mostly attributable to the rising fuel costs which are passed on to us through our shipping and handling costs, along with increased costs paid for our distributor commissions.

Total operating expenses increased 1.8% for the first quarter of 2011 to $920,915 compared to $904,493 the same period in 2010. This increase is mostly attributable to the traveling costs associated with increased distributor and company activities.  In 2009 a goodwill impairment of $5,777,627 was recorded, but no goodwill impairment was needed in 2010, or to date in 2011.  General and administrative expenses increased by $88,223 compared to the first quarter of 2010. This is due to increased advertising, marketing, and travel expenses associated with distributor and company activities. Salaries and wages decreased in 2011 compared to the same period in 2010 by $67,704 as a result of management’s effort to control staff costs in relation to our revenues.  Professional fees slightly increased for March 31, 2011 compared to the same period in 2010 by $7,366.  Depreciation and amortization decreased in the first quarter of 2011 compared to 2010 by $11,463 due to no additional assets being purchased in 2010 or to date in 2011.

We experienced an increase of 9.84% in revenues of $277,720 in the first quarter of 2011 compared to the same period in 2010. Our net loss for the first quarter of 2011 was $342,783, and a net loss per share of $0.02.  This compares to a net loss in the first quarter of 2010 of $43,536, and a net loss per share of $0.00. This is due to management decisions to support increased distributor sign ups and leader enrollments to facilitate our expected growth throughout 2011. We expect by the end of this fiscal year our percentage of expenses to revenues will be closer to what they were at year end 2010.

Off-balance Sheet Arrangements

We have not entered into any off-balance sheet arrangements that have or are reasonably likely to have a current or

future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources and would be considered material to investors.

Critical Accounting Estimates

We account for our investments in our subsidiary using the purchase method of accounting.  The excess of the consideration paid for a subsidiary over the fair value of acquired tangible assets less the fair value of acquired liabilities is assigned to intangible assets and goodwill.  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.  Goodwill is not amortized, but 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.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable to smaller reporting companies.

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ITEM 4.  CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) or 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed in our filings under the Exchange Act is recorded, processed, summarized and reported within the periods specified in the rules and forms of the SEC.  This information is accumulated to allow timely decisions regarding required disclosure.  Our Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report and concluded that our disclosure controls and procedures were ineffective due to the late filing of our December 31, 2010 Form 10-K.

Changes to Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act).  Management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the criteria set forth in “Internal Control - Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Management determined that there were no changes made in our internal control over financial reporting during the  quarter ended March 31, 2011 that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1A.  RISK FACTORS

Factors Affecting Future Performance

Actual costs and revenues could vary from the amounts we expect or budget, possibly materially, and those variations are likely to affect how much additional financing we will need for our operations.  

Management plans to increase sales and decrease expenses where appropriate to improve profitability.  Our future internal cash flows will be dependent on a number of factors, including:

•

The recovery of the United States and the global economy;

•

Our ability to encourage our Members to sponsor new Members and increase their own personal sales;

•

Our ability to promote our product lines with our Members and customers;

•

Our ability to develop successful new exclusive product lines;

•

Our ability to obtain essential oil raw materials for some of our products;

•

Effects of future regulatory changes in the area of direct marketing, if any;

•

Our ability to remain competitive in our domestic and international markets; and

•

Our ability to decrease shipping time and expense.

Our expansion into foreign markets exposes our business to risks related to those economies which may result in loss of revenues.

We have entered into agreements with Members and suppliers in foreign countries and we may establish similar arrangements in other countries in the future.  As a result, our future revenues may be affected by the economies of these countries.  Our international operations are subject to a number of risks, such as, longer payment cycles, unexpected changes in regulatory environments, import and export restrictions and tariffs, difficulties in staffing and managing international operations, potentially adverse recessionary environments and economies outside the United States, and possible political and economic instability.  

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ITEM 6.  EXHIBITS

Part I Exhibits

No.

Description

31.1

Chief Executive Officer Certification

31.2

Chief Financial Officer Certification

32.1

Section 1350 Certification

Part II Exhibits

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

*   Exhibits are management contracts or compensatory plans or arrangements.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

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