Attached files
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| EX-16 - LETTER ON CHANGE IN CERTIFYING ACCOUNTANT - Youngevity International, Inc. | ex16-1.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
Date of
Report (date of earliest event reported): October 12, 2020
YOUNGEVITY INTERNATIONAL, INC.
(Exact
name of registrant as specified in its charter)
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Delaware
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001-38116
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90-0890517
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(State
or other jurisdiction of incorporation)
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(Commission
File No.)
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(IRS
Employer Identification No.)
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2400 Boswell Road, Chula Vista, CA 91914
(Address
of principal executive offices) (Zip Code)
Registrant’s
telephone number, including area code: (619) 934-3980
N/A
(Former
name or former address, if changed since last report)
Check
the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant
under any of the following provisions:
☐ Written communications pursuant to Rule 425
under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12
under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to
Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
☐ Pre-commencement communications pursuant to
Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Securities
registered pursuant to Section 12(b) of the Act:
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Common
Stock
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YGYI
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The
Nasdaq Capital Market
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Series
D Preferred Stock
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YGYIP
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The
Nasdaq Capital Market
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Indicate
by check mark whether the registrant is an emerging growth company
as defined in in Rule 405 of the Securities Act of 1933
(§230.405 of this chapter) or Rule 12b-2 of the Securities
Exchange Act of 1934 (§240.12b-2 of this
chapter).
Emerging
growth company ☐
If an
emerging growth company, indicate by checkmark if the registrant
has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange
Act. ☐
Item 4.01 Changes in Registrant’s Certifying
Accountant.
On
October 12, 2020, the Board of Directors (the “Board”)
of Youngevity International, Inc. (the “Company”) was
notified by its registered independent certified public accounting
firm, Mayer Hoffman McCann P.C., of San Diego, CA that it had
resigned, effective immediately. Mayer Hoffman McCann P.C. has
served as the Company’s registered independent certified
public accountants since 2011.
The
Company’s Board has accepted the resignation of Mayer Hoffman
McCann P.C.
No
accountant's report on the Company’s consolidated financial
statements for either of the past two (2) years (i.e., the years
ended December 31, 2018 and 2017), contained an adverse opinion or
a disclaimer of opinion or was qualified or modified as to
uncertainty, audit scope or accounting principles, except for a
going concern modification included in both the 2018 and 2017
accountant’s reports expressing substantial doubt about the
ability of the Company to continue as a going concern.
During
the Company's two most recent fiscal years and the subsequent
interim periods proceeding such resignation, there were no
disagreements with Mayer Hoffman McCann P.C. on any matter of
accounting principles or practices, financial statement disclosure,
or auditing scope or procedure. During the Company's two most
recent fiscal years and the subsequent interim periods proceeding
such resignation, there were no “reportable events” as
that term is described in Item 304(a)(1)(v) of Regulation S-K,
other than as included in the notification on October 12, 2020 from
Mayer Hoffman McCann P.C. stating that the internal controls
necessary for the Company to develop reliable consolidated
financial statements do not exist and that information has come to
its attention that has led it to no longer be able to rely on
management's representations.
The
Company provided Mayer Hoffman McCann P.C. with a copy of the
foregoing disclosure and requested Mayer Hoffman McCann P.C. to
furnish the Company with a letter addressed to the Securities and
Exchange Commission (the “SEC”) stating whether it
agrees with the statements made therein. A copy of Mayer Hoffman
McCann P.C.’s letter to the SEC concurring with the
information contained herein is filed as Exhibit 16.1 to this
Current Report on Form 8-K.
Item 4.02 Non-Reliance on Previously Issued Financial Statements or
a Related Audit Report or Completed Interim Review.
On
October 13, 2020, the Audit Committee of the Board, following
discussions with management, determined that the unaudited
condensed consolidated financial statements for the quarters ended
March 31, 2019, June 30, 2019 and September 30, 2019 contained in
the Company’s Quarterly Reports on Form 10-Q previously filed
with the SEC on May 20, 2019, August 14, 2019 and November 18, 2019
should no longer be relied upon. Similarly, related press releases,
earnings releases, and investor communications describing the
Company’s unaudited condensed consolidated financial
statements for those periods should no longer be relied
upon.
The
determination of the Audit Committee to restate the
above-referenced condensed consolidated
financial statements was based upon certain errors to the
Company’s condensed consolidated financial statements
regarding the recognition of revenues and cost of sales of green
coffee for transfer to H&H Export Y CIA. LTDA
(“H&H”) in Nicaragua. During the 2019 audit
procedures, the Company determined that the Company did not own the
unprocessed green coffee prior to transferring the coffee to
H&H and is therefore an agent and processor of green coffee on
behalf of H&H. This determination meant that revenues on green
coffee transferred to H&H should have been recorded at net (the
added value of the processing of the green coffee beans) rather
than at gross, as previously reported. Based on its assessment,
management has determined that a restatement of the condensed
consolidated financial statements included in Quarterly Reports for
the quarters ended March 31, 2019, June 30, 2019 and September 30,
2019 was necessary due to a change in the accounting treatment of
its revenue derived from its green coffee sales, which had been
recorded on a gross basis and should be recorded on a net basis
reflecting the deduction of cost of revenue related to such
revenue.
The
Audit Committee, following discussions with management, has
determined that rather than recognizing revenues and cost of sales
of green coffee to H&H on a gross basis, the revenues and cost
of sales to H&H should be recognized on a net basis reflecting the
deduction of cost of revenue related to such revenue. The change in
accounting for the revenues and cost of sales of green coffee to
H&H from gross to net is not expected to have any impact on the
Company’s net income/loss.
In
addition to this change in accounting for recording revenue on
green coffee processing on behalf of H&H, management also
continued to update its review of the December 31, 2019 reserves
for uncollectable receivables for the remaining net trade account
receivable, note receivable and other receivables due from H&H.
Management has determined that it is probable that these
receivables from H&H are impaired and the condensed
consolidated financial statement restatements of the financial
statements included in Quarterly Reports for the quarters ended
March 31, 2019, June 30, 2019 and September 30, 2019 will be
adjusted to reflect an impairment. The Company’ subsidiary,
CLR Roasters LLC (“CLR”), has entered into an extended
payment program with H&H which it expects will allow CLR in the
future to realize the amounts due based on future shipments of
green coffee by CLR to H&H for delivery to its customers;
provided, that the amount of currently scheduled shipments of green
coffee by CLR to H&H for
delivery to H&H’s customers during 2020 is approximately
$3.8 million, resulting in significant uncertainty as to the timing
and amount of future payments and shipments for the balance of
approximately $5.0 million.
The
Company also has recently determined that the value of the
collateral underlying a promissory note, due November 2020, in the
principal and interest amount of $5.3 million, from H&H has
been impaired, resulting in an impairment allowance for $5.3
million. As a result, management believes it is more than likely
that the Company will not collect the outstanding balance and
interest due on the note receivable, and allowances for doubtful
accounts should be recognized at December 31, 2019.
The
Company has therefore recognized allowances for collectability
against the remaining net trade account receivable, notes
receivable and other receivables due from H&H for approximately
$5.0 million, $5.3 million and $397,000, respectively. These
amounts have been recorded as allowances for doubtful accounts at
the end of December 31, 2019.
The
Company intends to file as soon as practicable the restated
condensed consolidated financial statements for the quarters ended
March 31, 2019, June 30, 2019 and September 30, 2019, together with
its Annual Report on Form 10-K for the year ended December 31, 2019
and Quarterly Reports on Form 10-Q for the fiscal quarters ended
March 31, 2020 and June 30, 2020.
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Item 9.01.
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Financial Statements and Exhibits.
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(d) Exhibits.
The following exhibits are filed with this Current Report on Form
8-K:
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Exhibit
Number
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Description
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Letter
of Concurrence from Mayer Hoffman McCann P.C. dated October 16,
2020
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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 hereunto duly authorized.
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YOUNGEVITY
INTERNATIONAL, INC.
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Date:
October 16, 2020
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By:
/s/ David
Briskie
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Name:
David Briskie
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Title:
President and Chief Financial Officer
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