ForeverGreen Worldwide Corporation
Consolidated Statements of Stockholders' Equity
For the years ended December 31, 2011 and 2010 (restated)
									Additional				Other
	Preferred Stock				Common Stock				Paid-in		Accumulated		Comprehensive		Prepaid
	Shares		Amount		Shares		Amount		Capital		Deficit		Income		Expenses
Balance, December 31, 2009 (restated)	--		$        --		14,342,141		$  14,342		$ 30,806,346		$ (32,524,492)		$  (111,862)		$      (45,807)
Shares issued for services
$.1034 per share	--		--		550,000		550		56,282		-		--		(56,832)
Amortization of prepaid expenses	--		--		--		--		--		--		--		63,089
Foreign currency translation	--		--		--		--		--		--		(30,818)		--
Net loss for the period ended
December 31, 2010	--		--		--		--		--		(589,735)		--		--
Balance, December 31, 2010 (restated)	--		$         --		14,892,141		$  14,892		$ 30,862,628		$ (33,114,227)		$  (142,680)		$   (39,550)

Shares issued for services
$.1034 per share	--		--		-		-		--		--		--		-
Amortization of prepaid expenses	--		--		--		--		--		--		--		39,550
Contributed capital	--		--		--		--		71,481		--		-		--
Foreign currency translation	--		--		--		--		--		--		142,230		--
Net loss for the period ended
December 31, 2011	--		--		--		--		--		(1,459,268)		--		--
Balance, December 31, 2011	--		$         --		14,892,141		$  14,892		$ 30,934,109		$   (34,573,495)		$            (450)		$               -

The accompanying notes are an integral part of these financial statements

8

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ForeverGreen Worldwide Corporation
Consolidated Statements of Cash Flows
									For the Year Ended
									December 31,
									2011		2010
											(Restated)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss									$(1,459,268)		$(589,735)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
	Depreciation and amortization								213,948		325,393
	Common stock issued for services rendered								-		56,832
	Gain on settlement								-		(70,953)
Changes in operating assets and liabilities:
	Accounts receivable								(738,086)		(65,383)
	Prepaid expenses								(126,744)		52,390
	Inventory								(296,198)		97,698
	Deposits and other assets								489,111		15,989
	Accounts payable								502,130		-
	Accrued expenses								505,263		(139,780)
				Net Cash Used in Operating Activities					(909,844)		(317,549)
CASH FLOWS FROM INVESTING ACTIVITIES:
			Cash paid for trademarks						-		(435)
			Purchases of property and equipment						(732)		(16,920)
					Net Cash Used in Investing Activities				(732)		(17,355)
CASH FLOWS FROM FINANCING ACTIVITIES:
			Proceeds from bank overdraft						145,198		34,388
			Net proceeds from banking line of credit						100,420		(49,990)
			Payments on notes payable						(2,108)		(1,753)
			Payments on notes payable - related parties						(267,500)		205,000
			Proceeds from convertible notes payable – related party						200,000		-
			Proceeds from convertible note payable						776,720		100,000
					Net Cash Provided by Financing Activities				952,730		287,645
					Effect of Foreign Currency on Cash				2,821		(30,817)
NET INCREASE IN CASH									44,975		(78,076)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD									178,124		256,200
CASH AND CASH EQUIVALENTS AT END OF PERIOD									$         223,099		$178,124
SUPPLEMENTAL CASH FLOW INFORMATION
Interest									$          18,691		$            7,210
Income taxes									$                   -		$                   -

The accompanying notes are an integral part of these financial statements

9

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FOREVERGREEN WORLDWIDE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011 and 2010

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 one company. The combined operation subsequently combined their product lines and created a new unified catalog.

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

10

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FOREVERGREEN WORLDWIDE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011 and 2010

NOTE 1 -   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

a. Organization - continued

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, Guam, 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 Accounting Standards Codification (“ASC”) 605-10, Revenue Recognition in Financial Statements ASC 605-10, which provides guidance on the recognition, presentation, and disclosure of revenue in financial statements filed with the SEC.  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 years presented.  Revenues are reported net of returns.  All conditions of ASC 605-10 are met and the revenue is recorded upon sale, with an estimated accrual for returns where material.   

c. Accounts Receivable

Accounts receivable arise from doing business with third party distributor centers in various locations throughout South America. The accounts receivable are made up of fees owed by the distribution centers to the Company for the right to do business in our name. The Company evaluates the need for an allowance for doubtful accounts when it is determined that collection amounts owed is unlikely.  No allowance has been recorded at December 31, 2011 and 2010, accordingly.

Distributors are required to pay for products prior to shipment. Distributors typically pay for products in cash, by wire transfer or by credit card. Accordingly, the Company seldom carries accounts receivable from distributors that are not distribution centers and any balances carried would be minimal.

d. Principles of Consolidation

The consolidated balance sheets and statement of operations for the periods ended December 31, 2010 and 2011 include the books of ForeverGreen Worldwide Corporation (Nevada) and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in the consolidation.

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FOREVERGREEN WORLDWIDE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011 and 2010

NOTE 1 -   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

e. 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. Basic and diluted net loss per share attributable to common stockholders is computed by dividing net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period.  Our potentially dilutive shares, which include outstanding common stock options, common stock warrants and convertible debentures, have not been included in the computation of diluted net loss per share attributable to common stockholders for all periods presented, as the results would be anti-dilutive.  Such potentially dilutive shares are excluded when the effect would be to reduce net loss per share.  There were 4,132,324 and 1,102,475 such potentially dilutive shares excluded as of December 31, 2011 and 2010.

	December 31,
	2011		2010
Income (Loss) Numerator	$      (1,459,268)		$          (589,735)
Shares (Denominator)	14,892,141		14,346,674
Per Share Amount	$              (0.10)		$               (0.04)

f. Provision for Income Taxes  

The Company provides for income taxes under ASC 740, Accounting for Income Taxes. ASC 740 requires the use of an asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect when these differences are expected to reverse. The Company’s predecessor operated as entity exempt from Federal and State income taxes.

ASC 740 requires the reduction of deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

The provision for income taxes differs from the amounts which would be provided by applying the statutory federal income tax rate of 34% to the net loss before provision for income taxes for the following reasons:

	For the Years Ended
	December 31,
	2011		2010
Book income (loss) from operations	$   (496,151)		$         (200,510)
Inventory reserve	9,207		17,848
State tax benefit	(43,778)		(19,461)
Other	1,891		-
Employee expenses	(278)		20,232
Change in valuation allowance	529,109		181,891
Total provision for income taxes	$                     -		$                     -

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FOREVERGREEN WORLDWIDE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011 and 2010

NOTE 1 -  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED

f. Provision for Income Taxes - continued

Net deferred tax assets consist of the following components as of:

	December 31,
	2011		2010
Net operating loss carry forwards	$    10,175,796		$           9,672,574
Meals	(628)		(628)
Inventory reserve	18,696		9,489
Employee accruals	19,954		20,323
Depreciation and amortization	35,434		18,476
Valuation allowance	(10,249,252)		(9,720,143)
Net deferred taxes	$                     -		$                     -

The Company assesses the need for a valuation allowance against its deferred income tax assets at December 31, 2011.  Factors considered in this assessment include recent and expected future earnings and the Company’s liquidity and equity positions.  As of December 31, 2011 and 2010, 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, 2011, the Company has net operating loss carry forwards of approximately $26,760,701. These carry forwards are available to offset future taxable income, if any, and begin to expire in 2019.  The utilization of the net operating loss carry forwards is dependent upon the tax laws in effect at the time the net operating loss carry forwards can be utilized and may be significantly limited based on ownership changes as set forth in the Internal Revenue Code.

g. Cash and Cash Equivalents

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

h. 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, 2011 and 2010 is $121,459, and $233,499, respectively.

In accordance with ASC 360-10, 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 effect on the income

13

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FOREVERGREEN WORLDWIDE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011 and 2010

NOTE 1 -  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED

h. Property and Equipment - continued

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, 2011 and determined no adjustment to long term assets was needed.

i. 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, 2011 and 2010 there was an allowance for obsolete inventory in the amount of $27,079 and $27,079, respectively.

j. Fair Value of Financial Instruments

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, 2011 and 2010.

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.

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 ASC 505-50. 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

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FOREVERGREEN WORLDWIDE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011 and 2010

NOTE 1 -  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED

m. Equity Instruments - continued

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 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 $0 and $56,832 in expense for equity issued to consultants for the years ended December 31, 2011 and 2010, respectively.

n. Intangible Assets

Intangible assets consist of patent costs, trademark costs and the customer base.  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 of the technology and future cash flows. The Company recognizes impairment losses when undiscounted cash flows estimated to be generated from long-lived assets are less than the net carrying amount of intangible assets.  No impairment was recognized accordingly, during the years ended December 31, 2011 and 2010.

The Company capitalizes legal fees incurred to register trademarks for its products.  Trademarks consist of the following for the period ended December 31, 2010 and 2009:

	2011		2010
Trademarks	$    78,787		$    69,204
Less accumulated amortization	(27,157)		(20,259)
Net trademarks	$    51,630		$    48,945

The Customer Base intangible was calculated using a percentage of the gross margin of ForeverGreen International LLC (see Note 7 below).  The Company amortizes the customer base over a period of ten years. The customer base consists of the following for the period ended December 31, 2011:

	2011
Customer Base	$    855,900
Less accumulated amortization	(427,950)
Net Customer Base	$    427,950

Trademark, patent and customer based amortization expense for the years ended December 31, 2011 and 2010 were $92,489 and $91,894, respectively.

o. Advertising

Advertising expense for the years ended December 31, 2011 and 2010 were $186,349 and $61,290, respectively.

p. Business Acquisitions

Business acquisitions are accounted for under the purchase method of accounting.  Under that method, assets and liabilities of the business acquired are recorded at their estimated fair values as of the date of the acquisition, with any excess of the cost of the acquisition over the estimated fair value of the net tangible

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FOREVERGREEN WORLDWIDE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011 and 2010

NOTE 1 -  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED

p. Business Acquisitions – continued

and intangible assets acquired recorded as goodwill.  We make significant judgments and assumptions in determining the fair value of acquired assets and assumed liabilities, especially with respect to acquired intangibles.  Using different assumptions in determining fair value could materially impact the purchase price allocation and our financial position and results of operations.  Results of operations for acquired businesses are included in the consolidated financial statements from the date of acquisition.

q. Accumulated Other Comprehensive Income

Comprehensive loss includes net loss as currently reported under U.S. GAAP and other comprehensive loss. Other comprehensive loss considers the effects of additional economic events, such as foreign currency translation adjustments, that are not required to be recorded in determining net loss, but rather are reported as a separate component of stockholders’ equity (deficit).

r. Recent accounting pronouncements

Recent Accounting Pronouncements - In December 2010, the FASB issued ASU 2010-28, “Intangibles —Goodwill and Other (ASC Topic 350): When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts.” The amendments in this ASU modify Step 1 of the goodwill impairment test for reporting units with zero or negative carrying amounts. For those reporting units, an entity is required to perform Step 2 of the goodwill impairment test if it is more likely than not that a goodwill impairment exists. In determining whether it is more likely than not that goodwill impairment exists, an entity should consider whether there are any adverse qualitative factors indicating that impairment may exist. The qualitative factors are consistent with the existing guidance and examples, which require that goodwill of a reporting unit be tested for impairment between annual tests 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 public entities, the amendments in this ASU are effective for fiscal years, and interim periods within those years, beginning after December 15, 2010. The adoption of this guidance did not have a material impact on the Company’s results of operations or financial condition.

 

In May 2011, the Financial Accounting Standards Board (FASB) issued ASU 2011-04, guidance to improve consistency in application of existing fair value measurement and disclosure requirements.  The standard is intended to clarify the application of the requirements, not to establish valuation standards or affect valuation practices outside of financial reporting.  The guidance is effective for interim and annual periods beginning on or after December 15, 2011, with early adoption prohibited.  We do not expect adoption of this guidance to have an impact on our financial statements.

 

In June 2011, the FASB issued ASU 2011-05, guidance to improve the comparability, consistency, and transparency of financial reporting and to increase the prominence of items reported in other comprehensive income.  The standard eliminates the current option to present components of other comprehensive income as part of the statement of changes in stockholders’ equity.  The amendment requires that all non-owner changes in stockholders’ equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements.  The amendment does not affect how earnings per share is calculated or presented.  The guidance is effective for interim and annual periods beginning after December 15, 2011.  Early adoption is permitted. We do not expect adoption of this guidance to have an impact on our financial statements.

 

In September 2011, the FASB issued ASU 2011-08, “Intangibles — Goodwill and Other (Topic 350).” The objective of this Update is to simplify how entities test goodwill for impairment. This Update permits an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. The Update is effective for annual and interim goodwill

16

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FOREVERGREEN WORLDWIDE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011 and 2010

NOTE 1 -  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED

r. Recent accounting pronouncements - continued

impairment tests performed for fiscal years beginning after December 15, 2011. Early adoption is permitted, including for annual and interim goodwill impairment tests performed as of a date before September 15, 2011. The adoption of this guidance did not have a material impact on the Company’s results of operations or financial condition.

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, 2011 and 2010:

	2011		2010
Leasehold improvements	$      85,838		$        86,113
Office furniture & fixtures	187,548		177,355
Equipment	458,414		458,414
Vehicles	56,548		56,548
Computer equipment	515.170		516,546
Computer software	635,446		635,445
Total Fixed Assets	1,938,764		1,930,031
Accumulated depreciation	(1,787,620)		(1,665,144)
Total Property &   Equipment	$    151,144		$      264,887

Depreciation expense for the years ended December 31, 2011 and 2010 were $121,459 and $233,499 respectively.

NOTE 3 – ACCRUED EXPENSES

Accrued expenses consist of the following at December 31, 2011 and 2010:

	2011		2010
Distributor liabilities	$      440,361		$       421,933
Accrued employee benefits	58,689		59,506
Accrued accounting fees	-		64,832
Accrued taxes	1,032,382		858,699
Other accrued liabilities	579,196		384,236
Total	$    2,110,674		$    1,789,206

NOTE 4 – NOTES PAYABLE

Long term liabilities are detailed in the following schedules as of December 31, 2011 and 2010:

	2011		2010
Note payable to Wells Fargo Bank bearing interest
At 7%, principle and interest due monthly, matures
August, 2019, secured by equipment	$   23,092		$     25,200
Less current portion of Notes payable	(1,945)		(4,127)
Net Long-Term Liabilities	$    21,147		$   21,073

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FOREVERGREEN WORLDWIDE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011 and 2010

NOTE 4 – NOTES PAYABLE - continued

Future minimum principal payments on notes payable and notes payable-related party are as follows at December 31, 2011:

2012	1,945
2013	2,097
2014	2,259
2015	2,435
Thereafter	12,402
Total	$     21,138

2011 NOTES PAYABLE
AMOUNT	TYPE	ORIGINATION DATE	INTEREST RATE	DUE DATE
$ 485,000	Not convertible related	12/9/2008	10%	Due on demand
$ 437,478	Not convertible related	7/31/2009	10%	7/31/2012
$ 45,000	Convertible related	10/7/2010	10%	9/30/2012
$ 200,000	Convertible related	1/19/2011	10%	7/31/2012
$ 394,962	Convertible unrelated	1/19/2011	10%	7/31/2012
$ 100,000	Convertible unrelated	3/14/2011	10%	7/31/2012
$ 281,758	Convertible unrelated	5/26/2011	10%	12/31/2012
$ 231,756	Convertible unrelated	3/9/2010	10%	1/31/2012

2010 NOTES PAYABLE
AMOUNT	TYPE	ORIGINATION DATE	INTEREST RATE	DUE DATE
$ 485,000	Not convertible related	12/9/2008	10%	Due on demand
$  45,000	Not convertible related	7/23/2009	10%	11/30/2009
$ 437,478	Not convertible related	7/31/2009	10%	7/31/2012
$ 45,000	Not convertible related	8/21/2009	10%	11/30/2009
$ 17,500	Not convertible related	8/21/2009	10%	12/28/2009
$ 40,000	Not convertible related	1/7/2010	10%	2/20/2010
$ 40,000	Not convertible related	1/29/2010	10%	3/15/2010

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FOREVERGREEN WORLDWIDE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011 and 2010

NOTE 4 – NOTES PAYABLE - continued

2010 NOTES PAYABLE - continued
AMOUNT	TYPE	ORIGINATION DATE	INTEREST RATE	DUE DATE
$ 50,000	Not convertible related	3/4/2010	10%	4/30/2010
$  30,000	Not convertible related	10/7/2010	10%	9/30/2012
$ 45,000	Convertible related	10/7/2010	10%	9/30/2012
$ 231,756	Convertible unrelated	3/9/2010	10%	1/31/2012

The Company has a revolving line of credit bearing 6.75% interest per annum with balances of $100,420 and $50,379 at December 31, 2011 and 2010, respectively.

Accrued interest for the periods ended December 31, 2011 and 2010 was $391,719 and $195,615, respectively.

NOTE 5 – OPERATING LEASES

The Company has two building leases for office, production warehouse space in Orem, Utah.  The Company signed a new lease in 2011 for the office space at a monthly rent of $9,750.  The production warehouse lease for $10,061 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 Company 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. The company added offices in Chile and Costa Rica in 2011.  The Chile office has a one year lease and is paying $1,390 per month, and the Costa Rica office has a 3 year lease and is paying $1,500.  All rent amounts above are in USD.

Total Lease Commitments:

2012	192,370
2013	428,453
2014	263,295
2015	309,399
Thereafter	195,576
Total	$      1,289,093

Rent expense for operating leases for December 31, 2011 and 2010 was $249,117, and $286,908, respectively.

NOTE 6 - COMMITMENTS AND CONTINGENCIES

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.   The Company is aggressively defending its position and feels strongly that this claim will not result in a liability.

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FOREVERGREEN WORLDWIDE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011 and 2010

 

NOTE 7 – 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 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. See Note 1 (n) above for gross book value, accumulated amortization and net book value of the customer base intangible asset.

NOTE 8 – INVENTORY

Inventories for December 31, 2011 and 2010 were classified as follows:

	2011		2010
Raw Materials	$   442,147		$     356,133
Finished Goods	730,491		374,142
Total Inventory	1,172,638		730,275
Less Reserve for Obsolete Inventory	(27,079)		(27,079)
Total Inventory (net of  reserve)	$1,145,559		$    703,196

NOTE 9 - 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 $4,298,664 a net operating loss of $1,459,268, and accumulated deficit of $34,573,495 at December 31, 2011, 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.

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FOREVERGREEN WORLDWIDE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011 and 2010

NOTE 9 - GOING CONCERN - continued

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.

NOTE 10 – SUBSEQUENT EVENTS

We have evaluated events occurring after the date of our accompanying balance sheets through the date the financial statements were available to be 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 13, 2012 the Company borrowed $40,000 at an interest rate of 10%from a related party which was paid back in full by March 1, 2012.

On March 16, 2012 the Company borrowed $30,000 at an interest rate of 10% from a related party which was paid back in full on May 1, 2012.

NOTE 11 – RESTATED FINANCIAL STATEMENTS

            During the year ended December 31, 2011, the Company discovered goodwill impairment related to the year

            ended 2009, unrecorded liabilities and related expenses in 2010, unrecorded costs in 2010. The Company

            has restated its financial statements for the year ended December 31, 2010 to reflect the goodwill

            impairment, unrecorded liabilities and related expenses and unrecorded costs.  Summarized financial   

            statements reflecting the restatements are as follows:

[Restatements follow]

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FOREVERGREEN WORLDWIDE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011 and 2010

NOTE 11 – RESTATED FINANCIAL STATEMENTS – continued

CONSOLIDATED BALANCE SHEETS Year Ended December 31, 2010

continued

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FOREVERGREEN WORLDWIDE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011 and 2010

NOTE 11 – RESTATED FINANCIAL STATEMENTS – continued

CONSOLIDATED BALANCE SHEETS Year Ended December 31, 2010 – continued

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FOREVERGREEN WORLDWIDE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011 and 2010

NOTE 11 – RESTATED FINANCIAL STATEMENTS - continued

CONSOLIDATED STATEMENTS OF OPERATIONS Year Ended December 31, 2010

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FOREVERGREEN WORLDWIDE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011 and 2010

NOTE 11 – RESTATED FINANCIAL STATEMENTS - continued

CONSOLIDATED STATEMENTS OF CASH FLOWS - Year Ended December 31, 2010

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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 2 through 25.  

(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

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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:  September 27, 2012

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By:   /s/ Ronald K. Williams         Ronald K. Williams         Chairman of the Board         President         Chief Executive Officer	Date:  September 27, 2012
By:   /s/ Paul T. Frampton         Paul T. Frampton         Chief Financial Officer         Treasurer	Date:   September 27, 2012
By:   /s/ John S. Clayton         John S. Clayton         Director	Date:   September 27, 2012

27