UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

[X]

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

For the fiscal year ended December 31, 2013

OR

[  ]

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

For transition period ___ to ____

Commission file number: 000-26973

FOREVERGREEN WORLDWIDE CORPORATION

(Exact name of registrant as specified in its charter)

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

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

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

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

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.

Yes [   ]   No [X]

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

Yes [X]   No [  ]

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

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

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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 aggregate market value of the 6,519,334 shares of the registrant’s voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold ($0.25) on the last business day of its most recently completed second fiscal quarter (June 28, 2013) was $1,629,834.

The number of shares outstanding of the registrant’s common stock as of March 21, 2014 was 20,552,141.

Documents incorporated by reference:  None

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TABLE OF CONTENTS

PART I

Item 1.  Business

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Item 1A.  Risk Factors

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Item 2.  Properties

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Item 3.  Legal Proceedings

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Item 4.  Mine Safety Disclosure

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PART II

Item 5.  Market for Registrant’s Common Equity, Related Stockholder Matters

and Issuer Purchases of Equity Securities

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Item 6.  Selected Financial Data

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Item 8.  Financial Statements and Supplementary Data

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Item9.  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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Item 9A.  Controls and Procedures

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Item 9B.  Other Information

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PART III

Item 10.  Directors, Executive Officers and Corporate Governance

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Item 11.  Executive Compensation

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Item 12.  Security Ownership of Certain Beneficial Owners and Management

and Related Stockholder Matters

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Item 13.  Certain Relationships and Related Transactions, and Director Independence

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Item 14.  Principal Accounting Fees and Services

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PART IV

Item 15.  Exhibits, Financial Statement Schedules

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Signatures

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

FORWARD LOOKING STATEMENTS

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

PART I

ITEM 1.  BUSINESS

Historical Development

ForeverGreen Worldwide Corporation, formerly Whole Living, Inc. (“ForeverGreen Worldwide”), was incorporated in the state of Nevada on March 18, 1999 as Whole Living, Inc.  In May of 1999, Whole Living merged with Whole Living Inc., a Utah corporation, which owned the trademark “Brain Garden” and some of the products and formulas presently being marketed by ForeverGreen Worldwide.  

On January 13, 2006, Whole Living acquired a 23% interest in ForeverGreen International, LLC (“ForeverGreen International”).  ForeverGreen International is a network marketing company that focuses on whole foods and natural products.

Whole Living, Inc. changed the name of the corporation to “ForeverGreen Worldwide Corporation” on December 14, 2006 and acquired the remaining 77% interest of ForeverGreen International.  ForeverGreen International became a wholly-owned subsidiary of ForeverGreen Worldwide.  The Brain Garden subsidiary was dissolved after this acquisition.

Our Business

ForeverGreen Worldwide is a holding company that operates through its wholly owned subsidiary, ForeverGreen International, LLC (named alternately in this document as “the Company” or “FGI”). The Company develops, manufactures and distributes an expansive line of all natural whole foods and related wellness and personal care products to North America, Australia, Europe, Asia and South America, including our new global offering, PowerStrips™. We have two key lines of business with separate but complementary focus areas.

FGXpress specializes in the exclusive production and marketing of PowerStrips, a proprietary topical pain relief product that is listed with the U.S. Food and Drug Administration as a Class I Medical Device. These patented topical adhesive strips are small, light, flat and inexpensive to ship in a greeting-card sized envelope, making the product available to customers all around the world. Because of this unique product positioning and configuration, the Company has elected to operate FGXpress as a division of FGI.

ForeverGreen specializes in the development, manufacturing and marketing of a comprehensive line of raw/whole foods, essential oils and healthy personal care products. Two key differentiators separate ForeverGreen from our competitors in the direct sales and traditional consumer spaces. One is our proprietary marine phytoplankton nutritional component which is sourced through exclusive strategic partnerships in both farming and processing.

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The other is our patent-pending Aqueous Molecular Partitioning (AMP) technology which renders ingredients water-soluble without the use of chemicals or heat which may compromise the nutritional value or health benefits of many processed foods.

The FGXpress and ForeverGreen lines currently operate separately with distinct enrollment structures and compensation plans. While protecting the unique marketing advantages of the two lines, we are actively exploring the feasibility of cross-promotional strategies between them and a shared marketing structure that would offer significant benefits to our independent business owners while reinforcing the combined revenue potential of FGI.

While we relentlessly strive to improve our products, processes and profitability, what truly sets FGI apart is the value system that underlies every aspect of our operations. When ForeverGreen was founded in 2003, one of our earliest positioning statements was Health, Kindness, Opportunity. These three words summarize the balanced and interdependent values that guide every choice we make and every action we take as company. We value timelessness over trends. Our products and business practices are consciously crafted so that our employees and worldwide community members will think of ForeverGreen as a lasting career home, not a here-today, gone-tomorrow profit opportunity to be consumed and discarded.

Kindness is more than a catch phrase at ForeverGreen. Kindness is at the core of how we treat everyone who comes in contact with our company. Although we constantly aim for harmony and excellence, there are days when we disagree or make mistakes. When we discover a misalignment we deal with it directly, but in a respectful way that leaves our working relationships intact. We embrace the same growth and profit motives as any successful company, but we insist on using those profits to improve the world around us and touch as many lives as possible for the better. Every ForeverGreen Member and employee is encouraged to actively give back to their local communities through selfless acts of service. We model this expectation as a Company through corporate outreach initiatives such as KIVA.

The Company delivers products through a direct sales model known as network marketing or multilevel marketing. This form of direct selling provides entrepreneurial opportunities to individuals, often with significantly lower barriers to entry (such as education, technical experience and startup costs) than most other traditional small business ventures. Although the industry does not escape the controversies that arise in any business environment, it is important to note that this model has delivered many of the world’s most respected products and services for decades to a loyal and stable customer base. In keeping with our corporate philosophy, one of ForeverGreen’s fundamental objectives is to dignify the network marketing/direct sales profession through our conduct and the results we deliver.

The lean and agile direct sales model offers unique business advantages not available to old-paradigm wholesale or consumer product companies. Because our products are sold through a global community of independent business owners, ForeverGreen is not required to carry the overhead burden of a large direct-hire sales force or costly, high-risk inventory stockpiles. The resulting margin contributes to our bottom line performance and also enables us to offer our Members competitive commission incentives.

According to Direct Selling Association (DSA) estimates, U.S. direct retail sales increased by nearly 6% in 2012 from USD 29.87 billion to USD 31.63 billion. This increase accelerated a general upward trend that has been gaining momentum since 2009. The DSA estimates that by the end of 2012 nearly 16 million people were involved in direct selling in the United States. Although the industry technically experienced a small decline in participation over the past few years following a major surge after the 2008 financial crisis, this anomaly is offset by a significant and stable pattern of growth over the last ten years.

Estimates by the World Federation of Direct Selling Associations (WFDSA) and other industry observers indicate that worldwide direct selling volume increased in 2012 by over 5% to nearly USD $16 billion. Globally the WFDSA estimates that 89.6 million people are active in direct selling and the Asia/Pacific region accounts for roughly half of this group, paralleling the worldwide growth percentage. Other high growth regions include South America and Central and Eastern Europe and ForeverGreen is active in all of these areas, not only with a thriving

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Member (independent member) base, but also with a steadily expanding international office and distribution footprint.

By design, ForeverGreen has remained strategically positioned in direct sales product categories that have seen consistent growth and deliver a higher share of sales revenue. Wellness and personal products continue to be among the most popular and profitable direct sales items. Growing public concern over food additives, GMO products and the proliferation of food-related health problems suggests that demand for our products will remain strong for the foreseeable future. In addition, person-to-person sales, as practiced by ForeverGreen independent representatives, accounts for nearly two thirds of industry-wide sales revenue in the U.S. and as much as 80% worldwide. The key industry indicators we monitor support our assertion that ForeverGreen is in the right space at the right time.

Competition

The market for products designed to enhance physical and mental performance is large and intensely competitive. Our primary competitors include other network marketing companies that manufacture and market herbal remedies, nutritional products and personal care products. We also compete with large traditional retail businesses that offer products in similar categories. To attract positive industry attention and hold sustainable market advantage, we emphasize differentiators such as our company culture, our exclusive access to unique ingredients, the quality and efficacy of our products and the reliability and convenience of our distribution system. We emphasize products that improve health through a diet of whole-food beverages and real, natural products rather than fractionated pills and supplements. We take pride in our commitment to offering clean, all natural, and/or organic products.

Other network marketing offerings compete with our FrequenSea™ product in the health beverage category. These competing products are based on a variety of fruit juices from around the world such as mangosteen, noni, acai and other fruit or plant ingredients. To our knowledge, our FrequenSea formulation is the first beverage or “juice product” to provide the benefits of marine phytoplankton in a proprietary whole-food tonic blend that includes ionic sea minerals, rose, ginger, aloe vera, frankincense, and other quality ingredients in a delicious base of cranberry, blueberry, and a twist of lime.

A number of our Smart Food products compete with “health bars” and nutritional supplements offered by many competitor companies as meal replacement products. Our essential oils and personal care products compete with companies that offer similar products, such as NuSkin, Neways and Young Living Essential Oils. In addition, herbal remedies, personal care, and nutritional products can be purchased in a wide variety of channels of distribution. While we believe that consumers appreciate the convenience of ordering products from home through a sales person they know and trust or through a catalog, the buying habits of many consumers indicate they may not wish to change their preference for purchasing products through traditional retail channels. We address this challenge directly in our marketing approach.

We also compete for Members (distributors) with other direct selling organizations, many of which have a longer operating history and higher visibility, name recognition, and financial resources. Some of the dominant network marketing companies in our existing markets are Amway Corporation, Herbalife and NuSkin Enterprises, to name a few. We also compete with many smaller network marketing companies that also offer personal care products, health and nutrition products. We compete for new Members on the strength of our product line, leadership training, compensation plan, marketing focus, corporate values and management leadership strengths.  

Products

ForeverGreen’s mission is to produce and deliver products that improve health through a diet of whole-foods and beverages and real, natural products as an alternative to fractionated, processed pills and supplements. We take pride in our commitment to offering all natural, clean, and/or organic products.

ForeverGreen Worldwide Corporation develops, manufactures and distributes an expansive line of all natural whole foods and products to North America, Australia, Europe, Asia and South America, including their new global

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offering, PowerStrips. We also offer Azul and FrequenSea™ whole-food beverages with industry exclusive marine phytoplankton, the Versativa line of hemp-based whole-food products, Immune Support, weight management products, Pulse-8 powdered L-arginine formula, TRUessence™ Essential Oils and Apothecary, 24Karat Chocolate®, and an entire catalog of meals, snacks, household cleaners and personal care products.

Our best-selling product is FrequenSea, a whole-food beverage consisting of a proprietary blend of marine phytoplankton, ionic sea minerals, frankincense, rose, ginger and aloe vera in a base of blueberry, cranberry and lime juice concentrate. Many of FrequenSea’s ingredients are processed through a patent-pending process known as Aqueous Molecular Partitioning (AMP), which renders the ingredients water-soluble without using damaging chemicals or heat. FrequenSea is sold in single bottles, in individual single-serving packets or in four-bottle packs.

The marine phytoplankton in FrequenSea contains more than 200 different sea algae that are all processed through proprietary and patent-pending harvesting processes at a unique $30 million sea farm in the Pacific Northwest. A daily recommended amount of FrequenSea provides more than 66 vitamins and minerals and includes amino acids in a convenient bio-available form for easy ingestion and quick absorption. FrequenSea sales represent approximately 60 percent of ForeverGreen product sales.

Azul is a rich-in-antioxidant, delicious powdered blend of 24 raw whole food and super fruit ingredients and probiotics that are naturally dried and blended to preserve their natural integrity. ZMP 400 features zeolite, a volcanic mineral known for attracting and removing harmful metals, chemicals and toxins from the body, naturally activated in 400 milligrams of our exclusive, mineral-rich, marine phytoplankton. Introduced in 2009, Pulse-8 is a product designed to support heart health through a specific ratio of L-Arginine with marine phytoplankton.

Our whole food offerings consist of a variety of healthy, natural food products that are made onsite in our whole-food manufacturing facility. Versativa Pulse™ based with hemp seed, consists of 17 different nuts, seeds, fruits, grains and other whole foods. Pulse™ is offered in various flavors, either “loose” in bags or in snack bars, and may be used as a snack or a meal replacement. Pulse has natural unprocessed proteins, fibers, carbohydrates and other “AMPed” nutrients the body requires for optimal health. The newest addition to our whole-food snack line is a unique dehydrated kale chip product, which combines the crunchy goodness and nutrition of cashews and onions in a unique, healthy and satisfying alternative to regular potato chips.

Additionally, ForeverGreen offers our Members and customers a variety of pure, therapeutic-grade wild crafted essential oil singles and blends, sourced from all around the world. We believe there are many preventative and pleasurable ways to use essential oils topically, aromatically, as well as therapeutically in personal care products.

We believe the plant kingdom offers an abundance of our best medicines. Utilizing the patent-pending Aqueous Molecular Partitioning (AMP) process, which is exclusive to ForeverGreen, HYDRessence Plant Life Concentrates contain the nutrients of the entire plant in three effective, delicious, and highly concentrated liquid products that can be added to water or juice for an enhanced nutritious and pH-balancing experience.

We believe that everything you put on your skin will be absorbed into the bloodstream. With the potentially-harmful and cheap synthetic ingredients in many personal care products today, ForeverGreen’s Members and customers have access to healthy, natural personal care alternatives. Our personal care products include a variety of products to suit your personal care needs, from tooth powder to chemical-free house cleaners, to luxurious bath salts. Some highlighted products from this line include a lavender-based all-purpose body wash called Silk, Quench, a natural moisturizer, Touch antibacterial foaming hand soap and Protect hand sanitizer.

With the introduction of 24 Karat Chocolate®, ForeverGreen Members and customers are among the first to finally enjoy guilt-free organic chocolate that is high in antioxidants and processed without the fats, waxes and hormone-filled dairy milk common in many chocolate products. This naturally dark chocolate comes in individually wrapped Teasers, as well as in fondue chips with a chocolate melter for use at chocolate fondue parties. ForeverGreen’s 24 Karat Chocolate is also used as an ingredient in the weight management meal replacement products Thunder™ and FIXX, as well as in many of the whole-food bars offered in our Smart Food line. Thunder is a meal replacement

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drink powder formulated to provide 28% of the protein the body needs in an apple fiber base with natural sweeteners and antioxidants for a healthy yet delicious experience.

In an effort to simplify ForeverGreen’s product offerings, we have rebranded all of them under a Restoration Biology philosophy we call RESTORATION90. RESTORATION90 is based on the simple concept that the body doesn’t know its chronological age, but only acts its biological age. We are convinced that the body can work miracles and restore itself to a more youthful biological age when it is given the proper raw materials. FGI specializes in providing these high quality raw materials through a comprehensive line of innovative products. In November 2012, we streamlined our product offerings and retired items from our catalogue to strengthen our inventory positions. We strategically bring back certain popular items on a seasonal basis to help boost sales during normal cyclical fluctuations.

FGI remains committed to providing innovative, natural products to retain exclusivity for our Members and customers.  Our products take advantage of the latest in nutritional research and are designed to be easy to use and easy to sell. We believe that the efficacy of our products is measurable in their nutritional and health benefits.

We intend to continue our emphasis as a total lifestyle company focused on bringing to our domestic and international Members and customers our exclusive products.  In November 2012, we launched a new brand called FGXpress featuring the PowerStrips product which allows us to broaden our global business reach to many more countries. PowerStrips combine a patented fusion of modern energy and ancient herbs. Everyone and every part of the body needs energy. PowerStrips, worn daily, bring energy to those parts of the body that need it. By increasing energy, one of the first benefits customers notice is a relief of pain. For this reason, PowerStrips are listed with the FDA as a Class I Medical Device that can be used for pain relief.

Product Guarantees

Our 100% customer satisfaction policy allows product returns for all our products that are resalable, subject to a restocking fee. This policy improves our customer and Member satisfaction and brings us in line with Direct Selling Association recommendations. Actual product returns have been less than 2% of sales for the past two fiscal years and was 1.3% in 2013. We also maintain an insurance policy for product liability claims of $1,000,000 USD per claim and $2,000,000 USD annual aggregate limit.

Sales and Marketing

We provide exclusive, innovative nutritional and whole-food products that are eaten or consumed to achieve healthy results within the body. While the nutritional supplement industry, consisting of individually standardized supplements, herbs and the like has been flat in recent years, ForeverGreen’s exclusive and proprietary products protected through trade secrets and our proprietary processes and ingredients have experienced significant growth. In addition, the functional foods and products we offer are experiencing favorable growth.

We offer our products online and each Member Kit purchased also includes a virtual online website, known as a Virtual Office, designed for Members, where they can manage, monitor, and operate their businesses 24 hours a day from any location with internet access. This site is password protected, exclusive to Members and provides access to Company news, product tracking, product information, and a library of Company documents geared to help them with their business, such as frequently asked questions and various forms and reference materials.

In addition, we offer a replicated website model to our Members allowing them to obtain an immediate online presence and personal URL for their business, which they can use as a place to direct potential new Members to learn about the Company and sign up as Members. Features on this website include Company information, video and flash presentations, prospect management and follow-up, online registration of new Members, online product ordering, online customer service and a “contact me” function that allows anyone visiting the site to contact the Member directly via email.

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We rely on a network marketing system for the distribution of our products through our independent business owners (referred to as Members by ForeverGreen) and customers. Our revenue depends directly upon the sales efforts of our Members around the world. We distribute our products exclusively through independent Members who have contracted directly with us. Members are entitled to purchase products from us for personal use or for resale, depending on their market, and the sales by our Members have the potential to earn the Member commissions. Individuals who join as Members may enroll and sponsor other Members, and may further earn commissions from the resale of products. Our Compensation Plans for FGXpress and ForeverGreen provide many different ways to earn income for our Members, from FastStart earnings, to personal rebates on Member purchases, to downline commissions and leadership pools.

Distribution

Our main distribution center is located in Pleasant Grove, Utah near the main corporate office. We also have a fulfillment center in Auckland, New Zealand that improves our product delivery with cost savings and efficiencies for our Australian and New Zealand markets. In addition, we have ForeverGreen offices in Costa Rica, Colombia and Chile, Singapore, Japan and Mexico, but are using a third party in the Netherlands to service our Members in the European Union, and a third-party provider to distribute our products throughout Mexico. We buy raw materials from third-party suppliers, manufacture our whole-food products in-house and warehouse the bulk food product at our facilities. We service individual product orders and ship to individual customers and Members in the United States, and more than 150 countries throughout the world.

Members and their customers pay for products prior to shipment, incurring minimal accounts receivable for us. Members and customers have access to place orders online through their ForeverGreen websites, by phone through a growing call center, or even by facsimile. Typically, Members and customers pay for their product orders by credit card. Less than 10% of our sales are paid for with cash.

Enrollment and Sponsorship  

Enrollment and sponsorship activities are encouraged, but not required of our Members. Successful Members will both enroll and sponsor new Members. The sponsoring of new Members creates multiple levels in a network marketing structure. Individuals that a Member sponsors are referred to as “downline,” or “sponsored” Members. If downline Members also sponsor new Members, they create additional levels in the structure, but their downline Members remain in the same downline network as their original sponsoring Member.

Members assist their downline Members to successfully do the same. While we provide product and Company brochures, magazines, websites, DVDs and other sales and marketing materials, our greatest success and retention comes from Members who are accountable and responsible for educating and training new Members with respect to our products, the Company’s FGXpress and ForeverGreen Compensation Plans, and how to build and maintain a successful business.  

Generally, Members who are new to network marketing invite friends, family members, and acquaintances to attend conference calls, review websites and marketing materials, or attend personal or company-sponsored meetings. Members with a history in direct sales are quick to invite their contacts within the industry to experience the difference that our company brings to the network marketing profession. Some people are attracted to become Members after experiencing our products and desiring to enjoy the wholesale pricing that Members receive.

Turnover is a typical aspect of the direct selling or network marketing industry. Our Members understand that to prevent a possible decline in their organization and sales volume, the enrollment, sponsoring and training of new Members is necessary to increase the overall Member force and motivate new and existing Members. We may experience seasonal decreases in Member sponsoring and product sales because of holidays and customary vacation periods. We cannot predict the timing or degree of these enrollment fluctuations because of the number of factors that impact the sponsoring of new Members. We cannot assure that the number, growth or productivity of our Members will be sustained at current levels or increase in the future.  

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Weekly conference calls, the materials included in the Member Kit, training events, corporate events and online support offerings help to provide a duplicable business model that help new Members successfully begin their independent contractor business.

Member Contract

A potential Member must enter into a standard Member Agreement which governs the relationship between The Company and the Member in accord with our policies and procedures. Any person may join The Company as a Member to purchase products for personal use or to build a downline sales organization. In order to become a Member, a person may purchase a non-commissionable online digital Member Kit which includes all the business building websites, multi-language web office and online library. No product purchases are required to become a Member, and large inventory product purchases are discouraged. However, in order to receive compensation as a Member, personal or customer monthly purchases and/or personal customer sales of a certain amount of volume are required.

Our Member Agreement and Policies and Procedures, which outline the scope of permissible marketing activities, and information on the ForeverGreen compensation plan are posted on our website. Our Member rules and guidelines are designed to provide Members with maximum flexibility and opportunity within the bounds of governmental regulations regarding product claims, network marketing and prudent business policies and procedures. Members are independent contractors and are thus prohibited from representing themselves as our agents or as employees of the company. Members are obligated to present our products and business opportunity ethically and professionally. Members contractually agree to abide by all local, state and federal laws and regulations pertaining to the advertising, sale and distribution of our products. All advertising must be factual and not misleading and a Member may be terminated for making false claims about the income potential, the compensation plan, or product efficacy.

Members must represent to potential Members that the receipt of commissions is based on sales volumes and substantial efforts. Products may be promoted by personal contact or by literature produced or approved by the company. In traditional retail environments, our products generally may not be sold, and the business opportunity may not be promoted.

We are not in a position to provide the same level of direction, motivation, and oversight to our Members as we would our own employees because the Members are independent contractors residing across the United States and in many other countries. We review alleged reports of Member misconduct or breach of contract to enforce contract compliance.  If we determine that a Member has violated any of the Member Policies or Procedures, we may elect to educate the Member regarding the contract terms or impose sanctions such as warnings, probation, suspension of privileges of Membership, withholding commissions until specified conditions are satisfied, termination of the member’s rights completely or other appropriate injunctive relief.  A Member may voluntarily terminate their Membership at any time.

Compensation Plan

With the new branding of FGXpress and PowerStrips launched in November 2012, we also introduced a companion compensation plan our Peoples Plan to support this business and reward people who purchase and build their FGXpress business. An FGXpress Member could begin their commissions earning by introducing people to their FGXpress business.  When their personally invited person makes the first purchase, the Member can earn a one-time 25% Fast Start Bonus.  We wanted to make sure everyone knew what to do to achieve success in this business, therefore we introduced the X-Tribe concept.  X-Tribe is an easy road map to success in the FGXpress business. Each person begins building their X-Tribe by enrolling 4 people into their business.  They then teach each person to do the same.  When a person has 4 personally enrolled members and with 1000 points in their X-Tribe group, they can earn $100 or $200 depending on their personal contribution. The X-Tribe is the way to keep the beginner engaged. We believe when everyone is following the same actions the result can be impressive.  

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FGXpress also promotes team building. When people work as a team, they can be rewarded for their team actions. The Company pays 8% or 12% of their small leg organization’s purchases weekly. On top of the Team Bonus, leaders also can receive rewards from helping and leading their team. The Company pays a Matching Bonus up to 100% and 4 levels to leaders who achieve various ranks. We also offer lucrative one-time cash bonuses to people who reach new ranks for the first time. These cash bonuses range from $500 to $25,000 depending on the level of their success.

ForeverGreen’s People’s Plan is very simple to learn, which in turn means it is simple to teach and duplicate with our current Members and new Members. Part of the simplicity of the new People’s Plan is it incorporates the People’s Pack. The purchase of this pack by our Members allows each Member to maximize earnings via retail market up, commissions and bonuses available as they and their downline organization also purchase and resale the People’s Pack or any other ForeverGreen product.  

Each company product carries a specified number of commissionable volume, or “points.” Commissions or bonuses are based on a Member’s personal qualification, organizational, and leg commission volumes. A Member receives commissions based on a percentage of the sales volume of their downline weekly and monthly. Commission qualification volume points are essentially based upon a percentage of the product’s wholesale cost, net of any point-of-sale taxes. As a Member’s retail business expands, and as they successfully sponsor other Members into the business, both of which expand their businesses, the Member receives more commissions from the expanded sales volume of the downline. A Member receives monthly commission bonuses by remaining in good standing with the Company and by generating a minimum of 50 points of Personal Volume (PV).

We believe the ForeverGreen People’s Plan reaches out to every segment of our society. An individual may join as a Member for the exclusive products offered by our Company or for the wholesale prices that are available to Members purchasing product. An individual may join ForeverGreen and begin earning commissions rapidly with minimal investment. A Member receives a discount on their personal purchases or the purchases of their customers if they follow the value based purchase of FrequenSea or Azul with a product categorized as A, B or C, or other value package product combinations. This provides incentive to discuss successful products and programs with others. As a Member assists other individuals join the Member’s organization, the new Members generate commission payments to the upline Member through their product purchases.

A Member can earn retail profits for the difference between sales price and the wholesale price of the product. A Member can earn a 20% Fast Start Bonus on a new enrollee’s first purchase. This feature works with the current month end and can earn 5%, 10% or 20% on that purchase and other first level or generational volume. Members earn first level 5% payout at the rank of Apprentice or earn 10% or 20% at the rank of Learning or higher on first generation monthly personal volume purchases via their membership.  At MVP rank there is a 2% Bonus pool and at higher ranks there is an 8% leadership pools.

Our Members progress though the “People’s Plan” compensation plan with recognition and ranks that show their standing and leadership within the Company. A Member must generate Personal Volume (PV) with individual purchases or customer purchases.  A Member’s rank may vary from month to month based upon the increase and decrease in their monthly sales volume.  The new weekly “Fast Start Bonus” feature allows for even the lowest member status, requiring minimal volume qualifications, to earn compensation as they grow their businesses on a weekly basis.  The rank of Apprentice is indicative of the status of the new Member’s first rank in the ForeverGreen business, which is achieved by creating a total of 100 points of Personal Enrolled Member Volume (PEMV) and 50 points PV. PEMV is volume points purchased by those member personal introduced on the Members first level.   The progressive ranks include:  Apprentice, Learning, Determined, Successful, Leader, Team Leader, MVP, Hall of Fame, Free and Rainmaker.   Each rank qualifies for varying percentages paid monthly upon volume purchases per downline generations.  The rank of MVP also earns a 2% pool shares with all MVP’s.  The ranks of Hall of Fame, Free and Rainmaker also share a 6% pool with all Members in those ranks.

There are many competitor companies that offer unilevel plans, FastStart bonuses, and leadership pools. However,

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we believe that our approach and percentage of commission payout, combined with our unique and specific product focus and Company culture and growth, presents a far superior opportunity that that offered by competitor plans. This represents a unique, competitive advantage for our Members. The personal rewards for our Members generate incentive to attract additional network marketing professionals and newcomers alike. As our Members are rewarded financially, they are motivated to continue developing an organization to help others receive financial and recognition rewards and, as a result, the Company continues to grow. We continue to look at ways to improve our compensation plan in the future, as we recognize the importance of staying in touch with economic changes within the marketplace. In March of 2012 we updated our compensation plan to pay 9 generation along with a 5 level fast start payout.

The FGXpress Hybrid Compensation Plan brings together the best of unilevel and binary compensation plans. Making an important contribution to the network marketing profession, FGXpress has introduced the breakthrough X-Tribe concept. This plan is so simple that it can be explained on a napkin.  Each Personally Enrolled Member is part of two trees. The ENROLLMENT TREE addresses the unilevel features of the plan, with no limit to how many Members can be enrolled per level. The PLACEMENT TREE addresses the binary features of the plan. Each Member can only have two organizational legs, so everyone contributes building their two legs by placing their enrolments underneath.

The FGXpress compensation plan provides weekly payout. To be eligible to participate in the plan, receive bonuses, earn rank advancements and to keep your carry-over from week to week, it is necessary to have an “active order” for 100 QV (qualifying volume) or at least 50 QV at all times. With every product purchase, this volume (QV) is “active” for the current weekly pay period plus three more (four weekly periods total). Without an active order, qualification expires after the 4^th weekly pay period, which begins on Tuesday at 12am MST and ends on Monday at 11:59pm MST.

As with any business, individual results may vary, and will be based on the Member’s personal capacity, business experience, expertise and level of desire. There are no guarantees concerning the level of success FGXpress Members may experience. The examples used in FGI training materials are exceptional results, which may not apply to an average Member, and are not intended to represent or guarantee that anyone will achieve the same or similar results.

There are several ways for Members to get paid under the FGXpress compensation plan. The X-Tribe Bonus rewards duplication. The Team Bonus rewards Members for helping the leg that needs it most through training, mentoring and various forms of business support. The FastStart Bonus rewards enrollment activity with a 25% payout on the product orders of Personally Enrolled Members (PEM) during their first 4 weeks in the business. There is no limit to how many PEMs Members can enroll. The Rank Advancement Bonus rewards leadership development as a leader. Achieve a new rank once and get the title. Achieve it twice and get the bonus. The Matching Bonus rewards activity that supports the business growth of Personally Enrolled Members. This floating bonus provides a total payout of 62% from regular orders, and 87% from FastStart orders to qualified Members without jeopardizing The Company. FGXpress has published a detailed Compensation Plan Manual and supporting collateral training materials to assist Members in building their commission and bonus income.

Trademarks, Patents and Intellectual Property

We have secured, or are in the process of securing, trademark protection in the United States and around the world in markets where we currently do business or where we have a future strategic interest.  As of December 31, 2013 the Company holds eight U.S. trademarks and no foreign trademarks.  As we continue to expand internationally, trademark protection is increasingly important for brand recognition and Member and consumer loyalty. It is standard Company practice to follow through with ongoing trademark registration in the United States and other countries where we are experiencing growth.

A number of our products utilize proprietary formulations and processes. Although ForeverGreen does not directly hold any patents at this time, a number of our key vendors have secured or applied for patents to maintain

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exclusivity for the ingredients or integrated products they supply to us. To protect our own intellectual property and proprietary processes that are material to the long term health and profitability of the Company, ForeverGreen makes it a disciplined business practice to manage trade secrets and various forms of confidentiality and non-disclosure agreements.

Our exclusive PowerStrips product is listed with the FDA as a Class I Medical Device. ForeverGreen exercises special vigilance in the area of compliance. For this reason we employ a full time compliance team that closely monitors all company and Member messaging and is empowered to edit or remove all non-compliant language pertaining to our products. This team reports directly to our corporate General Counsel and we have also engaged the consulting services of a former Attorney General of the State of Utah to assist with compliance enforcement.

Strategic Partnerships

Throughout 2013, we had the freedom to use any supplier to purchase raw materials. We used several different vendor sources since most of the raw materials were readily available in the marketplace. We maintain good relationships with our key vendors to ensure a continuous supply of our key products. During 2013, we relied on two principal suppliers for our FrequenSea product. Marine Life Sciences provided the marine phytoplankton, and Primal Essence supplied the “AMP” technology used to process additional ingredients that accompany the marine phytoplankton in FrequenSea.

Although there are other providers in the world who claim to produce marine phytoplankton, our sourcing information indicates that the Marine Life Sciences product offers the best quality, the most ideal geographical location and the best harvesting and extraction methods. These factors contribute to the uniqueness and nutritional aasuperiority of the marine phytoplankton component in our products.

In 2007, Marine Life Sciences, LLC, a Nevada limited liability company (MLS), acquired the worldwide rights to the exclusive blend of marine phytoplankton produced by Unique Sea Farms, Ltd. In 2008 ForeverGreen International entered into an exclusive worldwide marketing agreement with MLS. Under the agreement, ForeverGreen International agreed to purchase an annual quota of marine phytoplankton.

Due to economic conditions in 2008, ForeverGreen International was unable to meet the annual quota requirements for the exclusive rights of the agreement with MLS. Therefore, the quotas and market conditions are under review with MLS to ensure the long-term stability of this key vendor relationship. MLS continues to share research results and other product data with ForeverGreen International and both parties have agreed to protect any proprietary information related to the product. The parties have further agreed to indemnify one another for any claims arising out of any action taken or omission by the other.  

Our essential oil products are formulated, processed and sourced with key vendors directly by ForeverGreen. We strive to hold full control over the manufacturing, control, quality, sourcing and label and marketing claims of the oils. Management believes our oil quality and customer satisfaction is greatly improved with the new ForeverGreen education system and delivery of quality essential oils.

We maintain in-house manufacturing capabilities for our whole foods and Versativa products. We retain the freedom to use any competitive suppliers to garner control over our product costs, quality and lead times for manufacturing and delivery. Our inventory control system ensures appropriate volumes of both raw materials and finished product based on the anticipated movement of each item in our catalog. Government Regulations

Government Regulation

Direct Selling Activities

Direct selling activities are regulated by various federal, state and local governmental agencies in the United States and foreign countries. To our knowledge, FGI’s method of distribution is in compliance in all material respects with

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the laws and regulations relating to not-for-resale and direct selling activities in the United States, Mexico, Japan, Canada, Singapore, New Zealand, Australia, Germany, the Netherlands,  the United Kingdom, and other markets. These laws and regulations are generally intended to prevent fraudulent or deceptive schemes, often referred to as “pyramids,” “money games,” “business opportunity” or “chain sales” schemes that promise quick rewards for little or no effort, require high entry costs, use high pressure recruiting methods, and/or do not involve legitimate products. The laws and regulations in our current markets often impose certain cancellation/product return, inventory buy-backs and “cooling-off” rights for consumers and Members, require us or our Members to register with a governmental agency impose various regulatory requirements on us.

The purpose of these laws and regulations is to ensure that Members are being compensated for sales of products and not for recruitment of new Members. The extent and provisions of these laws vary from state to state and internationally. International laws may impose significant restrictions and limitations on our business operations. For example, in foreign countries where we have not yet established a local office, our Members and customers purchase product through a not-for-resale program enabling them to receive product for personal consumption, but not retail the product to customers.  

Any assertion or determination that we are not in compliance with existing laws or regulations could potentially have a material adverse effect on our business and results of operations. We cannot assure that regulatory authorities in our existing markets will not impose new legislation or change existing legislation that might adversely affect our business in those markets. Also, we cannot assure that new judicial interpretations of existing law will not be issued that adversely affect our business. Regulatory action, whether or not it results in a final determination adverse to us, has the potential to create negative publicity, with detrimental effects on the motivation and recruitment of our Members and, consequently, on our revenue and net income.  

Regulation of Personal Care and Nutritional Food Products

Our products and related marketing and advertising are subject to governmental regulation by various domestic agencies and authorities, including the Food and Drug Administration, which regulates food, medical products and cosmetics. The advertising and marketing of our products are regulated by the Federal Trade Commission, which enforces consumer protection laws in regard to truth in advertising. The Consumer Product Safety Commission protects the public from unreasonable risk of injuries and death associated with consumer products, and the United States Department of Agriculture regulates food safety and quality. Similar types of agencies exist in our foreign markets. To date, we have not experienced any governmental actions related to health or safety and food and drug regulations for our products.

Our markets have regulations concerning product formulation, labeling and packaging. These laws and regulations often require us to, among other things, conform product labeling to the language and regulations, and register or qualify products with the applicable government authority or obtain necessary approvals or file necessary notifications for the marketing of such products. Many of our existing markets also regulate product claims and advertising. These laws regulate the types of claims and representations that can be made regarding the capabilities of products. For example, in the United States we are unable to make any claim that our nutritional products will diagnose, cure, mitigate, treat, or prevent disease.

Employees

As of the date of this filing we have 69 full-time employees with some services, employee and management functions being performed by ForeverGreen employees. Many of these employees directly support the Member network. Our employees are not presently covered by any collective bargaining agreement. We believe our relationships with our employees are good, and we have not experienced any work stoppages.

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ITEM 1A.  RISK FACTORS

Factors Affecting Future Performance

You should carefully review and consider the risks described below, as well as the other information in this report and in other reports and documents we file with the SEC when evaluating our business and future prospects. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties, not presently known to us, or that we currently see as immaterial, may also occur.  If any of the following risks or any additional risks and uncertainties actually occurs, then our business, financial condition and results of operations could be seriously harmed. In that event, the market price of our common stock could decline and you could lose all or a portion of the value of your investment in our common stock. You should not draw any inference as to the magnitude of any particular risk from its position in the following discussion.

We have a history of losses and may not remain profitable. We have recorded losses prior to 2013 and have recorded a net income for 2013. Our revenues from sales may not be sufficient to meet our working capital needs and/or to implement our business strategies. We may be required to rely on debt financing, further loans from related parties, and private placements of our common stock for our additional cash needs. Such funding sources may not be available or the terms of such funding sources may not be acceptable to the Company.  If the Company is unable to find such funding it could have a material adverse effect on our ability to continue as a going concern.

Recent economic conditions have made it more difficult for some companies to raise capital and obtain financing. Our inability to raise additional capital or to obtain additional financing, if needed, would negatively affect our ability to implement our business strategies and meet our goals. This, in turn, would adversely affect our financial condition and results of operations.

Because our direct-to-consumer sales rely on the marketability of key personalities, the inability of a key personality to perform his or her role or the existence of negative publicity surrounding a key personality may adversely affect our revenues. Direct-to-consumer products may be marketed with a key personality through our independent member channels. The inability or failure of a key personality to fulfill his or her role, or the ineffectiveness of a key personality as a spokesperson for a product, a reduction in the exposure of a key personality due to the discontinuance of a marketing program, or otherwise, or negative publicity about a key personality may adversely affect the sales of our product associated with that personality and could affect the sale of other products. A decline in sales would negatively affect our results of operations and financial condition.

The failure of our suppliers to supply quality materials in sufficient quantities, at a favorable price, and in a timely fashion could adversely affect our results of operations. We buy our raw materials from a variety of suppliers. The loss of any of our principal suppliers or of a supplier that provides any hard-to-obtain materials could adversely affect our business operations. Although we believe that we could establish alternate sources for most of our raw materials, any delay in locating and establishing relationships with other sources could result in product shortages, with a resulting loss of sales and customers. In certain situations we may be required to alter our products or to substitute different materials from alternative sources.

We rely solely on one supplier for our phytoplankton and PowerStrips products and the loss of, or unexpected interruption in this service would materially adversely affect our results of operations and financial condition.   

A shortage of raw materials or an unexpected interruption of product supply could result in higher prices for these products During 2013, the U.S. experienced increases in various product raw material costs, transportation costs and the cost of petroleum based raw materials and packaging supplies used in our business, which were associated with higher oil and fuel costs. Although, we may be able to raise our prices in response to significant increases in the cost of raw materials or production and transportation costs of products, we may not be able to raise prices sufficiently or quickly enough to offset the negative effects of the cost increases on our results of operations or financial condition.

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There can be no assurance that suppliers will provide the quality raw materials needed by us in the quantities requested or at a price we are willing to pay. Because we do not control the actual production of these raw materials, we are also subject to delays caused by interruption in production of materials based on conditions outside of our control, including weather, transportation interruptions, strikes and natural disasters or other catastrophic events.

Product liability claims could harm our business. We may be required to pay for losses or injuries purportedly or actually caused by our products. Although historically we have had no claims and relatively low financial exposure from product claims, we have experienced difficulty in finding insurers that are willing to provide product liability coverage at reasonable rates due to insurance industry trends and the rising cost of insurance generally. As a result, we have elected to self-insure our product liability risks for our product lines. Until we elect and are able at reasonable rates to obtain product liability insurance, if any of our products are found to cause any injury or damage, we will be subject to the full amount of liability associated with any injuries or damages. This liability could be substantial and may exceed our reserves. We cannot predict if and when product liability insurance will be available to us on reasonable terms.

Collectively, our officers and directors own a significant amount of our common stock, giving them influence over corporate transactions and other matters and potentially limiting the influence of other stockholders on important policy and management issues. Our officers and directors, together with their families and affiliates, beneficially owned approximately 35.6% of our outstanding shares of common stock as of March 21, 2014. As a result, our officers and directors could influence such business matters as the election of directors and approval of significant corporate transactions. Various transactions could be delayed, deferred or prevented without the approval of stockholders, including:

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transactions resulting in a change in control

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mergers and acquisitions

·

tender offers

·

election of directors

·

proxy contests

There can be no assurance that conflicts of interest will not arise with respect to the officers and directors who own shares of our common stock or that conflicts will be resolved in a manner favorable to us or our other stockholders.

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.  

ITEM 2.  PROPERTIES

The Company has outgrown the buildings they have leased for the past 7 years. Both leases for the former office and warehouse buildings expired on August 31, 2013 and the Company has been on a month to month lease since that time.  On November 12, 2013 the Company signed a new 7 year lease for its warehouse now located in Pleasant Grove, Utah.  The lease rate for that building is $6,936 per month and is leasing 11,187 square feet. On March 1, 2014 the Company signed a 5 year lease with Big Stick Enterprises LLC for our office head-quarters now located in Lindon, Utah.  The lease rate for that building is $36,467 per month to lease 27,250 square feet. The Company has an office in Japan with a 1 year lease paying $1,279 per month. The Company has an office in Mexico with a 1 year lease paying $2,061 per month and an office in Colombia with a one year least paying $959 per month. The Chile office has a month to month lease paying $747 per month, and the Costa Rica office has a two year lease and is paying $1,908 per month. The Company has an office in Ecuador with a 1 year lease paying

$600, plus a one year warehouse lease paying $122.  All lease amounts above are in USD.

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ITEM 3.  LEGAL PROCEEDINGS  

On June 13, 2012, Environmental Research Center, a non-profit corporation, filed a complaint in the Superior Court of California, County of Orange, against ForeverGreen Worldwide Corporation and ForeverGreen International, LLC.  ForeverGreen Worldwide received service of the complaint on July 29, 2012.  The complaint alleges that the Company failed to provide health hazard warnings related to lead to consumers of its products in California.  Environmental Research Center is seeking injunctive relief, an order compelling the Company to provide the health hazard warnings to past consumers and unspecified civil penalties.  The Complaint contains two alleged causes of action. Both allege violations of Health and Safety Code §25249.5 and seek injunctive relief as well as damages of $2,500 per day for each violation alleged. The Company and Environmental Research Center have reached a final settlement agreement.  The terms of the settlement are confidential.  The settlement was signed and completed by January 27, 2014.

On May 15, 2013 the Company settled a lawsuit with Sony Music Entertainment out of court.  The dispute was that the Company had mistakenly used a Michael Jackson song in one of its videos.  The song had been removed from the video before the Company was contacted by Sony. The terms of the settlement are confidential and the suit was settled and completed by December 31, 2013.

The Company is involved in various disputes and legal claims arising in the normal course of our business.  In the opinion of management any resulting litigation will not have a material effect on our financial position and results of operations.

ITEM 4.  MINE SAFETY DISCLOSURE

Not applicable to our operations.

PART II

ITEM 5.  MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Our common stock is listed on the OTC Bulletin Board under the symbol “FVRG.”  The following table represents the range of the high and low trading prices of our common stock for each quarter of the 2012 and 2013 years as reported by the OTC Bulletin Board.  Bid and ask quotations are available when there are two or more market makers and those quotations represent prices between dealers and may not include retail markups, markdowns, or commissions and may not necessarily represent actual transactions.

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Our shares are subject to Section 15(g) and Rule 15g-9 of the Securities and Exchange Act, commonly referred to as the “penny stock” rule.  The rule defines penny stock to be any equity security that has a market price less than $5.00 per share, subject to certain exceptions.  Trading in the penny stocks is subject to additional sales practice requirements on broker-dealers who sell penny stocks to persons other than established customers and accredited investors.  Accredited investors, in general, include certain institutional investors and individuals with assets in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 together with their spouse.  

For transactions covered by these rules, broker-dealers must make a special suitability determination for the purchase of our securities and must have received the purchaser’s written consent to the transaction prior to the purchase.  Additionally, for any transaction involving a penny stock, the rules require the delivery, prior to the first transaction, of a risk disclosure document relating to the penny stock.  A broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative, and current quotations for the security.  Finally, monthly statements must be sent to the purchaser disclosing recent price information for the penny stocks.  Consequently, these rules may restrict the ability of broker-dealers to trade or maintain a market in our common stock and may affect the ability of shareholders to sell their shares.

Holders

As of March 21, 2014, we had 142 shareholders of record, which does not include shareholders who hold shares in “street accounts” of securities brokers.

Dividends

We have not paid cash or stock dividends and have no present plan to pay any dividends, intending instead to reinvest our earnings, if any.  For the foreseeable future, we expect to retain any earnings to finance the operation and expansion of our business and the payment of any cash dividends on our common stock is unlikely.

Recent Sales of Unregistered Securities

On August 30, 2013 the Company issued 600,000 shares of common stock to Empire Fund Managers in consideration for $300,000.  All shares were privately issued with a restrictive legend, in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933.

On September 9, 2013 the Company issued 540,000 shares of common stock to Liberty Partners, LLC in consideration for conversion of a convertible promissory note and accrued interest totaling $334,230. All shares were privately issued with a restrictive legend, in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933.

On December 3, 2012 the Company issued 2,500,000 shares to Standard Registrar & Transfer Co.’s escrow as follows: 800,000 shares to Capital Communications, Inc., 900,000 shares to Compass Equity Partners, and 800,000 to Maestro Investments, to convert debt of $200,000.  On October 29, 2013 the Company accepted the conversion and issued the shares.  All shares were privately issued with a restrictive legend, in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933.

On January 29, 2014 the Company issued 1,000,000 shares of common stock to Brian T. McMullen for $700,000 cash and a note of $300,000 due to the Company.  The remaining 300,000 shares are being held by the Company as collateral for the note.   All shares were privately issued with a restrictive legend, in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933.

On January 31, 2014 the Company sold 1,000,000 shares of common stock to Ya-Ya Legacy Trust for $1,000,000 cash.  All shares were privately issued with a restrictive legend, in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933.

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Issuer Purchase of Securities

None.

ITEM 6.  SELECTED FINANCIAL DATA

Not applicable to smaller reporting companies.

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

Executive Overview

ForeverGreen Worldwide is a holding company which operates through its wholly-owned subsidiary, ForeverGreen International, LLC.  

We intend to continue our emphasis as a total lifestyle company focused on bringing our domestic and international Members and customers our exclusive FrequenSea™ and PowerStrips™ products. 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. 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.

We introduced the FGXpress brand in November of 2012 featuring our exclusive PowerStrips offering. We have since seen the sales trend averaging 30% sales growth per month since the launch. With this global, seamless, “Not For Resale” program we were able to attract industry leaders from around the world to our international community of independent distributors (Members). We project substantial sales increases for the year of 2014.  

Our major challenges for the next twelve months will be to respond to current economic conditions and to properly manage our systems and logistics centers around the world to support the demand for our 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. We are actively positioning ForeverGreen to be the company they can align with for the future as traditional employment options.

To keep pace with our market and product growth, we anticipate the need to expand our 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.

Liquidity and Capital Resources

At December 31, 2013 we had cash and cash equivalents of $284,741, with a working capital deficit of $2,366,781. We recognized product revenues of $17,402,460 and royalty revenues of $354,928 and recorded comprehensive

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income of $121,299 for 2013 compared to product revenues of $12,414,934 and royalty revenues of $160,441 and comprehensive loss of $834,545 for 2012.  During 2013 we financed our operations with revenues, a third party loan of $255,571 and the sale of 600,000 shares of restricted common stock for $300,000 cash.  Based on these factors, our independent auditors have expressed an opinion that there is substantial doubt as to our ability to continue as a going concern.

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; however, we cannot guarantee that we will be able to return to profitability in the short term.  

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

Commitments and Contingent Liabilities

Our total liabilities at December 31, 2013 were $6,301,037 compared to $5,909,051 at December 31, 2012.  The increase reflects a net increase of accrued expenses of $852,655 due to increased commissions payable resulting from higher revenues from our members at the end of 2013 compared to 2012.  Net deferred revenue increased by $292,756 again due to increased revenues at the end of 2013 compared to 2012. Accounts payable decreasing by $427,112 due to the Company have more cash available at the end of 2013 to pay it’s vendors in a timely manner. A net decrease in notes payable from non-related parties of $196,953. This decrease is broken down as one non-related party converting their convertible note payable of $281,758 and $61,412 of accrued interest to common stock, another non-related party converting their convertible note payable of $200,000 to common stock, and the addition of a non-related party loaning the Company $100,000. The Company also paid off related party payables of $54,494, paying down our line credit to a zero balance, and bank overdraft increasing by $25,050 all again due to the Company having excess cash due to increased revenues.  

NuStar Manufacturing v. ForeverGreen International.  On October 11, 2013, NuStar manufacturing filed a complaint in the Fourth Judicial District Court of the state of Utah, claiming a debt owed of $44,322.  On February 6, 2014, the parties entered into a Settlement and Release of All Claims.  The final payment under the agreement will be paid on or before May 30, 2014, and the case will be dismissed at that time.

Swedger, LLC, a limited liability company owned by Dr. William Hennen, made a claim against ForeverGreen International for past Royalties.  ForeverGreen issued a royalty check to Swedger, LLC on February 6, 2014, wherein Swedger, LLC received full payment of all past royalties.

On March 17, 2014 the Company issued 1,000,000 shares of common stock for $1,000,000 cash to a non-related party. At the end of the negotiated agreement the non-related party paid $700,000 cash and issued a note of $300,000 payable to the Company.  The Company is holding 300,000 shares of stock as collateral against the note.

Results of Operations

The following chart summarizes the consolidated financial statements of ForeverGreen Worldwide for the years ended December 31, 2013 and 2012.  The consolidated balance sheets and statements of operations includes ForeverGreen Worldwide and its wholly-owned subsidiaries ForeverGreen International, LLC, Productos Naturales

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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, and ForeverGreen Singapore.  The following chart is a summary of our financial statements for those periods and should be read in conjunction with the financial statements, and notes thereto, included with this report at Part II, Item 8, below.

Our total assets increased to $2,699,519 at December 31, 2013 compared to $1,488,234 at December 31, 2012. The increase is primarily due to an increase in inventory, purchase of fixed assets, and cash and cash equivalents. Total liabilities increased to $6,301,037 at December 31, 2013 compared to $5,909,051 at December 31, 2012. This increase is due to an increase of accrued expenses of $852,655 resulting from an increase in commission payable (included in accrued expenses). Deferred revenue increasing by $292,756, accounts payable decreasing by $427,112, net decrease in convertible notes payable of $196,953 as these notes were converted to stock, paying off related party payables of $54,494, paying down our line of credit to a zero balance, and our bank overdraft decreasing by $25,050.  All of these changes were the result of the Company having increased revenues at December 31, 2013 compared to December 31, 2012, giving the Company excess cash to better manage the business.

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We experienced a 41.2% increase in revenues in 2013 over 2012 resulting from a better than expected fourth quarter revenues. Our source of revenue is from the sale of various foods, other natural products, member sign ups and kits and freight and handling to deliver products to the members and customers.  We recognize revenue upon shipment of a sales order.

Gross profits increased due to increased revenues and reducing our two largest cost of sales expense product costs and shipping as we were able to optimize pricing with our key vendors.  Product costs also decreased because the majority of the Company’s sales were from FGX PowerStrips and the product and shipping costs for that product line are lower than our FGI product lines.

Cost of sales consists primarily of the cost of procuring and packaging products, and the cost of shipping product to our international subsidiaries and warehouses and to our members, plus credit card sales processing fees.  Cost of sales was approximately 26.7% of revenues for 2013 compared to 33.1 % of revenues for 2012.  The 2013 decrease is primarily due to decreasing our product and shipping costs.

Total operating expenses increased for 2013 compared to 2012 by $3,958,157. The majority of the increase is due increasing the percentage paid out to our members, the hiring of more employees, and the increase in business operations.

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

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

We calculated ForeverGreen International’s customer base intangible using a percentage of the gross margin of ForeverGreen International.  We will amortize the customer base over a period of ten years.  The amortization for 2013 and 2012 was $92,559 and $93,560, respectively.