Executive Overview

During the year ended December 31, 2018, the Company continued its planned consolidation and restructuring of the Company, including reducing overhead costs, streamlining the Company's product offerings, reducing shipping costs, reduction of personnel and consolidating domestic and foreign warehouse and office spaces. These strategies were directed to reduce overhead and debt, streamline domestic and international operations, improve distribution channels and consolidate the Company's product offerings.

Our gross profits have decreased for the year ended December 31, 2018, and we have recorded a net loss from operations. The Company continues to monitor its cost structure and implements cost saving measures deemed to be effective. The Company has initiated some new marketing initiatives to stimulate growth in its monthly revenues, which combined with some new financing, is allowing the Company to continue to invest in its expansion plan. New products have been and will continue to be considered to bolster Member recruiting and sales. 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.

Management anticipates that future additional capital needed for cash shortfalls will be provided by either debt or equity financing. We may pay these loans with cash, if available, or convert these loans into common stock. Any common stock issuance 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 our shareholders may experience dilution in the value per share of their common stock.

Results of Operations

The following chart summarizes the consolidated statements of operations of ForeverGreen Worldwide and






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Subsidiaries for the years ended December 31, 2018 and 2017.




                                                 Year ended December 31
      SUMMARY OF OPERATING RESULTS                2018             2017
      Revenues, net                          $   10,158,516    $  18,492,769
      Cost of sales                               3,302,543        4,571,724
      Gross profit                                6,855,973       13,921,045
      Selling and marketing expenses              3,413,441        7,739,550
      General and administrative expenses         4,145,368        6,680,890
      Depreciation and amortization                 924,831          942,572
      Total operating expenses                    8,483,640       15,363,012
      Net operating loss                        (1,627,667)      (1,441,967)
      Total other (expense)                     (1,048,602)        (713,927)
      Income tax provision (benefit)                     --               --
      Net loss                               $  (2,676,269)   $  (2,155,894)
      Net loss per share (basic and diluted)   $     (0.10)     $      (0.8)

We recognized revenues of $10,158,516 for 2018 compared to revenues of $18,492,769 for 2017. Our source of revenues is from the sale of various supplements, other natural products, member sign up fees, kits, and freight and handling to deliver products to the members and customers.

The Company experienced a 45.1% decrease in revenues in 2018 compared to 2017 resulting from an overall Company strategy to restructure expenses. Some of the cost cutting initiatives implemented resulted in a loss of revenues, but the net effect of the changes was to put the Company in a position for improved profitability. Also, in 2018 active Members decreased to 19,006 compared to 31,821 active members in 2017. The decrease in Member activity is, in part, a result of some of the cost cutting measures.

Cost of sales consists primarily of the cost of procuring and packaging products, shipping product and credit card sales processing fees. Cost of sales was approximately 32.5% of revenues for 2018 compared to 24.7% of revenues for 2017. The 2018 increase is primarily due to the lower product revenue for products and shipping.

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. As the TransArmor™ technology is implemented in additional products, the Company expects the global express product mix to become a larger part of its total revenues. With this shift to more envelope products, the Company will be able to deliver those products more inexpensively than a corresponding Farmer's Market product. 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.

Selling and marketing expenses include sales commissions paid to our Members, special incentives, costs for incentive trips and other rewards incentives. In 2018 selling and marketing expenses decreased to 33.6% of






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revenues compared to 41.9% in 2017. Selling and marketing expenses are commuted from the commission structure for the product sold and the commission tier the member receiving the commission is in.

General and administrative expense (inclusive of depreciation and amortization) decreased as a total expense, but increased as a percentage of revenues to 49.9% in 2018 from 41.2% in 2017.

Liquidity and Capital Resources





                                 Year ended December 31
SUMMARY OF BALANCE SHEET         2018             2017
Cash and cash equivalents    $      80,996    $      108,112
Restricted cash                     27,336            56,976
Total current assets               683,826         1,226,647
Total assets                     2,319,308         3,906,285
Total current liabilities       10,199,318         6,469,580
Long-term debt                   1,458,000         5,792,768
Total liabilities               11,657,318        12,262,348

Accumulated deficit $ (47,578,632) $ (44,902,363) Total stockholders' deficit $ (9,338,010) $ (8,356,063)

Our total assets decreased to $2,319,308 at December 31, 2018 from $3,906,285 at December 31, 2017. The decrease is primarily due to a $291,464 decrease in inventory to keep inventory supply in line with the lower revenues, a net decrease of $1,044,156 in property plant and equipment, a $29,640 decrease in restricted cash, a $27,116 decrease in cash, a $75,884 decrease in prepaid expenses and other assets, and a $118,717 decrease in receivables. All of these decreases are due to the reduced revenues in 2018.

Our total liabilities at December 31, 2018 were $11,657,318 compared to $12,262,348 at December 31, 2017. The decrease consists of a decrease in accounts payables of $233,423 due to lower level of activity during the year and net convertible notes payable from related parties increased by $397,639, net convertible notes payable from non-related parties decreased by $607,594, and notes payable decreased by $301,247. The changes in all notes payable are from new note additions, note settlements and extinguishments for common stock and restructurings, and principal and interest payments made during 2018.

At December 31, 2018, the Company had cash and cash equivalents of $80,996, a working capital deficit of $9,515,492 and accumulated deficit of $47,578,632, negative cash flows from operations, and has experienced cash flow difficulties.

The increase from the 2017 working capital deficit of $4,272,559 was due to a significant loss in assets and a reclassification of long term to short term of current liabilities. During 2018 the Company financed its operations with net cash flows from operations, and the issuance of promissory notes. These factors combined raise substantial doubt about the Company's ability to continue as a going concern.




                                                          Year ended December 31
SUMMARY OF CASH FLOWS                                     2018            2017
Net cash used in operating activities                  $ (512,705)   $  (1,321,130)
Net cash provided by ( used in) investing activities            --        (175,651)






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                                                         Year ended December 31
SUMMARY OF CASH FLOWS                                     2018           2017

Net cash provided by (used in) financing activities (246,373) 607,787 Effect of foreign currency on cash

                         702,322         714,840

Net decrease in cash equivalents and restricted cash $ (56,756) $ (174,154)

The net cash used in operating activities decreased by $808,425 in 2018. This is attributable to significant reductions in revenues and management's cost reduction initiatives not keeping pace with the decline. The initiatives included reductions in labor force, negotiating out of building leases, and paying one-time costs associated with the termination of certain contracts.

Net cash used in investing activities decreased by $175,651 in 2018 compared to 2017. This decrease is due to no fixed asset purchases in 2018.

Net cash provided by financing activities decreased by $854,160 compared to 2017. This decrease is due to less cash received from note issuances and no cash received from equity issuances in 2018.

Commitments and Obligations

The Company has an agreement with one vendor, Marine Life Sciences, LLC, that supplies 100% of the marine phytoplankton included in several top selling products. If that vendor were to discontinue the supply of this ingredient, our sales could decrease significantly. 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.

As of December 31, 2018, the Company has $5,670,146 in debt that will be due in the next twelve months. During 2017 and 2018 the Company has issued convertible promissory notes totaling $5,176,826 and $570,000, respectively, to related parties and third parties. The principal amount of the notes and accrued interest is due and payable on or before December 31, 2019. The notes also have a conversion feature for common shares.

Management anticipates it will satisfy these notes payable through increased revenues or negotiation of new payment due dates.

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 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. The Company did an annual analysis for the period ended December 31, 2018 and determined no adjustment to long-lived assets was needed.

The Company adjusts its inventories to lower of cost or market. Additionally, we adjust the carrying value of our inventory based on assumptions regarding future demand for our products and market conditions. If future demand






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and market conditions are less favorable than management's assumptions, additional inventory write-downs could be required. Likewise, favorable future demand and market conditions could positively impact future operating results if previously written down inventories are sold. We had obsolete and slow-moving inventories which were reserved against in the amount of $40,000 at December 31, 2018.

In determining the allowance for doubtful accounts, the Company evaluates the collectability of its accounts receivable and member advances based on a combination of factors. In circumstances where the Company is aware of a specific customer's inability to meet its financial obligations to us (e.g., bankruptcy filings), the Company records a specific allowance for doubtful accounts against amounts due to reduce the net recognized receivable to the amount it reasonably believe will be collected. For all other customers, the Company recognizes allowances for doubtful accounts based on the length of time the receivables are past due. If circumstances change (e.g., unexpected material adverse changes in a major customer's ability to meet its financial obligation to us or higher than expected customer defaults), the Company's estimates of the recoverability of amounts could differ from the actual amounts recovered.







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