10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2018

OR

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

For the transition period from ________ to __________

Commission file number 000-55181

TWINLAB CONSOLIDATED HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

Nevada	46-3951742
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

4800 T-Rex Avenue, Suite 305 Boca Raton, Florida	33431
(Address of principal executive offices)	(Zip Code)

(561) 443-5301

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

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

Yes ☐    No ☒

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes ☒    No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☐ (Do not check if a smaller reporting company)	Smaller reporting company ☒
	Emerging growth company ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes ☐   No ☒

The number of shares of common stock, $0.001 par value, outstanding on August 13, 2018 was 254,441,733 shares.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

TABLE OF CONTENTS

			Page No.
Part I - FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Condensed Consolidated Balance Sheets (Unaudited)	1
	Condensed Consolidated Statements of Operations (Unaudited)	2
	Condensed Consolidated Statements of Cash Flows (Unaudited)	3
	Notes to Condensed Consolidated Financial Statements (Unaudited)	5
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30
Item 4.	Controls and Procedures	30
Part II - OTHER INFORMATION
Item 1.	Legal Proceedings	31
Item 1A.	Risk Factors	31
Item 6.	Exhibits	32
	Signatures	33

PART I – FINANCIAL INFORMATION

Item 1.     Financial Statements.

TWINLAB CONSOLIDATED HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

	June 30,			December 31,
	2018			2017
ASSETS
Current assets:
Cash	$	609		$	1,350
Accounts receivable, net of allowance of $2,704 and $2,534, respectively		9,911			6,528
Inventories, net		12,173			17,168
Prepaid expenses and other current assets		3,273			2,256
Total current assets		25,966			27,302
Property and equipment, net		2,803			3,169
Intangible assets, net		22,146			23,063
Goodwill		17,797			17,797
Other assets		1,738			1,762
Total assets	$	70,450		$	73,093
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable	$	9,895		$	10,146
Accrued expenses and other current liabilities		13,482			10,336
Derivative liabilities		6,403			6,791
Notes payable and current portion of long-term debt, net of discount of $2,656 and $3,660, respectively		72,674			68,093
Total current liabilities		102,454			95,366
Long-term liabilities:
Deferred gain on sale of assets		1,484			1,565
Notes payable and long-term debt, net of current portion		3,257			3,383
Total long-term liabilities		4,741			4,948
Total liabilities		107,195			100,314
Commitments and contingencies
Stockholders’ deficit:
Common stock, $0.001 par value, 5,000,000,000 shares authorized, 389,247,784 and 388,081,117 shares issued and outstanding, respectively		389			388
Additional paid-in capital		228,056			226,884
Stock subscriptions receivable		(30	)		(30	)
Treasury stock, 134,806,051 shares at cost		(500	)		(500	)
Accumulated deficit		(264,660	)		(253,963	)
Total stockholders’ deficit		(36,745	)		(27,221	)
Total liabilities and stockholders' deficit	$	70,450		$	73,093

The accompanying notes are an integral part of the condensed consolidated financial statements.

1

TWINLAB CONSOLIDATED HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

 (AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2018			2017			2018			2017
Net sales	$	21,662		$	21,419		$	41,326		$	45,518
Cost of sales		16,779			15,766			32,369			33,265
Gross profit		4,883			5,653			8,957			12,253
Selling, general and administrative expenses		6,837			7,333			15,559			13,928
Loss from operations		(1,954	)		(1,680	)		(6,602	)		(1,675	)
Other income (expense):
Interest expense, net		(2,338	)		(2,478	)		(4,451	)		(4,442	)
Gain (loss) on change in derivative liabilities		(1,430	)		(297	)		388			(1,295	)
Other expense, net		(16	)		(25	)		(32	)		(24	)
Total other expense, net		(3,784	)		(2,800	)		(4,095	)		(5,761	)
Loss before income taxes		(5,738	)		(4,480	)		(10,697	)		(7,436	)
Provision for income taxes		-			-			-			-
Total net loss	$	(5,738	)	$	(4,480	)	$	(10,697	)	$	(7,436	)
Weighted average number of common shares outstanding – basic		255,149,140			252,959,714			254,206,926			252,941,772
Net loss per common share – basic	$	(0.02	)	$	(0.02	)	$	(0.04	)	$	(0.03	)
Weighted average number of common shares outstanding – diluted		255,149,140			252,959,714			265,522,796			252,941,772
Net loss per common share – diluted	$	(0.02	)	$	(0.02	)	$	(0.04	)	$	(0.03	)

The accompanying notes are an integral part of the condensed consolidated financial statements.

2

TWINLAB CONSOLIDATED HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(AMOUNTS IN THOUSANDS)

	Six Months Ended
	June 30,
	2018			2017
Cash flows from operating activities:
Net loss	$	(10,697	)	$	(7,436	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		1,341			1,612
Amortization of debt discount		1,004			1,244
Issuance of common stock for services		352			-
Stock-based compensation		172			301
Change in provision for obsolete inventory		(987	)		119
Change in provision for losses on accounts receivable		(165	)		185
(Gain) loss on change in derivative liabilities		(388	)		1,295
Other non-cash items		(82	)		(81	)
Changes in operating assets and liabilities:
Accounts receivable		(3,225	)		(1,692	)
Inventories		5,982			(4,063	)
Prepaid expenses and other current assets		(370	)		300
Other assets		24			(102	)
Accounts payable		(242	)		(218	)
Accrued expenses and other current liabilities		3,145			(204	)
Net cash used in operating activities		(4,136	)		(8,740	)
Cash flows from investing activities:
Purchase of property and equipment		(57	)		(29	)
Cash flows from financing activities:
Proceeds from the issuance of debt		4,000			3,267
Repayment of debt		(835	)		(1,057	)
Net borrowings from revolving credit facility		287			1,949
Net cash provided by financing activities		3,452			4,159
Net decrease in cash		(741	)		(4,610	)
Cash at the beginning of the period		1,350			5,097
Cash at the end of the period	$	609		$	487

The accompanying notes are an integral part of the condensed consolidated financial statements.

3

TWINLAB CONSOLIDATED HOLDINGS, INC.

 CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

 (AMOUNTS IN THOUSANDS) - Continued

	Six Months Ended
	June 30,
	2018		2017
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest	$	1,557	$	3,198
Cash paid for income taxes		-		-
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING TRANSACTIONS:
Issuance of common stock for prepaid expenses		648		-
Decrease in derivative liabilities and increase in common stock and additional
Relief of stock subscription accrual through long-term debt		-		(3,200	)
Issuance of new long-term debt as payment of existing prepaid stock subscription		-		3,200

The accompanying notes are an integral part of the condensed consolidated financial statements.

4

TWINLAB CONSOLIDATED HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

NOTE 1 – NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization

Twinlab Consolidated Holdings, Inc. (the “Company”, “Twinlab,” “we,” “our” and “us”) was incorporated on October 24, 2013 under the laws of the State of Nevada as Mirror Me, Inc. On August 7, 2014, we amended our articles of incorporation and changed our name to Twinlab Consolidated Holdings, Inc.

Nature of Operations

We are an integrated marketer, distributor and retailer of branded nutritional supplements and other natural products sold to and through domestic health and natural food stores, mass market retailers, specialty stores retailers, on-line retailers and websites. Internationally, we market and distribute branded nutritional supplements and other natural products to and through health and natural product distributors and retailers.

Our products include vitamins, minerals, specialty supplements and sports nutrition products sold under the Twinlab® brand name (including the REAAL®, and Twinlab® Fuel brand of sports nutrition products); a market leader in the healthy aging and beauty from within categories sold under the Reserveage™ Nutrition and ResVitale® brand names; diet and energy products sold under the Metabolife® brand name; the Re-Body® brand name; and a full line of herbal teas sold under the Alvita® brand name. To accommodate consumer preferences, our products come in various formulations and delivery forms, including capsules, tablets, softgels, chewables, liquids, sprays and powders. These products are sold primarily through health and natural food stores and on-line retailers, supermarkets, and mass-market retailers.

We also perform contract manufacturing services for private label products.  Our contract manufacturing business involves the manufacture of custom products to the specifications of a customer who requires finished product under the customer’s own brand name.  We do not market these private label products as our business is to sell the products to the customer, who then markets and sells the products to retailers or end consumers.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.

Basis of Presentation and Unaudited Information

The condensed consolidated interim financial statements included herein have been prepared by the Company in accordance with United States generally accepted accounting principles, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although we believe that the disclosures are adequate to make the information presented not misleading. These statements reflect all adjustments, consisting of normal recurring adjustments, which in the opinion of management, are necessary for fair presentation of the information contained therein. Financial results for any interim period are not necessarily indicative of financial results that may be expected for the fiscal year. The unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 filed with the SEC on April 2, 2018.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Actual results could differ from those estimates. Significant management estimates include those with respect to returns and allowances, allowance for doubtful accounts, reserves for inventory obsolescence, the recoverability of long-lived assets, intangibles and goodwill and the estimated value of warrants and derivative liabilities.

Revenue Recognition

Revenue from product sales, net of estimated returns and allowances, is recognized when evidence of an arrangement is in place, related prices are fixed, and determinable, contractual obligations have been satisfied, title and risk of loss have been transferred to the customer and collection of the resulting receivable is reasonably assured. Shipping terms are generally freight on board shipping point. We sell predominately in the North American and European markets, with international sales transacted in U.S. dollars.

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Fair Value of Financial Instruments

We apply the following fair value hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:

Level 1 – inputs are quoted prices in active markets for identical assets that the reporting entity has the ability to access at the measurement date.

Level 2 – inputs are other than quoted prices included within Level 1 that are observable for the asset, either directly or indirectly.

Level 3 – inputs are unobservable inputs for the asset that are supported by little or no market activity and that are significant to the fair value of the underlying asset or liability.

The following table summarizes our financial instruments that are measured at fair value on a recurring basis as of June 30, 2018 and December 31, 2017:

June 30, 2018	Total		Level 1		Level 2		Level 3
Derivative liabilities	$	6,403	$	-	$	-	$	6,403

December 31, 2017	Total		Level 1		Level 2		Level 3
Derivative liabilities	$	6,791	$	-	$	-	$	6,791

Accounts Receivable and Allowances

We grant credit to customers and generally do not require collateral or other security. We perform credit evaluations of our customers and provide for expected claims related to promotional items, customer discounts, shipping shortages, damages, and doubtful accounts based upon historical bad debt and claims experience.  As of June 30, 2018, total allowances amounted to $2,704, of which $495 was related to doubtful accounts receivable.  As of December 31, 2017, total allowances amounted to $2,534, of which $329 was related to doubtful accounts receivable. 

Inventories

Inventories are stated at the lower of cost or net realizable value and are reduced by an estimated reserve for obsolete inventory.

Property and Equipment

Property and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation, including amounts amortized under capital leases, is calculated on the straight-line method over the estimated useful lives of the related assets, which are 7 to 10 years for machinery and equipment, 8 years for furniture and fixtures and 3 years for computers. Leasehold improvements are amortized over the shorter of the useful life of the asset or the term of the lease.

Normal repairs and maintenance are expensed as incurred. When assets are retired or otherwise disposed of, the related cost and accumulated depreciation or amortization is removed from the accounts and any gain or loss is included in the results of operations.

Intangible Assets

Intangible assets consist primarily of trademarks and customer relationships, which are amortized on a straight-line basis over their estimated useful lives ranging from 3 to 30 years. The valuation and classification of these assets and the assignment of amortizable lives involve significant judgment and the use of estimates.

6

We believe that our long-term growth strategy supports our fair value conclusions. For intangible assets, the recoverability of these amounts is dependent upon achievement of our projections and the execution of key initiatives related to revenue growth and improved profitability.

Goodwill

Goodwill is not subject to amortization, but is reviewed for impairment annually, or more frequently whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable. An impairment charge would be recorded to the extent the carrying value of goodwill exceeds its estimated fair value. The testing of goodwill under established guidelines for impairment requires significant use of judgment and assumptions. Changes in forecasted operations and other assumptions could materially affect the estimated fair values. Changes in business conditions could potentially require adjustments to these asset valuations.

Impairment of Long-Lived Assets

Long-lived assets, including intangible assets subject to amortization, are reviewed for impairment when changes in circumstances indicate that the carrying amount of the asset may not be recoverable. If the carrying amount of the asset exceeds the expected undiscounted cash flows of the asset, an impairment charge is recognized equal to the amount by which the carrying amount exceeds fair value. The testing of these intangibles under established guidelines for impairment requires significant use of judgment and assumptions. Changes in forecasted operations and other assumptions could materially affect the estimated fair values. Changes in business conditions could potentially require adjustments to these asset valuations.

Indefinite-Lived Intangible Assets

Indefinite-lived intangible assets relating to the asset acquisition of Organic Holdings, a market leader in the healthy aging and beauty from within categories, and owner of the Reserveage Nutriton brands, are determined to have an indefinite useful economic life and as such are not amortized. Indefinite-lived intangible assets are tested for impairment annually which consists of a comparison of the fair value of the asset with its carrying value. The total indefinite-lived intangible assets as of June 30, 2018 and December 31, 2017 was $4,346.

Value of Warrants Issued with Debt

We estimate the grant date value of certain warrants issued with debt, using an outside professional valuation firm, which uses the Monte Carlo option lattice model. We record the amounts as interest expense or debt discount, depending on the terms of the agreement. These estimates involve multiple inputs and assumptions, including the market price of the Company’s common stock, stock price volatility and other assumptions to project earnings before interest, taxes, depreciation and amortization (“EBITDA”) and other reset events. These inputs and assumptions are subject to management’s judgment and can vary materially from period to period.

Derivative Liabilities

We have recorded certain warrants as derivative liabilities at estimated fair value, as determined based on our use of an outside professional valuation firm, due to the variable terms of the warrant agreements. The value of the derivative liabilities is generally estimated using the Monte Carlo option lattice model with multiple inputs and assumptions, including the market price of the Company’s common stock, stock price volatility and other assumptions to project EBITDA and other reset events. These inputs and assumptions are subject to management’s judgment and can vary materially from period to period.

Deferred gain on sale of assets

We entered into a sale-leaseback arrangement relating to our office facilities in 2013. Under the terms of the arrangement, we sold an office building and surrounding land and then leased the property back under a 15-year operating lease. We recorded a deferred gain for the amount of the gain on the sale of the asset, to be recognized as a reduction of rent expense over the life of the lease. Accordingly, we recorded amortization of deferred gain as a reduction of rental expense of $40 for the three months ended June 30, 2018 and 2017. For the six months ended June 30, 2018 and 2017, we recorded amortization of $81 and $81, respectively. As of June 30, 2018, and December 31, 2017, unamortized deferred gain on sale of assets was $1,484 and $1,565, respectively.

Net Income (Loss) per Common Share

Basic net income or loss per common share (Basic EPS) is computed by dividing net income or loss by the weighted average number of common shares outstanding. Diluted net income or loss per common share (Diluted EPS) is computed by dividing net income or loss by the sum of the weighted average number of common shares outstanding and the dilutive potential common shares then outstanding. Potential dilutive common share equivalents consist of total shares issuable upon the exercise of outstanding stock options and warrants to acquire common stock using the treasury stock method and the average market price per share during the period.

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When calculating diluted earnings or loss per share, if the effects are dilutive, companies are required to add back to net income or loss the effects of the change in derivative liabilities related to warrants. Additionally, if the effects of the change in derivative liabilities are added back to net income or loss, companies are required to include the warrants outstanding related to the derivative liability in the calculation of the weighted average dilutive shares. Accordingly, for the six months ended June 30, 2018, the gain on change in derivative liabilities was added to net loss, and the dilutive effect of the warrant derivative liabilities was included in the calculation of the weighted average dilutive shares. As there was no gain on change in derivative liabilities for the three months ended June 30, 2018, there was no dilutive effect on net loss and the calculation of the weighted average dilutive shares.

The common shares used in the computation of our basic and diluted net income (loss) per share are reconciled as follows:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2018			2017			2018			2017
Numerator:
Net loss	$	(5,738	)	$	(4,480	)	$	(10,697	)	$	(7,436	)
Effect of dilutive securities on net loss:
Common stock warrants		-			-			(388	)		-
Total net loss for purpose of calculating diluted net loss per common share	$	(5,738	)	$	(4,480	)	$	(11,085	)	$	(7,436	)
Number of shares used in per common share calculations:
Total weighted-average shares for purposes of calculating basic net loss per common share		255,149,140			252,959,714			254,206,926			252,941,772
Weighted-average effect of dilutive securities:
Common stock warrants		-			-			11,315,870			-
Total shares for purpose of calculating diluted net loss per common share		255,149,140			252,959,714			265,522,796			252,941,772
Net loss per common share:
Basic	$	(0.02	)	$	(0.02	)	$	(0.04	)	$	(0.03	)
Diluted	$	(0.02	)	$	(0.02	)	$	(0.04	)	$	(0.03	)

Significant Concentration of Credit Risk

Sales to our top three customers aggregated to approximately 28% and 22% of total sales for the three months ended June 30, 2018 and 2017, respectively, and 28% and 26% of total sales for the six months ended June 30, 2018 and 2017. Sales to one of those customers were approximately 12% and 10% of total sales for the three months ended June 30, 2018 and 2017, respectively, and 14% and 12% of total sales for the six months ended June 30, 2018 and 2017, respectively. Accounts receivable from top three customers were approximately 37% and 39% of total accounts receivable as of June 30, 2018 and December 31, 2017, respectively.

Recent Accounting Pronouncements

In January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-04, “Simplifying the Test for Goodwill Impairment (Topic 350)” which removes Step 2 of the goodwill impairment test that requires a hypothetical purchase price allocation.  A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill.  The amendments in this ASU are effective for fiscal years beginning after December 15, 2019.  Early adoption is permitted after January 1, 2017.  We do not expect the new guidance to have a significant impact on our condensed consolidated financial statements or related disclosures.

In February 2016, FASB issued ASU No. 2016-02, “Leases (Topic 842)”, which requires companies to recognize all leases as assets and liabilities on the consolidated balance sheet. This ASU retains a distinction between finance leases and operating leases, and the classification criteria for distinguishing between finance leases and operating leases are substantially similar to the classification criteria for distinguishing between capital leases and operating leases in the current accounting literature. The result of retaining a distinction between finance leases and operating leases is that under the lessee accounting model in Topic 842, the effect of leases in a consolidated statement of comprehensive income and a consolidated statement of cash flows is largely unchanged from previous GAAP. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Earlier application is permitted. The Company is currently evaluating the impact that the adoption of this ASU will have on its condensed consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, "Financial Instruments- Credit losses (Topic 326): Measurement of Credit losses on Financial Instruments". ASU 2016-13 requires an organization to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Our status as an emerging growth company allows us to defer adoption until the annual period, including interim periods within the annual period, beginning January 1, 2021. Management is currently evaluating the requirements of this guidance and has not yet determined the impact of the adoption on the Company's financial position or results from operations.

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In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)”. ASU 2014-09 amends the guidance for revenue recognition to replace numerous, industry-specific requirements and converges areas under this topic with those of the International Financial Reporting Standards. The ASU implements a five-step process for customer contract revenue recognition that focuses on transfer of control, as opposed to transfer of risk and rewards. The amendment also requires enhanced disclosures regarding the nature, amount, timing and uncertainty of revenues and cash flows from contracts with customers. Other major provisions include the capitalization and amortization of certain contract costs, ensuring the time value of money is considered in the transaction price, and allowing estimates of variable consideration to be recognized before contingencies are resolved in certain circumstances. The amendments in this ASU are effective for reporting periods beginning after December 15, 2016; however, in July 2015, the FASB agreed to delay the effective date by one year. The proposed deferral may permit early adoption but would not allow adoption any earlier than the original effective date of the standard. Entities can transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption.  Our status as an emerging growth company allows us to defer the adoption until the year (and interim periods therein) beginning January 1, 2019. We have chosen to delay our adoption until January 1, 2019.

Although there are several other new accounting pronouncements issued or proposed by the FASB, which we have adopted or will adopt, as applicable, we do not believe any of these accounting pronouncements has had or will have a material impact on our condensed consolidated financial position or results of operations.

NOTE 2 – GOING CONCERN

The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which assumes continuity of operations and realization of assets and liabilities in the ordinary course of business. In most periods since our formation, we have generated losses from operations. As of June 30, 2018, we had an accumulated deficit of $264,660. Historical losses are primarily attributable to lower than planned sales resulting from low fill rates on demand due to limitations of our working capital, delayed product introductions and postponed marketing activities, merger-related and other restructuring costs, and interest and refinancing charges associated with our debt refinancing. Losses have been funded primarily through issuance of common stock and third-party or related party debt.

Because of our history of operating losses, significant interest expense on our debt, and the recording of significant derivative liabilities, we have a working capital deficiency of $76,488 as of June 30, 2018.  We also have $72,674 of debt, net of discount, due within the next 12 months. These continuing conditions, among others, raise substantial doubt about our ability to continue as a going concern.

Management has addressed operating issues through the following actions: focusing on growing the core business and brands; continuing emphasis on major customers and key products; reducing manufacturing and operating costs that include significant workforce and salary expense reduction, and continuing to negotiate lower prices from major suppliers.  We believe that we may need additional capital to execute our business plan. If additional funding is required, there can be no assurance that sources of funding will be available when needed on acceptable terms or at all.

NOTE 3 – INVENTORIES

Inventories consisted of the following as of:

	June 30,			December 31,
	2018			2017
Raw materials	$	2,984		$	5,347
Work in process		263			1,965
Finished goods		10,319			12,236
		13,566			19,548
Reserve for obsolete inventory		(1,393	)		(2,380	)
	$	12,173		$	17,168

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NOTE 4 – PROPERTY AND EQUIPMENT

Property and equipment consisted of the following as of:

	June 30,			December 31,
	2018			2017
Machinery and equipment	$	12,166		$	12,156
Computers and other		9,614			9,589
Aquifer		482			482
Leasehold improvements		1,552			1,530
		23,814			23,757
Accumulated depreciation and amortization		(21,011	)		(20,588	)
	$	2,803		$	3,169

Assets held under capital leases are included in machinery and equipment and amounted to $631 and $777 as of June 30, 2018 and December 31, 2017, respectively.

Depreciation and amortization expense totaled $210 and $220 for the three months ended June 30, 2018 and 2017, respectively, and totaled $424 and $447 for the six months ended June 30, 2018 and 2017, respectively.

NOTE 5 – INTANGIBLE ASSETS

Intangible assets consisted of the following as of:

	June 30,			December 31,
	2018			2017
Trademarks	$	8,915		$	8,915
Indefinite-lived intangible assets		4,346			4,346
Customer relationships		19,110			19,110
Other		753			753
		33,124			33,124
Accumulated amortization		(10,978	)		(10,061	)
	$	22,146		$	23,063

Trademarks are amortized over periods ranging from 3 to 30 years, customer relationships are amortized over periods ranging from 15 to 16 years, and other intangible assets are amortized over 3 years. Amortization expense was $458 and $582 for the three months ended June 30, 2018 and 2017 and was $917 and $1,165 for the six months ended June 30, 2018 and 2017, respectively.

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NOTE 6 – DEBT

Debt consisted of the following as of:

	June 30,			December 31,
	2018			2017
Related-Party Debt:
July 2014 note payable to Little Harbor, LLC (Converted to a new note in February 2018)	$	3,267		$	3,267
July 2016 note payable to Little Harbor, LLC		4,770			4,770
January 2016 note payable to Great Harbor Capital, LLC		2,500			2,500
March 2016 note payable to Great Harbor Capital, LLC		7,000			7,000
December 2016 note payable to Great Harbor Capital, LLC		2,500			2,500
August 2017 note payable to Great Harbor Capital, LLC		3,000			3,000
February 2018 note payable to Great Harbor Capital, LLC		2,000			-
January 2016 note payable to Golisano Holdings LLC		2,500			2,500
March 2016 note payable to Golisano Holdings LLC		7,000			7,000
July 2016 note payable to Golisano Holdings LLC		4,770			4,770
December 2016 note payable to Golisano Holdings LLC		2,500			2,500
March 2017 note payable to Golisano Holdings LLC		3,267			3,267
February 2018 note payable to Golisano Holdings LLC		2,000			-
November 2014 note payable to Golisano Holdings LLC (formerly payable to Penta Mezzanine SBIC Fund I, L.P.), net of discount and unamortized loan fees in the aggregate of $1,084 and $1,491 as of June 30, 2018 and December 31, 2017, respectively		6,915			6,509
January 2015 note payable to Golisano Holdings LLC (formerly payable to JL-BBNC Mezz Utah, LLC), net of discount and unamortized loan fees in the aggregate of $1,372 and $1,829 as of June 30, 2018 and December 31, 2017, respectively		3,628			3,171
February 2015 note payable to Golisano Holdings LLC (formerly payable to Penta Mezzanine SBIC Fund I, L.P.), net of discount and unamortized loan fees in the aggregate of $95 and $130 as of June 30, 2018 and December 31, 2017, respectively		1,904			1,869
Total related-party debt		59,521			54,623
Senior Credit Facility with Midcap		12,375			12,088
April 2016 note payable to JL-Utah Sub, LLC		188			313
Capital lease obligations, net of discount of $105 and 210 as of June 30, 2018 and December 31, 2017, respectively		647			1,252
Huntington Holdings		3,200			3,200
Total other debt		4,035			4,765
Total debt		75,931			71,476
Less current portion		(72,674	)		(68,093	)
Long-term debt	$	3,257		$	3,383

Related-Party Debt

July 2014 Note Payable to Little Harbor, LLC

Pursuant to a July 2014 Debt Repayment Agreement with Little Harbor, LLC (“Little Harbor”), an entity owned by certain stockholders of the Company, we were obligated to pay such party $4,900 per year in structured monthly payments for 3 years provided that such payment obligations would terminate at such earlier time as the trailing ninety day volume weighted average closing sales price of the Company’s common stock on all domestic securities exchanges on which such stock is listed equals or exceeds $5.06 per share. This note is unsecured and matured on July 25, 2017 with an outstanding balance of $3,267. On February 6, 2018, we entered into an agreement with Little Harbor to convert the obligations into an unsecured promissory note. The note matures on July 25, 2020, bears interest at an annual rate of 8.5%, with the principal payable at maturity.

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July 2016 Note Payable to Little Harbor, LLC

On July 21, 2016, we issued an Unsecured Delayed Draw Promissory Note in favor of Little Harbor, pursuant to which Little Harbor may, in its sole discretion and pursuant to draw requests made by the Company, loan us up to the maximum principal amount of $4,770. This note is unsecured and matures on January 28, 2019. This note bears interest at an annual rate of 8.5%, with the principal payable at maturity. If Little Harbor, in its discretion, accepts a draw request made by the Company under this note, Little Harbor shall not transfer cash to the Company, but rather Little Harbor shall irrevocably agree to accept the principal amount of any monthly delayed draw under this note in lieu and in complete satisfaction of the obligation to make an equivalent dollar amount of periodic cash payments otherwise due to Little Harbor under the July 2014 note payable. During the year ended December 31, 2016, we requested and Little Harbor LLC approved, draws totaling $4,770. There were no draws during the year ended December 31, 2017 and the quarter ended June 30, 2018. We issued a warrant into escrow in connection with this loan (see Little Harbor Escrow Warrant in Note 7).

Little Harbor also delivered a deferment letter to which Little Harbor agreed to defer all payments due under the notes specified in the Little Harbor Deferment Letter through June 30, 2018 until October 1, 2018 and agreed to refrain from declaring a default and/or exercising any remedies under the notes.

January 2016 Note Payable to Great Harbor Capital, LLC

Pursuant to a January 28, 2016 Unsecured Promissory Note with Great Harbor Capital, LLC (“GH”), an affiliate of a member of our Board of Directors, GH lent us $2,500. The note matures on January 28, 2019, bears interest at an annual rate of 8.5%, with the principal payable in 24 monthly installments of $104 commencing on February 28, 2017. We issued a warrant into escrow in connection with this loan (see GH Escrow Warrants in Note 7).

March 2016 Note Payable to Great Harbor Capital, LLC

Pursuant to a March 21, 2016 Unsecured Promissory Note, GH lent us $7,000. The note matures on March 21, 2019, bears interest at an annual rate of 8.5%, with the principal payable in 24 monthly installments of $292 commencing on April 21, 2017. We issued a warrant into escrow in connection with this loan (see GH Escrow Warrants in Note 7).

December 2016 Note Payable to Great Harbor Capital, LLC

Pursuant to a December 31, 2016 Unsecured Promissory Note, GH lent us $2,500. The note matures on December 30, 2019, bears interest at an annual rate of 8.5%, with the principal payable at maturity. We issued a warrant into escrow in connection with this loan (see GH Escrow Warrants in Note 7).

August 2017 Note Payable to Great Harbor Capital, LLC

Pursuant to an August 30, 2017 Secured Promissory Note, GH lent us $3,000. The note matures on August 29, 2020, bears interest at an annual rate of 8.5%, with the principal payable at maturity. We issued a warrant into escrow in connection with this loan (see GH Escrow Warrants in Note 7).

February 2018 Note Payable to Great Harbor Capital, LLC

Pursuant to a February 6, 2018 Secured Promissory Note, GH lent us $2,000 (Great Harbor Note 1”). The note matures on February 6, 2021, bears interest at an annual rate of 8.5%, with the principal payable at maturity. This note is secured by collateral and is subordinate to the indebtedness owed to Midcap Funding X Trust (“MidCap”), as successor-by-assignment from MidCap Financial Trust.

Also, on February 6, 2018, the Company issued an Amended and Restated Secured Promissory Note to GH (“Great Harbor Note 2”) replacing the prior Secured Promissory Note issued on August 30, 2017. The amendment added a requirement that when the Company consummates any Special Asset Disposition (as defined in the Great Harbor Note 2), provided that the Company has a minimum liquidity of $1,000, the Company will use the net cash proceeds from the Special Asset Disposition to pay any accrued and unpaid interest under the Great Harbor Note 2 and any other note subject to the Intercreditor Agreement (defined below). The maturity date, interest rate and payment terms remain unchanged from the original secured promissory note issued to GH on August 30, 2017.

GH also delivered a deferment letter to which GH agreed to defer all payments due under the notes specified in the Great Harbor Deferment Letter through June 30, 2018 until October 1, 2018 and agreed to refrain from declaring a default and/or exercising any remedies under the notes.

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November 2014 Note Payable to Golisano Holdings LLC (formerly payable to Penta Mezzanine SBIC Fund I, L.P.)

On November 13, 2014, we raised proceeds of $8,000, less certain fees and expenses, from the issuance of a secured note to Penta Mezzanine SBIC Fund I, L.P. (“Penta”). The Managing Director of Penta, an institutional investor, is also a member of the Board of Directors of our Company. We granted Penta a security interest in our assets and pledged the shares of our subsidiaries as security for the note.  This note matures on November 13, 2019 with payments of principal due on a quarterly basis commencing on November 13, 2017 in installments of (i) $360 per quarter for the first four quarters, (ii) $440 per quarter for the next four quarters and (iii) $520 per quarter for each quarter thereafter.  This note bears interest of 12% per annum, payable monthly.  We issued a warrant to Penta to purchase 4,960,740 shares of the Company’s common stock in connection with this loan (see Penta Warrants in Note 7).  The estimated fair value of the warrant at the date of issuance was $3,770, which was recorded as a note discount and is being amortized into interest expense over the term of this loan.  Additionally, we had incurred loan fees of $273, which is also being amortized into interest expense over the term of this loan.  On March 8, 2017, Golisano Holdings LLC (“Golisano LLC”) acquired this note payable from Penta. The terms of this note payable remain the same with the only change being the holder of the promissory note.

January 2015 Note Payable to Golisano Holdings LLC (formerly payable to JL-Mezz Utah, LLC-f/k/a JL-BBNC Mezz Utah, LLC)

On January 22, 2015, we raised proceeds of $5,000, less certain fees and expenses, from the sale of a note to JL-Mezz Utah, LLC (f/k/a JL-BBNC Mezz Utah, LLC) (“JL”). The proceeds were restricted to pay a portion of the Nutricap Labs, LLC (“Nutricap”) asset acquisition. We granted JL a security interest in the Company’s assets, including real estate and pledged the shares of our subsidiaries as security for the note. The note matures on February 13, 2020 with payments of principal due on a quarterly basis commencing March 1, 2017 in installments starting at $250 per quarter and increasing to $350 per quarter. This note bears interest of 8% per annum, payable monthly. We issued a warrant to JL to purchase 2,329,400 shares of the Company’s common stock on January 22, 2015 and 434,809 shares of the Company’s common stock on February 4, 2015 (see JL Warrants in Note 7). The estimated fair value of these warrants at the date of issuances was $4,389, which was recorded as a note discount and is being amortized into interest expense over the term of these loans. Additionally, we had incurred loan fees of $152 relating to this loan, which is also being amortized into interest expense over the term of these loans. On March 8, 2017, Golisano LLC acquired this note payable from JL. The terms of this note payable remain the same with the only change being the holder of the promissory note.

February 2015 Note Payable to Golisano Holdings LLC (formerly payable to Penta Mezzanine SBIC Fund I, L.P.)

On February 6, 2015, we raised proceeds of $2,000, less certain fees and expenses, from the issuance of a secured note payable to Penta. The proceeds were restricted to pay a portion of the acquisition of the customer relationships of Nutricap. This note matures on November 13, 2019 with payments of principal due on a quarterly basis commencing November 13, 2017 in installments of (i) $90 per quarter for the first four quarters, (ii) $110 per quarter for the next four quarters and (iii) $130 per quarter for each quarter thereafter. This note bears interest of 8% per annum, payable monthly. We issued a warrant to Penta to purchase 869,618 shares of the Company’s common stock in connection with this loan (see Penta Warrants in Note 7). The estimated fair value of these warrants at the date of issuances totaled $250, which was recorded as a note discount and is being amortized into interest expense over the term of this loan. Additionally, we had incurred loan fees of $90, which is also being amortized into interest expense over the term of these loans. On March 8, 2017, Golisano LLC acquired this note payable from Penta. The terms of this note payable remain the same with the only change being the holder of the promissory note.

January 2016 Note Payable to Golisano Holdings LLC

Pursuant to a January 28, 2016 Unsecured Promissory Note with Golisano LLC, an affiliate of a member of our Board of Directors, Golisano LLC lent us $2,500. The note matures on January 28, 2019, bears interest at an annual rate of 8.5%, with the principal payable in 24 monthly installments of $104 commencing on February 28, 2017. We issued a warrant into escrow in connection with this loan (see Golisano Escrow Warrants in Note 7).

March 2016 Note Payable to Golisano Holdings LLC

Pursuant to a March 21, 2016 Unsecured Promissory Note, Golisano LLC lent us $7,000. The note matures on March 21, 2019, bears interest at an annual rate of 8.5%, with the principal payable in 24 monthly installments of $292 commencing on April 21, 2017. We issued a warrant into escrow in connection with this loan (see Golisano Escrow Warrants in Note 7).

July 2016 Note Payable to Golisano Holdings LLC

On July 21, 2016, we issued an Unsecured Delayed Draw Promissory Note in favor of Golisano LLC pursuant to which Golisano LLC may, in its sole discretion and pursuant to draw requests made by the Company, loan the Company up to the maximum principal amount of $4,770 (the “Golisano LLC July 2016 Note”). The Golisano LLC July 2016 Note matures on January 28, 2019. Interest on the outstanding principal accrues at a rate of 8.5% per year. The principal of the Golisano LLC July 2016 Note is payable at maturity. We issued a warrant into escrow in connection with this loan (see Golisano Escrow Warrants in Note 7). During the year ended December 31, 2016, we requested and Golisano LLC approved, draws totaling $4,770.

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December 2016 Note Payable to Golisano Holdings LLC

Pursuant to a December 31, 2016 Unsecured Promissory Note, Golisano LLC lent us $2,500. The note matures on December 30, 2019, bears interest at an annual rate of 8.5%, with the principal payable at maturity. We issued a warrant into escrow in connection with this loan (see Golisano Escrow Warrants in Note 7).

March 2017 Note Payable to Golisano Holdings LLC

Pursuant to a March 14, 2017 Unsecured Promissory Note, Golisano LLC lent us $3,267. The note matures on December 30, 2019, bears interest at an annual rate of 8.5%, with the principal payable at maturity. We issued a warrant into escrow in connection with this loan (see Golisano Escrow Warrants in Note 7).

February 2018 Note Payable to Golisano Holdings LLC

Pursuant to a February 6, 2018 Secured Promissory Note, Golisano LLC lent us $2,000 (“Golisano LLC Note”). The note matures on February 6, 2021, bears interest at an annual rate of 8.5%, with the principal payable at maturity. This note is secured by collateral and is subordinate to the indebtedness owed to MidCap.

Golisano LLC also delivered a deferment letter pursuant to which Golisano LLC agreed to defer all payments due under the notes specified in the Golisano Deferment Letter through June 30, 2018 until October 1, 2018 and agreed to refrain from declaring a default and/or exercising any remedies under the notes.

On February 6, 2018, GH and Golisano LLC entered into an intercreditor agreement where they agreed that each of the Great Harbor Note 1, the Great Harbor Note 2 and the Golisano LLC Note are pari passu as to repayment, security and otherwise and are equally and ratably secured (the “Intercreditor Agreement”).

Senior Credit Facility

On January 22, 2015, we entered into a three-year $15,000 revolving credit facility (the “Senior Credit Facility”) based on our accounts receivable and inventory, increasable to up to $20,000, with MidCap Financial Trust, which subsequently assigned the agreement to an affiliate, Midcap Funding X Trust (“MidCap”). On September 2, 2016, we entered into an amendment with Midcap to increase the Senior Credit Facility to $17,000 and extend our facility an additional 12 months.  We granted MidCap a first priority security interest in certain of our assets and pledged the shares of our subsidiaries as security for amounts owed under the credit facility. We are required to pay Midcap an unused line fee of 0.50% per annum, a collateral management fee of 1.20% per month and interest of LIBOR plus 5% per annum, which calculated interest rate was 7.77% per annum as of June 30, 2018.  We issued a warrant to Midcap to purchase 500,000 shares of the Company’s common stock (see Midcap Warrant in Note 7).  The estimated fair value of these warrants at the date of issuance was $130, which was recorded as a note discount and is being amortized into interest expense over the term of the Senior Credit Facility.  Additionally, we have incurred loan fees totaling $540 relating to the Senior Credit Facility and any subsequent amendments, which is also being amortized into interest expense over the term of the Senior Credit Facility.

Other Debt 

April 2016 Note Payable to JL-Utah Sub, LLC

Pursuant to an April 5, 2016 Unsecured Promissory Note, JL-Utah Sub, LLC lent us $500. The note matures on March 21, 2019, bears interest at an annual rate of 8.5%, with the principal payable in 24 monthly installments of $21 commencing on April 21, 2017.

Capital Lease Obligations

Our capital lease obligations pertain to various leasing agreements with Essex Capital Corporation (“Essex”), a related party to the Company as Essex’s principal owner was a member of the Board of Directors of the Company through January 22, 2018. 

14

Huntington Holdings, LLC

On August 6, 2016, the 18-month anniversary of the closing of a share purchase agreement, we were required to pay the purchaser of the common stock the difference between $2.29 per share and either a defined market price or a price per share determined by a valuation firm acceptable to both parties. Based on an outside professional valuation performed on the Company’s common stock, the Company estimated the stock price guarantee payment to be $3,210. Accordingly, the Company recorded a loss on the stock purchase price guarantee of $3,210 and a corresponding liability for the same amount in 2016, which was included in accrued expenses and other current liabilities in the consolidated balance sheet as of December 31, 2016. On June 2, 2017, the two parties came to an agreement in which we were required to issue an unsecured promissory note (the “Huntington Note”) in favor of Huntington. The Huntington Note matures on June 2, 2019 with the principal amount of $3,200 payable at maturity. Interest on the outstanding principal accrues at a rate of 8.5% per year from August 6, 2016 to August 15, 2017 and increases to 10% per year thereafter. We paid $50 to Huntington related to accrued interest from August 6, 2016 through the date of issuance of the Huntington Note. Huntington was required to return 778,385 shares of the Company’s common stock which were issued into escrow. We were required to provide certain piggyback registration rights to Huntington in regard to the remaining 749,999 shares of the Company’s common stock held by Huntington. If the Huntington Note was paid off prior to August 14, 2017, the 778,385 shares held in escrow were to be released from escrow and transferred to the Company for no additional consideration. If the note remained outstanding on August 15, 2017, we had the right, but not the obligation, to pay $140 to Huntington to purchase 764,192 of the subject shares held in escrow. Upon the exercise of this purchase option, the subject shares were to be released from escrow and transferred to the Company. If the note remained outstanding on August 15, 2017 and we did not exercise the option to purchase the shares, the shares were to be returned from escrow to Huntington and we would no longer have repurchase rights. On August 15, 2017, the note was outstanding, and we did not exercise the repurchase right. The 778,385 shares were returned from escrow to Huntington.

Financial Covenants

Certain of the foregoing debt agreements, as amended, require us to meet certain affirmative and negative covenants, including maintenance of specified ratios.  We amended our debt agreements with MidCap, Penta and JL, effective July 29, 2016, to, among other things, reset the financial covenants of each debt agreement.  As of June 30, 2018, we were not in compliance with these financial covenants of the debt agreements; however, the lenders provided the Company with a waiver of the covenant violations as of August 13, 2018.

NOTE 7 – WARRANTS AND REGISTRATION RIGHTS AGREEMENTS

The following table presents a summary of the status of our issued warrants as of June 30, 2018, and changes during the six months then ended:

				Weighted Average
	Shares			Exercise Price
Outstanding, December 31, 2017		15,855,017			0.18
Granted		500,000			-
Canceled / Expired		(500,000	)		-
Exercised		-			-
Outstanding, June 30, 2018		15,855,017			0.18

Warrants Issued

Midcap Warrant

In connection with the line of credit agreement with MidCap described in Note 6, we issued MidCap a warrant, exercisable through January 22, 2018, for an aggregate of 500,000 shares of the Company’s common stock at an exercise price of $0.76 per share (the “MidCap Warrant”).  We entered into a registration rights agreement with Midcap, dated as of January 22, 2015, granting MidCap certain registration rights, commencing October 1, 2015, for the shares of common stock issuable on exercise of the MidCap Warrant.

On January 22, 2015, the Company entered into a revolving credit facility with MidCap Financial Trust, which subsequently assigned the agreement to an affiliate, Midcap Funding X Trust. The agreement is amended from time to time and wherein it was necessary under the terms of the agreement to obtain MidCap's consent to the transactions contemplated by the above mentioned Great Harbor Note and Golisano LLC Note; on February 6, 2018, MidCap agreed to consent to the transactions contemplated in exchange for a warrant to MidCap exercisable for up to 500,000 shares of the Company’s common stock at an exercise price of $.76 per share. The Company has reserved 500,000 shares of the Company’s common stock for issuance under MidCap Warrant. The warrant, if exercisable, expires on February 6, 2019.

15

Penta Warrants

Pursuant to a stock purchase agreement dated June 30, 2015, a warrant was issued to Penta to purchase an aggregate 807,018 shares of our common stock at a price of $0.01 per share at any time prior to the close of business on June 30, 2020. We granted Penta certain registration rights, commencing October 1, 2015, for the shares of common stock issuable upon exercise of the warrant.

JL Warrants

Pursuant to a June 30, 2015 stock purchase agreement, a warrant was issued to JL to purchase an aggregate 403,509 shares of the Company’s common stock at a price of $0.01 per share at any time prior to the close of business on June 30, 2020, subject to certain adjustments. We granted JL certain registration rights, commencing October 1, 2015, for the shares of common stock issuable upon exercise of the warrant. The warrant was subsequently assigned by JL to two individuals.

Essex Warrants

In connection with the guarantee of a note payable issued in the Nutricap asset acquisition and capital lease obligations by Essex discussed in Note 6, Essex was issued a warrant exercisable for an aggregate 1,428,571 shares of the Company’s common stock at a purchase price of $0.77 per share, at any time prior to the close of business on June 30, 2020.  The number of shares issuable upon the exercise of the warrant is subject to adjustment on terms and conditions customary for a transaction of this nature in the event of (i) reorganization, recapitalization, stock split-up, combination of shares, mergers, consolidations and (ii) sale of all or substantially all of our assets or property.   Essex subsequently assigned warrants for 350,649 shares to another company.

JL Properties, Inc. Warrants

In April 2015, we entered into an office lease agreement which requires a $1,000 security deposit, subject to reduction if we achieve certain market capitalization metrics at certain dates. On April 30, 2015, we entered into a reimbursement agreement with JL Properties, Inc. (“JL Properties”) pursuant to which JL Properties agreed to arrange for and provide an unconditional, irrevocable, transferable, and negotiable commercial letter of credit to serve as the security deposit. As partial consideration for the entry by JL Properties into the reimbursement agreement and the provision of the letter of credit, we issued JL Properties two warrants to purchase shares of the Company’s common stock.

The first warrant is exercisable for an aggregate of 465,880 shares of common stock, subject to certain adjustments, at an aggregate purchase price of $0.01, at any time prior to April 30, 2020. In addition to adjustments on terms and conditions customary for a transaction of this nature in the event of (i) reorganization, recapitalization, stock split-up, combination of shares, mergers, consolidations and (ii) sale of all or substantially all of our assets or property, the number of shares of common stock issuable pursuant to the warrant will be increased in the event our consolidated adjusted EBITDA (as defined in the warrant agreement) for the fiscal year ending December 31, 2018 does not equal or exceed $19,250. JL Properties subsequently assigned the warrant to two individuals.

The second warrant is exercisable for an aggregate of 86,962 shares of common stock, at a per share purchase price of $1.00, at any time prior to April 30, 2020. The number of shares issuable upon exercise of the second warrant is subject to adjustment on terms and conditions customary for a transaction of this nature in the event of (i) reorganization, recapitalization, stock split-up, combination of shares, mergers, consolidations and (ii) sale of all or substantially all of our assets or property.

We have granted JL Properties certain registration rights, commencing October 1, 2015, for the shares of common stock issuable on exercise of the two warrants.

Golisano LLC Warrants (formerly Penta Warrants)

In connection with the November 13, 2014 note for $8,000 (see Note 6), Penta was issued a warrant to acquire 4,960,740 shares of the Company’s common stock at an aggregate exercise price of $0.01, through November 13, 2019. In connection with Penta’s consent to the terms of additional debt obtained by us, we also granted Penta a warrant to acquire 869,618 shares of common stock at a purchase price of $1.00 per share, through November 13, 2019. Both warrant agreements grant Penta certain registration rights, commencing October 1, 2015, for the shares of common stock issuable on exercise of the warrants. Penta has the right, under certain circumstances, to require us to purchase all or any portion of the equity interest in the Company issued or represented by the warrant to acquire 4,960,740 shares at a price based on the greater of (i) the product of (x) ten times our adjusted EBITDA with respect to the twelve months preceding the exercise of the put right times (y) the investor’s percentage ownership in the Company assuming full exercise of the warrant; or (ii) the fair market value of the investor’s equity interest underlying the warrant. In the event (i) we do not have the funds available to repurchase the equity interest under the warrant or (ii) such repurchase is not lawful, adjustments to the principal of the note purchased by Penta will be made or, under certain circumstances, interest will be charged on the amount otherwise due for such repurchase. We have the right, under certain circumstances, to require Penta to sell to us all or any portion of the equity interest issued or represented by the warrant to acquire 4,960,740 shares. The price for such repurchase will be the greater of (i) the product of (x) eleven times our adjusted EBITDA with respect to the twelve months preceding the exercise of the call right times (y) the investor’s percentage ownership in the company assuming full exercise of the warrant; or (ii) the fair market value of the equity interests underlying the warrant; or (iii) $3,750. In connection with Golisano LLC’s acquisition of the note payable from Penta on March 8, 2017 (see Note 6 above for additional information), these warrants were assigned to Golisano LLC.

16

Golisano LLC Warrants (formerly JL Warrants)

In connection with the January 22, 2015 note payable to JL, we issued JL warrants to purchase an aggregate of 2,329,400 shares of the Company’s common stock, at an aggregate exercise price of $0.01, through February 13, 2020. On February 4, 2015, we also granted to JL a warrant to acquire a total of 434,809 shares of common stock at a purchase price of $1.00 per share, through February 13, 2020. Both warrant agreements grant JL certain registration rights, commencing October 1, 2015, for the shares of common stock issuable upon exercise of the warrants. These warrants were subsequently assigned to two individuals. During the year ended December 31, 2016, these individuals exercised warrants for a total of 1,187,995 shares of the Company’s common stock for total proceeds to the Company of less than $1. In connection with Golisano LLC’s acquisition of the note payable from JL on March 8, 2017 (see Note 6 above for additional information), these warrants were assigned to Golisano LLC.

Golisano LLC Warrants

Pursuant to an October 2015 Securities Purchase Agreement with Golisano LLC, we issued Golisano LLC a warrant (the “Golisano Warrant” defined below),which Golisano Warrant is intended to maintain, following each future issuance of shares of common stock pursuant to the conversion, exercise or exchange of certain currently outstanding warrants to purchase shares of common stock held by third-parties (the “Outstanding Warrants”), Golisano LLC’s proportional ownership of our issued and outstanding common stock so that it is the same thereafter as on October 5, 2015. We have reserved 12,697,977 shares of common stock for issuance under the Golisano Warrant. The purchase price for any shares of common stock issuable upon exercise of the Golisano Warrant is $.001 per share. The Golisano Warrant is exercisable immediately and up to and including the date which is sixty days after the later to occur of the termination, expiration, conversion, exercise or exchange of all of the Outstanding Warrants and our delivery of notice thereof to Golisano LLC.  The Golisano Warrant is also subject to customary adjustments upon any recapitalization, capital reorganization or reclassification, consolidation, merger or transfer of all or substantially all of our assets. In addition, if any payments are made to a holder of an Outstanding Warrant in consideration for the termination of or agreement not to exercise such Outstanding Warrant, Golisano LLC will be entitled to equal treatment. We have entered into a registration rights agreement with Golisano LLC, dated as of October 5, 2015, granting Golisano LLC certain registration rights for the shares of common stock issuable on exercise of the Golisano Warrant.  On February 6, 2016, Golisano LLC exercised the Golisano Warrant in part for 509,141 shares of the Company’s common stock for an aggregate purchase price of $1. During the year ended December 31, 2016, the Golisano Warrant was cancelled in part for 6,857,143 shares pursuant to the cancellation of a portion of the Outstanding Warrants.  As of June 30, 2018, we have reserved 4,756,505 shares of its common stock for issuance under the Golisano Warrant.

Warrants Issued into Escrow

Golisano Escrow Warrants

In connection with a January 28, 2016 Unsecured Promissory Note, we issued into escrow in the name of Golisano LLC a warrant to purchase an aggregate of 1,136,363 shares of the Company’s common stock at an exercise price of $0.01 per share (the “January 2016 Golisano Warrant”). The January 2016 Golisano Warrant will not be released from escrow or be exercisable unless and until we fail to pay Golisano LLC the entire unamortized principal amount of the related promissory note and any accrued and unpaid interest thereon as of January 28, 2019 or such earlier date as is required pursuant to an acceleration notice (as defined in the related note agreement). We have reserved 1,136,363 shares of the Company’s common stock for issuance under the January 2016 Golisano Warrant. The January 2016 Golisano Warrant, if exercisable, expires on February 28, 2022. The January 2016 Golisano Warrant is also subject to customary adjustments upon any recapitalization, capital reorganization or reclassification, consolidation, merger or transfer of all or substantially all of our assets.

In connection with a March 21, 2016 Unsecured Promissory Note, we issued into escrow in the name of Golisano LLC a warrant to purchase an aggregate of 3,181,816 shares of the Company’s common stock at an exercise price of $0.01 per share (the “March 2016 Golisano Warrant”). The March 2016 Golisano Warrant will not be released from escrow or be exercisable unless and until we fail to pay Golisano LLC the entire unamortized principal amount of the related promissory note and any accrued and unpaid interest thereon as of March 21, 2019 or such earlier date as is required pursuant to an acceleration notice (as defined in the related note agreement). We have reserved 3,181,816 shares of the Company’s common stock for issuance under the March 2016 Golisano Warrant. The March 2016 Golisano Warrant, if exercisable, expires on March 21, 2022. The March 2016 Golisano Warrant is also subject to customary adjustments upon any recapitalization, capital reorganization or reclassification, consolidation, merger or transfer of all or substantially all of our assets.

In connection with the Golisano LLC July 2016 Notes we issued into escrow in the name of Golisano LLC a warrant to purchase an aggregate of 2,168,178 shares of the Company’s common stock, at an exercise price of $0.01 per share (the “Golisano July 2016 Warrant”). The Golisano July 2016 Warrant will not be released from escrow or be exercisable unless and until we fail to pay Golisano LLC the entire unamortized principal amount of the Golisano July 2016 Note and any accrued and unpaid interest thereon as of January 28, 2019 or such earlier date as is required pursuant to an Acceleration Notice (as defined in the Golisano LLC July 2016 Note). We have reserved 2,168,178 shares of the Company’s common stock for issuance under the Golisano July 2016 Warrant. The Golisano July 2016 Warrant, if exercisable, expires on July 21, 2022. The Golisano July 2016 Warrant is also subject to customary adjustments upon any recapitalization, capital reorganization or reclassification, consolidation, merger or transfer of all or substantially all of our assets.

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In connection with the Golisano LLC December 2016 Notes we issued into escrow in the name of Golisano LLC a warrant to purchase an aggregate of 1,136,363 shares of the Company’s common stock, at an exercise price of $0.01 per share (the “Golisano December 2016 Warrant”). The Golisano December 2016 Warrant will not be released from escrow or be exercisable unless and until we fail to pay Golisano LLC the entire unamortized principal amount of the Golisano December 2016 Note and any accrued and unpaid interest thereon as of December 30, 2019 or such earlier date as is required pursuant to an acceleration notice (as defined in the Golisano LLC December 2016 Note). We have reserved 1,136,363 shares of the Company’s common stock for issuance under the Golisano December 2016 Warrant. The Golisano December 2016 Warrant, if exercisable, expires on December 30, 2022. The Golisano December 2016 Warrant is also subject to customary adjustments upon any recapitalization, capital reorganization or reclassification, consolidation, merger or transfer of all or substantially all of our assets.

In connection with the Golisano LLC March 2017 Notes we issued into escrow in the name of Golisano LLC a warrant to purchase an aggregate of 1,484,847 shares of the Company’s common stock, at an exercise price of $0.01 per share (the “Golisano March 2017 Warrant”). The Golisano March 2017 Warrant will not be released from escrow or be exercisable unless and until we fail to pay Golisano LLC the entire unamortized principal amount of the Golisano March 2017 Note and any accrued and unpaid interest thereon as of December 30, 2019 or such earlier date as is required pursuant to an acceleration notice (as defined in the Golisano LLC March 2017 Note). We have reserved 1,484,847 shares of the Company’s common stock for issuance under the Golisano March 2017 Warrant. The Golisano March 2017 Warrant, if exercisable, expires on March 14, 2023. The Golisano March 2017 Warrant is also subject to customary adjustments upon any recapitalization, capital reorganization or reclassification, consolidation, merger or transfer of all or substantially all of our assets.

We previously entered into a registration rights agreement with Golisano LLC, dated as of October 5, 2015 (the “Registration Rights Agreement”), granting Golisano LLC certain registration rights for certain shares of the Company’s common stock. The shares of common stock issuable pursuant to the above warrants are also entitled to the benefits of the Registration Rights Agreement.

In connection with the Golisano LLC, February 2018 note, we issued into escrow in the name of Golisano LLC a warrant to purchase an aggregate of 1,818,182 shares of the Company’s common stock at an exercise price of $0.01 per share (the "Golisano Warrant"). The Golisano Warrant will not be released from escrow or be exercisable unless and until the Company fails to pay Golisano LLC the entire unamortized principal amount of the note and any accrued and unpaid interest thereon as of February 6, 2021, or such earlier date as is required pursuant to an acceleration notice. The Company has reserved 1,818,182 shares of the Company’s common stock for issuance under the Golisano Warrant. The Golisano Warrant, if exercisable, expires on February 6, 2024.

GH Escrow Warrants

In connection with a January 28, 2016 Unsecured Promissory Note, we issued into escrow in the name of GH a warrant to purchase an aggregate of 1,136,363 shares of the Company’s common stock at an exercise price of $0.01 per share (the “January 2016 GH Warrant”). The January 2016 GH Warrant will not be released from escrow or be exercisable unless and until we fail to pay GH the entire unamortized principal amount of the related promissory note and any accrued and unpaid interest thereon as of January 28, 2019 or such earlier date as is required pursuant to an acceleration notice (as defined in the related note agreement). We have reserved 1,136,363 shares of the Company’s common stock for issuance under the January 2016 GH warrant. The January 2016 GH Warrant, if exercisable, expires on February 28, 2022. The January 2016 GH Warrant is also subject to customary adjustments upon any recapitalization, capital reorganization or reclassification, consolidation, merger or transfer of all or substantially all of our assets.

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In connection with a March 21, 2016 Unsecured Promissory Note, we issued into escrow in the name of GH a warrant to purchase an aggregate of 3,181,816 shares of the Company’s common stock at an exercise price of $0.01 per share (the “March 2016 GH Warrant”). The March 2016 GH Warrant will not be released from escrow or be exercisable unless and until we fail to pay GH the entire unamortized principal amount of the related promissory note and any accrued and unpaid interest thereon as of March 21, 2019 or such earlier date as is required pursuant to an acceleration notice (as defined in the related note agreement). We have reserved 3,181,816 shares of the Company’s common stock for issuance under the March 2016 GH Warrant. The March 2016 GH Warrant, if exercisable, expires on March 21, 2022. The March 2016 GH Warrant is also subject to customary adjustments upon any recapitalization, capital reorganization or reclassification, consolidation, merger or transfer of all or substantially all of our assets.

In connection with the GH December 2016 Unsecured Promissory Note, we issued into escrow in the name of GH a warrant to purchase an aggregate of 1,136,363 shares of the Company’s common stock, at an exercise price of $0.01 per share (the “December 2016 GH Warrant”). The December 2016 GH Warrant will not be released from escrow or be exercisable unless and until we fail to pay GH the entire unamortized principal amount of the December 2016 GH note and any accrued and unpaid interest thereon as of December 30, 2019 or such earlier date as is required pursuant to an acceleration notice (as defined in the December 2016 GH Warrant). We have reserved 1,136,363 shares of common stock for issuance under the December 2016 GH Warrant. The December 2016 GH Warrant, if exercisable, expires on December 30, 2022. The December 2016 GH Warrant is also subject to customary adjustments upon any recapitalization, capital reorganization or reclassification, consolidation, merger or transfer of all or substantially all of our assets.

In connection with the GH August 2017 Secured Promissory Note, we issued into escrow in the name of GH a warrant to purchase an aggregate of 1,363,636 shares of the Company’s common stock, at an exercise price of $0.01 per share (the “August 2017 GH Warrant”). The August 2017 GH Warrant will not be released from escrow or be exercisable unless and until we fail to pay GH the entire unamortized principal amount of the August 2017 GH note and any accrued and unpaid interest thereon as of August 29, 2020 or such earlier date as is required pursuant to an acceleration notice (as defined in the August 2017 GH Warrant). We have reserved 1,363,636 shares of common stock for issuance under the August 2017 GH Warrant. The August 2017 GH Warrant, if exercisable, expires on August 30, 2023. The August 2017 GH Warrant is also subject to customary adjustments upon any recapitalization, capital reorganization or reclassification, consolidation, merger or transfer of all or substantially all of our assets.

In connection with the GH February 2018 Secured Promissory Note, we issued into escrow in the name of GH a warrant to purchase an aggregate of 1,818,182 shares of the Company’s common stock at an exercise price of $0.01 per share (the "Great Harbor Warrant"). The Great Harbor Warrant will not be released from escrow or be exercisable unless and until the Company fails to pay GH the entire unamortized principal amount of the note and any accrued and unpaid interest thereon as of February 6, 2021, or such earlier date as is required pursuant to an acceleration notice. The Company has reserved 1,818,182 shares of the Company’s common stock for issuance under the Great Harbor Warrant. The Great Harbor Warrant, if exercisable, expires on February 6, 2024.

JL-US Escrow Warrant

In connection with an April 5, 2016 Unsecured Promissory Note, we issued into escrow in the name of JL-Utah Sub (“JL-US”) a warrant to purchase an aggregate of 227,273 shares of the Company’s common stock at an exercise price of $0.01 per share (the “JL-US Warrant”). The JL-US Warrant will not be released from escrow or be exercisable unless and until we fail to pay JL-US the entire unamortized principal amount of the JL-US note and any accrued and unpaid interest thereon as of March 21, 2019 or such earlier date as is required pursuant to an acceleration notice (as defined in the JL-US note).  We have reserved 227,273 shares of the Company’s common stock for issuance under the JL-US Warrant.  The JL-US Warrant, if exercisable, expires on March 21, 2022. The JL-US Warrant is also subject to customary adjustments upon any recapitalization, capital reorganization or reclassification, consolidation, merger or transfer of all or substantially all of our assets.

Little Harbor Escrow Warrant

The Little Harbor July 2016 unsecured delayed draw promissory note provides that we issue into escrow in the name of Little Harbor a warrant to purchase an aggregate of 2,168,178 shares of common stock at an exercise price of $0.01 per share (the “Little Harbor July 2016 Warrant”).  The Little Harbor July 2016 Warrant will not be released from escrow or be exercisable unless and until we fail to pay Little Harbor the entire unamortized principal amount of the Little Harbor July 2016 note and any accrued and unpaid interest thereon as of January 28, 2019 or such earlier date as is required pursuant to an acceleration notice (as defined in the Little Harbor July 2016 note).  We have reserved 2,168,178 shares of the Company’s common stock for issuance under the Little Harbor July 2016 Warrant. The Little Harbor July 2016 Warrant, if exercisable, expires on July 21, 2022.  The Little Harbor July 2016 Warrant is also subject to customary adjustments upon any recapitalization, capital reorganization or reclassification, consolidation, merger or transfer of all or substantially all of our assets.  The Little Harbor July 2016 Warrant grants Little Harbor certain registration rights for the shares of the Company’s common stock issuable upon exercise of the Little Harbor July 2016 Warrant.

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NOTE 8 – DERIVATIVE LIABILITIES

The number of shares of common stock issuable pursuant to certain warrants issued in 2015 will be increased if our adjusted EBITDA or the market price of the Company’s common stock do not meet certain defined amounts. We have recorded the estimated fair value of the warrants as of the date of issuance. Due to the variable terms of the warrant agreements, the warrants are recorded as derivative liabilities with a corresponding charge to our consolidated statements of comprehensive income (loss) for changes in the estimated fair value of the warrants from the date of issuance to each balance sheet reporting date. As of June 30, 2018, we have estimated the total fair value of the derivative liabilities to be $6,403 as compared to $6,791 as of December 31, 2017. We had the following activity in our derivative liabilities account since December 31, 2017:

	Six Months Ended
	June 30,
	2018
Derivative liabilities as of December 31, 2017	$	6,791
Gain on change in fair value of derivative liabilities		(388	)
Derivative liabilities as of June 30, 2018	$	6,403

The value of the derivative liabilities is generally estimated using an options lattice model with multiple inputs and assumptions, including the market price of the Company’s common stock, stock price volatility and other assumptions to project EBITDA and other reset events. These inputs and assumptions are subject to management’s judgment and can vary materially from period to period.

NOTE 9 – STOCKHOLDERS’ DEFICIT

Preferred Stock

The Company has authorized 500,000,000 shares of preferred stock with a par value of $0.001 per share. No shares of the preferred stock have been issued.

Twinlab Consolidation Corporation 2013 Stock Incentive Plan

The only equity compensation plan currently in effect is the Twinlab Consolidation Corporation 2013 Stock Incentive Plan (the “TCC Plan”), which was assumed by the Company on September 16, 2014. The TCC Plan originally established a pool of 20,000,000 shares of common stock for issuance as incentive awards to employees for the purposes of attracting and retaining qualified employees who will aid in the success of the Company. From January through December 2015, the Company granted restricted stock units to certain employees of the Company pursuant to the TCC Plan. Each restricted stock unit relates to one share of the Company’s common stock. The restricted stock unit awards vest 25% each annually on various dates through 2019. The Company estimated the grant date fair market value per share of the restricted stock units and is amortizing the total estimated grant date value over the vesting periods. During the six months ended June 30, 2018, there were not any shares of common stock issued to employees pursuant to the vesting of restricted stock units. As of June 30, 2018, 6,464,378 shares remain available for use in the TCC Plan.

Common Stock Repurchase

On January 5, 2017, pursuant to a repurchase agreement 642,366 shares of the Company’s common stock was purchased by the Company for an aggregate repurchase price of less than $1.

Stock Subscription Receivable and Loss on Stock Price Guarantee

As of June 30, 2018, the stock subscription receivable dated August 1, 2014 for the purchase of 1,528,384 shares of the Company’s common stock had a principal balance of $30 and bears interest at an annual rate of 5%.

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On August 6, 2016, the 18-month anniversary of the closing of a share purchase agreement, we were required to pay the purchaser of the common stock the difference between $2.29 per share and either a defined market price or a price per share determined by a valuation firm acceptable to both parties. Based on an outside professional valuation performed on the Company’s common stock, the Company estimated the stock price guarantee payment to be $3,210. Accordingly, the Company recorded a loss on the stock purchase price guarantee of $3,210 and a corresponding liability for the same amount in 2016, which was included in accrued expenses and other current liabilities in the consolidated balance sheet as of December 31, 2016. On June 2, 2017, the two parties came to an agreement in which we were required to issue the Huntington Note in favor of Huntington. The Huntington Note matures on June 2, 2019 with the principal amount of $3,200 payable at maturity. Interest on the outstanding principal accrues at a rate of 8.5% per year from August 6, 2016 to August 15, 2017 and increases to 10% per year thereafter. We paid $50 to Huntington related to accrued interest from August 6, 2016 through the date of issuance of the Huntington Note. Huntington was required to return 778,385 shares of the Company’s common stock which were issued into escrow. We were required to provide certain piggyback registration rights to Huntington in regard to the remaining 749,999 shares of the Company’s common stock held by Huntington. If the Huntington Note was paid off prior to August 14, 2017, the 778,385 shares held in escrow were to be released from escrow and transferred to the Company for no additional consideration. If the note remained outstanding on August 15, 2017, we had the right, but not the obligation, to pay $140 to Huntington to purchase 764,192 of the subject shares held in escrow. Upon the exercise of this purchase option, the subject shares were to be released from escrow and transferred to the Company. If the note remained outstanding on August 15, 2017 and we did not exercise the option to purchase the shares, the shares were to be returned from escrow to Huntington and we would no longer have repurchase rights. On August 15, 2017, the note was outstanding, and we did not exercise the repurchase right. The 778,385 shares were returned from escrow to Huntington. Pursuant to the agreement, we were also required to enter into a four-year lease agreement with the purchaser related to our premises occupied by Nutricap.

On June 6, 2018, the Company issued 4,166,667 shares of common stock to Platinum Advisory Services, LLC in accordance with the terms of the Equity in Exchange for Services Agreement that the parties entered into on December 27, 2017.

NOTE 10 – SUBSEQUENT EVENTS

On July 17, 2018, the Board of Directors appointed Anthony Zolezzi as the Company’s Chief Executive Officer and President.

On July 17, 2018, the Company and Mr. Zolezzi entered into an employment agreement (the “Employment Agreement”), outlining the terms of Mr. Zolezzi’s employment with the Company. Under the terms of the Employment Agreement, Mr. Zolezzi was also granted an initial equity award of restricted stock. The initial equity award is up to 8,000,000 shares of common stock ("Initial Equity Award") in exchange for an exercise price equal to the fair market value of the Company's common stock and is subject to the Company's 2013 Stock Incentive Plan and further issuance of shares as necessory.

Great Harbor Capital

On July 27, 2018, the Company issued a Secured Promissory Note in favor of GH, pursuant to which GH has loaned the Company the principal amount of $5,000,000 ("Great Harbor Note 3"). The Great Harbor Note 3 matures on January 27, 2020. Interest on the outstanding principal accrues at a rate of 8.5% per year and is payable monthly on the first day of each month, beginning September 1, 2018. The principal of the Great Harbor Note 3 is payable at maturity.  The Great Harbor Note 3 is secured by collateral. The Great Harbor Note 3 is subordinate to the indebtedness owed to MidCap.  The Great Harbor Note 3 is senior to the indebtedness owed to Little Harbor, LLC and Golisano Holdings LLC.

The Company also issued to GH a warrant to purchase an aggregate of 2,500,000 shares of Company common stock at an exercise price of $.01 per share (the "July 2018 Great Harbor Warrant"). The July 2018 Great Harbor Warrant is exercisable on any business day prior to the expiration date.  The Company has reserved 2,500,000 shares of Company common stock for issuance under the July 2018 Great Harbor Warrant. The July 2018 Great Harbor Warrant expires on July 27, 2024.

The July 2018 Great Harbor Warrant is also subject to customary adjustments upon any recapitalization, reorganization, stock split up, combination of shares, merger or consolidation. The July 2018 Great Harbor Warrant grants GH certain registration rights for the shares of Company common stock issuable upon exercise of the July 2018 Great Harbor Warrant.

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Golisano Holdings LLC

The Company entered into the Twelfth Amendment to the Note and Warrant Purchase Agreement, dated as of July 27, 2018, by and among the Company and Golisano LLC, as successor by assignment to JL-Mezz Utah, LLC f/k/a JL-BBNC Mezz Utah, LLC to the original Note and Warrant Purchase Agreement, dated as of January 22, 2015, as amended from time to time (the “Twelfth Amendment”).  Pursuant to the Twelfth Amendment, Golisano LLC consented to the secured loan in the amount of $5,000,000 from GH.

The Company also entered into the Thirteenth Amendment to Note and Warrant Purchase Agreement and Limited Consent, dated as of July 27, 2018, by and among the Company and Golisano LLC, as successor by assignment to Penta Mezzanine SBIC Fund I, L.P. to the original Note and Warrant Purchase Agreement, dated as of November 13, 2014, as amended from time to time (the “Thirteenth Amendment”).  Pursuant to the Thirteenth Amendment, Golisano LLC consented to the secured loan in the amount of $5,000,000 from GH. 

Midcap Funding X Trust

On July 27, 2018, MidCap consented to the Great Harbor Note 3 and the repayment of the Great Harbor Note 3 in the future.  The Company, its subsidiaries and Midcap, as successor-by-assignment from MidCap Financial Trust, are parties to a certain Credit and Security Agreement dated as of January 22, 2015, as amended from time to time (the "Credit Agreement").

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Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.
	(Amounts in thousands, except share and per share amounts and number of employees)

Overview

This Quarterly Report on Form 10-Q contains forward-looking statements. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The words “believes,” “anticipates,” “plans,” “expects,” “intends” and similar expressions identify some of the forward-looking statements. Forward-looking statements are not guarantees of performance or future results and involve risks, uncertainties and assumptions. The factors discussed elsewhere in this Form 10-Q and in subsequent Quarterly Reports on Form 10-Q and Annual Reports on Form 10-K, could also cause actual results to differ materially from those indicated by our forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements.

Our Operations

We are an integrated marketer, distributor and retailer of branded nutritional supplements and other natural products sold to and through domestic health and natural food stores, mass market retailers, specialty stores retailers, on-line retailers and websites. Internationally, we market and distribute branded nutritional supplements and other natural products to and through health and natural product distributors and retailers.

Our products include vitamins, minerals, specialty supplements and sports nutrition products primarily under the Twinlab® (including the REAAL®, and Twinlab® Fuel brand of sports nutrition products), Reserveage™ and ResVitale® brands. We also manufacture and sell diet and energy products under the Metabolife® and Re-Body® brands and a full line of herbal teas under the Alvita® brand. To accommodate consumer preferences, our products come in various formulations and delivery forms, including capsules, tablets, softgels, chewables, liquids, sprays, powders and whole herbs. These products are sold primarily through health and natural food stores and on-line retailers, supermarkets, and mass-market retailers.

We also perform contract manufacturing services for private label products.  Our contract manufacturing business involves the manufacture of custom products to the specifications of a customer who requires finished products under the customer’s own brand name.  We do not market these private label products as our business is to sell the products to the customer, who then markets and sells the products to retailers or end consumers.

We manufacture and/or distribute one of the broadest branded product lines in the industry with approximately 260 stock keeping units, or SKUs. We believe that as a result of our emphasis on innovation, quality, loyalty, education and customer service, our brands are widely recognized in health and natural food stores and among their customers.

We have fully integrated our two 2015 acquisitions. The first was the acquisition of the customer relationships of Nutricap, a provider of dietary supplement contract manufacturing services, into our subsidiary, NutraScience, in February 2015, and the second was the acquisition of 100% of the equity interests of Organic Holdings, a market leader in the healthy aging and beauty from within categories and owner of the award-winning Reserveage™ Nutrition brand, in October 2015. Progress has been made in consolidating manufacturing operations and we continue to believe that these acquisitions significantly strengthened our product offerings, contract manufacturing services and our sales and marketing capabilities, providing us with opportunities to improve our market position in addition to adding to supply chain efficiencies.

Recent Developments

Chief Executive Officer and Board Member Changes

Effective April 25, 2018, Ms. Naomi Whittel has resigned from her position as Chief Executive Officer of Twinlab and as a member of the Company’s Board of Directors, in order to pursue other opportunities.

On April 27, 2018, the Company and Ms. Whittel entered into a Separation and Release Agreement (the “Separation Agreement”). The Separation Agreement is qualified in its entirety by reference to the full text of such document, which document is filed as Exhibit 10.176 in the Company’s Form 8-K filed with the SEC on April 30, 2018. Per the Separation Agreement, Ms. Whittel surrendered 3,000,000 shares of the Company’s common stock.

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On May 8, 2018, the Board of Directors appointed Anthony Zolezzi to fill a vacancy on the Board.

On July 17, 2018, the Board appointed Anthony Zolezzi as the Company’s Chief Executive Officer and President.

 Plant Transition

On January 25, 2018, the Company announced that as part of improving operational efficiencies, the Company will transition the manufacturing of the balance of our products to strategic manufacturing partners (the “Transition”). The announcement came the same day the Board of Directors made the decision to undertake the Transition. The Board of Directors believe that restructuring the supply chain similar to that of our NutraScience division, and leveraging access to exclusive technologies, and processes, should result in greater flexibility, more efficient capital allocation and an improved cost structure, all of which are in the best interest of the Company and its shareholders.

The Company has and expects to continue to incur certain foreseeable and unforeseeable costs to make the Transition, which have included but are not limited to increasing inventory to maintain products and services throughout the Transition, as well as providing severance to the affected Utah based employees. An accrual of $1.5 million was made at the end of March 31, 2018 for severance pay for Utah based employees scheduled to be terminated at various times this year. According to the plan, production at the underutilized American Fork, Utah facility has been shut down since April 30, 2018. All manufacturing has been moved to our portfolio of qualified contract manufacturing partners across the country. We have also selected a 3PL distribution provider to handle all of our warehouse and distribution needs and all inventories have been moved to 3PL.

Our contract manufacturing partners include softgel manufacturers, liquid manufacturers, capsule and tablet manufacturers, bulk powder operations and other specialty manufacturers when needed. These contract manufacturers do business with us under both short and long-term contracts depending on our needs. We do not manufacture any of the basic materials used in packaging (bottles, boxes, shipping cartons, caps, tamper resistant films, etc.). We believe that our portfolio of contract manufacturing partners provides us with flexibility and nimbleness in our supply chain giving us a competitive advantage.  In addition, we have redundancy across contract manufacturers giving us further flexibility.

We employ a supply chain staff that works with marketing, product development, formulations and quality control personnel as we carefully manage our contract manufacturing partners. Raw materials are sourced by our contract manufacturing partners through a variety of domestically and internationally approved suppliers principally from the United States, Europe and China. We have long-term relationships with many of our contract manufacturing partners and we are constantly evaluating our partners and looking for new relationships that can add value to our supply chain operations.

Going Concern Uncertainty

The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which assumes continuity of operations and realization of assets and liabilities in the ordinary course of business. In most periods since our formation, we have generated losses from operations. As of June 30, 2018, we had an accumulated deficit of $264,660. Historical losses are primarily attributable to lower than planned sales resulting from low fill rates on demand due to limitations of our working capital, delayed product introductions and postponed marketing activities, merger-related and other restructuring costs, and interest and refinancing charges associated with our debt refinancing. Losses have been funded primarily through issuance of common stock and third-party or related party debt.

Because of this history of operating losses, significant interest expense on our debt, and the recording of significant derivative liabilities, we have a working capital deficiency of $76,488 as of June 30, 2018. We also have $72,674 of debt, net of discount, due within the next 12 months. These continuing conditions, among others, raise substantial doubt about our ability to continue as a going concern.

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Management has addressed operating issues through the following actions: focusing on growing the core business and brands; continuing emphasis on major customers and key products; reducing manufacturing and operating costs and continuing to negotiate lower prices from major suppliers. During the six months ended June 30, 2018, we obtained debt funding totaling $4,000 to execute the new supply chain initiatives and increase inventory levels to support the closure of Utah facility initiatives. This funding will assist the company to pay for severance cost, unpaid vacation, and other facility closure expenses. It is possible that we may need additional capital to execute our business plan. If additional funding is required, there can be no assurance that sources of funding will be available when needed on acceptable terms or at all. To meet capital requirements, the Company may consider selling certain assets.

Critical Accounting Policies and Estimates

This discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements, which we have prepared in accordance with the U.S. generally accepted accounting principles. The preparation of our financial statements required us to make estimates and assumptions that affected the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of net sales and expenses during the reported periods. Significant estimates include values and lives assigned to acquired intangible assets, reserves for customer returns and allowances, uncollectible accounts receivable, valuation adjustments for slow moving, obsolete and/or damaged inventory and valuation, recoverability of long-lived assets, intangibles and goodwill, estimated values of stock options and warrants, share-based compensation, and the identification and valuation of derivatives. Actual results may differ from these estimates.

Our critical accounting policies and estimates include the following:

Revenue Recognition

Revenue from product sales, net of estimated returns and allowances, is recognized when evidence of an arrangement is in place, related prices are fixed, and determinable, contractual obligations have been satisfied, title and risk of loss have been transferred to the customer and collection of the resulting receivable is reasonably assured. Shipping terms are generally freight on board shipping point. We sell predominately in the North American and European markets, with international sales transacted in U.S. Dollars.

Accounts Receivable and Allowances

We grant credit to customers and generally do not require collateral or other security. We perform credit evaluations of our customers and provide for expected claims, related to promotional items; customer discounts; shipping shortages and damages; and doubtful accounts based upon historical bad debt and claims experience.

Inventories

Inventories are stated at the lower of cost or net realizable value and are reduced by an estimated reserve for obsolete inventory.

Intangible Assets

Intangible assets consist primarily of trademarks and customer relationships, which are amortized on a straight-line basis over their estimated useful lives ranging from 3 to 30 years. The valuation and classification of these assets and the assignment of amortizable lives involve significant judgment and the use of estimates.

We believe that our long-term growth strategy supports our fair value conclusions. For intangible assets, the recoverability of these amounts is dependent upon achievement of our projections and the execution of key initiatives related to revenue growth and improved profitability.

Goodwill

Goodwill is not subject to amortization, but is reviewed for impairment annually, or more frequently whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable. An impairment charge would be recorded to the extent the carrying value of goodwill exceeds its estimated fair value. The testing of goodwill under established guidelines for impairment requires significant use of judgment and assumptions. Changes in forecasted operations and other assumptions could materially affect the estimated fair values. Changes in business conditions could potentially require adjustments to these asset valuations.

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Impairment of Long-Lived Assets

Long-lived assets, including intangible assets subject to amortization, are reviewed for impairment when changes in circumstances indicate that the carrying amount of the asset may not be recoverable. If the carrying amount of the asset exceeds the expected undiscounted cash flows of the asset, an impairment charge is recognized equal to the amount by which the carrying amount exceeds fair value. The testing of these intangibles under established guidelines for impairment requires significant use of judgment and assumptions. Changes in forecasted operations and other assumptions could materially affect the estimated fair values. Changes in business conditions could potentially require adjustments to these asset valuations.

Indefinite-Lived Intangible Assets

Indefinite-lived intangible assets relating to the asset acquisition of Organic Holdings are determined to have an indefinite useful economic life and as such are not amortized. Indefinite-lived intangible assets are tested for impairment annually which consists of a comparison of the fair value of the asset with its carrying value.

Value of Warrants Issued with Debt

We estimate the grant date value of certain warrants issued with debt, using an outside professional valuation firm, which uses the Monte Carlo option lattice model. We record the amounts as interest expense or debt discount, depending on the terms of the agreement. These estimates involve multiple inputs and assumptions, including the market price of the Company’s common stock, stock price volatility and other assumptions to project earnings before interest, taxes, depreciation and amortization (“EBITDA”) and other reset events. These inputs and assumptions are subject to management’s judgment and can vary materially from period to period.

Derivative Liabilities

We have recorded certain warrants as derivative liabilities at estimated fair value, as determined based on the Company’s use of an outside professional valuation firm, due to the variable terms of the warrant agreements. The value of the derivative liabilities is generally estimated using Monte Carlo option lattice model with multiple inputs and assumptions, including the market price of the Company’s common stock, stock price volatility and other assumptions to project EBITDA and other reset events. These inputs and assumptions are subject to management’s judgment and can vary materially from period to period.

Share-Based Compensation

We record share-based compensation, including grants of restricted stock units, based on their grant date fair values and record compensation expense over the vesting period of the restricted stock awards.

Income Taxes

We account for income taxes using an asset and liability approach. Deferred income taxes are determined by applying currently enacted tax laws and rates to the cumulative temporary differences between the carrying values of assets and liabilities for financial statement and income tax purposes. Valuation allowances against deferred tax assets are recorded when we are unable to conclude that it is more likely than not that such deferred tax assets will be realized.

Results of Operations

Net Sales

Our net sales increased $243, or 1%, to $21,662 for the three months ended June 30, 2018 from $21,419 for the three months ended June 30, 2017. On a year-to-date basis, our net sales decreased $4,192, or 9%, to $41,326 for the six months ended June 30, 2018 from $45,518 for the six months ended June 30, 2017. The increase in our net sales for the three months ended June 30, 2017 is attributed to the launch of our new product “REAAL”. The decrease in our net sales for the six months ended June 30, 2018 is primarily related to a continued declining trend in Twinlab and Organic Holdings branded sales due to lost distribution from out-of-stock conditions caused by order fulfilment shortfalls.  Additionally, sales volume from a major customer in 2017 was not repeated in 2018.

Gross Profit

Our gross profit decreased $770, or 14%, to $4,883 for the three months ended June 30, 2018 from $5,653 for the three months ended June 30, 2017.  On a year-to-date basis, our gross profit decreased $3,296, or 27%, to $8,957 for the six months ended June 30, 2018 from $12,253 for the six months ended June 30, 2017. The decrease in our gross profit is derived from shifts in the margin mix of sales, lower net sales, and accrued severance pay of $573 recorded during the three months ended March 31, 2018 for Utah based production employees terminated or scheduled to be terminated due to the Utah plant closure (see selling, general and administrative expenses below for the remainder of the accrued severance).

26

Selling, General and Administrative Expenses

Our selling, general and administrative expenses decreased $496, or 7%, to $6,837 for the three months ended June 30, 2018 from $7,333 for the three months ended June 30, 2017. On a year-to-date basis, our selling, general and administrative expenses increased $1,631, or approximately 12%, to $15,559 for the six months ended June 30, 2018 from $13,928 for the six months ended June 30, 2017.  The decrease in selling, general and administrative expenses for the three months ended June 30, 2018 is related to the Company’s 2018 rightsizing initiatives.  The increases in our selling, general and administrative expenses for the six months ended June 30, 2018 are primarily due to plant closure related expenses recorded during the three months ended March 31, 2018 such as employees’ severance pay accrual of $889 and outside consulting fees. 

Interest Expense, Net

Our interest expense decreased $140, or 6%, to $2,338 for the three months ended June 30, 2018 from $2,478 for the three months ended June 30, 2017.  On a year-to-date basis, our interest expense increased slightly by $9, or 0.2%, to $4,451 for the six months ended June 30, 2018 from $4,442 for the six months ended June 30, 2017. The decrease in our interest expense for the three months ended June 30, 2018 is primarily due to paying off one capital lease.

Gain (Loss) on Change in Derivative Liabilities

The number of shares of common stock issuable pursuant to certain warrants issued in 2015 will be increased if our audited adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”) or the market price of the Company’s common stock do not meet certain defined amounts. We have recorded the estimated fair value of the warrants as of the date of issuance. Due to the variable terms of the warrant agreements, changes in the estimated fair value of the warrants from the date of issuance to each balance sheet reporting date are recorded as derivative liabilities with a corresponding charge to our consolidated statements of operations. During the three months and six months ended June 30, 2018, we reported a loss on change in derivative liabilities of $1,430 and a gain of $388, respectively. During the three and six months ended June 30, 2017, we reported a loss on change in derivative liabilities of $297 and $1,295, respectively.

Liquidity and Capital Resources

At June 30, 2018, we had an accumulated deficit of $264,660, primarily because of our history of operating losses and our recording of derivative liabilities and loss on stock purchase guarantee.  We have a working capital deficiency of $76,488 at June 30, 2018.  Losses have been funded primarily through issuance of common stock, borrowings from our stockholders and third-party debt and proceeds from the exercise of warrants. As of June 30, 2018, we had cash of $609.  On an ongoing basis, we also seek to improve operating cash through trade receivables and payables management as well as inventory stocking levels. We used net cash in operating activities of $4,136 for the six months ended June 30, 2018.  During the six months ended June 30, 2018, we incurred new debt of $4,000 and a net increase in borrowings on our senior credit facility of $287 to fund our operations and debt repayment of $835.

Our total liabilities increased by $6,881 to $107,195 at June 30, 2018 from $100,314 at December 31, 2017.  This increase in our total liabilities was primarily due to the accrual of $1,462 for severance pay for Utah based employees scheduled to be terminated, a net increase of $4,000 in debt, new debt financings obtained during the first six months of 2018, while partially offset by a non-cash gain on change in derivative liabilities of $388.  For discussion of our debt financings completed to date during 2018, see Notes 6 and 7 in the Notes to Condensed Consolidated Financial Statements included in this Report.

Cash Flows from Operating, Investing and Financing Activities

Net cash used in operating activities was $4,136 for the six months ended June 30, 2018 as a result of our net loss of $10,697, a non-cash gain on change in derivative liabilities of $388, other non-cash expenses totaling $1,635 net and an increase in net operating assets and liabilities of $5,314.  By comparison, for the six months ended June 30, 2017, net cash used in operating activities was $8,740 as a result of our net loss of $7,436, a non-cash loss on change in derivative liabilities of $1,295 as well as other non-cash expenses totaling $3,380 and an increase in net operating assets and liabilities of $5,979. See Condensed Consolidated Statements of Cash Flows included in this Report for additional information.

Net cash used in investing activities for the six months ended June 30, 2018 and 2017 was $57 and $29, respectively, consisting of the purchase of property and equipment.

27

Net cash provided by financing activities was $3,452 for the six months ended June 30, 2018, primarily consisting of proceeds from the issuance of debt of $4,000, net borrowings of $287 under our revolving credit facility, partially offset by repayment of debt of $835. Net cash provided by financing activities was $4,159 for the six months ended June 30, 2017.

Ongoing Funding Requirements

As set forth above, we have obtained additional debt financing to date in 2018 to support operations. It is possible that we may need additional funding to enable us to fund our operating expenses and capital expenditure requirements.

Until such time, if ever, as we can generate substantial product revenues, we intend to finance our cash needs through a combination of equity offerings, debt financings, collaborations, strategic alliances and licensing arrangements. There can be no assurance that any of those sources of funding will be available when needed on acceptable terms or at all. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interests of existing stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of existing stockholders. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise funds through collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or to grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings or relationships with third parties when needed or on acceptable terms, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts; abandon our business strategy of growth through acquisitions; or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

Recent Accounting Pronouncements

In January 2017, the FASB issued ASU No. 2017-04, “Simplifying the Test for Goodwill Impairment (Topic 350)” which removes Step 2 of the goodwill impairment test that requires a hypothetical purchase price allocation.  A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill.  The amendments in this ASU are effective for fiscal years beginning after December 15, 2019.  Early adoption is permitted after January 1, 2017.  We do not expect the new guidance to have a significant impact on our condensed consolidated financial statements or related disclosures.

In February 2016, FASB issued ASU No. 2016-02, “Leases (Topic 842)”, which requires companies to recognize all leases as assets and liabilities on the consolidated balance sheet. This ASU retains a distinction between finance leases and operating leases, and the classification criteria for distinguishing between finance leases and operating leases are substantially similar to the classification criteria for distinguishing between capital leases and operating leases in the current accounting literature. The result of retaining a distinction between finance leases and operating leases is that under the lessee accounting model in Topic 842, the effect of leases in a consolidated statement of comprehensive income and a consolidated statement of cash flows is largely unchanged from previous GAAP. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Earlier application is permitted. The Company is currently evaluating the impact that the adoption of this ASU will have on its condensed consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, "Financial Instruments- Credit losses (Topic 326): Measurement of Credit losses on Financial Instruments". ASU 2016-13 requires an organization to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Our status as an emerging growth company allows us to defer adoption until the annual period, including interim periods within the annual period, beginning January 1, 2021. Management is currently evaluating the requirements of this guidance and has not yet determined the impact of the adoption on the Company's financial position or results from operations.

28

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)”. ASU 2014-09 amends the guidance for revenue recognition to replace numerous, industry-specific requirements and converges areas under this topic with those of the International Financial Reporting Standards. The ASU implements a five-step process for customer contract revenue recognition that focuses on transfer of control, as opposed to transfer of risk and rewards. The amendment also requires enhanced disclosures regarding the nature, amount, timing and uncertainty of revenues and cash flows from contracts with customers. Other major provisions include the capitalization and amortization of certain contract costs, ensuring the time value of money is considered in the transaction price, and allowing estimates of variable consideration to be recognized before contingencies are resolved in certain circumstances. The amendments in this ASU are effective for reporting periods beginning after December 15, 2016; however, in July 2015, the FASB agreed to delay the effective date by one year. The proposed deferral may permit early adoption but would not allow adoption any earlier than the original effective date of the standard. Entities can transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption.  Our status as an emerging growth company allows us to defer the adoption until the year (and interim periods therein) beginning January 1, 2019. We have chosen to delay our adoption until January 1, 2019.

Although there are several other new accounting pronouncements issued or proposed by the FASB, which we have adopted or will adopt, as applicable, we do not believe any of these accounting pronouncements has had or will have a material impact on our condensed consolidated financial position or results of operations

Material Contractual Obligations

On December 15, 2016, we entered into an operating lease agreement for approximately 13,000 square feet of office space in Boca Raton, Florida.  The agreement expires in February 2026, and has a monthly base rent of $17 in year 1 to $21 in year 8. The commencement date is August 2017.

As of June 30, 2018, we have total debt of $75,931, of which $59,521 is considered to be related-party debt. For discussion of our debt financings, see Notes 6 and 7 in the Notes to Condensed Consolidated Financial Statements included in this Report.

Effective February 6, 2013, we entered into an operating lease agreement for approximately 170,000 square feet of manufacturing, R&D, warehousing and shipping space, which includes roughly 30,000 square feet of office space, in American Fork, Utah. The agreement expires in February 2028 and has a monthly base rent of $60, provided that commencing on the five-year anniversary date thereafter, the base rent shall be increased by 10% over the base rent for the preceding five-year period.

Effective April 7, 2015, we entered into an operating lease agreement for approximately 31,000 square feet of office space in St. Petersburg, Florida. The agreement expires in April 2027 and has a monthly base rent of $59 for year 1 to $76 for year 12.

29

On January 17, 2018, the Company entered into a Sublicense Agreement with 463IP Partners, LLC (“463IP”) in which 463IP granted an exclusive, worldwide, perpetual sublicense to the licensed patents, licensed processes and licensed technology with the right to use, make, sell, offer, import, export, practice and develop the licensed patents, licensed processes, licensed products and licensed technology in all of the countries and territories of the world and with respect to the direct marketing, sale, use and consumption efforts directed towards athletes. In return for this sublicense, the Company agreed to purchase certain minimum amounts of licensed product solely from 463IP or from a manufacturer approved by 463IP. The minimum requirements are 10,000 kilograms of blended licensed product during the first year of the Sublicense Agreement and 20,000 kilograms of blended licensed product during the second year of the Sublicense Agreement.

If purchased from 463IP, the price will be equivalent to the fully loaded cost to 463IP. Additionally, the Company will pay a royalty equal to $2.50 per kilogram of blended licensed product purchased regardless of whether it is purchased from 463IP or a manufacturer approved by 463IP. The Per Kilo Fee shall be reduced by 50% under certain circumstances set forth in the Sublicense Agreement.

Off-Balance Sheet Arrangements

None.

Item 3.          Quantitative and Qualitative Disclosures About Market Risk.

This item is not applicable as we are currently considered a smaller reporting company.

Item 4.          Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2018 pursuant to Rule 13a-15(b) under the Exchange Act. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

Based on the evaluation of our disclosure controls and procedures as of June 30, 2018, our management has concluded that our disclosure controls and procedures were effective as of June 30, 2018.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on Effectiveness of Controls and Procedures

In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

30

PART II—OTHER INFORMATION

Item 1.          Legal Proceedings

CH Robinson Worldwide v. Twinlab Consolidation Corporation, Case No.: Pending, in the District Court of the Fourth Judicial District in and for Hennepin County, Minnesota, filed on March 7, 2018. The plaintiffs in this matter allege Twinlab Corporation is in breach of a contract agreement related to unpaid invoices. The matter is currently stayed pending the Company’s review and investigation of the claim.

Item 1A.     Risk Factors.

Risks and uncertainties that, if they were to occur, could materially adversely affect our business or cause our actual results to differ materially from the results contemplated by the forward-looking statements contained in this report and other public statements were set forth in the “Item 1A Risk Factors” section of our Annual Report on Form 10-K filed with the SEC on April 2, 2018.

Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial conditions and/or operating results.

31

Item 6.          Exhibits.

Exhibit Number	Exhibit Description
10.175	Equity in Exchange for Services Agreement (incorporated by reference to Exhibit 10.175 to the Company’s report on Form 10-K on April 3, 2018)
10.176	Separation and Release Agreement, dated as of April 25, 2018, by and between Twinlab Consolidated Holdings, Inc. and Ms. Naomi Whittel (incorporated by reference to Exhibit 10.176 to the Company’s report on Form 8-K on April 30, 2018)
10.177	Employment Agreement, dated July 17, 2018, by and between Twinlab Consolidated Holdings, Inc. and Mr. Anthony Zolezzi (incorporated by reference to Exhibit 10.177 to the Company’s report on Form 8-K on July 19, 2018)
31.1	Rule 13a-14(a)/15d-14(a) Certification.
31.2	Rule 13a-14(a)/15d-14(a) Certification.
32.1	Certification Pursuant to 18 U.S.C. Section 1350.
32.2	Certification Pursuant to 18 U.S.C. Section 1350.
101.INS	XBRL Instance.
101.SCH	XBRL Taxonomy Extension Schema.
101.CA	XBRL Taxonomy Extension Calculation.
101.DEF	XBRL Taxonomy Extension Definition.
101.LAB	XBRL Taxonomy Extension Label.
101.PRE	XBRL Taxonomy Extension Presentation.

32

SIGNATURES

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

	TWINLAB CONSOLIDATED HOLDINGS, INC.
Date: August 13, 2018	By:	/s/ Anthony Zolezzi
		Anthony Zolezzi
		Chief Executive Officer and President
Date: August 13, 2018	By:	/s/ Alan S. Gever
		Alan S. Gever
		Chief Financial Officer and Chief Operating Officer

33

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Anthony Zolezzi, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Twinlab Consolidated Holdings, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 13, 2018

  /s/ Anthony Zolezzi

  Anthony Zolezzi

  Chief Executive Officer and President

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Alan S. Gever, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Twinlab Consolidated Holdings, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 13, 2018

  /s/ Alan S. Gever

  Alan S. Gever

  Chief Financial Officer and Chief Operating Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Twinlab Consolidated Holdings, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2018 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Anthony Zolezzi, Chief Executive Officer and President of the Company, certify, pursuant to 18 U.S.C. s.s. 1350, as adopted pursuant to s.s. 906 of the Sarbanes-Oxley Act of 2002, that

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 13, 2018	/s/ Anthony Zolezzi
	Anthony Zolezzi
	Chief Executive Officer and President

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Twinlab Consolidated Holdings, Inc. and will be retained by Twinlab Consolidated Holdings, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

                In connection with the Quarterly Report of Twinlab Consolidated Holdings, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2018 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Alan S. Gever, Chief Financial Officer and Chief Operating Officer of the Company, certify, pursuant to 18 U.S.C. s.s. 1350, as adopted pursuant to s.s. 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 13, 2018	/s/ Alan S. Gever
	Alan S. Gever
	Chief Financial Officer and Chief Operating Officer

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Twinlab Consolidated Holdings, Inc. and will be retained by Twinlab Consolidated Holdings, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document And Entity Information - shares	6 Months Ended
	Jun. 30, 2018	Aug. 13, 2018
Document Information [Line Items]
Entity Registrant Name	Twinlab Consolidated Holdings, Inc.
Entity Central Index Key	0001590695
Trading Symbol	tlcc
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Entity Common Stock, Shares Outstanding (in shares)		254,441,733
Document Type	10-Q
Document Period End Date	Jun. 30, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q2
Amendment Flag	false

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($)	Jun. 30, 2018	Dec. 31, 2017
Current assets:
Cash	$ 609,000	$ 1,350,000
Accounts receivable, net of allowance of $2,704 and $2,534, respectively	9,911,000	6,528,000
Inventories, net	12,173,000	17,168,000
Prepaid expenses and other current assets	3,273,000	2,256,000
Total current assets	25,966,000	27,302,000
Property and equipment, net	2,803,000	3,169,000
Intangible assets, net	22,146,000	23,063,000
Goodwill	17,797,000	17,797,000
Other assets	1,738,000	1,762,000
Total assets	70,450,000	73,093,000
Current liabilities:
Accounts payable	9,895,000	10,146,000
Accrued expenses and other current liabilities	13,482,000	10,336,000
Derivative liabilities	6,403,000	6,791,000
Notes payable and current portion of long-term debt, net of discount of $2,656 and $3,660, respectively	72,674,000	68,093,000
Total current liabilities	102,454,000	95,366,000
Long-term liabilities:
Deferred gain on sale of assets	1,484,000	1,565,000
Notes payable and long-term debt, net of current portion	3,257,000	3,383,000
Total long-term liabilities	4,741,000	4,948,000
Total liabilities	107,195,000	100,314,000
Commitments and contingencies
Stockholders’ deficit:
Common stock, $0.001 par value, 5,000,000,000 shares authorized, 389,247,784 and 388,081,117 shares issued and outstanding, respectively	389,000	388,000
Additional paid-in capital	228,056,000	226,884,000
Stock subscriptions receivable	(30,000)	(30,000)
Treasury stock, 134,806,051 shares at cost	(500,000)	(500,000)
Accumulated deficit	(264,660,000)	(253,963,000)
Total stockholders’ deficit	(36,745,000)	(27,221,000)
Total liabilities and stockholders' deficit	$ 70,450,000	$ 73,093,000

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Accounts receivable, allowance	$ 2,704	$ 2,534
Notes payable and current portion of long-term debt, unamortized discount	$ 2,656	$ 3,660
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, authorized (in shares)	5,000,000,000	5,000,000,000
Common stock, issued (in shares)	389,247,784	388,081,117
Common stock, outstanding (in shares)	389,247,784	388,081,117
Treasury stock, shares (in shares)	134,806,051	134,806,051

XML

Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Net sales	$ 21,662	$ 21,419	$ 41,326	$ 45,518
Cost of sales	16,779	15,766	32,369	33,265
Gross profit	4,883	5,653	8,957	12,253
Selling, general and administrative expenses	6,837	7,333	15,559	13,928
Loss from operations	(1,954)	(1,680)	(6,602)	(1,675)
Other income (expense):
Interest expense, net	(2,338)	(2,478)	(4,451)	(4,442)
Gain (loss) on change in derivative liabilities	(1,430)	(297)	388	(1,295)
Other expense, net	(16)	(25)	(32)	(24)
Total other expense, net	(3,784)	(2,800)	(4,095)	(5,761)
Loss before income taxes	(5,738)	(4,480)	(10,697)	(7,436)
Provision for income taxes
Total net loss	$ (5,738)	$ (4,480)	$ (10,697)	$ (7,436)
Weighted average number of common shares outstanding – basic (in shares)	255,149,140	252,959,714	254,206,926	252,941,772
Net loss per common share – basic (in dollars per share)	$ (0.02)	$ (0.02)	$ (0.04)	$ (0.03)
Weighted average number of common shares outstanding – diluted (in shares)	255,149,140	252,959,714	265,522,796	252,941,772
Net loss per common share – diluted (in dollars per share)	$ (0.02)	$ (0.02)	$ (0.04)	$ (0.03)

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Cash flows from operating activities:
Net loss	$ (10,697)	$ (7,436)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	1,341	1,612
Amortization of debt discount	1,004	1,244
Issuance of common stock for services	352
Stock-based compensation	172	301
Change in provision for obsolete inventory	(987)	119
Change in provision for losses on accounts receivable	(165)	185
(Gain) loss on change in derivative liabilities	(388)	1,295
Other non-cash items	(82)	(81)
Changes in operating assets and liabilities:
Accounts receivable	(3,225)	(1,692)
Inventories	5,982	(4,063)
Prepaid expenses and other current assets	(370)	300
Other assets	24	(102)
Accounts payable	(242)	(218)
Accrued expenses and other current liabilities	3,145	(204)
Net cash used in operating activities	(4,136)	(8,740)
Cash flows from investing activities:
Purchase of property and equipment	(57)	(29)
Cash flows from financing activities:
Proceeds from the issuance of debt	4,000	3,267
Repayment of debt	(835)	(1,057)
Net borrowings from revolving credit facility	287	1,949
Net cash provided by financing activities	3,452	4,159
Net decrease in cash	(741)	(4,610)
Cash at the beginning of the period	1,350	5,097
Cash at the end of the period	609	487
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest	1,557	3,198
Cash paid for income taxes
Issuance of common stock for prepaid expenses	648
Relief of stock subscription accrual through long-term debt		(3,200)
Issuance of new long-term debt as payment of existing prepaid stock subscription		$ 3,200

XML

Note 1 - Nature of Operations and Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2018

Notes to Financial Statements

Significant Accounting Policies [Text Block]

NOTE

1

– NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization

Twinlab Consolidated Holdings, Inc. (the “Company”, “Twinlab,” “we,” “our” and “us”) was incorporated on

October 24, 2013

under the laws of the State of Nevada as Mirror Me, Inc. On

August 7, 2014,

we amended our articles of incorporation and changed our name to Twinlab Consolidated Holdings, Inc.

Nature of Operations

We are an integrated marketer, distributor and retailer of branded nutritional supplements and other natural products sold to and through domestic health and natural food stores, mass market retailers, specialty stores retailers, on-line retailers and websites. Internationally, we market and distribute branded nutritional supplements and other natural products to and through health and natural product distributors and retailers.

Our products include vitamins, minerals, specialty supplements and sports nutrition products sold under the Twinlab® brand name (including the REAAL®, and Twinlab® Fuel brand of sports nutrition products); a market leader in the healthy aging and beauty from within categories sold under the Reserveage™ Nutrition and ResVitale® brand names; diet and energy products sold under the Metabolife® brand name; the Re-Body® brand name; and a full line of herbal teas sold under the Alvita® brand name. To accommodate consumer preferences, our products come in various formulations and delivery forms, including capsules, tablets, softgels, chewables, liquids, sprays and powders. These products are sold primarily through health and natural food stores and on-line retailers, supermarkets, and mass-market retailers.

We also perform contract manufacturing services for private label products.  Our contract manufacturing business involves the manufacture of custom products to the specifications of a customer who requires finished product under the customer’s own brand name.  We do

not

market these private label products as our business is to sell the products to the customer, who then markets and sells the products to retailers or end consumers.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.

Basis of Presentation and Unaudited Information

The condensed consolidated interim financial statements included herein have been prepared by the Company in accordance with United States generally accepted accounting principles, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although we believe that the disclosures are adequate to make the information presented

not

misleading. These statements reflect all adjustments, consisting of normal recurring adjustments, which in the opinion of management, are necessary for fair presentation of the information contained therein. Financial results for any interim period are

not

necessarily indicative of financial results that

may

be expected for the fiscal year. The unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form

10

-K for the year ended

December 31, 2017

filed with the SEC on

April 2, 2018.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Actual results could differ from those estimates. Significant management estimates include those with respect to returns and allowances, allowance for doubtful accounts, reserves for inventory obsolescence, the recoverability of long-lived assets, intangibles and goodwill and the estimated value of warrants and derivative liabilities.

Revenue Recognition

Revenue from product sales, net of estimated returns and allowances, is recognized when evidence of an arrangement is in place, related prices are fixed, and determinable, contractual obligations have been satisfied, title and risk of loss have been transferred to the customer and collection of the resulting receivable is reasonably assured. Shipping terms are generally freight on board shipping point. We sell predominately in the North American and European markets, with international sales transacted in U.S. dollars.

Fair

V

alue of

F

inancial

I

nstruments

We apply the following fair value hierarchy, which prioritizes the inputs used to measure fair value into

three

levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:

Level

1

– inputs are quoted prices in active markets for identical assets that the reporting entity has the ability to access at the measurement date.

Level

2

– inputs are other than quoted prices included within Level

1

that are observable for the asset, either directly or indirectly.

Level

3

– inputs are unobservable inputs for the asset that are supported by little or

no

market activity and that are significant to the fair value of the underlying asset or liability.

The following table summarizes our financial instruments that are measured at fair value on a recurring basis as of

June 30, 2018

and

December 31, 2017:

June 30, 2018	Total		Level 1		Level 2		Level 3
Derivative liabilities	$	6,403	$	-	$	-	$	6,403

December 31, 2017	Total		Level 1		Level 2		Level 3
Derivative liabilities	$	6,791	$	-	$	-	$	6,791

Accounts Receivable and Allowances

We grant credit to customers and generally do

not

require collateral or other security. We perform credit evaluations of our customers and provide for expected claims related to promotional items, customer discounts, shipping shortages, damages, and doubtful accounts based upon historical bad debt and claims experience.  As of

June 30, 2018,

total allowances amounted to

$2,704,

of which

$495

was related to doubtful accounts receivable.  As of

December 31, 2017,

total allowances amounted to

$2,534,

of which

$329

was related to doubtful accounts receivable. 

Inventories

Inventories are stated at the lower of cost or net realizable value and are reduced by an estimated reserve for obsolete inventory.

Property and Equipment

Property and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation, including amounts amortized under capital leases, is calculated on the straight-line method over the estimated useful lives of the related assets, which are

7

to

10

years for machinery and equipment,

8

years for furniture and fixtures and

3

years for computers. Leasehold improvements are amortized over the shorter of the useful life of the asset or the term of the lease.

Normal repairs and maintenance are expensed as incurred. When assets are retired or otherwise disposed of, the related cost and accumulated depreciation or amortization is removed from the accounts and any gain or loss is included in the results of operations.

Intangible Assets

Intangible assets consist primarily of trademarks and customer relationships, which are amortized on a straight-line basis over their estimated useful lives ranging from

3

to

30

years. The valuation and classification of these assets and the assignment of amortizable lives involve significant judgment and the use of estimates.

We believe that our long-term growth strategy supports our fair value conclusions. For intangible assets, the recoverability of these amounts is dependent upon achievement of our projections and the execution of key initiatives related to revenue growth and improved profitability.

Goodwill

Goodwill is

not

subject to amortization, but is reviewed for impairment annually, or more frequently whenever events or changes in circumstances indicate the carrying value of goodwill

may

not

be recoverable. An impairment charge would be recorded to the extent the carrying value of goodwill exceeds its estimated fair value. The testing of goodwill under established guidelines for impairment requires significant use of judgment and assumptions. Changes in forecasted operations and other assumptions could materially affect the estimated fair values. Changes in business conditions could potentially require adjustments to these asset valuations.

Impairment of Long-Lived Assets

Long-lived assets, including intangible assets subject to amortization, are reviewed for impairment when changes in circumstances indicate that the carrying amount of the asset

may

not

be recoverable. If the carrying amount of the asset exceeds the expected undiscounted cash flows of the asset, an impairment charge is recognized equal to the amount by which the carrying amount exceeds fair value. The testing of these intangibles under established guidelines for impairment requires significant use of judgment and assumptions. Changes in forecasted operations and other assumptions could materially affect the estimated fair values. Changes in business conditions could potentially require adjustments to these asset valuations.

Indefinite-Lived Intangible Assets

Indefinite-lived intangible assets relating to the asset acquisition of Organic Holdings, a market leader in the healthy aging and beauty from within categories, and owner of the Reserveage Nutriton brands, are determined to have an indefinite useful economic life and as such are

not

amortized. Indefinite-lived intangible assets are tested for impairment annually which consists of a comparison of the fair value of the asset with its carrying value. The total indefinite-lived intangible assets as of

June 30, 2018

and

December 31, 2017

was

$4,346

.

Value of Warrants Issued with Debt

We estimate the grant date value of certain warrants issued with debt, using an outside professional valuation firm, which uses the Monte Carlo option lattice model. We record the amounts as interest expense or debt discount, depending on the terms of the agreement. These estimates involve multiple inputs and assumptions, including the market price of the Company’s common stock, stock price volatility and other assumptions to project earnings before interest, taxes, depreciation and amortization (“EBITDA”) and other reset events. These inputs and assumptions are subject to management’s judgment and can vary materially from period to period.

Derivative Liabilities

We have recorded certain warrants as derivative liabilities at estimated fair value, as determined based on our use of an outside professional valuation firm, due to the variable terms of the warrant agreements. The value of the derivative liabilities is generally estimated using the Monte Carlo option lattice model with multiple inputs and assumptions, including the market price of the Company’s common stock, stock price volatility and other assumptions to project EBITDA and other reset events. These inputs and assumptions are subject to management’s judgment and can vary materially from period to period.

Deferred gain on sale of assets

We entered into a sale-leaseback arrangement relating to our office facilities in

2013.

Under the terms of the arrangement, we sold an office building and surrounding land and then leased the property back under a

15

-year operating lease. We recorded a deferred gain for the amount of the gain on the sale of the asset, to be recognized as a reduction of rent expense over the life of the lease. Accordingly, we recorded amortization of deferred gain as a reduction of rental expense of

$40

for the

three

months ended

June 30, 2018

and

2017.

For the

six

months ended

June 30, 2018

and

2017,

we recorded amortization of

$81

and

$81,

respectively. As of

June 30, 2018,

and

December 31, 2017,

unamortized deferred gain on sale of assets was

$1,484

and

$1,565,

respectively.

Net Income (Loss) per Common Share

Basic net income or loss per common share (Basic EPS) is computed by dividing net income or loss by the weighted average number of common shares outstanding. Diluted net income or loss per common share (Diluted EPS) is computed by dividing net income or loss by the sum of the weighted average number of common shares outstanding and the dilutive potential common shares then outstanding. Potential dilutive common share equivalents consist of total shares issuable upon the exercise of outstanding stock options and warrants to acquire common stock using the treasury stock method and the average market price per share during the period.

When calculating diluted earnings or loss per share, if the effects are dilutive, companies are required to add back to net income or loss the effects of the change in derivative liabilities related to warrants. Additionally, if the effects of the change in derivative liabilities are added back to net income or loss, companies are required to include the warrants outstanding related to the derivative liability in the calculation of the weighted average dilutive shares. Accordingly, for the

six

months ended

June 30, 2018,

the gain on change in derivative liabilities was added to net loss, and the dilutive effect of the warrant derivative liabilities was included in the calculation of the weighted average dilutive shares. As there was

no

gain on change in derivative liabilities for the

three

months ended

June 30, 2018,

there was

no

dilutive effect on net loss and the calculation of the weighted average dilutive shares.

The common shares used in the computation of our basic and diluted net income (loss) per share are reconciled as follows:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2018			2017			2018			2017
Numerator:
Net loss	$	(5,738	)	$	(4,480	)	$	(10,697	)	$	(7,436	)
Effect of dilutive securities on net loss:
Common stock warrants		-			-			(388	)		-
Total net loss for purpose of calculating diluted net loss per common share	$	(5,738	)	$	(4,480	)	$	(11,085	)	$	(7,436	)
Number of shares used in per common share calculations:
Total weighted-average shares for purposes of calculating basic net loss per common share		255,149,140			252,959,714			254,206,926			252,941,772
Weighted-average effect of dilutive securities:
Common stock warrants		-			-			11,315,870			-
Total shares for purpose of calculating diluted net loss per common share		255,149,140			252,959,714			265,522,796			252,941,772
Net loss per common share:
Basic	$	(0.02	)	$	(0.02	)	$	(0.04	)	$	(0.03	)
Diluted	$	(0.02	)	$	(0.02	)	$	(0.04	)	$	(0.03	)

Significant Concentration of Credit Risk

Sales to our top

three

customers aggregated to approximately

28%

and

22%

of total sales for the

three

months ended

June 30, 2018

and

2017,

respectively, and

28%

and

26%

of total sales for the

six

months ended

June 30, 2018

and

2017.

Sales to

one

of those customers were approximately

12%

and

10%

of total sales for the

three

months ended

June 30, 2018

and

2017,

respectively, and

14%

and

12%

of total sales for the

six

months ended

June 30, 2018

and

2017,

respectively. Accounts receivable from top

three

customers were approximately

37%

and

39%

of total accounts receivable as of

June 30, 2018

and

December 31, 2017,

respectively.

Recent Accounting Pronouncements

In

January 2017,

the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)

No.

2017

-

04,

“Simplifying the Test for Goodwill Impairment (Topic

350

)” which removes Step

2

of the goodwill impairment test that requires a hypothetical purchase price allocation.  A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value,

not

to exceed the carrying amount of goodwill.  The amendments in this ASU are effective for fiscal years beginning after

December 15, 2019.  

Early adoption is permitted after

January 1, 2017.  

We do

not

expect the new guidance to have a significant impact on our condensed consolidated financial statements or related disclosures.

In

February 2016,

FASB issued ASU

No.

2016

-

02,

“Leases (Topic

842

)”, which requires companies to recognize all leases as assets and liabilities on the consolidated balance sheet. This ASU retains a distinction between finance leases and operating leases, and the classification criteria for distinguishing between finance leases and operating leases are substantially similar to the classification criteria for distinguishing between capital leases and operating leases in the current accounting literature. The result of retaining a distinction between finance leases and operating leases is that under the lessee accounting model in Topic

842,

the effect of leases in a consolidated statement of comprehensive income and a consolidated statement of cash flows is largely unchanged from previous GAAP. The amendments in this ASU are effective for fiscal years beginning after

December 15, 2018,

including interim periods within those fiscal years. Earlier application is permitted. The Company is currently evaluating the impact that the adoption of this ASU will have on its condensed consolidated financial statements.

In

June 2016,

the FASB issued ASU

2016

-

13,

"Financial Instruments- Credit losses (Topic

326

): Measurement of Credit losses on Financial Instruments". ASU

2016

-

13

requires an organization to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Our status as an emerging growth company allows us to defer adoption until the annual period, including interim periods within the annual period, beginning

January 1, 2021.

Management is currently evaluating the requirements of this guidance and has

not

yet determined the impact of the adoption on the Company's financial position or results from operations.

In

May 2014,

the FASB issued ASU

2014

-

09,

“Revenue from Contracts with Customers (Topic

606

)”. ASU

2014

-

09

amends the guidance for revenue recognition to replace numerous, industry-specific requirements and converges areas under this topic with those of the International Financial Reporting Standards. The ASU implements a

five

-step process for customer contract revenue recognition that focuses on transfer of control, as opposed to transfer of risk and rewards. The amendment also requires enhanced disclosures regarding the nature, amount, timing and uncertainty of revenues and cash flows from contracts with customers. Other major provisions include the capitalization and amortization of certain contract costs, ensuring the time value of money is considered in the transaction price, and allowing estimates of variable consideration to be recognized before contingencies are resolved in certain circumstances. The amendments in this ASU are effective for reporting periods beginning after

December 15, 2016;

however, in

July 2015,

the FASB agreed to delay the effective date by

one

year. The proposed deferral

may

permit early adoption but would

not

allow adoption any earlier than the original effective date of the standard. Entities can transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption.  Our status as an emerging growth company allows us to defer the adoption until the year (and interim periods therein) beginning

January 1, 2019.

We have chosen to delay our adoption until

January 1, 2019.

Although there are several other new accounting pronouncements issued or proposed by the FASB, which we have adopted or will adopt, as applicable, we do

not

believe any of these accounting pronouncements has had or will have a material impact on our condensed consolidated financial position or results of operations.

XML

Note 2 - Going Concern

6 Months Ended

Jun. 30, 2018

Notes to Financial Statements

Substantial Doubt about Going Concern [Text Block]

NOTE

2

– GOING CONCERN

The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which assumes continuity of operations and realization of assets and liabilities in the ordinary course of business. In most periods since our formation, we have generated losses from operations. As of

June 30, 2018,

we had an accumulated deficit of

$264,660.

Historical losses are primarily attributable to lower than planned sales resulting from low fill rates on demand due to limitations of our working capital, delayed product introductions and postponed marketing activities, merger-related and other restructuring costs, and interest and refinancing charges associated with our debt refinancing. Losses have been funded primarily through issuance of common stock and

third

-party or related party debt.

Because of our history of operating losses, significant interest expense on our debt, and the recording of significant derivative liabilities, we have a working capital deficiency of

$76,488

as of

June 30, 2018.  

We also have

$72,674

of debt, net of discount, due within the next

12

months. These continuing conditions, among others, raise substantial doubt about our ability to continue as a going concern.

Management has addressed operating issues through the following actions: focusing on growing the core business and brands; continuing emphasis on major customers and key products; reducing manufacturing and operating costs that include significant workforce and salary expense reduction, and continuing to negotiate lower prices from major suppliers.  We believe that we

may

need additional capital to execute our business plan. If additional funding is required, there can be

no

assurance that sources of funding will be available when needed on acceptable terms or at all.

XML

Note 3 - Inventories

6 Months Ended

Jun. 30, 2018

Notes to Financial Statements

Inventory Disclosure [Text Block]

NOTE

3

– INVENTORIES

Inventories consisted of the following as of:

	June 30,			December 31,
	2018			2017
Raw materials	$	2,984		$	5,347
Work in process		263			1,965
Finished goods		10,319			12,236
		13,566			19,548
Reserve for obsolete inventory		(1,393	)		(2,380	)
	$	12,173		$	17,168

XML

Note 4 - Property and Equipment

6 Months Ended

Jun. 30, 2018

Notes to Financial Statements

Property, Plant and Equipment Disclosure [Text Block]

NOTE

4

– PROPERTY AND EQUIPMENT

Property and equipment consisted of the following as of:

	June 30,			December 31,
	2018			2017
Machinery and equipment	$	12,166		$	12,156
Computers and other		9,614			9,589
Aquifer		482			482
Leasehold improvements		1,552			1,530
		23,814			23,757
Accumulated depreciation and amortization		(21,011	)		(20,588	)
	$	2,803		$	3,169

Assets held under capital leases are included in machinery and equipment and amounted to

$631

and

$777

as of

June 30, 2018

and

December 31, 2017,

respectively.

Depreciation and amortization expense totaled

$210

and

$220

for the

three

months ended

June 30, 2018

and

2017,

respectively, and totaled

$424

and

$447

for the

six

months ended

June 30, 2018

and

2017,

respectively.

XML

Note 5 - Intangible Assets

6 Months Ended

Jun. 30, 2018

Notes to Financial Statements

Intangible Assets Disclosure [Text Block]

NOTE

5

– INTANGIBLE ASSETS

Intangible assets consisted of the following as of:

	June 30,			December 31,
	2018			2017
Trademarks	$	8,915		$	8,915
Indefinite-lived intangible assets		4,346			4,346
Customer relationships		19,110			19,110
Other		753			753
		33,124			33,124
Accumulated amortization		(10,978	)		(10,061	)
	$	22,146		$	23,063

Trademarks are amortized over periods ranging from

3

to

30

years, customer relationships are amortized over periods ranging from

15

to

16

years, and other intangible assets are amortized over

3

years. Amortization expense was

$458

and

$582

for the

three

months ended

June 30, 2018

and

2017

and was

$917

and

$1,165

for the

six

months ended

June 30, 2018

and

2017,

respectively.

XML

Note 6 - Debt

6 Months Ended

Jun. 30, 2018

Notes to Financial Statements

Debt Disclosure [Text Block]

NOTE

6

– DEBT

Debt consisted of the following as of:

	June 30,			December 31,
	2018			2017
Related-Party Debt:
July 2014 note payable to Little Harbor, LLC (Converted to a new note in February 2018)	$	3,267		$	3,267
July 2016 note payable to Little Harbor, LLC		4,770			4,770
January 2016 note payable to Great Harbor Capital, LLC		2,500			2,500
March 2016 note payable to Great Harbor Capital, LLC		7,000			7,000
December 2016 note payable to Great Harbor Capital, LLC		2,500			2,500
August 2017 note payable to Great Harbor Capital, LLC		3,000			3,000
February 2018 note payable to Great Harbor Capital, LLC		2,000			-
January 2016 note payable to Golisano Holdings LLC		2,500			2,500
March 2016 note payable to Golisano Holdings LLC		7,000			7,000
July 2016 note payable to Golisano Holdings LLC		4,770			4,770
December 2016 note payable to Golisano Holdings LLC		2,500			2,500
March 2017 note payable to Golisano Holdings LLC		3,267			3,267
February 2018 note payable to Golisano Holdings LLC		2,000			-
November 2014 note payable to Golisano Holdings LLC (formerly payable to Penta Mezzanine SBIC Fund I, L.P.), net of discount and unamortized loan fees in the aggregate of $1,084 and $1,491 as of June 30, 2018 and December 31, 2017, respectively		6,915			6,509
January 2015 note payable to Golisano Holdings LLC (formerly payable to JL-BBNC Mezz Utah, LLC), net of discount and unamortized loan fees in the aggregate of $1,372 and $1,829 as of June 30, 2018 and December 31, 2017, respectively		3,628			3,171
February 2015 note payable to Golisano Holdings LLC (formerly payable to Penta Mezzanine SBIC Fund I, L.P.), net of discount and unamortized loan fees in the aggregate of $95 and $130 as of June 30, 2018 and December 31, 2017, respectively		1,904			1,869
Total related-party debt		59,521			54,623
Senior Credit Facility with Midcap		12,375			12,088
April 2016 note payable to JL-Utah Sub, LLC		188			313
Capital lease obligations, net of discount of $105 and 210 as of June 30, 2018 and December 31, 2017, respectively		647			1,252
Huntington Holdings		3,200			3,200
Total other debt		4,035			4,765
Total debt		75,931			71,476
Less current portion		(72,674	)		(68,093	)
Long-term debt	$	3,257		$	3,383

Related-Party Debt

July 2014

Note Payable

to

Little Harbor, LLC

Pursuant to a

July 2014

Debt Repayment Agreement with Little Harbor, LLC (“Little Harbor”), an entity owned by certain stockholders of the Company, we were obligated to pay such party

$4,900

per year in structured monthly payments for

3

years provided that such payment obligations would terminate at such earlier time as the trailing

ninety

day volume weighted average closing sales price of the Company’s common stock on all domestic securities exchanges on which such stock is listed equals or exceeds

$5.06

per share. This note is unsecured and matured on

July 25, 2017

with an outstanding balance of

$3,267.

On

February 6, 2018,

we entered into an agreement with Little Harbor to convert the obligations into an unsecured promissory note. The note matures on

July 25, 2020

,

bears interest at an annual rate of

8.5%,

with the principal payable at maturity.

July 2016

Note Payable

to

Little Harbor, LLC

On

July 21, 2016,

we issued an Unsecured Delayed Draw Promissory Note in favor of Little Harbor, pursuant to which Little Harbor

may,

in its sole discretion and pursuant to draw requests made by the Company, loan us up to the maximum principal amount of

$4,770.

This note is unsecured and matures on

January 28, 2019

.

This note bears interest at an annual rate of

8.5%,

with the principal payable at maturity. If Little Harbor, in its discretion, accepts a draw request made by the Company under this note, Little Harbor shall

not

transfer cash to the Company, but rather Little Harbor shall irrevocably agree to accept the principal amount of any monthly delayed draw under this note in lieu and in complete satisfaction of the obligation to make an equivalent dollar amount of periodic cash payments otherwise due to Little Harbor under the

July 2014

note payable. During the year ended

December 31, 2016,

we requested and Little Harbor LLC approved, draws totaling

$4,770.

There were

no

draws during the year ended

December 31, 2017

and the quarter ended

June 30, 2018.

We issued a warrant into escrow in connection with this loan (see Little Harbor Escrow Warrant in Note

7

).

Little Harbor also delivered a deferment letter to which Little Harbor agreed to defer all payments due under the notes specified in the Little Harbor Deferment Letter through

June 30, 2018

until

October 1, 2018

and agreed to refrain from declaring a default and/or exercising any remedies under the notes.

January 2016

Note Payable to

Great Harbor Capital

, LLC

Pursuant to a

January 28, 2016

Unsecured Promissory Note with Great Harbor Capital, LLC (“GH”), an affiliate of a member of our Board of Directors, GH lent us

$2,500.

The note matures on

January 28, 2019

,

bears interest at an annual rate of

8.5%,

with the principal payable in

24

monthly installments of

$104

commencing on

February 28, 2017

.

We issued a warrant into escrow in connection with this loan (see GH Escrow Warrants in Note

7

).

March 2016

Note Payable to

Great Harbor Capital

, LLC

Pursuant to a

March 21, 2016

Unsecured Promissory Note, GH lent us

$7,000.

The note matures on

March 21, 2019

,

bears interest at an annual rate of

8.5%,

with the principal payable in

24

monthly installments of

$292

commencing on

April 21, 2017

.

We issued a warrant into escrow in connection with this loan (see GH Escrow Warrants in Note

7

).

December 2016

Note Payable to

Great Harbor Capital

, LLC

Pursuant to a

December 31, 2016

Unsecured Promissory Note, GH lent us

$2,500.

The note matures on

December 30, 2019

,

bears interest at an annual rate of

8.5%,

with the principal payable at maturity. We issued a warrant into escrow in connection with this loan (see GH Escrow Warrants in Note

7

).

August 2017

Note Payable to Great Harbor Capital, LLC

Pursuant to an

August 30, 2017

Secured Promissory Note, GH lent us

$3,000.

The note matures on

August 29, 2020

,

bears interest at an annual rate of

8.5%,

with the principal payable at maturity. We issued a warrant into escrow in connection with this loan (see GH Escrow Warrants in Note

7

).

February

201

8

Note Payable to

Great Harbor Capital

, LLC

Pursuant to a

February 6, 2018

Secured Promissory Note, GH lent us

$2,000

(Great Harbor Note

1”

). The note matures on

February 6, 2021

,

bears interest at an annual rate of

8.5%,

with the principal payable at maturity. This note is secured by collateral and is subordinate to the indebtedness owed to Midcap Funding

X

Trust (“MidCap”), as successor-by-assignment from MidCap Financial Trust.

Also, on

February 6, 2018,

the Company issued an Amended and Restated Secured Promissory Note to GH (“Great Harbor Note

2”

) replacing the prior Secured Promissory Note issued on

August 30, 2017.

The amendment added a requirement that when the Company consummates any Special Asset Disposition (as defined in the Great Harbor Note

2

), provided that the Company has a minimum liquidity of

$1,000,

the Company will use the net cash proceeds from the Special Asset Disposition to pay any accrued and unpaid interest under the Great Harbor Note

2

and any other note subject to the Intercreditor Agreement (defined below). The maturity date, interest rate and payment terms remain unchanged from the original secured promissory note issued to GH on

August 30, 2017.

GH also delivered a deferment letter to which GH agreed to defer all payments due under the notes specified in the Great Harbor Deferment Letter through

June 30, 2018

until

October 1, 2018

and agreed to refrain from declaring a default and/or exercising any remedies under the notes.

November 2014

Note Payable to Golisano Holdings LLC (formerly payable to

Penta Mezzanine SBIC Fund I, L.P.

)

On

November 13, 2014,

we raised proceeds of

$8,000,

less certain fees and expenses, from the issuance of a secured note to Penta Mezzanine SBIC Fund I, L.P. (“Penta”). The Managing Director of Penta, an institutional investor, is also a member of the Board of Directors of our Company. We granted Penta a security interest in our assets and pledged the shares of our subsidiaries as security for the note.  This note matures on

November 13, 2019

with payments of principal due on a quarterly basis commencing on

November 13, 2017

in installments of (i)

$360

per quarter for the

first

four

quarters, (ii)

$440

per quarter for the next

four

quarters and (iii)

$520

per quarter for each quarter thereafter.  This note bears interest of

12%

per annum, payable monthly.  We issued a warrant to Penta to purchase

4,960,740

shares of the Company’s common stock in connection with this loan (see Penta Warrants in Note

7

).  The estimated fair value of the warrant at the date of issuance was

$3,770,

which was recorded as a note discount and is being amortized into interest expense over the term of this loan.  Additionally, we had incurred loan fees of

$273,

which is also being amortized into interest expense over the term of this loan.  On

March 8, 2017,

Golisano Holdings LLC (“Golisano LLC”) acquired this note payable from Penta. The terms of this note payable remain the same with the only change being the holder of the promissory note.

January 2015

Note Payable to Golisano Holdings LLC (formerly payable to JL-Mezz Utah, LLC-

f/k/a JL-BBNC Mezz Utah, LLC)

On

January 22, 2015,

we raised proceeds of

$5,000,

less certain fees and expenses, from the sale of a note to JL-Mezz Utah, LLC (f/k/a JL-BBNC Mezz Utah, LLC) (“JL”). The proceeds were restricted to pay a portion of the Nutricap Labs, LLC (“Nutricap”) asset acquisition. We granted JL a security interest in the Company’s assets, including real estate and pledged the shares of our subsidiaries as security for the note. The note matures on

February 13, 2020

with payments of principal due on a quarterly basis commencing

March 1, 2017

in installments starting at

$250

per quarter and increasing to

$350

per quarter. This note bears interest of

8%

per annum, payable monthly. We issued a warrant to JL to purchase

2,329,400

shares of the Company’s common stock on

January 22, 2015

and

434,809

shares of the Company’s common stock on

February 4, 2015 (

see JL Warrants in Note

7

). The estimated fair value of these warrants at the date of issuances was

$4,389,

which was recorded as a note discount and is being amortized into interest expense over the term of these loans. Additionally, we had incurred loan fees of

$152

relating to this loan, which is also being amortized into interest expense over the term of these loans. On

March 8, 2017,

Golisano LLC acquired this note payable from JL. The terms of this note payable remain the same with the only change being the holder of the promissory note.

February 2015

Note Payable to Golisano Holdings LLC (formerly payable to

Penta Mezzanine SBIC Fund I, L.P.

)

On

February 6, 2015,

we raised proceeds of

$2,000,

less certain fees and expenses, from the issuance of a secured note payable to Penta. The proceeds were restricted to pay a portion of the acquisition of the customer relationships of Nutricap. This note matures on

November 13, 2019

with payments of principal due on a quarterly basis commencing

November 13, 2017

in installments of (i)

$90

per quarter for the

first

four

quarters, (ii)

$110

per quarter for the next

four

quarters and (iii)

$130

per quarter for each quarter thereafter. This note bears interest of

8%

per annum, payable monthly. We issued a warrant to Penta to purchase

869,618

shares of the Company’s common stock in connection with this loan (see Penta Warrants in Note

7

). The estimated fair value of these warrants at the date of issuances totaled

$250,

which was recorded as a note discount and is being amortized into interest expense over the term of this loan. Additionally, we had incurred loan fees of

$90,

which is also being amortized into interest expense over the term of these loans. On

March 8, 2017,

Golisano LLC acquired this note payable from Penta. The terms of this note payable remain the same with the only change being the holder of the promissory note.

January 2016

Note Payable to Golisano Holdings LLC

Pursuant to a

January 28, 2016

Unsecured Promissory Note with Golisano LLC, an affiliate of a member of our Board of Directors, Golisano LLC lent us

$2,500.

The note matures on

January 28, 2019

,

bears interest at an annual rate of

8.5%,

with the principal payable in

24

monthly installments of

$104

commencing on

February 28, 2017.

We issued a warrant into escrow in connection with this loan (see Golisano Escrow Warrants in Note

7

).

March 2016

Note Payable to Golisano Holdings LLC

Pursuant to a

March 21, 2016

Unsecured Promissory Note, Golisano LLC lent us

$7,000.

The note matures on

March 21, 2019

,

bears interest at an annual rate of

8.5%,

with the principal payable in

24

monthly installments of

$292

commencing on

April 21, 2017

.

We issued a warrant into escrow in connection with this loan (see Golisano Escrow Warrants in Note

7

).

July 2016

Note Payable to Golisano Holdings LLC

On

July 21, 2016,

we issued an Unsecured Delayed Draw Promissory Note in favor of Golisano LLC pursuant to which Golisano LLC

may,

in its sole discretion and pursuant to draw requests made by the Company, loan the Company up to the maximum principal amount of

$4,770

(the “Golisano LLC

July 2016

Note”). The Golisano LLC

July 2016

Note matures on

January 28, 2019

.

Interest on the outstanding principal accrues at a rate of

8.5%

per year. The principal of the Golisano LLC

July 2016

Note is payable at maturity. We issued a warrant into escrow in connection with this loan (see Golisano Escrow Warrants in Note

7

). During the year ended

December 31, 2016,

we requested and Golisano LLC approved, draws totaling

$4,770.

December 2016

Note Payable to Golisano Holdings LLC

Pursuant to a

December 31, 2016

Unsecured Promissory Note, Golisano LLC lent us

$2,500.

The note matures on

December 30, 2019

,

bears interest at an annual rate of

8.5%,

with the principal payable at maturity. We issued a warrant into escrow in connection with this loan (see Golisano Escrow Warrants in Note

7

).

March

201

7

Note Payable to Golisano Holdings LLC

Pursuant to a

March 14, 2017

Unsecured Promissory Note, Golisano LLC lent us

$3,267.

The note matures on

December 30, 2019

,

bears interest at an annual rate of

8.5%,

with the principal payable at maturity. We issued a warrant into escrow in connection with this loan (see Golisano Escrow Warrants in Note

7

).

February

201

8

Note Payable to Golisano Holdings LLC

Pursuant to a

February 6, 2018

Secured Promissory Note, Golisano LLC lent us

$2,000

(“Golisano LLC Note”). The note matures on

February 6, 2021,

bears interest at an annual rate of

8.5%,

with the principal payable at maturity. This note is secured by collateral and is subordinate to the indebtedness owed to MidCap.

Golisano LLC also delivered a deferment letter pursuant to which Golisano LLC agreed to defer all payments due under the notes specified in the Golisano Deferment Letter through

June 30, 2018

until

October 1, 2018

and agreed to refrain from declaring a default and/or exercising any remedies under the notes.

On

February 6, 2018,

GH and Golisano LLC entered into an intercreditor agreement where they agreed that each of the Great Harbor Note

1,

the Great Harbor Note

2

and the Golisano LLC Note are pari passu as to repayment, security and otherwise and are equally and ratably secured (the “Intercreditor Agreement”).

Senior Credit Facility

On

January 22, 2015,

we entered into a

three

-year

$15,000

revolving credit facility (the “Senior Credit Facility”) based on our accounts receivable and inventory, increasable to up to

$20,000,

with MidCap Financial Trust, which subsequently assigned the agreement to an affiliate, Midcap Funding

X

Trust (“MidCap”). On

September 2, 2016,

we entered into an amendment with Midcap to increase the Senior Credit Facility to

$17,000

and extend our facility an additional

12

months.  We granted MidCap a

first

priority security interest in certain of our assets and pledged the shares of our subsidiaries as security for amounts owed under the credit facility. We are required to pay Midcap an unused line fee of

0.50%

per annum, a collateral management fee of

1.20%

per month and interest of LIBOR plus

5%

per annum, which calculated interest rate was

7.77%

per annum as of

June 30, 2018. 

We issued a warrant to Midcap to purchase

500,000

shares of the Company’s common stock (see Midcap Warrant in Note

7

).  The estimated fair value of these warrants at the date of issuance was

$130,

which was recorded as a note discount and is being amortized into interest expense over the term of the Senior Credit Facility.  Additionally, we have incurred loan fees totaling

$540

relating to the Senior Credit Facility and any subsequent amendments, which is also being amortized into interest expense over the term of the Senior Credit Facility.

Other Debt

April 2016

Note Payable to

JL-Utah Sub, LLC

Pursuant to an

April 5, 2016

Unsecured Promissory Note, JL-Utah Sub, LLC lent us

$500.

The note matures on

March 21, 2019,

bears interest at an annual rate of

8.5%,

with the principal payable in

24

monthly installments of

$21

commencing on

April 21, 2017.

Capital Lease Obligations

Our capital lease obligations pertain to various leasing agreements with Essex Capital Corporation (“Essex”), a related party to the Company as Essex’s principal owner was a member of the Board of Directors of the Company through

January 22, 2018. 

Huntington Holdings, LLC

On

August 6, 2016,

the

18

-month anniversary of the closing of a share purchase agreement, we were required to pay the purchaser of the common stock the difference between

$2.29

per share and either a defined market price or a price per share determined by a valuation firm acceptable to both parties. Based on an outside professional valuation performed on the Company’s common stock, the Company estimated the stock price guarantee payment to be

$3,210.

Accordingly, the Company recorded a loss on the stock purchase price guarantee of

$3,210

and a corresponding liability for the same amount in

2016,

which was included in accrued expenses and other current liabilities in the consolidated balance sheet as of

December 31, 2016.

On

June 2, 2017,

the

two

parties came to an agreement in which we were required to issue an unsecured promissory note (the “Huntington Note”) in favor of Huntington. The Huntington Note matures on

June 2, 2019

with the principal amount of

$3,200

payable at maturity. Interest on the outstanding principal accrues at a rate of

8.5%

per year from

August 6, 2016

to

August 15, 2017

and increases to

10%

per year thereafter. We paid

$50

to Huntington related to accrued interest from

August 6, 2016

through the date of issuance of the Huntington Note. Huntington was required to return

778,385

shares of the Company’s common stock which were issued into escrow. We were required to provide certain piggyback registration rights to Huntington in regard to the remaining

749,999

shares of the Company’s common stock held by Huntington. If the Huntington Note was paid off prior to

August 14, 2017,

the

778,385

shares held in escrow were to be released from escrow and transferred to the Company for

no

additional consideration. If the note remained outstanding on

August 15, 2017,

we had the right, but

not

the obligation, to pay

$140

to Huntington to purchase

764,192

of the subject shares held in escrow. Upon the exercise of this purchase option, the subject shares were to be released from escrow and transferred to the Company. If the note remained outstanding on

August 15, 2017

and we did

not

exercise the option to purchase the shares, the shares were to be returned from escrow to Huntington and we would

no

longer have repurchase rights. On

August 15, 2017,

the note was outstanding, and we did

not

exercise the repurchase right. The

778,385

shares were returned from escrow to Huntington.

Financial Covenants

Certain of the foregoing debt agreements, as amended, require us to meet certain affirmative and negative covenants, including maintenance of specified ratios.  We amended our debt agreements with MidCap, Penta and JL, effective

July 29, 2016,

to, among other things, reset the financial covenants of each debt agreement.  As of

June 30, 2018,

we were

not

in compliance with these financial covenants of the debt agreements; however, the lenders provided the Company with a waiver of the covenant violations as of

August 13, 2018.

XML

Note 7 - Warrants and Registration Rights Agreements

6 Months Ended

Jun. 30, 2018

Notes to Financial Statements

Warrants Disclosure [Text Block]

NOTE

7

–

WARRANTS

AND REGISTRATION RIGHTS AGREEMENT

S

The following table presents a summary of the status of our issued warrants as of

June 30, 2018,

and changes during the

six

months then ended:

				Weighted Average
	Shares			Exercise Price
Outstanding, December 31, 2017		15,855,017			0.18
Granted		500,000			-
Canceled / Expired		(500,000	)		-
Exercised		-			-
Outstanding, June 30, 2018		15,855,017			0.18

Warrants Issued

Midcap Warrant

In connection with the line of credit agreement with MidCap described in Note

6,

we issued MidCap a warrant, exercisable through

January 22, 2018,

for an aggregate of

500,000

shares of the Company’s common stock at an exercise price of

$0.76

per share (the “MidCap Warrant”).  We entered into a registration rights agreement with Midcap, dated as of

January 22, 2015,

granting MidCap certain registration rights, commencing

October 1, 2015,

for the shares of common stock issuable on exercise of the MidCap Warrant.

On

January 22, 2015,

the Company entered into a revolving credit facility with MidCap Financial Trust, which subsequently assigned the agreement to an affiliate, Midcap Funding

X

Trust. The agreement is amended from time to time and wherein it was necessary under the terms of the agreement to obtain MidCap's consent to the transactions contemplated by the above mentioned Great Harbor Note and Golisano LLC Note; on

February 6, 2018,

MidCap agreed to consent to the transactions contemplated in exchange for a warrant to MidCap exercisable for up to

500,000

shares of the Company’s common stock at an exercise price of

$.76

per share. The Company has reserved

500,000

shares of the Company’s common stock for issuance under MidCap Warrant. The warrant, if exercisable, expires on

February 6, 2019.

Penta Warrants

Pursuant to a stock purchase agreement dated

June 30, 2015,

a warrant was issued to Penta to purchase an aggregate

807,018

shares of our common stock at a price of

$0.01

per share at any time prior to the close of business on

June 30, 2020.

We granted Penta certain registration rights, commencing

October 1, 2015,

for the shares of common stock issuable upon exercise of the warrant.

JL Warrants

Pursuant to a

June 30, 2015

stock purchase agreement, a warrant was issued to JL to purchase an aggregate

403,509

shares of the Company’s common stock at a price of

$0.01

per share at any time prior to the close of business on

June 30, 2020,

subject to certain adjustments. We granted JL certain registration rights, commencing

October 1, 2015,

for the shares of common stock issuable upon exercise of the warrant. The warrant was subsequently assigned by JL to

two

individuals.

Essex Warrants

In connection with the guarantee of a note payable issued in the Nutricap asset acquisition and capital lease obligations by Essex discussed in Note

6,

Essex was issued a warrant exercisable for an aggregate

1,428,571

shares of the Company’s common stock at a purchase price of

$0.77

per share, at any time prior to the close of business on

June 30, 2020. 

The number of shares issuable upon the exercise of the warrant is subject to adjustment on terms and conditions customary for a transaction of this nature in the event of (i) reorganization, recapitalization, stock split-up, combination of shares, mergers, consolidations and (ii) sale of all or substantially all of our assets or property.   Essex subsequently assigned warrants for

350,649

shares to another company.

JL Properties, Inc. Warrants

In

April 2015,

we entered into an office lease agreement which requires a

$1,000

security deposit, subject to reduction if we achieve certain market capitalization metrics at certain dates. On

April 30, 2015,

we entered into a reimbursement agreement with JL Properties, Inc. (“JL Properties”) pursuant to which JL Properties agreed to arrange for and provide an unconditional, irrevocable, transferable, and negotiable commercial letter of credit to serve as the security deposit. As partial consideration for the entry by JL Properties into the reimbursement agreement and the provision of the letter of credit, we issued JL Properties

two

warrants to purchase shares of the Company’s common stock.

The

first

warrant is exercisable for an aggregate of

465,880

shares of common stock, subject to certain adjustments, at an aggregate purchase price of

$0.01,

at any time prior to

April 30, 2020.

In addition to adjustments on terms and conditions customary for a transaction of this nature in the event of (i) reorganization, recapitalization, stock split-up, combination of shares, mergers, consolidations and (ii) sale of all or substantially all of our assets or property, the number of shares of common stock issuable pursuant to the warrant will be increased in the event our consolidated adjusted EBITDA (as defined in the warrant agreement) for the fiscal year ending

December 31, 2018

does

not

equal or exceed

$19,250.

JL Properties subsequently assigned the warrant to

two

individuals.

The

second

warrant is exercisable for an aggregate of

86,962

shares of common stock, at a per share purchase price of

$1.00,

at any time prior to

April 30, 2020.

The number of shares issuable upon exercise of the

second

warrant is subject to adjustment on terms and conditions customary for a transaction of this nature in the event of (i) reorganization, recapitalization, stock split-up, combination of shares, mergers, consolidations and (ii) sale of all or substantially all of our assets or property.

We have granted JL Properties certain registration rights, commencing

October 1, 2015,

for the shares of common stock issuable on exercise of the

two

warrants.

Golisano

LLC

Warrants (formerly

Penta Warrants

)

In connection with the

November 13, 2014

note for

$8,000

(see Note

6

), Penta was issued a warrant to acquire

4,960,740

shares of the Company’s common stock at an aggregate exercise price of

$0.01,

through

November 13, 2019.

In connection with Penta’s consent to the terms of additional debt obtained by us, we also granted Penta a warrant to acquire

869,618

shares of common stock at a purchase price of

$1.00

per share, through

November 13, 2019.

Both warrant agreements grant Penta certain registration rights, commencing

October 1, 2015,

for the shares of common stock issuable on exercise of the warrants. Penta has the right, under certain circumstances, to require us to purchase all or any portion of the equity interest in the Company issued or represented by the warrant to acquire

4,960,740

shares at a price based on the greater of (i) the product of (

x

)

ten

times our adjusted EBITDA with respect to the

twelve

months preceding the exercise of the put right times (y) the investor’s percentage ownership in the Company assuming full exercise of the warrant; or (ii) the fair market value of the investor’s equity interest underlying the warrant. In the event (i) we do

not

have the funds available to repurchase the equity interest under the warrant or (ii) such repurchase is

not

lawful, adjustments to the principal of the note purchased by Penta will be made or, under certain circumstances, interest will be charged on the amount otherwise due for such repurchase. We have the right, under certain circumstances, to require Penta to sell to us all or any portion of the equity interest issued or represented by the warrant to acquire

4,960,740

shares. The price for such repurchase will be the greater of (i) the product of (

x

)

eleven

times our adjusted EBITDA with respect to the

twelve

months preceding the exercise of the call right times (y) the investor’s percentage ownership in the company assuming full exercise of the warrant; or (ii) the fair market value of the equity interests underlying the warrant; or (iii)

$3,750.

In connection with Golisano LLC’s acquisition of the note payable from Penta on

March 8, 2017 (

see Note

6

above for additional information), these warrants were assigned to Golisano LLC.

Golisano

LLC

Warrants (formerly

JL Warrants

)

In connection with the

January 22, 2015

note payable to JL, we issued JL warrants to purchase an aggregate of

2,329,400

shares of the Company’s common stock, at an aggregate exercise price of

$0.01,

through

February 13, 2020.

On

February 4, 2015,

we also granted to JL a warrant to acquire a total of

434,809

shares of common stock at a purchase price of

$1.00

per share, through

February 13, 2020.

Both warrant agreements grant JL certain registration rights, commencing

October 1, 2015,

for the shares of common stock issuable upon exercise of the warrants. These warrants were subsequently assigned to

two

individuals. During the year ended

December 31, 2016,

these individuals exercised warrants for a total of

1,187,995

shares of the Company’s common stock for total proceeds to the Company of less than

$1.

In connection with Golisano LLC’s acquisition of the note payable from JL on

March 8, 2017 (

see Note

6

above for additional information), these warrants were assigned to Golisano LLC.

Golisano

LLC

Warrants

Pursuant to an

October 2015

Securities Purchase Agreement with Golisano LLC, we issued Golisano LLC a warrant (the “Golisano Warrant” defined below),which Golisano Warrant is intended to maintain, following each future issuance of shares of common stock pursuant to the conversion, exercise or exchange of certain currently outstanding warrants to purchase shares of common stock held by

third

-parties (the “Outstanding Warrants”), Golisano LLC’s proportional ownership of our issued and outstanding common stock so that it is the same thereafter as on

October 5, 2015.

We have reserved

12,697,977

shares of common stock for issuance under the Golisano Warrant. The purchase price for any shares of common stock issuable upon exercise of the Golisano Warrant is

$.001

per share. The Golisano Warrant is exercisable immediately and up to and including the date which is

sixty

days after the later to occur of the termination, expiration, conversion, exercise or exchange of all of the Outstanding Warrants and our delivery of notice thereof to Golisano LLC.  The Golisano Warrant is also subject to customary adjustments upon any recapitalization, capital reorganization or reclassification, consolidation, merger or transfer of all or substantially all of our assets. In addition, if any payments are made to a holder of an Outstanding Warrant in consideration for the termination of or agreement

not

to exercise such Outstanding Warrant, Golisano LLC will be entitled to equal treatment. We have entered into a registration rights agreement with Golisano LLC, dated as of

October 5, 2015,

granting Golisano LLC certain registration rights for the shares of common stock issuable on exercise of the Golisano Warrant.  On

February 6, 2016,

Golisano LLC exercised the Golisano Warrant in part for

509,141

shares of the Company’s common stock for an aggregate purchase price of

$1.

During the year ended

December 31, 2016,

the Golisano Warrant was cancelled in part for

6,857,143

shares pursuant to the cancellation of a portion of the Outstanding Warrants.  As of

June 30, 2018,

we have reserved

4,756,505

shares of its common stock for issuance under the Golisano Warrant.

Warrants Issued into Escrow

Golisano

Escrow

Warrants

In connection with a

January 28, 2016

Unsecured Promissory Note, we issued into escrow in the name of Golisano LLC a warrant to purchase an aggregate of

1,136,363

shares of the Company’s common stock at an exercise price of

$0.01

per share (the

“January 2016

Golisano Warrant”). The

January 2016

Golisano Warrant will

not

be released from escrow or be exercisable unless and until we fail to pay Golisano LLC the entire unamortized principal amount of the related promissory note and any accrued and unpaid interest thereon as of

January 28, 2019

or such earlier date as is required pursuant to an acceleration notice (as defined in the related note agreement). We have reserved

1,136,363

shares of the Company’s common stock for issuance under the

January 2016

Golisano Warrant. The

January 2016

Golisano Warrant, if exercisable, expires on

February 28, 2022.

The

January 2016

Golisano Warrant is also subject to customary adjustments upon any recapitalization, capital reorganization or reclassification, consolidation, merger or transfer of all or substantially all of our assets.

In connection with a

March 21, 2016

Unsecured Promissory Note, we issued into escrow in the name of Golisano LLC a warrant to purchase an aggregate of

3,181,816

shares of the Company’s common stock at an exercise price of

$0.01

per share (the

“March 2016

Golisano Warrant”). The

March 2016

Golisano Warrant will

not

be released from escrow or be exercisable unless and until we fail to pay Golisano LLC the entire unamortized principal amount of the related promissory note and any accrued and unpaid interest thereon as of

March 21, 2019

or such earlier date as is required pursuant to an acceleration notice (as defined in the related note agreement). We have reserved

3,181,816

shares of the Company’s common stock for issuance under the

March 2016

Golisano Warrant. The

March 2016

Golisano Warrant, if exercisable, expires on

March 21, 2022.

The

March 2016

Golisano Warrant is also subject to customary adjustments upon any recapitalization, capital reorganization or reclassification, consolidation, merger or transfer of all or substantially all of our assets.

In connection with the Golisano LLC

July 2016

Notes we issued into escrow in the name of Golisano LLC a warrant to purchase an aggregate of

2,168,178

shares of the Company’s common stock, at an exercise price of

$0.01

per share (the “Golisano

July 2016

Warrant”). The Golisano

July 2016

Warrant will

not

be released from escrow or be exercisable unless and until we fail to pay Golisano LLC the entire unamortized principal amount of the Golisano

July 2016

Note and any accrued and unpaid interest thereon as of

January 28, 2019

or such earlier date as is required pursuant to an Acceleration Notice (as defined in the Golisano LLC

July 2016

Note). We have reserved

2,168,178

shares of the Company’s common stock for issuance under the Golisano

July 2016

Warrant. The Golisano

July 2016

Warrant, if exercisable, expires on

July 21, 2022.

The Golisano

July 2016

Warrant is also subject to customary adjustments upon any recapitalization, capital reorganization or reclassification, consolidation, merger or transfer of all or substantially all of our assets.

In connection with the Golisano LLC

December 2016

Notes we issued into escrow in the name of Golisano LLC a warrant to purchase an aggregate of

1,136,363

shares of the Company’s common stock, at an exercise price of

$0.01

per share (the “Golisano

December 2016

Warrant”). The Golisano

December 2016

Warrant will

not

be released from escrow or be exercisable unless and until we fail to pay Golisano LLC the entire unamortized principal amount of the Golisano

December 2016

Note and any accrued and unpaid interest thereon as of

December 30, 2019

or such earlier date as is required pursuant to an acceleration notice (as defined in the Golisano LLC

December 2016

Note). We have reserved

1,136,363

shares of the Company’s common stock for issuance under the Golisano

December 2016

Warrant. The Golisano

December 2016

Warrant, if exercisable, expires on

December 30, 2022.

The Golisano

December 2016

Warrant is also subject to customary adjustments upon any recapitalization, capital reorganization or reclassification, consolidation, merger or transfer of all or substantially all of our assets.

In connection with the Golisano LLC

March 2017

Notes we issued into escrow in the name of Golisano LLC a warrant to purchase an aggregate of

1,484,847

shares of the Company’s common stock, at an exercise price of

$0.01

per share (the “Golisano

March 2017

Warrant”). The Golisano

March 2017

Warrant will

not

be released from escrow or be exercisable unless and until we fail to pay Golisano LLC the entire unamortized principal amount of the Golisano

March 2017

Note and any accrued and unpaid interest thereon as of

December 30, 2019

or such earlier date as is required pursuant to an acceleration notice (as defined in the Golisano LLC

March 2017

Note). We have reserved

1,484,847

shares of the Company’s common stock for issuance under the Golisano

March 2017

Warrant. The Golisano

March 2017

Warrant, if exercisable, expires on

March 14, 2023.

The Golisano

March 2017

Warrant is also subject to customary adjustments upon any recapitalization, capital reorganization or reclassification, consolidation, merger or transfer of all or substantially all of our assets.

We previously entered into a registration rights agreement with Golisano LLC, dated as of

October 5, 2015 (

the “Registration Rights Agreement”), granting Golisano LLC certain registration rights for certain shares of the Company’s common stock. The shares of common stock issuable pursuant to the above warrants are also entitled to the benefits of the Registration Rights Agreement.

In connection with the Golisano LLC,

February 2018

note, we issued into escrow in the name of Golisano LLC a warrant to purchase an aggregate of

1,818,182

shares of the Company’s common stock at an exercise price of

$0.01

per share (the "Golisano Warrant"). The Golisano Warrant will

not

be released from escrow or be exercisable unless and until the Company fails to pay Golisano LLC the entire unamortized principal amount of the note and any accrued and unpaid interest thereon as of

February 6, 2021,

or such earlier date as is required pursuant to an acceleration notice. The Company has reserved

1,818,182

shares of the Company’s common stock for issuance under the Golisano Warrant. The Golisano Warrant, if exercisable, expires on

February 6, 2024.

GH Escrow Warrants

In connection with a

January 28, 2016

Unsecured Promissory Note, we issued into escrow in the name of GH a warrant to purchase an aggregate of

1,136,363

shares of the Company’s common stock at an exercise price of

$0.01

per share (the

“January 2016

GH Warrant”). The

January 2016

GH Warrant will

not

be released from escrow or be exercisable unless and until we fail to pay GH the entire unamortized principal amount of the related promissory note and any accrued and unpaid interest thereon as of

January 28, 2019

or such earlier date as is required pursuant to an acceleration notice (as defined in the related note agreement). We have reserved

1,136,363

shares of the Company’s common stock for issuance under the

January 2016

GH warrant. The

January 2016

GH Warrant, if exercisable, expires on

February 28, 2022.

The

January 2016

GH Warrant is also subject to customary adjustments upon any recapitalization, capital reorganization or reclassification, consolidation, merger or transfer of all or substantially all of our assets.

In connection with a

March 21, 2016

Unsecured Promissory Note, we issued into escrow in the name of GH a warrant to purchase an aggregate of

3,181,816

shares of the Company’s common stock at an exercise price of

$0.01

per share (the

“March 2016

GH Warrant”). The

March 2016

GH Warrant will

not

be released from escrow or be exercisable unless and until we fail to pay GH the entire unamortized principal amount of the related promissory note and any accrued and unpaid interest thereon as of

March 21, 2019

or such earlier date as is required pursuant to an acceleration notice (as defined in the related note agreement). We have reserved

3,181,816

shares of the Company’s common stock for issuance under the

March 2016

GH Warrant. The

March 2016

GH Warrant, if exercisable, expires on

March 21, 2022.

The

March 2016

GH Warrant is also subject to customary adjustments upon any recapitalization, capital reorganization or reclassification, consolidation, merger or transfer of all or substantially all of our assets.

In connection with the GH

December 2016

Unsecured Promissory Note, we issued into escrow in the name of GH a warrant to purchase an aggregate of

1,136,363

shares of the Company’s common stock, at an exercise price of

$0.01

per share (the

“December 2016

GH Warrant”). The

December 2016

GH Warrant will

not

be released from escrow or be exercisable unless and until we fail to pay GH the entire unamortized principal amount of the

December 2016

GH note and any accrued and unpaid interest thereon as of

December 30, 2019

or such earlier date as is required pursuant to an acceleration notice (as defined in the

December 2016

GH Warrant). We have reserved

1,136,363

shares of common stock for issuance under the

December 2016

GH Warrant. The

December 2016

GH Warrant, if exercisable, expires on

December 30, 2022.

The

December 2016

GH Warrant is also subject to customary adjustments upon any recapitalization, capital reorganization or reclassification, consolidation, merger or transfer of all or substantially all of our assets.

In connection with the GH

August 2017

Secured Promissory Note, we issued into escrow in the name of GH a warrant to purchase an aggregate of

1,363,636

shares of the Company’s common stock, at an exercise price of

$0.01

per share (the

“August 2017

GH Warrant”). The

August 2017

GH Warrant will

not

be released from escrow or be exercisable unless and until we fail to pay GH the entire unamortized principal amount of the

August 2017

GH note and any accrued and unpaid interest thereon as of

August 29, 2020

or such earlier date as is required pursuant to an acceleration notice (as defined in the

August 2017

GH Warrant). We have reserved

1,363,636

shares of common stock for issuance under the

August 2017

GH Warrant. The

August 2017

GH Warrant, if exercisable, expires on

August 30, 2023.

The

August 2017

GH Warrant is also subject to customary adjustments upon any recapitalization, capital reorganization or reclassification, consolidation, merger or transfer of all or substantially all of our assets.

In connection with the GH

February 2018

Secured Promissory Note, we issued into escrow in the name of GH a warrant to purchase an aggregate of

1,818,182

shares of the Company’s common stock at an exercise price of

$0.01

per share (the "Great Harbor Warrant"). The Great Harbor Warrant will

not

be released from escrow or be exercisable unless and until the Company fails to pay GH the entire unamortized principal amount of the note and any accrued and unpaid interest thereon as of

February 6, 2021,

or such earlier date as is required pursuant to an acceleration notice. The Company has reserved

1,818,182

shares of the Company’s common stock for issuance under the Great Harbor Warrant. The Great Harbor Warrant, if exercisable, expires on

February 6, 2024.

JL-US Escrow Warrant

In connection with an

April 5, 2016

Unsecured Promissory Note, we issued into escrow in the name of JL-Utah Sub (“JL-US”) a warrant to purchase an aggregate of

227,273

shares of the Company’s common stock at an exercise price of

$0.01

per share (the “JL-US Warrant”). The JL-US Warrant will

not

be released from escrow or be exercisable unless and until we fail to pay JL-US the entire unamortized principal amount of the JL-US note and any accrued and unpaid interest thereon as of

March 21, 2019

or such earlier date as is required pursuant to an acceleration notice (as defined in the JL-US note).  We have reserved

227,273

shares of the Company’s common stock for issuance under the JL-US Warrant.  The JL-US Warrant, if exercisable, expires on

March 21, 2022.

The JL-US Warrant is also subject to customary adjustments upon any recapitalization, capital reorganization or reclassification, consolidation, merger or transfer of all or substantially all of our assets.

Little Harbor Escrow Warrant

The Little Harbor

July 2016

unsecured delayed draw promissory note provides that we issue into escrow in the name of Little Harbor a warrant to purchase an aggregate of

2,168,178

shares of common stock at an exercise price of

$0.01

per share (the “Little Harbor

July 2016

Warrant”).  The Little Harbor

July 2016

Warrant will

not

be released from escrow or be exercisable unless and until we fail to pay Little Harbor the entire unamortized principal amount of the Little Harbor

July 2016

note and any accrued and unpaid interest thereon as of

January 28, 2019

or such earlier date as is required pursuant to an acceleration notice (as defined in the Little Harbor

July 2016

note).  We have reserved

2,168,178

shares of the Company’s common stock for issuance under the Little Harbor

July 2016

Warrant. The Little Harbor

July 2016

Warrant, if exercisable, expires on

July 21, 2022. 

The Little Harbor

July 2016

Warrant is also subject to customary adjustments upon any recapitalization, capital reorganization or reclassification, consolidation, merger or transfer of all or substantially all of our assets.  The Little Harbor

July 2016

Warrant grants Little Harbor certain registration rights for the shares of the Company’s common stock issuable upon exercise of the Little Harbor

July 2016

Warrant.

XML

Note 8 - Derivative Liabilities

6 Months Ended

Jun. 30, 2018

Notes to Financial Statements

Derivatives and Fair Value [Text Block]

NOTE

8

– DERIVATIVE LIABILIT

IES

The number of shares of common stock issuable pursuant to certain warrants issued in

2015

will be increased if our adjusted EBITDA or the market price of the Company’s common stock do

not

meet certain defined amounts. We have recorded the estimated fair value of the warrants as of the date of issuance. Due to the variable terms of the warrant agreements, the warrants are recorded as derivative liabilities with a corresponding charge to our consolidated statements of comprehensive income (loss) for changes in the estimated fair value of the warrants from the date of issuance to each balance sheet reporting date. As of

June 30, 2018,

we have estimated the total fair value of the derivative liabilities to be

$6,403

as compared to

$6,791

as of

December 31, 2017.

We had the following activity in our derivative liabilities account since

December 31, 2017:

	Six Months Ended
	June 30,
	2018
Derivative liabilities as of December 31, 2017	$	6,791
Gain on change in fair value of derivative liabilities		(388	)
Derivative liabilities as of June 30, 2018	$	6,403

The value of the derivative liabilities is generally estimated using an options lattice model with multiple inputs and assumptions, including the market price of the Company’s common stock, stock price volatility and other assumptions to project EBITDA and other reset events. These inputs and assumptions are subject to management’s judgment and can vary materially from period to period.

XML

Note 9 - Stockholders' Deficit

6 Months Ended

Jun. 30, 2018

Notes to Financial Statements

Stockholders' Equity Note Disclosure [Text Block]

NOTE

9

–

STOCKHOLDERS’

DEFICIT

Preferred Stock

The Company has authorized

500,000,000

shares of preferred stock with a par value of

$0.001

per share.

No

shares of the preferred stock have been issued.

Twinlab Consolidation Corporation

2013

Stock Incentive Plan

The only equity compensation plan currently in effect is the Twinlab Consolidation Corporation

2013

Stock Incentive Plan (the “TCC Plan”), which was assumed by the Company on

September 16, 2014.

The TCC Plan originally established a pool of

20,000,000

shares of common stock for issuance as incentive awards to employees for the purposes of attracting and retaining qualified employees who will aid in the success of the Company. From

January

through

December 2015,

the Company granted restricted stock units to certain employees of the Company pursuant to the TCC Plan. Each restricted stock unit relates to

one

share of the Company’s common stock. The restricted stock unit awards vest

25%

each annually on various dates through

2019.

The Company estimated the grant date fair market value per share of the restricted stock units and is amortizing the total estimated grant date value over the vesting periods. During the

six

months ended

June 30, 2018,

there were

not

any shares of common stock issued to employees pursuant to the vesting of restricted stock units. As of

June 30, 2018,

6,464,378

shares remain available for use in the TCC Plan.

Common Stock Repurchase

On

January 5, 2017,

pursuant to a repurchase agreement

642,366

shares of the Company’s common stock was purchased by the Company for an aggregate repurchase price of less than

$1.

Stock Subscription Receivable

and Loss on Stock Price Guarantee

As of

June 30, 2018,

the stock subscription receivable dated

August 1, 2014

for the purchase of

1,528,384

shares of the Company’s common stock had a principal balance of

$30

and bears interest at an annual rate of

5%.

On

August 6, 2016,

the

18

-month anniversary of the closing of a share purchase agreement, we were required to pay the purchaser of the common stock the difference between

$2.29

per share and either a defined market price or a price per share determined by a valuation firm acceptable to both parties. Based on an outside professional valuation performed on the Company’s common stock, the Company estimated the stock price guarantee payment to be

$3,210.

Accordingly, the Company recorded a loss on the stock purchase price guarantee of

$3,210

and a corresponding liability for the same amount in

2016,

which was included in accrued expenses and other current liabilities in the consolidated balance sheet as of

December 31, 2016.

On

June 2, 2017,

the

two

parties came to an agreement in which we were required to issue the Huntington Note in favor of Huntington. The Huntington Note matures on

June 2, 2019

with the principal amount of

$3,200

payable at maturity. Interest on the outstanding principal accrues at a rate of

8.5%

per year from

August 6, 2016

to

August 15, 2017

and increases to

10%

per year thereafter. We paid

$50

to Huntington related to accrued interest from

August 6, 2016

through the date of issuance of the Huntington Note. Huntington was required to return

778,385

shares of the Company’s common stock which were issued into escrow. We were required to provide certain piggyback registration rights to Huntington in regard to the remaining

749,999

shares of the Company’s common stock held by Huntington. If the Huntington Note was paid off prior to

August 14, 2017,

the

778,385

shares held in escrow were to be released from escrow and transferred to the Company for

no

additional consideration. If the note remained outstanding on

August 15, 2017,

we had the right, but

not

the obligation, to pay

$140

to Huntington to purchase

764,192

of the subject shares held in escrow. Upon the exercise of this purchase option, the subject shares were to be released from escrow and transferred to the Company. If the note remained outstanding on

August 15, 2017

and we did

not

exercise the option to purchase the shares, the shares were to be returned from escrow to Huntington and we would

no

longer have repurchase rights. On

August 15, 2017,

the note was outstanding, and we did

not

exercise the repurchase right. The

778,385

shares were returned from escrow to Huntington. Pursuant to the agreement, we were also required to enter into a

four

-year lease agreement with the purchaser related to our premises occupied by Nutricap.

On

June 6, 2018,

the Company issued

4,166,667

shares of common stock to Platinum Advisory Services, LLC in accordance with the terms of the Equity in Exchange for Services Agreement that the parties entered into on

December 27, 2017.

XML

Note 10 - Subsequent Events

6 Months Ended

Jun. 30, 2018

Notes to Financial Statements

Subsequent Events [Text Block]

NOTE

10

– SUBSEQUENT EVENTS

On

July 17, 2018,

the Board of Directors appointed Anthony Zolezzi as the Company’s Chief Executive Officer and President.

On

July 17, 2018,

the Company and Mr. Zolezzi entered into an employment agreement (the “Employment Agreement”), outlining the terms of Mr. Zolezzi’s employment with the Company. Under the terms of the Employment Agreement, Mr. Zolezzi was also granted an initial equity award of restricted stock. The initial equity award is up to

8,000,000

shares of common stock ("Initial Equity Award") in exchange for an exercise price equal to the fair market value of the Company's common stock and is subject to the Company's

2013

Stock Incentive Plan and further issuance of shares as necessory.

Great Harbor Capital

On 

July 27, 2018, 

the Company issued a Secured Promissory Note in favor of GH, pursuant to which GH has loaned the Company the principal amount of 

$5,000,000

 ("Great Harbor Note

3"

). The Great Harbor Note

3

matures on

January 27, 2020.

Interest on the outstanding principal accrues at a rate of

8.5%

per year and is payable monthly on the

first

day of each month, beginning

September 1, 2018.

The principal of the Great Harbor Note

3

is payable at maturity.  The Great Harbor Note

3

is secured by collateral. The Great Harbor Note

3

is subordinate to the indebtedness owed to MidCap.  The Great Harbor Note

3

is senior to the indebtedness owed to Little Harbor, LLC and Golisano Holdings LLC.

The Company also issued to GH a warrant to purchase an aggregate of

2,500,000

shares of Company common stock at an exercise price of 

$.01

 per share (the

"July 2018

Great Harbor Warrant"). The

July 2018

Great Harbor Warrant is exercisable on any business day prior to the expiration date.  The Company has reserved

2,500,000

shares of Company common stock for issuance under the

July 2018

Great Harbor Warrant. The

July 2018

Great Harbor Warrant expires on

July 27, 2024.

The

July 2018

Great Harbor Warrant is also subject to customary adjustments upon any recapitalization, reorganization, stock split up, combination of shares, merger or consolidation. The

July 2018

Great Harbor Warrant grants GH certain registration rights for the shares of Company common stock issuable upon exercise of the

July 2018

Great Harbor Warrant.

Golisano Holdings LLC

The Company entered into the Twelfth Amendment to the Note and Warrant Purchase Agreement, dated as of

July 27, 2018,

by and among the Company and Golisano LLC, as successor by assignment to JL-Mezz Utah, LLC f/k/a JL-BBNC Mezz Utah, LLC to the original Note and Warrant Purchase Agreement, dated as of

January 22, 2015,

as amended from time to time (the “Twelfth Amendment”).  Pursuant to the Twelfth Amendment, Golisano LLC consented to the secured loan in the amount of

$5,000,000

from GH.

The Company also entered into the Thirteenth Amendment to Note and Warrant Purchase Agreement and Limited Consent, dated as of

July 27, 2018,

by and among the Company and Golisano LLC, as successor by assignment to Penta Mezzanine SBIC Fund I, L.P. to the original Note and Warrant Purchase Agreement, dated as of

November 13, 2014,

as amended from time to time (the “Thirteenth Amendment”).  Pursuant to the Thirteenth Amendment, Golisano LLC consented to the secured loan in the amount of

$5,000,000

from GH. 

Midcap Funding

X

Trust

On

July 27, 2018,

MidCap consented to the Great Harbor Note

3

and the repayment of the Great Harbor Note

3

in the future.  The Company, its subsidiaries and Midcap, as successor-by-assignment from MidCap Financial Trust, are parties to a certain Credit and Security Agreement dated as of

January 22, 2015,

as amended from time to time (the "Credit Agreement").

XML

Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2018

Accounting Policies [Abstract]

Consolidation, Policy [Policy Text Block]

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.

Basis of Accounting, Policy [Policy Text Block]

Basis of Presentation and Unaudited Information

The condensed consolidated interim financial statements included herein have been prepared by the Company in accordance with United States generally accepted accounting principles, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although we believe that the disclosures are adequate to make the information presented

not

misleading. These statements reflect all adjustments, consisting of normal recurring adjustments, which in the opinion of management, are necessary for fair presentation of the information contained therein. Financial results for any interim period are

not

necessarily indicative of financial results that

may

be expected for the fiscal year. The unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form

10

-K for the year ended

December 31, 2017

filed with the SEC on

April 2, 2018.

Use of Estimates, Policy [Policy Text Block]

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Actual results could differ from those estimates. Significant management estimates include those with respect to returns and allowances, allowance for doubtful accounts, reserves for inventory obsolescence, the recoverability of long-lived assets, intangibles and goodwill and the estimated value of warrants and derivative liabilities.

Revenue Recognition, Policy [Policy Text Block]

Revenue Recognition

Revenue from product sales, net of estimated returns and allowances, is recognized when evidence of an arrangement is in place, related prices are fixed, and determinable, contractual obligations have been satisfied, title and risk of loss have been transferred to the customer and collection of the resulting receivable is reasonably assured. Shipping terms are generally freight on board shipping point. We sell predominately in the North American and European markets, with international sales transacted in U.S. dollars.

Fair Value of Financial Instruments, Policy [Policy Text Block]

Fair

V

alue of

F

inancial

I

nstruments

We apply the following fair value hierarchy, which prioritizes the inputs used to measure fair value into

three

levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:

Level

1

– inputs are quoted prices in active markets for identical assets that the reporting entity has the ability to access at the measurement date.

Level

2

– inputs are other than quoted prices included within Level

1

that are observable for the asset, either directly or indirectly.

Level

3

– inputs are unobservable inputs for the asset that are supported by little or

no

market activity and that are significant to the fair value of the underlying asset or liability.

The following table summarizes our financial instruments that are measured at fair value on a recurring basis as of

June 30, 2018

and

December 31, 2017:

June 30, 2018	Total		Level 1		Level 2		Level 3
Derivative liabilities	$	6,403	$	-	$	-	$	6,403

December 31, 2017	Total		Level 1		Level 2		Level 3
Derivative liabilities	$	6,791	$	-	$	-	$	6,791

Receivables, Trade and Other Accounts Receivable, Allowance for Doubtful Accounts, Policy [Policy Text Block]

Accounts Receivable and Allowances

We grant credit to customers and generally do

not

require collateral or other security. We perform credit evaluations of our customers and provide for expected claims related to promotional items, customer discounts, shipping shortages, damages, and doubtful accounts based upon historical bad debt and claims experience.  As of

June 30, 2018,

total allowances amounted to

$2,704,

of which

$495

was related to doubtful accounts receivable.  As of

December 31, 2017,

total allowances amounted to

$2,534,

of which

$329

was related to doubtful accounts receivable. 

Inventory, Policy [Policy Text Block]

Inventories

Inventories are stated at the lower of cost or net realizable value and are reduced by an estimated reserve for obsolete inventory.

Property, Plant and Equipment, Policy [Policy Text Block]

Property and Equipment

Property and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation, including amounts amortized under capital leases, is calculated on the straight-line method over the estimated useful lives of the related assets, which are

7

to

10

years for machinery and equipment,

8

years for furniture and fixtures and

3

years for computers. Leasehold improvements are amortized over the shorter of the useful life of the asset or the term of the lease.

Normal repairs and maintenance are expensed as incurred. When assets are retired or otherwise disposed of, the related cost and accumulated depreciation or amortization is removed from the accounts and any gain or loss is included in the results of operations.

Goodwill and Intangible Assets, Policy [Policy Text Block]

Intangible Assets

Intangible assets consist primarily of trademarks and customer relationships, which are amortized on a straight-line basis over their estimated useful lives ranging from

3

to

30

years. The valuation and classification of these assets and the assignment of amortizable lives involve significant judgment and the use of estimates.

We believe that our long-term growth strategy supports our fair value conclusions. For intangible assets, the recoverability of these amounts is dependent upon achievement of our projections and the execution of key initiatives related to revenue growth and improved profitability.

Goodwill and Intangible Assets, Goodwill, Policy [Policy Text Block]

Goodwill

Goodwill is

not

subject to amortization, but is reviewed for impairment annually, or more frequently whenever events or changes in circumstances indicate the carrying value of goodwill

may

not

be recoverable. An impairment charge would be recorded to the extent the carrying value of goodwill exceeds its estimated fair value. The testing of goodwill under established guidelines for impairment requires significant use of judgment and assumptions. Changes in forecasted operations and other assumptions could materially affect the estimated fair values. Changes in business conditions could potentially require adjustments to these asset valuations.

Impairment or Disposal of Long-Lived Assets, Policy [Policy Text Block]

Impairment of Long-Lived Assets

Long-lived assets, including intangible assets subject to amortization, are reviewed for impairment when changes in circumstances indicate that the carrying amount of the asset

may

not

be recoverable. If the carrying amount of the asset exceeds the expected undiscounted cash flows of the asset, an impairment charge is recognized equal to the amount by which the carrying amount exceeds fair value. The testing of these intangibles under established guidelines for impairment requires significant use of judgment and assumptions. Changes in forecasted operations and other assumptions could materially affect the estimated fair values. Changes in business conditions could potentially require adjustments to these asset valuations.

Goodwill and Intangible Assets, Intangible Assets, Policy [Policy Text Block]

Indefinite-Lived Intangible Assets

Indefinite-lived intangible assets relating to the asset acquisition of Organic Holdings, a market leader in the healthy aging and beauty from within categories, and owner of the Reserveage Nutriton brands, are determined to have an indefinite useful economic life and as such are

not

amortized. Indefinite-lived intangible assets are tested for impairment annually which consists of a comparison of the fair value of the asset with its carrying value. The total indefinite-lived intangible assets as of

June 30, 2018

and

December 31, 2017

was

$4,346

.

Fair Value of Warrants Issued, Policy [Policy Text Block]

Value of Warrants Issued with Debt

We estimate the grant date value of certain warrants issued with debt, using an outside professional valuation firm, which uses the Monte Carlo option lattice model. We record the amounts as interest expense or debt discount, depending on the terms of the agreement. These estimates involve multiple inputs and assumptions, including the market price of the Company’s common stock, stock price volatility and other assumptions to project earnings before interest, taxes, depreciation and amortization (“EBITDA”) and other reset events. These inputs and assumptions are subject to management’s judgment and can vary materially from period to period.

Derivatives, Policy [Policy Text Block]

Derivative Liabilities

We have recorded certain warrants as derivative liabilities at estimated fair value, as determined based on our use of an outside professional valuation firm, due to the variable terms of the warrant agreements. The value of the derivative liabilities is generally estimated using the Monte Carlo option lattice model with multiple inputs and assumptions, including the market price of the Company’s common stock, stock price volatility and other assumptions to project EBITDA and other reset events. These inputs and assumptions are subject to management’s judgment and can vary materially from period to period.

Sale Leaseback Transactions, Policy [Policy Text Block]

Deferred gain on sale of assets

We entered into a sale-leaseback arrangement relating to our office facilities in

2013.

Under the terms of the arrangement, we sold an office building and surrounding land and then leased the property back under a

15

-year operating lease. We recorded a deferred gain for the amount of the gain on the sale of the asset, to be recognized as a reduction of rent expense over the life of the lease. Accordingly, we recorded amortization of deferred gain as a reduction of rental expense of

$40

for the

three

months ended

June 30, 2018

and

2017.

For the

six

months ended

June 30, 2018

and

2017,

we recorded amortization of

$81

and

$81,

respectively. As of

June 30, 2018,

and

December 31, 2017,

unamortized deferred gain on sale of assets was

$1,484

and

$1,565,

respectively.

Earnings Per Share, Policy [Policy Text Block]

Net Income (Loss) per Common Share

Basic net income or loss per common share (Basic EPS) is computed by dividing net income or loss by the weighted average number of common shares outstanding. Diluted net income or loss per common share (Diluted EPS) is computed by dividing net income or loss by the sum of the weighted average number of common shares outstanding and the dilutive potential common shares then outstanding. Potential dilutive common share equivalents consist of total shares issuable upon the exercise of outstanding stock options and warrants to acquire common stock using the treasury stock method and the average market price per share during the period.

When calculating diluted earnings or loss per share, if the effects are dilutive, companies are required to add back to net income or loss the effects of the change in derivative liabilities related to warrants. Additionally, if the effects of the change in derivative liabilities are added back to net income or loss, companies are required to include the warrants outstanding related to the derivative liability in the calculation of the weighted average dilutive shares. Accordingly, for the

six

months ended

June 30, 2018,

the gain on change in derivative liabilities was added to net loss, and the dilutive effect of the warrant derivative liabilities was included in the calculation of the weighted average dilutive shares. As there was

no

gain on change in derivative liabilities for the

three

months ended

June 30, 2018,

there was

no

dilutive effect on net loss and the calculation of the weighted average dilutive shares.

The common shares used in the computation of our basic and diluted net income (loss) per share are reconciled as follows:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2018			2017			2018			2017
Numerator:
Net loss	$	(5,738	)	$	(4,480	)	$	(10,697	)	$	(7,436	)
Effect of dilutive securities on net loss:
Common stock warrants		-			-			(388	)		-
Total net loss for purpose of calculating diluted net loss per common share	$	(5,738	)	$	(4,480	)	$	(11,085	)	$	(7,436	)
Number of shares used in per common share calculations:
Total weighted-average shares for purposes of calculating basic net loss per common share		255,149,140			252,959,714			254,206,926			252,941,772
Weighted-average effect of dilutive securities:
Common stock warrants		-			-			11,315,870			-
Total shares for purpose of calculating diluted net loss per common share		255,149,140			252,959,714			265,522,796			252,941,772
Net loss per common share:
Basic	$	(0.02	)	$	(0.02	)	$	(0.04	)	$	(0.03	)
Diluted	$	(0.02	)	$	(0.02	)	$	(0.04	)	$	(0.03	)

Concentration Risk, Credit Risk, Policy [Policy Text Block]

Significant Concentration of Credit Risk

Sales to our top

three

customers aggregated to approximately

28%

and

22%

of total sales for the

three

months ended

June 30, 2018

and

2017,

respectively, and

28%

and

26%

of total sales for the

six

months ended

June 30, 2018

and

2017.

Sales to

one

of those customers were approximately

12%

and

10%

of total sales for the

three

months ended

June 30, 2018

and

2017,

respectively, and

14%

and

12%

of total sales for the

six

months ended

June 30, 2018

and

2017,

respectively. Accounts receivable from top

three

customers were approximately

37%

and

39%

of total accounts receivable as of

June 30, 2018

and

December 31, 2017,

respectively.

New Accounting Pronouncements, Policy [Policy Text Block]

Recent Accounting Pronouncements

In

January 2017,

the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)

No.

2017

-

04,

“Simplifying the Test for Goodwill Impairment (Topic

350

)” which removes Step

2

of the goodwill impairment test that requires a hypothetical purchase price allocation.  A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value,

not

to exceed the carrying amount of goodwill.  The amendments in this ASU are effective for fiscal years beginning after

December 15, 2019.  

Early adoption is permitted after

January 1, 2017.  

We do

not

expect the new guidance to have a significant impact on our condensed consolidated financial statements or related disclosures.

In

February 2016,

FASB issued ASU

No.

2016

-

02,

“Leases (Topic

842

)”, which requires companies to recognize all leases as assets and liabilities on the consolidated balance sheet. This ASU retains a distinction between finance leases and operating leases, and the classification criteria for distinguishing between finance leases and operating leases are substantially similar to the classification criteria for distinguishing between capital leases and operating leases in the current accounting literature. The result of retaining a distinction between finance leases and operating leases is that under the lessee accounting model in Topic

842,

the effect of leases in a consolidated statement of comprehensive income and a consolidated statement of cash flows is largely unchanged from previous GAAP. The amendments in this ASU are effective for fiscal years beginning after

December 15, 2018,

including interim periods within those fiscal years. Earlier application is permitted. The Company is currently evaluating the impact that the adoption of this ASU will have on its condensed consolidated financial statements.

In

June 2016,

the FASB issued ASU

2016

-

13,

"Financial Instruments- Credit losses (Topic

326

): Measurement of Credit losses on Financial Instruments". ASU

2016

-

13

requires an organization to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Our status as an emerging growth company allows us to defer adoption until the annual period, including interim periods within the annual period, beginning

January 1, 2021.

Management is currently evaluating the requirements of this guidance and has

not

yet determined the impact of the adoption on the Company's financial position or results from operations.

In

May 2014,

the FASB issued ASU

2014

-

09,

“Revenue from Contracts with Customers (Topic

606

)”. ASU

2014

-

09

amends the guidance for revenue recognition to replace numerous, industry-specific requirements and converges areas under this topic with those of the International Financial Reporting Standards. The ASU implements a

five

-step process for customer contract revenue recognition that focuses on transfer of control, as opposed to transfer of risk and rewards. The amendment also requires enhanced disclosures regarding the nature, amount, timing and uncertainty of revenues and cash flows from contracts with customers. Other major provisions include the capitalization and amortization of certain contract costs, ensuring the time value of money is considered in the transaction price, and allowing estimates of variable consideration to be recognized before contingencies are resolved in certain circumstances. The amendments in this ASU are effective for reporting periods beginning after

December 15, 2016;

however, in

July 2015,

the FASB agreed to delay the effective date by

one

year. The proposed deferral

may

permit early adoption but would

not

allow adoption any earlier than the original effective date of the standard. Entities can transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption.  Our status as an emerging growth company allows us to defer the adoption until the year (and interim periods therein) beginning

January 1, 2019.

We have chosen to delay our adoption until

January 1, 2019.

Although there are several other new accounting pronouncements issued or proposed by the FASB, which we have adopted or will adopt, as applicable, we do

not

believe any of these accounting pronouncements has had or will have a material impact on our condensed consolidated financial position or results of operations.

XML

Note 1 - Nature of Operations and Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2018

Notes Tables

Fair Value, Assets Measured on Recurring Basis [Table Text Block]

June 30, 2018	Total		Level 1		Level 2		Level 3
Derivative liabilities	$	6,403	$	-	$	-	$	6,403

December 31, 2017	Total		Level 1		Level 2		Level 3
Derivative liabilities	$	6,791	$	-	$	-	$	6,791

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2018			2017			2018			2017
Numerator:
Net loss	$	(5,738	)	$	(4,480	)	$	(10,697	)	$	(7,436	)
Effect of dilutive securities on net loss:
Common stock warrants		-			-			(388	)		-
Total net loss for purpose of calculating diluted net loss per common share	$	(5,738	)	$	(4,480	)	$	(11,085	)	$	(7,436	)
Number of shares used in per common share calculations:
Total weighted-average shares for purposes of calculating basic net loss per common share		255,149,140			252,959,714			254,206,926			252,941,772
Weighted-average effect of dilutive securities:
Common stock warrants		-			-			11,315,870			-
Total shares for purpose of calculating diluted net loss per common share		255,149,140			252,959,714			265,522,796			252,941,772
Net loss per common share:
Basic	$	(0.02	)	$	(0.02	)	$	(0.04	)	$	(0.03	)
Diluted	$	(0.02	)	$	(0.02	)	$	(0.04	)	$	(0.03	)

XML

Note 3 - Inventories (Tables)

6 Months Ended

Jun. 30, 2018

Notes Tables

Schedule of Inventory, Current [Table Text Block]

	June 30,			December 31,
	2018			2017
Raw materials	$	2,984		$	5,347
Work in process		263			1,965
Finished goods		10,319			12,236
		13,566			19,548
Reserve for obsolete inventory		(1,393	)		(2,380	)
	$	12,173		$	17,168

XML

Note 4 - Property and Equipment (Tables)

6 Months Ended

Jun. 30, 2018

Notes Tables

Property, Plant and Equipment [Table Text Block]

	June 30,			December 31,
	2018			2017
Machinery and equipment	$	12,166		$	12,156
Computers and other		9,614			9,589
Aquifer		482			482
Leasehold improvements		1,552			1,530
		23,814			23,757
Accumulated depreciation and amortization		(21,011	)		(20,588	)
	$	2,803		$	3,169

XML

Note 5 - Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2018

Notes Tables

Schedule of Finite-Lived Intangible Assets [Table Text Block]

	June 30,			December 31,
	2018			2017
Trademarks	$	8,915		$	8,915
Indefinite-lived intangible assets		4,346			4,346
Customer relationships		19,110			19,110
Other		753			753
		33,124			33,124
Accumulated amortization		(10,978	)		(10,061	)
	$	22,146		$	23,063

XML

Note 6 - Debt (Tables)

6 Months Ended

Jun. 30, 2018

Notes Tables

Schedule of Debt [Table Text Block]

	June 30,			December 31,
	2018			2017
Related-Party Debt:
July 2014 note payable to Little Harbor, LLC (Converted to a new note in February 2018)	$	3,267		$	3,267
July 2016 note payable to Little Harbor, LLC		4,770			4,770
January 2016 note payable to Great Harbor Capital, LLC		2,500			2,500
March 2016 note payable to Great Harbor Capital, LLC		7,000			7,000
December 2016 note payable to Great Harbor Capital, LLC		2,500			2,500
August 2017 note payable to Great Harbor Capital, LLC		3,000			3,000
February 2018 note payable to Great Harbor Capital, LLC		2,000			-
January 2016 note payable to Golisano Holdings LLC		2,500			2,500
March 2016 note payable to Golisano Holdings LLC		7,000			7,000
July 2016 note payable to Golisano Holdings LLC		4,770			4,770
December 2016 note payable to Golisano Holdings LLC		2,500			2,500
March 2017 note payable to Golisano Holdings LLC		3,267			3,267
February 2018 note payable to Golisano Holdings LLC		2,000			-
November 2014 note payable to Golisano Holdings LLC (formerly payable to Penta Mezzanine SBIC Fund I, L.P.), net of discount and unamortized loan fees in the aggregate of $1,084 and $1,491 as of June 30, 2018 and December 31, 2017, respectively		6,915			6,509
January 2015 note payable to Golisano Holdings LLC (formerly payable to JL-BBNC Mezz Utah, LLC), net of discount and unamortized loan fees in the aggregate of $1,372 and $1,829 as of June 30, 2018 and December 31, 2017, respectively		3,628			3,171
February 2015 note payable to Golisano Holdings LLC (formerly payable to Penta Mezzanine SBIC Fund I, L.P.), net of discount and unamortized loan fees in the aggregate of $95 and $130 as of June 30, 2018 and December 31, 2017, respectively		1,904			1,869
Total related-party debt		59,521			54,623
Senior Credit Facility with Midcap		12,375			12,088
April 2016 note payable to JL-Utah Sub, LLC		188			313
Capital lease obligations, net of discount of $105 and 210 as of June 30, 2018 and December 31, 2017, respectively		647			1,252
Huntington Holdings		3,200			3,200
Total other debt		4,035			4,765
Total debt		75,931			71,476
Less current portion		(72,674	)		(68,093	)
Long-term debt	$	3,257		$	3,383

XML

Note 7 - Warrants and Registration Rights Agreements (Tables)

6 Months Ended

Jun. 30, 2018

Notes Tables

Schedule of Stockholders' Equity Note, Warrants or Rights [Table Text Block]

				Weighted Average
	Shares			Exercise Price
Outstanding, December 31, 2017		15,855,017			0.18
Granted		500,000			-
Canceled / Expired		(500,000	)		-
Exercised		-			-
Outstanding, June 30, 2018		15,855,017			0.18

XML

Note 8 - Derivative Liabilities (Tables)

6 Months Ended

Jun. 30, 2018

Notes Tables

Schedule of Derivative Liabilities at Fair Value [Table Text Block]

	Six Months Ended
	June 30,
	2018
Derivative liabilities as of December 31, 2017	$	6,791
Gain on change in fair value of derivative liabilities		(388	)
Derivative liabilities as of June 30, 2018	$	6,403

XML

Note 1 - Nature of Operations and Summary of Significant Accounting Policies (Details Textual) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2018 USD ($)	Jun. 30, 2017 USD ($)	Jun. 30, 2018 USD ($)	Jun. 30, 2017 USD ($)	Dec. 31, 2017 USD ($)
Allowance for Doubtful Accounts Receivable, Current, Ending Balance	$ 2,704		$ 2,704		$ 2,534
Allowance for Accounts Receivable, Current, Doubtful Accounts	495		495		329
Indefinite-lived Intangible Assets (Excluding Goodwill), Ending Balance	$ 4,346		$ 4,346		4,346
Lessor, Operating Lease, Term of Contract	15 years		15 years
Amortization of Deferred Gain on Sale of Assets	$ 40	$ 40	$ 81	$ 81
Deferred Gain on Sale of Property	$ 1,484		$ 1,484		$ 1,565
Sales Revenue, Net [Member] | Top Three Customers [Member] | Customer Concentration Risk [Member]
Number of Major Customers	3	3	3	3
Concentration Risk, Percentage	28.00%	22.00%	28.00%	26.00%
Sales Revenue, Net [Member] | One of Top Three Customers [Member] | Customer Concentration Risk [Member]
Number of Major Customers	1	1	1	1
Concentration Risk, Percentage	12.00%	10.00%	14.00%	12.00%
Accounts Receivable [Member] | Customer Concentration Risk [Member]
Number of Major Customers			3
Concentration Risk, Percentage			37.00%		39.00%
Minimum [Member] | Trademarks and Customer Relationships [Member]
Finite-Lived Intangible Asset, Useful Life			3 years
Maximum [Member] | Trademarks and Customer Relationships [Member]
Finite-Lived Intangible Asset, Useful Life			30 years
Machinery and Equipment [Member] | Minimum [Member]
Property, Plant and Equipment, Useful Life			7 years
Machinery and Equipment [Member] | Maximum [Member]
Property, Plant and Equipment, Useful Life			10 years
Furniture and Fixtures [Member]
Property, Plant and Equipment, Useful Life			8 years
Computer Equipment [Member]
Property, Plant and Equipment, Useful Life			3 years

XML

Note 1 - Nature of Operations and Summary of Significant Accounting Policies - Financial Instruments Measured at Fair Value on a Recurring Basis (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Derivative liabilities	$ 6,403	$ 6,791
Fair Value, Measurements, Recurring [Member]
Derivative liabilities	6,403	6,791
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Derivative liabilities	0	0
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Derivative liabilities	0	0
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Derivative liabilities	$ 6,403	$ 6,791

XML

Note 1 - Nature of Operations and Summary of Significant Accounting Policies - Basic and Diluted Net Loss Per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Net loss	$ (5,738)	$ (4,480)	$ (10,697)	$ (7,436)
Common stock warrants			(388)
Total net loss for purpose of calculating diluted net loss per common share	$ (5,738)	$ (4,480)	$ (11,085)	$ (7,436)
Total weighted-average shares for purposes of calculating basic net loss per common share (in shares)	255,149,140	252,959,714	254,206,926	252,941,772
Common stock warrants (in shares)			11,315,870
Total shares for purpose of calculating diluted net loss per common share (in shares)	255,149,140	252,959,714	265,522,796	252,941,772
Basic (in dollars per share)	$ (0.02)	$ (0.02)	$ (0.04)	$ (0.03)
Diluted (in dollars per share)	$ (0.02)	$ (0.02)	$ (0.04)	$ (0.03)

XML

Note 2 - Going Concern (Details Textual) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Retained Earnings (Accumulated Deficit), Ending Balance	$ (264,660)	$ (253,963)
Working Capital Deficiency	76,488
Long-term Debt, Current Maturities, Total	$ 72,674	$ 68,093

XML

Note 3 - Inventories - Summary of Inventories (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Raw materials	$ 2,984	$ 5,347
Work in process	263	1,965
Finished goods	10,319	12,236
	13,566	19,548
Reserve for obsolete inventory	(1,393)	(2,380)
	$ 12,173	$ 17,168

XML

Note 4 - Property and Equipment (Details Textual) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Capital Leased Assets, Gross, Total	$ 631		$ 631		$ 777
Depreciation, Total	$ 210	$ 220	$ 424	$ 447

XML

Note 4 - Property and Equipment - Summary of Property and Equipment (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Property and equipment	$ 23,814	$ 23,757
Accumulated depreciation and amortization	(21,011)	(20,588)
	2,803	3,169
Machinery and Equipment [Member]
Property and equipment	12,166	12,156
Computers and Other [Member]
Property and equipment	9,614	9,589
Aquifer [Member]
Property and equipment	482	482
Leasehold Improvements [Member]
Property and equipment	$ 1,552	$ 1,530

XML

Note 5 - Intangible Assets (Details Textual) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Amortization of Intangible Assets, Total	$ 458	$ 582	$ 917	$ 1,165
Other Intangible Assets [Member]
Finite-Lived Intangible Asset, Useful Life			3 years
Minimum [Member] | Trademarks [Member]
Finite-Lived Intangible Asset, Useful Life			3 years
Minimum [Member] | Customer Relationships [Member]
Finite-Lived Intangible Asset, Useful Life			15 years
Maximum [Member] | Trademarks [Member]
Finite-Lived Intangible Asset, Useful Life			30 years
Maximum [Member] | Customer Relationships [Member]
Finite-Lived Intangible Asset, Useful Life			16 years

XML

Note 5 - Intangible Assets - Summary of Intangible Assets (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Indefinite-lived intangible assets	$ 4,346	$ 4,346
	33,124	33,124
Accumulated amortization	(10,978)	(10,061)
	22,146	23,063
Trademarks [Member]
Intangible assets	8,915	8,915
Customer Relationships [Member]
Intangible assets	19,110	19,110
Other Intangible Assets [Member]
Intangible assets	$ 753	$ 753

XML

Note 6 - Debt (Details Textual) - USD ($)																3 Months Ended	6 Months Ended	10 Months Ended	12 Months Ended
	Jun. 02, 2019	Jun. 30, 2018	Feb. 06, 2018	Aug. 30, 2017	Mar. 14, 2017	Dec. 31, 2016	Sep. 02, 2016	Aug. 06, 2016	Jul. 21, 2016	Apr. 05, 2016	Mar. 21, 2016	Jan. 28, 2016	Feb. 06, 2015	Jan. 22, 2015	Nov. 13, 2014	Jun. 30, 2018	Jun. 30, 2018	Jun. 02, 2017	Dec. 31, 2017	Dec. 31, 2016	Aug. 15, 2017	Jul. 25, 2017	Feb. 04, 2015
Class of Warrant or Right, Number of Securities Called by Warrants or Rights		15,855,017														15,855,017	15,855,017		15,855,017
Loss on Stock Purchase Guarantees																				$ 3,210,000
Common Stock, Shares Subscribed but Unissued, Return																					778,385
Common Stock, Shares Subscribed but Unissued		1,528,384														1,528,384	1,528,384
Revolving Credit Facility [Member] | Midcap Funding X Trust [Member]
Debt Instrument, Term														3 years
Class of Warrant or Right, Number of Securities Called by Warrants or Rights														500,000
Warrants Not Settleable in Cash, Fair Value Disclosure														$ 130,000
Debt Instrument, Fee Amount														540,000
Line of Credit Facility, Maximum Borrowing Capacity							$ 17,000,000							$ 15,000,000
Line of Credit Facility, Potential Maximum Borrowing Capacity							$ 20,000,000
Percentage of Unused Line Fee Per Month							0.50%
Percentage of Management Fee Per Month							1.20%
Debt Instrument, Basis Spread on Variable Rate							5.00%
Debt Instrument, Interest Rate, Effective Percentage		7.77%														7.77%	7.77%
Related Party August 2017 Note Payable to Great Harbor LLC [Member]
Long-term Debt, Total		$ 3,000,000														$ 3,000,000	$ 3,000,000		$ 3,000,000
Minimum Liquidity			$ 1,000,000
Golisano Holdings LLC [Member]
Debt Instrument, Periodic Payment, Total															$ 360,000
Debt Instrument, Interest Rate, Stated Percentage													8.00%	8.00%	12.00%
Debt Instrument, Face Amount													$ 2,000,000
Debt Instrument, Periodic Payment, Principal													90,000	$ 250,000
Proceeds from Notes Payable, Total														$ 5,000,000	$ 8,000,000
Debt Instrument Periodic Principal Payments Due in Next Four Quarters													110,000		440,000
Debt Instrument Periodic Principal Payments Due Thereafter													130,000		$ 520,000
Class of Warrant or Right, Number of Securities Called by Warrants or Rights														2,329,400	4,960,740								434,809
Warrants Not Settleable in Cash, Fair Value Disclosure													250,000	$ 4,389,000	$ 3,770,000
Debt Instrument, Fee Amount													$ 90,000	152,000	$ 273,000
Increased Debt Instrument Periodic Payment														$ 350,000
Debt Instrument, Maturity Date													Nov. 13, 2019	Feb. 13, 2020	Nov. 13, 2019
Golisano Holdings LLC [Member] | Warrants Issued on January 22, 2015[Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights													869,618
Huntington Holdings, LLC [Member]
Common Stock Subscription Price Per Share								$ 2.29
Stock Price Guarantee Payment								$ 3,210,000
Common Stock, Shares Subscribed but Unissued, Return		778,385														778,385	778,385				778,385
Common Stock, Shares Subscribed but Unissued		749,999														749,999	749,999
Common Stock, Shares Subscribed but Unissued, Option to Purchase Shares Price		$ 140,000														$ 140,000	$ 140,000				$ 140,000
Common Stock, Shares Subscribed but Unissued, Option to Purchase Shares		764,192														764,192	764,192				764,192
Notes Payable, Other Payables [Member] | Great Harbor Capital, LLC [Member]
Debt Instrument, Interest Rate, Stated Percentage			8.50%	8.50%		8.50%					8.50%	8.50%								8.50%
Debt Instrument, Face Amount			$ 2,000,000	$ 3,000,000		$ 2,500,000					$ 7,000,000	$ 2,500,000								$ 2,500,000
Debt Instrument, Periodic Payment, Principal											$ 292,000	$ 104,000
Debt Instrument, Maturity Date			Feb. 06, 2021	Aug. 29, 2020	Dec. 30, 2019	Dec. 30, 2019					Mar. 21, 2019	Jan. 28, 2019
Debt Instrument, Date of First Required Payment											Apr. 21, 2017	Feb. 28, 2017
Notes Payable, Other Payables [Member] | Little Harbor [Member]
Debt Instrument, Periodic Payment, Total																	$ 4,900,000
Debt Instrument, Term																	3 years
Debt Instrument, Obligation Termination, Stock Price Trigger		5.06														5.06	5.06
Long-term Debt, Total																						$ 3,267
Debt Instrument, Interest Rate, Stated Percentage		8.50%														8.50%	8.50%
Debt Instrument, Maturity Date		Jul. 25, 2017	Jul. 25, 2020
Related Party Debt July 2016 Note Payable to Little Harbor LLC [Member]
Debt Instrument, Interest Rate, Stated Percentage									8.50%
Debt Instrument, Face Amount									$ 4,770,000
Proceeds from Related Party Debt																$ 0			$ 0	$ 4,770,000
Debt Instrument, Maturity Date									Jan. 28, 2019
Unsecured Promissory Note [Member] | Golisano Holdings LLC [Member]
Debt Instrument, Interest Rate, Stated Percentage					8.50%	8.50%					8.50%	8.50%								8.50%
Debt Instrument, Face Amount					$ 3,267,000	$ 2,500,000					$ 7,000,000	$ 2,500,000								$ 2,500,000
Debt Instrument, Periodic Payment, Principal											$ 292,000	$ 104,000
Debt Instrument, Maturity Date						Dec. 30, 2019					Mar. 21, 2019
Debt Instrument, Date of First Required Payment											Apr. 21, 2017
Unsecured Promissory Note [Member] | Huntington Holdings, LLC [Member]
Debt Instrument, Interest Rate, Stated Percentage																					8.50%
Debt Instrument, Face Amount																		$ 3,200,000			$ 3,200,000
Interest Paid, Including Capitalized Interest, Operating and Investing Activities, Total								$ 50,000										$ 50,000
Unsecured Promissory Note [Member] | Huntington Holdings, LLC [Member] | Scenario, Forecast [Member]
Debt Instrument, Interest Rate, Increase (Decrease)	10.00%
Unsecured Delayed Draw Promissory Note [Member] | Golisano Holdings LLC [Member]
Debt Instrument, Interest Rate, Stated Percentage									8.50%
Debt Instrument, Face Amount									$ 4,770,000
Proceeds from Related Party Debt																				$ 4,770,000
Debt Instrument, Maturity Date									Jan. 28, 2019
Secured Debt [Member] | Golisano Holdings LLC [Member]
Debt Instrument, Interest Rate, Stated Percentage			8.50%
Debt Instrument, Face Amount			$ 2,000,000
Debt Instrument, Maturity Date			Feb. 06, 2021
Notes Payable Maturing in March 2019 [Member] | JL [Member]
Debt Instrument, Interest Rate, Stated Percentage										8.50%
Debt Instrument, Periodic Payment, Principal										$ 21,000
Notes Payable to Bank, Noncurrent										$ 500,000
Debt Instrument, Maturity Date										Mar. 21, 2019
Debt Instrument, Date of First Required Payment										Apr. 21, 2017

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Note 6 - Debt - Summary of Debt (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Other debt	$ 75,931	$ 71,476
Total debt	75,931	71,476
Less current portion	(72,674)	(68,093)
Long-term debt	3,257	3,383
Capital Lease Obligations [Member]
Capital lease obligations, net of discount of $105 and 210 as of June 30, 2018 and December 31, 2017, respectively	647	1,252
Related Party July 2014 Note Payable to Little Harbor, LLC, [Member]
Long-term debt, net	3,267	3,267
Related Party Debt July 2016 Note Payable to Little Harbor LLC [Member]
Long-term debt, net	4,770	4,770
Related-Party Debt January 2016 Note Payable to Great Harbor Hospital, LLC [Member]
Long-term debt, net	2,500	2,500
Related-Party Debt March 2016 Note Payable to Great Harbor Capital, LLC [Member]
Long-term debt, net	7,000	7,000
Related-Party Debt December 2016 Note Payable to Great Harbor Hospital, LLC [Member]
Long-term debt, net	2,500	2,500
Related Party August 2017 Note Payable to Great Harbor LLC [Member]
Long-term debt, net	3,000	3,000
Related Party February 2018 Note Payable to Great Harbor LLC [Member]
Long-term debt, net	2,000
Related-Party Debt January 2016 Note payable to Golisano Holdings LLC [Member]
Long-term debt, net	2,500	2,500
Related-Party Debt March 2016 note payable to Golisano Holdings LLC [Member]
Long-term debt, net	7,000	7,000
Related Part Debt July 2016 Note Payable To Golisano Holdings LLC [Member]
Long-term debt, net	4,770	4,770
Related Part Debt December 2016 Note Payable To Golisano Holdings LLC [Member]
Long-term debt, net	2,500	2,500
Related-party Debt March 2017 Note payable to Golisano Holdings LLC [Member]
Long-term debt, net	3,267	3,267
Related Party February 2018 Note Payable to Golisano Holdings LLC [Member]
Long-term debt, net	2,000
Related Party Debt November 2014 Note Payable to Golisano Holdings LLC (Formerly Penta Mezzanine SBIC Fund I, L.P.) [Member]
Long-term debt, net	6,915	6,509
Related-Party Debt January 2015 Note Payable to Golisano Holdings LLC (Formerly Payable to JL-BBNC Mezz Utah, LLC) [Member]
Long-term debt, net	3,628	3,171
February 2015 Note Payable to Golisano Holdings LLC (Formerly Payable to Penta Mezzanine SBIC Fund I, L.P.) [Member]
Long-term debt, net	1,904	1,869
Related Party Debt [Member]
Long-term debt, net	59,521	54,623
Senior Credit Facility With Midcap [Member]
Long-term debt, net	12,375	12,088
April 2016 Note Payable To JL-Utah Sub, LLC [Member]
Long-term debt, net	188	313
Unsecured Promissory Note with Huntington Holdings, LLC [Member]
Long-term debt, net	3,200	3,200
Debt Other Than Related Party Debt and Credit Facility [Member]
Other debt	4,035	4,765
Total debt	$ 4,035	$ 4,765

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Note 6 - Debt - Summary of Debt (Details) (Parentheticals) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Capital Lease Obligations [Member]
Debt instrument, unamortized discount	$ 105	$ 210
Related-Party Debt January 2015 Note Payable to Golisano Holdings LLC (Formerly Payable to JL-BBNC Mezz Utah, LLC) [Member]
Debt instrument, unamortized discount	1,372	1,829
February 2015 Note Payable to Golisano Holdings LLC (Formerly Payable to Penta Mezzanine SBIC Fund I, L.P.) [Member]
Debt instrument, unamortized discount	$ 95	$ 130

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Note 7 - Warrants and Registration Rights Agreements (Details Textual) - USD ($)																	1 Months Ended	6 Months Ended	12 Months Ended
	Feb. 28, 2018	Feb. 06, 2018	Aug. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Jul. 31, 2016	Apr. 05, 2016	Mar. 21, 2016	Feb. 06, 2016	Jan. 28, 2016	Jun. 30, 2015	Apr. 30, 2015	Feb. 06, 2015	Feb. 04, 2015	Jan. 22, 2015	Nov. 13, 2014	Apr. 30, 2015	Jun. 30, 2018	Dec. 31, 2016	Dec. 31, 2017	Oct. 31, 2015
Class of Warrant or Right, Number of Securities Called by Warrants or Rights																		15,855,017		15,855,017
Class of Warrant or Right, Exercise Price of Warrants or Rights																		$ 0.18		$ 0.18
Class of Warrant or Right, Exercised During Period, Number of Securities Called by Warrants or Rights
Essex Capital Corporation [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights											1,428,571
Class of Warrant or Right, Exercise Price of Warrants or Rights											$ 0.77
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right																		350,649
Class of Warrant or Right, Expiration Date											Jun. 30, 2020
Golisano Holdings LLC [Member]
Class of Warrant or Right, Exercise Price of Warrants or Rights									$ 1												$ 0.001
Common Stock, Capital Shares Reserved for Future Issuance																		4,756,505			12,697,977
Number of Warrants Expired									509,141
Number of Warrants Cancelled																			6,857,143
January 2016 Golisano Warrant [Member]
Class of Warrant or Right, Exercise Price of Warrants or Rights										$ 0.01
Common Stock, Capital Shares Reserved for Future Issuance										1,136,363
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right										1,136,363
Class of Warrant or Right, Expiration Date										Feb. 28, 2022
March 2016 Golisano Warrant [Member]
Class of Warrant or Right, Exercise Price of Warrants or Rights								$ 0.01
Common Stock, Capital Shares Reserved for Future Issuance								3,181,816
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right								3,181,816
Class of Warrant or Right, Expiration Date								Mar. 21, 2022
Little Harbor July 2016 Warrant [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights						2,168,178
Class of Warrant or Right, Exercise Price of Warrants or Rights						$ 0.01
Common Stock, Capital Shares Reserved for Future Issuance						2,168,178
Class of Warrant or Right, Expiration Date						Jul. 21, 2022
Golisano LLC December 2016 Warrant [Member]
Class of Warrant or Right, Exercise Price of Warrants or Rights					$ 0.01														$ 0.01
Common Stock, Capital Shares Reserved for Future Issuance					1,136,363														1,136,363
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right					1,136,363														1,136,363
Class of Warrant or Right, Expiration Date					Dec. 30, 2022
Golisano LLC March 2017 Warrant [Member]
Class of Warrant or Right, Exercise Price of Warrants or Rights				$ 0.01
Common Stock, Capital Shares Reserved for Future Issuance				1,484,847
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right				1,484,847
Class of Warrant or Right, Expiration Date				Mar. 14, 2023
Golisano Warrants [Member]
Class of Warrant or Right, Exercise Price of Warrants or Rights		$ 0.01				$ 0.01
Common Stock, Capital Shares Reserved for Future Issuance		1,818,182				2,168,178
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right		1,818,182				2,168,178
Class of Warrant or Right, Expiration Date		Feb. 06, 2024				Jul. 21, 2022
January 2016 GH Warrant [Member]
Class of Warrant or Right, Exercise Price of Warrants or Rights										$ 0.01
Common Stock, Capital Shares Reserved for Future Issuance										1,136,363
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right										1,136,363
Class of Warrant or Right, Expiration Date										Feb. 28, 2022
March 2016 GH Warrant [Member]
Class of Warrant or Right, Exercise Price of Warrants or Rights								$ 0.01
Common Stock, Capital Shares Reserved for Future Issuance								3,181,816
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right								3,181,816
Class of Warrant or Right, Expiration Date								Mar. 21, 2022
December 2016 GH Warrant [Member]
Class of Warrant or Right, Exercise Price of Warrants or Rights					$ 0.01														$ 0.01
Common Stock, Capital Shares Reserved for Future Issuance					1,136,363														1,136,363
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right					1,136,363														1,136,363
Class of Warrant or Right, Expiration Date					Dec. 30, 2022
August 2017 GH Warrant [Member]
Class of Warrant or Right, Exercise Price of Warrants or Rights			$ 0.01
Common Stock, Capital Shares Reserved for Future Issuance			1,363,636
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right			1,363,636
Class of Warrant or Right, Expiration Date			Aug. 30, 2023
Great Harbor Warrant [Member]
Class of Warrant or Right, Exercise Price of Warrants or Rights	$ 0.01
Common Stock, Capital Shares Reserved for Future Issuance	1,818,182
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right	1,818,182
Class of Warrant or Right, Expiration Date	Feb. 06, 2024
JL Warrants [Member]
Class of Warrant or Right, Exercise Price of Warrants or Rights							$ 0.01
Common Stock, Capital Shares Reserved for Future Issuance							227,273
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right							227,273
Class of Warrant or Right, Expiration Date							Mar. 21, 2022
Midcap Funding X Trust [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights		500,000													500,000
Class of Warrant or Right, Exercise Price of Warrants or Rights		$ 0.76													$ 0.76
Common Stock, Capital Shares Reserved for Future Issuance		500,000
Class of Warrant or Right, Expiration Date		Feb. 06, 2019
Penta Mezzanine SBIC Fund I, L.P. [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights													4,960,740					4,960,740
Class of Warrant or Right, Exercise Price of Warrants or Rights													$ 0.01
Proceeds from Notes Payable, Total																$ 8,000,000
Class of Warrants or Rights, Subject to Repurchase																		4,960,740
Class of Warrant or Right, Minimum Repurchase Price, Under Agreement																		$ 3,750,000
Class of Warrant or Right, Expiration Date													Nov. 13, 2019
Penta Mezzanine SBIC Fund I, L.P. [Member] | Warrants Issued on June 30, 2015 [Member]
Class of Warrant or Right, Exercise Price of Warrants or Rights											$ 0.01
Class of Warrant or Right, Cancelled, Number of Securities Called by Warrants or Rights											807,018
Class of Warrant or Right, Expiration Date											Jun. 30, 2020
Penta Mezzanine SBIC Fund I, L.P. [Member] | Warrants Issued on January 22, 2015[Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights															869,618
Class of Warrant or Right, Exercise Price of Warrants or Rights															$ 1
Class of Warrant or Right, Expiration Date															Nov. 13, 2019
JL-BBNC Mezz Utah, LLC [Member]
Class of Warrant or Right, Exercised During Period, Number of Securities Called by Warrants or Rights																			1,187,995
Proceeds from Warrant Exercises																			$ 1
JL-BBNC Mezz Utah, LLC [Member] | Warrants Issued on June 30, 2015 [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights											403,509
Class of Warrant or Right, Exercise Price of Warrants or Rights											$ 0.01
Class of Warrant or Right, Expiration Date											Jun. 30, 2020
JL-BBNC Mezz Utah, LLC [Member] | Warrants Issued on January 22, 2015[Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights															2,329,400
Class of Warrant or Right, Exercise Price of Warrants or Rights															$ 0.01
Class of Warrant or Right, Expiration Date															Feb. 13, 2020
JL-BBNC Mezz Utah, LLC [Member] | Warrants Issued on February 4, 2015 [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights														434,809
Class of Warrant or Right, Exercise Price of Warrants or Rights														$ 1
Class of Warrant or Right, Expiration Date														Feb. 13, 2020
JL Properties, Inc. [Member]
Deposits Assets												$ 1,000,000					$ 1,000,000
JL Properties, Inc. [Member] | First Warrant [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights												465,880					465,880
Class of Warrant or Right, Exercise Price of Warrants or Rights												$ 0.01					$ 0.01
Adjustments on Warrants Trigger Event, Minimum Adjusted EBITDA																	$ 19,250,000
Class of Warrant or Right, Expiration Date												Apr. 30, 2020
JL Properties, Inc. [Member] | Second Warrant [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights												86,962					86,962
Class of Warrant or Right, Exercise Price of Warrants or Rights												$ 1					$ 1
Class of Warrant or Right, Expiration Date												Apr. 30, 2020

XML

Note 7 - Warrants and Registration Rights Agreements - Summary of the Warrants Issued and Changes (Details)	6 Months Ended
	Jun. 30, 2018 $ / shares shares
Outstanding, beginning balance (in shares) | shares	15,855,017
Outstanding, weighted average exercise price (in dollars per share) | $ / shares	$ 0.18
Granted (in shares) | shares	500,000
Granted, weighted average exercise price (in dollars per share) | $ / shares
Canceled / Expired (in shares) | shares	(500,000)
Canceled / expired, weighted average exercise price (in dollars per share) | $ / shares
Exercised (in shares) | shares
Exercised, weighted average exercise price (in dollars per share) | $ / shares
Outstanding, ending balance (in shares) | shares	15,855,017
Outstanding, weighted average exercise price (in dollars per share) | $ / shares	$ 0.18

XML

Note 8 - Derivative Liabilities (Details Textual) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Derivative Liability, Total	$ 6,403	$ 6,791

XML

Note 8 - Derivative Liabilities - Activity in Derivative Liabilities Account (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Derivative liabilities as of December 31, 2017			$ 6,791
Gain on change in fair value of derivative liabilities	$ 1,430	$ 297	(388)	$ 1,295
Derivative liabilities as of June 30, 2018	$ 6,403		$ 6,403

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Note 9 - Stockholders' Deficit (Details Textual) - USD ($)					6 Months Ended	10 Months Ended	12 Months Ended
	Jun. 02, 2019	Jun. 06, 2018	Jan. 05, 2017	Aug. 06, 2016	Jun. 30, 2018	Jun. 02, 2017	Dec. 31, 2016	Dec. 31, 2017	Aug. 15, 2017
Preferred Stock, Shares Authorized					500,000,000
Preferred Stock, Par or Stated Value Per Share					$ 0.001
Preferred Stock, Shares Issued, Total					0
Stock Issued During Period, Shares, Restricted Stock Award, Gross					0
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant					6,464,378
Stock Issued During Period Shares Warrants Exercised			642,366
Stock Issued During Period Value Warrants Exercised			$ 1
Common Stock, Shares Subscribed but Unissued					1,528,384
Common Stock, Share Subscribed but Unissued, Subscriptions Receivable					$ 30,000			$ 30,000
Subscription Receivable Annual Interest Rate					5.00%
Loss on Stock Purchase Guarantees							$ 3,210,000
Common Stock, Shares Subscribed but Unissued, Return									778,385
Huntington Holdings, LLC [Member]
Common Stock, Shares Subscribed but Unissued					749,999
Common Stock Subscription Price Per Share				$ 2.29
Stock Price Guarantee Payment				$ 3,210,000
Common Stock, Shares Subscribed but Unissued, Return					778,385				778,385
Common Stock, Shares Subscribed but Unissued, Option to Purchase Shares Price					$ 140,000				$ 140,000
Common Stock, Shares Subscribed but Unissued, Option to Purchase Shares					764,192				764,192
Lessee, Operating Lease, Term of Contract					4 years
Huntington Holdings, LLC [Member] | Unsecured Promissory Note [Member]
Debt Instrument, Face Amount						$ 3,200,000			$ 3,200,000
Debt Instrument, Interest Rate, Stated Percentage									8.50%
Interest Paid, Including Capitalized Interest, Operating and Investing Activities, Total				$ 50,000		$ 50,000
Huntington Holdings, LLC [Member] | Unsecured Promissory Note [Member] | Scenario, Forecast [Member]
Debt Instrument, Interest Rate, Increase (Decrease)	10.00%
Platinum [Member]
Stock Issued During Period, Shares, New Issues		4,166,667
TCC Plan [Member]
Common Stock, Capital Shares Reserved for Future Issuance					20,000,000
TCC Plan [Member] | Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage					25.00%

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Note 10 - Subsequent Events (Details Textual) - USD ($)	Jul. 17, 2018	Jul. 27, 2018	Jun. 30, 2018	Feb. 28, 2018	Dec. 31, 2017
Class of Warrant or Right, Number of Securities Called by Warrants or Rights			15,855,017		15,855,017
Class of Warrant or Right, Exercise Price of Warrants or Rights			$ 0.18		$ 0.18
Great Harbor Warrant [Member]
Class of Warrant or Right, Exercise Price of Warrants or Rights				$ 0.01
Related-Party Debt January 2015 Note Payable to Golisano Holdings LLC (Formerly Payable to JL-BBNC Mezz Utah, LLC) [Member]
Long-term Debt, Total			$ 3,628,000		$ 3,171,000
Subsequent Event [Member] | Great Harbor Warrant [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights		2,500,000
Class of Warrant or Right, Exercise Price of Warrants or Rights		$ 0.01
Subsequent Event [Member] | Great Harbor Note [Member]
Debt Instrument, Face Amount		$ 5,000,000
Debt Instrument, Interest Rate, Stated Percentage		8.50%
Subsequent Event [Member] | Related-Party Debt January 2015 Note Payable to Golisano Holdings LLC (Formerly Payable to JL-BBNC Mezz Utah, LLC) [Member]
Long-term Debt, Total		$ 5,000,000
Chief Executive Officer [Member] | Restricted Stock [Member] | Subsequent Event [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period	8,000,000