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The Company executed a 50-month lease of a 17,426 square foot building in Denver, CO to accommodate the growth in inventory and support warehouse operations. The warehouse operations will be moved prior to year end from its current location at the Golden, CO headquarters.
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2016-06-15
2023-10-15
2024-02-10
Fully vested
Three year vesting schedules of 1/3 each year through October 2016.
Three year vesting schedules of 1/3 each year through February 2017.
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<p style="margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"><b><u>Note 1 - Summary of Significant Accounting Policies</u></b></font></p>
<p style="margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"><b>Organization and Nature of Business, and Basis
of Presentation</b></font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">iSatori, Inc. (the “Company”)
was incorporated under the laws of the state of Delaware on June 29, 2012. The trading symbol of the Company on OTCQB is “IFIT”.</font></p>
<p style="margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">The Company is engaged in researching,
designing, developing, contracting for the manufacture, marketing, selling and distributing of various branded nutritional and
dietary supplement products for the general nutrition market. The “general nutrition market” may include such activities
as body-building, weight-training, physique enhancement (e.g., increase of lean body mass and decrease in fat mass) and enhanced
athletic performance through increased strength and/or endurance and proper nutrition.</font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">The Company engages in funding
clinical studies with the objective of discovering and/or validating claims of new, efficacious and safe products for the Company’s
relevant market as well as providing necessary and appropriate substantiation for any claims which the Company may use in its
marketing and advertising. The Company markets products which are under its control and which are in some way proprietary to the
Company. Some of the Company’s products are the subject of patents, service marks and or trademarks owned by the Company.</font></p>
<p style="margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"><b>Unaudited Interim Financial
Information</b></font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">The accompanying interim condensed
financial statements have been prepared in accordance with our accounting practices described in our audited financial statements
for the year ended December 31, 2013, and are unaudited. These unaudited interim condensed financial statements should be read
in conjunction with the audited financial statements and accompanying notes for the year ended December 31, 2013. The accompanying
interim condensed financial statements are presented in accordance with the rules and regulations of the Securities and Exchange
Commission and, accordingly, do not include all the disclosures required by generally accepted accounting principles in the United
States (“U.S. GAAP”) with respect to annual financial statements. In the opinion of management, all adjustments, consisting
of normal recurring accruals that are considered necessary for a fair presentation of the interim condensed financial information,
have been included. However, operating results for the periods presented are not necessarily indicative of the results that may
be expected for a full year.</font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"><b>Financial Instruments</b></font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">The Company considers all highly
liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents. Accordingly, cash
and cash equivalents consist of petty cash, checking accounts and money market funds.</font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"><b>Fair Value Measurements</b></font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">ASC 820-10 establishes a framework
for measuring the fair value of assets and liabilities and requires additional disclosure about fair value measurements. ASC 820-10
defines fair value as the price that would be received to sell an asset or paid to transfer a liability in the principal (or most
advantageous market) for the asset or liability in an orderly transaction between market participants at the measurement date.</font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">The Company has a number of financial
instruments, including cash, cash equivalents, receivables, inventory, payables and debt obligations. The carrying amount of cash
and cash equivalents, receivables, accounts payable, accrued expenses and notes payable approximates their fair value because
of the short maturity of these instruments. As further described in Note 7, the Company has issued warrants which are measured
at fair value on a recurring basis and result in a long-term derivative liability on the balance sheet. The actual and estimated
fair values, respectively, of the Company’s financial instruments are as follows:</font></p>
<p style="text-align: justify; margin: 0"></p>
<table cellspacing="0" cellpadding="0" style="margin-top: 0px; font-size: 9pt; width: 100%">
<tr style="font-size: 1pt">
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 10px"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 65px"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 10px"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 10px"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 66px"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 10px"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 10px"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 65px"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 10px"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 10px"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 65px"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr>
<td style="vertical-align: bottom"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="5" style="border-bottom: #000000 1px solid; vertical-align: bottom; font-size: 8.5pt; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>September
30, 2014</b></font></td>
<td style="vertical-align: bottom; font-size: 8.5pt"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="5" style="border-bottom: #000000 1px solid; vertical-align: bottom; font-size: 8.5pt; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>December
31, 2013</b></font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom: #000000 1px solid"><p style="font-size: 8.5pt; text-align: center; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"><b>Carrying</b></font></p>
<p style="font-size: 8.5pt; text-align: center; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"><b>Amount</b></font></p></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom: #000000 1px solid; font-size: 8.5pt; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>Fair
Value</b></font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom: #000000 1px solid"><p style="font-size: 8.5pt; text-align: center; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"><b>Carrying</b></font></p>
<p style="font-size: 8.5pt; text-align: center; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"><b>Amount</b></font></p></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom: #000000 1px solid; font-size: 8.5pt; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>Fair
Value</b></font></td></tr>
<tr style="background-color: #ebebff">
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif"><b>Cash and cash equivalents</b></font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="vertical-align: top; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,153,865</font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="vertical-align: top; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,153,865</font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="vertical-align: top; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">822,876</font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="vertical-align: top; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">822,876</font></td></tr>
<tr>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif"><b>Receivables</b></font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="vertical-align: top; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,893,580</font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="vertical-align: top; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,893,580</font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="vertical-align: top; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2,398,178</font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="vertical-align: top; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2,398,178</font></td></tr>
<tr style="background-color: #ebebff">
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif"><b>Accounts Payable</b></font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="vertical-align: top; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,276,642</font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="vertical-align: top; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,276,642</font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="vertical-align: top; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,248,490</font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="vertical-align: top; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,248,490</font></td></tr>
<tr>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif"><b>Derivative Liability</b></font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="vertical-align: top; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">226,445</font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="vertical-align: top; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">226,445</font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="vertical-align: top; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">471,015</font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="vertical-align: top; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">471,015</font></td></tr>
</table>
<p style="text-align: justify; margin: 0"> </p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"><b>Trade Receivables and Credit
Policy</b></font></p>
<p style="margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">Trade receivables are uncollateralized
customer obligations due under normal trade terms requiring payment generally within 10-60 days from the invoice date. Accounts
are considered delinquent when outstanding for more than 7 days past due date. The Company does not have a policy of accruing
interest on past due accounts. Payments on trade receivables are applied as instructed per the customer, or to the earliest unpaid
invoices. The allowance for doubtful accounts represents an estimate of amounts considered uncollectible and is determined based
on management’s historical collection experience, adverse situations that may affect the customer’s ability to repay,
and prevailing economic conditions. Specific accounts deemed uncollectible are written off periodically with subsequent receipts
on previously written off accounts credited to bad debt expense. The allowance for doubtful accounts is $0 for each of the periods
ended September 30, 2014 and December 31, 2013. Receivables at each of the below respective periods consisted of the following:</font></p>
<p style="text-align: justify; margin: 0"></p>
<table cellspacing="0" cellpadding="0" style="width: 100%; margin-top: 0px; font-size: 9pt">
<tr style="font-size: 1pt">
<td style="width: 71%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 13%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 13%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr>
<td style="vertical-align: bottom"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom: #000000 1px solid; vertical-align: bottom"><p style="font-size: 8.5pt; text-align: center; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"><b>September
30,</b></font></p>
<p style="font-size: 8.5pt; text-align: center; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"><b>2014</b></font></p></td>
<td style="vertical-align: bottom; font-size: 8.5pt"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom: #000000 1px solid; vertical-align: bottom"><p style="font-size: 8.5pt; text-align: center; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"><b>December
31,</b></font></p>
<p style="font-size: 8.5pt; text-align: center; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"><b>2013</b></font></p></td></tr>
<tr style="background-color: #ebebff">
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif"><b>Trade Receivables</b></font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="vertical-align: top; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,834,174</font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="vertical-align: top; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2,323,522</font></td></tr>
<tr>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif"><b>Other</b></font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="vertical-align: top; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">59,406</font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="vertical-align: top; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">74,656</font></td></tr>
<tr style="background-color: #ebebff">
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif"><b>Allowance for doubtful accounts</b></font></td>
<td style="border-bottom: #000000 1px solid; vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: #000000 1px solid; vertical-align: top; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(0)</font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: #000000 1px solid; vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: #000000 1px solid; vertical-align: top; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(0)</font></td></tr>
<tr>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif"><b>Totals</b></font></td>
<td style="border-bottom: #000000 3px double; vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: #000000 3px double; vertical-align: top; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,893,580</font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: #000000 3px double; vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: #000000 3px double; vertical-align: top; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2,398,178</font></td></tr>
</table>
<p style="margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">In addition, the Company has
recorded an allowance for customer returns in the amount of approximately $85,000 and $70,000 at September 30, 2014 and December
31, 2013, respectively, in accrued expenses.</font></p>
<p style="margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"><b>Inventory Valuation</b></font></p>
<p style="margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">Inventories of nutritional and
dietary supplements are stated at lower of cost or market on a first-in, first-out (FIFO) basis as noted below:</font></p>
<p style="text-align: justify; margin: 0"></p>
<table cellspacing="0" cellpadding="0" style="width: 100%; margin-top: 0px; font-size: 9pt">
<tr style="font-size: 1pt">
<td style="width: 70%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 2%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 13%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 13%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr>
<td style="vertical-align: bottom"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom: #000000 1px solid; vertical-align: bottom"><p style="font-size: 8.5pt; text-align: center; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"><b>September
30,</b></font></p>
<p style="font-size: 8.5pt; text-align: center; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"><b>2014</b></font></p></td>
<td style="vertical-align: bottom; font-size: 8.5pt"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom: #000000 1px solid; vertical-align: bottom"><p style="font-size: 8.5pt; text-align: center; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"><b>December
31,</b></font></p>
<p style="font-size: 8.5pt; text-align: center; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"><b>2013</b></font></p></td></tr>
<tr style="background-color: #ebebff">
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif"><b>Labels and packaging</b></font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="vertical-align: top; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">170,189</font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="vertical-align: top; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">120,057</font></td></tr>
<tr>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif"><b>Raw materials</b></font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="vertical-align: top; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">284,560</font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="vertical-align: top; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">207,320</font></td></tr>
<tr style="background-color: #ebebff">
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif"><b>Finished goods</b></font></td>
<td style="border-bottom: #000000 1px solid; vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: #000000 1px solid; vertical-align: top; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2,191,558</font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: #000000 1px solid; vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: #000000 1px solid; vertical-align: top; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,658,387</font></td></tr>
<tr>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif"><b>Totals</b></font></td>
<td style="border-bottom: #000000 3px double; vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: #000000 3px double; vertical-align: top; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2,646,307</font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: #000000 3px double; vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: #000000 3px double; vertical-align: top; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,985,764</font></td></tr>
</table>
<p style="margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"><b>Note Receivable</b></font></p>
<p style="margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">The predecessor company disposed
of a dormant product line of vitamins in December 2010. As part of the consideration in this divestiture, the Company received
from the purchaser of this product line an unsecured note in the amount of $170,000. The original note was due to be repaid on
or before March 2014, where interest accrued principally at an annual rate of 5%, based upon the initial $170,000 principal and
was payable monthly. As of March 31, 2013, the note was novated and a new promissory note was issued to reflect a modification
in the payment terms, which includes no interest. The total note receivable balance at September 30, 2014 was $85,528, and is
due to be repaid in monthly increments through May 1, 2017.</font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"><b>Revenue Recognition</b></font></p>
<p style="margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">The Company operates predominantly
as a distributor of its dietary supplement products through traditional large retailers, wholesale distributors, and electronic
intermediaries. Revenue from product sales is recognized upon transfer of title of the Company’s product to its customers.
Net sales represent product sales less actual returns, trade allowances, discounts, and product promotions. Sales to direct customers
have an unconditional money back guarantee for thirty to ninety days after the date of purchase. Sales to a select number of the
retail customers carry a “Sale or Return” Purchase agreement per contract, where if minimum sales thresholds are not
met within required timeframe, the inventory will be returned to the Company for full credit. Other retail customers receive a
percentage discount from invoice to cover any customer returns or damages they may incur. Returns, trade allowances, discounts,
and product promotions were $840,670 and $484,296 for the three month period ended September 30, 2014 and 2013, respectively.
Returns, trade allowances, discounts, and product promotions were $2,200,761 and $1,492,824 for the nine month period ended September
30, 2014 and 2013, respectively.</font></p>
<p style="text-align: justify; margin: 0"> </p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">In addition, the Company provides
allowances for sales returns based upon estimated and known returns. Product returns are recorded as a reduction of net revenues
and as a reduction of the accounts receivable balance.</font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">The Company receives other revenues
which include but are not limited to shipping and handling charges billed to customers.</font></p>
<p style="margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">The Company has recorded $210,002
as of September 30, 2014 in deferred revenue as a liability pertaining to inventory sold under consignment terms, even though
it has already been paid for by the customer.</font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"><b>Cost of Sales</b></font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">The Company purchases its products
directly from third party manufacturers. The Company’s cost of sales include product costs, including any associated materials
used in production, cost of warehousing and distribution. Included in the cost of sales are transit freight and shipping and handling
costs that are incurred by the Company.</font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"><b>Income Taxes</b></font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">The Company utilizes the asset
and liability method of accounting for income taxes. Under this asset and liability method, deferred tax assets and liabilities
are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying
amounts of existing assets and liabilities, and their respective tax bases. Deferred tax assets and liabilities are measured using
enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. See Note
4, “Income Taxes”.</font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">Since 2012 was the Company’s
initial tax year, there are no prior federal or state tax returns subject to examination. Accordingly, the only taxable periods
subject to examination by federal and state taxing authorities are the periods ended December 31, 2013 and 2012. Federal and state
tax returns for the Company prior to the short form merger are open for the period ended December 31, 2011.</font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"><b>Leases</b></font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">The Company leases its headquarters
facility, comprising approximately 10,044 square feet, in Golden (metropolitan Denver), Colorado. The total rent expense for each
of the three month periods ended September 30, 2014 and 2013, was $20,716. The total rent expense for each of the nine month periods
ended September 30, 2014 and 2013, was $62,147. The lease term expires January 31, 2017 and requires equal monthly payments over
the remaining term. Future payments under the lease total $193,347. The Company also leases miscellaneous office and warehouse
equipment. In most cases, management expects that in the normal course of business these leases will be renewed or replaced by
other leases as applicable.</font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"><b>Marketing</b></font></p>
<p style="margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">The Company expenses all production
costs related to advertising costs as they are incurred, including print, digital, and television when the advertisement has been
broadcast or otherwise finished and or distributed. The Company records website costs related to its direct-to-consumer advertisements
in accordance with FASB ASC 340-20 “Capitalized Advertising Costs”. In accordance with FASB ASC 340-20, direct response
advertising costs incurred should be reported as assets and should be amortized over the estimated period of the benefits, based
on the proportion of current period revenue from the advertisements to probable future revenue. As of September 30, 2014 and December
31, 2013, the Company had deferred $0 and $7,651 respectively, related to such advertising costs. This amount was included in
Deposits and other assets and amortized over a one year period, the estimated time frame to which the existing commercial was
used. For the three month period ended September 30, 2014 and 2013, marketing expenses totaled $310,580 and $1,005,858, respectively.
For the nine month period ended September 30, 2014 and 2013, marketing expenses totaled $1,252,698 and $1,330,788, respectively.</font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"><b>Research and Development Costs</b></font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">Research and development costs,
which includes the funding of clinical research studies, as well as creation and development of new products, are expensed when
incurred. Research and development costs of $57,002 and $68,071 for the three month period ended September 30, 2014 and 2013,
respectively, are included in selling and marketing expense. Research and development costs of $67,907 and $155,836 for the nine
month period ended September 30, 2014 and 2013, respectively, are included in selling and marketing expense.</font></p>
<p style="text-align: justify; margin: 0"> </p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"><b>Distribution, Shipping and
Handling Costs</b></font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">Shipping costs on purchases and
shipping and handling fees related to sales charged to customers are both included in cost of sales. As mentioned in Revenue Recognition,
shipping and handling revenue billed customers are reflected in other revenues.</font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"><b>Concentration of Credit Risk</b></font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">Financial instruments that potentially
subject the Company to concentration of credit risk consist principally of trade accounts receivables. Concentrations of credit
with respect to trade receivables are limited due to the large number of customers comprising the Company’s customer bases
and their dispersion across different geographic locations.</font></p>
<p style="margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">The Company maintains cash balances
at one financial institution located in Colorado and one in California. Accounts at these institutions are insured by the Federal
Deposit Insurance Corporation (FDIC) up to $250,000 per account. At times during the year, the Company’s bank balances have
exceeded the FDIC limit. Management believes the risk of loss at such institutions to be minimal.</font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">During the nine month period
ended September 30, 2014, sales to three customers made up 60% of total product revenue, with each customer representing greater
than 10% of product revenue on an individual basis. These customers’ combined accounts receivable balances were 56% of total
accounts receivable at September 30, 2014. During the nine month period ended September 30, 2013, sales to three customers made
up 56% of total product revenue, with each customer representing greater than 10% of product revenue on an individual basis. These
customers’ combined accounts receivable balances were 65% of total accounts receivable as of September 30, 2013. During
the nine month period ended September 30, 2014, purchases from four vendors made up 70% of total inventory purchases. These vendors’
combined accounts payable balances were 58% of total accounts payable as of September 30, 2014. During the nine month period ended
September 30, 2013, purchases from two vendors made up 73% of total inventory purchases. These vendors’ combined accounts
payable balances were 43% of total accounts payable as of September 30, 2013.</font></p>
<p style="margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"><b>Use of Estimates</b></font></p>
<p style="margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">The preparation of the financial
statements in conformity with accounting principles generally accepted in the United States of America requires management to
make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Significant estimates include but are not limited to the fair value determination of derivative instruments, the valuation allowance
with respect to estimated utilization of net operating losses, estimated allowances for sales returns and collectability of trade
receivables.</font></p>
<p style="margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"><b>Earnings (Loss) Per Share</b></font></p>
<p style="margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">Net earnings (loss) per share
is computed by dividing net income (loss) less preferred dividends for the period by the weighted average number of shares of
common stock outstanding during each period. Diluted earnings (loss) per share is computed by dividing net income (loss) less
preferred dividends for the period by the weighted average number of shares of common stock, common stock equivalents and potentially
dilutive securities outstanding during each period.</font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">Since the Company reflected a
net loss for the three month period ended September 30, 2014 and the three and nine month periods ended September 30, 2013, the
effect of considering any common stock equivalents, if exercisable, would have been anti-dilutive.</font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">The Company has the following
common stock equivalents as of September 30, 2014 and 2013:</font></p>
<p style="margin: 0"></p>
<table cellspacing="0" cellpadding="0" style="margin-top: 0px; font-size: 9pt; width: 100%">
<tr style="font-size: 1pt">
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 18px"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 73px"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 7px"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 73px"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 5px"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 73px"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 7px"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 73px"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr>
<td style="vertical-align: bottom"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="3" style="vertical-align: bottom"><p style="font-size: 8.5pt; text-align: center; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"><b>Three
Months Ended</b></font></p>
<p style="font-size: 8.5pt; text-align: center; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"><b>September
30,</b></font></p></td>
<td style="vertical-align: bottom; font-size: 8.5pt"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="3" style="vertical-align: bottom"><p style="font-size: 8.5pt; text-align: center; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"><b>Nine
Months Ended</b></font></p>
<p style="font-size: 8.5pt; text-align: center; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"><b>September
30,</b></font></p></td></tr>
<tr style="vertical-align: bottom">
<td style="font-size: 8.5pt"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font-size: 8.5pt"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: #000000 1px solid; font-size: 8.5pt; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>2014</b></font></td>
<td style="font-size: 8.5pt"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: #000000 1px solid; font-size: 8.5pt; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>2013</b></font></td>
<td style="font-size: 8.5pt"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: #000000 1px solid; font-size: 8.5pt; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>2014</b></font></td>
<td style="font-size: 8.5pt"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: #000000 1px solid; font-size: 8.5pt; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>2013</b></font></td></tr>
<tr style="vertical-align: bottom; background-color: #ebebff">
<td><font style="font: 10pt Times New Roman, Times, Serif">Basic weighted average common shares outstanding</font></td>
<td style="font-size: 8.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">12,892,515</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">12,878,216</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">12,886,216</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">12,730,371</font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font: 10pt Times New Roman, Times, Serif">Stock options (exercise price – $0.573-$2.50/share)</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">334,647</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">430,132</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">398,922</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">460,587</font></td></tr>
<tr style="vertical-align: bottom; background-color: #ebebff">
<td><font style="font: 10pt Times New Roman, Times, Serif">Warrants (exercise price – $0.001-$2.25/share)</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">417,418</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">426,744</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">418,226</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">432,280</font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font: 10pt Times New Roman, Times, Serif">Total common stock equivalents</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">13,644,580</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">13,735,092</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">13,703,364</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">13,623,238</font></td></tr>
</table>
<p style="margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"><b><u>Note 2 - Contingencies</u></b></font></p>
<p style="margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">In accordance with the standards
on contingencies, the Company accrues a loss contingency if it is probable and can reasonably be estimated or a liability has
been incurred at the date of the financial statements. If both of these conditions are not met, or if an exposure to loss exists
in excess of the amount accrued, disclosure of the contingency shall be made when there is at least a reasonable possibility that
a loss or an additional loss may have been incurred. The Company is exposed to legal claims encountered in the normal course of
business. See Note 3, “Litigation”. Management believes that the ultimate resolution of these matters will not have
a material adverse effect on the operating results or the financial position of the Company.</font></p>
<p style="text-align: justify; text-indent: 0; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"><b><u>Note
3 - Litigation</u></b></font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">The Company is engaged in various
legal actions, claims and proceedings arising in the normal course of business, including claims related to breach of contracts,
product liabilities and intellectual property matters resulting from the Company’s business activities. As with most actions
such as these, an estimation of any possible and/or ultimate liability cannot always be determined. The following summaries highlight
the current status of certain material commercial litigation in which the Company is involved.</font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">On May 17, 2013 and on January
31, 2014 the Company received demand letters from the Environmental Research Corporation, “ERC” requesting substantiation
of compliance with the State of California’s Proposition 65 regulations for ten of its products. In October, while the Company
was awaiting the results of the compliance testing, ERC contacted the Company again requesting settlement to their initial demand
letter. And in February 2014, before compliance testing or any other demand letter validation was completed, ERC contacted the
Company again requesting settlement to their second demand letter. After many discussions with ERC, a lawsuit was filed by ERC
for the non-compliance issues with the State of California’ Proposition 65 regulations. Along with the company’s California
counsel the company has begun the process of discovery from both sides. The Company continues to remain in communication with
ERC and their counsel with the intent to settle the mutual disputes. The Company believes that there is a reasonable possibility,
as defined by FASB ASC 450-20, of an unfavorable outcome. However, the range of any possible loss cannot be reasonably estimated
as of the date of the financial statements.</font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">On March 24, 2014 the Company
received a summons in a civil action filed by Wise Sports Nutrition, LLC claiming alleged trademark infringement for iSatori’s
Garcinia Trim product. Company counsel has made contact with the plaintiff’s attorney and filed a response to the alleged
trademark infringement with the Company’s counterclaims. The Company believes the counterclaims have strong merit and are
pursuing their defense. Both parties have prepared responses and presented them to the court. The case has currently been stayed
pending a ruling on the motion made by the Company to stay the case. The Company believes that it is too early in the proceedings
to make a determination of either a favorable or unfavorable outcome. Therefore, no range of any possible gain or loss can be
reasonably estimated as of the date of the financial statements.</font></p>
<p style="text-align: justify; text-indent: 0; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"><b><u>Note
4 - Income Taxes</u></b></font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">For the three months ended September
30, 2014 and 2013, the Company recognized income tax expense of $18,144, and expense of $73,608, respectively.</font></p>
<p style="margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">For the nine months ended September
30, 2014, the Company recognized income tax expense of $97,349, and for the nine months ended September 30, 2013, the Company
recognized an income tax benefit of $110,606.</font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">The difference between the nine
months ended September 30, 2014 effective rate of 48.64% and the Federal statutory rate of 35.0% is primarily due to state and
foreign income taxes (net of federal benefit), change in the valuation allowance, and an adjustment to the income tax receivable.</font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">At September 30, 2014 management
believes there are no uncertain tax positions.</font></p>
<p style="text-align: justify; text-indent: 0; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"><b><u>Note
5- Stockholders’ Equity</u></b></font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">At September 30, 2014, there
were 12,896,852 shares of common stock, par value $.01 per share, outstanding for the Company.</font></p>
<p style="margin: 0"> </p>
<p style="margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The Company issued warrants, now totaling 420,549
shares, to purchase 3% of fully diluted shares of the common stock of the Company to Breakwater Structured Growth Opportunity
Fund, L.P., with an imputed exercise price equal to approximately one-hundredth of a dollar in connection with a $1.025 million
subordinated mezzanine loan arrangement. These warrants are fully vested and expire on June 15, 2016. The Company used a lattice
model in developing a fair value for the Breakwater warrant obligation at September 30, 2014, using a quoted stock value of $.55
per share, which represents a discount of 50% from the closing stock price. This reduction was based on the application of a discount
for lack of liquidity. Other assumptions used in the above valuations include (a) risk-free interest rate of .58% based on duration,
(b) weighted average expected term years of 1.79 (c) weighted average expected stock volatility of 37.46% (e) expected dividends
of 0%, (f) stock price movements ranging from 1.05332062 to .94937855 and (g) risk neutral probabilities ranging from .48808915
to .51191085.</font></p>
<p style="margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">The warrant valuation resulted
in income of $52,568 in the Statement of Operations for the three month period ended September 30, 2014, and income of $41,501
in the Statement of Operations for the three month period ended September 30, 2013. For the nine month period ended September
30, 2014, the valuation resulted in income of $244,570 in the Statement of Operations, and for the nine month period ended September
30, 2013 the valuation resulted in expense of $71,398 in the Statement of Operations.</font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">On April 1, 2014, the Company
issued 7,500 shares of its $.01 par value common stock to a business development consultant. The Company considered the fair value
of the shares issued to be the most reliable measure of compensation to the consultant. At the time of the issuance, the Company’s
stock price was $2.17 per share, and therefore the issuance resulted in $16,275 of share based compensation expense for the three
and nine months ended September 30, 2014.</font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; text-indent: 0px; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"><i>2012 Performance
Incentive Plan</i></font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">On September 27, 2012, the Company’s
Board of Directors approved the 2012 Performance Incentive Plan (the Plan”). The Plan allows the Company to promote the
success of the Corporation and to increase stockholder value by providing an additional means through the grant of awards to attract,
motivate, retain and reward selected employees and other eligible persons. Any stock option granted in the form of an incentive
stock option will be intended to comply with the<font style="color: #00007f"> </font>requirements of Section 422 of the Code.
Only stock options granted to employees qualify for incentive stock option treatment. A stock option may be exercised in whole
or in installments, which may be cumulative. Shares of common stock purchased upon the exercise of a stock option must be paid
for in full at the time of the exercise in cash or such other consideration determined by the compensation committee. Payment
may include tendering shares of common stock or surrendering of a stock award, or a combination of methods.</font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">The Plan is administered by the
Plan Administrator, being the Board or one or more committees appointed by the Board or another committee (within its delegated
authority) to administer all or certain aspects of this Plan. The Administrator has full and exclusive power within the limitations
set forth in the Plan to make all decisions and determinations regarding the selection of participants and the granting of awards;
establishing the terms and conditions relating to each award; adopting rules, regulations and guidelines; and interpreting the
Plan.</font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">On January 2, 2014, the Company
issued options to purchase 10,000 shares of the Company’s common stock to an employee with an exercise price of $2.50 per
share and which contain three year vesting schedules of 1/3 each year through October 2016. These options are due to expire on
October 15, 2023.</font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">On February 10, 2014, the Company
issued options to purchase 6,000 shares of the Company’s common stock to an employee with an exercise price of $2.22 per
share and which contain three year vesting schedules of 1/3 each year through February 2017. These options are due to expire on
February 10, 2024.</font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">The Company, in developing a
fair value for the employee options used a current stock price of $1.11-1.25, which represents a discount of 50% from the quoted
stock price for lack of marketability. Other assumptions used in the above valuations include (a) risk-free interest rate of 2.13-2.41%
based on duration, (b) weighted average expected terms ranging from 6.08 to 6.33 years; (c) weighted average expected stock volatility
of 35.22 % and (e) expected dividends of 0%.</font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">The Company has recorded share
based compensation expense due to option issuances under the Plan totaling $5,352 for the three months ended September 30, 2014,
and has recorded share based compensation expense due to option issuances under the Plan totaling $17,474 for the nine months
ended September 30, 2014.</font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">On July 10, 2014, the Company
issued 5,603 shares of restricted stock to members of its board of directors. On September 23, 2014, the Company issued 4,098
shares of restricted stock to a new member of its board of directors. The Company is amortizing total expense related to these
issuances over the restriction period which is equivalent to the directors’ one-year term. The Company has recorded share
based compensation expense due to these issuances of $1,961 for the three months ended September 30, 2014, and share based compensation
expense due to these and prior issuances of $10,087 for the nine months ended September 30, 2014.</font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; text-indent: 0; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"><b><u>Note
6- Revolving Line of Credit and Related Interest</u></b></font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">The Company entered into a renewed
and expanded Credit Agreement with Colorado Business Bank West of Denver, Colorado on August 27, 2014. Borrowings under this agreement
are used to provide ongoing working capital and for other general corporate purposes of the Company.</font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">The agreement provides a revolving
commitment to the Company of $2,000,000. Amounts outstanding under the agreement are reflected in a promissory note with a principal
balance of $2,000,000 and maturity date of November 16, 2015 (the “Promissory Note”). The principal balance on the
Promissory Note bears interest at the one month USD LIBOR rate measured not more often than once per month (the “Index”).
Interest on any unpaid balance under the promissory note will bear interest at the Index plus 3.75% with a minimum interest rate
of 4.00% per annum, and is payable monthly. The agreement requires the Company to comply with certain affirmative covenants, including
a minimum current ratio of 1.5 to 1, a maximum leverage ratio of 2 to 1, and minimum tangible equity capital of $2,750,000 through
November 30, 2014, and $3,000,000 thereafter, as well as providing limitations on dividends, additional indebtedness, and certain
other changes. As of September 30, 2014, the Company was in compliance with these covenants.</font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">The Company’s prior line
of credit with Colorado Business Bank West of Denver, Colorado provided a revolving commitment to the Company in the amount of
$1,500,000 and was in effect since its inception on July 16, 2012 and subsequent renewal on October 16, 2013 through the date
of the renewal and expansion on August 27, 2014. Other terms of the former credit agreement were the same as those of the renewed
and expanded agreement described above.</font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">The outstanding balance on the
Company’s revolving line of credit as of September 30, 2014 and December 31, 2013 was $1,620,519 and $1,220,655, respectively.</font></p>
<p style="text-align: justify; text-indent: 0; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"><b><u>Note
7 - Fair Value Measurements and Disclosures</u></b></font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">The Company follows ASC 820,
Fair Value Measurements and Disclosures, which defines fair value, establishes a framework for using fair value to measure assets
and liabilities, and expands disclosures about fair value measurements. The statement establishes a hierarchy for inputs used
in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring
that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing
the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are
inputs that reflect the Company’s assumptions of what market participants would use in pricing the asset or liability developed
based on the best information available in the circumstances. The hierarchy is broken down into three levels based on the reliability
of the inputs as follows:</font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">Level 1: Quoted prices are available
in active markets for identical assets or liabilities.</font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">Level 2: Quoted prices in active
markets for similar assets and liabilities that are observable for the asset or liability; or</font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">Level 3: Unobservable pricing
inputs that are generally less observable from objective sources, such as discounted cash flow models or valuations.</font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">ASC 820 requires financial assets
and liabilities to be classified based on the lowest level of input that is significant to the fair value measurement. The Company’s
assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation
of the fair value of assets and liabilities and their placement within the fair value hierarchy levels.</font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">For the purposes of marketable
securities where there is an active market, the Company uses the quoted prices available for the identical asset or liability.
As of September 30, 2014, the Company had $42,311 in assets held for sale valued using the Level 1 mark-to-market approach. As
of December 31, 2013, the Company had $108,228 in assets held for sale valued using the Level 1 mark-to-market approach.</font></p>
<p style="margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">For the purposes of the warrant
derivative liability, the Company uses a lattice model and a combination of observable and unobservable inputs; therefore the
fair value measurement of the liability is classified within Level 3 of the hierarchy. The inputs used in the fair value measurements
categorized within Level 3 include the stock price at the valuation date, the exercise price of the warrant, the expected period
of time the warrant will be outstanding, the annual volatility of the underlying stock price, the annual yield rate of quarterly
dividends, and the risk free rate of interest relevant to the expected time period the warrant will be outstanding.</font></p>
<p style="text-align: justify; margin: 0"> </p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">The following table represents
the Company’s assets and liabilities that were accounted for at fair value on a recurring basis by level within the fair
value hierarchy:</font></p>
<p style="margin: 0"></p>
<table cellspacing="0" cellpadding="0" style="margin-top: 0px; font-size: 9pt; width: 100%">
<tr style="font-size: 1pt">
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 6px"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 56px"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 6px"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 6px"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 55px"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 7px"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 6px"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 59px"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 6px"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 6px"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 56px"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 6px"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 6px"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 58px"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 6px"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 6px"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 61px"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr>
<td style="vertical-align: bottom"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="8" style="border-bottom: #000000 1px solid; vertical-align: bottom; font-size: 8.5pt; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>September
30, 2014</b></font></td>
<td style="vertical-align: bottom; font-size: 8.5pt"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="8" style="border-bottom: #000000 1px solid; vertical-align: bottom; font-size: 8.5pt; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>December
31, 2013</b></font></td></tr>
<tr style="vertical-align: bottom">
<td style="font-size: 8.5pt"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="font-size: 8.5pt; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>Level
1</b></font></td>
<td style="font-size: 8.5pt"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="font-size: 8.5pt; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>Level
2</b></font></td>
<td style="font-size: 8.5pt"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="font-size: 8.5pt; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>Level
3</b></font></td>
<td style="font-size: 8.5pt"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="font-size: 8.5pt; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>Level
1</b></font></td>
<td style="font-size: 8.5pt"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="font-size: 8.5pt; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>Level
2</b></font></td>
<td style="font-size: 8.5pt"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="font-size: 8.5pt; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>Level
3</b></font></td></tr>
<tr style="vertical-align: bottom">
<td style="font-size: 8.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-top: #000000 1px solid; font-size: 8.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="font-size: 8.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-top: #000000 1px solid; font-size: 8.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="font-size: 8.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-top: #000000 1px solid; font-size: 8.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="font-size: 8.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-top: #000000 1px solid; font-size: 8.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="font-size: 8.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-top: #000000 1px solid; font-size: 8.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="font-size: 8.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-top: #000000 1px solid; font-size: 8.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: #ebebff">
<td><font style="font: 10pt Times New Roman, Times, Serif">Balance</font></td>
<td style="border-bottom: #000000 3px double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: #000000 3px double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">42,311</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: #000000 3px double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: #000000 3px double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: #000000 3px double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: #000000 3px double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">226,445</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: #000000 3px double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: #000000 3px double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">108,228</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: #000000 3px double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: #000000 3px double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: #000000 3px double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: #000000 3px double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">471,015</font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font: 10pt Times New Roman, Times, Serif">Beginning of Period</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">108,228</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">471,015</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">29,338</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">701,852</font></td></tr>
<tr style="vertical-align: bottom; background-color: #ebebff">
<td><font style="font: 10pt Times New Roman, Times, Serif">Deletions</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(115,881)</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(36,103)</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(87,755)</font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font: 10pt Times New Roman, Times, Serif">Revisions</font></td>
<td style="border-bottom: #000000 1px solid"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: #000000 1px solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">49,964</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: #000000 1px solid"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: #000000 1px solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: #000000 1px solid"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: #000000 1px solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(244,570)</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: #000000 1px solid"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: #000000 1px solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">114,993</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: #000000 1px solid"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: #000000 1px solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: #000000 1px solid"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: #000000 1px solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(143,082)</font></td></tr>
<tr style="vertical-align: bottom; background-color: #ebebff">
<td><font style="font: 10pt Times New Roman, Times, Serif">End of Period</font></td>
<td style="border-bottom: #000000 3px double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: #000000 3px double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">42,311</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: #000000 3px double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: #000000 3px double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: #000000 3px double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: #000000 3px double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">226,445</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: #000000 3px double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: #000000 3px double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">108,228</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: #000000 3px double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: #000000 3px double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: #000000 3px double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: #000000 3px double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">471,015</font></td></tr>
</table>
<p style="margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="margin: 0pt"></p>
<p style="text-align: justify; text-indent: 0; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"><b><u>Note
8 – Subsequent Events</u></b></font></p>
<p style="margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Effective November 1, the Company executed a 50-month
lease of a 17,426 square foot building in Denver, CO to accommodate the growth in inventory and support warehouse operations.
The warehouse operations will be moved prior to year end from its current location at the Golden, CO headquarters.</font></p>
<p style="margin: 0pt"></p>
<p style="margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"><b>Organization and Nature of Business, and Basis
of Presentation</b></font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">iSatori, Inc. (the “Company”)
was incorporated under the laws of the state of Delaware on June 29, 2012. The trading symbol of the Company on OTCQB is “IFIT”.</font></p>
<p style="margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">The Company is engaged in researching,
designing, developing, contracting for the manufacture, marketing, selling and distributing of various branded nutritional and
dietary supplement products for the general nutrition market. The “general nutrition market” may include such activities
as body-building, weight-training, physique enhancement (e.g., increase of lean body mass and decrease in fat mass) and enhanced
athletic performance through increased strength and/or endurance and proper nutrition.</font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">The Company engages in funding
clinical studies with the objective of discovering and/or validating claims of new, efficacious and safe products for the Company’s
relevant market as well as providing necessary and appropriate substantiation for any claims which the Company may use in its
marketing and advertising. The Company markets products which are under its control and which are in some way proprietary to the
Company. Some of the Company’s products are the subject of patents, service marks and or trademarks owned by the Company.</font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"><b>Financial Instruments</b></font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">The Company considers all highly
liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents. Accordingly, cash
and cash equivalents consist of petty cash, checking accounts and money market funds.</font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"><b>Fair Value Measurements</b></font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">ASC 820-10 establishes a framework
for measuring the fair value of assets and liabilities and requires additional disclosure about fair value measurements. ASC 820-10
defines fair value as the price that would be received to sell an asset or paid to transfer a liability in the principal (or most
advantageous market) for the asset or liability in an orderly transaction between market participants at the measurement date.</font></p>
<p style="text-align: justify; margin: 0"> </p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">The Company has a number of financial
instruments, including cash, cash equivalents, receivables, inventory, payables and debt obligations. The carrying amount of cash
and cash equivalents, receivables, accounts payable, accrued expenses and notes payable approximates their fair value because
of the short maturity of these instruments. As further described in Note 7, the Company has issued warrants which are measured
at fair value on a recurring basis and result in a long-term derivative liability on the balance sheet</font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"><b>Trade Receivables and Credit
Policy</b></font></p>
<p style="margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">Trade receivables are uncollateralized
customer obligations due under normal trade terms requiring payment generally within 10-60 days from the invoice date. Accounts
are considered delinquent when outstanding for more than 7 days past due date. The Company does not have a policy of accruing
interest on past due accounts. Payments on trade receivables are applied as instructed per the customer, or to the earliest unpaid
invoices. The allowance for doubtful accounts represents an estimate of amounts considered uncollectible and is determined based
on management’s historical collection experience, adverse situations that may affect the customer’s ability to repay,
and prevailing economic conditions. Specific accounts deemed uncollectible are written off periodically with subsequent receipts
on previously written off accounts credited to bad debt expense.</font></p>
<p style="margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"><b>Inventory Valuation</b></font></p>
<p style="margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">Inventories of nutritional and
dietary supplements are stated at lower of cost or market on a first-in, first-out (FIFO) basis.</font></p>
<p style="margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"><b>Revenue Recognition</b></font></p>
<p style="margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">The Company operates predominantly
as a distributor of its dietary supplement products through traditional large retailers, wholesale distributors, and electronic
intermediaries. Revenue from product sales is recognized upon transfer of title of the Company’s product to its customers.
Net sales represent product sales less actual returns, trade allowances, discounts, and product promotions. Sales to direct customers
have an unconditional money back guarantee for thirty to ninety days after the date of purchase. Sales to a select number of the
retail customers carry a “Sale or Return” Purchase agreement per contract, where if minimum sales thresholds are not
met within required timeframe, the inventory will be returned to the Company for full credit. Other retail customers receive a
percentage discount from invoice to cover any customer returns or damages they may incur. Returns, trade allowances, discounts,
and product promotions were $840,670 and $484,296 for the three month period ended September 30, 2014 and 2013, respectively.
Returns, trade allowances, discounts, and product promotions were $2,200,761 and $1,492,824 for the nine month period ended September
30, 2014 and 2013, respectively.</font></p>
<p style="text-align: justify; margin: 0"> </p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">In addition, the Company provides
allowances for sales returns based upon estimated and known returns. Product returns are recorded as a reduction of net revenues
and as a reduction of the accounts receivable balance.</font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"><b>Cost of Sales</b></font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">The Company purchases its products
directly from third party manufacturers. The Company’s cost of sales include product costs, including any associated materials
used in production, cost of warehousing and distribution. Included in the cost of sales are transit freight and shipping and handling
costs that are incurred by the Company.</font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"><b>Income Taxes</b></font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">The Company utilizes the asset
and liability method of accounting for income taxes. Under this asset and liability method, deferred tax assets and liabilities
are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying
amounts of existing assets and liabilities, and their respective tax bases. Deferred tax assets and liabilities are measured using
enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. </font></p>
<p style="margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"><b>Marketing</b></font></p>
<p style="margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">The Company expenses all production
costs related to advertising costs as they are incurred, including print, digital, and television when the advertisement has been
broadcast or otherwise finished and or distributed. The Company records website costs related to its direct-to-consumer advertisements
in accordance with FASB ASC 340-20 “Capitalized Advertising Costs”. In accordance with FASB ASC 340-20, direct response
advertising costs incurred should be reported as assets and should be amortized over the estimated period of the benefits, based
on the proportion of current period revenue from the advertisements to probable future revenue.</font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"><b>Research and Development Costs</b></font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">Research and development costs,
which includes the funding of clinical research studies, as well as creation and development of new products, are expensed when
incurred.</font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"><b>Distribution, Shipping and
Handling Costs</b></font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">Shipping costs on purchases and
shipping and handling fees related to sales charged to customers are both included in cost of sales. As mentioned in Revenue Recognition,
shipping and handling revenue billed customers are reflected in other revenues.</font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"><b>Concentration of Credit Risk</b></font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">Financial instruments that potentially
subject the Company to concentration of credit risk consist principally of trade accounts receivables. Concentrations of credit
with respect to trade receivables are limited due to the large number of customers comprising the Company’s customer bases
and their dispersion across different geographic locations.</font></p>
<p style="margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"><b>Use of Estimates</b></font></p>
<p style="margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">The preparation of the financial
statements in conformity with accounting principles generally accepted in the United States of America requires management to
make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Significant estimates include but are not limited to the fair value determination of derivative instruments, the valuation allowance
with respect to estimated utilization of net operating losses, estimated allowances for sales returns and collectability of trade
receivables.</font></p>
<p style="margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"><b>Earnings (Loss) Per Share</b></font></p>
<p style="margin: 0"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: justify; margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">Net earnings (loss) per share
is computed by dividing net income (loss) less preferred dividends for the period by the weighted average number of shares of
common stock outstanding during each period. Diluted earnings (loss) per share is computed by dividing net income (loss) less
preferred dividends for the period by the weighted average number of shares of common stock, common stock equivalents and potentially
dilutive securities outstanding during each period.</font></p>
<table cellspacing="0" cellpadding="0" style="margin-top: 0px; font-size: 9pt; width: 100%">
<tr>
<td style="vertical-align: bottom"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="5" style="border-bottom: #000000 1px solid; vertical-align: bottom; font-size: 8.5pt; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>September
30, 2014</b></font></td>
<td style="vertical-align: bottom; font-size: 8.5pt"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="5" style="border-bottom: #000000 1px solid; vertical-align: bottom; font-size: 8.5pt; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>December
31, 2013</b></font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom: #000000 1px solid"><p style="font-size: 8.5pt; text-align: center; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"><b>Carrying</b></font></p>
<p style="font-size: 8.5pt; text-align: center; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"><b>Amount</b></font></p></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom: #000000 1px solid; font-size: 8.5pt; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>Fair
Value</b></font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom: #000000 1px solid"><p style="font-size: 8.5pt; text-align: center; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"><b>Carrying</b></font></p>
<p style="font-size: 8.5pt; text-align: center; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"><b>Amount</b></font></p></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom: #000000 1px solid; font-size: 8.5pt; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>Fair
Value</b></font></td></tr>
<tr style="background-color: #ebebff">
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif"><b>Cash and cash equivalents</b></font></td>
<td style="vertical-align: bottom; width: 10px"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="vertical-align: top; text-align: right; width: 65px"><font style="font: 10pt Times New Roman, Times, Serif">1,153,865</font></td>
<td style="vertical-align: bottom; width: 10px"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; width: 10px"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="vertical-align: top; text-align: right; width: 66px"><font style="font: 10pt Times New Roman, Times, Serif">1,153,865</font></td>
<td style="vertical-align: bottom; width: 10px"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; width: 10px"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="vertical-align: top; text-align: right; width: 65px"><font style="font: 10pt Times New Roman, Times, Serif">822,876</font></td>
<td style="vertical-align: bottom; width: 10px"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; width: 10px"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="vertical-align: top; text-align: right; width: 65px"><font style="font: 10pt Times New Roman, Times, Serif">822,876</font></td></tr>
<tr>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif"><b>Receivables</b></font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="vertical-align: top; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,893,580</font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="vertical-align: top; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,893,580</font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="vertical-align: top; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2,398,178</font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="vertical-align: top; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2,398,178</font></td></tr>
<tr style="background-color: #ebebff">
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif"><b>Accounts Payable</b></font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="vertical-align: top; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,276,642</font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="vertical-align: top; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,276,642</font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="vertical-align: top; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,248,490</font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="vertical-align: top; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,248,490</font></td></tr>
<tr>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif"><b>Derivative Liability</b></font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="vertical-align: top; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">226,445</font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="vertical-align: top; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">226,445</font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="vertical-align: top; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">471,015</font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="vertical-align: top; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">471,015</font></td></tr>
</table>
<table cellspacing="0" cellpadding="0" style="width: 100%; margin-top: 0px; font-size: 9pt">
<tr>
<td style="vertical-align: bottom"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom: #000000 1px solid; vertical-align: bottom"><p style="font-size: 8.5pt; text-align: center; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"><b>September
30,</b></font></p>
<p style="font-size: 8.5pt; text-align: center; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"><b>2014</b></font></p></td>
<td style="vertical-align: bottom; font-size: 8.5pt"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom: #000000 1px solid; vertical-align: bottom"><p style="font-size: 8.5pt; text-align: center; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"><b>December
31,</b></font></p>
<p style="font-size: 8.5pt; text-align: center; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"><b>2013</b></font></p></td></tr>
<tr style="background-color: #ebebff">
<td style="vertical-align: bottom; width: 71%"><font style="font: 10pt Times New Roman, Times, Serif"><b>Trade Receivables</b></font></td>
<td style="vertical-align: bottom; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="vertical-align: top; text-align: right; width: 13%"><font style="font: 10pt Times New Roman, Times, Serif">1,834,174</font></td>
<td style="vertical-align: bottom; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="vertical-align: top; text-align: right; width: 13%"><font style="font: 10pt Times New Roman, Times, Serif">2,323,522</font></td></tr>
<tr>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif"><b>Other</b></font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="vertical-align: top; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">59,406</font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="vertical-align: top; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">74,656</font></td></tr>
<tr style="background-color: #ebebff">
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif"><b>Allowance for doubtful accounts</b></font></td>
<td style="border-bottom: #000000 1px solid; vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: #000000 1px solid; vertical-align: top; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(0)</font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: #000000 1px solid; vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: #000000 1px solid; vertical-align: top; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(0)</font></td></tr>
<tr>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif"><b>Totals</b></font></td>
<td style="border-bottom: #000000 3px double; vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: #000000 3px double; vertical-align: top; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,893,580</font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: #000000 3px double; vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: #000000 3px double; vertical-align: top; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2,398,178</font></td></tr>
</table>
<table cellspacing="0" cellpadding="0" style="width: 100%; margin-top: 0px; font-size: 9pt">
<tr>
<td style="vertical-align: bottom"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom: #000000 1px solid; vertical-align: bottom"><p style="font-size: 8.5pt; text-align: center; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"><b>September
30,</b></font></p>
<p style="font-size: 8.5pt; text-align: center; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"><b>2014</b></font></p></td>
<td style="vertical-align: bottom; font-size: 8.5pt"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom: #000000 1px solid; vertical-align: bottom"><p style="font-size: 8.5pt; text-align: center; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"><b>December
31,</b></font></p>
<p style="font-size: 8.5pt; text-align: center; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"><b>2013</b></font></p></td></tr>
<tr style="background-color: #ebebff">
<td style="vertical-align: bottom; width: 70%"><font style="font: 10pt Times New Roman, Times, Serif"><b>Labels and packaging</b></font></td>
<td style="vertical-align: bottom; width: 2%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="vertical-align: top; text-align: right; width: 13%"><font style="font: 10pt Times New Roman, Times, Serif">170,189</font></td>
<td style="vertical-align: bottom; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="vertical-align: top; text-align: right; width: 13%"><font style="font: 10pt Times New Roman, Times, Serif">120,057</font></td></tr>
<tr>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif"><b>Raw materials</b></font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="vertical-align: top; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">284,560</font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="vertical-align: top; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">207,320</font></td></tr>
<tr style="background-color: #ebebff">
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif"><b>Finished goods</b></font></td>
<td style="border-bottom: #000000 1px solid; vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: #000000 1px solid; vertical-align: top; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2,191,558</font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: #000000 1px solid; vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: #000000 1px solid; vertical-align: top; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,658,387</font></td></tr>
<tr>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif"><b>Totals</b></font></td>
<td style="border-bottom: #000000 3px double; vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: #000000 3px double; vertical-align: top; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2,646,307</font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: #000000 3px double; vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: #000000 3px double; vertical-align: top; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,985,764</font></td></tr>
</table>
<table cellspacing="0" cellpadding="0" style="margin-top: 0px; font-size: 9pt; width: 100%">
<tr>
<td style="vertical-align: bottom"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: bottom"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="3" style="vertical-align: bottom"><p style="font-size: 8.5pt; text-align: center; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"><b>Three
Months Ended</b></font></p>
<p style="font-size: 8.5pt; text-align: center; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"><b>September
30,</b></font></p></td>
<td style="vertical-align: bottom; font-size: 8.5pt"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="3" style="vertical-align: bottom"><p style="font-size: 8.5pt; text-align: center; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"><b>Nine
Months Ended</b></font></p>
<p style="font-size: 8.5pt; text-align: center; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"><b>September
30,</b></font></p></td></tr>
<tr style="vertical-align: bottom">
<td style="font-size: 8.5pt"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font-size: 8.5pt; width: 18px"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: #000000 1px solid; font-size: 8.5pt; text-align: center; width: 73px"><font style="font: 8pt Times New Roman, Times, Serif"><b>2014</b></font></td>
<td style="font-size: 8.5pt; width: 7px"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: #000000 1px solid; font-size: 8.5pt; text-align: center; width: 73px"><font style="font: 8pt Times New Roman, Times, Serif"><b>2013</b></font></td>
<td style="font-size: 8.5pt; width: 5px"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: #000000 1px solid; font-size: 8.5pt; text-align: center; width: 73px"><font style="font: 8pt Times New Roman, Times, Serif"><b>2014</b></font></td>
<td style="font-size: 8.5pt; width: 7px"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: #000000 1px solid; font-size: 8.5pt; text-align: center; width: 73px"><font style="font: 8pt Times New Roman, Times, Serif"><b>2013</b></font></td></tr>
<tr style="vertical-align: bottom; background-color: #ebebff">
<td><font style="font: 10pt Times New Roman, Times, Serif">Basic weighted average common shares outstanding</font></td>
<td style="font-size: 8.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">12,892,515</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">12,878,216</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">12,886,216</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">12,730,371</font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font: 10pt Times New Roman, Times, Serif">Stock options (exercise price – $0.573-$2.50/share)</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">334,647</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">430,132</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">398,922</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">460,587</font></td></tr>
<tr style="vertical-align: bottom; background-color: #ebebff">
<td><font style="font: 10pt Times New Roman, Times, Serif">Warrants (exercise price – $0.001-$2.25/share)</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">417,418</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">426,744</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">418,226</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">432,280</font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font: 10pt Times New Roman, Times, Serif">Total common stock equivalents</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">13,644,580</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">13,735,092</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">13,703,364</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">13,623,238</font></td></tr>
</table>
<table cellspacing="0" cellpadding="0" style="margin-top: 0px; font-size: 9pt; width: 100%">
<tr>
<td style="vertical-align: bottom"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="8" style="border-bottom: #000000 1px solid; vertical-align: bottom; font-size: 8.5pt; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>September
30, 2014</b></font></td>
<td style="vertical-align: bottom; font-size: 8.5pt"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="8" style="border-bottom: #000000 1px solid; vertical-align: bottom; font-size: 8.5pt; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>December
31, 2013</b></font></td></tr>
<tr style="vertical-align: bottom">
<td style="font-size: 8.5pt"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="font-size: 8.5pt; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>Level
1</b></font></td>
<td style="font-size: 8.5pt"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="font-size: 8.5pt; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>Level
2</b></font></td>
<td style="font-size: 8.5pt"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="font-size: 8.5pt; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>Level
3</b></font></td>
<td style="font-size: 8.5pt"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="font-size: 8.5pt; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>Level
1</b></font></td>
<td style="font-size: 8.5pt"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="font-size: 8.5pt; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>Level
2</b></font></td>
<td style="font-size: 8.5pt"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="font-size: 8.5pt; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>Level
3</b></font></td></tr>
<tr style="vertical-align: bottom">
<td style="font-size: 8.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-top: #000000 1px solid; font-size: 8.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="font-size: 8.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-top: #000000 1px solid; font-size: 8.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="font-size: 8.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-top: #000000 1px solid; font-size: 8.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="font-size: 8.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-top: #000000 1px solid; font-size: 8.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="font-size: 8.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-top: #000000 1px solid; font-size: 8.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="font-size: 8.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-top: #000000 1px solid; font-size: 8.5pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: #ebebff">
<td><font style="font: 10pt Times New Roman, Times, Serif">Balance</font></td>
<td style="border-bottom: #000000 3px double; width: 6px"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: #000000 3px double; text-align: right; width: 56px"><font style="font: 10pt Times New Roman, Times, Serif">42,311</font></td>
<td style="width: 6px"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: #000000 3px double; width: 6px"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: #000000 3px double; text-align: right; width: 55px"><font style="font: 10pt Times New Roman, Times, Serif">0</font></td>
<td style="width: 7px"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: #000000 3px double; width: 6px"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: #000000 3px double; text-align: right; width: 59px"><font style="font: 10pt Times New Roman, Times, Serif">226,445</font></td>
<td style="width: 6px"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: #000000 3px double; width: 6px"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: #000000 3px double; text-align: right; width: 56px"><font style="font: 10pt Times New Roman, Times, Serif">108,228</font></td>
<td style="width: 6px"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: #000000 3px double; width: 6px"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: #000000 3px double; text-align: right; width: 58px"><font style="font: 10pt Times New Roman, Times, Serif">0</font></td>
<td style="width: 6px"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: #000000 3px double; width: 6px"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: #000000 3px double; text-align: right; width: 61px"><font style="font: 10pt Times New Roman, Times, Serif">471,015</font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font: 10pt Times New Roman, Times, Serif">Beginning of Period</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">108,228</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">471,015</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">29,338</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">701,852</font></td></tr>
<tr style="vertical-align: bottom; background-color: #ebebff">
<td><font style="font: 10pt Times New Roman, Times, Serif">Deletions</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(115,881)</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(36,103)</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(87,755)</font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font: 10pt Times New Roman, Times, Serif">Revisions</font></td>
<td style="border-bottom: #000000 1px solid"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: #000000 1px solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">49,964</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: #000000 1px solid"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: #000000 1px solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: #000000 1px solid"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: #000000 1px solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(244,570)</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: #000000 1px solid"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: #000000 1px solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">114,993</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: #000000 1px solid"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: #000000 1px solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: #000000 1px solid"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: #000000 1px solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(143,082)</font></td></tr>
<tr style="vertical-align: bottom; background-color: #ebebff">
<td><font style="font: 10pt Times New Roman, Times, Serif">End of Period</font></td>
<td style="border-bottom: #000000 3px double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: #000000 3px double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">42,311</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: #000000 3px double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: #000000 3px double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: #000000 3px double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: #000000 3px double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">226,445</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: #000000 3px double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: #000000 3px double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">108,228</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: #000000 3px double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: #000000 3px double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: #000000 3px double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: #000000 3px double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">471,015</font></td></tr>
</table>
13703364
13644580
13735092
13623238
2015-11-16
The agreement requires the Company to comply with certain affirmative covenants, including a minimum current ratio of 1.5 to 1, a maximum leverage ratio of 2 to 1, and minimum tangible equity capital of $2,750,000 through November 30, 2014, and $3,000,000 thereafter, as well as providing limitations on dividends, additional indebtedness, and certain other changes.
As of September 30, 2014, the Company was in compliance with the credit facility covenants.
P50M
9701
0
4375