NOTE 2 – GOING CONCERN

The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which assumes continuity of operations and realization of assets and liabilities in the ordinary course of business. Since their formation, the Company and its subsidiaries have operated at a loss. At September 30, 2014, the Company had an accumulated deficit of $180,294 and a total stockholders’ deficit of $853. Through 2003, these losses were primarily associated with start-up activities and brand and infrastructure development. Since then, losses were primarily attributable to lower than planned sales resulting from high customer inventory positions at the beginning of the year, delayed product introductions and postponed marketing activities, merger-related and other restructuring costs, and interest and refinancing charges associated with the Company’s debt refinancing. Losses have been funded primarily through issuance of preferred and common stock, borrowings from the Company’s stockholders, and third-party debt of which a significant amount has been personally guaranteed by certain of the Company’s stockholders.

Because of this history of operating losses and significant interest expense on the Company’s debt, the Company has a working capital deficiency of $2,863 at September 30, 2014. The Company also has significant debt due within the next 12 months.

Management continues to address and make significant progress with the operating issues; however, these continuing conditions raise substantial doubt about the Company's ability to continue as a going concern.

Management has addressed operating issues through the following actions: focusing on growing the core business and brands, with international expansion; continuing emphasis on major customers and private label opportunities with major customers, key products and introducing new products; and reducing manufacturing and operating costs and continuing to negotiate lower prices from major suppliers. Management believes that it will be able to restructure the debt obligations that are currently due in 2014 to extend the due date to years subsequent to 2014; however, there can be no assurance that the Company will be able to restructure its existing debt obligations or meet its debt obligations as they become due. In connection with the Merger, management was able to convert a majority of the Company’s outstanding debt to equity. Additionally, management believes that by improving operations, continuing to focus on cost reductions, and restructuring debt payment obligations as discussed above, the Company will be able to fund operations over the next twelve months; however, there can be no assurance that the Company will be able to improve operations, reduce costs, or, as discussed above, restructure remaining debt obligations.

The condensed consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.