3. GOING CONCERN

12 Months Ended

Dec. 31, 2016

Going Concern

GOING CONCERN

The Company has continuously incurred losses from operations, however, the operating loss in 2016 includes a significant nonrecurring expense in the amount of $818,665, primarily a non-cash loss on the issuance of warrants for services valued at $758,665. Without this non-cash expense, operating income was $342,918 for 2016. See NOTE 4 below for a discussion of this expense. On December 31, 2016, the Company has a working capital balance of $601,654. The Company has adopted a robust operating plan for 2017 that projects existing cash and future cash to be generated from operations will satisfy our foreseeable working capital, debt repayment and capital expenditure requirements for at least the next twelve months. However, minimal funding may be required at certain times during the year due to the timing of significant expenditures such as inventory purchases. The Company believes it will be able to obtain such funding, if required during 2017. We will also monitor our cash flow; assess our business plan; and make expenditure adjustments accordingly.

Based upon the Company's current ability to obtain additional financing or equity capital and to achieve profitable operations, it is not appropriate at this time to continue using the going concern basis.