Restatement of Previously Issued Financial Statements

9 Months Ended

Sep. 28, 2013

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Note 2. Restatement of Previously Issued Financial Statements

On November 18, 2013, during the review of the interim financial statements, the Company determined that the previously issued financial statements for the three month period and the six month period ending March 30, 2013 and June 29, 2013, respectively, contained in the Company’s Quarterly Reports on Form 10-Q (“ Quarterly Reports”) for the period ended March 30, 2013 (as filed with the Securities and Exchange Commission on May 10, 2013) and June 29, 2013 (as filed with the Securities and Exchange Commission on August 13, 2013), respectively, should no longer be relied upon because of certain non-cash errors in the Quarterly Reports and that those financial statements (the “Financial Statements”) would be restated to make the necessary accounting adjustments.

The financial statements filed for the three month period ended March 30, 2013 and the six month period ended June 29, 2013 contained a misstatement pertaining to the accounting treatment of the sale of the BluScience assets to NeutriSci International, Inc. (“NeutriSci”) (See Note 4). The value of the equity and the senior secured convertible note that the Company received from NeutriSci as part of the purchase price were originally accounted for at their stated values which resulted in the Company recognizing a gain on the sale of the BluScience assets. Due to the inability to make a reliably determinable estimate of the fair value of the NeutriSci equity securities and the ultimate collectability of the note received as consideration, management has determined that the proper accounting for the sale transaction is the cost recovery method. Under the cost recovery method, no gain on the sale will be recognized until the Company’s cost basis in the net assets sold has been recovered. In addition, the Company originally accounted for its investment in NeutriSci under the cost method where it has now be determined that the equity method should have been used. The Company expects all amendments and restatements to the Financial Statements affected to be non-cash in nature.

The Company has determined that the restatements of its Financial Statements resulted from a material weakness in its internal control over financial reporting, specifically related to its process and procedures related to the accounting for sale of assets in exchange for non-cash consideration. More information regarding the Company’s controls and procedures is set forth in Part I, Item 4 of this Form 10-Q.

The necessary accounting adjustments have been made to the Company’s financial statements for the nine month period ended September 28, 2013 presented in this Form 10-Q.

The Company will restate the Financial Statements to correct the errors noted above and file amendments to the previous periods Quarterly Reports with the Securities and Exchange Commission as soon as practicable. The correction of the errors will restate the previously issued Financial Statements as follows:

Statement of Operations (Unaudited)
For the Three Month Period Ended March 30, 2013
	Previously Reported			Restatement Adjustments			As Restated
Sales	$	2,334,566		$	-		$	2,334,566
Gross profit		672,840			-			672,840
Net income (loss)	$	1,468,525		$	(2,892,597	)	$	(1,424,072	)
Basic net income (loss) per common share	$	0.02		$	(0.03	)	$	(0.02	)
Diluted net income (loss) per common share	$	0.01		$	(0.03	)	$	(0.02	)
Statement of Operations (Unaudited)
For the Three Month Period Ended June 29, 2013
	Previously Reported			Restatement Adjustments			As Restated
Sales	$	2,706,896		$	-		$	2,706,896
Gross profit		960,738			-			960,738
Net loss	$	(989,722	)	$	(31,144	)	$	(1,020,866	)
Basic and Diluted net loss per common share	$	(0.01	)	$	(0.00	)	$	(0.01	)
Statement of Operations (Unaudited)
For the Six Month Period Ended June 29, 2013
	Previously Reported			Restatement Adjustments			As Restated
Sales	$	5,041,462		$	-		$	5,041,462
Gross profit		1,633,578			-			1,633,578
Net income (loss)	$	478,803		$	(2,923,741	)	$	(2,444,938	)
Basic net income (loss) per common share	$	0.00		$	(0.03	)	$	(0.03	)
Diluted net income (loss) per common share	$	0.00		$	(0.03	)	$	(0.03	)
Balance Sheet (Unaudited) March 30, 2013
	Previously Reported			Restatement Adjustments			As Restated
Total assets	$	10,717,431		$	(2,892,597	)	$	7,824,834
Total liabilities		3,983,157			-			3,983,157
Total stockholder's equity	$	6,734,274		$	(2,892,597	)	$	3,841,677
Balance Sheet (Unaudited)
June 29, 2013
	Previously Reported			Restatement Adjustments			As Restated
Total assets	$	10,945,473		$	(2,923,741	)	$	8,021,732
Total liabilities		3,753,218			-			3,753,218
Total stockholder's equity	$	7,192,255		$	(2,923,741	)	$	4,268,514