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Managements Plans for Continuing Operations
3 Months Ended
Mar. 31, 2012
Managements Plans for Continuing Operations [Text Block]

Note 10.   Management’s Plans for Continuing Operations

The Company has incurred a net loss of $4,431,853 for the three month period ended March 31, 2012.  The loss for the three month period ended March 31, 2012 is largely due to sales promotions and sales discounts related to the launch of BluScience retail dietary supplement products at retail distribution channels.  For the three months ended March 31, 2012, sales promotions, sales discounts and returns for BluScience retail dietary supplement products segment totaled $2,249,168.  This resulted in negative net sales of $69,742 for BluScience retail dietary supplement products segment for the three months ended March 31, 2012, as the gross sales were $2,179,426.  In addition, we incurred heavy sales and marketing expenses in support of the launch of BluScience retail dietary supplement products.  For the three months ended March 31, 2012, sales and marketing expenses for BluScience retail dietary supplement products segment was $1,383,718. We expect the launch of BluScience (and future new products) to consume significant selling and marketing expenses.  We are evaluating the revenues from BluScience and adjusting our expected expenditures in light of our remaining capital available and expected revenues to account for the possibility that we may not be able to raise additional capital in the near term.
   
Management’s anticipation of future growth is largely related to the line of proprietary ingredients offered by the Company and the demand for BluScience retail dietary supplement products containing these ingredients.
 
Management believes it will be able to support operations of the Company with its current cash, cash equivalents and cash from operations through December, 2012.  In addition, as of March 31, 2012, the Company has 8,553,564 warrants outstanding with an exercise price of $0.21 per share.  Assuming the full exercise of the outstanding warrants for cash, the Company would receive additional proceeds of $1,796,248.   There is no guarantee that the holders of these warrants will exercise any of the outstanding warrants for cash, and the Company will not receive any proceeds from any of the outstanding warrants until they are exercised.  If the Company determines that it needs additional financing to further enable it to achieve its long-term strategic objectives, there can be no assurance that it will be available on terms favorable to it or at all.   If adequate financing is not available, the Company will further delay, postpone or terminate product and service expansion and curtail selling, general and administrative operations, which commenced in the first and second quarters of 2012. The inability to raise additional financing may have a material adverse effect on the future performance of the Company.