RESTATEMENT OF FINANCIAL STATEMENTS

9 Months Ended

Sep. 30, 2015

9.RESTATEMENT OF FINANCIAL STATEMENTS

On November 10, 2015, the Company, together with its Audit Committee, concluded that investors should no longer rely on the previously issued unaudited condensed financial statements as of and for the three and six months ended June 30, 2015 (the “Affected Periods”) in the Original Report. The Company reached its conclusion after discussion with its Audit Committee and a joint discussion with its independent registered public accounting firm. The Company also identified a material weakness in its internal controls as of June 30, 2015. The Company is taking steps to remediate this weakness.

In the course of preparing the condensed financial statements as of and for the three and nine months ended September 30, 2015, the Company discovered an error in the total amount of raw materials in the detailed subsidiary ledger as of June 30, 2015. The Company’s raw materials subsidiary ledger is in a spreadsheet format. Such error resulted from an incorrect summation of individual inventory amounts in the spreadsheet. This resulted in the recording of incorrect raw materials and cost of goods sold amounts in the Company’s general ledger which was used to prepare the unaudited condensed financial statements in the Original Report. Consequently, raw materials inventories were understated by $596,000 as of June 30, 2015 and cost of goods sold was overstated by $596,000 for the Affected Periods.

The following table illustrates the effect on each restated line item:

		As of June 30, 2015

Condensed Balance Sheets		Previously Reported			Adjustments			As Restated
Inventories, net	$	5,504,764		$	596,000		$	6,100,764
Total current assets	$	30,670,892		$	596,000		$	31,266,892
Total assets	$	42,053,755		$	596,000		$	42,649,755
Retained deficit	$	(27,437,834	)	$	596,000		$	(26,841,834	)
Total stockholders’ equity	$	31,764,545		$	596,000		$	32,360,545
Total liabilities and stockholders’ equity	$	42,053,755		$	596,000		$	42,649,755

		For the Three Months Ended June 30, 2015

Condensed Statements of Operations		Previously Reported			Adjustments			As Restated

Cost of manufactured product	$	4,152,282		$	(596,000	)	$	3,556,282
Total cost of sales	$	4,710,241		$	(596,000	)	$	4,114,241
Gross profit	$	2,005,229		$	596,000		$	2,601,229
Loss from operations	$	(1,836,322	)	$	596,000		$	(1,240,322	)
Net income (loss) before income taxes	$	5,844,675		$	596,000		$	6,440,675
Net income (loss)	$	5,842,630		$	596,000		$	6,438,630
Earnings (loss) applicable to common shareholders	$	5,615,076		$	596,000		$	6,211,076
Basic earnings (loss) per share	$	0.20					$	0.22
Diluted earnings (loss) per share	$	0.19					$	0.21

		For the Six Months Ended June 30, 2015

Condensed Statements of Operations		Previously Reported			Adjustments			As Restated

Cost of manufactured product	$	7,414,289		$	(596,000	)	$	6,818,289
Total cost of sales	$	8,490,530		$	(596,000	)	$	7,894,530
Gross profit	$	4,403,516		$	596,000		$	4,999,516
Loss from operations	$	(2,731,419	)	$	596,000		$	(2,135,419	)
Net income (loss) before income taxes	$	4,902,374		$	596,000		$	5,498,374

		For the Six Months Ended June 30, 2015

Condensed Statements of Operations		Previously Reported			Adjustments			As Restated
Net income (loss)	$	4,898,285		$	596,000		$	5,494,285
Earnings (loss) applicable to common shareholders	$	4,442,982		$	596,000		$	5,038,982
Basic earnings (loss) per share	$	0.16					$	0.18
Diluted earnings (loss) per share	$	0.15					$	0.17

		For the Six Months Ended June 30, 2015

Condensed Statements of Cash Flows		Previously Reported			Adjustments			As Restated
Net income (loss)	$	4,898,285		$	596,000		$	5,494,285
Inventories	$	(841,216	)	$	(596,000	)	$	(1,437,216	)