UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)

x☒ Quarterly Report Pursuant To Section 13 Or 15(d) Of The Securities Exchange Act Of 1934

For quarterly period ended ~~December~~June 3130, ~~2011~~2015

¨☐ Transition Report Pursuant To Section 13 Or 15(d) Of The Securities Exchange Act Of 1934

For the transition period from _____ to _____

COMMISSION FILE NUMBER 033-24138-D

IMAGENETIX, INC. ~~(Exact name of registrant as specified in its charter)~~

(Exact name of registrant as specified in its charter)

	NEVADA				87-0463772
(State or other jurisdiction of incorporation or organization)				(I.R.S. Employer Identification No.)

10845 Rancho Bernardo Road, Suite 105 ~~San Diego, California 92127 (Address of principal executive offices)~~

San Diego, California 92127

(Address of principal executive offices)

Registrant’s telephone number (including area code) (858) 674-8455

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x ☒ No ☐ ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ~~Yes x No ¨~~

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

Large accelerated filer ¨☐ Accelerated filer ¨☐ Non-accelerated filer ¨☐ Smaller reporting company x☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ~~Yes ¨ No x~~

~~State the number of shares outstanding of each of the issuer's classes~~Yes ~~of common equity, as of the latest practicable date:~~☐ No ☒

Common Stock, $.001 par value		11,811,288
(Class)		Outstanding at February 14, 2012

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13, or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

Yes ☒ No ☐

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date:


Common Stock, $.001 par value		28,422,955

(Class)		Outstanding at August 14, 2015

Imagenetix, Inc.

INDEX

			Page	~~Page~~
PART I. FINANCIAL INFORMATION
PART I.	FINANCIAL INFORMATION
Item 1.	~~Item~~Financial 1.Statements:	~~Financial Statements:~~
		Condensed Consolidated Balance Sheets as of December 31, 2011 (unaudited) and March 31, 2011		3
	Condensed Consolidated Balance Sheets as of June 30, 2015 (unaudited) and March 31, 2015		3
		Condensed Consolidated Statements of Operations for the three and nine months ended December 31, 2011 and 2010 (unaudited)		4
	Condensed Consolidated Statement of Operations for the three months ended June 30, 2015 (unaudited)		4
		Condensed Consolidated Statements of Cash Flows for the nine months ended December 31, 2011 and 2010 (unaudited)		5
	Condensed Consolidated Statement of Stockholders’ Equity for the three months ended June 30, 2015 (unaudited)		5
		Notes to Unaudited Condensed Consolidated Financial Statements		6
	Condensed Consolidated Statement of Cash Flows for the three months ended June 30, 2015 (unaudited)		6
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		13
	Notes to Unaudited Condensed Consolidated Financial Statements		7
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk		*
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		14
	Item 4T.	Controls and Procedures		21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		*
PART II. OTHER INFORMATION
Item 4T.	Controls and Procedures		20
	Item 1.	Legal Proceedings		21
PART II.	OTHER INFORMATION
	Item 1A.	Risk Factors		22
Item 1.	Legal Proceedings		*
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		*
Item 1A.	Risk Factors		20
	Item 3.	Defaults Upon Senior Securities		*
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		23
	Item 4.	Reserved		*
Item 3.	Defaults Upon Senior Securities		*
	Item 5.	Other Information		*
Item 4.	Reserved		*
	Item 6.	Exhibits		25
Item 5.	Other Information		*
SIGNATURES				25
Item 6.	Exhibits		24
SIGNATURES

* No information provided due to inapplicability of the item.

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

Imagenetix, Inc. Condensed Consolidated Balance Sheets

Condensed Consolidated Balance Sheets


	June 30,			March 31,
	2015			2015
	(Unaudited)			(Audited)
ASSETS

Current assets:
Cash	$	92,389		$	63,444
Accounts receivable, net		383,141			335,617
Inventories, net		115,153			120,470
Prepaid expenses and other current assets		98,990			68,051
Total current assets		689,673			587,582

Property and equipment, net		21,665			22,939
Goodwill		8,205,597			8,205,597
Other assets		21,189			21,782
Total assets	$	8,938,124		$	8,837,900

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:
Short term claims payable	$	500,000		$	500,000
Accounts payable		395,075			284,603
Accrued liabilities		15,690			49,159
Insurance contract payable		48,226			13,001
Customer deposits		37,275			8,500
Total current liabilities		996,266			855,263

Long term claims payable		1,650,000			1,650,000

Stockholders’ equity
Preferred stock, $.001 par value; 5,000,000 shares authorized: none outstanding		—			—
Common stock, $.001 par value; 50,000,000 shares authorized: 28,422,955 and 28,372,955 issued and outstanding at June 30, 2015 and March 31, 2015, respectively		28,422			28,372
Capital in excess of par value		6,333,927			6,325,977
Retained earnings		(70,491	)		(21,712	)
Total stockholders’ equity		6,291,858			6,332,637
Total liabilities and stockholders’ equity	$	8,938,124		$	8,837,900

	December 31,			March 31,
	2011			2011
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	208,517		$	398,997
Accounts receivable, net		486,294			669,976
Receivable from sale of licenses and intellectual property		400,000			1,250,000
Inventories, net		607,893			993,393
Prepaid expenses and other current assets		77,343			131,932
Deferred tax assets		-			127,800
Total current assets		1,780,047			3,572,098
Property and equipment, net		35,558			58,498
Long-term prepaid expenses		-			6,000
Other assets		60,933			80,240
Long-term deferred tax assets		-			2,203,000
Total Assets	$	1,876,538		$	5,919,836
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
Current liabilities:
Secured note payable to a bank	$	-		$	839,000
Secured note payable		721,316			-
Convertible notes		-			300,000
Accounts payable		296,943			820,509
Accrued litigation liability		500,000			-
Accrued liabilities		41,615			71,857
Customer deposits		22,422			15,077
Current deferred revenue		1,750,000			1,750,000
Contract payable		39,853			42,347
Total current liabilities		3,372,149			3,838,790
Stockholders' (deficit) equity
Preferred stock, $.001 par value; 5,000,000 shares
authorized: none outstanding		-			-
Common stock, $.001 par value; 50,000,000 shares
authorized: 11,811,288 issued and outstanding at
December 31, 2011 and March 31, 2011, respectively		11,810			11,810
Capital in excess of par value		13,616,504			13,543,753
Accumulated deficit		(15,123,925	)		(11,474,517	)
Total stockholders' (deficit) equity		(1,495,611	)		2,081,046
Total Liabilities and Stockholders' (Deficit) Equity	$	1,876,538		$	5,919,836

See accompanying notes to unaudited condensed consolidated financial statements.

~~See accompanying notes to unaudited condensed consolidated financial statements.~~3

3Imagenetix, Inc. Condensed Consolidated Statement of Operations (Unaudited)

Imagenetix, Inc.


	Three Months
	Ended
	June 30,
	2015

Net sales
Product sales	$	209,515
Licenses and royalties		168,000
Total net sales		377,515

Cost of sales		92,184

Gross profit		285,331

Operating expenses:
Selling, general and administrative		91,785
Payroll expense		147,864
Consulting expense		96,564
Operating expenses		336,213

Operating loss		(50,882	)

Other income (expense):
Other income		2,103
Total other income		2,103

Loss before income taxes		(48,779	)

Income tax provision		—

Net loss	$	(48,779	)

Basic net loss per share	$	(0.00	)
Fully diluted net loss per share	$	(0.00	)

Basic weighted average common shares outstanding		28,411,966
Fully diluted weighted average common shares outstanding		28,411,966

~~Condensed~~See accompanying ~~Consolidated~~notes ~~Statements~~to ofunaudited ~~Operations~~condensed consolidated financial statements.

~~(Unaudited)~~4

	Three Months Ended						Nine Months Ended
Imagenetix, Inc.
	December 31,			December 31,			December 31,			December 31,
Condensed Consolidated Statement of Stockholders’ Equity
	2011			2010			2011			2010
(Unaudited)
Net sales
	Common Stock						Capital in excess			Retained			Stockholders’
Product sales	$	171,176		$	1,696,394		$	1,269,036		$	6,001,380
	Shares			Amount			of Par Value			Earnings (Losses)			Equity
Licenses and royalties		232,560			-			556,396			-
Balance, March 31, 2015 (audited)		28,372,955		$	28,372		$	6,325,977		$	(21,712	)	$	6,332,637
Total net sales		403,736			1,696,394			1,825,432			6,001,380
Issuance of common stock for services		50,000			50			7,950			—			8,000
Cost of sales		119,963			1,279,231			648,095			3,460,732
Net loss for the period ended June 30, 2015		—			—			—			(48,779	)		(48,779	)
Gross profit		283,773			417,163			1,177,337			2,540,648
Balance, June 30, 2015		28,422,955		$	28,422		$	6,333,927		$	(70,491	)	$	6,291,858
Operating expenses:
Selling, general and administrative		147,233			1,816,058			569,547			3,287,866
Payroll expense		141,553			272,163			436,895			834,375
Consulting expense		161,173			353,169			789,304			1,105,722
Operating expenses		449,959			2,441,390			1,795,746			5,227,963
Operating income (loss)		(166,186	)		(2,024,227	)		(618,409	)		(2,687,315	)
Other income (expense):
Other income		-			5			87			1,177
Litigation loss		-			-			(500,000	)		-
Interest expense		(56,569	)		(43,643	)		(200,286	)		(158,085	)
Other income (expense):		(56,569	)		(43,638	)		(700,199	)		(156,908	)
Income (loss) before income taxes		(222,755	)		(2,067,865	)		(1,318,608	)		(2,844,223	)
Income tax expense (benefit)		-			(865,900	)		2,330,800			(1,108,700	)
Net income (loss)	$	(222,755	)	$	(1,201,965	)	$	(3,649,408	)	$	(1,735,523	)
Basic and diluted net income (loss) per share	$	(0.02	)	$	(0.10	)	$	(0.31	)	$	(0.15	)
Basic and diluted weighted average common shares outstanding		11,811,288			11,811,288			11,811,288			11,645,175

See accompanying notes to unaudited condensed consolidated financial statements.

Imagenetix, Inc. Condensed Consolidated Statements of Cash Flows (Unaudited)

Condensed Consolidated Statements of Cash Flows


	Three months ended
	June 30, 2015
Operating activities:
Net loss	$	(48,779	)
Adjustments to reconcile net loss to cash provided by (used in) operating activities:
Provision for uncollectible accounts receivable		15,298
Issuance of common stock for services		8,000
Amortization and depreciation		1,867
Changes in assets and liabilities:
(Increase) decrease in accounts receivable		(62,822	)
(Increase) decrease in inventories		5,317
(Increase) decrease in other assets		(30,939	)
Increase (decrease) in accounts payable		110,472
Increase (decrease) in accrued liabilities		(33,469	)
Increase (decrease) in customer deposits		28,775
Net cash (used in) operating activities		(6,280	)
Investing activities
Net cash used in investing activities		—
Financing activities:
Proceeds from issuance of insurance contract payable		48,856
Payments against insurance contracts payable		(13,631	)
Net cash provided by financing activities		35,225
Net increase in cash		28,945
Cash, beginning of period		63,444
Cash, end of period	$	92,389

Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for:
Interest	$	—
Income taxes	$	—

Non Cash Operating Activities:
Elimination of accounts receivable reserve	$	73,667

~~(Unaudited)~~See accompanying notes to unaudited condensed consolidated financial statements.

	Nine Months Ended December 31,
	2011			2010
Operating activities:
Net loss	$	(3,649,408	)	$	(1,735,523	)
Adjustments to reconcile net loss
to cash provided by (used in) operating activities:
Amortization and depreciation		42,247			39,057
Provision for doubtful accounts		6,000			(25,000	)
Provision for returns and discounts		-			59,000
Provision for inventory obsolescence		103,526			(40,202	)
Non cash expense related to debt discount on notes		-			5,440
Non cash expense related to issuance of warrants
and granting of stock options		72,751			253,398
Changes in assets and liabilities:
(Increase) decrease in accounts receivable		627,682			55,835
(Increase) decrease in receivable from sale of licenses and
intellectual property		400,000			-
(Increase) decrease in inventories		281,974			402,019
(Increase) decrease in other assets		60,588			(154,265	)
(Increase) decrease in deferred taxes		2,330,800			(1,076,900	)
Increase (decrease) in accounts payable		(523,566	)		(287,114	)
Increase (decrease) in litigation liability		500,000			-
Increase (decrease) in accrued liabilities		(8,925	)		(15,191	)
Increase (decrease) in customer deposits		7,345			(3,299	)
Net cash (used in) provided by operating activities		251,014			(2,522,745	)
Investing activities
Purchases of property and equipment		-			(1,762	)
Net cash used in investing activities		-			(1,762	)
Financing activities:
Payments on contracts payable		(53,517	)		(102,599	)
Proceeds from contracts payable		51,023			91,101
Proceeds from secured note payable		700,000			-
Proceeds from bridge loans, convertible notes
and bank financings		-			1,735,000
Payments on bridge loans		(300,000	)		(410,000	)
Payment on bank financing		(839,000	)		-
Proceeds from exericse of warrants		-			224
Proceeds from sale of common stock		-			400,000
Net cash (used in) provided by financing activities		(441,494	)		1,713,726
Net decrease in cash and cash equivalents		(190,480	)		(810,781	)
Cash and cash equivalents, beginning of period		398,997			981,510
Cash and cash equivalents, end of period	$	208,517		$	170,729
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for:
Interest	$	50,221		$	75,848
Income taxes	$	-		$	-
Non Cash Investing and Financing Activities:
Debt discount on convertible notes	$	-		$	11,105
Deferral of quarterly interest payments	$	26,250		$	-

~~See accompanying notes to unaudited condensed consolidated financial~~IMAGENETIX, ~~statements~~INC.

5Notes to the Unaudited Condensed Consolidated Financial Statements

~~IMAGENETIX, INC~~1. BASIS OF PRESENTATION

~~Notes~~The consolidated financial statements of Imagenetix, Inc. (“Imagenetix”) presented herein have been prepared pursuant to the ~~Unaudited~~rules ~~Condensed~~of ~~Consolidated~~the ~~Financial~~Securities and Exchange Commission for quarterly reports on Form 10-Q and do not include all of the information ~~Statements~~and footnotes required by accounting principles generally accepted in the United States of America.

1In the opinion of management, the interim consolidated financial statements reflect all adjustments of a normal recurring nature necessary for a fair statement of the results for interim periods. ~~BASIS~~ Operating results for the period are not necessarily indicative of the OFresults ~~PRESENTATION~~that may be expected for the year.

~~The consolidated financial statements of Imagenetix, Inc. ("Imagenetix")~~Emergence ~~presented~~from ~~herein~~Bankruptcy have been prepared pursuant to the rules of the Securities and Exchange Commission for quarterly reports on Form 10-Q and do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America. These statements should be read in conjunction with our audited consolidated financial statements and notes thereto included in Form 10-K for the year ended March 31, 2011.

InImagenetix filed for protection under the ~~opinion~~United ofStates ~~management,~~Bankruptcy ~~the~~Code ~~interim~~on ~~consolidated~~December ~~financial statements~~12, ~~reflect~~2012. ~~all~~During ~~adjustments~~the period of atime ~~normal~~from ~~recurring~~December ~~nature~~12, 2012 ~~necessary~~to ~~for~~March a31, ~~fair~~2015 ~~statement~~(the effective date of the ~~results~~Company’s ~~for~~Plan ~~interim~~of ~~periods. Operating~~Reorganization), ~~results for~~ the ~~three~~Company ~~month~~filed ~~periods~~with ~~are~~the ~~not~~SEC ~~necessarily~~on ~~indicative~~Form 8Ks portions of ~~the~~its ~~results~~Monthly ~~that~~Operating ~~may~~Reports beas ~~expected~~filed ~~for~~with the ~~year~~Bankruptcy Court.

~~Going~~The Company’s ~~Concern~~Plan of Reorganization was approved by the Court on September 10, 2014 with an effective date of September 16, 2015. The Plan of Reorganization included an issuance of common stock and warrants for cash, the acquisition of Periodyne, the issuance of common stock to pay professional fees incurred during the proceeding and a compromise to the claims of TriPharma and the unsecured creditors.

~~These~~As ~~financial statements have been prepared~~a onresult aof ~~going concern basis. However, during~~ the ~~nine~~issuance ~~months~~of ~~ended~~common ~~December 31~~stock, ~~2011 and~~ the ~~year ended March 31, 2011, the~~ Company ~~incurred~~ ~~net~~was ~~losses~~eligible ofto ~~$3,649,408~~adopt ~~and~~“fresh-start ~~$2,167,594,~~reporting” ~~respectively,~~which ~~and~~enabled ~~had an accumulated deficit of $15,123,925 and a working capital~~the ~~deficit of $1,592,102 at December 31, 2011. The~~ Company’s ~~ability~~ to ~~continue~~reduce asits aprevious ~~going~~accumulated ~~concern~~deficit ~~is dependent upon its ability~~ to ~~generate~~zero ~~profitable~~as ~~operations~~of in the ~~future~~effective ~~and/or~~date toof ~~obtain~~ the ~~necessary~~Plan ~~financing~~of ~~to meet its obligations and repay its liabilities arising from normal business operations when they come due~~Reorganization. The ~~outcome of these matters cannot be predicted with any~~accompanying ~~certainty~~financial atstatements reflect this ~~time~~election and, ~~as such raise substantial doubt as to the Company’s ability to continue as a going concern. Since inception~~accordingly, the ~~Company~~financial ~~has~~statements ~~satisfied~~for ~~its capital needs through debt and equity financings and expects to fund~~ the ~~Company~~three ~~from these~~months ~~sources~~ended ~~until~~June ~~profitability~~30, ~~is achieved. There can be no assurance that funds will be available at terms favorable to the~~2015 ~~Company~~do ornot ~~that~~reflect ~~future~~comparative ~~profitability can be achieved. The consolidated financial~~ statements dofor ~~not include~~ any ~~adjustments~~prior ~~relating to~~accounting ~~the~~periods. ~~recoverability~~A ~~and~~reconciliation ~~classification~~ of ~~recorded asset amounts or~~ the ~~amounts~~“fresh-start ~~and classification of liabilities that might~~reporting” beis ~~necessary~~included ~~should~~in ~~the~~Note ~~Company be unable to continue as a going concern~~2.

~~Management’s Plans~~Going Concern

~~Management's~~The Company ~~plans~~has historically financed its operations internally and through debt and equity financings. At June 30, 2015, we had cash holdings of $92,389 compared to ~~eliminate~~$63,444 ~~the~~at ~~going~~March ~~concern~~31, ~~situation~~2015. ~~include~~Our net working capital at June 30, 2015, was a deficit of $306,593 ~~but~~compared ~~are~~to a deficit of $267,681 as of March 31, 2015. The Company may incur unknown expenses or may not ~~limited~~be able to meet its revenue forecast, and one or more of these circumstances would require the ~~following:~~Company to seek additional capital. The Company may not be able to obtain equity capital or debt funding on terms that are acceptable. Even if the Company receives additional funding, such proceeds may not be sufficient to allow the Company to sustain operations until it becomes profitable and begins to generate positive cash flows from operations. This raises substantial doubt about the Company’s ability to continue as a going concern.

~~Seek~~The Company ~~all~~may ~~options~~employ ~~available~~cost tocutting ~~successfully~~programs ~~set~~should ~~aside an~~the ~~unfavorable~~revenue ~~interim~~projections ~~ruling~~fall inshort anand ~~ongoing~~alternative ~~arbitration~~debt ~~matter~~or ~~with~~equity ~~TriPharma~~financings ~~LLC~~are not found at terms acceptable to the Company.

~~Increase~~The accompanying ~~revenue~~consolidated ~~from~~financial ~~the~~statements ~~transition~~have ~~from~~been ~~mass~~prepared ~~market~~on ~~sales~~a going concern basis, which contemplates the realization of ~~its~~assets ~~products~~and satisfaction of liabilities in the normal course of business. The financial statements do not include any adjustments relating to athe ~~licensing~~recoverability and ~~royalty~~classification ~~structure~~of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

~~If necessary, the Company will continue cost cutting programs to reduce cash requirements.~~7

~~Earnings Per Share~~IMAGENETIX, INC.

~~We follow the Financial Accounting Standards Board Accounting Standards~~Notes ~~Codification ("ASC") No. 260. Under ASC No. 260, basic earnings per share is calculated as earnings available~~ to ~~common stockholders divided by~~ the ~~weighted~~Unaudited ~~average~~Condensed ~~number~~Consolidated ofFinancial ~~common~~Statements ~~shares outstanding. Diluted earnings per share is calculated as net income divided by the diluted weighted average number of common shares.~~(Continued)

6Earnings Per Share

~~IMAGENETIX~~We follow the Financial Accounting Standards Board Accounting Standards Codification (“ASC”) No. 260. Under ASC No. 260, ~~INC~~basic earnings per share is calculated as earnings available to common stockholders divided by the weighted average number of common shares outstanding. Diluted earnings per share is calculated as net income divided by the diluted weighted average number of common shares.

~~Notes~~The diluted weighted average number of common shares is calculated using the treasury stock method for common stock issuable pursuant to outstanding common stock warrants. For any period in which the ~~Unaudited~~calculation ~~Condensed~~of ~~Consolidated~~loss per share is anti-dilutive, the diluted ~~Financial~~weighted ~~Statements~~average ~~(Continued)~~number of shares is the equivalent to the number of shares outstanding.

~~The diluted weighted average number of common shares is calculated using the treasury stock method for common stock issuable pursuant to outstanding stock options and common stock warrants~~2. ~~See Note~~FRESH-START ~~7 for a discussion of commitments to issue additional shares of common stock and warrants.~~REPORTING

~~Stock~~We ~~Based~~adopted ASC ~~Compensation~~852, Reorganizations, effective as of September 16, 2014, the effective date of the Plan of Reorganization. Under ASC 852 the following pro-forma balance sheet represents the change from the final bankruptcy filing to the initial accounting balances using “Fresh-Start Reporting.”

We account for stock based compensation under ASC Nos. 718 and 505. ASC Nos. 718 and 505 require all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values.8

~~We have selected the Black-Scholes method of valuation for share-based compensation. The charge is recognized in non-cash compensation~~IMAGENETIX, ~~which is included in stock-based compensation expense, on a straight-line~~ ~~basis over the remaining service period based on the options’ original estimate of fair value~~INC.

~~We apply ASC Nos. 718 and 505 in valuing options granted~~ Notes to ~~consultants and estimate~~ the ~~fair~~Unaudited ~~value~~Condensed ofConsolidated ~~such~~Financial ~~options~~Statements using the Black-Scholes option-pricing model. The fair value is recorded as consulting expense as services are provided. Options granted to consultants for which vesting is contingent based on future performance are measured at their then current fair value at each period end, until vested.(Continued)

Research and Development

				Reorganization				Fresh-start
	Predecessor			adjustments				adjiustments				Successor

Cash	$	235,622		$	1,258,087		^1,3	$	—			$	1,493,709
Accounts receivable		206,494			—				(45,692	)	⁵		160,802
Inventory		31,780			34,460		³		(17,500	)	⁵		48,740
Prepaid assets		23,899			—				—				23,899
Property, plant & equipment					—				25,487		⁵		25,487
Goodwill					1,163,383		³		7,042,214		⁵		8,205,597
Intangible assets		23,166			—				—				23,166
Total assets		520,961			2,455,930				7,004,509				9,981,400

Accounts payable- post-petition		532,338			(489,000	)	^1,2		—				43,338
Accrued interest		30,902			—								30,902
Accrued liabilities		23,619			190,393		⁴		—				214,012
Secured liabilities- PRI		726,250			—				—				726,250
Secured liabilities- TriPharma		2,594,884			(194,884	)	⁴		—				2,400,000
Priority tax liability		1,895			(190	)	⁴		—				1,705
Customer deposits		128,100			(57,870	)	³		(61,980	)	⁶		8,250
Unsecured debt- pre-petition		949,628			(717,034	)	⁴		—				232,594
Total liabilities		4,987,616			(1,268,585	)			(61,980	)			3,657,051

Common stock		13,061			15,211		^1,2,3		—				28,272
Additional paid in capital		13,690,254			6,296,077		^1,2,3		(13,690,254	)	⁷		6,296,077
Retained earnings (deficit)		(18,169,970	)		(2,586,773	)	^1,2,3,4		20,756,743		⁷		—
Total stockholders’ equity (deficit)		(4,466,655	)		3,724,515				7,066,489				6,324,349
Total liabilities and stockholders equity	$	520,961		$	2,455,930			$	7,004,509			$	9,981,400

WeReorganization ~~have~~adjustments ~~previously~~reflect ~~incurred~~equity ~~expenses~~funding toof ~~develop~~the ~~our~~plan ~~products~~of ~~and formulas~~reorganization, ~~commission~~issuance ~~entities~~of tocommon ~~perform~~stock ~~clinical~~in ~~trials~~exchange ~~and~~of ~~evaluate~~professional ~~potential products to expand our portfolio. In addition~~fees, we ~~have received a patent for a drug candidate which, if successful, will address periodontal diseases. We have started~~ the ~~initial new~~acquisition ~~drug~~of ~~process~~Periodyne and ~~have completed several animal studies. We did not incurr any research and development expenses during~~ the ~~three~~ ~~and~~discharge ~~nine~~of ~~months~~liabilities ~~ended~~subject ~~December~~to ~~31,~~compromise ~~2011, however we did incur research and development expenses, which are included~~ in ~~general and~~accordance ~~administrative~~with ~~expenses in~~ the ~~statement~~plan of ~~operations,~~reorganization ofas ~~$2,325 and $21,816 for the corresponding periods of the previous fiscal year.~~follows:

2. NEW ACCOUNTING STANDARDS

Issuance of common stock to fund plan of reorganization	¹	$	1,254,800
Issuance of common stock for professional fees	²		790,000
Acquisition of Periodyne	³		1,258,000
Liabilities subject to compromise	⁴		421,715
		$	3,724,515

In May 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2011-04, Fair Value Measurement (Accounting Standards Codification (“ASC”) Topic 820) — Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. The amendments in this ASU result in common fair value measurement and disclosure requirements in U.S. GAAP and international financial reporting standards (“IFRS”). Consequently, the amendments change the wording used to describe many of the requirements in U.S. GAAP for measuring fair value and for disclosing information about fair value measurements. To improve consistency in application across jurisdictions some changes in wording are necessary to ensure that U.S. GAAP and IFRS fair value measurement and disclosure requirements are described in the same way. The ASU also provides for certain changes in current GAAP disclosure requirements, for example with respect to the measurement of level 3 assets and for measuring the fair value of an instrument classified in a reporting entity’s shareholders’ equity. The amendments in this ASU are to be applied prospectively, and are effective during interim and annual periods beginning after December 15, 2011. The adoption of this guidance is not anticipated to have a material impact on our consolidated financial position, results of operations or cash flows.


Fresh-start adjustments to accounts receivable, inventory, property and equipment, and goodwill reflect the adjustment of the assets of the successor to their fair values, including tangible assets not previously recognized:

Accounts receivable		$	(45,692	)
Inventory			(17,500	)
Property and equipment			25,487
Goodwill			7,042,214
Total asset adjustments	⁵	$	7,004,509

Fresh-start adjustments to customer deposits reflects the adjustment of the liabilities of the successor to its fair value:

Customer deposits	⁶	$	(61,980	)

⁽⁷⁾Fresh-start adjustment to retained earnings (deficit) resets accumulated deficit to zero.

IMAGENETIX, INC.

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

~~In May 2011, the FASB issued ASU No~~3. ~~2011-05, Comprehensive~~ ACCOUNTS Income (ASC Topic 220) — Presentation of Comprehensive Income. The amendments from this update will result in more converged guidance on how comprehensive income is presented under both U.S. GAAP and IFRS. With this update to ASC 220, an entity has the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In both choices, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. The amendments in this update do not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income, nor does it affect how earnings per share is calculated or presented. Current U.S. GAAP allows reporting entities three alternatives for presenting other comprehensive income and its components in financial statements. One of those presentation options is to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity. This update eliminates that option. The amendments in this ASU should be applied retrospectively, and are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. The adoption of this guidance is not anticipated to have a material impact on our consolidated financial position, results of operations or cash flows.RECEIVABLE

~~A variety of proposed or otherwise potential accounting standards~~Accounts receivable are ~~currently~~carried ~~under~~at ~~study~~the byexpected ~~standard-setting~~realizable ~~organizations and various regulatory agencies~~value. ~~Because~~ ofAccounts ~~the~~receivable ~~tentative and~~consisted ~~preliminary nature~~ of ~~these proposed standards, management has not determined whether implementation of such proposed standards would be material to~~ the ~~Company’s consolidated financial statements.~~following:

3. ACCOUNTS RECEIVABLE

	June 30,		March 31,
	2015		2015

Accounts receivable	$	383,141	$	393,986
Allowance for doubtful accounts		—		(58,369	)

Accounts receivable, net	$	383,141	$	335,617

~~Accounts~~At June ~~receivable~~30, ~~are~~2015, ~~carried~~we athad ~~the~~three ~~expected realizable~~customers ~~value.~~which ~~Accounts~~accounted for 44%, 33% and 14%, respectfully, of our accounts receivable ~~consisted~~balances. At March 31, 2015, we had five customers which accounted for 49%, 15%, 14%, 11% and 11%, respectfully, of ~~the~~our ~~following:~~accounts receivable balances.

	December 31,			March 31,
	2011			2011
Accounts receivable - trade	$	635,294		$	812,976
Allowance for doubtful accounts		(31,000	)		(25,000	)
Allowance for returns and discounts		(118,000	)		(118,000	)
Accounts receivable, net	$	486,294		$	669,976

For the period ended June 30, 2015, we had three significant customers which accounted for 44%, 29% and 14% of our net sales.

~~At December 31, 2011, we had three customers which accounted for 31%, 22% and 11%, respectfully, of our accounts receivable balances~~4. ~~At March 31, 2011, we had two customers which accounted for 44%, and 37%, respectfully, of our accounts receivable balances.~~ INVENTORIES

~~For the nine months ended December 31, 2011,~~Inventories weare ~~had~~carried ~~one~~at ~~significant~~the ~~customer~~lower ~~who~~of ~~accounted~~cost ~~for~~or ~~50% of sales~~market. ~~For~~Cost ~~the~~is ~~nine~~determined ~~months~~by ~~ended~~the ~~December~~first-in ~~31,~~first-out ~~2010,~~method. weIndirect ~~had~~overhead ~~two~~costs ~~significant~~are allocated ~~customers~~to ~~which~~inventory. ~~accounted~~Inventories ~~for~~consist ~~64% % and 11%, respectfully,~~ of ~~sales.~~the following:

4. INVENTORIES

	June 30,		March 31,
	2015		2015

Finished products	$	115,153	$	120,470
Less reserve for obsolescence		—		—
	$	115,153	$	120,470

~~Inventories~~5. ~~consist of the following:~~GOODWILL

8As a result of adopting “Fresh-Start Reporting” goodwill of $7,042,214 was recognized when accumulated retained deficit was reduced to zero and goodwill of $1,163,383 was recognized on the acquisition of Periodyne.

~~IMAGENETIX, INC.~~10

~~Notes to the Unaudited Condensed Consolidated~~IMAGENETIX, ~~Financial Statements (Continued)~~INC.

	December 31,		March 31,
	2011		2011
Raw materials	$	398,665	$	517,600
Finished products		255,622		375,227
Boxes, labels, tubes & bottles		214,132		257,566
		868,419		1,150,393
Less reserve for obsolescence		260,526		157,000
	$	607,893	$	993,393

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

57. ~~OTHER ASSETS~~ TRIPHARMA SETTLEMENT

~~The~~In ~~following~~November 2011, isa judgment in the amount of approximately $4,500,000 was entered against us as the result of an arbitration ruling in favor of TriPharma LLC, a ~~summary~~previous distributor of ~~intangible~~ours. ~~assets~~As a result of aggressive collection actions taken by TriPharma, we filed a ~~which~~Bankruptcy proceeding in December 2012. As part of the Bankruptcy proceeding we negotiated a reduction in the arbitration award to approximately $2,500,000 with an additional reduction of $500,000 available if we pay any remaining balance by March 16, 2016. However, if we default on payment of the obligation, the amount is increased by $1,000,000. There is no interest on the obligation as long as we are ~~included~~not in ~~“Other~~default ~~Assets”~~and the balance is paid in full by March 16, 2016. Interest will be charged from September 16, 2014 at a rate of 6% if we go into default. As a result of negotiations as to where payments were to be made in December 2014, a payment that was due on December 1, 2014 was not paid until December 16, 2014 when TriPharma issued a Notice of Default. Although we contend that no default took place, we entered into a Forbearance Agreement which deferred the ~~face~~March 1, 2015 payment of $100,000 until June 1, 2015. Again, in June 2015, there arose a dispute as to where payments were to be made and the ~~balance~~Company ~~sheet:~~did not make the deferred payment from March 1, 2015 or the payment that was due on June 1, 2015. TriPharma did not issue a Notice of Default. Eventually, the issue as to whether a default took place in December 2014 and to where payments are to be made may need to be resolved by the Bankruptcy Court.

	December 31,		March 31,
	2011		2011
Trademarks	$	13,032	$	13,032
Patent		172,965		172,965
		185,997		185,997
Less accumulated amortization		125,064		105,757
	$	60,933	$	80,240

The following is the scheduled amounts due, assuming no reduction as a result of early payment and no increase as a result of default, reflected as Long term claims payable as of June 30, 2015:

6. SECURED NOTES PAYABLE

Years ending March 31,
	2016	$	500,000
	2017		450,000
	2018		550,000
	2019		600,000
	2020		50,000
	Total	$	2,150,000

~~In June 2010, we entered into an asset based line of credit with a bank~~8. ~~The terms of the agreement enabled us to borrow up to 65% of our accounts receivables and up to $300,000 of our inventory~~ COMMITMENTS ~~subject~~AND to certain limitations. The maximum amount we could borrow was $1,500,000. As of December 31, 2011, the line of credit was paid off. The interest rate on the outstanding balance was the greater of the prime rate plus 1.75% or 5% (10% in the case of a default) plus a maintenance fee of 0.25% and an annual facility fee of 1% of the maximum borrowing amount. On the payoff of the line of credit, the bank withdrew a secured position it had on the assets of the company.CONTINGINCIES

In May 2011, we entered into a $700,000 secured note payable with the parent company of one of our customers. The terms of the note include quarterly interest payments at a rate of 7.5% for 18 months at the end of which time the entire note is due. In September 2011, two quarterly interest payments were deferred and added to the principal of the note. The note is secured by the assets of the Company. In addition, we agreed to provide a $7 per KG discount on all purchases made by the customer during the 18 month term with a guaranteed minimum discount of $70,000. Since the $7 per KG discount is tied to the financing agreement, we are recognizing this amount as an increase to interest expense.Contingencies

9We are involved in litigation from time to time in the normal course of business.

~~IMAGENETIX~~Management believes there are no claims, ~~INC~~which would have a material effect on our financial position.

~~Notes to the Unaudited Condensed Consolidated~~9. EQUITY ~~Financial Statements (Continued)~~TRANSACTIONS

~~7. DEFERRED~~Common ~~INCOME~~Stock

~~During~~In April ~~fiscal year 2011~~2015, we ~~entered~~issued ~~into a licensing arrangement that is contingent on future performance and obligations. As of December 31~~50, ~~2011, $1,750,~~000 isshares ~~reflected~~of asrestricted ~~deferred~~common ~~income~~stock ~~and $400,000~~to ~~is reflected as~~ a ~~receivable~~consultant ~~from~~in ~~the~~exchange ~~sale~~for ofservices ~~licenses~~at ~~and~~an ~~intellectual~~amount ~~property, the recognition~~ of ~~which will be dependent~~$8,000, onor ~~future~~$0.16 ~~performance~~per ~~and obligations~~share.

8In September 2014, we issued 5,228,333 shares of restricted common stock to a group of individual investors for an aggregate amount of $1,254,800, or $0. ~~COMMITMENTS~~24 per share, related to the financing of our emergence from the Bankruptcy proceeding. In addition, in September ~~AND~~2014, ~~CONTINGINCIES~~we issued 6,583,333 shares of unrestricted common stock to two legal firms as settlement of administrative claims as a result of the Bankruptcy proceeding for an aggregate amount of $790,000, or $0.12 per share, and 3,400,000 shares of restricted common stock to the sole owner of Periodyne LLC for the acquisition of the membership interests in Periodyne LLC for an aggregate amount of $1,258,000, or $0.37 per share.

~~TriPharma Suit~~ 11

~~On April 30~~IMAGENETIX, ~~2010, TriPharma, Inc., a customer of Imagenetix,~~ ~~filed a legal action in the United States Southern District Court of California, case number 10CV0933IEG, related to an Exclusive Marketing and Supply Agreement, as amended on June 19, 2008~~INC. TriPharma asserted that Imagenetix breached the terms of the Agreement and sought injunctive relief and unspecified damages. An unfavorable interim arbitration order was issued against the Company in September 2011 and a final order was issued in November 2011 in an amount of approximately $3,935,000. The Company filed a petition in the United States Southern District of California which was subsequently re-filed in the Superior Court of California, County of San Diego, case number 37-2011-00101044-CU-PA-CTL, to have the arbitration order vacated. While the exact amount of this loss is not known, a reasonable estimate, based on information currently available, is $500,000. This amount has been recognized as a loss in the current period and appears as an accrued litigation liability.

~~Nikken~~Notes to ~~Suit~~the Unaudited Condensed Consolidated Financial Statements (Continued)

~~On April 29, 2011, Imagenetix filed a legal action in the United~~In ~~States~~November ~~Central District of California~~2014, ~~case~~we ~~number~~issued ~~CV11-3727GHK (VBKx)~~100,000 ~~against~~shares ~~Nikken~~of ~~Inc.,~~restricted ~~Et.~~common ~~Al.~~stock ~~Imagenetix~~to ~~claims~~a ~~that~~consultant ~~the defendants~~in ~~infringed~~exchange ~~on its U.S. Patent No. 5,596,676 entitled “Method~~ for ~~the~~services ~~Treatment~~at ofan ~~Osteoarthritis”~~amount ~~and entered into unfair competition under the Lanham Act. Imagenetix seeks damages~~ of ~~approximately~~ $3130,000,~~000 and injunctive relief. The~~ ~~parties~~or ~~filed motions related to this case and a reexamination of the patent has been undertaken by the U~~$0.S.30 ~~Patent~~per ~~and Trademark Office~~share.

~~Contingencies~~Warrants

WeIn September ~~are~~2014, ~~involved~~as inpart ~~litigation~~of ~~from~~the ~~time to~~Plan ~~time~~of inReorganization ~~the~~we ~~normal~~issued ~~course~~warrants to investors, the principal of ~~business~~Periodyne and employees.

~~Management~~A ~~believes there are no such~~summary ~~claims,~~of ~~which~~outstanding ~~would~~warrants ~~have~~is aas ~~material effect on our financial position.~~follows:

Other agreements

	For the Period Ended
		June 30, 2015
				Weighted
				Average
				Exercise
Warrants		Shares		Price
Outstanding at March 31, 2015			8,409,334	$	0.62
Granted			—	$	—
Cancelled			—	$	—
Exercised			—	$	—
Outstanding at June 30, 2015			8,409,334	$	0.62

Exercisable at June 30, 2015			8,409,334	$	0.62

Weighted average fair value of warrants granted during the period				$	—

~~We routinely enter into contracts and agreements with suppliers, manufacturers, consultants, product marketing, and sales representatives in the normal course of doing business~~10. ~~These agreements~~ INCOME ~~can be either short or long term and are normally limited to specific products and~~TAXES

~~marketing~~We ~~opportunities~~have adopted ASC 740 which prescribes a comprehensive model of how a company should recognize, measure, present, and disclose in its financial statements uncertain tax positions that the company has taken or expects to take on a tax return. ASC 740 states that a tax benefit from an uncertain position may be recognized if it is “more likely than not” that the position is sustainable, based upon its technical merits. The tax benefit of a qualifying position is the largest amount of tax benefit that is greater than 50 percent likely of being realized upon ultimate settlement with a taxing authority having full knowledge of all relevant information.

~~9. EQUITY TRANSACTIONS~~12

~~In May 2010~~IMAGENETIX, ~~we issued 800,000 shares of restricted~~ ~~common stock to two institutional investors for an aggregated amount of $400,000, or $0~~INC.~~50 per share.~~

10Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

~~IMAGENETIX~~Upon adoption of ASC 740, ~~INC~~there was no impact to our consolidated financial statements. We estimate that the unrecognized tax benefit will not change significantly within the next twelve months. We will continue to classify income tax penalties and interest as part of general and administrative expense in our statements of operations. Accrued interest on uncertain tax positions is not significant. There are no penalties accrued as of June 30, 2015. The following table summarizes the open tax years for each major jurisdiction:

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

Jurisdiction		Open Tax Years
Federal		2011 – 2013
California		2011 – 2013

~~During~~As ~~the three and nine months ended December 31, 2011,~~ we ~~recorded~~ ~~non-cash~~have ~~compensation~~had ofsignificant $0net ~~and~~operating ~~$44,825,~~loss ~~respectively,~~carry ~~and~~forwards ~~non-cash~~from ~~general and administrative expense of $0 and $18,305, respectively, for stock options and warrants issued to employees and consultants. For~~ the ~~three~~predecessor ~~and nine months ended December 31~~company, ~~2010,~~even weif ~~recorded non-cash~~certain ~~interest~~ of ~~$9,622~~our ~~and~~tax ~~$76,797,~~positions ~~respectively~~were disallowed, asit ais ~~result~~not offoreseen ~~notes~~that we ~~entered~~would ~~into~~have ~~and~~to ~~paid~~pay ~~off~~any ~~during~~taxes in the ~~periods~~near future. ~~We also~~Consequently, ~~recorded~~we ~~non-cash~~do ~~compensation~~not ofcalculate ~~$26,895~~the ~~and $149,145 and non-cash general and administrative expense~~ impact of ~~$9,152~~interest ~~and~~or ~~$27,456 for~~penalties ~~stock~~on ~~options~~amounts ~~and~~that ~~warrants~~might ~~issued~~be ~~to employees and consultants~~disallowed.

~~The~~During the ~~significant~~period ~~assumptions~~ended ~~used~~June in30, ~~the~~2015, ~~Black~~we ~~Sholes~~reviewed ~~model~~our todeferred ~~estimate~~tax assets and determined that, as a result of previous continuing losses, ~~the~~we ~~expenses~~could ~~for~~not ~~the~~expect ~~issuance~~a greater than 50 percent likelihood of ~~stock~~the ~~options~~tax benefits being realized. Accordingly, we will continue to recognize a full valuation allowance against our current and ~~warrants~~long-term ~~are~~deferred astax ~~follows:~~assets.

	Three months ended		Nine months ended
	December 31,		December 31,
	2011	2010	2011	2010
Expected term of options and warrants	None	None	None	5 years
Expected volatility	None	None	None	78 to 79%
Expeceted dividends	None	None	None	None
Risk-free interest rate	None	None	None	1.28 to 2.01%
Forteitures	None	None	None	0%

AITEM 2. MANAGEMENT’S ~~summary~~DISCUSSION ofAND ~~the~~ANALYSIS ~~options~~OF ~~outstanding~~FINANCIAL ~~follows:~~CONDITION AND RESULTS OF OPERATIONS.

	For the Nine Months Ended
	December 31, 2011
				Weighted
				Average
				Exercise
Options	Shares			Price
Outstanding at beginning of year		1,890,000		$	0.60
Granted		-			-
Cancelled/ Expired		(540,000	)		0.63
Exercised		-			-
Outstanding at end of the period		1,350,000		$	0.57
Exercisable at end of the the period		1,350,000		$	0.57
Weighted average fair value of options
granted during the period		-		$	-

THE FOLLOWING DISCUSSION INCLUDES FORWARD-LOOKING STATEMENTS WITH RESPECT TO OUR FUTURE FINANCIAL PERFORMANCE. ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE CURRENTLY ANTICIPATED AND FROM HISTORICAL RESULTS DEPENDING UPON A VARIETY OF FACTORS, INCLUDING THOSE DESCRIBED BELOW UNDER THE SUB-HEADING, “RISK FACTORS.”

~~As of December 31, 2011, the unamortized portion of stock compensation expense on all existing stock options was $0.~~Overview

AWe ~~summary~~develop, formulate and market over-the-counter, natural-based nutritional supplements and skin care products. Our products are proprietary, often supported by scientific studies which we request and are offered through multiple channels of ~~other~~distribution, ~~warrants~~including ~~outstanding~~direct marketing ~~follows:~~companies, also known as network marketing or multi-level marketing companies, and chain store retailers. Our primary product is Celadrin® a product formulation which we sell to the mass market through retailers and on a private label basis to wholesale customers. We also license our intellectual property to third parties.

11A key part of our marketing strategy is to provide to our wholesale customers a “turnkey” approach to the marketing and distribution of our products. This turnkey approach provides these customers with all the services necessary to market our products, including developing specific product formulations, providing supporting scientific studies regarding the effectiveness of the product and arranging for the manufacture and marketing of the product.

~~IMAGENETIX~~Historically, we ~~INC~~have sold our own branded product, Celadrin®, directly to the mass markets through retail sellers. We currently plan to expand our activities in developing, licensing and selling products and formulations to businesses and organizations that in-turn market our products through multiple channels of distribution, including direct marketing companies, mass marketing companies, medical, health and nutritional professionals, medical newsletters and direct response radio and television. We also offer Celadrin® products through wholesale customers that in turn offer their products containing Celadrin® to mass market retailers.

~~Notes~~Management’s discussion and analysis of results of operations and financial condition are based upon the Company’s financial statements. These statements have been prepared in accordance with accounting principles generally accepted in the United States of America. These principles require management to make certain estimates, judgments and assumptions that affect the ~~Unaudited~~reported ~~Condensed~~amounts ~~Consolidated~~of assets, ~~Financial~~liabilities, ~~Statements~~revenues ~~(Continued)~~and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates based on historical experience and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

	For the Nine Months Ended
	December 31, 2011
			Weighted
			Average
			Exercise
Warrants	Shares		Price
Outstanding at beginning of year		1,301,341	$	0.72
Granted		-		-
Cancelled		-		-
Exercised		-		-
Outstanding at end of the period		1,301,341	$	0.72
Exercisable at end of the the period		1,301,341	$	0.72
Weighted average fair value of warrants
granted during the period		-	$	-

Critical Accounting Policies and Estimates

10We have identified ten accounting principles that we believe are key to an understanding of our financial statements. ~~INCOME~~ These important ~~TAXES~~accounting policies require management’s most difficult, subjective judgments.

We have adopted ASC 740 which prescribes a comprehensive model of how a company should recognize, measure, present, and disclose in its financial statements uncertain tax positions that the company has taken or expects to take on a tax return1. ~~ASC 740 states that a tax benefit from an uncertain position may be recognized~~ ifFresh-Start ~~it is "more likely than not" that the position is sustainable, based upon its technical merits~~Reporting. The tax benefit of a qualifying position is the largest amount of tax benefit that is greater than 50 percent likely of being realized upon ultimate settlement with a taxing authority having full knowledge of all relevant information.

~~Upon~~As ~~adoption~~a result of ~~ASC~~the ~~740,~~issuance ~~there~~of ~~was~~common nostock ~~impact~~during toits ~~our~~emergence ~~consolidated financial~~from ~~statements. We~~a ~~estimate~~bankruptcy ~~that~~proceeding, the ~~unrecognized~~Company ~~tax~~was ~~benefit~~eligible ~~will~~to ~~not~~adopt ~~change~~“fresh-start reporting” ~~significantly~~which ~~within~~enables the ~~next~~Company ~~twelve months. We will continue~~ to ~~classify~~reduce ~~income~~its ~~tax~~previous ~~penalties~~accumulated ~~and~~deficit ~~interest~~to zero as ~~part~~ of ~~general~~the ~~and~~effective ~~administrative~~date ~~expense~~of the inPlan ~~our statements~~ of ~~operations~~Reorganization. ~~Accrued~~ ~~interest~~A onreconciliation ~~uncertain tax positions is not significant. There are no penalties accrued as~~ of ~~December~~the ~~31,~~“fresh-start ~~2011. The~~reporting” ~~following~~is ~~table~~included ~~summarizes~~in ~~the~~Note ~~open~~2 ~~tax~~to ~~years~~these ~~for~~financial ~~each major jurisdiction:~~statements.

Jurisdiction		Open Tax Years
Federal		2008 – 2010
California		2008 – 2010

2. Cash and Cash Equivalents.

~~As we have had significant net operating loss carry forwards, even~~For ifpurposes ~~certain~~ of ~~our~~the ~~tax~~financial ~~positions were disallowed~~statements, ~~it is not foreseen that~~ we ~~would~~consider ~~have~~all tohighly ~~pay~~liquid ~~any~~debt ~~taxes~~investments inpurchased ~~the~~with ~~near~~a ~~future.~~maturity ~~Consequently, we do not calculate the impact~~ of ~~interest~~three months or ~~penalties~~less onto ~~amounts that might~~ be ~~disallowed~~cash equivalents.

During the period ended December 31, 2011, we reviewed our deferred tax assets and determined that, as a result of the continuing losses, we could no longer expect a greater than 50 percent likelihood of the tax benefits being realized. Accordingly, during the nine months ended December 31, 2011, we established a full valuation allowance against our current and long-term deferred tax assets.14

123. Accounts receivable.

~~ITEM~~Accounts receivable 2are carried at the expected net realizable value. ~~MANAGEMENT'S~~The ~~DISCUSSION~~allowance ~~AND~~for ~~ANALYSIS~~doubtful OFaccounts ~~FINANCIAL~~is ~~CONDITION~~based ~~AND~~on ~~RESULTS~~management’s assessment OFof ~~OPERATIONS~~the collectability of specific customer accounts and the aging of the accounts receivable. If there were a deterioration of a major customer’s creditworthiness, or actual defaults were higher than historical experience, our estimates of the recoverability of amounts due to us could be overstated, which could have a negative impact on operations.

~~THE FOLLOWING DISCUSSION INCLUDES FORWARD-LOOKING STATEMENTS WITH RESPECT TO OUR FUTURE FINANCIAL PERFORMANCE~~4. ~~ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE CURRENTLY ANTICIPATED AND FROM HISTORICAL~~ ~~RESULTS DEPENDING UPON A VARIETY OF FACTORS, INCLUDING THOSE DESCRIBED BELOW UNDER THE SUB-HEADING, "RISK FACTORS." SEE ALSO OUR ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED MARCH 31, 2011.~~Inventory

~~Overview~~Inventory is carried at the lower of cost or market. Cost is determined by the first-in first-out method. Indirect overhead costs are allocated to inventory.

~~We develop, formulate and market over-the-counter, natural-based nutritional supplements and skin care products~~5. ~~Our products are proprietary, often supported by scientific studies which we request~~ ~~and~~Property ~~are offered through multiple channels of distribution, including direct marketing companies, also known as network marketing or multi-level marketing companies,~~ and chain store retailers. Our primary product is Celadrin® a product formulation which we sell to the mass market through retailers and on a private label basis to wholesale customers. We also license our intellectual property to third parties.Equipment

AProperty and ~~key~~equipment ~~part~~are stated at cost. Expenditures for major renewals and betterments that extend the useful lives of ~~our~~property ~~marketing~~and equipment ~~strategy~~are iscapitalized, toupon ~~provide~~being placed in service. Expenditures for maintenance and repairs are charged to ~~our~~expense ~~wholesale~~as incurred. ~~customers~~Depreciation ais ~~"turnkey"~~computed ~~approach~~over the estimated useful life of three to seven years, except leasehold improvements which are depreciated over the ~~marketing~~lesser ~~and~~of ~~distribution~~the remaining lease life or the life of ~~our~~the ~~products~~asset, using the straight-line method. ~~This~~We ~~turnkey~~follow ~~approach~~the ~~provides~~provisions of ~~these~~the Financial Accounting Standards Board Accounting Standards Codification (“ASC”) No. 360. Under ASC No. 360, ~~customers~~long-lived ~~with~~assets ~~all~~and ~~the~~certain ~~services~~identifiable ~~necessary~~intangibles to ~~market~~be ~~our~~held ~~products,~~and ~~including~~used ~~developing~~by ~~specific~~us ~~product~~are ~~formulations,~~reviewed ~~providing~~for impairment whenever events or ~~supporting~~changes ~~scientific~~in ~~studies~~circumstances ~~regarding~~indicate that the ~~effectiveness~~carrying amount of an asset may not be recoverable. We continuously evaluate the ~~product~~recoverability of ~~and~~our ~~arranging~~long-lived ~~for~~assets based on estimated future cash flows and the ~~manufacture~~estimated fair value of such long-lived assets, and ~~marketing~~provide for impairment if such undiscounted cash flows are insufficient to recover the carrying amount of the ~~product~~ long-lived asset.

~~Historically, we have sold our own branded product, Celadrin®, directly to the mass markets through retail sellers~~6. ~~We currently plan to expand our activities in developing, licensing and selling~~ ~~products~~Trademarks and formulations to businesses and organizations that in-turn market our products through multiple channels of distribution, including direct marketing companies, mass marketing companies, medical, health and nutritional professionals, medical newsletters and direct response radio and television. We also offer Celadrin® products through wholesale customers that in turn offer their products containing Celadrin® to mass market retailers.Patents

~~Management's discussion and analysis~~Patents ~~of results of operations~~ and ~~financial~~trademarks ~~condition~~ are ~~based~~carried ~~upon~~at ~~the~~cost ~~Company's~~less ~~financial~~accumulated ~~statements.~~amortization ~~These~~and ~~statements~~are ~~have~~amortized ~~been prepared~~over intheir ~~accordance~~estimated ~~with~~useful ~~accounting~~lives ~~principles generally accepted in the United States~~ of ~~America.~~from ~~These principles require~~8 ~~management~~ to ~~make~~17 ~~certain~~years ~~estimates,~~for ~~judgments~~patents and ~~assumptions~~17 ~~that~~years ~~affect~~for ~~the~~trademarks. ~~reported~~The ~~amounts~~carrying value of ~~assets,~~patents ~~liabilities, revenues~~ and ~~expenses,~~trademarks ~~and~~is ~~related~~periodically ~~disclosure~~reviewed ~~of contingent assets~~ and impairments, ~~liabilities.~~if ~~On an on-going basis~~any, weare ~~evaluate~~recognized ~~our~~when ~~estimates~~the ~~based on~~expected ~~historical~~future ~~experience~~benefit ~~and various other assumptions that are believed~~ to be ~~reasonable~~derived ~~under~~from ~~the~~individual ~~circumstances,~~intangible ~~the~~assets ~~results of~~is ~~which~~less ~~form~~than its ~~the~~carrying ~~basis~~value ~~for~~determined ~~making~~based ~~judgments~~on ~~about~~ the ~~carrying~~provisions ~~values~~ of ~~assets~~ASC ~~and liabilities that are not readily apparent from other sources~~No. ~~Actual~~360 ~~results~~as ~~may~~discussed ~~differ from these estimates under different assumptions or conditions~~above.

~~Critical~~7. Revenue ~~Accounting Policies and Estimates~~Recognition

We ~~have~~recognize revenue ~~identified~~in ~~ten~~accordance ~~accounting~~with the SEC’s Staff Accounting Bulletin No. 104, “Revenue Recognition in Financial Statements” ~~principles~~(SAB104) and ASC No. 605. SAB 104 requires that wefour ~~believe~~basic ~~are~~criteria ~~key~~be tomet before revenue can be recognized: 1) there is evidence that an ~~understanding~~arrangement ofexists; ~~our~~2) ~~financial~~delivery ~~statements~~has occurred; 3) the fee is fixed or determinable; and 4) collectability is reasonably assured. ~~These~~ASC ~~important~~No. ~~accounting~~605 ~~policies~~states ~~require~~that revenue from sales transactions where the buyer has the right to return the product shall be ~~management'~~recognized at the time of sale only if (1) the seller’s ~~most~~price ~~difficult~~to the buyer is substantially fixed or determinable at the date of sale; (2) the buyer has paid the seller, ~~subjective~~or ~~judgments~~the buyer is obligated to pay the seller and the obligation is not contingent on resale of the product; (3) the buyer’s obligation to the seller would not be changed in the event of theft or physical destruction or damage of the product; (4) the buyer acquiring the product for resale has economic substance apart from that provided by the seller; (5) the seller does not have significant obligations for future performance to directly bring about resale of the product by the buyer; and (6) the amount of future returns can be reasonably estimated. We recognize revenue upon determination that all criteria for revenue recognition have been met. The criteria are usually met at the time title passes to the customer, which usually occurs upon shipment. Revenue from shipments where title passes upon delivery is deferred until the shipment has been delivered.

13We account for payments made to customers in accordance with ASC No. 605, which states that cash consideration (including a sales incentive) given by a vendor to a customer is presumed to be a reduction of the selling prices of the vendor’s products or services and, therefore, should be characterized as a reduction of revenue when recognized in the vendor’s income statement, rather than a sales and marketing expense. We have various agreements with customers that provide for discounts and rebates. These agreements are classified as a reduction of revenue. Certain other costs associated with customers that meet the requirements of ASC No. 605 are recorded as sales and marketing expense.

~~1. Going Concern.~~ 15

~~These~~We ~~financial statements have~~guarantee ~~been~~customer ~~prepared on a going concern basis~~satisfaction. ~~However,~~Our ~~during~~policy requires the ~~nine~~customer ~~months~~to ~~ended~~return ~~December 31, 2011 and~~ the ~~year~~unused ~~ended~~product ~~March~~to ~~31, 2011,~~ the ~~Company~~retailer ~~incurred~~from ~~net~~whom ~~losses~~they ~~of $3,649,408 and $2,167,594, respectively, and had an accumulated deficit of~~originally ~~$15,123,925~~purchased ~~at December 31, 2011~~it. InWe ~~addition,~~pay asthe ofretailer ~~December~~for ~~31, 2011,~~ the ~~Company~~returned ~~had~~product plus a ~~working~~handling ~~capital deficit of $1,592,102~~cost. ~~The~~We ~~Company’s~~review ~~ability~~gross torevenue ~~continue~~for asestimated areturns of ~~going~~private ~~concern~~label iscontract ~~dependent~~manufacturing ~~upon~~products ~~its~~and ~~ability~~ direct-to-consumer ~~generate~~products. ~~profitable operations~~The inestimated ~~the~~returns ~~future~~are ~~and/or~~based toupon ~~obtain~~ the ~~necessary financing to meet its obligations and repay its liabilities arising~~trailing ~~from~~six ~~normal~~months ~~business~~of ~~operations~~private ~~when~~label ~~they~~contract ~~come~~manufacturing ~~due.~~gross ~~The~~sales ~~outcome~~and ofour ~~these~~historical ~~matters~~experience ~~cannot~~for beboth ~~predicted~~private ~~with~~label ~~any~~contract ~~certainty at~~manufacturing ~~this time~~ and ~~as such raise substantial doubt as~~ direct-to-consumer ~~the~~product ~~Company’s ability to continue as a going concern~~returns. ~~Since inception~~However, the ~~Company~~estimate ~~has~~for ~~satisfied~~product ~~its~~returns ~~capital~~does ~~needs~~not ~~through~~reflect ~~debt~~the ~~and~~impact ~~equity~~of ~~financings~~a ~~and~~large ~~expects~~product recall toresulting ~~fund the Company~~ from ~~these~~product ~~sources~~nonconformance ~~until~~or ~~profitability~~other isfactors ~~achieved.~~as ~~There~~such ~~can~~events beare nonot ~~assurance~~predictable ~~that~~nor ~~funds~~is ~~will be available at terms favorable to~~ the ~~Company~~related oreconomic ~~that future profitability can be achieved~~impact estimable. ~~The~~We ~~consolidated~~periodically ~~financial~~assess ~~statements do not include any adjustments relating to~~ the ~~recoverability~~adequacy ~~and classification~~ of ~~recorded~~this ~~asset~~policy ~~amounts or the amounts~~ and ~~classification~~record ~~of liabilities~~a ~~that~~liability ~~might be necessary should the Company be unable to continue~~ as ~~a going concern~~necessary.

2.As ~~Cash~~part of the services we provide to our private label contract manufacturing customers, we may perform, but are not required to perform, certain research and ~~Cash~~development ~~Equivalents~~activities related to the development or improvement of their products. While our customers typically do not pay directly for this service, the cost of this service is included as a component of the price we charge to manufacture and deliver their products.

~~For~~Royalties- we ~~purposes~~recognize ofrevenue ~~the~~from ~~financial~~royalties ~~statements,~~based ~~we consider~~on ~~all~~reports ~~highly~~provided ~~liquid~~by ~~debt~~our ~~investments~~customers ~~purchased~~(typically ~~with~~30 adays ~~maturity~~after the end of ~~three~~the ~~months~~quarter on orwhich ~~less~~the toroyalty bepayment ~~cash~~is ~~equivalents~~based.)

3Licensing- we also derive license revenue from fees for the transfer of proven and reusable intellectual property components. Generally, ~~Accounts~~these ~~receivable~~payments will include a nonrefundable technology license fee, which will be payable upon the transfer of intellectual property. License fees will be recognized upon the execution of the license agreement and transfer of intellectual property provided no further significant performance obligations exist and collectability is deemed probable. If additional performance obligations are present, we defer revenue recognition until such time as the performance obligation is satisfied.

~~Accounts receivable are carried at the expected net realizable value~~8. ~~The allowance for doubtful accounts is based on management’s assessment of the collectability of specific~~ ~~customer~~Income accounts and the aging of the accounts receivable. If there were a deterioration of a major customer’s creditworthiness, or actual defaults were higher than historical experience, our estimates of the recoverability of amounts due to us could be overstated, which could have a negative impact on operations.Taxes

4We account for income taxes in accordance with ASC No. ~~Inventory~~740. This statement requires an asset and liability approach for accounting for income taxes and prescribes a comprehensive model of how a company should recognize, measure, present, and disclose in its financial statements uncertain tax positions that the company has taken or expects to take on a tax return. ASC No. 740 states that a tax benefit from an uncertain position may be recognized if it is “more likely than not” that the position is sustainable, based upon its technical merits. The tax benefit of a qualifying position is the largest amount of tax benefit that is greater than 50 percent likely of being realized upon ultimate settlement with a taxing authority having full knowledge of all relevant information.

~~Inventory is carried at the lower of cost or market. Cost is determined by the first-in first-out method. Indirect overhead costs are allocated to inventory.~~16

5.Selected Financial ~~Property and Equipment~~Information

~~Property and equipment are stated at cost. Expenditures for major~~Results ~~renewals and betterments that extend the useful lives~~ of property and equipment are capitalized, upon being placed in service. Expenditures for maintenance and repairs are charged to expense as incurred. Depreciation is computed over the estimated useful life of three to seven years, except leasehold improvements which are depreciated over the lesser of the remaining lease life or the life of the asset, using the straight-line method. We follow the provisions of the Financial Accounting Standards Board Accounting Standards Codification ("ASC") No. 360. Under ASC No. 360, long-lived assets and certain identifiable intangibles to be held and used by us are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. We continuously evaluate the recoverability of our long-lived assets based on estimated future cash flows and the estimated fair value of such long-lived assets, and provide for impairment if such undiscounted cash flows are insufficient to recover the carrying amount of the long-lived asset.Operations

6.Three Months ~~Trademarks~~Ended ~~and~~June ~~Patents~~30, 2015

Patents and trademarks are carried at cost less accumulated amortization and are amortized over their estimated useful lives of from 8 to 17 years for patents and 17 years for trademarks. The carrying value of patents and trademarks is periodically reviewed and impairments, if any, are recognized when the expected future benefit to be derived from individual intangible assets is less than its carrying value determined based on the provisions of ASC No. 360 as discussed above.

		Three Months
		Ended
		6/30/15

Net sales	$	377,515
Cost of goods sold		92,184
% of net sales		24.4	%
Gross profit		285,331
% of net sales		75.6	%

Operating expenses
Selling, general and administrative		91,785
Payroll expense		147,864
Consulting expense		96,564
Total operating expenses		336,213

Other income (expense)		2,103

Net income before taxes		(48,779	)
Income taxes		—
Net income	$	(48,779	)

~~7. Stock~~Net ~~Based Compensation~~Sales

~~We adopted ASC Nos.718 and 505, which require that share-based payments~~Net besales ~~reflected~~for ~~as an expense based upon~~ the ~~grant-date~~three ~~fair~~months ~~value~~ended ofJune ~~those~~30, ~~awards.~~2015 ~~The~~was ~~expense is recognized over the remaining vesting periods of the awards. The Company estimates the fair value of these awards~~$377,515 ~~including~~and ~~stock~~was ~~options~~derived ~~and~~primarily ~~warrants,~~from ~~using~~license ~~the Black-Scholes model~~income. ~~This~~We ~~model~~anticipate ~~requires management to make certain estimates~~ that in ~~the~~future ~~assumptions~~periods ~~used~~revenue ~~in this model, including the expected term the award~~ will beincrease ~~held,~~as ~~volatility~~a result of ~~the~~our ~~underlying~~acquiring ~~common~~Periodyne ~~stock, discount rate~~ and ~~forfeiture~~increased ~~rate.~~sales Weof ~~develop~~ our ~~assumptions based~~products ~~on our past historical trends as well as consider changes for future expectations~~post-bankruptcy.

14Cost of Goods Sold

8Cost of goods sold as a percentage of net sales was 24.4% ~~Revenue~~for ~~Recognition~~the three months ended June 30, 2015. We anticipate that in future periods cost of goods sold will increase as a result of our acquiring Periodyne and increased sales of our products post-bankruptcy.

~~We recognize revenue in accordance with the SEC’s Staff Accounting Bulletin No. 104~~Selling, ~~“Revenue Recognition in Financial Statements” (SAB104) and ASC No. 605. SAB 104 requires that~~ ~~four~~General ~~basic criteria be met before revenue can be recognized: 1) there is evidence that an arrangement exists; 2) delivery has occurred; 3) the fee is fixed or determinable;~~ and ~~4) collectability is reasonably assured. ASC No. 605 states that revenue from sales transactions where the buyer has the right to return the product shall be recognized at the time of sale only if (1)~~Administrative the seller’s price to the buyer is substantially fixed or determinable at the date of sale; (2) the buyer has paid the seller, or the buyer is obligated to pay the seller and the obligation is not contingent on resale of the product; (3) the buyer’s obligation to the seller would not be changed in the event of theft or physical destruction or damage of the product; (4) the buyer acquiring the product for resale has economic substance apart from that provided by the seller; (5) the seller does not have significant obligations for future performance to directly bring about resale of the product by the buyer; and (6) the amount of future returns can be reasonably estimated. We recognize revenue upon determination that all criteria for revenue recognition have been met. The criteria are usually met at the time title passes to the customer, which usually occurs upon shipment. Revenue from shipments where title passes upon delivery is deferred until the shipment has been delivered.

~~We account for payments made to customers in accordance with ASC No. 605~~Selling, ~~which states that cash consideration (including a sales incentive) given by a vendor to a customer is presumed to be a~~ ~~reduction~~general ofand ~~the~~administrative ~~selling~~expenses ~~prices~~were ~~of the vendor’s products or services and~~$91,785 ~~therefore,~~for ~~should~~the bethree ~~characterized~~months asended aJune ~~reduction of revenue when recognized in the vendor’s income statement~~30, ~~rather than a sales and marketing expense~~2015. We ~~have~~anticipate ~~various~~expenses ~~agreements with~~will ~~customers that provide for discounts and rebates. These agreements are classified~~ increase as a ~~reduction~~result of ~~revenue.~~our ~~Certain~~acquiring ~~other costs~~Periodyne ~~associated~~and ~~with~~increased ~~customers that meet the requirements of ASC No. 605 are recorded as~~ sales ~~and marketing expense. Vendor considerations recorded as a reduction~~ of ~~sales~~our ~~were~~products ~~$979,000~~post- ~~and $1,185,000 for the years ended March 31, 2011 and 2010~~bankruptcy.

~~We guarantee customer satisfaction. Our policy requires the customer~~Payroll to return the unused product to the retailer from whom they originally purchased it. We pay the retailer for the returned product plus a handling cost. We review gross revenue for estimated returns of private label contract manufacturing products and direct-to-consumer products. The estimated returns are based upon the trailing six months of private label contract manufacturing gross sales and our historical experience for both private label contract manufacturing and direct-to-consumer product returns. However, the estimate for product returns does not reflect the impact of a large product recall resulting from product nonconformance or other factors as such events are not predictable nor is the related economic impact estimable. We periodically assess the adequacy of this policy and record a liability as necessary. For the years ended March 31, 2011 and 2010, we recorded reserves of $118,000 and $86,000 for potential returns, allowances and product buy backs.Expense

~~As part of the services we provide to our private label contract~~Payroll ~~manufacturing~~expense ~~customers,~~was ~~we may perform~~$147,864 ~~but~~for ~~are not required to perform, certain research and development activities related to~~ the ~~development~~three ormonths ~~improvement~~ended ofJune ~~their~~30, ~~products~~2015. ~~While~~We ~~our~~anticipate ~~customers~~that ~~typically~~payroll doexpenses ~~not~~will ~~pay~~increase ~~directly~~in ~~for~~future ~~this service, the cost~~periods ~~of this service is included~~ as a ~~component~~result of ~~the~~our ~~price~~acquiring wePeriodyne ~~charge~~and toincreased ~~manufacture~~sales ~~and~~of ~~deliver~~our ~~their~~ products post- bankruptcy.

~~Royalties- we recognize revenue from royalties based on reports provided by our customers (typically 30 days after the end of the quarter on which the royalty payment is based.)~~17

~~Licensing- we also derive license revenue~~Consulting from fees for the transfer of proven and reusable intellectual property components. Generally, these payments will include a nonrefundable technology license fee, which will be payable upon the transfer of intellectual property. License fees will be recognized upon the execution of the license agreement and transfer of intellectual property provided no further significant performance obligations exist and collectability is deemed probable. If additional performance obligations are present, we defer revenue recognition until such time as the performance obligation is satisfied.Expense

15Consulting expense was $96,564 for the three months ended June 30, 2015. We anticipate an increase in consulting expense in future periods as a result of our acquiring Periodyne and increased sales of our products post- bankruptcy.

9. Other Income ~~Taxes~~

~~We account for income taxes in accordance with ASC No. 740. This~~Other ~~statement requires an asset and liability approach for accounting for~~ income ~~taxes~~was ~~and prescribes a comprehensive model of how a company should recognize~~$2,103 ~~measure,~~for ~~present, and disclose in its financial statements uncertain tax positions that~~ the ~~company has~~three ~~taken~~months orended ~~expects~~June ~~to take on a tax return. ASC No. 740 states that a tax benefit from an uncertain position may be recognized if it is "more likely than not" that the position is sustainable~~30, ~~based upon its technical merits~~2015. The tax benefit of a qualifying position is the largest amount of tax benefit that is greater than 50 percent likely of being realized upon ultimate settlement with a taxing authority having full knowledge of all relevant information.

~~10. Research and Development~~18

~~We have previously incurred expenses to develop our products and~~Capital formulas, commission entities to perform clinical trials and evaluate potential products to expand our portfolio. In addition, we have received a patent for a drug candidate which, if successful, will address periodontal diseases. We have started the initial new drug process and have completed several animal studies. We did not incur any research and development expenses during the three and nine months ended December 31, 2011, however we did incur research and development expenses, which are included in general and administrative expenses in the statement of operations, of $2,325 and $21,816 for the corresponding periods of the previous fiscal year.Resources

Selected Financial Information

Working Capital
							Increase
	6/30/15			3/31/15			(Decrease)

Current assets	$	689,673		$	587,582		$	81,738
Current liabilities		996,266			855,263			120,650
Working capital	$	(306,593	)	$	(267,681	)	$	(38,912	)

Long-term debt	$	1,650,000		$	1,650,000		$	—

Stockholders’ equity	$	6,291,858		$	6,332,637		$	(40,779	)

Results of Operations

Statements of Cash Flows Select Information

	Three months ended
	6/30/15
Net cash provided by (used in):
Operating activities	$	(6,280	)
Investing activities	$	—
Financing activities	$	35,225

Three Months Ended December 31, 2011 Compared to Three Months Ended December 31, 2010


Balance Sheet Select Information
					Increase
	6/30/15		3/31/15		(Decrease)

Cash	$	92,389	$	63,444	$	28,945

Accounts receivable, net	$	383,141	$	335,617	$	27,171

Inventories, net	$	115,153	$	120,470	$	(5,317	)

Secured note payable	$	—	$	—	$	—

Accounts payable and accrued expenses	$	410,765	$	333,762	$	56,650

	Three Months Ended
							Increase
	12/31/2011			12/31/2010			(Decrease)			%
Statements of Operations:
Net sales	$	404,000		$	1,696,000		$	(1,292,000	)		-76.2	%
Cost of goods sold		120,000			1,279,000			(1,159,000	)		-90.6	%
% of net sales		29.7	%		75.4	%		-45.7	%		-60.6	%
Gross profit		284,000			417,000			(133,000	)		-31.9	%
% of net sales		70.3	%		24.6	%		45.7	%		185.9	%
Operating expenses
Selling, general and administrative		147,000			1,816,000			(1,669,000	)		-91.9	%
Payroll expense		142,000			272,000			(130,000	)		-47.8	%
Consulting expense		161,000			353,000			(192,000	)		-54.4	%
Total operating expenses		450,000			2,441,000			(1,991,000	)		-81.6	%
Interest expense		(57,000	)		(44,000	)		13,000			-29.5	%
Provision for taxes		-			(866,000	)		866,000			NM
Net loss		(223,000	)		(1,202,000	)		(979,000	)		81.4	%
Net loss per share basic and diluted		(0.02	)		(0.10	)		(0.08	)		80.0	%

Liquidity

~~Net~~The Company ~~Sales~~has historically financed its operations internally and through debt and equity financings. At June 30, 2015, we had cash holdings of $92,389 compared to $63,444 at March 31, 2015. Our net working capital at June 30, 2015, was a deficit of $306,593 compared to a deficit of $267,681 as of March 31, 2015. The Company may incur unknown expenses or may not be able to meet its revenue forecast, and one or more of these circumstances would require the Company to seek additional capital. The Company may not be able to obtain equity capital or debt funding on terms that are acceptable. Even if the Company receives additional funding, such proceeds may not be sufficient to allow the Company to sustain operations until it becomes profitable and begins to generate positive cash flows from operations. This raises substantial doubt about the Company’s ability to continue as a going concern.

Net sales for the quarter ended December 31, 2011 decreased $1,292,000, a 76.2% decrease, to $404,000 compared to $1,696,000 for the quarter ended December 31, 2010. The primary reason for the sales decrease is a transition from mass market and wholesale sales to distribution and licensing sales.19

16The Company may employ cost cutting programs should the revenue projections fall short and alternative debt or equity financings are not found at terms acceptable to the Company.

~~Breakdown~~The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of ~~net~~assets ~~sales~~and satisfaction of liabilities in the normal course of business. The financial statements do not include any adjustments relating to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

	Three Months Ended December 31,
	2011					2010					Increase
	$		%			$		%			(Decrease)
Wholesale	$	171,000		100	%	$	160,000		9	%	$	11,000
Mass market		-		0	%		1,510,000		89	%		(1,510,000	)
Distibutors		-		0	%		26,000		2	%		(26,000	)
	$	171,000		100	%	$	1,696,000		100	%	$	(1,525,000	)
Licenses and royalties	$	233,000		100	%	$	-		-		$	233,000

ITEM 4T. CONTROLS AND PROCEDURES.

WeOur chief ~~anticipate~~executive ~~mass~~officer ~~market~~and ~~sales~~our tochief befinancial ~~substantially~~officer ~~eliminated~~conducted ~~over~~ an evaluation of the ~~upcoming~~effectiveness ~~quarters~~of the design and operation of our disclosure controls and procedures (as ~~part~~defined in Securities Exchange Act Rules 13a-15(e) and 15d-15(e)) as of June 30, 2015. Based on their evaluation, they concluded that our disclosure controls and procedures were effective and designed to give reasonable assurance that the ~~transition~~information required to ~~distribution~~be disclosed by us in reports that we file or submit under the Exchange Act was made known to them by others and ~~licensing~~was ~~sales~~recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. There was no change in our internal controls that occurred during the period covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to affect, our internal controls over financial reporting.

~~Cost~~PART II. ofOTHER ~~Goods Sold~~INFORMATION

~~Cost of goods sold as a percentage of net sales decreased to 29.7%~~ITEM ~~for the quarter ended December 31, 2011 compared to 75~~1A.4% ~~for~~RISK ~~the quarter ended December 31, 2010~~FACTORS. This decrease was the result of the product mix, initiation of licenses and royalties revenue, reduced gross revenue and larger advertising allowances on our mass market sales during the previous fiscal year period. We anticipate this percentage to decrease as we transition to distribution and licensing sales.

~~Selling, General and Administrative~~Risk Factors

~~Selling,~~You should ~~general~~consider ~~and~~the ~~administrative~~following ~~expenses~~discussion ~~decreased~~of ~~$1,669,000, a~~risks ~~91.9%~~as ~~decrease,~~well toas ~~$147,000~~other ~~for~~information ~~the~~regarding ~~quarter~~our ~~ended~~common ~~December~~stock. ~~31,~~The ~~2011~~risks ~~compared~~and touncertainties described ~~$1,816,000~~below ~~for~~are not the ~~quarter~~only ~~ended~~ones. ~~December~~Additional ~~31, 2010.~~risks ~~This~~and ~~decrease~~uncertainties ~~was~~not ~~primarily~~presently ~~due~~known to aus ~~reduction~~or inthat ~~advertising~~we ~~expenses~~currently ofdeem immaterial ~~approximately~~also ~~$1,546,000~~may ~~and~~impair aour ~~decrease~~business inoperations. ~~travel related~~If ~~costs~~any of ~~approximately~~the ~~$44,000.~~following Werisks ~~anticipate~~actually ~~future decreases in selling~~occur, ~~general~~our ~~and~~business ~~administrative~~could ~~expenses~~be ~~as we transition to distributor and licensing sales~~harmed.

~~Payroll~~We cannot ~~Expense~~provide assurance that debt or equity financings will be available to fund the company

~~Payroll expense decreased to $142~~Since inception,~~000~~ ~~for~~we ~~the~~have ~~quarter~~satisfied ~~ended~~our ~~December 31,~~capital ~~2011,~~needs athrough ~~decrease~~debt ofand ~~47.8%~~equity orfinancings ~~$130,000~~and ~~compared~~expect to ~~$272,000~~fund ~~for~~ the ~~quarter~~company ~~ended~~from ~~December~~these ~~31, 2010. This decrease was a result~~sources ofuntil aprofitability ~~reduction~~is inachieved. ~~work~~There ~~force~~can asbe weno ~~transition~~assurance tothat ~~distributor~~funds ~~and~~will ~~licensing~~be ~~sales~~available ~~coupled~~at ~~with~~terms afavorable ~~reduction in non-cash compensation expense related~~ to ~~employee~~us ~~stock~~or ~~options~~that ~~for~~future profitability ~~the~~can ~~current~~be ~~fiscal period compared to the previous year fiscal period~~achieved.

~~Consulting~~There Is ~~Expenses~~Only One Supplier for Celadrin®. If We Are Unable to Purchase Celadrin® from This Supplier, Our Business Would Be Harmed.

~~Consulting~~There is ~~expenses~~only ~~decreased~~one tosupplier ~~$161,000~~ for ~~the~~Celadrin®. ~~quarter~~We ~~ended December~~will ~~31,~~rely ~~2011,~~upon aCeladrin® ~~decrease~~to ofexpand ~~54.4%~~our orproduct ~~$192,000~~lines ~~compared~~and torevenue ~~$353,000~~in ~~for~~ the ~~quarter ended December 31, 2010~~future. ~~This decrease~~ ~~was~~If aour ~~result~~Celadrin® ofsupplier agoes ~~reduction~~out of ~~expenses~~business ~~related~~or toelects ~~the~~for ~~mass~~any ~~market~~reason ~~segment~~not ofto ~~approximately~~supply ~~$167,000~~us ~~coupled~~ with aCeladrin®, ~~decrease~~we inwould have ~~legal~~to ~~expenses~~find ofanother ~~approximately~~Celadrin® ~~$18,000~~supplier ~~related~~or tosuffer ~~two~~a ~~active~~significant ~~proceedings~~reduction in our revenue.

~~Interest~~We Rely ~~Expense~~upon a Limited Number of Customers the Loss of Which Would Reduce Our Revenue and Any Earnings.

~~Interest~~Our largest ~~expense~~customer ofaccounted ~~$57,000~~for ~~was~~78% ~~recognized~~of ~~during~~our ~~the~~net ~~quarter~~sales ~~ended December 31, 2011 compared to $44,000~~ for the ~~quarter~~period ended ~~December~~June 3130, ~~2010~~2015. ~~This~~If ~~increase~~not ~~was~~replaced ~~the~~by ~~result~~other oflarge ~~non-cash interest of approximately $42~~customers,~~000 related to a secured loan with~~ the ~~parent~~loss ~~company~~ of ~~one~~this ofsignificantly ~~our~~large ~~customers~~customer ~~offset~~could byreduce aour ~~reduction~~revenue inand ~~interest expense~~adversely onaffect ~~bridge~~our ~~loans~~cash flow and ~~the~~earnings, ~~asset~~if ~~based line of credit~~any.

1720

~~Provision~~We Have ~~for~~Recently ~~Income~~Changed ~~Taxes~~to a Licensing Model to Generate Revenue Which Could Impact Our Revenue and Profitability.

~~During~~Our business ~~the~~model ~~previous~~has ~~quarter~~changed wefrom ~~determined~~exclusively itselling ~~necessary~~products directly to ~~set~~wholesalers, upretailers, and customers to additionally alicensing ~~valuation~~the ~~against~~sale of our ~~deferred~~products ~~tax~~to ~~assets~~third parties. ~~Accordingly~~This ~~during~~business ~~the~~model ~~quarter~~requires ~~ended~~the ~~December~~third ~~31,~~parties ~~2011,~~to wecommit ~~regonized~~to $0such ~~tax~~an ~~benefit~~agreement ~~compared~~and to asuccessfully ~~$866,900~~sell ~~income~~products ~~tax~~with ~~benefit~~our ~~recognized~~technologies. ~~during~~We have not achieved similar significant revenue producing license deals in the ~~quarter~~past. ~~ended~~If ~~December~~we 31are not successful at implementing a licensing model, ~~2010~~our revenues, cash flow and earnings, if any, could be adversely affected.

~~Nine~~We Rely ~~months~~upon ~~Ended~~Other ~~December~~Outside ~~31,~~Suppliers ~~2011~~to ~~Compared~~Produce toOur ~~Nine~~Products ~~months~~Which ~~Ended December~~Could ~~31,~~Delay ~~2010~~Our Product Deliveries.

	Nine Months Ended
							Increase
	12/31/2011			12/31/2010			(Decrease)			%
Statements of Operations:
Net sales	$	1,825,000		$	6,001,000		$	(4,176,000	)		-69.6	%
Cost of goods sold		648,000			3,460,000			(2,812,000	)		-81.3	%
% of net sales		35.5	%		57.7	%		-22.2	%		-38.4	%
Gross profit		1,177,000			2,541,000			(1,364,000	)		-53.7	%
% of net sales		64.5	%		42.3	%		22.2	%		52.3	%
Operating expenses
Selling, general and administrative		569,000			3,288,000			(2,719,000	)		-82.7	%
Payroll expense		437,000			834,000			(397,000	)		-47.6	%
Consulting expense		789,000			1,106,000			(317,000	)		-28.7	%
Total operating expenses		1,795,000			5,228,000			(3,433,000	)		-65.7	%
Interest expense		(200,000	)		(158,000	)		(42,000	)		26.6	%
Litigation loss		(500,000	)		-			(500,000	)		NM
Other income		-			1,000			(1,000	)		NM
Income tax expense (benefit)		2,331,000			(1,108,000	)		3,439,000			NM
Net loss		(3,649,000	)		(1,736,000	)		(1,913,000	)		110.2	%
Net loss per share basic and diluted		(0.31	)		(0.15	)		(0.16	)		106.7	%

All of our products are produced by outside manufacturers who process ingredients provided to them by our suppliers and with whom we have contracts. Our profit margins and our ability to deliver products on a timely basis are dependent upon these manufacturers and suppliers. Should any of these manufacturers or suppliers fail to provide us with product, we would be required to obtain new manufacturers and suppliers, which would be costly and time consuming and could delay our product deliveries.

~~Net~~Product Liability ~~Sales~~Claims Against Us Could Be Costly.

~~Net~~Some of ~~sales~~our ~~for~~nutritional ~~the~~supplements ~~nine~~contain ~~months~~newly-introduced ~~ended~~ingredients ~~December~~or 31combinations of ingredients, ~~2011~~and ~~decreased~~we have little long-term ~~$4,176,000,~~health ainformation 69about individuals consuming those ingredients.6% ~~decrease~~If any of these products were thought or proved to be harmful, we could be subject to litigation. Although we carry product liability insurance in the face amount of $1,~~825~~000,000 ~~compared~~per tooccurrence and $62,~~001~~000,000 ~~for~~in the ~~nine~~aggregate ~~months~~and ~~ended~~require ~~December~~our ~~31,~~suppliers ~~2010.~~and ~~The~~manufacturers ~~primary~~to ~~reason for~~include ~~the~~us ~~sales~~as ~~decrease~~insured isparties aon ~~transition~~their ~~from~~product liability ~~mass~~insurance ~~market~~policies, ~~and~~our ~~wholesale~~coverage ~~sales~~may tonot ~~distribution~~be ~~and~~adequate ~~licensing~~to ~~sales.~~protect ~~Mass~~us ~~market~~from ~~sales reflect~~potential ~~mark~~product ~~down~~liability ~~allowances~~claims onand ~~existing~~costs of ~~store inventories~~defense.

18We Are Subject to Intense Competition from Other Nutritional Supplement Marketers Which Could Reduce Our Revenue and Profit Margins.

~~Breakdown~~Competition in ofthe ~~net~~nutritional ~~sales~~supplement market is intense. We compete with numerous companies that have longer operating histories, more products and greater name recognition and financial resources than we do. In order to compete, we could be forced to lower our product prices, which would reduce our revenue and profit margins.

	Nine Months Ended December 31,
	2011					2010					Increase
	$		%			$		%			(Decrease)
Wholesale	$	379,000		30	%	$	699,000		12	%	$	(320,000	)
Mass market		155,000		12	%		4,532,000		76	%		(4,377,000	)
Distibutors		735,000		58	%		770,000		13	%		(35,000	)
	$	1,269,000		100	%	$	6,001,000		100	%	$	(4,732,000	)
Licenses and royalties	$	557,000		100	%	$	-		-		$	557,000

We Are Highly Regulated, Which Increases Our Costs of Doing Business.

We ~~anticipate mass market sales to be substantially eliminated over~~are ~~the~~subject ~~upcoming quarters as part of the transition~~ to ~~distribution~~laws and ~~licensing~~regulations ~~sales.~~which cover:

~~Cost~~• the formulation, manufacturing, packaging, labeling, distribution, importation, sale and storage of ~~Goods~~our ~~Sold~~products;

~~Cost~~• ~~of goods sold as a percentage of net sales decreased to 35.5% for~~ the ~~nine~~health ~~months~~and ~~ended~~safety ~~December 31, 2011 compared to 57.7% for the nine months ended December 31, 2010. This decrease was the result~~ of ~~the~~food ~~product mix, initiation of licenses~~ and royalties revenue, reduced gross revenue and larger advertising allowances on our mass market sales during the previous fiscal year period. We anticipate this percentage to decrease as we transition to distribution and licensing sales.drugs;

~~Selling,~~• ~~General~~trade practice and ~~Administrative~~direct selling laws; and

~~General~~• ~~and~~product ~~administrative~~claims ~~expenses~~and ~~decreased~~advertising ~~$2,719,000,~~by aus; ~~82.7% decrease,~~or ~~to $569,000~~ for ~~the~~which nine months ended December 31, 2011 compared to $3,288,000 for the nine months ended December 31, 2010. This decrease was primarily due to a reduction in advertising expenses of approximately $2,344,000, a decrease in travel related costs of approximately $102,000 and a reduction in research and development expenses of approximately $22,000. We anticipate future decreases in general and administrative expenses as we ~~transition~~may tobe ~~distributor~~held ~~and licensing sales~~responsible.

~~Payroll~~Compliance with ~~Expense~~these laws and regulations is time consuming and expensive. Moreover, new regulations could be adopted that would severely restrict the products we sell or our ability to continue our business. We are unable to predict the nature of any future laws, regulations, interpretations or applications, nor can we predict what effect additional governmental regulations or administrative orders, when and if promulgated, would have on our business in the future. These future changes could, however, require the reformulation or elimination of certain products; imposition of additional record keeping and documentation requirements; imposition of new federal reporting and application requirements; modified methods of importing, manufacturing, storing or distributing certain products; and expanded or different labeling and substantiation requirements for certain products and ingredients. Any or all of these requirements could harm our business.

Payroll expense decreased to $437,000 for the nine months ended December 31, 2011, a decrease of 47.6% or $397,000 compared to $834,000 for the nine months ended December 31, 2010. This decrease was a result of a reduction in work force as we transition to distributor and licensing sales coupled with a reduction in non-cash compensation expense related to employee stock options for the current fiscal period compared to the previous year fiscal period.21

~~Consulting~~There Are ~~Expenses~~Limitations on the Liability of Our Officers and Directors Which May Restrict Our Stockholders from Bringing Claims.

~~Consulting~~Our Bylaws ~~expenses~~substantially ~~decreased~~limit ~~to $789,000 for~~ the ~~nine~~liability ~~months ended December 31, 2011, a decrease~~ of ~~28.7%~~our orofficers ~~$317,000~~and ~~compared~~directors to ~~$1,106,000~~us ~~for~~and ~~the~~our ~~nine~~stockholders ~~months~~for ~~ended~~negligence ~~December~~and ~~31,~~breach ~~2010. This decrease~~of ~~was~~fiduciary aor ~~result~~other ofduties ato ~~reduction~~us. ofThis ~~expenses~~limitation ~~related~~may toprevent ~~the~~stockholders ~~mass~~from ~~market~~bringing ~~segment~~claims ofagainst ~~approximately~~our ~~$520,000~~officers ~~partially~~and ~~offset by an increase~~directors in ~~legal~~the ~~expenses of approximately $224,000 related to two active proceedings~~future.

~~Interest~~Shares of ~~Expense~~Our Common Stock Which Are Eligible for Sale by Our Stockholders May Decrease the Price of Our Common Stock.

~~Interest~~We ~~expense~~have 28,422,955 common shares outstanding of ~~$200,000~~which ~~was~~approximately ~~recognized~~24 ~~during~~million ~~the~~are ~~nine~~freely ~~months ended~~tradable ~~December~~or ~~31,~~saleable ~~2011~~under ~~compared~~Rule to144. ~~$158,000~~We ~~for~~also have ~~the~~outstanding ~~nine~~common ~~months~~stock ~~ended~~warrants ~~December~~exercisable 31into up to 8,409,334 ~~2010.~~shares ~~This~~of ~~increase~~common ~~was~~stock ~~the~~which ~~result~~could ofbecome ~~non-cash~~free trading ~~interest~~if ofexercised. ~~approximately~~If ~~$84,000~~our ~~related~~stockholders tosell asubstantial ~~secured~~amounts ~~loan~~of ~~with~~our ~~the~~common ~~parent~~stock, ~~company~~the ofmarket ~~one~~price of our ~~customers~~common stock could decrease.

19There is a Limited but Potentially Volatile Trading Market in Our Common Stock, Which May Adversely Affect Our Stock Price.

~~Litigation~~Our common ~~Losses~~stock trades on the Electronic Bulletin Board. The Bulletin Board tends to be highly illiquid, in part because there is no national quotation system by which potential investors can track the market price of shares except through information received or generated by a limited number of broker-dealers that make a market in particular stocks. There is a greater chance of market volatility for securities that trade on the Bulletin Board as opposed to a national exchange or quotation system. This volatility may be caused by a variety of factors, including:

~~During~~• ~~the~~The ~~nine~~lack ~~months ended December 31, 2011, we received an unfavorable order in an arbitration case with TriPharma LLC. in an amount~~ of ~~approximately~~readily $3,935,000. We filed a petition in the United States Southern District of California which was subsequently re-filed in a California state court to have the arbitration order vacated. While the exact amount of this loss is not known, a reasonable estimate, based on information currently available, isprice ~~$500,000. This amount has been recognized as a loss in the current fiscal year and appears as an accrued litigation liability.~~quotations;

~~Provision~~• ~~for~~The ~~Income~~absence ~~Taxes~~of consistent administrative supervision of “bid” and “ask” quotations;

~~During~~• ~~the~~Lower ~~nine~~trading ~~months~~volume; ended December 31, 2011, we set up a valuation against our deferred tax assets of approximately $3,710,000 which resulted in a tax provision during the nine month period of $2,331,000 compared to a tax provision of $1,108,000 recognized during the same period of the previous fiscal year.and

~~Capital~~• ~~Resources~~Market conditions.

~~Working~~There could ~~Capital~~be ~~(Deficit)~~wide fluctuations in the market price of our common stock. These fluctuations may have an extremely negative effect on the market price of our securities and may prevent an investor from obtaining a market price equal to his purchase price when he attempts to sell our securities in the open market. In these situations, the investor may be required to either sell our securities at a market price which is lower than his purchase price, or to hold our securities for a longer period of time than he planned.

							Increase
	12/31/11			3/31/11			(Decrease)
Current assets	$	1,780,047		$	3,572,098		$	(1,792,051	)
Current liabilities		3,372,149			3,838,790			(466,641	)
Working capital (deficit)	$	(1,592,102	)	$	(266,692	)	$	(1,325,410	)
Long-term debt	$	-		$	-		$	-
Stockholders' (deficit) equity	$	(1,495,611	)	$	2,081,046		$	(3,576,657	)

Because Our Common Stock Is Classified as a “Penny Stock,” Trading in it Could Be Limited, and Our Stock Price Could Decline.

~~Statements~~Our common stock falls under the definition of ~~Cash~~“penny ~~Flows~~stock” ~~Select~~since ~~Information~~our net tangible assets are below $2,500,000. In such event, trading in our common stock may be limited because broker-dealers are required to provide their customers with disclosure documents prior to allowing them to participate in transactions involving our common stock. These disclosure requirements are burdensome to broker-dealers and may discourage them from allowing their customers to participate in transactions involving our common stock.

	Nine Months Ended						Increase
	12/31/11			12/31/10			(Decrease)
Net cash provided by (used in):
Operating activities	$	251,014		$	(2,522,745	)	$	2,773,759
Investing activities	$	-		$	(1,762	)	$	1,762
Financing activities	$	(441,494	)	$	1,713,726		$	(2,155,220	)

“Penny stocks” are equity securities with a market price below $5.00 per share, other than a security that is registered on a national exchange or included for quotation on the Nasdaq system, unless the issuer has net tangible assets of more than $2,000,000 and has been in continuous operation for greater than three years. Issuers who have been in operation for less than three years must have net tangible assets of at least $5,000,000.

Balance Sheet Select Information
					Increase
	12/31/11		3/31/11		(Decrease)
Cash and cash equivalients	$	208,517	$	398,997	$	(190,480	)
Accounts receivable, net	$	486,294	$	669,976	$	(183,682	)
Inventories, net	$	607,893	$	993,393	$	(385,500	)
Secured note payable	$	721,316	$	839,000	$	(117,684	)
Accounts payable and accrued expenses	$	838,558	$	892,366	$	(53,808	)

20Rules promulgated by the Securities and Exchange Commission under Section 15(g) of the Exchange Act require broker-dealers engaging in transactions in penny stocks, to first provide to their customers a series of disclosures and documents, including:

~~Liquidity~~• A standardized risk disclosure document identifying the risks inherent in investment in penny stocks;

We• ~~have~~All ~~historically~~compensation financed our operations internally and through debt and equity financings. At December 31, 2011, we had cash holdings of $208,517, a decrease of $190,480 compared to March 31, 2011. Our net working capital deficit at December 31, 2011, was $1,592,102 compared to a deficit of $266,692 as of March 31, 2011. The continuing decrease is primarily the result of operating losses incurred during the nine months ended December 31, 2011 which included recording an unfavorable ruling in an ongoing arbitration case and recording a write down of deferred tax assets. During the first nine months of fiscal 2012, we received ~~$850,000~~by ~~in cash from~~ the ~~deferred~~broker-dealer ~~sale of our intellectual property and $700,000 from an investor. The proceeds were used to pay off and close the asset based line of credit as we reposition ourselves away from the mass market~~ in ~~favor~~connection ~~of intellectual property licensing and royalty sales to compliment distributor revenue. Although our cash requirements for marketing and advertising will be eliminated~~ with ~~this~~the ~~new business model, we have no history concerning licensing and royalty revenue.~~transaction;

~~These~~• ~~financial~~Current ~~statements~~quotation ~~have~~prices ~~been prepared on a going concern basis. However, during the nine months ended December 31, 2011~~ and ~~the~~other ~~year~~relevant ~~ended~~market ~~March~~data; ~~31, 2011, the Company incurred net losses of $3,649,408~~ and $2,167,594, respectively, and had an accumulated deficit of $1,490,399 at December 31, 2011. In addition, as of December 31, 2011, the Company had a working capital deficit of $1,592,102. The Company’s ability to continue as a going concern is dependent upon its ability to generate profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. The outcome of these matters cannot be predicted with any certainty at this time and as such raise substantial doubt as to the Company’s ability to continue as a going concern. Since inception, the Company has satisfied its capital needs through debt and equity financings and expects to fund the Company from these sources until profitability is achieved. There can be no assurance that funds will be available at terms favorable to the Company or that future profitability can be achieved.

~~New~~• ~~Accounting~~Monthly ~~Standards~~account statements reflecting the fair market value of the securities. In addition, these rules require that a broker-dealer obtain financial and other information from a customer, determine that transactions in penny stocks are suitable for such customer and deliver a written statement to such customer setting forth the basis for this determination.

~~See~~ITEM ~~Note~~ 2-. ~~Recent~~UNREGISTERED ~~Accounting~~SALE ~~Pronouncements-~~OF toEQUITY ~~our~~SECURITES ~~condensed~~AND ~~consolidated financial~~USE ~~statements~~OF ~~included in Item 1 of this Form 10-Q for discussion of recent accounting pronouncements.~~PROCEEDS

~~ITEM~~During the ~~4T.~~quarter ~~CONTROLS~~ended ~~AND~~June ~~PROCEDURES.~~30, 2015 we issued the following equity securities:

Our chief executive officer and our chief financial officer conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Securities Exchange Act Rules 13a-15(e) and 15d-15(e)) as of December 31, 2011. Based on their evaluation, they concluded that our disclosure controls and procedures were effective and designed to give reasonable assurance that the information required to be disclosed by us in reports that we file or submit under the Exchange Act was made known to them by others and was recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. There was no change in our internal controls that occurred during the period covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to affect, our internal controls over financial reporting.

Common Stock

Date Stock		Price per
Issued	Number of Shares	Share	Consideration
4/20/2015	50,000	$0.16	Services

~~PART~~With respect IIto the above equity securities issuances, the Company relied on exemptions provided by Sections 4(a)(2) and 3(a)9 of the Securities Act of 1933, as amended (the “Securities Act”). ~~OTHER~~No ~~INFORMATION~~advertising or general solicitation was employed in offering the securities. The securities were issued to a limited number of persons all of whom were accredited investors as that term is defined in Rule 501 of Regulation D under the Securities Act. All were capable of analyzing the merits and risks of their investment, acknowledged in writing that they were acquiring the securities for investment and not with a view toward distribution or resale, and understood the speculative nature of their investment. All securities issued contained a restrictive legend prohibiting transfer of the shares except in accordance with federal securities laws.

~~ITEM 1. LEGAL PROCEEDINGS~~23

~~TriPharma Suit~~ITEM 6. EXHIBITS.

On April 30, 2010, TriPharma, Inc., a customer of Imagenetix, filed a legal action in the United States Southern District Court of California, case number 10CV0933IEG, related to an Exclusive Marketing and Supply Agreement, as amended on June 19, 2008. TriPharma asserted that Imagenetix breached the terms of the Agreement and sought injunctive relief and unspecified damages. An unfavorable interim arbitration order was issued against the Company in September 2011 and a final order was issued in November 2011 in an amount of approximately $3,935,000. The Company filed a petition in the United States Southern District of California which was subsequently re-filed in the Superior Court of California, County of San Diego, case number 37-2011-00101044-CU-PA-CTL, to have the arbitration order vacated. While the exact amount of this loss is not known, a reasonable estimate, based on information currently available, is $500,000. This amount has been recognized as a loss in the current period and appears as an accrued litigation liability.

Exhibit No.		Title

31.1		302 Certification of William P. Spencer, Chief Executive Officer

31.2		302 Certification of Lowell W. Giffhorn, Chief Financial Officer

32.1		906 Certification of William P. Spencer, Chief Executive Officer

32.2		906 Certification of Lowell W. Giffhorn, Chief Financial Officer

101.INS		XBRL Instant Document

101.SCH		XBRL Taxonomy Extension Scheme Document

101.CAL		XBRL Taxonomy Extension Calculati8on Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

21SIGNATURES

~~Nikken~~In ~~Suit~~accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

~~On April 29~~IMAGENETIX, ~~2011, Imagenetix filed a legal action in the United~~ ~~States Central District of California, case number CV11-3727GHK (VBKx), against Nikken Inc~~INC., ~~Et. Al. Imagenetix claims that the~~ defendants infringed on its U.S. Patent No. 5,596,676 entitled “Method for the Treatment of Osteoarthritis” and entered into unfair competition under the Lanham Act. Imagenetix seeks damages of approximately $31,000,000 and injunctive relief. The parties filed motions related to this case and a ~~reexamination~~Nevada ~~of the patent has been undertaken by the U.S. Patent and Trademark Office.~~corporation

ITEM 1A. RISK FACTORS.


Date: August 14, 2015	By:	/s/ WILLIAM P. SPENCER
		William P. Spencer
		Chief Executive Officer

		(Principal Executive Officer and duly authorized to sign on behalf of the Registrant)

~~Risk Factors~~24

You should consider the following discussion of risks as well as other information regarding our common stock. The risks and uncertainties described below are not the only ones. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations. If any of the following risks actually occur, our business could be harmed.

We have had significant losses, accumulated deficit earnings and negative working capital which may affect our ability to continue as a going concern.

Our ability to continue as a going concern is dependent upon our ability to generate profitable operations in the future and/or to obtain the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they come due. The outcome of these matters cannot be predicted with any certainty at this time and as such raise substantial doubt as to our ability to continue as a going concern. Since inception, we have satisfied our capital needs through debt and equity financings and expect to fund the company from these sources until profitability is achieved. There can be no assurance that funds will be available at terms favorable to us or that future profitability can be achieved.

There Is Only One Supplier for Celadrin®. If We Are Unable to Purchase Celadrin® from This Supplier, Our Business Would Be Harmed.

There is only one supplier for Celadrin®, which we use in approximately 69% of our products and which represented approximately 69% of our sales for the year ended March 31, 2011. We will rely upon Celadrin® to expand our product lines and revenue in the future. If our Celadrin® supplier goes out of business or elects for any reason not to supply us with Celadrin®, we would have to find another Celadrin® supplier or suffer a significant reduction in our revenue.

We Rely upon a Limited Number of Customers the Loss of Which Would Reduce Our Revenue and Any Earnings.

Our largest customer accounted for 50% of our net sales for the nine months ended December 31, 2011 and our two largest customers accounted for 54% and 14% of our net sales for the year ended March 31, 2011. If not replaced by other large customers, the loss of any significantly large customer could reduce our revenue and adversely affect our cash flow and earnings, if any.

We Have Recently Changed to a Licensing Model to Generate Revenue Which Could Impact Our Revenue and Profitability.

Our business model has changed from exclusively selling products directly to wholesalers, retailers, and customers to additionally licensing the sale of our products to third parties. This business model requires the third parties to commit to such an agreement and to successfully sell products with our technologies. We have not achieved similar significant revenue producing license deals in the past. If we are not successful at implementing a licensing model, our revenues, cash flow and earnings, if any, could be adversely affected.

We Rely upon Other Outside Suppliers to Produce Our Products Which Could Delay Our Product Deliveries.

Product Liability Claims Against Us Could Be Costly.

Some of our nutritional supplements contain newly-introduced ingredients or combinations of ingredients, and we have little long-term health information about individuals consuming those ingredients. If any of these products were thought or proved to be harmful, we could be subject to litigation. Although we carry product liability insurance in the face amount of $1,000,000 per occurrence and $2,000,000 in the aggregate and require our suppliers and manufacturers to include us as insured parties on their product liability insurance policies, our coverage may not be adequate to protect us from potential product liability claims and costs of defense.

We Are Subject to Intense Competition from Other Nutritional Supplement Marketers Which Could Reduce Our Revenue and Profit Margins.

Competition in the nutritional supplement market is intense. We compete with numerous companies that have longer operating histories, more products and greater name recognition and financial resources than we do. In order to compete, we could be forced to lower our product prices, which would reduce our revenue and profit margins.

We Are Highly Regulated, Which Increases Our Costs of Doing Business.

We are subject to laws and regulations which cover:

• the formulation, manufacturing, packaging, labeling, distribution, importation, sale and storage of our products;

• the health and safety of food and drugs;

• trade practice and direct selling laws; and

• product claims and advertising by us; or for which we may be held responsible.

Compliance with these laws and regulations is time consuming and expensive. Moreover, new regulations could be adopted that would severely restrict the products we sell or our ability to continue our business. We are unable to predict the nature of any future laws, regulations, interpretations or applications, nor can we predict what effect additional governmental regulations or administrative orders, when and if promulgated, would have on our business in the future. These future changes could, however, require the reformulation or elimination of certain products; imposition of additional record keeping and documentation requirements; imposition of new federal reporting and application requirements; modified methods of importing, manufacturing, storing or distributing certain products; and expanded or different labeling and substantiation requirements for certain products and ingredients. Any or all of these requirements could harm our business.

There Are Limitations on the Liability of Our Officers and Directors Which May Restrict Our Stockholders from Bringing Claims.

Our Bylaws substantially limit the liability of our officers and directors to us and our stockholders for negligence and breach of fiduciary or other duties to us. This limitation may prevent stockholders from bringing claims against our officers and directors in the future.

Shares of Our Common Stock Which Are Eligible for Sale by Our Stockholders May Decrease the Price of Our Common Stock.

We have 11,811,288 common shares outstanding which are freely tradable or saleable under Rule 144. We also have outstanding common stock warrants and stock options exercisable into up to 3,191,341 shares of common stock which could become free trading if exercised. If our stockholders sell substantial amounts of our common stock, the market price of our common stock could decrease.

There is a Limited but Potentially Volatile Trading Market in Our Common Stock, Which May Adversely Affect Our Stock Price.

Our common stock trades on the Electronic Bulletin Board. The Bulletin Board tends to be highly illiquid, in part because there is no national quotation system by which potential investors can track the market price of shares except through information received or generated by a limited number of broker-dealers that make a market in particular stocks. There is a greater chance of market volatility for securities that trade on the Bulletin Board as opposed to a national exchange or quotation system. This volatility may be caused by a variety of factors, including:

• The lack of readily available price quotations;

• The absence of consistent administrative supervision of "bid" and "ask" quotations;

• Lower trading volume; and

• Market conditions.

There could be wide fluctuations in the market price of our common stock. These fluctuations may have an extremely negative effect on the market price of our securities and may prevent an investor from obtaining a market price equal to his purchase price when he attempts to sell our securities in the open market. In these situations, the investor may be required to either sell our securities at a market price which is lower than his purchase price, or to hold our securities for a longer period of time than he planned.

Because Our Common Stock Is Classified as a "Penny Stock," Trading in it Could Be Limited, and Our Stock Price Could Decline.

Our common stock falls under the definition of "penny stock" since our net tangible assets are below $2,500,000. In such event, trading in our common stock may be limited because broker-dealers are required to provide their customers with disclosure documents prior to allowing them to participate in transactions involving our common stock. These disclosure requirements are burdensome to broker-dealers and may discourage them from allowing their customers to participate in transactions involving our common stock.

"Penny stocks" are equity securities with a market price below $5.00 per share, other than a security that is registered on a national exchange or included for quotation on the Nasdaq system, unless the issuer has net tangible assets of more than $2,000,000 and has been in continuous operation for greater than three years. Issuers who have been in operation for less than three years must have net tangible assets of at least $5,000,000.

Rules promulgated by the Securities and Exchange Commission under Section 15(g) of the Exchange Act require broker-dealers engaging in transactions in penny stocks, to first provide to their customers a series of disclosures and documents, including:

• A standardized risk disclosure document identifying the risks inherent in investment in penny stocks;

• All compensation received by the broker-dealer in connection with the transaction;

• Current quotation prices and other relevant market data; and

• Monthly account statements reflecting the fair market value of the securities. In addition, these rules require that a broker-dealer obtain financial and other information from a customer, determine that transactions in penny stocks are suitable for such customer and deliver a written statement to such customer setting forth the basis for this determination.

ITEM 6. EXHIBITS.

Exhibit No.		Title
31.1		302 Certification of William P. Spencer, Chief Executive Officer
31.2		302 Certification of Lowell W. Giffhorn, Chief Financial Officer
32.1		906 Certification of William P. Spencer, Chief Executive Officer
32.2		906 Certification of Lowell W. Giffhorn, Chief Financial Officer

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

IMAGENETIX, INC.

a Nevada corporation

Date: February 14, 2012	By:	/s/ WILLIAM P. SPENCER
		William P. Spencer
		Chief Executive Officer
		(Principal Executive Officer and duly authorized
		to sign on behalf of the Registrant)

Filing Compare · IMAGENETIX INC /NV/