NOTE 1 ORGANIZATION AND OPERATIONS
Generic Marketing Services,
Inc. was incorporated on July 19, 2007 under the laws of the State of Nevada as a subsidiary of Basic Services, Inc., also a Nevada
corporation. On December 31, 2007, Basic Services, Inc. spun off Generic Marketing Services and on October 8, 2008, Generic Marketing
Services changed its name to Total Nutraceutical Solutions, Inc. On January 9, 2012, the Nevada Secretary of State accepted an
amendment to our Articles of Incorporation to change the name again to Entia Biosciences, Inc. (Entia, the Company, us, we or our)
and to form a wholly owned subsidiary named Total Nutraceutical Solutions, Inc. (TNS) Entia is an emerging biotechnology company
engaged in the discovery, formulation and marketing of natural compounds and whole foods that can be used in branded medical foods,
nutraceuticals, cosmetics and other products sold by us, our TNS subsidiary and by third parties.
On February 15, 2012 a
10:1 reverse stock split became effective after we received authorization from Financial Industry Regulatory
Authority (FINRA) for the corporate action that was approved by the shareholders on December 19, 2011.
On May 15, 2012, Entia
moved from its current location to a larger building in order to increase its in-house research and manufacturing capability, increase
its warehouse storage capacity, and accommodate anticipated increases in order fulfillment and staffing. By moving to the larger
facility, Entia was able to vertically integrate its Vitamin D enhancement technology and the milling, blending, encapsulating,
bottling, labeling, packaging and fulfillment of its products. This move resulted in a significant improvement in production efficiencies
and the cost of its final products. Production of cosmetic products and certain nutraceuticals are still being outsourced.
We have a history of incurring
net losses and net operating cash flow deficits. We are continually researching and developing new technologies related to our
organic nutraceutical products, including the production of medical foods for clinical studies in diabetes, anemia and Parkinsons
disease. At September 30, 2012, we had cash and cash equivalents of $14,698. These conditions raise substantial doubt about our
ability to continue as a going concern. As a result, we anticipate that our cash and cash equivalent balances, anticipated cash
flows from operations and anticipated operating cash flows will be sufficient to meet our cash requirements through December 2012.
In order for us to continue
as a going concern beyond this point and ultimately to achieve profitability, we may be required to obtain capital from external
sources, increase revenues and reduce operating costs. The issuance of equity securities will also cause dilution to our shareholders.
If external financing sources of financing are not available or are inadequate to fund our operations, we will be required to reduce
operating costs including personnel costs, which could jeopardize our future strategic initiatives and business plans. The accompanying
consolidated financial statements have been prepared assuming that the company continues as a going concern.
The consolidated financial
statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets
or the amounts and classification of liabilities that may result from the matters discussed herein.