Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Sep. 30, 2013 | Nov. 12, 2013 | |
Document And Entity Information | ' | ' |
Entity Registrant Name | 'Liberator, Inc. | ' |
Entity Central Index Key | '0001374567 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 30-Sep-13 | ' |
Amendment Flag | 'false | ' |
Current Fiscal Year End Date | '--06-30 | ' |
Is Entity a Well-known Seasoned Issuer? | 'No | ' |
Is Entity a Voluntary Filer? | 'No | ' |
Is Entity's Reporting Status Current? | 'Yes | ' |
Entity Filer Category | 'Smaller Reporting Company | ' |
Entity Common Stock, Shares Outstanding | ' | 70,702,596 |
Document Fiscal Period Focus | 'Q1 | ' |
Document Fiscal Year Focus | '2014 | ' |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Sep. 30, 2013 | Jun. 30, 2013 |
Current assets: | ' | ' |
Cash and cash equivalents | $293,346 | $397,860 |
Accounts receivable, net | 660,290 | 522,900 |
Inventories | 1,337,537 | 1,409,703 |
Prepaid expenses | 71,171 | 76,932 |
Total current assets | 2,362,344 | 2,407,395 |
Equipment and leasehold improvements, net | 736,558 | 756,990 |
Other assets | 4,479 | 4,479 |
Total assets | 3,103,381 | 3,168,864 |
Current liabilities: | ' | ' |
Accounts payable | 1,613,782 | 1,607,765 |
Accrued compensation | 308,160 | 214,110 |
Accrued expenses and interest | 185,855 | 232,714 |
Line of credit | 531,161 | 366,196 |
Short-term unsecured notes payable | 23,950 | 21,422 |
Current portion of lease payable | 70,956 | 67,963 |
Current portion of deferred rent payable | 225,388 | 349,952 |
Merchant cash advance (net discount) | 507,521 | 664,625 |
Notes payable-related party | 116,000 | 116,000 |
Total current liabilities | 3,582,773 | 3,640,747 |
Long-term liabilities: | ' | ' |
Leases payable | 59,149 | 40,927 |
Deferred rent payable | 107,066 | 125,553 |
Unsecured note payable | 300,000 | 300,000 |
Unsecured lines of credit | 7,906 | 12,535 |
Convertible notes payable-shareholder | 625,000 | 625,000 |
Total Liabilities | 4,681,894 | 4,744,762 |
Stockholders' deficit: | ' | ' |
Common stock | 707,026 | 707,026 |
Additional paid-in capital | 5,788,658 | 5,764,331 |
Accumulated deficit | -8,074,627 | -8,047,685 |
Total stockholders'deficit | -1,578,513 | -1,575,898 |
Total liabilities and stockholders' deficit | 3,103,381 | 3,168,864 |
Preferred Stock | ' | ' |
Stockholders' deficit: | ' | ' |
Preferred stock | 0 | 0 |
Series A Convertible Preferred Stock | ' | ' |
Stockholders' deficit: | ' | ' |
Preferred stock | $430 | $430 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | Sep. 30, 2013 | Jun. 30, 2013 |
Allowance for doubtful accoounts | $4,015 | $4,986 |
Discount on cash advance | 24,000 | ' |
Common stock- par value | $0.01 | $0.01 |
Common stock- shares authorized | 175,000,000 | 175,000,000 |
Common stock- shares issued | 70,702,596 | 70,702,596 |
Common stock- shares outstanding | 70,702,596 | 70,702,596 |
Preferred Stock | ' | ' |
Preferred stock - par value | $0.00 | $0.00 |
Preferred stock - shares authorized | 5,700,000 | 5,700,000 |
Preferred stock - shares issued | ' | ' |
Preferred stock - shares outstanding | ' | ' |
Series A Convertible Preferred Stock | ' | ' |
Preferred stock - par value | $0.00 | $0.00 |
Preferred stock - shares authorized | 4,300,000 | 4,300,000 |
Preferred stock - shares issued | 4,300,000 | 4,300,000 |
Preferred stock - shares outstanding | 4,300,000 | 4,300,000 |
Preferred stock - liquidation preference | $1,000,000 | $1,000,000 |
Consolidated_Statements_of_Ope
Consolidated Statements of Operations (USD $) | 3 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Income Statement [Abstract] | ' | ' |
Net Sales | $3,343,717 | $3,210,175 |
Cost of goods sold | 2,289,650 | 2,201,399 |
Gross profit | 1,054,067 | 1,008,776 |
Operating expenses: | ' | ' |
Advertising and promotion | 85,827 | 101,628 |
Other selling and marketing | 399,794 | 316,489 |
General and administrative | 429,866 | 455,424 |
Depreciation | 57,849 | 43,808 |
Total operating expenses | 973,336 | 917,349 |
Income from operations | 80,731 | 91,427 |
Other income (expense): | ' | ' |
Interest income | 62 | 97 |
Interest (expense) and financing costs | -107,735 | -85,045 |
Total Other Income (Expense) | -107,673 | -84,948 |
Net income (loss) before income taxes | -26,942 | 6,479 |
Provision for income taxes | ' | ' |
Net income (loss) | ($26,942) | $6,479 |
Net income (loss) per share | ' | ' |
Basic | $0 | $0 |
Diluted | $0 | $0 |
Shares used in computing net income (loss) per share | ' | ' |
Basic | 70,702,596 | 70,702,596 |
Diluted | 70,702,596 | 70,702,596 |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 3 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
OPERATING ACTIVITIES: | ' | ' |
Net income (loss) | ($26,942) | $6,479 |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ' | ' |
Depreciation and amortization | 57,849 | 43,808 |
Stock based compensation expense | 24,327 | 10,574 |
Provision for bad debt | 2,435 | 2,490 |
Deferred rent payable | -15,494 | -12,834 |
Changes in operating assets and liabilities: | ' | ' |
Accounts receivable | -139,825 | 61,479 |
Inventories | 72,166 | -144,662 |
Prepaid expenses and other assets | 5,761 | -29,317 |
Accounts payable | 6,017 | 120,517 |
Accrued compensation | 94,050 | 51,409 |
Accrued expenses and interest | -46,859 | 2,049 |
Net cash provided by operating activities | 33,485 | 111,992 |
INVESTING ACTIVITIES: | ' | ' |
Investment in equipment and leasehold improvements | -6,438 | -112,136 |
Net cash used in investing activities | -6,438 | -112,136 |
FINANCING ACTIVITIES: | ' | ' |
Net cash provided by (used in) line of credit | 164,965 | -68,992 |
Net repayment of credit card cash advance | -124,564 | ' |
Repayment of unsecured line of credit | -4,629 | -6,358 |
Net repayment of short-term debt | -157,104 | -92,513 |
Principal payments on equipment note payable and capital leases | -10,229 | -9,045 |
Net cash used in financing activities | -131,561 | -176,908 |
Net decrease in cash and cash equivalents | -104,514 | -177,052 |
Cash and cash equivalents at beginning of period | 397,860 | 494,420 |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | 293,346 | 317,368 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ' | ' |
Additions to capital leases | 30,979 | ' |
Cash paid during the year for: Interest | 100,862 | 74,719 |
Cash paid during the year for: Income taxes | ' | ' |
Organization_and_Nature_of_Bus
Organization and Nature of Business | 3 Months Ended |
Sep. 30, 2013 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' |
Organization and Nature of Business | ' |
NOTE 1. ORGANIZATION AND NATURE OF BUSINESS | |
Liberator, Inc. (the “Company” or “Liberator”) was incorporated in the State of Florida on February 25, 1999. References to the “Company” in these notes include the Company and its wholly owned subsidiaries, OneUp Innovations, Inc. (“OneUp”), and Foam Labs, Inc. (“Foam Labs”.) | |
The Company is a designer and manufacturer of various specialty furnishings for the sexual wellness market. The Company has also become an online retailer of products for the sexual wellness market. The Company’s sales and manufacturing operation are located in the same facility in Atlanta, Georgia. Sales are generated through internet and print advertisements. We have a diversified customer base with no particular concentration of credit risk in one economic sector. For the three months ending September 30, 2013, sales to customer A accounted for 16% of our wholesale channel net sales. Foreign operations and foreign net sales are not material. Our business is seasonal and as a result we typically experience higher sales in our second and third quarters. | |
The accompanying unaudited condensed interim consolidated financial statements of Liberator, Inc. and all of its wholly-owned subsidiaries (collectively, the "Company" “we” or "Liberator") included herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC"). Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with generally accepted accounting principles of the United States of America ("GAAP") have been condensed or omitted pursuant to applicable rules and regulations. In the opinion of management, all adjustments considered necessary for fair presentation have been included. The year-end condensed balance sheet data were derived from audited consolidated financial statements but do not include all disclosures required by GAAP. The results of operations for the three months ended September 30, 2013 are not necessarily indicative of the results to be expected for the entire year. These condensed interim consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Annual Report on Form 10-K for the fiscal year ended June 30, 2013. | |
Going Concern - The accompanying financial statements have been prepared in accordance with U.S. generally accepted accounting principles, which contemplates continuation of the Company as a going concern. As of September 30, 2013, the Company has an accumulated deficit of $8,074,627 and a working capital deficit of $1,220,429. This raises substantial doubt about to its ability to continue as a going concern. | |
In view of these matters, realization of a major portion of the assets in the accompanying balance sheet is dependent upon continued operations of the Company, which in turn is dependent upon the Company’s ability to meet its financing requirements, and the success of its future operations. Management believes that actions presently being taken to revise the Company’s operating and financial requirements provide the opportunity for the Company to continue as a going concern. | |
These actions include an ongoing initiative to increase gross profit margins through improved production controls and reporting. We also plan to manage discretionary expense levels to be better aligned with current and expected revenue levels. Furthermore, our plan of operation for the next twelve months continues a strategy for growth within our existing lines of business with an on-going focus on growing domestic sales. We estimate that the operational growth plans we have identified will require approximately $300,000 of funding. We expect to invest approximately $150,000 on sales and marketing programs, primarily sexual wellness advertising in magazines, on the internet and on cable television. We will also be exploring the opportunity to acquire other compatible businesses. | |
We plan to finance the required $300,000 with a combination of anticipated cash flows from operations over the next twelve months as well as cash on hand and cash we will seek to obtain through equity and debt financings. | |
The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. However, management cannot provide any assurances that the Company will be successful in accomplishing these plans. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 3 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Accounting Policies [Abstract] | ' | ||||||||
Summary of Significant Accounting Policies | ' | ||||||||
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||||||
Basis of Presentation | |||||||||
These consolidated financial statements include the accounts and operations of our wholly owned operating subsidiaries, OneUp Innovations, Inc. and Foam Labs, Inc. Intercompany accounts and transactions have been eliminated in consolidation. Certain prior period amounts have been reclassified to conform to the current year presentation. | |||||||||
The accompanying consolidated condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. These consolidated condensed financial statements and notes should be read in conjunction with the Company’s consolidated financial statements contained in the Company’s report on Form 10-K for the year ended June 30, 2013 filed on September 30, 2013. | |||||||||
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent assets and liabilities at the balance sheet date and the reported amounts of revenues and expenses during the period reported. Management reviews these estimates and assumptions periodically and reflects the effect of revisions in the period that they are determined to be necessary. Actual results could differ from those estimates and assumptions. | |||||||||
Use of Estimates | |||||||||
The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions in determining the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Significant estimates in these consolidated financial statements include estimates of: asset impairment; income taxes; tax valuation reserves; allowances for doubtful accounts; share-based compensation; and useful lives for depreciation and amortization. Actual results could differ materially from these estimates. | |||||||||
Revenue Recognition | |||||||||
We recognize revenues as goods are shipped to customers and title is transferred. The criteria for recognition of revenue are when persuasive evidence that an arrangement exists and both title and risk of loss have passed to the customer, the price is fixed or determinable, and collectability is reasonably assured. Sales returns and allowances are estimated and recorded as a reduction to sales in the period in which sales are recorded. | |||||||||
The Company records product sales net of estimated product returns and discounts from the list prices for its products. The amounts of product returns and the discount amounts have not been material to date. The Company includes shipping and handling costs in cost of product sales. | |||||||||
Cash and Cash Equivalents | |||||||||
For purposes of reporting cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. | |||||||||
Allowance for Doubtful Accounts | |||||||||
The allowance for doubtful accounts reflects management's best estimate of probable credit losses inherent in the accounts receivable balance. The Company determines the allowance based on historical experience, specifically identified nonpaying accounts and other currently available evidence. The Company reviews its allowance for doubtful accounts monthly with a focus on significant individual past due balances over 90 days. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have any off-balance sheet credit exposure related to its customers. | |||||||||
The following is a summary of Accounts Receivable as of September 30, 2013 and June 30, 2013. | |||||||||
September 30, | June 30, | ||||||||
2013 | 2013 | ||||||||
Accounts receivable | $ | 693,884 | $ | 555,628 | |||||
Allowance for doubtful accounts | (4,015 | ) | (4,986 | ) | |||||
Allowance for discounts and returns | (29,579 | ) | (27,742 | ) | |||||
Total accounts receivable, net | $ | 660,290 | $ | 522,900 | |||||
Inventories and Inventory Reserves | |||||||||
Inventories are stated at the lower of cost or market. Cost is determined using the first-in, first-out (FIFO) method. Market is defined as sales price less cost to dispose and a normal profit margin. Inventory costs include materials, labor, depreciation and overhead. | |||||||||
Concentration of Credit Risk | |||||||||
The Company maintains its cash accounts with banks located in Georgia. The total cash balances are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000 per bank. The Company had bank balances on deposit at September 30, 2013 that exceeded the balance insured by the FDIC by $58,635. Accounts receivable are typically unsecured and are derived from revenue earned from customers primarily located in North America and Europe. | |||||||||
During the three month ended September 30, 2013, we purchased 22% and 21% of total inventory purchases from two vendors. | |||||||||
During the fiscal year ended June 30, 2013, we purchased 30% and 18% of total inventory purchases from two vendors. | |||||||||
As of September 30, 2013 one of the Company’s customers represents 20% of the total accounts receivables. | |||||||||
Fair Value of Financial and Derivative Instruments | |||||||||
At September 30, 2013, our financial instruments included cash and cash equivalents, accounts receivable, accounts payable, and other long-term debt. | |||||||||
The fair values of these financial instruments approximated their carrying values based on either their short maturity or current terms for similar instruments. | |||||||||
The Company measures the fair value of its assets and liabilities under the guidance of ASC 820, Fair Value Measurements and Disclosures, which defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles and expands disclosures about fair value measurements. ASC 820 does not require any new fair value measurements, but its provisions apply to all other accounting pronouncements that require or permit fair value measurement. | |||||||||
ASC 820 clarifies that fair value is an exit price, representing the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants based on the highest and best use of the asset or liability. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. ASC 820 requires the Company to use valuation techniques to measure fair value that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized as follows: | |||||||||
Level 1: Observable inputs such as quoted prices for identical assets or liabilities in active markets; | |||||||||
Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly such as quoted prices for similar assets or liabilities or market-corroborated inputs; and | |||||||||
Level 3: Unobservable inputs for which there is little or no market data, which require the reporting entity to develop its own assumptions about how market participants would price the assets or liabilities. | |||||||||
The valuation techniques that may be used to measure fair value are as follows: | |||||||||
A. Market approach - Uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. | |||||||||
B. Income approach - Uses valuation techniques to convert future amounts to a single present amount based on current market expectations about those future amounts, including present value techniques, option-pricing models and excess earnings method. | |||||||||
C. Cost approach - Based on the amount that currently would be required to replace the service capacity of an asset (replacement cost). | |||||||||
Advertising Costs | |||||||||
Advertising costs are expensed in the period when the advertisements are first aired or distributed to the public. Prepaid advertising (included in prepaid expenses) was $17,177 at September 30, 2013 and $16,709 at June 30, 2013. Advertising expense for the three months ended September 30, 2013 and 2012 was $85,827 and $101,628, respectively. | |||||||||
Research and Development | |||||||||
Research and development expenses for new products are expensed as they are incurred. Expenses for new product development totaled $23,754 and $25,727 for the three months ended September 30, 2013 and 2012, respectively. Research and development costs are included in general and administrative expense. | |||||||||
Property and Equipment | |||||||||
Property and equipment are stated at cost. Depreciation and amortization are computed using the straight-line method over estimated service lives for financial reporting purposes of 2-10 years. | |||||||||
Expenditures for major renewals and betterments that extend the useful lives of property and equipment are capitalized. Expenditures for maintenance and repairs are charged to expense as incurred. When properties are disposed of, the related costs and accumulated depreciation are removed from the respective accounts, and any gain or loss is recognized currently. | |||||||||
Impairment or Disposal of Long Lived Assets | |||||||||
Long-lived assets to be held are reviewed for events or changes in circumstances which indicate that their carrying value may not be recoverable. They are tested for recoverability using undiscounted cash flows to determine whether or not impairment to such value has occurred as required by FASB ASC Topic No. 360, Property, Plant, and Equipment. The Company has determined that there was no impairment at September 30, 2013. | |||||||||
Operating Leases | |||||||||
The Company leases its facility under a ten year operating lease that was signed in September 2005 and expires December 31, 2015. The lease is on an escalating schedule with the final year on the lease at $34,358 per month. The liability for this difference in the monthly payments is accounted for as a deferred rent liability, and the balance in this account at September 30, 2013 was $178,022. The rent expense under this lease for the three months ended September 30, 2013 and 2012 was $80,931. The Company also leases certain equipment under operating leases, as more fully described in Note 14 - Commitments and Contingencies. | |||||||||
Segment Information | |||||||||
We have identified three reportable sales channels: Direct, Wholesale and Other. Direct includes product sales through our two e-commerce sites and our single retail store. Wholesale includes Liberator branded products sold to distributors and retailers, non-Liberator products sold to retailers, and private label items sold to other resellers. The Wholesale category also includes contract manufacturing services, which consists of specialty items that are manufactured in small quantities for certain customers, and which, to date, has not been a material part of our business. Other consists principally of shipping and handling fees and costs derived from our Direct business and fulfillment service fees. For the three months ending September 30, 2013, sales to Customer A accounted for 16% of our wholesale channel net sales. | |||||||||
The following is a summary of sales results for the Direct, Wholesale, and Other channels. | |||||||||
Three Months Ended | |||||||||
(unaudited) | |||||||||
September 30, | September 30, | ||||||||
2013 | 2012 | ||||||||
Net Sales: | |||||||||
Direct | $ | 1,351,487 | $ | 1,182,877 | |||||
Wholesale | 1,857,908 | 1,808,783 | |||||||
Other | 134,322 | 218,515 | |||||||
Total Net Sales | $ | 3,343,717 | $ | 3,210,175 | |||||
Gross Margin: | |||||||||
Direct | $ | 664,005 | $ | 602,199 | |||||
Wholesale | 474,614 | 419,424 | |||||||
Other | (84,552 | ) | (12,847 | ) | |||||
Total Gross Margin | $ | 1,054,067 | $ | 1,008,776 | |||||
Recently Adopted Accounting Pronouncements | |||||||||
Recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the AICPA, and the SEC, did not, or are not believed by management, to have a material impact on the Company’s present or future financial statements. | |||||||||
Net Income (Loss) Per Share | |||||||||
Basic net income (loss) per common share was determined by dividing net income (loss) applicable to common stockholders by the weighted average common shares outstanding during the period. | |||||||||
The following potentially issuable common shares were not included in the computation of diluted net income (loss) per share because they would have an anti-dilutive: | |||||||||
September 30, | |||||||||
2013 | 2012 | ||||||||
Common stock options | 4,966,500 | 3,023,956 | |||||||
Common stock warrants | 2,462,393 | 2,462,393 | |||||||
Convertible preferred stock | 4,300,000 | 4,300,000 | |||||||
Convertible notes | 7,545,455 | 4,375,000 | |||||||
Total | 19,274,348 | 14,161,349 | |||||||
Income Taxes | |||||||||
We utilize the asset and liability method of accounting for income taxes. We recognize deferred tax liabilities or assets for the expected future tax consequences of temporary differences between the book and tax basis of assets and liabilities. We regularly assess the likelihood that our deferred tax assets will be recovered from future taxable income. We consider projected future taxable income and ongoing tax planning strategies in assessing the amount of the valuation allowance necessary to offset our deferred tax assets that will not be recoverable. We have recorded and continue to carry a full valuation allowance against our gross deferred tax assets that will not reverse against deferred tax liabilities within the scheduled reversal period. If we determine in the future that it is more likely than not that we will realize all or a portion of our deferred tax assets, we will adjust our valuation allowance in the period we make the determination. We expect to provide a full valuation allowance on our future tax benefits until we can sustain a level of profitability that demonstrates our ability to realize these assets. | |||||||||
Stock Based Compensation | |||||||||
We account for stock-based compensation in accordance with FASB ASC 718, Compensation - Stock Compensation. We measure the cost of each stock option at its fair value on the grant date. Each award vests over the subsequent period during which the recipient is required to provide service in exchange for the award (the vesting period). The cost of each award is recognized as expense in the financial statements over the respective vesting period. All of the Company’s stock options are service-based awards, and because the Company’s stock options are plain vanilla,” as defined by the U. S. Securities and Exchange Commission in Staff Accounting Bulletin No. 107, they are reflected only in Stockholders’ Equity and Compensation Expense accounts. | |||||||||
Stock Issued for Services to other than Employees | |||||||||
Common stock, stock options and common stock warrants issued to other than employees or directors are recorded on the basis of their fair value, as required by FASB ASC 505, which is measured as of the date required by FASB ASC 505, “Equity – Based Payments to Non-Employees”. In accordance with FASB ASC 505, the stock options or common stock warrants are valued using the Black-Scholes option pricing model on the basis of the market price of the underlying common stock on the “valuation date”, which for options and warrants related to contracts that have substantial disincentives to non-performance is the date of the contract, and for all other contracts is the vesting date. Expense related to the options and warrants is recognized on a straight-line basis over the shorter of the period over which services are to be received or the vesting period. Where expense must be recognized prior to a valuation date, the expense is computed under the Black-Scholes option pricing model on the basis of the market price of the underlying common stock at the end of the period, and any subsequent changes in the market price of the underlying common stock up through the valuation date is reflected in the expense recorded in the subsequent period in which that change occurs. |
Stockbased_Compensation
Stockbased Compensation | 3 Months Ended | ||||||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||||||
Equity [Abstract] | ' | ||||||||||||||||||||
Stockbased Compensation | ' | ||||||||||||||||||||
NOTE 3. STOCK-BASED COMPENSATION | |||||||||||||||||||||
Options | |||||||||||||||||||||
At September 30, 2013, the Company had the 2009 Stock Option Plan (the Plan), which is shareholder-approved and under which 5,000,000 shares are reserved for issuance until the Plan terminates on October 20, 2019. | |||||||||||||||||||||
Under the Plan, eligible employees and certain independent consultants may be granted options to purchase shares of the Company’s common stock. The shares issuable under the Plan will either be shares of the Company’s authorized but previously unissued common stock or shares reacquired by the Company, including shares purchased on the open market. As of September 30, 2013, the number of shares available for issuance under the Plan was 433,500. | |||||||||||||||||||||
The following table summarizes the Company’s stock option activities during the three months ended September 30, 2013: | |||||||||||||||||||||
Number of Shares | Weighted | Weighted | Intrinsic | ||||||||||||||||||
Underlying | Average | Average | Value | ||||||||||||||||||
Outstanding | Remaining | Exercise | |||||||||||||||||||
Options | Contractual | Price | |||||||||||||||||||
Life (Years) | |||||||||||||||||||||
Options outstanding as of June 30, 2013 | 3,583,500 | 3.8 | $ | 0.1 | $ | - | |||||||||||||||
Granted | 1,726,000 | 4.9 | $ | 0.05 | $ | - | |||||||||||||||
Exercised | - | - | $ | - | $ | - | |||||||||||||||
Forfeited or expired | (343,000 | ) | 3.8 | $ | 0.11 | $ | - | ||||||||||||||
Options outstanding as of September 30, 2013 | 4,966,500 | 4 | $ | 0.09 | $ | - | |||||||||||||||
Options exercisable as of September 30, 2013 | 907,750 | 3.1 | $ | 0.13 | $ | - | |||||||||||||||
The aggregate intrinsic value in the table above is before applicable income taxes and represents the excess amount over the exercise price optionees would have received if all options had been exercised on the last business day of the period indicated, based on the Company’s closing stock price of $.045 for such day. | |||||||||||||||||||||
There were 1,726,000 stock options granted during the three months ended September 30, 2013 and 80,000 stock options granted during the three months ended September 30, 2012. The value assumptions related to options granted during the three months ended September 30, 2013 and 2012, respectively, were as follows: | |||||||||||||||||||||
Three Months | Three Months | ||||||||||||||||||||
Ended September 30, 2013 | Ended September 30, 2012 | ||||||||||||||||||||
Exercise Price: | $0.05 | $0.10 | |||||||||||||||||||
Volatility: | 251% | 40% | |||||||||||||||||||
Risk Free Rate: | 0.99% | 0.43% | |||||||||||||||||||
Vesting Period: | 4 years | 4 years | |||||||||||||||||||
Forfeiture Rate: | 0% | 0% | |||||||||||||||||||
Expected Life | 4.5 years | 4.5 years | |||||||||||||||||||
Dividend Rate | 0% | 0% | |||||||||||||||||||
The following table summarizes the weighted average characteristics of outstanding stock options as of | |||||||||||||||||||||
September 30, 2013: | |||||||||||||||||||||
Outstanding Options | Exercisable Options | ||||||||||||||||||||
Exercise Prices | Number | Remaining | Weighted | Number of | Weighted | ||||||||||||||||
of Shares | Life | Average | Shares | Average | |||||||||||||||||
(Years) | Price | Price | |||||||||||||||||||
$.05 to .09 | 3,746,000 | 4.5 | $ | 0.06 | 400,000 | $ | 0.06 | ||||||||||||||
$.15 to .16 | 966,500 | 2.9 | $ | 0.16 | 317,250 | $ | 0.16 | ||||||||||||||
$.20 to .25 | 254,000 | 1 | $ | 0.25 | 190,500 | $ | 0.25 | ||||||||||||||
Total stock options | 4,966,500 | 4 | $ | 0.09 | 907,750 | $ | 0.13 | ||||||||||||||
Stock-based compensation | |||||||||||||||||||||
We account for stock-based compensation to employees in accordance with FASB ASC 718, Compensation Stock Compensation. We measure the cost of each stock option and at its fair value on the grant date. Each award vests over the subsequent period during which the recipient is required to provide service in exchange for the award (the vesting period). The cost of each award is recognized as expense in the financial statements over the respective vesting period. | |||||||||||||||||||||
Stock option-based compensation expense recognized in the condensed consolidated statements of operations for the three month period ended September 30, 2013 and 2012 are based on awards ultimately expected to vest, and is reduced for estimated forfeitures. | |||||||||||||||||||||
The following table summarizes stock option-based compensation expense by line item in the Condensed Consolidated Statements of Operations, all relating to the Plan: | |||||||||||||||||||||
Three Months | |||||||||||||||||||||
Ended September 30, | |||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||
Cost of Goods Sold | $ | 4,600 | $ | 2,974 | |||||||||||||||||
Other Selling and Marketing | 2,227 | 933 | |||||||||||||||||||
General and Administrative | 17,500 | 6,667 | |||||||||||||||||||
Total Stock-based Compensation Expense | $ | 24,327 | $ | 10,574 | |||||||||||||||||
As of September 30, 2013, the Company’s total unrecognized compensation cost was $115,444, which will be recognized over the weighted average vesting period of 3 years. |
Inventories
Inventories | 3 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Inventory Disclosure [Abstract] | ' | ||||||||
Inventories | ' | ||||||||
NOTE 4. INVENTORIES, NET | |||||||||
Inventories are stated at the lower of cost (which approximates first-in, first-out) or market. Market is defined as sales price less cost to dispose and a normal profit margin. Inventories consisted of the following: | |||||||||
30-Sep-13 | June 30, 2013 | ||||||||
Raw materials | $ | 484,957 | $ | 528,771 | |||||
Work in process | 152,236 | 138,240 | |||||||
Finished goods | 700,344 | 742,692 | |||||||
Inventories, net | $ | 1,337,537 | $ | 1,409,703 | |||||
Equipment_and_Leasehold_Improv
Equipment and Leasehold Improvements, Net | 3 Months Ended | ||||||||||
Sep. 30, 2013 | |||||||||||
Property, Plant and Equipment [Abstract] | ' | ||||||||||
Equipment and Leasehold Improvements, Net | ' | ||||||||||
NOTE 5. EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET | |||||||||||
Equipment and leasehold improvements are stated at cost. Depreciation and amortization are provided using the straight-line method over the estimated useful lives for equipment and furniture and fixtures, or the shorter of the remaining lease term or estimated useful lives for leasehold improvements. | |||||||||||
Equipment and leasehold improvements consisted of the following: | |||||||||||
September 30, | June 30, | Estimated | |||||||||
2013 | 2013 | Useful Life | |||||||||
Factory Equipment | $ | 1,731,410 | $ | 1,693,993 | 2-10 years | ||||||
Computer Equipment and Software | 867,677 | 867,677 | 5-7 years | ||||||||
Office Equipment and Furniture | 166,996 | 166,996 | 5-7 years | ||||||||
Leasehold Improvements | 343,120 | 343,120 | 10 years | ||||||||
Subtotal | 3,109,203 | 3,071,786 | |||||||||
Accumulated Depreciation | (2,372,645 | ) | (2,314,796 | ) | |||||||
Total equipment and leasehold improvements, net | $ | 736,558 | $ | 756,990 | |||||||
Management reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. Recoverability of these assets is measured by a comparison of the carrying amount to forecasted undiscounted future cash flows expected to be generated by the asset. If the carrying amount exceeds its estimated future cash flows, then an impairment charge is recognized to the extent that the carrying amount exceeds the asset’s fair value. Management has determined no asset impairment occurred during the three months ended September 30, 2013. |
Notes_Payable
Notes Payable | 3 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Debt Disclosure [Abstract] | ' | ||||||||
Notes Payable | ' | ||||||||
NOTE 6. NOTES PAYABLE | |||||||||
Notes payable consisted of the following: | |||||||||
30-Sep-13 | 30-Jun-13 | ||||||||
Unsecured note payable for $250,000 to Hope Capital, Inc. with interest at 20%, principal and interest paid bi-weekly, maturing December 6, 2013. Secured by personal guarantee of majority stockholder. | 52,022 | 121,584 | |||||||
Unsecured note payable for $250,000 to Hope Capital, Inc. with interest at 20%, principal and interest paid bi-weekly, maturing January 10, 2014. Secured by personal guarantee of majority stockholder. | 82,292 | 140,784 | |||||||
Unsecured note payable for $130,000 to Hope Capital, Inc. with interest at 20%, principal and interest paid bi-weekly, maturing April 4, 2014. Secured by personal guarantee of majority stockholder. | 73,207 | 102,256 | |||||||
Unsecured note payable for $100,000 to an individual, with interest at 20% payable monthly; principal due in full on July 31, 2012. Subsequent to June 30, 2012, the due date on this note was extended to July 31, 2013. Subsequent to June 30, 2013, the due date on this note was extended to July 31, 2015. Secured by personal guarantee of majority stockholder. | 100,000 | 100,000 | |||||||
Unsecured note payable for $300,000 to an individual, with interest at 20%, principal and interest originally due in full on January 3, 2012; extended to January 3, 2013, then extended to January 3, 2014, with interest payable monthly and principal due on maturity. Secured by personal guarantee of majority stockholder. | 300,000 | 300,000 | |||||||
Unsecured note payable for $200,000 to an individual, with interest at 16%, principal and interest originally due on January 3, 2011, extended to May 1, 2013. Beginning May 31, 2011, the interest rate was increased to 20%, with interest payable monthly, and the principal due in full on May 1, 2013. Effective April 30, 2013, the due date on this note was extended to May 1, 2015. Secured by personal guarantee of majority stockholder. | 200,000 | 200,000 | |||||||
Total unsecured notes payable | 807,521 | 964,624 | |||||||
Less: current portion | (507,521 | ) | (664,624 | ) | |||||
Long-term unsecured notes payable | $ | 300,000 | $ | 300,000 | |||||
Shortterm_Notes_PayableRelated
Short-term Notes Payable-Related Party | 3 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Notes to Financial Statements | ' | ||||||||
Short-term Notes Payable-Related Party | ' | ||||||||
NOTE 7. SHORT TERM NOTES PAYABLE-RELATED PARTY | |||||||||
September 30, | June 30, | ||||||||
2013 | 2013 | ||||||||
Unsecured note payable to an officer, with interest at 3.25%, due on demand | $ | 40,000 | $ | 40,000 | |||||
Unsecured note payable to an officer, with interest at 3.25%, due on demand | 76,000 | 76,000 | |||||||
Total unsecured notes payable | $ | 116,000 | $ | 116,000 |
Line_of_Credit
Line of Credit | 3 Months Ended |
Sep. 30, 2013 | |
Notes to Financial Statements | ' |
Line of Credit | ' |
NOTE 8. LINE OF CREDIT | |
On May 24, 2011, the Company’s wholly owned subsidiary, OneUp and OneUp’s wholly owned subsidiary, Foam Labs entered into a credit facility with a finance company, Advance Financial Corporation, to provide it with an asset based line of credit of up to $750,000 against 85% of eligible accounts receivable (as defined in the agreement) for the purpose of improving working capital. The term of the agreement is one year, renewable for additional one-year terms unless either party provides written notice of non-renewal at least 90 days prior to the end of the current financing period. The credit facility is secured by our accounts receivable and other rights to payment, general intangibles, inventory and equipment, and are subject to eligibility requirements for current accounts receivable. Advances under the agreement bear interest at a rate of 2.5% over the lenders Index Rate. In addition there is a Monthly Service Fee (as defined in the agreement) of up to 1.25% per month. | |
On September 4, 2013, the credit agreement with Advance Financial Corporation was amended and restated to increase the asset based line of credit to $1,000,000 to include an Inventory Advance (as defined in the amended and restated receivable financing agreement) of up to the lesser of $300,000 or 75% of the eligible accounts receivable loan. In addition, the amended and restated agreement changed the interest calculation to prime rate plus 3% (as of September 30, 2013, the interest rate was 6.25%) and the Monthly Service Fee was changed to .5% per month. | |
The Company’s CEO, Louis Friedman, has personally guaranteed the repayment of the facility. In addition, Liberator has provided its corporate guarantee of the credit facility. On September 30, 2013, the balance owed under this line of credit was $531,161. On September 30, 2013, we were current and in compliance with all terms and conditions of this line of credit. | |
Management believes cash flows generated from operations, along with current cash and investments as well as borrowing capacity under the line of credit should be sufficient to finance capital requirements required by operations. If new business opportunities do arise, additional outside funding may be required. |
Credit_Card_Advance
Credit Card Advance | 3 Months Ended |
Sep. 30, 2013 | |
Notes to Financial Statements | ' |
Credit Card Advance | ' |
NOTE 9. CREDIT CARD ADVANCE | |
On October 4, 2012, the Company entered into an agreement with Credit Cash NJ, LLC whereby Credit Cash agreed to loan OneUp and Foam Labs a total of $400,000. The loan is secured by OneUp’s and Foam Lab’s existing and future credit card collections. Terms of the loan call for a repayment of $448,000, which includes a one-time finance charge of $48,000, approximately ten months after the funding date. On May 14, 2013, the loan was renewed for $400,000 and the remaining balance of $126,518 on the prior loan was repaid from the net proceeds of the renewal. At the time of the renewal, the Company had a balance of $14,400 in unamortized discount which was charged to interest expense during the fourth quarter. Terms of the renewal loan call for a repayment of $448,000, which includes a one-time finance charge of $48,000, approximately ten months after May 14, 2013. This will be accomplished by Credit Cash withholding a fixed amount each business day of $2,074 from OneUp’s credit card receipts until full repayment is made. The loan is guaranteed by the Company and is personally guaranteed by the Company’s CEO and majority shareholder, Louis S. Friedman. As of September 30, 2013, the principle amount is $249,388, net of a discount of $24,000. |
Unsecured_Lines_of_Credit
Unsecured Lines of Credit | 3 Months Ended |
Sep. 30, 2013 | |
Notes to Financial Statements | ' |
Unsecured Lines of Credit | ' |
NOTE 10. UNSECURED LINES OF CREDIT | |
The Company has drawn cash advances on two unsecured lines of credit that are in the name of the Company and Louis S. Friedman. The terms of these unsecured lines of credit call for monthly payments of principal and interest, with interest rates ranging from 7% to 18%. The aggregate amount owed on the two unsecured lines of credit was $7,906 at September 30, 2013 and $12,535 at June 30, 2013. |
Convertible_Notes_Payable_Shar
Convertible Notes Payable Shareholder | 3 Months Ended |
Sep. 30, 2013 | |
Notes to Financial Statements | ' |
Convertible Notes Payable Shareholder | ' |
NOTE 11. CONVERTIBLE NOTES PAYABLE - SHAREHOLDER | |
On June 24, 2009, the Company issued a 3% convertible note payable to Hope Capital with a face amount of $375,000. Hope Capital is a shareholder of the Company and was the majority shareholder of the Company before the merger with OneUp. The note was convertible, at the holder’s option or the Company’s option, into common stock at $.25 per share and could be converted at any time prior to the maturity date of August 15, 2012. Effective August 15, 2012, the note was amended to reduce the per share conversion price to $0.20 and extend the maturity date to August 15, 2013. Effective August 15, 2013, the note was amended again to reduce the per share conversion price to $0.125 and extend the maturity date to August 15, 2014. There was no beneficial conversion on the date of amendment as the face value was equal to the conversion price. Upon maturity, the Company has the option to either repay the note plus accrued interest in cash or issue the equivalent number of shares of common stock at $.125 per share, unless such conversion would force the holders’ total ownership of common stock of the Company to exceed 9.9% of the total shares outstanding. As of September 30, 2013, the principle balance was $375,000 and accrued interest was $47,897. | |
On September 2, 2009, the Company issued a 3% convertible note payable to Hope Capital, Inc. with a face amount of $250,000. The note was convertible, at the holder’s option, into common stock at $.25 per share and could be converted at any time prior to the maturity date of September 2, 2012. Effective September 2, 2012, the note was amended to reduce the per share conversion price to $0.10 and extend the maturity date to September 2, 2013. Effective September 2, 2013, the note was amended again to reduce the per share conversion price to $0.055 and extend the maturity date to September 2, 2014. There was no beneficial conversion on the date of amendment as the face value was equal to the conversion price. Upon maturity, the Company has the option to either repay the note plus accrued interest in cash or issue the equivalent number of shares of common stock at $.055 per share, unless such conversion would force the holders’ total ownership of common stock of the Company to exceed 9.9% of the total shares outstanding. As of September 30, 2013, the principle balance was $250,000 and the accrued interest was $30,596. |
Stockholders_Equity
Stockholders' Equity | 3 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Equity [Abstract] | ' | ||||||||
Stockholders' Equity | ' | ||||||||
NOTE 12. STOCKHOLDERS’ EQUITY | |||||||||
Common Stock- The Company’s authorized common stock was 175,000,000 shares at September 30, 2013 and June 30, 2013. Common shareholders are entitled to dividends if and when declared by the Company’s Board of Directors, subject to preferred stockholder dividend rights. At September 30, 2013, the Company had reserved the following shares of common stock for issuance: | |||||||||
September 30, | |||||||||
2013 | |||||||||
Shares of common stock subject to outstanding warrants | 2,462,393 | ||||||||
Shares of common stock reserved for issuance under the 2009 Stock Option Plan | 5,000,000 | ||||||||
Shares of common stock issuable upon conversion of the Preferred Stock | 4,300,000 | ||||||||
Shares of common stock issuable upon conversion of Convertible Notes | 7,545,455 | ||||||||
Total shares of common stock equivalents | 19,307,848 | ||||||||
Preferred Stock - On February 18, 2011, the Company filed an amendment to its Articles of Incorporation, effective February 9, 2011, authorizing the issuance of preferred stock and the Company now has 10,000,000 authorized shares of preferred stock, par value $.0001 per share, of which 4,300,000 shares have been designated and issued as Series A Convertible Preferred Stock. Each share of Series A Convertible Preferred Stock is convertible into one share of common stock and has a liquidation preference of $.2325 ($1,000,000 in the aggregate). Liquidation payments to the preferred holders have priority and are made in preference to any payments to the holders of common stock. In addition, each share of Series A Convertible Preferred Stock is entitled to the number of votes equal to the result of: (i) the number of shares of common stock of the Company issued and outstanding at the time of such vote multiplied by 1.01; divided by (ii) the total number of Series A Convertible Preferred Shares issued and outstanding at the time of such vote. At each meeting of shareholders of the Company with respect to any and all matters presented to the shareholders of the Company for their action or consideration, including the election of directors, holders of Series A Convertible Preferred Shares shall vote together with the holders of common shares as a single class. | |||||||||
Stock Purchase Warrants - As of September 30, 2013, the following share purchase warrants were outstanding: | |||||||||
Number of Warrants | Exercise | Expiration | |||||||
Prices | Dates | ||||||||
292,479 | $ | 0.5 | 26-Jun-14 | ||||||
1,292,479 | $ | 0.75 | 26-Jun-14 | ||||||
877,435 | $ | 1 | 26-Jun-14 | ||||||
2,462,393 | |||||||||
The following table summarizes the continuity of the Company’s share purchase warrants: | |||||||||
Shares | Weighted Average | ||||||||
Exercise Prices | |||||||||
Balance June 30, 2013 | 2,462,393 | $ | 0.81 | ||||||
Expired | — | — | |||||||
Balance September 30, 2013 | 2,462,393 | $ | 0.81 | ||||||
Related_Parties
Related Parties | 3 Months Ended |
Sep. 30, 2013 | |
Related Party Transactions [Abstract] | ' |
Related Parties | ' |
NOTE 13. RELATED PARTIES | |
The Company has a subordinated note payable to the majority shareholder’s wife in the amount of $76,000. Interest on the note during the three months ended September 30, 2013 was accrued by the Company at the prevailing prime rate (which is currently 3.25%) and totaled $623. The accrued interest on the note as of September 30, 2013 was $10,673. This note is subordinate to all other credit facilities currently in place. | |
On June 24, 2009, the Company issued a 3% convertible note payable to Hope Capital with a face amount of $375,000. Hope Capital is a shareholder of the Company and was the majority shareholder of the Company before the merger with OneUp Innovations. The note was convertible, at the holder’s option or the Company’s option, into common stock at $.25 per share and could be converted at any time prior to the maturity date of August 15, 2012. Effective August 15, 2012, the note was amended to reduce the per share conversion price to $0.20 and extend the maturity date to August 15, 2013. On August 15, 2013, the note was further amended to reduce the per share conversion price to $.125 and extend the maturity date to August 15, 2014. Upon maturity, the Company has the option to either repay the note plus accrued interest in cash or issue the equivalent number of shares of common stock at $.125 per share, unless such conversion would force the holders’ total ownership of common stock of the Company to exceed 9.9% of the total shares outstanding. There was no beneficial conversion on the date of amendment as the face value was equal to the conversion price. As of September 30, 2013, the principle balance was $375,000 and accrued interest was $47,897. | |
On September 2, 2009, the Company issued a 3% convertible note payable to Hope Capital. The note was convertible, at the holder’s option, into common stock at $.25 per share and could be converted at any time prior to the maturity date of September 2, 2012. Effective September 2, 2012, the note was amended to reduce the per share conversion price to $0.10 and extend the maturity date to September 2, 2013. Effective September 2, 2013, the note was amended again to reduce the per share conversion price to $0.055 and extend the maturity date to September 2, 2014. There was no beneficial conversion on the date of amendment as the face value was equal to the conversion price. As of September 30, 2013, the principle balance was $250,000 and the accrued interest was $30,596. | |
On October 30, 2010, Mr. Friedman, loaned the Company $40,000. Interest on the loan during the three months ended September 30, 2013 was accrued by the Company at the prevailing prime rate (which was 3.25% on September 30, 2013) and totaled $328. The accrued interest on the note as of September 30, 2013 was $3,576. This note is subordinate to all other credit facilities currently in place. | |
On January 3, 2011, an individual loaned the Company $300,000 with an interest rate of 20%. Interest on the loan is being paid monthly, with the principal due in full on January 3, 2012; extended to January 3, 2013; then extended to January 3, 2014 with interest payable monthly and principle due on maturity. Louis Friedman, the Company’s CEO, personally guaranteed the repayment of the loan obligation. | |
The Company’s CEO, Louis Friedman, has personally guaranteed the repayment of the loan obligation to Advance Financial Corporation (see Note 8 – Line of Credit). In addition, Liberator has provided its corporate guarantees of the credit facility. On September 30, 2013, the balance owed under this line of credit was $531,161. | |
On July 20, 2011, the Company issued an unsecured promissory note to an individual for $100,000. Terms of the promissory note call for monthly interest payments of $1,667 (equal to interest at 20% per annum), with the principal amount due in full on July 31, 2012. On July 31, 2012, the note was extended to July 31, 2013 under the same terms. Prior to June 30, 2013, the note was extended to July 31, 2015 under the same terms. Repayment of the promissory note is personally guaranteed by the Company’s CEO and majority shareholder, Louis S. Friedman. | |
On December 10, 2012, the Company issued an unsecured promissory note to Hope Capital and Jabro Funding Corp. for $250,000. Terms of the note call for bi-weekly principal and interest payments of $10,646 with the note due in full on December 6, 2013. Mr. Friedman has personally guaranteed the repayment of the loan obligation. | |
On January 14, 2013, the Company issued an unsecured promissory note to Hope Capital and Jabro Funding Corp. for $250,000. Terms of the note call for bi-weekly principal and interest payments of $10,646 with the note due in full on January 10, 2014. Mr. Friedman has personally guaranteed the repayment of the loan obligation. | |
The loan from Credit Cash (see Note 9 – Credit Card Advance) is guaranteed by the Company (including OneUp and Foam Labs) and is personally guaranteed by the Company’s CEO and majority shareholder, Louis S. Friedman. |
Commitments_and_Contingencies
Commitments and Contingencies | 3 Months Ended | ||||
Sep. 30, 2013 | |||||
Commitments and Contingencies Disclosure [Abstract] | ' | ||||
Commitments and Contingencies | ' | ||||
NOTE 14. COMMITMENTS AND CONTINGENCIES | |||||
Operating Leases | |||||
The Company leases its facility under a ten year operating lease that was signed in September 2005 and expires December 31, 2015. Lease payments are on an escalating schedule with the final year on the lease at $34,358 per month. The liability for this difference in the monthly payments is accounted for as a deferred rent liability, and the balance in this account at September 30, 2013 was $178,022 and $193,516 at June 30, 2013. The rent expense under this lease for the three months ended September 30, 2013 and 2012 was $80,931. | |||||
The Company also leases certain postage equipment under an operating lease. The monthly lease is $104 per month and expires January 2017. | |||||
The Company entered into an operating lease for certain material handling equipment in September 2010. The monthly lease amount is $1,587 per month and expires in September 2015. | |||||
Future minimum lease payments under non-cancelable operating leases at September 30, 2013 are as follows: | |||||
Years ending June 30, | |||||
2014 (nine months) | 374,760 | ||||
2015 | 425,274 | ||||
2016 | 210,569 | ||||
Thereafter through 2017 | 1,038 | ||||
Total minimum lease payments | $ | 1,011,641 | |||
Capital Leases | |||||
The Company has acquired equipment under the provisions of long-term leases. For financial reporting purposes, minimum lease payments relating to the equipment have been capitalized. The leased properties under these capital leases have a total cost of $349,205. These assets are included in the fixed assets listed in Note 5 - Equipment and Leasehold Improvements and include computers, software, furniture, and equipment. The capital leases have stated or imputed interest rates ranging from 7% to 21%. | |||||
The following is an analysis of the minimum future lease payments subsequent to September 30, 2013: | |||||
Years ending June 30, | |||||
2014 (nine months) | $ | 26,607 | |||
2015 | 31,407 | ||||
2016 | 30,311 | ||||
2017 | 18,885 | ||||
Thereafter through 2018 | 440 | ||||
Total minimum lease payments | 107,650 | ||||
Less amount representing interest | (24,551 | ) | |||
Present value of net minimum lease payments | 83,099 | ||||
Less current portion | (23,950 | ) | |||
Long-term obligations under leases payable | $ | 59,149 | |||
Legal Proceedings | |||||
As of the date of this Quarterly Report on Form 10-Q, there are no material pending legal or governmental proceedings relating to our company or properties to which we are a party, and to our knowledge there are no material proceedings to which any of our directors, executive officers or affiliates are a party adverse to us or which have a material interest adverse to us. |
Subsequent_Events
Subsequent Events | 3 Months Ended |
Sep. 30, 2013 | |
Subsequent Events [Abstract] | ' |
Subsequent Events | ' |
NOTE 15. SUBSEQUENT EVENTS | |
On October 31, 2013, the Company issued an unsecured promissory note to an individual for $100,000. Terms of the promissory note call for monthly interest payments of $1,667 (equal to interest at 20% per annum) beginning on November 30, 2013, with the principal amount due in full on or before October 31, 2014. Repayment of the promissory note is personally guaranteed by the Company’s CEO and majority shareholder, Louis S. Friedman. |
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policies) | 3 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Accounting Policies [Abstract] | ' | ||||||||
Organization | ' | ||||||||
Liberator, Inc. (the “Company” or “Liberator”) was incorporated in the State of Florida on February 25, 1999. References to the “Company” in these notes include the Company and its wholly owned subsidiaries, OneUp Innovations, Inc. (“OneUp”), and Foam Labs, Inc. (“Foam Labs”.) | |||||||||
The Company is a designer and manufacturer of various specialty furnishings for the sexual wellness market. The Company has also become an online retailer of products for the sexual wellness market. The Company’s sales and manufacturing operation are located in the same facility in Atlanta, Georgia. Sales are generated through internet and print advertisements. We have a diversified customer base with no particular concentration of credit risk in one economic sector. For the three months ending September 30, 2013, sales to customer A accounted for 16% of our wholesale channel net sales. Foreign operations and foreign net sales are not material. Our business is seasonal and as a result we typically experience higher sales in our second and third quarters. | |||||||||
The accompanying unaudited condensed interim consolidated financial statements of Liberator, Inc. and all of its wholly-owned subsidiaries (collectively, the "Company" “we” or "Liberator") included herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC"). Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with generally accepted accounting principles of the United States of America ("GAAP") have been condensed or omitted pursuant to applicable rules and regulations. In the opinion of management, all adjustments considered necessary for fair presentation have been included. The year-end condensed balance sheet data were derived from audited consolidated financial statements but do not include all disclosures required by GAAP. The results of operations for the three months ended September 30, 2013 are not necessarily indicative of the results to be expected for the entire year. These condensed interim consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Annual Report on Form 10-K for the fiscal year ended June 30, 2013. | |||||||||
Going Concern | ' | ||||||||
Going Concern - The accompanying financial statements have been prepared in accordance with U.S. generally accepted accounting principles, which contemplates continuation of the Company as a going concern. As of September 30, 2013, the Company has an accumulated deficit of $8,074,627 and a working capital deficit of $1,220,429. This raises substantial doubt about to its ability to continue as a going concern. | |||||||||
In view of these matters, realization of a major portion of the assets in the accompanying balance sheet is dependent upon continued operations of the Company, which in turn is dependent upon the Company’s ability to meet its financing requirements, and the success of its future operations. Management believes that actions presently being taken to revise the Company’s operating and financial requirements provide the opportunity for the Company to continue as a going concern. | |||||||||
These actions include an ongoing initiative to increase gross profit margins through improved production controls and reporting. We also plan to manage discretionary expense levels to be better aligned with current and expected revenue levels. Furthermore, our plan of operation for the next twelve months continues a strategy for growth within our existing lines of business with an on-going focus on growing domestic sales. We estimate that the operational growth plans we have identified will require approximately $300,000 of funding. We expect to invest approximately $150,000 on sales and marketing programs, primarily sexual wellness advertising in magazines, on the internet and on cable television. We will also be exploring the opportunity to acquire other compatible businesses. | |||||||||
We plan to finance the required $300,000 with a combination of anticipated cash flows from operations over the next twelve months as well as cash on hand and cash we will seek to obtain through equity and debt financings. | |||||||||
The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. However, management cannot provide any assurances that the Company will be successful in accomplishing these plans. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. | |||||||||
Basis of Presentation | ' | ||||||||
Basis of Presentation | |||||||||
These consolidated financial statements include the accounts and operations of our wholly owned operating subsidiaries, OneUp Innovations, Inc. and Foam Labs, Inc. Intercompany accounts and transactions have been eliminated in consolidation. Certain prior period amounts have been reclassified to conform to the current year presentation. | |||||||||
The accompanying consolidated condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. These consolidated condensed financial statements and notes should be read in conjunction with the Company’s consolidated financial statements contained in the Company’s report on Form 10-K for the year ended June 30, 2013 filed on September 30, 2013. | |||||||||
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent assets and liabilities at the balance sheet date and the reported amounts of revenues and expenses during the period reported. Management reviews these estimates and assumptions periodically and reflects the effect of revisions in the period that they are determined to be necessary. Actual results could differ from those estimates and assumptions. | |||||||||
Use of Estimates | ' | ||||||||
Use of Estimates | |||||||||
The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions in determining the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Significant estimates in these consolidated financial statements include estimates of: asset impairment; income taxes; tax valuation reserves; allowances for doubtful accounts; share-based compensation; and useful lives for depreciation and amortization. Actual results could differ materially from these estimates. | |||||||||
Revenue Recognition | ' | ||||||||
Revenue Recognition | |||||||||
We recognize revenues as goods are shipped to customers and title is transferred. The criteria for recognition of revenue are when persuasive evidence that an arrangement exists and both title and risk of loss have passed to the customer, the price is fixed or determinable, and collectability is reasonably assured. Sales returns and allowances are estimated and recorded as a reduction to sales in the period in which sales are recorded. | |||||||||
The Company records product sales net of estimated product returns and discounts from the list prices for its products. The amounts of product returns and the discount amounts have not been material to date. The Company includes shipping and handling costs in cost of product sales. | |||||||||
Cash and Cash Equivalents | ' | ||||||||
Cash and Cash Equivalents | |||||||||
For purposes of reporting cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. | |||||||||
Allowance for Doubtful Accounts | ' | ||||||||
Allowance for Doubtful Accounts | |||||||||
The allowance for doubtful accounts reflects management's best estimate of probable credit losses inherent in the accounts receivable balance. The Company determines the allowance based on historical experience, specifically identified nonpaying accounts and other currently available evidence. The Company reviews its allowance for doubtful accounts monthly with a focus on significant individual past due balances over 90 days. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have any off-balance sheet credit exposure related to its customers. | |||||||||
The following is a summary of Accounts Receivable as of September 30, 2013 and June 30, 2013. | |||||||||
September 30, | June 30, | ||||||||
2013 | 2013 | ||||||||
Accounts receivable | $ | 693,884 | $ | 555,628 | |||||
Allowance for doubtful accounts | (4,015 | ) | (4,986 | ) | |||||
Allowance for discounts and returns | (29,579 | ) | (27,742 | ) | |||||
Total accounts receivable, net | $ | 660,290 | $ | 522,900 | |||||
Inventories and Inventory Reserves | ' | ||||||||
Inventories and Inventory Reserves | |||||||||
Inventories are stated at the lower of cost or market. Cost is determined using the first-in, first-out (FIFO) method. Market is defined as sales price less cost to dispose and a normal profit margin. Inventory costs include materials, labor, depreciation and overhead. | |||||||||
Concentration of Credit Risk | ' | ||||||||
Concentration of Credit Risk | |||||||||
The Company maintains its cash accounts with banks located in Georgia. The total cash balances are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000 per bank. The Company had bank balances on deposit at September 30, 2013 that exceeded the balance insured by the FDIC by $58,635. Accounts receivable are typically unsecured and are derived from revenue earned from customers primarily located in North America and Europe. | |||||||||
During the three month ended September 30, 2013, we purchased 22% and 21% of total inventory purchases from two vendors. | |||||||||
During the fiscal year ended June 30, 2013, we purchased 30% and 18% of total inventory purchases from two vendors. | |||||||||
As of September 30, 2013 one of the Company’s customers represents 20% of the total accounts receivables. | |||||||||
Fair Value of Financial and Derivative Instruments | ' | ||||||||
Fair Value of Financial and Derivative Instruments | |||||||||
At September 30, 2013, our financial instruments included cash and cash equivalents, accounts receivable, accounts payable, and other long-term debt. | |||||||||
The fair values of these financial instruments approximated their carrying values based on either their short maturity or current terms for similar instruments. | |||||||||
The Company measures the fair value of its assets and liabilities under the guidance of ASC 820, Fair Value Measurements and Disclosures, which defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles and expands disclosures about fair value measurements. ASC 820 does not require any new fair value measurements, but its provisions apply to all other accounting pronouncements that require or permit fair value measurement. | |||||||||
ASC 820 clarifies that fair value is an exit price, representing the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants based on the highest and best use of the asset or liability. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. ASC 820 requires the Company to use valuation techniques to measure fair value that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized as follows: | |||||||||
Level 1: Observable inputs such as quoted prices for identical assets or liabilities in active markets; | |||||||||
Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly such as quoted prices for similar assets or liabilities or market-corroborated inputs; and | |||||||||
Level 3: Unobservable inputs for which there is little or no market data, which require the reporting entity to develop its own assumptions about how market participants would price the assets or liabilities. | |||||||||
The valuation techniques that may be used to measure fair value are as follows: | |||||||||
A. Market approach - Uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. | |||||||||
B. Income approach - Uses valuation techniques to convert future amounts to a single present amount based on current market expectations about those future amounts, including present value techniques, option-pricing models and excess earnings method. | |||||||||
C. Cost approach - Based on the amount that currently would be required to replace the service capacity of an asset (replacement cost). | |||||||||
Advertising Costs | ' | ||||||||
Advertising Costs | |||||||||
Advertising costs are expensed in the period when the advertisements are first aired or distributed to the public. Prepaid advertising (included in prepaid expenses) was $17,177 at September 30, 2013 and $16,709 at June 30, 2013. Advertising expense for the three months ended September 30, 2013 and 2012 was $85,827 and $101,628, respectively. | |||||||||
Research and Development | ' | ||||||||
Research and Development | |||||||||
Research and development expenses for new products are expensed as they are incurred. Expenses for new product development totaled $23,754 and $25,727 for the three months ended September 30, 2013 and 2012, respectively. Research and development costs are included in general and administrative expense. | |||||||||
Property and Equipment | ' | ||||||||
Property and Equipment | |||||||||
Property and equipment are stated at cost. Depreciation and amortization are computed using the straight-line method over estimated service lives for financial reporting purposes of 2-10 years. | |||||||||
Expenditures for major renewals and betterments that extend the useful lives of property and equipment are capitalized. Expenditures for maintenance and repairs are charged to expense as incurred. When properties are disposed of, the related costs and accumulated depreciation are removed from the respective accounts, and any gain or loss is recognized currently. | |||||||||
Impairment or Disposal of Long Lived Assets | ' | ||||||||
Impairment or Disposal of Long Lived Assets | |||||||||
Long-lived assets to be held are reviewed for events or changes in circumstances which indicate that their carrying value may not be recoverable. They are tested for recoverability using undiscounted cash flows to determine whether or not impairment to such value has occurred as required by FASB ASC Topic No. 360, Property, Plant, and Equipment. The Company has determined that there was no impairment at September 30, 2013. | |||||||||
Operating Leases | ' | ||||||||
Operating Leases | |||||||||
The Company leases its facility under a ten year operating lease that was signed in September 2005 and expires December 31, 2015. The lease is on an escalating schedule with the final year on the lease at $34,358 per month. The liability for this difference in the monthly payments is accounted for as a deferred rent liability, and the balance in this account at September 30, 2013 was $178,022. The rent expense under this lease for the three months ended September 30, 2013 and 2012 was $80,931. The Company also leases certain equipment under operating leases, as more fully described in Note 14 - Commitments and Contingencies. | |||||||||
Segment Information | ' | ||||||||
Segment Information | |||||||||
We have identified three reportable sales channels: Direct, Wholesale and Other. Direct includes product sales through our two e-commerce sites and our single retail store. Wholesale includes Liberator branded products sold to distributors and retailers, non-Liberator products sold to retailers, and private label items sold to other resellers. The Wholesale category also includes contract manufacturing services, which consists of specialty items that are manufactured in small quantities for certain customers, and which, to date, has not been a material part of our business. Other consists principally of shipping and handling fees and costs derived from our Direct business and fulfillment service fees. For the three months ending September 30, 2013, sales to Customer A accounted for 16% of our wholesale channel net sales. | |||||||||
The following is a summary of sales results for the Direct, Wholesale, and Other channels. | |||||||||
Three Months Ended | |||||||||
(unaudited) | |||||||||
September 30, | September 30, | ||||||||
2013 | 2012 | ||||||||
Net Sales: | |||||||||
Direct | $ | 1,351,487 | $ | 1,182,877 | |||||
Wholesale | 1,857,908 | 1,808,783 | |||||||
Other | 134,322 | 218,515 | |||||||
Total Net Sales | $ | 3,343,717 | $ | 3,210,175 | |||||
Gross Margin: | |||||||||
Direct | $ | 664,005 | $ | 602,199 | |||||
Wholesale | 474,614 | 419,424 | |||||||
Other | (84,552 | ) | (12,847 | ) | |||||
Total Gross Margin | $ | 1,054,067 | $ | 1,008,776 | |||||
Recent Accounting Pronouncements | ' | ||||||||
Recently Adopted Accounting Pronouncements | |||||||||
Recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the AICPA, and the SEC, did not, or are not believed by management, to have a material impact on the Company’s present or future financial statements. | |||||||||
Net Income (Loss) Per Share | ' | ||||||||
Net Income (Loss) Per Share | |||||||||
Basic net income (loss) per common share was determined by dividing net income (loss) applicable to common stockholders by the weighted average common shares outstanding during the period. | |||||||||
The following potentially issuable common shares were not included in the computation of diluted net income (loss) per share because they would have an anti-dilutive: | |||||||||
September 30, | |||||||||
2013 | 2012 | ||||||||
Common stock options | 4,966,500 | 3,023,956 | |||||||
Common stock warrants | 2,462,393 | 2,462,393 | |||||||
Convertible preferred stock | 4,300,000 | 4,300,000 | |||||||
Convertible notes | 7,545,455 | 4,375,000 | |||||||
Total | 19,274,348 | 14,161,349 | |||||||
Income Taxes | ' | ||||||||
Income Taxes | |||||||||
We utilize the asset and liability method of accounting for income taxes. We recognize deferred tax liabilities or assets for the expected future tax consequences of temporary differences between the book and tax basis of assets and liabilities. We regularly assess the likelihood that our deferred tax assets will be recovered from future taxable income. We consider projected future taxable income and ongoing tax planning strategies in assessing the amount of the valuation allowance necessary to offset our deferred tax assets that will not be recoverable. We have recorded and continue to carry a full valuation allowance against our gross deferred tax assets that will not reverse against deferred tax liabilities within the scheduled reversal period. If we determine in the future that it is more likely than not that we will realize all or a portion of our deferred tax assets, we will adjust our valuation allowance in the period we make the determination. We expect to provide a full valuation allowance on our future tax benefits until we can sustain a level of profitability that demonstrates our ability to realize these assets. | |||||||||
Stock based Compensation | ' | ||||||||
Stock Based Compensation | |||||||||
We account for stock-based compensation in accordance with FASB ASC 718, Compensation - Stock Compensation. We measure the cost of each stock option at its fair value on the grant date. Each award vests over the subsequent period during which the recipient is required to provide service in exchange for the award (the vesting period). The cost of each award is recognized as expense in the financial statements over the respective vesting period. All of the Company's stock options are service-based awards, and because the Company's stock options are plain vanilla, as defined by the U. S. Securities and Exchange Commission in Staff Accounting Bulletin No. 107, they are reflected only in Stockholders' Equity and Compensation Expense accounts. | |||||||||
Stock Issued for Services to other than Employees | ' | ||||||||
Stock Issued for Services to other than Employees | |||||||||
Common stock, stock options and common stock warrants issued to other than employees or directors are recorded on the basis of their fair value, as required by FASB ASC 505, which is measured as of the date required by FASB ASC 505, Equity Based Payments to Non-Employees’. In accordance with FASB ASC 505, the stock options or common stock warrants are valued using the Black-Scholes option pricing model on the basis of the market price of the underlying common stock on the evaluation date, which for options and warrants related to contracts that have substantial disincentives to non-performance is the date of the contract, and for all other contracts is the vesting date. Expense related to the options and warrants is recognized on a straight-line basis over the shorter of the period over which services are to be received or the vesting period. Where expense must be recognized prior to a valuation date, the expense is computed under the Black-Scholes option pricing model on the basis of the market price of the underlying common stock at the end of the period, and any subsequent changes in the market price of the underlying common stock up through the valuation date is reflected in the expense recorded in the subsequent period in which that change occurs. |
Summary_of_Significant_Account2
Summary of Significant Accounting Policies (Tables) | 9 Months Ended | ||||||||
Mar. 31, 2013 | |||||||||
Accounting Policies [Abstract] | ' | ||||||||
Summary of Accounts Receivable | ' | ||||||||
September 30, | June 30, | ||||||||
2013 | 2013 | ||||||||
Accounts receivable | $ | 693,884 | $ | 555,628 | |||||
Allowance for doubtful accounts | (4,015 | ) | (4,986 | ) | |||||
Allowance for discounts and returns | (29,579 | ) | (27,742 | ) | |||||
Total accounts receivable, net | $ | 660,290 | $ | 522,900 | |||||
Summary of sales | ' | ||||||||
Three Months Ended | |||||||||
(unaudited) | |||||||||
September 30, | September 30, | ||||||||
2013 | 2012 | ||||||||
Net Sales: | |||||||||
Direct | $ | 1,351,487 | $ | 1,182,877 | |||||
Wholesale | 1,857,908 | 1,808,783 | |||||||
Other | 134,322 | 218,515 | |||||||
Total Net Sales | $ | 3,343,717 | $ | 3,210,175 | |||||
Gross Margin: | |||||||||
Direct | $ | 664,005 | $ | 602,199 | |||||
Wholesale | 474,614 | 419,424 | |||||||
Other | (84,552 | ) | (12,847 | ) | |||||
Total Gross Margin | $ | 1,054,067 | $ | 1,008,776 | |||||
Anti-dilutive securities | ' | ||||||||
September 30, | |||||||||
2013 | 2012 | ||||||||
Common stock options | 4,966,500 | 3,023,956 | |||||||
Common stock warrants | 2,462,393 | 2,462,393 | |||||||
Convertible preferred stock | 4,300,000 | 4,300,000 | |||||||
Convertible notes | 7,545,455 | 4,375,000 | |||||||
Total | 19,274,348 | 14,161,349 |
Stockbased_Compensation_Tables
Stockbased Compensation (Tables) | 9 Months Ended | ||||||||||||||||||||
Mar. 31, 2013 | |||||||||||||||||||||
Equity [Abstract] | ' | ||||||||||||||||||||
Summary of Option Activity | ' | ||||||||||||||||||||
Number of Shares | Weighted | Weighted | Intrinsic | ||||||||||||||||||
Underlying | Average | Average | Value | ||||||||||||||||||
Outstanding | Remaining | Exercise | |||||||||||||||||||
Options | Contractual | Price | |||||||||||||||||||
Life (Years) | |||||||||||||||||||||
Options outstanding as of June 30, 2013 | 3,583,500 | 3.8 | $ | 0.1 | $ | - | |||||||||||||||
Granted | 1,726,000 | 4.9 | $ | 0.05 | $ | - | |||||||||||||||
Exercised | - | - | $ | - | $ | - | |||||||||||||||
Forfeited or expired | (343,000 | ) | 3.8 | $ | 0.11 | $ | - | ||||||||||||||
Options outstanding as of September 30, 2013 | 4,966,500 | 4 | $ | 0.09 | $ | - | |||||||||||||||
Options exercisable as of September 30, 2013 | 907,750 | 3.1 | $ | 0.13 | $ | - | |||||||||||||||
Value assumptions related to options | ' | ||||||||||||||||||||
Three Months | Three Months | ||||||||||||||||||||
Ended September 30, 2013 | Ended September 30, 2012 | ||||||||||||||||||||
Exercise Price: | $0.05 | $0.10 | |||||||||||||||||||
Volatility: | 251% | 40% | |||||||||||||||||||
Risk Free Rate: | 0.99% | 0.43% | |||||||||||||||||||
Vesting Period: | 4 years | 4 years | |||||||||||||||||||
Forfeiture Rate: | 0% | 0% | |||||||||||||||||||
Expected Life | 4.5 years | 4.5 years | |||||||||||||||||||
Dividend Rate | 0% | 0% | |||||||||||||||||||
Weighted Average characteristics of outstanding stock options | ' | ||||||||||||||||||||
Outstanding Options | Exercisable Options | ||||||||||||||||||||
Exercise Prices | Number | Remaining | Weighted | Number of | Weighted | ||||||||||||||||
of Shares | Life | Average | Shares | Average | |||||||||||||||||
(Years) | Price | Price | |||||||||||||||||||
$.05 to .09 | 3,746,000 | 4.5 | $ | 0.06 | 400,000 | $ | 0.06 | ||||||||||||||
$.15 to .16 | 966,500 | 2.9 | $ | 0.16 | 317,250 | $ | 0.16 | ||||||||||||||
$.20 to .25 | 254,000 | 1 | $ | 0.25 | 190,500 | $ | 0.25 | ||||||||||||||
Total stock options | 4,966,500 | 4 | $ | 0.09 | 907,750 | $ | 0.13 | ||||||||||||||
Stock-based compensation expense | ' | ||||||||||||||||||||
Three Months | |||||||||||||||||||||
Ended September 30, | |||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||
Cost of Goods Sold | $ | 4,600 | $ | 2,974 | |||||||||||||||||
Other Selling and Marketing | 2,227 | 933 | |||||||||||||||||||
General and Administrative | 17,500 | 6,667 | |||||||||||||||||||
Total Stock-based Compensation Expense | $ | 24,327 | $ | 10,574 |
Inventories_Tables
Inventories (Tables) | 9 Months Ended | ||||||||
Mar. 31, 2013 | |||||||||
Inventory Disclosure [Abstract] | ' | ||||||||
Inventories | ' | ||||||||
30-Sep-13 | 30-Jun-13 | ||||||||
Raw materials | $ | 484,957 | $ | 528,771 | |||||
Work in process | 152,236 | 138,240 | |||||||
Finished goods | 700,344 | 742,692 | |||||||
Inventories, net | $ | 1,337,537 | $ | 1,409,703 |
Equipment_and_Leasehold_Improv1
Equipment and Leasehold Improvements, Net (Tables) | 9 Months Ended | ||||||||||
Mar. 31, 2013 | |||||||||||
Property, Plant and Equipment [Abstract] | ' | ||||||||||
Equipment and Leasehold Improvements, Net | ' | ||||||||||
September 30, | June 30, | Estimated | |||||||||
2013 | 2013 | Useful Life | |||||||||
Factory Equipment | $ | 1,731,410 | $ | 1,693,993 | 2-10 years | ||||||
Computer Equipment and Software | 867,677 | 867,677 | 5-7 years | ||||||||
Office Equipment and Furniture | 166,996 | 166,996 | 5-7 years | ||||||||
Leasehold Improvements | 343,120 | 343,120 | 10 years | ||||||||
Subtotal | 3,109,203 | 3,071,786 | |||||||||
Accumulated Depreciation | (2,372,645 | ) | (2,314,796 | ) | |||||||
Total equipment and leasehold improvements, net | $ | 736,558 | $ | 756,990 |
Shortterm_Notes_PayableRelated1
Short-term Notes Payable-Related Party (Tables) | 9 Months Ended | ||||||||
Mar. 31, 2013 | |||||||||
Notes to Financial Statements | ' | ||||||||
Short-term Notes Payable - Related Party | ' | ||||||||
September 30, | June 30, | ||||||||
2013 | 2013 | ||||||||
Unsecured note payable to an officer, with interest at 3.25%, due on demand | $ | 40,000 | $ | 40,000 | |||||
Unsecured note payable to an officer, with interest at 3.25%, due on demand | 76,000 | 76,000 | |||||||
Total unsecured notes payable | $ | 116,000 | $ | 116,000 |
Stockholders_Equity_Tables
Stockholders' Equity (Tables) | 3 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Equity [Abstract] | ' | ||||||||
Share of common stock for issuance | ' | ||||||||
September 30, | |||||||||
2013 | |||||||||
Shares of common stock subject to outstanding warrants | 2,462,393 | ||||||||
Shares of common stock reserved for issuance under the 2009 Stock Option Plan | 5,000,000 | ||||||||
Shares of common stock issuable upon conversion of the Preferred Stock | 4,300,000 | ||||||||
Shares of common stock issuable upon conversion of Convertible Notes | 7,545,455 | ||||||||
Total shares of common stock equivalents | 19,307,848 | ||||||||
Stock Purchase Warrants | ' | ||||||||
Number of Warrants | Exercise | Expiration | |||||||
Prices | Dates | ||||||||
292,479 | $ | 0.5 | 26-Jun-14 | ||||||
1,292,479 | $ | 0.75 | 26-Jun-14 | ||||||
877,435 | $ | 1 | 26-Jun-14 | ||||||
2,462,393 | |||||||||
Share Purchase Warrants | ' | ||||||||
Shares | Weighted Average | ||||||||
Exercise Prices | |||||||||
Balance June 30, 2013 | 2,462,393 | $ | 0.81 | ||||||
Expired | — | — | |||||||
Balance September 30, 2013 | 2,462,393 | $ | 0.8 |
Going_Concern_Details_Narrativ
Going Concern (Details Narrative) (USD $) | 3 Months Ended | |
Sep. 30, 2013 | Jun. 30, 2013 | |
Going Concern | ' | ' |
Accumulated deficit | $8,074,627 | $8,047,685 |
Working Capital Deficit | 220,429 | ' |
Operational and Strategic growth plans | ' | ' |
Finances required | 300,000 | ' |
Sales and Marketing budget | $150,000 | ' |
Allowance_for_Doubtful_Account
Allowance for Doubtful Accounts (Details Narrative) (USD $) | 3 Months Ended | 12 Months Ended |
Sep. 30, 2013 | Jun. 30, 2013 | |
Allowance for Doubtful Accounts | ' | ' |
Accounts Receivable | $693,884 | $555,628 |
Allowance for doubtful accounts | -4,015 | -4,986 |
Reserve for returns and discounts | -29,579 | -27,742 |
Accounts receivable, net | $660,290 | $522,900 |
Concentrations_Details_Narrati
Concentrations (Details Narrative) (USD $) | 3 Months Ended | 12 Months Ended |
Sep. 30, 2013 | Jun. 30, 2013 | |
FDIC Insured | ' | 250,000 |
Exceed FDIC | ' | 58,635 |
Vendor #1 | ' | ' |
Number | '2 | '2 |
Percentage | 22.00% | 30.00% |
Vendor #2 | ' | ' |
Percentage | 21.00% | 18.00% |
Customer #1 | ' | ' |
Number | '1 | ' |
Percentage | 20.00% | ' |
Advertising_Costs_Details_Narr
Advertising Costs (Details Narrative) (USD $) | 3 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Jun. 30, 2013 | |
Marketing and Advertising Expense [Abstract] | ' | ' | ' |
Prepaid Advertising | $17,117 | ' | $16,709 |
Advertising Expense | $85,827 | $101,628 | ' |
Research_and_development_Detai
Research and development (Details Narrative) (USD $) | 3 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Research and Development [Abstract] | ' | ' |
Research and development | $23,754 | $25,727 |
Opearting_Leases_Details_Narra
Opearting Leases (Details Narrative) (USD $) | 3 Months Ended |
Sep. 30, 2013 | |
Deferred rent liability | $178,022 |
Rent Expense | 80,931 |
Facility | ' |
Monthly rental, final year on lease | $34,358 |
Results_of_Reporting_Lines_Det
Results of Reporting Lines (Details Narrative) (USD $) (USD $) | 3 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Net Sales | $3,343,717 | $3,210,175 |
Gross margin | 1,054,067 | 1,008,776 |
Direct | ' | ' |
Net Sales | 1,351,487 | 1,182,877 |
Gross margin | 664,005 | 602,199 |
Wholesale | ' | ' |
Net Sales | 1,857,908 | 1,808,783 |
Gross margin | 474,614 | 419,424 |
Other | ' | ' |
Net Sales | 134,322 | 218,515 |
Gross margin | ($84,552) | ($12,847) |
Net_Income_Loss_per_shareDetai
Net Income (Loss) per share(Details Narrative) | 3 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ' | ' |
Anti-dilutive Securities | 19,274,348 | 14,161,349 |
Stock Options | ' | ' |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ' | ' |
Anti-dilutive Securities | 4,966,500 | 3,023,956 |
Stock warrants | ' | ' |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ' | ' |
Anti-dilutive Securities | 2,462,393 | 2,462,393 |
Convertible Preferred Stock | ' | ' |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ' | ' |
Anti-dilutive Securities | 4,300,000 | 4,300,000 |
Convertible Notes | ' | ' |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ' | ' |
Anti-dilutive Securities | 7,545,455 | 4,375,000 |
Stockholders_EquityOptions_Det
Stockholders' Equity-Options (Details Narrative) (USD $) | 3 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | ' |
Options, authorized | 5,000,000 | ' |
Options, available for issurance | 433,500 | ' |
Closing stock price | $0.05 | ' |
Stock options granted | 1,726,000 | 80,000 |
Stockbased_Compensation_Stock_
Stock-based Compensation - Stock Options Activity - Additional (Details) (USD $) | 3 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Stock-Based Compensation - Stock Options Activity - Additional Details | ' | ' |
Closing stock price | $0.05 | ' |
Stock options, value | ' | ' |
Weighted average grant-date fair value of stock options | $217,600 | $73,758 |
Stock options, vested | $20,147 | $44,524 |
Stockbased_Compensation_Stock_1
Stock-based Compensation - Stock Options Activity (Details) (USD $) | 3 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Jun. 30, 2013 | |
Number of Shares Underlying Outstanding Options | ' | ' | ' |
Options outstanding, beginning | 3,583,500 | ' | ' |
Granted | 1,726,000 | 80,000 | ' |
Forfeited or expired | -343,000 | ' | ' |
Options outstanding, ending | 4,966,500 | ' | ' |
Options exercisable | 907,750 | ' | ' |
Weighted Average Remaining Contractual Life (Years) | ' | ' | ' |
Options outstanding, beginning | '3 years 8 months | ' | ' |
Granted | '4 years 9 months | ' | ' |
Forfeited or expired | '3 years 8 months | ' | ' |
Options outstanding, ending | '4 years 0 months | ' | ' |
Options exercisable | ' | ' | '3 years 1 month |
Weighted Average Exercise Price | ' | ' | ' |
Options outstanding, beginning | $0.10 | ' | ' |
Granted | $0.05 | ' | ' |
Forfeited or expired | $0.11 | ' | ' |
Options outstanding, ending | $0.09 | ' | ' |
Options exercisable | ' | ' | $0.13 |
Aggregate Intrinsic Value | ' | ' | ' |
Options outstanding, beginning | ' | ' | ' |
Stockbased_Compensation_Assump
Stock-based Compensation - Assumptions (Details) (USD $) | 3 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Stock-Based Compensation - Assumptions Details | ' | ' |
Exercise Price | $0.05 | $0.10 |
Volatility | 40.00% | 251.00% |
Risk Free Rate | 0.43% | 0.99% |
Vesting Period | '4 years 0 months | '4 years 0 months |
Forfeiture Rate | 0.00% | 0.00% |
Expected Life | '4 years 5 months | '4 years 5 months |
Dividend Rate | 0.00% | 0.00% |
Stockbased_Compensation_Weight
Stock-based Compensation - Weighted Average outstanding stock options (Details) (USD $) | 3 Months Ended |
Sep. 30, 2013 | |
Outstanding Options[Abstract] | ' |
Number of shares | 4,966,500 |
Remaining Life (Years) | '4 years 0 months |
Weighted Average Price | $0.09 |
Exercisable Options [Abstract] | ' |
Number of Shares | 907,750 |
Weighted Average Exercise Price | $0.13 |
$.05 to .09 | ' |
Exercise price range, lower range (in dollars per share) | $0.05 |
Exercise price range, upper range (in dollars per share) | $0.09 |
Outstanding Options[Abstract] | ' |
Number of shares | 3,746,000 |
Remaining Life (Years) | '4 years 5 months |
Weighted Average Price | $0.06 |
Exercisable Options [Abstract] | ' |
Number of Shares | 400,000 |
Weighted Average Exercise Price | $0.06 |
$.15 to .16 | ' |
Exercise price range, lower range (in dollars per share) | $0.15 |
Exercise price range, upper range (in dollars per share) | $0.16 |
Outstanding Options[Abstract] | ' |
Number of shares | 966,500 |
Remaining Life (Years) | '2 years 9 months |
Weighted Average Price | $0.16 |
Exercisable Options [Abstract] | ' |
Number of Shares | 317,250 |
Weighted Average Exercise Price | $0.16 |
$.20 to.25 | ' |
Exercise price range, lower range (in dollars per share) | $0.20 |
Exercise price range, upper range (in dollars per share) | $0.25 |
Outstanding Options[Abstract] | ' |
Number of shares | 254,000 |
Remaining Life (Years) | '1 year 0 months |
Weighted Average Price | $0.25 |
Exercisable Options [Abstract] | ' |
Number of Shares | 190,500 |
Weighted Average Exercise Price | $0.25 |
Stockbased_Compensation_Stockb
Stock-based Compensation - Stock-based compensation expense (Details) (USD $) | 3 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Stock-based compensation expense | $24,327 | $10,574 |
Unrecognized compensation cost | 115,444 | ' |
Weighted average vesting period | '3 years | ' |
Cost of Goods Sold | ' | ' |
Stock-based compensation expense | 4,600 | 2,974 |
Other Selling and Marketing | ' | ' |
Stock-based compensation expense | 2,227 | 933 |
General And Administrative | ' | ' |
Stock-based compensation expense | $17,500 | $6,667 |
Inventories_Details
Inventories (Details) (USD $) | Sep. 30, 2013 | Jun. 30, 2013 |
Inventory Disclosure [Abstract] | ' | ' |
Raw materials | $484,957 | $528,771 |
Work in Process | 152,236 | 138,240 |
Finished Goods | 700,344 | 742,692 |
Inventories | $1,337,537 | $1,409,703 |
Equipment_and_Leasehold_Improv2
Equipment and Leasehold Improvements, Net (Details) (USD $) | Sep. 30, 2013 | Jun. 30, 2013 |
Property and Equipment, gross | $3,109,203 | $3,071,786 |
Accumulated depreciation | -2,372,645 | -2,314,796 |
Property and Equipment, net | 736,558 | 756,990 |
Equipment | ' | ' |
Property and Equipment, gross | 1,731,410 | 1,693,993 |
Computer equipment and software | ' | ' |
Property and Equipment, gross | 867,677 | 867,677 |
Office equipment and furniture | ' | ' |
Property and Equipment, gross | 166,996 | 166,996 |
Leasehold Improvements | ' | ' |
Property and Equipment, gross | $343,120 | $343,120 |
Equipment_and_Leasehold_Improv3
Equipment and Leasehold Improvements, Net (Details Narrative) (USD $) | 3 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Depreciation Expense | $57,849 | $43,808 |
Equipment | Minimum | ' | ' |
Depreciation life | '2 | ' |
Equipment | Maximum | ' | ' |
Depreciation life | '10 | ' |
Computer equipment and software | Minimum | ' | ' |
Depreciation life | '5 | ' |
Computer equipment and software | Maximum | ' | ' |
Depreciation life | '7 | ' |
Office equipment and furniture | Minimum | ' | ' |
Depreciation life | '5 | ' |
Office equipment and furniture | Maximum | ' | ' |
Depreciation life | '7 | ' |
Leasehold Improvements | ' | ' |
Depreciation life | '10 | ' |
Notes_Payable_Details_Narrativ
Notes Payable (Details Narrative) (USD $) (USD $) | 3 Months Ended | |
Sep. 30, 2013 | Jun. 30, 2013 | |
Short-term unsecured notes payable | $807,251 | $964,624 |
Current portion | -664,624 | -507,521 |
Long-term unsecured notes payable | 300,000 | 300,000 |
Note 1 Member | ' | ' |
Note Face Amount | 250,000 | ' |
Interest Rate | 20.00% | ' |
Date of Maturity | 12-Jan-13 | ' |
Short-term unsecured notes payable | 52,022 | 121,584 |
Note 2 Member | ' | ' |
Note Face Amount | 250,000 | ' |
Interest Rate | 20.00% | ' |
Extended Date of Maturity | 10-Jan-14 | ' |
Short-term unsecured notes payable | 82,292 | 140,784 |
Note 3 Member | ' | ' |
Note Face Amount | 130,000 | ' |
Interest Rate | 20.00% | ' |
Date of Maturity | 4-Apr-14 | ' |
Short-term unsecured notes payable | 73,207 | 102,256 |
Note 4 Member | ' | ' |
Note Face Amount | ' | 100,000 |
Interest Rate | ' | 20.00% |
Date of Maturity | 31-Jul-12 | ' |
Extended Date of Maturity | 31-Jul-13 | ' |
Short-term unsecured notes payable | 100,000 | 100,000 |
Note 5 Member | ' | ' |
Note Face Amount | ' | 300,000 |
Interest Rate | ' | 20.00% |
Date of Maturity | 3-Jan-13 | ' |
Extended Date of Maturity | 3-Jan-14 | ' |
Short-term unsecured notes payable | 300,000 | 300,000 |
Note 6 Member | ' | ' |
Note Face Amount | 200,000 | ' |
Interest Rate | 16.00% | ' |
Date of Maturity | 3-Jan-11 | ' |
Extended Date of Maturity | 1-May-15 | ' |
Short-term unsecured notes payable | $200,000 | $200,000 |
Shortterm_Notes_PayableRelated2
Short-term Notes Payable-Related Party (Details Narrative) (USD $) (USD $) | Sep. 30, 2013 | Jun. 30, 2013 |
Short-term unsecured notes payable | $116,000 | $116,000 |
Note 1 Member | ' | ' |
Interest Rate | ' | 3.25% |
Short-term unsecured notes payable | 40,000 | 40,000 |
Note 2 Member | ' | ' |
Interest Rate | ' | 3.25% |
Short-term unsecured notes payable | $76,000 | $76,000 |
Line_of_Credit_Details_Narrati
Line of Credit (Details Narrative) (USD $) | 0 Months Ended | 3 Months Ended | |
24-May-11 | Sep. 30, 2013 | Jun. 30, 2013 | |
Line of credit | ' | $531,161 | $366,196 |
Line of Credit | ' | ' | ' |
Date issued | 24-May-11 | ' | ' |
Line of credit, limit | $750,000 | ' | $1,000,000 |
Collateral | '85% of eligible accounts receivable | 'lesser of $300,000 or 75% of the eligible accounts receivable loan | ' |
Interest Rate Description | '2.5% over the lenders Index Rate | ' prime rate plus 3% | ' |
Lenders Index Rate | ' | ' | 4.75% |
Monthly Service Fee | 1.25% | 0.50% | ' |
Credit_Card_Advance_Details_Na
Credit Card Advance (Details Narrative) (USD $) | Sep. 30, 2013 | Oct. 04, 2012 | 14-May-13 |
Credit Card Advance | Credit Card Advance | ||
Credit Card Advance, limit | ' | $400,000 | ' |
Repayment Amount | ' | 448,000 | 126,518 |
Finance charge | ' | 48,000 | ' |
Periodic payment | ' | 2,074 | ' |
Unamortized discount | ' | ' | 14,400 |
Credit Card Advance, gross | 249,388 | ' | ' |
Discount on cash advance | $24,000 | ' | ' |
Unsecured_Lines_of_Credit_Deta
Unsecured Lines of Credit (Details Narrative) (USD $) | 3 Months Ended | |
Sep. 30, 2013 | Jun. 30, 2013 | |
Line of Credit Facility [Abstract] | ' | ' |
Interest Rate, minimum | 7.00% | ' |
Interest Rate, maximum | 18.00% | ' |
Unsecured lines of credit | $7,906 | $12,535 |
Convertible_Notes_Payable_Shar1
Convertible Notes Payable Shareholder (Details Narrative) (USD $) | Sep. 30, 2013 | Jun. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | ||
Convertible Notes #1 | New Convertible Notes #1 | Convertible Notes #2 | |||||
Date issued | ' | ' | 24-Jun-09 | ' | 2-Feb-09 | ||
Note Face Amount | ' | ' | $375,000 | ' | $250,000 | ||
Interest Rate | ' | ' | 3.00% | ' | 3.00% | ||
Conversion rate | ' | ' | $0.25 | $0.13 | [1] | $0.25 | [1] |
Date of Maturity | ' | ' | 15-Aug-12 | 15-Aug-14 | 2-Sep-12 | ||
Convertible Notes Payable. prinicpal balance | 625,000 | 625,000 | ' | 375,000 | 250,000 | ||
Accrued Interest | ' | ' | ' | $47,897 | $30,596 | ||
[1] | Upon maturity, the Company has the option to either repay the note plus accrued interest in cash or issue the equivalent number of shares of common stock at $.20 per share, unless such conversion would force the holders' total ownership of common stock of the Company to exceed 9.9% of the total shares outstanding. |
Stockholders_Equity_Share_of_c
Stockholders' Equity - Share of common stock for issuance (Details) | 3 Months Ended | |
Sep. 30, 2013 | Jun. 30, 2013 | |
Equity [Abstract] | ' | ' |
Shares of common stock subject to outstanding warrants | 2,462,393 | 2,462,393 |
Shares of common stock reserved for issuance under the 2009 Stock Option Plan | 5,000,000 | ' |
Shares of common stock issuable upon conversion of the Preferred Stock | 4,300,000 | ' |
Shares of common stock issuable upon conversion of Convertible Notes | 7,545,455 | ' |
Total shares of common stock equivalents | 19,307,848 | ' |
Stockholders_Equity_Share_Purc
Stockholders' Equity - Share Purchase Warrants (Details) (USD $) | Sep. 30, 2013 | Jun. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 |
292,479 Warrants | 1,292,479 Warrants | 877,435 Warrants | |||
Warrants outstanding | 2,462,393 | 2,462,393 | 292,479 | 1,292,479 | 877,435 |
Exercise Price | ' | ' | 0.5 | 0.75 | 1 |
Expiration Date | ' | ' | 26-Jun-14 | 26-Jun-14 | 26-Jun-14 |
Stockholders_Equity_Share_Purc1
Stockholders' Equity - Share Purchase Warrants Activity (Details) (USD $) (USD $) | Sep. 30, 2013 | Jun. 30, 2013 |
Share Purchase Warrants | ' | ' |
Beginning Balance, June 30, 2013 | 2,462,393 | 2,462,393 |
Ending Balance, September 30, 2013 | 2,462,393 | 2,462,393 |
Weighted Average Exercise Price | ' | ' |
Balance, June 30, 2013 | $0.81 | $0.81 |
Ending Balance, September 30, 2013 | $0.81 | $0.81 |
Related_Parties_Details_Narrat
Related Parties (Details Narrative) (USD $) | Sep. 30, 2013 | Jun. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 |
Shareholder Wife Note | 24-Jun-09 | 2-Sep-09 | October 30, 2010 Note | January 3, 2011 Note | July 20, 2012 Note | April 2, 2012 Note | 10-Dec-12 | January 14, 2013 Note | |||
Issue Date | ' | ' | 30-Jun-10 | 24-Jun-09 | 2-Sep-09 | 30-Oct-10 | 3-Jan-11 | 20-Jul-11 | 2-Apr-12 | 10-Dec-12 | 13-Jan-12 |
Note Face Amount | ' | ' | $76,000 | $375,000 | ' | $40,000 | $300,000 | $100,000 | $130,000 | $250,000 | $250,000 |
Principal and interest payment | ' | ' | ' | ' | ' | ' | ' | ' | 5,536 | 10,646 | 10,646 |
Interest Payment | ' | ' | ' | ' | ' | ' | ' | 1,667 | ' | ' | ' |
Frequency | ' | ' | ' | ' | ' | ' | ' | ' | 'bi-weekly | ' | 'bi-weekly |
Interest Rate | ' | ' | 3.25% | 3.00% | 3.00% | 3.25% | 20.00% | 20.00% | ' | ' | ' |
Date of Maturity | ' | ' | ' | ' | 2-Sep-12 | ' | 3-Jan-13 | ' | ' | 6-Dec-13 | ' |
Extended Date of Maturity | ' | ' | ' | ' | 2-Sep-13 | ' | ' | ' | ' | ' | ' |
Short-term unsecured notes payable | 664,624 | 507,521 | ' | 375,000 | 250,000 | ' | ' | ' | ' | ' | ' |
Acrrued Interest | ' | ' | 10,673 | 47,897 | 30,596 | 3,576 | ' | ' | ' | ' | ' |
Interest Expense | ' | ' | 623 | ' | ' | 328 | ' | ' | ' | ' | ' |
Line of credit | $531,161 | $366,196 | ' | ' | ' | ' | $531,161 | ' | ' | ' | ' |
Related_Parties_Line_of_Credit
Related Parties Line of Credit (Details Narrative) (USD $) | Sep. 30, 2013 | Jun. 30, 2013 |
Related Party Transactions [Abstract] | ' | ' |
Line of credit | $531,161 | $366,196 |
Commitments_and_Contingencies_
Commitments and Contingencies - Operating Leases (Details Narrative) (USD $) | 3 Months Ended | |
Sep. 30, 2013 | Jun. 30, 2013 | |
Operating Leases | ' | ' |
Deferred rent liability | $178,022 | ' |
Rent Expense | 80,931 | ' |
Capital Leases | ' | ' |
Leased properties | ' | 349,205 |
Employment Agreements | ' | ' |
Officer Salary | 150,000 | ' |
Voting Power | '70.2% | ' |
Minimum | ' | ' |
Capital Leases | ' | ' |
Interest rates | 7.00% | ' |
Maximum | ' | ' |
Capital Leases | ' | ' |
Interest rates | 21.00% | ' |
Facility | ' | ' |
Operating Leases | ' | ' |
Letter of Credit | ' | 25,000 |
Monthly rental, final year | 34,358 | ' |
Term of lease | 'Signed in September 2005 and expires December 31, 2015 | ' |
Postage Equipment | ' | ' |
Operating Leases | ' | ' |
Monthly rental, final year | 104 | ' |
Term of lease | 'Expires January 2017 | ' |
Equipment | ' | ' |
Operating Leases | ' | ' |
Monthly rental, final year | $1,587 | ' |
Term of lease | 'Expires September 2015 | ' |
Commitments_and_Contingencies_1
Commitments and Contingencies - Future minimum operarting lease payments (Details) (USD $) (USD $) | Sep. 30, 2013 |
Commitments And Contingencies - Future Minimum Operarting Lease Payments Details Usd | ' |
2014 | $374,760 |
2015 | 425,274 |
2016 | 210,569 |
2017 | 1,038 |
Future Minimum Lease Payments | $1,011,641 |
Commitments_and_Contingencies_2
Commitments and Contingencies - Future minimum capital lease payments (Details) (USD $) | Sep. 30, 2013 |
Capital Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | ' |
2014 | $26,607 |
2015 | 31,407 |
2016 | 30,311 |
2017 | 18,885 |
2018 | 440 |
Future Minimum Lease Payments | 107,650 |
Less Amount Representing Interest | -24,551 |
Present Value of Minimum Lease Payments | 83,099 |
Current portion of lease payable | -23,950 |
Long-Term Obligations under Leases Payable | $59,149 |
Income_TaxesComponents_of_Defe
Income Taxes-Components of Deferred tax assets and liabilities (Details Narrative) (USD $) | Sep. 30, 2013 | Jun. 30, 2013 |
Deferred tax assets: | ' | ' |
Net operating loss carry-forwards | $2,250,500 | $2,360,009 |
Valuation allowance | -2,250,500 | -2,360,009 |
Net deferred tax assets | ' | ' |
Income_Taxes_Income_Tax_Provis
Income Taxes- Income Tax Provision (Details Narrative) (USD $) | 3 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Income Taxes- Income Tax Provision Details Narrative | ' | ' |
Book loss from operations | $109,509 | $271,920 |
Valuation (allowance) | -109,509 | -271,920 |
Net tax benefit | ' | ' |
Income_Taxes_Details_Narrative
Income Taxes (Details Narrative) (USD $) | Jun. 30, 2013 |
Income Taxes Details Narrative | ' |
Net operating loss | $2,400,000 |
Subsequent_Events_Details_Narr
Subsequent Events (Details Narrative) (Note 1 Member, USD $) | 0 Months Ended |
Oct. 31, 2013 | |
Note 1 Member | ' |
Note Face Amount | $100,000 |
Monthly interest | $1,667 |