Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Mar. 31, 2013 | Feb. 10, 2014 | |
Document And Entity Information | ' | ' |
Entity Registrant Name | 'AIRWARE LABS CORP. | ' |
Entity Central Index Key | '0001500123 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 31-Mar-14 | ' |
Amendment Flag | 'false | ' |
Current Fiscal Year End Date | '--09-30 | ' |
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 | ' | 58,867,712 |
Document Fiscal Period Focus | 'Q2 | ' |
Document Fiscal Year Focus | '2014 | ' |
Consolidated_Balance_Sheets_Un
Consolidated Balance Sheets (Unaudited) (USD $) | Mar. 31, 2014 | Sep. 30, 2013 |
ASSETS | ' | ' |
Cash and cash equivalents | $80,335 | $19,942 |
Accounts receivable | 27,676 | 35,019 |
Inventory | 47,971 | 51,423 |
Deposits | 41,920 | ' |
Prepaid expenses | 14,011 | 10,690 |
Total current assets | 211,913 | 117,074 |
Other Assets: | ' | ' |
Property and equipmnet, net | 18,275 | 31,619 |
Intangible assets, net | 273,877 | 291,072 |
Deposits | 4,787 | 2,400 |
Investment in Breathe Active, LLC | 290 | 290 |
Total Assets | 509,142 | 442,455 |
LIABILITIES AND STOCKHOLDERS' (DEFICIT) | ' | ' |
Accounts payable | 1,638,514 | 1,868,205 |
Accrued interest - related parties | 23,080 | 12,793 |
Accrued interest | 6,251 | 6,441 |
Accrued expenses | 46,195 | 18,554 |
Customer deposit | 80,437 | ' |
Notes payable | ' | 18,178 |
Convertible notes payable - current portion | 50,443 | 32,773 |
Convertible notes payable to related parties - current portion, net of discount | 20,000 | 25,000 |
Total current liabilities | 1,864,920 | 1,981,944 |
Accrued interest to related parties | 42 | 1,267 |
Notes payable to former officer | 47,500 | 47,520 |
Convertible notes payable, less current portion | ' | 22,227 |
Convertible notes payable to related parties, less current portion, net of discount | 616,556 | 228,782 |
Warrant liablility | ' | 1,098,566 |
Total liabilities | 2,529,018 | 3,380,306 |
Stockholders' (Deficit): | ' | ' |
Common stock, par value $.0001 per share, 200,000,000 and 200,000,000 shares authorized; 58,323,721 and 38,129,100 shares issued and outstanding at March 31, 2014 and September 30, 2013, respectively | 5,832 | 3,813 |
Additional paid-in capital | 28,709,100 | 12,071,023 |
Accumulated (deficit) | -30,734,808 | -15,012,687 |
Total stockholders' (deficit) | -2,019,876 | -2,937,851 |
Total Liabilities and Stockholders' (Deficit) | $509,142 | $442,455 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | Mar. 31, 2014 | Sep. 30, 2013 |
Statement of Financial Position [Abstract] | ' | ' |
Common stock, par value | $0.00 | $0.00 |
Common stock, authorized | 200,000,000 | 200,000,000 |
Common stock, issued | 58,323,721 | 38,129,100 |
Common stock, outstanding | 58,323,721 | 38,129,100 |
Consolidated_Statements_of_Ope
Consolidated Statements of Operations (Unaudited) (USD $) | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2013 | |
Income Statement [Abstract] | ' | ' | ' | ' |
Revenues, net | $44,633 | $119,616 | $55,340 | $198,814 |
Cost of products sold | 39,062 | 45,474 | 43,607 | 93,003 |
Gross profit | 5,571 | 74,142 | 11,733 | 105,811 |
Operating expenses | ' | ' | ' | ' |
General and administrative | 241,408 | 330,480 | 508,193 | 611,711 |
Sales and marketing | 68,828 | 71,922 | 83,522 | 115,878 |
Total expenses | 310,236 | 402,402 | 591,715 | 727,589 |
(Loss) from operations | -304,665 | -328,260 | -579,982 | -621,778 |
Other income (expense) | ' | ' | ' | ' |
Interest income | ' | ' | 289 | ' |
Forgiveness of debt | ' | ' | 20 | ' |
Induced note conversion expense | -2,697 | ' | -2,697 | -9,300 |
Interest expense | -331,481 | -118,848 | -518,316 | -200,661 |
Valuation (loss) - common stock warrants | ' | ' | -707,400 | ' |
Loss on warrants exercised | -13,914,034 | ' | -13,914,034 | ' |
Total other income (expense) | -14,248,212 | -118,848 | -15,142,138 | -209,961 |
(Loss) before income taxes | -14,552,877 | -447,108 | -15,722,120 | -831,739 |
Income tax expense | ' | ' | ' | ' |
Net (loss) | ($14,552,877) | ($447,108) | ($15,722,120) | ($831,739) |
Basic and diluted net (loss) per common share | ($0.36) | ($0.01) | ($0.40) | ($0.03) |
Basic and diluted weighted average common shares outstanding | 40,953,071 | 33,231,681 | 39,281,951 | 31,874,811 |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (Unaudited) (USD $) | 6 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Operating Activities: | ' | ' |
Net (loss) | ($15,722,120) | ($831,739) |
Adjustments to reconcile net (loss) to net cash (used in) operating activities: | ' | ' |
Depreciation and amortization | 30,538 | 27,702 |
Common stock issued obligated for services | 375,722 | 10,000 |
Options and warrants issued for services | 30,958 | 25,256 |
Interest expense from amortization of debt discount | 387,773 | 80,041 |
Induced conversion expense | 2,697 | 9,300 |
Stock issued for interest expense | 107,982 | 89,106 |
Forgiveness of debt | -20 | ' |
Loss on warrants exercised | 13,914,034 | ' |
Valuation (gain) expense - common stock warrants | 707,400 | ' |
Changes in operating assets and liabilities: | ' | ' |
Accounts receivable | 7,343 | 475,086 |
Inventory | 3,452 | -101,482 |
Prepaid expenses | -3,321 | 99,918 |
Deposits | -44,307 | -5,000 |
Accounts payable | -229,691 | 4,947 |
Accrued interest | 8,872 | -27,707 |
Customer Deposit | 80,437 | ' |
Accrued expenses | 27,641 | 4,228 |
Net Cash (Used in) Operating Activities | -314,610 | -140,344 |
Investing Activities: | ' | ' |
Purchases of property and equipment | ' | -35,534 |
Net Cash (Used In) Investing Activities | ' | -35,534 |
Financing Activities: | ' | ' |
Stock issued for cash | ' | 228,750 |
Proceeds from convertible notes payable | 1,002,000 | 585,000 |
Repayment of convertible notes payable | ' | -400,000 |
Repayment of notes payable | -22,735 | ' |
Options re-purchased | -2,500 | ' |
Stock re-purchased | -601,762 | ' |
Proceeds from factored accounts receivable | ' | 346,448 |
Repayment of factored accounts receivable note | ' | -497,872 |
Net Cash Provided by Financing Activities | 375,003 | 262,326 |
Net (Decrease) Increase in Cash | 60,393 | 86,448 |
Cash - Beginning of Year | 19,942 | 1,400 |
Cash - End of Year | 80,335 | 87,848 |
Interest paid in cash | 1,365 | 46,986 |
Non-cash investing and financing activities: | ' | ' |
Stock issued for convertible notes | 5,000 | 10,000 |
Debt discount on note payable, related party | ' | 1,500 |
Warrants issued to related party for convertible note modification | ' | $1,564 |
Summary_Significant_Accounting
Summary Significant Accounting Policies and Use of Estimates | 3 Months Ended | ||
Mar. 31, 2013 | |||
Accounting Policies [Abstract] | ' | ||
Summary Significant Accounting Policies and Use of Estimates | ' | ||
1 | Summary of Significant Accounting Policies and Use of Estimates | ||
Basis of Presentation and Organization | |||
Airware Labs Corp. (“Airware Labs” or the “Company”), formerly Crown Dynamics Corp., is a Delaware corporation. The Company was incorporated under the laws of the State of Delaware on June 15, 2010. On October 26, 2012, the Articles of Incorporation were amended to reflect a name change to Airware Labs Corp. On November 13, 2012, the Board approved a change in fiscal year end from December 31 to September 30. | |||
On March 20, 2012, through an equity exchange agreement, the Company acquired all of the issued and outstanding stock of Airware Holdings, Inc., a Nevada corporation (“Airware”), in exchange for shares of the Company’s newly-issued common stock. Airware Holdings, Inc. was formed in February 2010 and is a non-prescription medical products company. The principal business purpose of the Company is to develop, manufacture and distribute nasal breathing devices. The Company targets prospective customers such as compassionate sleeping partners, individuals with allergies and athletic enthusiasts throughout the United States, Canada and Europe. | |||
The share exchange has been accounted for as a recapitalization reverse merger between Airware Holdings, Inc. and Airware Labs Corp. Airware Holdings, Inc. is the accounting acquirer and Airware Labs Corp. is the accounting acquiree. Consequently, the historical pre-merger financial statements of Airware Holdings, Inc. are now those of the Company. The par value of the stock of Airware Holdings, Inc. of $.001 per share has been adjusted to that of the Company of $.0001 per share with the par value difference charged to paid-in capital. The pre-merger deficit is that of Airware Holdings, Inc. Airware Labs Corp’s pre-merger accumulated deficit has been charged to paid-in capital. The pre-merger Airware Holdings, Inc. outstanding shares have been adjusted to reflect the exchange. The pre-merger outstanding shares of Airware Labs Corp. were included in the issued and outstanding shares of the Company at the date of the merger. | |||
The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. Inter-company balances and transactions have been eliminated upon consolidation. | |||
Accounting Estimates | |||
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could materially differ from those estimates. Significant estimates of the Company include accounting for depreciation and amortization, recoverability of intangible assets, deferred income taxes, accruals and contingencies, the imputed interest rate of the note payable to related party and the fair value of common stock, and the estimated fair value of stock options and warrants. | |||
Unaudited Interim Financial Statements | |||
The interim consolidated financial statements of the Company as of March 31, 2014 and 2013, and for the periods then ended, are unaudited. However, in the opinion of management, the interim financial statements include all adjustments, consisting of only normal recurring adjustments, necessary to present fairly the Company’s financial position as of March 31, 2014 and the results of its operations and its cash flows for the periods ended March 31, 2014 and 2013. These results are not necessarily indicative of the results expected for the fiscal year ended September 30, 2014. The accompanying financial statements and notes thereto do not reflect all disclosures required under accounting principles generally accepted in the United States (U.S. “GAAP”). | |||
Net Loss per Share | |||
Basic earnings per share does not include dilution and is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of an entity. Dilutive securities are not included in the weighted average number of shares when inclusion would be anti-dilutive. Due to the net losses for the periods ended March 31, 2014 and 2013, basic and diluted loss per common share were the same, as the effect of potentially dilutive securities would have been anti-dilutive. | |||
As of March 31, 2014, there were total shares of 27,039,724 issuable upon conversion of notes payable, exercise of warrants and options that were not included in the earnings per share calculation as they were anti-dilutive. |
Going_Concern
Going Concern | 3 Months Ended | ||
Mar. 31, 2013 | |||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' | ||
Going Concern | ' | ||
2 | Going Concern | ||
The Company has incurred losses since inception and requires additional funds for future operating activities. The Company’s selling activity has not yet reached a level of revenue sufficient to fund its operating activities. These factors create an uncertainty as to how the Company will fund its operations and maintain sufficient cash flow to operate as a going concern. | |||
In response to these financial difficulties, management is continuing to pursue financing from various sources, including private placements from investors and institutions. Management believes these efforts will contribute toward funding the Company’s activities until sufficient revenue can be earned from future operations. In addition, the Company is seeking additional distribution partners in both domestic and foreign markets. Management believes these combined efforts, if successful, will be sufficient to meet its working capital needs and its currently anticipated expenditure levels for the next year. | |||
The Company’s ability to meet its cash requirements in the next year is dependent upon obtaining this financing and achieving improved sales levels. If this is not achieved, the Company may be unable to obtain sufficient cash flow to fund its operations and obligations, and therefore, may be unable to continue as a going concern. The accompanying financial statements have been prepared on a going concern basis, and accordingly, do not include any adjustments relating to the recoverability and classification of recorded asset amounts; nor do they include adjustments to the amounts and classification of liabilities that might be necessary should the Company be unable to continue operations or be required to sell its assets. |
Convertible_Notes_Payable
Convertible Notes Payable | 3 Months Ended | ||
Mar. 31, 2013 | |||
Notes to Financial Statements | ' | ||
Convertible Notes Payable | ' | ||
3. Convertible Notes Payable | |||
Convertible notes payable consist of the following: | |||
$ 5,000 | |||
8.00% notes payable, due August 22, 2012, convertible to common stock at $.50 per share, interest payments are due at maturity, unsecured | |||
45,443 | |||
6.50% note payable, due November 26, 2011, convertible to common stock at $2 per share, interest payments are due annually, unsecured. Terms amended in March 2013 to interest at 4.25%, with $4,000 monthly payments of principal and interest | |||
50,443 | |||
Less current portion | (50,443) | ||
$ - | |||
Notes_Payable_to_Former_Office
Notes Payable to Former Officer | 3 Months Ended | |
Mar. 31, 2013 | ||
Debt Disclosure [Abstract] | ' | |
Notes Payable to Former Officer | ' | |
4. Notes Payable to Former Officer | ||
Notes payable to former officer consists of the following: | ||
0.27% note payable, due August 1, 2016, interest due at maturity, unsecured | $ 47,500 | |
On December 5, 2013, the Company entered into a revised promissory note with former officer David Dolezal calling for four equal payments to begin on November 1, 2015 and ending August 1, 2016. Interest was reduced from 2.0% to 0.27%. |
Convertible_Notes_Payable_to_R
Convertible Notes Payable to Related Parties | 3 Months Ended | |
Mar. 31, 2013 | ||
Notes to Financial Statements | ' | |
Convertible Notes Payable to Related Parties | ' | |
5. Convertible Notes Payable to Related Parties | ||
Convertible notes payable to related parties consist of the following: | ||
12% note payable net of unamortized debt discount of $1,691,444, due September 30, 2015, convertible to common stock at $.10 per share, interest payments are due monthly. Debt is secured by substantially all of the assets of the Company | $ 616,556 | |
20,000 | ||
8.00 % note payable due August 26, 2012, convertible to common stock at $.50 per share, interest payments are due at maturity, unsecured | ||
636,556 | ||
Less current portion | (20,000) | |
$ 616,556 | ||
On August 21, 2013, the Company entered into a ninth allonge to a convertible secured bridge note with Stockbridge Enterprises, L.P. (“Stockbridge”) which provided for up to $3,206,000 principal and a maturity date of September 30, 2015. As of March 31, 2014, the Company has borrowed $2,308,000 against this line of credit. |
Loss_on_Warrants_Exercised
Loss on Warrants Exercised | 3 Months Ended |
Mar. 31, 2013 | |
Guarantees [Abstract] | ' |
Loss on Warrants Exercised | ' |
6. Loss on Warrants Exercised | |
On March 5, 2014, the Company issued 22,457,143 shares of stock to Stockbridge for the cashless exercise of all of their 26,200,000 outstanding warrants. This transaction resulted in a loss of $13,914,034. |
Related_Party_Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2013 | |
Related Party Transactions [Abstract] | ' |
Related Party Transactions | ' |
7. Related Party Transactions | |
As detailed in Notes Payable to Former Officer Footnote 4, the Company has a note payable to its former President and Executive Chairman, David Dolezal. | |
On December 5, 2013, the Company entered into a share re-purchase agreement with former officer Mr. David Dolezal to buy back 7,567,622 shares of common stock held by Mr. Dolezal and entities under his control. Other outside investors were granted the opportunity to participate in this purchase, with 1,550,000 shares being purchased directly from Mr. Dolezal by others, and 6,017,622 being re-purchased by the Company. Upon completion of this transaction on December 17, 2013, Mr. Dolezal no longer has any ownership in the Company. | |
As discussed in Convertible Notes Payable to Related Parties Footnote 5, the Company has a convertible secured bridge note with Stockbridge. During the six months ended March 31, 2014, the Company borrowed $1,002,000 against this note. | |
As noted in Stockholders’ Deficit Footnote 9 and Loss on Warrants Exercised Footnote 6, on March 5. 2014, the Company issued 22,457,143 shares of stock to Stockbridge for the cashless exercise of all of their 26,200,000 outstanding warrants. |
Commitments_and_Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2013 | |
Commitments and Contingencies | ' |
Commitments and Contingencies | ' |
8. Commitments and Contingencies | |
The Company has agreed to indemnify its officers and directors for certain events or occurrences that may arise as a result of the officers or director serving in such capacity. The term of the indemnification period is for the officer’s or director’s lifetime. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited. | |
The Company enters into indemnification provisions under its agreements with other companies in its ordinary course of business, typically with business partners, customers, landlords, lenders and lessors. Under these provisions, the Company generally indemnifies and holds harmless the indemnified party for losses suffered or incurred by the indemnified party as a result of the Company’s activities or, in some cases, as a result of the indemnified party’s activities under the agreement. The maximum potential amount of future payments the Company could be required to make under these indemnification provisions is unlimited. | |
The Company has not incurred material costs to defend lawsuits or settle claims related to these indemnification agreements. As a result, the Company believes the estimated fair value of these agreements is minimal. Accordingly, the Company has no liabilities recorded for these agreements as of March 31, 2014. | |
On December 22, 2011, the Company entered into a distribution agreement that provides for the issuance of common stock warrants, with an expiration date of 3 years, for the purchase of the Company’s common stock in an amount equal to 15% of the total products purchased by the distributor from the Company at the invoice price against the previous year’s purchases of paid invoices. The warrant price will be equal to the closing price of Airware Labs Corp.’s stock price at the anniversary date of the agreement. | |
On December 27, 2011, the Company was named as a defendant in a lawsuit alleging a default on two notes payable totaling $75,000 plus accrued interest. Ultimately, a judgment for $92,001 was entered against the Company as a result of this lawsuit. Per a later settlement agreement, the Company has been making monthly payments of $4,000 against this judgment with interest due on the remaining balance of 4.25% per annum. The notes and accrued interest are reflected in the Company’s Balance Sheet as of March 31, 2014. | |
The Company is in default on a convertible note payable totaling $5,000 and a convertible note payable to a related party totaling $20,000. The Company has attempted communication with the note holders to request extensions or conversion. | |
On July 26, 2012, the Company was named as a Defendant in a lawsuit alleging patent infringement. The Company believed the claims were without merit. After the Company vigorously defended the action, the plaintiff moved to dismiss its own claims, and the Court entered judgment in the Company’s favor. The Court also denied the Company’s request for reimbursement of its attorneys’ fees; the Company retains the right to appeal that decision. | |
On April 8, 2013, the Company entered into an exclusive agency agreement with National United Trading and Investment FZ LLC. This is a performance-based agreement to develop new markets in the United Arab Emirates and other Middle Eastern markets of relevance. | |
On July 16, 2013, the Company entered into a Severance Agreement with Jeffrey Rassas, the Company’s Chief Executive Officer pursuant to which Mr. Rassas will be entitled to the following severance benefits: (i) the Company shall pay to Mr. Rassas his base salary for a period of 12 months following termination without cause; (ii) Mr. Rassas shall be paid any earned and unpaid bonus due; and, (iii) and all unvested stock-based compensation held by Mr. Rassas shall vest as of the date of termination. | |
On November 5, 2013, the Company entered into an agreement with Ramirez Advisors Inter-National, LLC to serve as an advisor to the Company as it pertains to the possible manufacturing of various Company products in Mexico as well as possible business opportunities for Company products in the Mexican market. Additionally, Ramirez Advisors Inter-National, LLC will use its best efforts to locate distributors in Mexico City for the Company's filtration product line given the high levels of pollution in this region. | |
On January 28, 2014, the Company entered into an agreement (the “Acorn Agreement”) with Acorn Management Partners, LLC (“Acorn”) to perform certain financial advisory, business development and professional relations services (the “Acorn Services”). Under the terms of the Acorn Agreement and in exchange for the performance of the Acorn Services by Acorn, the Company shall pay to Acorn an aggregate of $115,000 USD in cash plus a variable number of shares of the restricted common stock of the Company. The Acorn Agreement shall expire on January 27, 2015, unless terminated earlier in accordance with its terms. | |
The Company sells the majority of its products through major distributors. The Company warrants to the distributors that the product will be free from defects in material and workmanship. The Company has determined its product warranty to be immaterial at March 31, 2014. The likelihood that the Company’s estimate of the accrued product warranty claims will materially change in the near term is considered remote. |
Stockholders_Deficit
Stockholders Deficit | 3 Months Ended | ||||
Mar. 31, 2013 | |||||
Equity [Abstract] | ' | ||||
Stockholders Deficit | ' | ||||
9. Stockholders’ Deficit | |||||
Common Stock | |||||
During the six months ended March 31, 2014, the Company issued 2,143,655 shares of stock in payment of interest on the Stockbridge convertible note. | |||||
As further detailed in Related Party Transactions Footnote 7, on December 5, 2013, the Company entered into a share re-purchase agreement with former officer Mr. David Dolezal and re-purchased 6,017,622 shares of common stock held by Mr. Dolezal and entities under his control. | |||||
On January 21, 2014, the Company issued 102,916 shares of stock for the payment of consulting services. The shares were valued using the average closing price ($0.18) for the quarter. | |||||
As referenced in Commitments and Contingencies Footnote 8, on January 27, 2014, the Company issued 225,000 shares of stock for payment to Acorn Management Partners, LLC. The shares were valued using the closing price ($0.22) on the date the shares were issued with a 25% discount for the restricted trading. | |||||
On February 20, 2014, the Company issued 52,941 shares of stock for the payment of consulting services. The shares were valued using the closing price ($0.34) on the date the shares were issued. | |||||
On February 28, 2014, the Company issued 1,207,388 shares of stock to two vendors in satisfaction of accounts payable of $301,847. | |||||
On March 3, 2014, the Company issued 23,200 shares of stock for the conversion of a note payable to related party and interest. | |||||
On March 5, 2014, the Company issued shares of stock to Stockbridge as part of a warrant exercise. Stockbridge exercised 26,200,000 warrants to purchase stock. They elected to use the cashless exercise formula, which resulted in the issuance of 22,457,143 shares of common stock of the Company. | |||||
Warrants | |||||
The balance of warrants outstanding for purchase of the Company’s common stock as of March 31, 2014 is as follows: | |||||
Common Shares | Exercise Price of Warrants | Date Issued | Expiration | ||
Issuable Upon | Date | ||||
Exercise of Warrants | |||||
250,000 | $1.00 | 4/26/11 | 4/25/14 | ||
Issued under a private placement memorandum | |||||
50,000 | $1.00 | 4/27/11 | 4/26/14 | ||
Issued under a private placement memorandum | |||||
25,000 | $1.00 | 4/28/11 | 4/27/14 | ||
Issued under a private placement memorandum | |||||
200,000 | $1.00 | 5/3/11 | 5/2/14 | ||
Issued under a private placement memorandum | |||||
20,000 | $0.25 | 3/8/12 | 3/7/17 | ||
Issued for financing expense | |||||
40,000 | $0.50 | 4/30/12 | 4/29/15 | ||
Issued under a consultant settlement agreement | |||||
125,464 | $0.75 | 12/22/12 | 12/21/15 | ||
Issued per distribution agreement | |||||
140,000 | $0.40 | 6/25/13 | 6/25/15 | ||
Issued under a private placement memorandum | |||||
120,000 | $0.40 | 6/26/13 | 6/26/15 | ||
Issued under a private placement memorandum | |||||
172,028 | $0.14 | 12/22/13 | 12/22/16 | ||
Issued per distribution agreement | |||||
1,142,492 | |||||
Balance of Warrants at March 31, 2014 | |||||
Stock Options | |||||
The Company had the following options outstanding at March 31, 2014: | |||||
Common Shares | Exercise Price of Options | Date Issued | Expiration | ||
Issuable Upon | Date | ||||
Exercise of Options | |||||
775,000 | $0.50 | 4/20/11 | 4/19/21 | ||
Options granted to former officer & two former senior advisory board members | |||||
700,000 | $0.50 | 7/19/11 | 7/18/16 | ||
Options granted to former employee and three consultants | |||||
52,844 | $0.25 | 4/30/12 | 4/29/22 | ||
Options granted under a consultant agreement settlement | |||||
150,000 | $0.30 | 1/25/13 | 1/24/23 | ||
Options granted to Board member | |||||
1,550,000 | $0.30 | 1/25/13 | 1/24/23 | ||
Options granted to employee and two consultants | |||||
250,000 | $0.26 | 5/20/13 | 5/19/16 | ||
Options granted to medical advisory board member | |||||
250 | $0.28 | 9/5/13 | 9/4/16 | ||
Options granted to consultant | |||||
500,000 | $0.25 | 9/28/13 | 12/31/14 | ||
Options issued for investment in Breathe Active, LLC | |||||
500,000 | $0.50 | 9/28/13 | 12/31/14 | ||
Options issued for investment in Breathe Active, LLC | |||||
-200,000 | |||||
Options re-purchased by Company (1) | |||||
150,000 | $0.11 | 10/4/13 | 10/3/23 | ||
Options granted to Board member (2) | |||||
433,333 | $0.11 | 10/4/13 | 10/3/23 | ||
Options granted to Officers (3) | |||||
5,111,177 | |||||
Balance of Options at March 31, 2014 | |||||
(1) On December 5, 2013, per an Agreement and Mutual Release of Claims with a former consultant, the Company paid $2,500 in return for the relinquishment of the consultant’s stock options. | |||||
(2) On October 4, 2013, the Company granted stock options to a Board member. These options are immediately vested, have an exercise price of $.11 and have a term of 10 years. | |||||
(3) On October 4, 2013, the Company granted stock options to two officers. These options have an exercise price of $.11 and a term of 10 years. The options vest evenly over the next three years on the anniversary of the grant date, unless there is a change in corporate control, then the options vest immediately. |
Customer_Rebates
Customer Rebates | 3 Months Ended |
Mar. 31, 2013 | |
Accounting Policies [Abstract] | ' |
CUSTOMER REBATES | ' |
10. Customer Rebates | |
As part of an agreement with its domestic distributor, the Company agreed to provide free product to assist in promotional efforts by the distributor. This free product would be recognized as credits on future orders as they are placed. During the six months ended March 31, 2014, this resulted in $66,989 being recognized as customer credits against revenue and $12,777 in samples expense. An additional $7,659 in credit remains to be granted against future orders as they are placed per this agreement. |
Subsequent_Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2013 | |
Subsequent Events [Abstract] | ' |
Subsequent Events | ' |
11. Subsequent Events | |
Subsequent to March 31, 2014, the Company borrowed an additional $100,000 against the convertible secured note with Stockbridge to fund marketing efforts. The total currently drawn on the note is $2,408,000. | |
On April 23, 2014, the Company entered into a product development agreement with Dan Pool of Designer Products. As compensation, the Company will pay $1,500 in stock accrued monthly and issued quarterly. Additionally, the Company will pay a monthly royalty of 5% of net sales of any products created by Dan Pool as inventor. |
Summary_Significant_Accounting1
Summary Significant Accounting Policies and Use of Estimates (Policies) | 3 Months Ended |
Mar. 31, 2013 | |
Accounting Policies [Abstract] | ' |
Basis of Presentation and Organization | ' |
Basis of Presentation and Organization | |
Airware Labs Corp. (“Airware Labs” or the “Company”), formerly Crown Dynamics Corp., is a Delaware corporation. The Company was incorporated under the laws of the State of Delaware on June 15, 2010. On October 26, 2012, the Articles of Incorporation were amended to reflect a name change to Airware Labs Corp. On November 13, 2012, the Board approved a change in fiscal year end from December 31 to September 30. | |
On March 20, 2012, through an equity exchange agreement, the Company acquired all of the issued and outstanding stock of Airware Holdings, Inc., a Nevada corporation (“Airware”), in exchange for shares of the Company’s newly-issued common stock. Airware Holdings, Inc. was formed in February 2010 and is a non-prescription medical products company. The principal business purpose of the Company is to develop, manufacture and distribute nasal breathing devices. The Company targets prospective customers such as compassionate sleeping partners, individuals with allergies and athletic enthusiasts throughout the United States, Canada and Europe. | |
The share exchange has been accounted for as a recapitalization reverse merger between Airware Holdings, Inc. and Airware Labs Corp. Airware Holdings, Inc. is the accounting acquirer and Airware Labs Corp. is the accounting acquiree. Consequently, the historical pre-merger financial statements of Airware Holdings, Inc. are now those of the Company. The par value of the stock of Airware Holdings, Inc. of $.001 per share has been adjusted to that of the Company of $.0001 per share with the par value difference charged to paid-in capital. The pre-merger deficit is that of Airware Holdings, Inc. Airware Labs Corp’s pre-merger accumulated deficit has been charged to paid-in capital. The pre-merger Airware Holdings, Inc. outstanding shares have been adjusted to reflect the exchange. The pre-merger outstanding shares of Airware Labs Corp. were included in the issued and outstanding shares of the Company at the date of the merger. | |
The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. Inter-company balances and transactions have been eliminated upon consolidation. | |
Accounting Estimates | ' |
Accounting Estimates | |
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could materially differ from those estimates. Significant estimates of the Company include accounting for depreciation and amortization, recoverability of intangible assets, deferred income taxes, accruals and contingencies, the imputed interest rate of the note payable to related party and the fair value of common stock, and the estimated fair value of stock options and warrants. | |
Unaudited Interim Financial Statements | ' |
Unaudited Interim Financial Statements | |
The interim consolidated financial statements of the Company as of March 31, 2014 and 2013, and for the periods then ended, are unaudited. However, in the opinion of management, the interim financial statements include all adjustments, consisting of only normal recurring adjustments, necessary to present fairly the Company’s financial position as of March 31, 2014 and the results of its operations and its cash flows for the periods ended March 31, 2014 and 2013. These results are not necessarily indicative of the results expected for the fiscal year ended September 30, 2014. The accompanying financial statements and notes thereto do not reflect all disclosures required under accounting principles generally accepted in the United States (U.S. “GAAP”). | |
Net Loss per Share | ' |
Net Loss per Share | |
Basic earnings per share does not include dilution and is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of an entity. Dilutive securities are not included in the weighted average number of shares when inclusion would be anti-dilutive. Due to the net losses for the periods ended March 31, 2014 and 2013, basic and diluted loss per common share were the same, as the effect of potentially dilutive securities would have been anti-dilutive. | |
As of March 31, 2014, there were total shares of 27,039,724 issuable upon conversion of notes payable, exercise of warrants and options that were not included in the earnings per share calculation as they were anti-dilutive. |
Convertible_Notes_Payable_Tabl
Convertible Notes Payable (Tables) | 3 Months Ended | ||
Mar. 31, 2013 | |||
Notes to Financial Statements | ' | ||
Convertible notes payable | ' | ||
$ 5,000 | |||
8.00% notes payable, due August 22, 2012, convertible to common stock at $.50 per share, interest payments are due at maturity, unsecured | |||
45,443 | |||
6.50% note payable, due November 26, 2011, convertible to common stock at $2 per share, interest payments are due annually, unsecured. Terms amended in March 2013 to interest at 4.25%, with $4,000 monthly payments of principal and interest | |||
50,443 | |||
Less current portion | (50,443) | ||
$ - |
Notes_Payable_to_Former_Office1
Notes Payable to Former Officer (Tables) | 3 Months Ended | |
Mar. 31, 2013 | ||
Debt Disclosure [Abstract] | ' | |
Notes payable to former officer | ' | |
0.27% note payable, due August 1, 2016, interest due at maturity, unsecured | $ 47,500 |
Convertible_Notes_Payable_to_R1
Convertible Notes Payable to Related Parties (Tables) | 3 Months Ended | |
Mar. 31, 2013 | ||
Notes to Financial Statements | ' | |
Convertible Notes Payable to Related Parties | ' | |
12% note payable net of unamortized debt discount of $1,691,444, due September 30, 2015, convertible to common stock at $.10 per share, interest payments are due monthly. Debt is secured by substantially all of the assets of the Company | $ 616,556 | |
20,000 | ||
8.00 % note payable due August 26, 2012, convertible to common stock at $.50 per share, interest payments are due at maturity, unsecured | ||
636,556 | ||
Less current portion | (20,000) | |
$ 616,556 |
Stockholders_Deficit_Tables
Stockholders Deficit (Tables) | 3 Months Ended | ||||
Mar. 31, 2013 | |||||
Equity [Abstract] | ' | ||||
Balance of warrants outstanding for purchase of Company's common stock | ' | ||||
Common Shares | Exercise Price of Warrants | Date Issued | Expiration | ||
Issuable Upon | Date | ||||
Exercise of Warrants | |||||
250,000 | $1.00 | 4/26/11 | 4/25/14 | ||
Issued under a private placement memorandum | |||||
50,000 | $1.00 | 4/27/11 | 4/26/14 | ||
Issued under a private placement memorandum | |||||
25,000 | $1.00 | 4/28/11 | 4/27/14 | ||
Issued under a private placement memorandum | |||||
200,000 | $1.00 | 5/3/11 | 5/2/14 | ||
Issued under a private placement memorandum | |||||
20,000 | $0.25 | 3/8/12 | 3/7/17 | ||
Issued for financing expense | |||||
40,000 | $0.50 | 4/30/12 | 4/29/15 | ||
Issued under a consultant settlement agreement | |||||
125,464 | $0.75 | 12/22/12 | 12/21/15 | ||
Issued per distribution agreement | |||||
140,000 | $0.40 | 6/25/13 | 6/25/15 | ||
Issued under a private placement memorandum | |||||
120,000 | $0.40 | 6/26/13 | 6/26/15 | ||
Issued under a private placement memorandum | |||||
172,028 | $0.14 | 12/22/13 | 12/22/16 | ||
Issued per distribution agreement | |||||
1,142,492 | |||||
Balance of Warrants at March 31, 2014 | |||||
Balance of options outstanding | ' | ||||
Common Shares | Exercise Price of Options | Date Issued | Expiration | ||
Issuable Upon | Date | ||||
Exercise of Options | |||||
775,000 | $0.50 | 4/20/11 | 4/19/21 | ||
Options granted to former officer & two former senior advisory board members | |||||
700,000 | $0.50 | 7/19/11 | 7/18/16 | ||
Options granted to former employee and three consultants | |||||
52,844 | $0.25 | 4/30/12 | 4/29/22 | ||
Options granted under a consultant agreement settlement | |||||
150,000 | $0.30 | 1/25/13 | 1/24/23 | ||
Options granted to Board member | |||||
1,550,000 | $0.30 | 1/25/13 | 1/24/23 | ||
Options granted to employee and two consultants | |||||
250,000 | $0.26 | 5/20/13 | 5/19/16 | ||
Options granted to medical advisory board member | |||||
250 | $0.28 | 9/5/13 | 9/4/16 | ||
Options granted to consultant | |||||
500,000 | $0.25 | 9/28/13 | 12/31/14 | ||
Options issued for investment in Breathe Active, LLC | |||||
500,000 | $0.50 | 9/28/13 | 12/31/14 | ||
Options issued for investment in Breathe Active, LLC | |||||
-200,000 | |||||
Options re-purchased by Company (1) | |||||
150,000 | $0.11 | 10/4/13 | 10/3/23 | ||
Options granted to Board member (2) | |||||
433,333 | $0.11 | 10/4/13 | 10/3/23 | ||
Options granted to Officers (3) | |||||
5,111,177 | |||||
Balance of Options at March 31, 2014 | |||||
Summary_Significant_Accounting2
Summary Significant Accounting Policies and Use of Estimates (Details Narrative) (USD $) | Mar. 31, 2014 |
Accounting Policies [Abstract] | ' |
Original par value of company stock | $0.00 |
Modified par value of company stock | $0.00 |
Total anti-dilutive shares outstanding | 27,039,724 |
Convertible_Notes_Payable_Conv
Convertible Notes Payable - Convertible notes payable (Details) (USD $) | Mar. 31, 2014 |
Notes to Financial Statements | ' |
8.00% notes payable, due August 22, 2012, convertible to common stock at $.50 per share, interest payments are due at maturity, unsecured | $5,000 |
6.50% note payable, due November 26, 2011, convertible to common stock at $2 per share, interest payments are due annually, unsecured. Terms amended in March 2013 to interest at 4.25%, with $4,000 monthly payments of principal and interest | 45,443 |
Total convertible notes payable | 50,443 |
Less current portion | -50,443 |
Convertible notes payable - long term | ' |
Notes_Payable_to_Former_Office2
Notes Payable to Former Officer - Notes payable to former officer (Details) (USD $) | Mar. 31, 2014 |
Debt Disclosure [Abstract] | ' |
0.27% note payable, due August 1, 2016, interest due at maturity, unsecured | $47,500 |
Notes_Payable_to_Former_Office3
Notes Payable to Former Officer (Details Narrative) | Dec. 05, 2013 |
Debt Disclosure [Abstract] | ' |
Original promissory note interest rate | 2.00% |
Revised promissory note interest rate | 0.27% |
Convertible_Notes_Payable_to_R2
Convertible Notes Payable to Related Parties - Convertible Notes Payable to Related Parties (Details) (USD $) | Mar. 31, 2014 |
Notes to Financial Statements | ' |
12% note payable net of unamortized debt discount of $1,691,444, due September 30, 2015, convertible to common stock at $.10 per share, interest payments are due monthly. Debt is secured by substantially all of the assets of the Company | $616,556 |
8.00 % note payable due August 26, 2012, convertible to common stock at $.50 per share, interest payments are due at maturity, unsecured | 20,000 |
Total convertible notes payable to related parties | 636,556 |
Less current portion | ($20,000) |
Convertible_Notes_Payable_to_R3
Convertible Notes Payable to Related Parties (Details Narrative) (USD $) | Mar. 31, 2014 | Aug. 21, 2013 |
Notes to Financial Statements | ' | ' |
Modified note payable amount after additional borrowings | ' | $3,206,000 |
Additional borrowings from Stockbridge Enterprise | $2,308,000 | ' |
Loss_on_Warrants_Exercised_Det
Loss on Warrants Exercised (Details Narrative) (USD $) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 05, 2014 | |
Guarantees [Abstract] | ' | ' |
Shares issued to Stockbridge | ' | 22,457,143 |
Cashless exercise | $26,200,000 | ' |
Loss | ($13,914,034) | ' |
Related_Party_Transactions_Det
Related Party Transactions (Details Narrative) (USD $) | 3 Months Ended | 6 Months Ended | |||
Mar. 31, 2013 | Mar. 31, 2014 | Mar. 05, 2014 | Dec. 17, 2013 | Dec. 05, 2013 | |
Related Party Transactions [Abstract] | ' | ' | ' | ' | ' |
Common stock avaliable under repurchase agreement | ' | ' | ' | ' | 7,567,622 |
Portion repurchased by outside investors | ' | ' | ' | 1,550,000 | ' |
Portion repurchased by the Company | ' | ' | ' | 6,017,622 | 6,017,622 |
Amount borrowed against Stockbridge note | ' | $1,002,000 | ' | ' | ' |
CommonStockSharesIssued | ' | ' | 22,457,143 | ' | ' |
Cashless exercise | 26,200,000 | ' | ' | ' | ' |
Commitments_and_Contingencies_
Commitments and Contingencies (Details Narrative) (USD $) | Mar. 31, 2014 | Jan. 28, 2014 | Dec. 27, 2011 | Dec. 22, 2011 |
Commitments and Contingencies | ' | ' | ' | ' |
Expiration date of stock warrants issued | ' | ' | ' | '3 years |
Amount of notes payable in default | ' | ' | $75,000 | ' |
Final judgment as result of lawsuit | ' | ' | 92,001 | ' |
Monthly payments on lawsuit judgement | ' | ' | 4,000 | ' |
Annual interest rate on balance of lawsuit judgement | ' | ' | 4.25% | ' |
Amount of convertible note payable in default | 5,000 | ' | ' | ' |
Amount of convertible note payable to related party in default | 20,000 | ' | ' | ' |
Amount owed to Acorn Management Partners | ' | $115,000 | ' | ' |
Stockholders_Deficit_Details_N
Stockholders Deficit (Details Narrative) (USD $) | 6 Months Ended | |||||||||
Mar. 31, 2014 | Mar. 05, 2014 | Mar. 03, 2014 | Feb. 28, 2014 | Feb. 20, 2014 | Jan. 27, 2014 | Jan. 21, 2014 | Dec. 17, 2013 | Dec. 05, 2013 | Oct. 04, 2013 | |
Equity [Abstract] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Common stock issued for payment of interest on Stockbridge note | 2,143,655 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Shares re-purchased from Mr. David Dolezal | ' | ' | ' | ' | ' | ' | ' | 6,017,622 | 6,017,622 | ' |
Shares issued as payment for services | ' | ' | 23,200 | 1,207,388 | 52,941 | ' | 102,916 | ' | ' | ' |
Shares issued as payment for consulting services, per share value | ' | ' | ' | ' | $0.34 | ' | $0.18 | ' | ' | ' |
Shares issued as payment to Acorn Management Partners, LLC | ' | ' | ' | ' | ' | 225,000 | ' | ' | ' | ' |
Shares issued as payment to Acorn Management Partners, LLC, per share value | ' | ' | ' | ' | ' | $0.22 | ' | ' | ' | ' |
Accounts payable satisfied | ' | ' | ' | $301,847 | ' | ' | ' | ' | ' | ' |
Warrants exercised by Stockbridge | ' | 26,200,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Shares of common stock issed to Stockbridge | ' | 22,457,143 | ' | ' | ' | ' | ' | ' | ' | ' |
Paid to consultant for return of stock options | ' | ' | ' | ' | ' | ' | ' | ' | $2,500 | ' |
Stock options granted, exercise price per share | ' | ' | ' | ' | ' | ' | ' | ' | ' | $0.11 |
Customer_Rebates_Details_Narra
Customer Rebates (Details Narrative) (USD $) | 6 Months Ended |
Mar. 31, 2014 | |
Accounting Policies [Abstract] | ' |
Customer credits against revenue | $66,989 |
Samples expense | 12,777 |
Remaining credit to be granted against future orders per promotional agreement | $7,659 |
Subsequent_Events_Details_Narr
Subsequent Events (Details Narrative) (USD $) | 3 Months Ended | 4 Months Ended | |
Mar. 31, 2014 | 14-May-14 | 15-May-14 | |
Subsequent Events [Abstract] | ' | ' | ' |
Additional borrowing on Stockbridge note subsequent to quarter end | ' | $100,000 | ' |
Total amount currently drawn on Stockbridge note | ' | ' | 2,408,000 |
Product development agreement with Dan Pool | $1,500 | ' | ' |