Document_and_Entity_Informatio
Document and Entity Information | 6 Months Ended | |
Mar. 31, 2015 | 11-May-15 | |
Document And Entity Information | ||
Entity Registrant Name | AIRWARE LABS CORP. | |
Entity Central Index Key | 1500123 | |
Document Type | 10-Q | |
Document Period End Date | 31-Mar-15 | |
Amendment Flag | FALSE | |
Current Fiscal Year End Date | -21 | |
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 | 67,107,677 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2015 |
CONDENSED_CONSOLIDATED_BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (USD $) | Mar. 31, 2015 | Sep. 30, 2014 |
Current Assets: | ||
Cash and cash equivalents | $49,138 | $42,582 |
Accounts receivable | 530 | 3,137 |
Inventory | 66,633 | 71,614 |
Deposits | 10,000 | 10,000 |
Prepaid expenses and other current assets | 47,789 | 66,205 |
Total current assets | 174,090 | 193,538 |
Other Assets: | ||
Property and equipment, net | 23,180 | 20,039 |
Intangible assets, net | 270,646 | 292,402 |
Deposits | 2,387 | 2,387 |
Investment in Breathe Active, LLC | 290 | 290 |
Total Assets | 470,593 | 508,656 |
Current Liabilities: | ||
Accounts payable | 1,674,419 | 1,639,529 |
Accrued interest - related parties | 37,255 | 32,076 |
Accrued interest | 1,444 | 1,244 |
Accrued expenses | 119,637 | 72,172 |
Notes payable to former officer | 23,750 | |
Convertible notes payable | 5,000 | 27,678 |
Convertible notes payable to related parties - current portion, net of discount | 2,144,850 | 1,324,659 |
Total current liabilities | 4,006,355 | 3,097,358 |
Accrued interest to related parties | 170 | 106 |
Notes payable to former officer | 23,750 | 47,500 |
Total liabilities | 4,030,275 | 3,144,964 |
Stockholders' Deficit: | ||
Common stock, par value $.0001 per share, 200,000,000 and 200,000,000 shares authorized; 66,133,720 and 62,256,379 shares issued and outstanding at March 31, 2015 and September 30, 2014, respectively | 6,613 | 6,226 |
Common stock to be issued, 200,000 shares, par value $.0001 | 20 | |
Additional paid-in capital | 30,450,327 | 29,452,379 |
Accumulated deficit | -34,016,642 | -32,094,913 |
Total stockholders' deficit | -3,559,682 | -2,636,308 |
Total Liabilities and Stockholders' Deficit | $470,593 | $508,656 |
CONDENSED_CONSOLIDATED_BALANCE1
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Mar. 31, 2015 | Sep. 30, 2014 |
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 | 66,133,720 | 62,256,379 |
Common stock, outstanding | 66,133,720 | 62,256,379 |
Common stock to be issued, shares | 200,000 |
CONDENSED_CONSOLIDATED_STATEME
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (USD $) | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2014 | Mar. 31, 2015 | Mar. 31, 2014 | |
Income Statement [Abstract] | ||||
Revenues, net | $10,487 | $44,633 | $103,771 | $55,340 |
Cost of products sold | 8,043 | 39,062 | 64,800 | 43,607 |
Gross profit | 2,444 | 5,571 | 38,971 | 11,733 |
Operating expenses | ||||
General and administrative | 261,159 | 241,408 | 472,592 | 508,193 |
Sales and marketing | 94,755 | 68,828 | 155,739 | 83,522 |
Total expenses | 355,914 | 310,236 | 628,331 | 591,715 |
Loss from operations | -353,470 | -304,665 | -589,360 | -579,982 |
Other income (expense) | ||||
Interest income | 289 | |||
Forgiveness of debt | 20 | |||
Induced note conversion expense | -2,697 | -2,697 | ||
Interest expense | -645,124 | -331,481 | -1,332,368 | -518,316 |
Valuation (loss) - common stock warrants | -707,400 | |||
Loss on warrants exercised | -13,914,034 | -13,914,034 | ||
Total other income (expense) | -645,124 | -14,248,212 | -1,332,368 | -15,142,138 |
Loss before income taxes | -998,594 | -14,552,877 | -1,921,728 | -15,722,120 |
Income tax expense | ||||
Net loss | ($998,594) | ($14,552,877) | ($1,921,728) | ($15,722,120) |
Basic and diluted net loss per common share | ($0.02) | ($0.36) | ($0.03) | ($0.40) |
Basic and diluted weighted average common shares outstanding | 65,258,629 | 40,953,071 | 64,322,891 | 39,281,951 |
CONDENSED_CONSOLIDATED_STATEME1
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (USD $) | 6 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Operating Activities: | ||
Net loss | ($1,921,728) | ($15,722,120) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 33,615 | 30,538 |
Common stock issued for services | 74,000 | 375,722 |
Options and warrants issued for services | 36,097 | 30,958 |
Interest expense from amortization of debt discount | 820,190 | 387,773 |
Induced conversion expense | 2,697 | |
Stock issued for interest expense | 506,258 | 107,982 |
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 | 2,607 | 7,343 |
Inventory | 4,981 | 3,452 |
Prepaid expenses | 18,416 | -3,321 |
Deposits | -44,307 | |
Accounts payable | 34,890 | -229,691 |
Accrued interest | 5,443 | 8,872 |
Customer deposit | 80,437 | |
Accrued expenses | 47,465 | 27,641 |
Net Cash Used in Operating Activities | -337,766 | -314,610 |
Investing Activities: | ||
Purchases of property and equipment | -15,000 | |
Net Cash Used In Investing Activities | -15,000 | |
Financing Activities: | ||
Stock issued for cash | 32,000 | |
Proceeds from convertible notes payable | 350,000 | 1,002,000 |
Repayment of notes payable | -22,678 | -22,735 |
Options re-purchased | -2,500 | |
Stock re-purchased | -601,762 | |
Net Cash Provided by Financing Activities | 359,322 | 375,003 |
Net Increase in Cash | 6,556 | 60,393 |
Cash - Beginning of Period | 42,582 | 19,942 |
Cash - End of Period | 49,138 | 80,335 |
Supplemental disclosure of cash flow information: | ||
Interest paid in cash | 84 | 1,365 |
Non-cash investing and financing activities: | ||
Stock issued for convertible notes | 5,000 | |
Debt discount on note payable, related party | $350,000 |
Summary_of_Significant_Account
Summary of Significant Accounting Policies and Use of Estimates | 6 Months Ended |
Mar. 31, 2015 | |
Accounting Policies [Abstract] | |
Summary of 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 breathing solutions that address major respiratory challenges impacting human health. | |
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, 2015 and 2014, 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, 2015 and the results of its operations and its cash flows for the periods ended March 31, 2015 and 2014. These results are not necessarily indicative of the results expected for the fiscal year ended September 30, 2015. 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, 2015 and 2014, 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, 2015, there were total shares of 35,148,622 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 | 6 Months Ended |
Mar. 31, 2015 | |
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 | 6 Months Ended | ||||
Mar. 31, 2015 | |||||
Debt Disclosure [Abstract] | |||||
Convertible Notes Payable | 3. Convertible Notes Payable | ||||
Convertible notes payable consist of the following: | |||||
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 | |||
Notes_Payable_to_Former_Office
Notes Payable to Former Officer | 6 Months Ended | ||||
Mar. 31, 2015 | |||||
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 | |||
Less current portion | (23,750 | ) | |||
$ | 23,750 | ||||
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 | 6 Months Ended | ||||
Mar. 31, 2015 | |||||
Debt Disclosure [Abstract] | |||||
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 to significant shareholder, net of unamortized debt discount of $933,150, 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 | $ | 2,124,850 | |||
8.00 % note payable to advisory board member, due August 26, 2012, convertible to common stock at $.50 per share, interest payments are due at maturity, unsecured | 20,000 | ||||
$ | 2,144,850 | ||||
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, 2015, the Company has borrowed $3,058,000 against this line of credit. |
Related_Party_Transactions
Related Party Transactions | 6 Months Ended |
Mar. 31, 2015 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 6. 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. | |
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, 2015, the Company borrowed $350,000 against this note. |
Commitments_and_Contingencies
Commitments and Contingencies | 6 Months Ended |
Mar. 31, 2015 | |
Commitments and Contingencies | |
Commitments and Contingencies | 7. 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, 2015. | |
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. | |
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 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. There has been no expense recognized through March 31, 2015 as a result of this agreement. | |
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 January 6, 2014, the Company entered into a license agreement with Eastar Industries, Co., pursuant to which the Company granted Eastar an exclusive license to sell its products in China for a term of five years in exchange for a royalty equal to 18% of gross profits generated by the sales of products in China. Additionally, the Company and Eastar agree to establish a joint venture company in Hong Kong of Shanghai which will be assigned Eastar’s rights under the agreement and of which 18% of the joint venture will be owned by the Company. | |
On April 23, 2014, the Company entered into a product development agreement with Dan Pool of Designer Products. This agreement was modified on June 16, 2014. As compensation, the Company will pay $5,000 monthly, as well as issue up to two million stock options as the Company’s stock price hits certain benchmarks. Additionally, the Company will pay a monthly royalty of 5% of net sales of any products created by Dan Pool as inventor. There has been no expense recognized through March 31, 2015 as a result of the royalty portion of this agreement. | |
On August 28, 2014, the Company was named as a Defendant in a lawsuit by a former officer alleging wrongful termination. On March 31, 2015, the Company entered into a settlement agreement with the former officer wherein the Company shall pay $30,000 over the course of six months, starting on April 7, 2015. This amount is recorded on the balance sheet as part of accrued expenses. | |
On October 13, 2014, the Company entered into a consulting agreement with Mr. Adam Herschman. Mr. Herschman has been engaged to provide marketing, advertising, and social media-related services. He has been compensated by the issuance of 250,000 shares of stock. | |
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, 2015. 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 | 6 Months Ended | ||||
Mar. 31, 2015 | |||||
Equity [Abstract] | |||||
Stockholders' Deficit | 8. Stockholders’ Deficit | ||||
Common Stock | |||||
During the six months ended March 31, 2015, the Company issued 3,473,040 shares of stock in payment of interest on the Stockbridge convertible note. | |||||
On November 20, 2014, the Company issued 322,250 shares of stock for the payment of consulting services. 72,250 shares were valued using the average closing price ($0.166) for the previous quarter. 250,000 shares were valued at the closing stock price on the date of agreement ($0.20). | |||||
On January 28, 2015, the Company issued 82,051 shares of stock for the payment of consulting services. They were valued using the average closing price ($0.146) for the previous quarter. | |||||
On March 24, 2015, the Company received $40,000 towards the purchase of 200,000 shares of stock. This was part of a subscription agreement totaling $50,000. The shares were not issued as of the end of the quarter. | |||||
Warrants | |||||
The balance of warrants outstanding for purchase of the Company’s common stock as of March 31, 2015 is as follows: | |||||
Common Shares | Exercise Price of Warrants | Date Issued | Expiration | ||
Issuable Upon | Date | ||||
Exercise of Warrants | |||||
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 | |||||
25,000 | $0.40 | 7/2/14 | 6/1/16 | ||
Issued under a private placement memorandum | |||||
50,000 | $0.60 | 7/2/14 | 6/1/16 | ||
Issued under a private placement memorandum | |||||
25,000 | $0.80 | 7/2/14 | 6/1/16 | ||
Issued under a private placement memorandum | |||||
145,510 | $0.13 | 12/22/14 | 12/22/17 | ||
Issued per distribution agreement | |||||
863,002 | |||||
Balance of Warrants at March 31, 2015 | |||||
Stock Options | |||||
The Company had the following options outstanding at March 31, 2015: | |||||
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 | |||||
500,000 | $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 | |||||
150,000 | $0.11 | 10/4/13 | 10/3/23 | ||
Options granted to Board member | |||||
433,333 | $0.11 | 10/4/13 | 10/3/23 | ||
Options granted to Officers | |||||
150,000 | $0.25 | 9/5/14 | 9/4/24 | ||
Options granted to Board member | |||||
633,333 | $0.25 | 9/5/14 | 9/4/24 | ||
Options granted to Officers and consultants | |||||
5,894,510 | |||||
Balance of Options at March 31, 2015 | |||||
During the six months ended March 31, 2015, $32,104 was expensed for the pro-rata vesting of stock-based compensation. As of March 31, 2015, the balance of unrecognized compensation cost related to non-vested stock-based compensation to be expensed in future periods was $69,170. |
Significant_Customer
Significant Customer | 6 Months Ended |
Mar. 31, 2015 | |
Risks and Uncertainties [Abstract] | |
Significant Customer | 9. Significant Customer |
For the six months ended March 31, 2015, 83% of the Company’s revenues were from one customer. Accounts receivable for this customer as of March 31, 2015 totaled $0. |
Subsequent_Events
Subsequent Events | 6 Months Ended |
Mar. 31, 2015 | |
Subsequent Events [Abstract] | |
Subsequent Events | 10. Subsequent Events |
On April 28, 2015, the Company issued 629,987 shares of restricted common stock as payment for interest on loans to the Company for March 2015, at a cost basis of $.05 per share. | |
On April 28, 2015, the Company issued 93,970 shares of restricted common stock to one holder as compensation for services rendered to the Company from January 1 to March 31, 2015, at a cost basis of $0.128 per share. | |
On April 28, 2015, the Company issued 250,000 shares of restricted common stock per a subscription agreement of $50,000. | |
On April 2, 2015, the Company and Gerdz Investments Limited Partnership, RLLP (“Gerdz”) entered into a Cancellation Agreement with regards to 200,000 options originally issued on July 19, 2011, exercisable at $0.50. | |
On April 2, 2015, the Company issued 200,000 options to Gerdz, exercisable at $0.10 per share, which vest immediately and shall expire on April 2, 2025. |
Summary_of_Significant_Account1
Summary of Significant Accounting Policies and Use of Estimates (Policies) | 6 Months Ended |
Mar. 31, 2015 | |
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 breathing solutions that address major respiratory challenges impacting human health. | |
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, 2015 and 2014, 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, 2015 and the results of its operations and its cash flows for the periods ended March 31, 2015 and 2014. These results are not necessarily indicative of the results expected for the fiscal year ended September 30, 2015. 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, 2015 and 2014, 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, 2015, there were total shares of 35,148,622 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) | 6 Months Ended | ||||
Mar. 31, 2015 | |||||
Debt Disclosure [Abstract] | |||||
Convertible notes payable | 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 |
Notes_Payable_to_Former_Office1
Notes Payable to Former Officer (Tables) | 6 Months Ended | ||||
Mar. 31, 2015 | |||||
Debt Disclosure [Abstract] | |||||
Notes payable to former officer | 0.27% note payable, due August 1, 2016, interest due at maturity, unsecured | $ | 47,500 | ||
Less current portion | (23,750 | ) | |||
$ | 23,750 |
Convertible_Notes_Payable_to_R1
Convertible Notes Payable to Related Parties (Tables) | 6 Months Ended | ||||
Mar. 31, 2015 | |||||
Convertible Notes Payable To Related Parties Tables | |||||
Convertible notes payable to related parties | 12% note payable to significant shareholder, net of unamortized debt discount of $933,150, 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 | $ | 2,124,850 | ||
8.00 % note payable to advisory board member, due August 26, 2012, convertible to common stock at $.50 per share, interest payments are due at maturity, unsecured | 20,000 | ||||
$ | 2,144,850 |
Stockholders_Deficit_Tables
Stockholders' Deficit (Tables) | 6 Months Ended | ||||
Mar. 31, 2015 | |||||
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 | |||||
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 | |||||
25,000 | $0.40 | 7/2/14 | 6/1/16 | ||
Issued under a private placement memorandum | |||||
50,000 | $0.60 | 7/2/14 | 6/1/16 | ||
Issued under a private placement memorandum | |||||
25,000 | $0.80 | 7/2/14 | 6/1/16 | ||
Issued under a private placement memorandum | |||||
145,510 | $0.13 | 12/22/14 | 12/22/17 | ||
Issued per distribution agreement | |||||
863,002 | |||||
Balance of Warrants at March 31, 2015 | |||||
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 | |||||
500,000 | $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 | |||||
150,000 | $0.11 | 10/4/13 | 10/3/23 | ||
Options granted to Board member | |||||
433,333 | $0.11 | 10/4/13 | 10/3/23 | ||
Options granted to Officers | |||||
150,000 | $0.25 | 9/5/14 | 9/4/24 | ||
Options granted to Board member | |||||
633,333 | $0.25 | 9/5/14 | 9/4/24 | ||
Options granted to Officers and consultants | |||||
5,894,510 | |||||
Balance of Options at March 31, 2015 | |||||
Summary_of_Significant_Account2
Summary of Significant Accounting Policies and Use of Estimates (Details Narrative) | 6 Months Ended |
Mar. 31, 2015 | |
Accounting Policies [Abstract] | |
Anti-dilutive shares issuable not included in earnings per share calculation | 35,148,622 |
Convertible_Notes_Payable_Conv
Convertible Notes Payable - Convertible notes payable (Details) (Convertible Notes Payable A, USD $) | 6 Months Ended |
Mar. 31, 2015 | |
Convertible Notes Payable A | |
Notes payable, amount | $5,000 |
Notes payable, interest rate | 8.00% |
Notes payable, due date | 22-Aug-12 |
Notes payable, conversion to common stock price per share | $0.50 |
Notes_Payable_to_Former_Office2
Notes Payable to Former Officer - Notes payable to former officer (Details) (USD $) | 6 Months Ended | |
Mar. 31, 2015 | Sep. 30, 2014 | |
Notes payable to former officer, amount | $23,750 | $47,500 |
Notes payable to former officer | ||
Notes payable to former officer, amount | 47,500 | |
Notes payable to former officer, interest rate | 0.27% | |
Notes payable to former officer, due date | 1-Aug-16 | |
Less Current Portion | ||
Notes payable to former officer, amount | -23,750 | |
Balance | ||
Notes payable to former officer, amount | $23,750 |
Notes_Payable_to_Former_Office3
Notes Payable to Former Officer (Details Narrative) (Interest rate information) | 0 Months Ended |
Dec. 05, 2013 | |
Interest rate information | |
Notes payable to former officer, original interest rate | 2.00% |
Notes payable to former officer, reduced interest rate | 0.27% |
Convertible_Notes_Payable_to_R2
Convertible Notes Payable to Related Parties - Convertible notes payable to related parties (Details) (USD $) | 6 Months Ended |
Mar. 31, 2015 | |
Convertible notes payable to related parties A | |
Note payable, amount | $2,124,850 |
Note payable, interest rate | 12.00% |
Unamortized debt discount | 933,150 |
Note payable, due date | 30-Sep-15 |
Note payable, conversion to common stock price per share | $0.10 |
Convertible notes payable to related parties B | |
Note payable, amount | 20,000 |
Note payable, interest rate | 8.00% |
Note payable, due date | 26-Aug-12 |
Note payable, conversion to common stock price per share | $0.50 |
Convertible notes payable to related parties Total | |
Note payable, amount | $2,144,850 |
Convertible_Notes_Payable_to_R3
Convertible Notes Payable to Related Parties (Details Narrative) (USD $) | Mar. 31, 2015 |
Debt Disclosure [Abstract] | |
Ninth allonge to convertible secured bridge note with Stockbridge, maximum line of credit | $3,206,000 |
Ninth allonge to convertible secured bridge note with Stockbridge, current borrowed portion | $3,058,000 |
Related_Party_Transactions_Det
Related Party Transactions (Details Narrative) (USD $) | 6 Months Ended |
Mar. 31, 2015 | |
Related Party Transactions [Abstract] | |
Amount borrowed against convertible secured note with Stockbridge | $350,000 |
Commitments_and_Contingencies_
Commitments and Contingencies (Details Narrative) (USD $) | 0 Months Ended | 6 Months Ended | 11 Months Ended | 15 Months Ended | |||
Oct. 13, 2014 | Dec. 23, 2011 | Oct. 07, 2015 | Mar. 31, 2015 | Mar. 31, 2015 | Aug. 26, 2012 | Aug. 22, 2012 | |
Distribution Agreement | |||||||
Expiration of common stock warrants made available for issuance by agreement | 3 years | ||||||
Amount of common stock available for purchase, percentage of total products purchased by distributor at invoice price against previous year's purchase of paid invoices | 15.00% | ||||||
Defaults on Convertible Notes Payable | |||||||
Default on convertible note payable | $5,000 | ||||||
Default on convertible note payable to a related party | 20,000 | ||||||
License Agreement with Eastar Industries, Co. | |||||||
Sales license term | 5 years | ||||||
Royalty to Company, percentage of gross profits generated by sales of products in China | 18.00% | ||||||
Percentage of joint venture company established with Eastar owned by Company | 18.00% | ||||||
Product Development Agreement with Dan Pool or Designer Products | |||||||
Monthly development fee | 5,000 | ||||||
Monthly royalty paid, percentage of net sales | 5.00% | ||||||
Lawsuits | |||||||
Settlement agreement with former officer | $30,000 | ||||||
Consulting Agreement | |||||||
Shares issued as compensation for services | 250,000 |
Stockholders_Deficit_Balance_o
Stockholders' Deficit - Balance of warrants outstanding for purchase of Company's common stock (Details) (USD $) | 6 Months Ended |
Mar. 31, 2015 | |
Issued for financing expense | |
Common shares issued upon exercise of warrants | 20,000 |
Exercise price of warrants | $0.25 |
Date issued | 8-Mar-12 |
Expiration date | 7-Mar-17 |
Issued under a consultant settlement agreement | |
Common shares issued upon exercise of warrants | 40,000 |
Exercise price of warrants | $0.50 |
Date issued | 30-Apr-12 |
Expiration date | 29-Apr-15 |
Issued per distribution agreement (a) | |
Common shares issued upon exercise of warrants | 125,464 |
Exercise price of warrants | $0.75 |
Date issued | 22-Dec-12 |
Expiration date | 21-Dec-15 |
Issued under a private placement memorandum (a) | |
Common shares issued upon exercise of warrants | 140,000 |
Exercise price of warrants | $0.40 |
Date issued | 25-Jun-13 |
Expiration date | 25-Jun-15 |
Issued under a private placement memorandum (b) | |
Common shares issued upon exercise of warrants | 120,000 |
Exercise price of warrants | $0.40 |
Date issued | 26-Jun-13 |
Expiration date | 26-Jun-15 |
Issued per distribution agreement (b) | |
Common shares issued upon exercise of warrants | 172,028 |
Exercise price of warrants | $0.14 |
Date issued | 22-Dec-13 |
Expiration date | 22-Dec-16 |
Issued under a private placement memorandum (c) | |
Common shares issued upon exercise of warrants | 25,000 |
Exercise price of warrants | $0.40 |
Date issued | 2-Jul-14 |
Expiration date | 1-Jun-16 |
Issued under a private placement memorandum (d) | |
Common shares issued upon exercise of warrants | 50,000 |
Exercise price of warrants | $0.60 |
Date issued | 2-Jul-14 |
Expiration date | 1-Jun-16 |
Issued under a private placement memorandum (e) | |
Common shares issued upon exercise of warrants | 25,000 |
Exercise price of warrants | $0.80 |
Date issued | 2-Jul-14 |
Expiration date | 1-Jun-16 |
Issued per distribution agreement (c) | |
Common shares issued upon exercise of warrants | 145,510 |
Exercise price of warrants | $0.13 |
Date issued | 22-Dec-14 |
Expiration date | 22-Dec-17 |
Balance of Warrants | |
Common shares issued upon exercise of warrants | 863,002 |
Stockholders_Deficit_Options_o
Stockholders' Deficit - Options outstanding (Details) (USD $) | 6 Months Ended |
Mar. 31, 2015 | |
Options granted to former officer & two former senior advisory board members | |
Common shares issuable upon exercise of options | 775,000 |
Exercise price of options | $0.50 |
Date issued | 20-Apr-11 |
Expiration date | 19-Apr-21 |
Options granted to former employee and three consultants | |
Common shares issuable upon exercise of options | 500,000 |
Exercise price of options | $0.50 |
Date issued | 19-Jul-11 |
Expiration date | 18-Jul-16 |
Options granted under consultant settlement agreement | |
Common shares issuable upon exercise of options | 52,844 |
Exercise price of options | $0.25 |
Date issued | 30-Apr-12 |
Expiration date | 29-Apr-22 |
Options granted to Board member (a) | |
Common shares issuable upon exercise of options | 150,000 |
Exercise price of options | $0.30 |
Date issued | 25-Jan-13 |
Expiration date | 24-Jan-23 |
Options granted to employee and two consultants | |
Common shares issuable upon exercise of options | 1,550,000 |
Exercise price of options | $0.30 |
Date issued | 25-Jan-13 |
Expiration date | 24-Jan-23 |
Options granted to medical advisory board member | |
Common shares issuable upon exercise of options | 250,000 |
Exercise price of options | $0.26 |
Date issued | 20-May-13 |
Expiration date | 19-May-16 |
Options granted to consultant | |
Common shares issuable upon exercise of options | 250,000 |
Exercise price of options | $0.28 |
Date issued | 5-Sep-13 |
Expiration date | 4-Sep-16 |
Options issued for investment in Breathe Active, LLC (a) | |
Common shares issuable upon exercise of options | 500,000 |
Exercise price of options | $0.25 |
Date issued | 28-Sep-13 |
Expiration date | 31-Dec-14 |
Options issued for investment in Breathe Active, LLC (b) | |
Common shares issuable upon exercise of options | 500,000 |
Exercise price of options | $0.50 |
Date issued | 28-Sep-13 |
Expiration date | 31-Dec-14 |
Options granted to Board member (b) | |
Common shares issuable upon exercise of options | 150,000 |
Exercise price of options | $0.11 |
Date issued | 4-Oct-13 |
Expiration date | 3-Oct-23 |
Options granted to Officers | |
Common shares issuable upon exercise of options | 433,333 |
Exercise price of options | $0.11 |
Date issued | 4-Oct-13 |
Expiration date | 3-Oct-23 |
Options granted to Board member (c) | |
Common shares issuable upon exercise of options | 150,000 |
Exercise price of options | $0.25 |
Date issued | 5-Sep-14 |
Expiration date | 4-Sep-24 |
Options granted to Officers and consultants | |
Common shares issuable upon exercise of options | 633,333 |
Exercise price of options | $0.25 |
Date issued | 5-Sep-14 |
Expiration date | 4-Sep-24 |
Balance of Options | |
Common shares issuable upon exercise of options | 5,894,510 |
Stockholders_Deficit_Common_St
Stockholders' Deficit - Common Stock (Details Narrative) (USD $) | 0 Months Ended | 6 Months Ended | ||
Mar. 24, 2015 | Mar. 31, 2015 | Jan. 28, 2015 | Nov. 20, 2014 | |
Equity [Abstract] | ||||
Shares issued in payment of interest on Stockbridge convertible note\ | 3,473,040 | |||
Shares issued for payment of consulting services | 82,051 | 322,250 | ||
Consulting services shares valued under average closing price of previous quarter | 72,250 | |||
Previous quarter average closing price | $0.15 | $0.17 | ||
Consulting services shares valued at closing price on date of agreement | 250,000 | |||
Sale of stock, funds received | $40,000 | |||
Sale of stock, shares | 200,000 | |||
Sale of stock, subscription agreement total | $50,000 |
Stockholders_Deficit_Stock_Opt
Stockholders' Deficit - Stock Options (Details Narrative) (USD $) | 6 Months Ended |
Mar. 31, 2015 | |
Stockholders Deficit - Stock Options Details Narrative | |
Expenses for pro-rata vesting of stock-based compensation | $32,104 |
Balance of unrecognized compensation cost related to non-vested stock-based compensation to be expensed in future periods | $69,170 |
Significant_Customer_Details_N
Significant Customer (Details Narrative) (USD $) | 6 Months Ended |
Mar. 31, 2015 | |
Significant Customer Details Narrative | |
Percentage of Company's revenues from one customer | 83.00% |
Accounts receivable from one customer | $0 |
Subsequent_Events_Details_Narr
Subsequent Events (Details Narrative) (USD $) | 0 Months Ended | ||
Mar. 24, 2015 | Apr. 28, 2015 | Apr. 02, 2015 | |
Subscription agreement, amount | $50,000 | ||
Issued as payment for interest on loans to Company | |||
Restricted common stock issued, shares | 629,987 | ||
Restricted common stock issued, cost basis per share | $0.05 | ||
Issued to one holder as compensation for services rendered | |||
Restricted common stock issued, shares | 93,970 | ||
Restricted common stock issued, cost basis per share | $0.13 | ||
Issued per a subscription agreement | |||
Restricted common stock issued, shares | 250,000 | ||
Subscription agreement, amount | $50,000 | ||
Gerdz Investments Limited Partnership, RLLP | |||
Options canceled per Cancellation Agreement | 200,000 | ||
Options canceled per Cancellation Agreement, exercise price | $0.50 | ||
Options issued | 200,000 | ||
Options issued, exercise price | $0.10 | ||
Options issued, expiration date | 2-Apr-15 |