Item 9 Labs (INLB) 10-Q 16 May 16 2016 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Mar. 31, 2016	May. 16, 2016
Document And Entity Information
Entity Registrant Name	AIRWARE LABS CORP.
Entity Central Index Key	1,500,123
Document Type	10-Q
Document Period End Date	Mar. 31, 2016
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		77,734,658
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2,016

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($)	Mar. 31, 2016	Sep. 30, 2015
Current Assets:
Cash and cash equivalents	$ 43,677	$ 41,745
Accounts receivable	530	530
Inventory	45,278	45,457
Prepaid expenses and other current assets	1,532	8,476
Total current assets	91,017	96,208
Other Assets:
Property and equipment, net	9,100	14,070
Deposits	2,387	2,387
Total Assets	102,504	112,665
Current Liabilities:
Accounts payable	1,678,485	1,640,327
Accrued interest - related parties	41,695	38,849
Accrued interest	1,844	1,644
Accrued expenses	149,750	138,057
Notes payable to former officer	23,750	47,500
Convertible notes payable	5,000	5,000
Convertible notes payable to related parties - current portion	20,000	20,000
Total current liabilities	1,920,524	1,891,377
Convertible notes payable to related parties, less current portion, net of unamortized debt discount of $179,246 and $0 at March 31, 2016 and September 30, 2015, respectively	3,226,754	3,206,000
Total liabilities	5,147,278	5,097,377
Stockholders' Deficit:
Common stock, par value $.0001 per share, 200,000,000 shares authorized; 76,977,541 and 72,210,283 shares issued and outstanding at March 31, 2016 and September 30, 2015, respectively	$ 7,698	7,221
Common stock to be issued, 0 and 290,000 shares at March 31, 2016 and September 30, 2015, respectively		29
Additional paid-in capital	$ 33,808,121	31,843,635
Accumulated deficit	(38,860,593)	(36,835,597)
Total stockholders' deficit	(5,044,774)	(4,984,712)
Total Liabilities and Stockholders' Deficit	$ 102,504	$ 112,665

CONDENSED CONSOLIDATED BALANCE3

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)	Mar. 31, 2016	Sep. 30, 2015
Statement of Financial Position [Abstract]
Unamortized debt discount of convertible notes payable to related parties	$ 179,246	$ 0
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, authorized	200,000,000	200,000,000
Common stock, issued	76,977,541	72,210,283
Common stock, outstanding	76,977,541	72,210,283
Common stock to be issued, shares	0	290,000

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Mar. 31, 2016	Mar. 31, 2015
Income Statement [Abstract]
Revenues, net	$ 12,957	$ 10,487	$ 117,831	$ 103,771
Cost of products sold	9,202	8,043	65,387	64,800
Gross profit	3,755	2,444	52,444	38,971
Operating expenses
General and administrative	198,316	261,159	387,302	472,592
Sales and marketing	18,871	94,755	30,132	155,739
Total expenses	217,187	355,914	417,434	628,331
Loss from operations	(213,432)	(353,470)	(364,990)	(589,360)
Other expense
Interest expense	(293,553)	$ (645,124)	(537,905)	$ (1,332,368)
Loss on extinguishment of debt	(1,122,100)		(1,122,100)
Total other expense	(1,415,653)	$ (645,124)	(1,660,005)	$ (1,332,368)
Loss before income taxes	$ (1,629,085)	$ (998,594)	$ (2,024,995)	$ (1,921,728)
Income tax expense
Net loss	$ (1,629,085)	$ (998,594)	$ (2,024,995)	$ (1,921,728)
Basic and diluted net loss per common share	$ (0.02)	$ (0.02)	$ (0.03)	$ (0.03)
Basic and diluted weighted average common shares outstanding	74,905,877	65,258,629	73,759,058	64,322,891

CONDENSED CONSOLIDATED STATEME5

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)	6 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Operating Activities:
Net loss	$ (2,024,995)	$ (1,921,728)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	4,970	33,615
Common stock issued for services	12,750	74,000
Options and warrants issued for services	52,816	36,097
Interest expense from amortization of debt discount	20,754	820,190
Stock issued for interest on convertible notes - related party	513,868	$ 506,258
Loss on extinguishment of debt	$ 1,122,100
Exchange of sales proceeds for mold		$ (8,290)
Changes in operating assets and liabilities:
Accounts receivable		2,607
Inventory	$ 179	4,981
Prepaid expenses	6,943	18,416
Accounts payable	38,158	34,890
Accrued interest	3,046	5,443
Accrued expenses	11,693	47,465
Net Cash Used in Operating Activities	$ (237,718)	(346,056)
Investing Activities:
Purchases of equipment		(6,710)
Net Cash Used In Investing Activities		(6,710)
Financing Activities:
Stock and warrants issued for cash	$ 63,400	32,000
Proceeds from convertible notes payable - related party	200,000	$ 350,000
Repayments of notes payable to former officer	$ (23,750)
Repayment of notes payable		$ (22,678)
Net Cash Provided by Financing Activities	$ 239,650	359,322
Net Increase in Cash	1,932	6,556
Cash - Beginning of Period	41,745	42,582
Cash - End of Period	$ 43,677	49,138
Supplemental disclosure of cash flow information:
Interest paid in cash		$ 84
Income taxes paid in cash

Summary of Significant Accounti

Summary of Significant Accounting Policies and Use of Estimates	6 Months Ended
	Mar. 31, 2016
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 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. Unaudited Interim Financial Statements The interim condensed consolidated financial statements of the Company as of March 31, 2016 and 2015, and for the periods then ended, are prepared in accordance with the instructions to Form 10-Q. Accordingly, the accompanying condensed consolidated financial statements and notes thereto do not reflect all disclosures required under accounting principles generally accepted in the United States (U.S. “GAAP”). 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, 2016 and the results of its operations and its cash flows for the periods ended March 31, 2016 and 2015. These results are not necessarily indicative of the results expected for the fiscal year ended September 30, 2016. Principles of Consolidation The accompanying condensed consolidated financial statements include the accounts of Airware Labs Corp and its wholly owned subsidiary, Airware Holdings, Inc. Intercompany balances and transactions have been eliminated. 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, deferred income taxes, accruals and contingencies, estimates for customer returns, the fair value of common stock and the estimated fair value of stock options and warrants. Cash and Cash Equivalents The Company considers all highly liquid instruments purchased with a remaining maturity of three months or less to be cash equivalents. Inventory Inventory is mostly held by a third party, consists of finished goods and is stated at the lower of cost, determined by the first-in, first-out method, or market. Property and Equipment Property and equipment are recorded at cost. Depreciation is provided for on the straight-line method, over the estimated useful lives of the assets. Maintenance and repairs that neither materially add to the value of the property nor appreciably prolong its life are charged to expense as incurred. Betterments or renewals are capitalized when incurred. Gains and losses on the disposition of property and equipment are recorded in the period incurred. Production molds owned by the Company are capitalized and are included in manufacturing equipment. Pre-production design and development costs are expensed as incurred. The estimated useful lives of property and equipment are: • Manufacturing equipment 2-3 years • Office furniture and equipment 5-7 years Revenue Recognition The Company recognizes revenue on the sale of products at the time of delivery and acceptance. Delivery is generally FOB destination. At the time of delivery, the following have occurred: • Evidence of delivery; • A price per unit has been determined; and • Collectability has Revenues are recorded net of returns and co-operative advertising costs. Income Taxes The Company accounts for income taxes under FASB ASC 740, Income Taxes 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, 2016 and 2015, 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, 2016, there were total shares of 54,139,483 issuable upon conversion of notes payable and the 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, 2016
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. The combination of these factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s ability to meet its cash requirements in the next year is dependent upon obtaining additional 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 as a result there is substantial doubt the Company will be able to continue as a going concern. The accompanying condensed consolidated 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, 2016
Debt Disclosure [Abstract]
Convertible Notes Payable	3. Convertible Note Payable The Company has a convertible note payable with a principal balance of $5,000, which was due on August 22, 2012, is unsecured, carries an interest rate of 8% and is convertible to common stock at $.50 per share.

Notes Payable to Former Officer

Notes Payable to Former Officer	6 Months Ended
	Mar. 31, 2016
Debt Disclosure [Abstract]
Notes Payable to Former Officer	4. Note Payable to Former Officer The Company has a note payable with an original principal balance of $47,500 due to a former officer, which is due on August 1, 2016, is unsecured and carries an interest rate of 0.27%. On December 5, 2013 the Company revised the terms of the Note calling for four equal payments to begin on November 1, 2015 and ending August 1, 2016. As part of this revision, the interest rate was reduced from 2% to 0.27%. The following represents future minimum payments due on the outstanding balance: Principal balance at March 31, 2016 $ 23,750 Less current portion (23,750 ) $ —

Convertible Notes Payable to Re

Convertible Notes Payable to Related Parties	6 Months Ended
	Mar. 31, 2016
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 net of unamortized debt discount of $179,246, due September 30, 2017, convertible to common stock at $.08 per share, interest payments are due monthly. Debt is secured by substantially all of the assets of the Company. $ 3,226,754 The Company has a note payable due to a former advisory board member, which bears interest at 8%, was due August 26, 2012 and is convertible to common stock at $.50 per share. Interest payments were due at maturity and the note is unsecured. 20,000 Less current portion (20,000 ) $ 3,226,754 On January 22, 2016, the Company entered into an Allonge to the convertible note held by our primary debt holder by which our line of credit was increased by $200,000 and the conversion price of the outstanding principal balance was adjusted to $.08 from $.10. In accordance with ASC 470-50, the Company evaluated the modification of the debt under the terms of the newest allonge and determined the revised terms resulted in an extinguishment of debt. Accordingly, the difference between the reacquisition price of the debt and the net carrying amount of the extinguished debt was recognized in current income. A loss in the amount of $1,122,100 was recorded on the debt extinguishment.

Related Party Transactions

Related Party Transactions	6 Months Ended
	Mar. 31, 2016
Related Party Transactions [Abstract]
Related Party Transactions	6. Related Party Transactions As detailed in Notes 4 and 5, the Company has a note payable to its former President, a convertible note payable to a former advisory board member and another convertible note with an entity that owns a majority of our outstanding shares. The Company repaid $23,750 of the note payable during the six months ended March 31, 2016. The Company paid $37,180 during the six months ended March 31, 2016 to a company owned by its CFO for her services as CFO. The Company paid $62,496 during the six months ended March 31, 2016 to a company owned by its President for his services as President. During the six months ended March 31, 2016, the Company paid zero cash for interest on the related party debt.

Commitments and Contingencies

Commitments and Contingencies	6 Months Ended
	Mar. 31, 2016
Commitments and Contingencies
Commitments and Contingencies	7 Commitments and Contingencies 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. During the six months ended March 31, 2016, the Company issued a warrant to purchase 252,124 shares of common stock at $.08 per share to this distributor. On January 6, 2014, the Company entered into a license agreement with Eastar Industries, Co. (“Eastar”), 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 agreed to establish a joint venture company in Hong Kong or 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. As of March 31, 2016, the joint venture has yet to be established. The Company entered into an office lease agreement commencing June 1, 2014 and expiring August 31, 2017. As part of the lease agreement, a concession of the first three months’ rent was provided. Total rent to be paid over the course of the lease is being expensed ratably over the period of the entire lease, creating a deferred rent liability of $3,593 as of March 31, 2016. On August 17, 2015, the Company entered into an agreement with a company owned by its President for his services as President on a contract basis in exchange for a fixed monthly fee. $62,496 was paid during the six months ended March 31, 2016 per this agreement. 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, 2016. 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, 2016
Equity [Abstract]
Stockholders' Deficit	8. Stockholders’ Deficit Common Stock During the six months ended March 31, 2016, the Company issued 3,853,687 shares of common stock in payment of September 2015 through February 2016 interest totaling $192,684 on the primary debt holders convertible note. On December 31, 2015, the Company issued 200,000 shares of common stock per subscription agreements totaling $20,000. The Company received net proceeds of $18,000, net of issuance costs of $2,000 paid as a capital marketing fee. As part of these stock subscriptions, 100,000 warrants to purchase common stock at $.25 were also issued. On December 31, 2015, the Company issued 96,071 shares of common stock for the payment of consulting services rendered to the Company between April 1, 2015 and September 30, 2015. The shares were valued at the average trading price over the period of service, which approximated fair value, in the amount of $12,750. During the quarter ended December 31, 2015, the company received $45,500 towards the purchase of 227,500 shares of common stock. Net proceeds amounted to $36,400 after the issuance costs of $9,100 paid as a capital marketing fee. This was part of a subscription agreement totaling $375,000. These shares, as well as others paid for per the same subscription agreement totaling 517,500, were issued on March 15, 2016. On March 15, 2016, the Company issued 100,000 shares of common stock per a subscription agreement for $10,000. The Company received net proceeds of $9,000, net of issuance costs of $1,000 paid as a capital marketing fee. As part of this stock subscription, 50,000 warrants to purchase common stock at $.25 were also issued. Warrants The balance of warrants outstanding for purchase of the Company’s common stock as of March 31, 2016 is as follows: Common Shares Issuable Upon Exercise of Warrants Exercise Date Expiration Date Balance of Warrants at September 30, 2015 4,988,002 Issued under a private placement memorandum (1) 50,000 $ 0.25 12/3/2015 12/3/2017 Issued under a private placement memorandum (1) 50,000 $ 0.25 12/14/2015 12/14/2017 Issued per distribution agreement (2) 252,124 $ 0.08 12/22/2015 12/22/2018 Issued under a private placement memorandum (1) 50,000 $ 0.25 1/28/2016 1/28/2018 Expired warrants (125,464 ) Balance of Warrants at March 31, 2016 5,264,662 (1) During the six months ended March 31, 2016, the company issued stock purchase warrants as part of stock subscription agreements. (2) On December 22, 2015, the Company issued a three-year warrant at $.08 to purchase 252,124 shares of common stock per a distribution agreement. Stock Options The Company had the following options outstanding at March 31, 2016: Common Shares Issuable Upon Exercise of Warrants Exercise Date Expiration Date Balance of options at September 30, 2015 5,394,510 Options granted to consultant (1) 26,786 $ 0.25 11/1/2015 11/1/2025 Options granted to consultant (1) 75,000 $ 0.25 12/1/2015 12/1/2025 Options granted to consultant (1) 57,692 $ 0.25 1/1/2016 1/1/2026 Options granted to consultant (1) 50,000 $ 0.25 2/1/2016 2/1/2026 Options granted to consultant (1) 62,500 $ 0.25 3/1/2016 3/1/2026 Options granted to officers and board member (2) 583,333 $ 0.15 3/8/2016 3/8/2026 Balance of Options at March 31, 2016 6,249,821 (1) On October 15, 2015, the Company entered into an agreement with a patent attorney to provide intellectual property services as in-house patent counsel. Per the agreement, he receives monthly stock option grants. He is to receive $7,500 per month in stock option grants, and the quantity of stock options issued monthly is determined by the closing price on the last day of the month. (2) On March 8, 2016, the Company granted a total of 583,333 stock options for the purchase of the Company’s common stock. Included in this amount, 433,333 stock options were granted to corporate officers and 150,000 stock options to a Board member. The options are exercisable at $.15 per share of common stock over a ten year term. The options for the Board member vested immediately, all others vest equally over the next three years. During the three and six month periods ended March 31, 2016, $24,867 and $45,958, respectively, was expensed for the pro-rata vesting of stock-based compensation. As of March 31, 2016, the balance of unrecognized compensation cost related to non-vested stock-based compensation to be expensed in future periods was $73,985. The Company determines the fair value of stock options issued on the date of grant using the Black-Scholes option-pricing model. The following assumptions were used for determining the fair value of the options granted during the six months ended March 31, 2016: Expected stock price volatility 32.96-33.53% Expected dividend yield 0.00% Risk-free interest rate 1.83-2.27% Option life 10.00 years

Significant Customer

Significant Customer	6 Months Ended
	Mar. 31, 2016
Risks and Uncertainties [Abstract]
Significant Customer	9. Significant Customer The Company generally sells through a limited number of large distributors. The Company invoices the distributors directly as opposed to the ultimate retail store. Consequently, the Company’s sales are to a small number of customers. For the three and six months ended March 31, 2016, sales to two distributors was approximately 61% and 92%, respectfully, of our total sales.

Subsequent Events

Subsequent Events	6 Months Ended
	Mar. 31, 2016
Subsequent Events [Abstract]
Subsequent Events	10. Subsequent Events On April 7, 2016, the Company issued 681,200 shares of common stock to a related party as payment for interest on loans to the Company totaling $34,060. Additionally, the Company issued 75,917 shares of common stock to a vendor in satisfaction of accounts payable amounts totaling $11,387.

Summary of Significant Accoun16

Summary of Significant Accounting Policies and Use of Estimates (Policies)	6 Months Ended
	Mar. 31, 2016
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 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.
Unaudited Interim Financial Statements	Unaudited Interim Financial Statements The interim condensed consolidated financial statements of the Company as of March 31, 2016 and 2015, and for the periods then ended, are prepared in accordance with the instructions to Form 10-Q. Accordingly, the accompanying condensed consolidated financial statements and notes thereto do not reflect all disclosures required under accounting principles generally accepted in the United States (U.S. “GAAP”). 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, 2016 and the results of its operations and its cash flows for the periods ended March 31, 2016 and 2015. These results are not necessarily indicative of the results expected for the fiscal year ended September 30, 2016.
Principles of Consolidation	Principles of Consolidation The accompanying condensed consolidated financial statements include the accounts of Airware Labs Corp and its wholly owned subsidiary, Airware Holdings, Inc. Intercompany balances and transactions have been eliminated.
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, deferred income taxes, accruals and contingencies, estimates for customer returns, the fair value of common stock and the estimated fair value of stock options and warrants.
Cash and Cash Equivalents	Cash and Cash Equivalents The Company considers all highly liquid instruments purchased with a remaining maturity of three months or less to be cash equivalents.
Inventory	Inventory Inventory is mostly held by a third party, consists of finished goods and is stated at the lower of cost, determined by the first-in, first-out method, or market.
Property and Equipment	Property and Equipment Property and equipment are recorded at cost. Depreciation is provided for on the straight-line method, over the estimated useful lives of the assets. Maintenance and repairs that neither materially add to the value of the property nor appreciably prolong its life are charged to expense as incurred. Betterments or renewals are capitalized when incurred. Gains and losses on the disposition of property and equipment are recorded in the period incurred. Production molds owned by the Company are capitalized and are included in manufacturing equipment. Pre-production design and development costs are expensed as incurred. The estimated useful lives of property and equipment are: • Manufacturing equipment 2-3 years • Office furniture and equipment 5-7 years
Revenue Recognition	Revenue Recognition The Company recognizes revenue on the sale of products at the time of delivery and acceptance. Delivery is generally FOB destination. At the time of delivery, the following have occurred: • Evidence of delivery; • A price per unit has been determined; and • Collectability has Revenues are recorded net of returns and co-operative advertising costs.
Income Taxes	Income Taxes The Company accounts for income taxes under FASB ASC 740, Income Taxes
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, 2016 and 2015, 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, 2016, there were total shares of 54,139,483 issuable upon conversion of notes payable and the exercise of warrants and options that were not included in the earnings per share calculation as they were anti-dilutive.

Notes Payable to Former Offic17

Notes Payable to Former Officer (Tables)	6 Months Ended
	Mar. 31, 2016
Debt Disclosure [Abstract]
Future minimum payments due on the outstanding balance	Principal balance at March 31, 2016 $ 23,750 Less current portion (23,750 ) $ —

Convertible Notes Payable to 18

Convertible Notes Payable to Related Parties (Tables)	6 Months Ended
	Mar. 31, 2016
Convertible Notes Payable To Related Parties Tables
Convertible notes payable to related parties	12% note payable net of unamortized debt discount of $179,246, due September 30, 2017, convertible to common stock at $.08 per share, interest payments are due monthly. Debt is secured by substantially all of the assets of the Company. $ 3,226,754 The Company has a note payable due to a former advisory board member, which bears interest at 8%, was due August 26, 2012 and is convertible to common stock at $.50 per share. Interest payments were due at maturity and the note is unsecured. 20,000 Less current portion (20,000 ) $ 3,226,754

Stockholders' Deficit (Tables)

Stockholders' Deficit (Tables)	6 Months Ended
	Mar. 31, 2016
Equity [Abstract]
Balance of warrants outstanding for purchase of Company's common stock	Common Shares Issuable Upon Exercise of Warrants Exercise Date Expiration Date Balance of Warrants at September 30, 2015 4,988,002 Issued under a private placement memorandum (1) 50,000 $ 0.25 12/3/2015 12/3/2017 Issued under a private placement memorandum (1) 50,000 $ 0.25 12/14/2015 12/14/2017 Issued per distribution agreement (2) 252,124 $ 0.08 12/22/2015 12/22/2018 Issued under a private placement memorandum (1) 50,000 $ 0.25 1/28/2016 1/28/2018 Expired warrants (125,464 ) Balance of Warrants at March 31, 2016 5,264,662
Options outstanding	Common Shares Issuable Upon Exercise of Warrants Exercise Date Expiration Date Balance of options at September 30, 2015 5,394,510 Options granted to consultant (1) 26,786 $ 0.25 11/1/2015 11/1/2025 Options granted to consultant (1) 75,000 $ 0.25 12/1/2015 12/1/2025 Options granted to consultant (1) 57,692 $ 0.25 1/1/2016 1/1/2026 Options granted to consultant (1) 50,000 $ 0.25 2/1/2016 2/1/2026 Options granted to consultant (1) 62,500 $ 0.25 3/1/2016 3/1/2026 Options granted to officers and board member (2) 583,333 $ 0.15 3/8/2016 3/8/2026 Balance of Options at March 31, 2016 6,249,821
Fair value assumptions of options granted	Expected stock price volatility 32.96-33.53% Expected dividend yield 0.00% Risk-free interest rate 1.83-2.27% Option life 10.00 years

Summary of Significant Accoun20

Summary of Significant Accounting Policies and Use of Estimates (Details Narrative)	6 Months Ended
	Mar. 31, 2016shares
Anti-dilutive shares issuable not included in earnings per share calculation	54,139,483
Manufacturing equipment - minimum life
Estimated useful lives of property and equipment	2 years
Manufacturing equipment - maximum life
Estimated useful lives of property and equipment	3 years
Office furniture and equipment - minimum life
Estimated useful lives of property and equipment	5 years
Office furniture and equipment - maximum life
Estimated useful lives of property and equipment	7 years

Convertible Notes Payable - Con

Convertible Notes Payable - Convertible notes payable (Details) - Convertible Notes Payable A	6 Months Ended
	Mar. 31, 2016USD ($)$ / shares
Notes payable, amount | $	$ 5,000
Notes payable, interest rate	8.00%
Notes payable, due date	Aug. 22, 2012
Notes payable, conversion to common stock price per share | $ / shares	$ 0.50

Notes Payable to Former Offic22

Notes Payable to Former Officer - Future minimum payments due on the outstanding balance (Details)	Mar. 31, 2016USD ($)
Notes payable to former officer
Notes payable to former officer, amount	$ 23,750
Less Current Portion
Notes payable to former officer, amount	$ (23,750)
Balance
Notes payable to former officer, amount

Notes Payable to Former Offic23

Notes Payable to Former Officer (Details Narrative) - USD ($)	Dec. 05, 2013	Mar. 31, 2016
Original principal balance of note payable due to former officer		$ 47,500
Due date		Aug. 1, 2016
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 24

Convertible Notes Payable to Related Parties - Convertible notes payable to related parties (Details)	6 Months Ended
	Mar. 31, 2016USD ($)$ / shares
Convertible notes payable to related parties A
Note payable, amount	$ 3,226,754
Note payable, interest rate	12.00%
Note payable, due date	Sep. 30, 2017
Note payable, conversion to common stock price per share | $ / shares	$ 0.08
Note payable, unamortized debt discount	$ 179,246
Convertible notes payable to related parties B
Note payable, amount	$ 20,000
Note payable, interest rate	8.00%
Note payable, due date	Aug. 26, 2012
Note payable, conversion to common stock price per share | $ / shares	$ 0.50
Convertible notes payable to related parties - Less current portion
Note payable, amount	$ (20,000)
Convertible notes payable to related parties - Total
Note payable, amount	$ 3,226,754

Convertible Notes Payable to 25

Convertible Notes Payable to Related Parties (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Mar. 31, 2016	Mar. 31, 2015	Jan. 22, 2016
Convertible Notes Payable To Related Parties Details Narrative
Allonge entered into with primary debt holder of convertible note, line of credit increase					$ 200,000
Allonge entered into with primary debt holder of convertible note, original conversion price					$ 0.08
Allonge entered into with primary debt holder of convertible note, adjusted conversion price					$ 0.10
Loss on extinguishment of debt	$ (1,122,100)		$ (1,122,100)

Related Party Transactions (Det

Related Party Transactions (Details Narrative) - USD ($)	6 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Repayments of notes payable to former officer	$ (23,750)
Cash paid for interest on related party debt
President
Amounts paid to company owned be related party for services	$ 62,496
CFO
Amounts paid to company owned be related party for services	$ 37,180

Commitments and Contingencies (

Commitments and Contingencies (Details Narrative) - USD ($)	Dec. 23, 2011	Mar. 31, 2016	Mar. 31, 2016
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%
Warrant issued to purchase common stock, shares		252,124
Warrant issued to purchase common stock, price per share		$ 0.08
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%
Office Lease Agreement
Lease expiration date		Aug. 31, 2017
Deferred rent liability		$ 3,593	$ 3,593
President
Service Agreement with Company Owned by President
Amounts paid to company owned be related party for services		$ 62,496

Stockholders' Deficit - Balance

Stockholders' Deficit - Balance of warrants outstanding for purchase of Company's common stock (Details) - $ / shares	6 Months Ended
	Mar. 31, 2016	Sep. 30, 2015
Balance of Warrants
Common shares issued upon exercise of warrants	5,264,662	4,988,002
Issued under a private placement memorandum (a)
Common shares issued upon exercise of warrants	50,000
Exercise price of warrants	$ .25
Date issued	Dec. 3, 2015
Expiration date	Dec. 3, 2017
Issued under a private placement memorandum (b)
Common shares issued upon exercise of warrants	50,000
Exercise price of warrants	$ .25
Date issued	Dec. 14, 2015
Expiration date	Dec. 14, 2017
Issued per distribution agreement (a)
Common shares issued upon exercise of warrants	252,124
Exercise price of warrants	$ .08
Date issued	Dec. 22, 2015
Expiration date	Dec. 22, 2018
Issued under a private placement memorandum (c)
Common shares issued upon exercise of warrants	50,000
Exercise price of warrants	$ 0.25
Date issued	Jan. 28, 2016
Expiration date	Jan. 28, 2018
Expired warrants
Common shares issued upon exercise of warrants	(125,464)

Stockholders' Deficit - Options

Stockholders' Deficit - Options outstanding (Details) - $ / shares	6 Months Ended
	Mar. 31, 2016	Sep. 30, 2015
Balance of Options
Common shares issuable upon exercise of options	6,249,821	5,394,510
Options granted to consultant (a)
Common shares issuable upon exercise of options	26,786
Exercise price of options	$ .25
Date issued	Nov. 1, 2015
Expiration date	Nov. 1, 2025
Options granted to consultant (b)
Common shares issuable upon exercise of options	75,000
Exercise price of options	$ .25
Date issued	Dec. 1, 2015
Expiration date	Dec. 1, 2025
Options granted to consultant (c)
Common shares issuable upon exercise of options	57,692
Exercise price of options	$ 0.25
Date issued	Jan. 1, 2016
Expiration date	Jan. 1, 2026
Options granted to consultant (d)
Common shares issuable upon exercise of options	50,000
Exercise price of options	$ .25
Date issued	Feb. 1, 2016
Expiration date	Feb. 1, 2026
Options granted to consultant (e)
Common shares issuable upon exercise of options	62,500
Exercise price of options	$ .25
Date issued	Mar. 1, 2016
Expiration date	Mar. 1, 2026
Options granted to officers and board member
Common shares issuable upon exercise of options	583,333
Exercise price of options	$ .15
Date issued	Mar. 8, 2016
Expiration date	Mar. 8, 2026

Stockholders' Deficit - Fair va

Stockholders' Deficit - Fair value assumptions of options granted (Details)	6 Months Ended
	Mar. 31, 2016
Stockholders Deficit - Fair Value Assumptions Of Options Granted Details
Expected stock price volatility, minimum	32.96%
Expected stock price volatility, maximum	33.53%
Expected dividend yield	0.00%
Risk-free interest rate, minimum	1.83%
Risk-free interest rate, maximum	2.27%
Option life	10 years

Stockholders' Deficit - Common

Stockholders' Deficit - Common Stock (Details Narrative) - USD ($)	6 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Mar. 15, 2016	Dec. 31, 2015
Equity [Abstract]
Stock issued in payment of interest on primary debt holders convertible note, shares	3,853,687
Stock issued in payment of interest on primary debt holders convertible note, amount	$ 192,684
Subscription agreements, shares issued			100,000	200,000
Subscription agreements, amount			$ 10,000	$ 20,000
Subscription agreements, net proceeds received			9,000	18,000
Subscription agreements, issuance costs paid			$ (1,000)	$ (2,000)
Subscription agreements, warrants issued			50,000	100,000
Subscription agreements, warrant purchase price per share			$ 0.25	$ 0.25
Shares issued for payment of consulting services, shares	96,071
Shares issued for payment of consulting services, value	$ 12,750	$ 74,000
Sale of stock, gross proceeds received	45,500
Sale of stock, net proceeds received	$ 36,400
Sale of stock, total shares to be issued	227,500
Sale of stock, subscription agreement total				$ 375,000
Sale of stock, issuance costs paid as capital marketing fee	$ (9,100)

Stockholders' Deficit - Warrant

Stockholders' Deficit - Warrants (Details Narrative)	Dec. 22, 2015$ / sharesshares
Stockholders Deficit - Warrants Details Narrative
Warrant issued per distribution agreement (a), term	3 years
Warrant issued per distribution agreement (a), purchase price | $ / shares	$ 0.08
Warrant issued per distribution agreement (a), shares | shares	252,124

Stockholders' Deficit - Stock O

Stockholders' Deficit - Stock Options (Details Narrative)	3 Months Ended	6 Months Ended
	Mar. 31, 2016USD ($)	Mar. 31, 2016USD ($)
Stockholders Deficit - Stock Options Details Narrative
Monthly stock option grants for intellectual property services, amount		$ 7,500
Expenses for pro-rata vesting of stock-based compensation	$ 24,867	45,958
Balance of unrecognized compensation cost related to non-vested stock-based compensation to be expensed in future periods	$ 73,985	$ 73,985

Significant Customer (Details N

Significant Customer (Details Narrative)	3 Months Ended	6 Months Ended
	Mar. 31, 2016	Mar. 31, 2016
Significant Customer Details Narrative
Percentage of total sales to distributors	61.00%	92.00%

Subsequent Events (Details Narr

Subsequent Events (Details Narrative)	Apr. 07, 2016USD ($)shares
Issued to a related party as payment for interest on loans
Common stock issued, shares | shares	681,200
Common stock issued, amount | $	$ 34,060
Issued to a vendor in satisfaction of accounts payable
Common stock issued, shares | shares	75,917
Common stock issued, amount | $	$ 11,387