XML 32 R14.htm IDEA: XBRL DOCUMENT v2.4.0.6
8. Subsequent events
12 Months Ended
Jun. 30, 2012
Subsequent Events [Abstract]  
8. Subsequent events

Between August 17, 2012 and September 18, 2012, our Company issued a total of $215,000 in convertible promissory notes to seven accredited investors, one of which was a member of our Board of Directors.  The convertible promissory notes must be repaid by our Company within 9 months from the date of issuance; accrue interest at the rate of 14%; and are convertible at the election of the investors at such time as our Company has raised a minimum of $500,000 in equity in a subsequent equity financing, at the conversion price which is the lower of 80% of the per share purchase price paid for the securities by the investors in the subsequent financing, or $0.50 per share.  Unless these promissory notes are converted or repaid earlier, our Company must pay the noteholders the amount of the then accrued interest on the three, six, and nine month anniversaries of the issue date. In connection with the issuance of the promissory notes, the investors in the aggregate received two-year warrants to purchase up to a total of 32,250 shares of common stock at $0.50 per share, and two-year warrants to purchase up to a total of 53,750 shares of common stock at $0.01 per share.  The issuance of notes and warrants to the investors was made in reliance on the exemption provided by Section 4(2) of the Securities Act of 1933, as amended (the Securities Act) for the offer and sale of securities not involving a public offering, and Regulation D promulgated under the Securities Act.


On August 24, 2012, our company issued 4 year warrants to purchase up to 50,000 shares of our common stock with an exercise price of $0.50 per share to a third party consultant as part of the termination of their consulting services agreement for investor relations services.


On September 6, 2012, our Companys Board of Directors approved the repricing of options and warrants granted to employees, active consultants and board members.  The repriced options and warrants had exercise prices ranging from $1.25 to $3.73.  A total of 1,245,000 options and warrants were amended to reduce the exercise price to $0.52 per share, based on the most recent closing price for our Companys common stock, which is deemed the fair market value as of that date.


On September 20, 2012, our Company issued 250,000 shares to a third party consultant in consideration for its services under the terms of a consulting agreement for investor relations and public communications services.  The issuance of shares was made in reliance on the exemption provided by Section 4(2) of the Securities Act for the offer and sale of securities not involving a public offering, and Regulation D promulgated under the Securities Act.  

On October 1, 2012, our Company obtained a $3 million dollar production line of credit line from Norco Sourcing (Hong Kong) Company Ltd (Norco).  One of our directors, Clifton Leung, has an ownership interest in Norco.  The line of credit will allow our Company to produce product for inventory purposes without the need for customer purchase orders as a requirement to order product from its contract manufacturer.  The line of credit will bear interest at 9% per annum and require payment 60 days after shipment of the product.  For the initial three to four months, the line will fund the full cost of the production, after which our Company will pay a 40% deposit for subsequent productions.  Additionally, when our Company borrows under the line of credit, we are required to grant Norco100,000 shares of common stock and warrants to purchase up to 100,000 shares of our Companys common stock at an exercise price of $0.01 per share.  Similarly, once our Companys outstanding balance on the line exceeds $1,000,000, our Company is required to issue an additional 100,000 shares of common stock and warrants to purchase up to 100,000 shares of common stock at an exercise price of $0.01 per share. Finally, if our Company exceeds $2,000,000 balance on the line, our Company is required to issue an additional 100,000 shares of stock and warrants to purchase up to 100,000 additional shares of stock at an exercise price of $0.01 per share.