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Document And Entity Information (USD $)
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12 Months Ended | ||
|---|---|---|---|
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Sep. 30, 2011
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Nov. 15, 2011
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Mar. 31, 2011
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| Document and Entity Information [Abstract] | |||
| Entity Registrant Name | Parametric Sound Corp | ||
| Document Type | 10-K | ||
| Current Fiscal Year End Date | --09-30 | ||
| Entity Common Stock, Shares Outstanding | 19,517,027 | ||
| Entity Public Float | $ 6,790,000 | ||
| Amendment Flag | false | ||
| Entity Central Index Key | 0001493761 | ||
| Entity Current Reporting Status | Yes | ||
| Entity Voluntary Filers | No | ||
| Entity Filer Category | Smaller Reporting Company | ||
| Entity Well-known Seasoned Issuer | No | ||
| Document Period End Date | Sep. 30, 2011 | ||
| Document Fiscal Year Focus | 2011 | ||
| Document Fiscal Period Focus | FY |
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- Definition
If the value is true, then the document as an amendment to previously-filed/accepted document. No definition available.
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- Definition
End date of current fiscal year in the format --MM-DD. No definition available.
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- Definition
This is focus fiscal period of the document report. For a first quarter 2006 quarterly report, which may also provide financial information from prior periods, the first fiscal quarter should be given as the fiscal period focus. Values: FY, Q1, Q2, Q3, Q4, H1, H2, M9, T1, T2, T3, M8, CY. No definition available.
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- Definition
This is focus fiscal year of the document report in CCYY format. For a 2006 annual report, which may also provide financial information from prior periods, fiscal 2006 should be given as the fiscal year focus. Example: 2006. No definition available.
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- Definition
The end date of the period reflected on the cover page if a periodic report. For all other reports and registration statements containing historical data, it is the date up through which that historical data is presented. If there is no historical data in the report, use the filing date. The format of the date is CCYY-MM-DD. No definition available.
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- Definition
The type of document being provided (such as 10-K, 10-Q, N-1A, etc). The document type is limited to the same value as the supporting SEC submission type, minus any "/A" suffix. The acceptable values are as follows: S-1, S-3, S-4, S-11, F-1, F-3, F-4, F-9, F-10, 6-K, 8-K, 10, 10-K, 10-Q, 20-F, 40-F, N-1A, 485BPOS, 497, NCSR, N-CSR, N-CSRS, N-Q, 10-KT, 10-QT, 20-FT, POS AM and Other. No definition available.
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| X | ||||||||||
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- Definition
A unique 10-digit SEC-issued value to identify entities that have filed disclosures with the SEC. It is commonly abbreviated as CIK. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Indicate number of shares outstanding of each of registrant's classes of common stock, as of latest practicable date. Where multiple classes exist define each class by adding class of stock items such as Common Class A [Member], Common Class B [Member] onto the Instrument [Domain] of the Entity Listings, Instrument No definition available.
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| X | ||||||||||
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- Definition
Indicate "Yes" or "No" whether registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. This information should be based on the registrant's current or most recent filing containing the related disclosure. No definition available.
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| X | ||||||||||
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- Definition
Indicate whether the registrant is one of the following: (1) Large Accelerated Filer, (2) Accelerated Filer, (3) Non-accelerated Filer, or (4) Smaller Reporting Company. Definitions of these categories are stated in Rule 12b-2 of the Exchange Act. This information should be based on the registrant's current or most recent filing containing the related disclosure. No definition available.
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| X | ||||||||||
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- Definition
State aggregate market value of voting and non-voting common equity held by non-affiliates computed by reference to price at which the common equity was last sold, or average bid and asked price of such common equity, as of the last business day of registrant's most recently completed second fiscal quarter. The public float should be reported on the cover page of the registrants form 10K. No definition available.
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| X | ||||||||||
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- Definition
The exact name of the entity filing the report as specified in its charter, which is required by forms filed with the SEC. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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- Definition
Indicate "Yes" or "No" if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. No definition available.
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| X | ||||||||||
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- Definition
Indicate "Yes" or "No" if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Is used on Form Type: 10-K, 10-Q, 8-K, 20-F, 6-K, 10-K/A, 10-Q/A, 20-F/A, 6-K/A, N-CSR, N-Q, N-1A. No definition available.
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- Details
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- Details
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| X | ||||||||||
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- Details
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| X | ||||||||||
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- Definition
Carrying value as of the balance sheet date of liabilities incurred (and for which invoices have typically been received) and payable to vendors for goods and services received that are used in an entity's business. Used to reflect the current portion of the liabilities (due within one year or within the normal operating cycle if longer). Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Carrying value as of the balance sheet date of obligations incurred and payable, pertaining to costs that are statutory in nature, are incurred on contractual obligations, or accumulate over time and for which invoices have not yet been received or will not be rendered. Examples include taxes, interest, rent and utilities. Used to reflect the current portion of the liabilities (due within one year or within the normal operating cycle if longer). Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Carrying value as of the balance sheet date of the obligations incurred through that date and payable for employees' services provided. Used to reflect the current portion of the liabilities (due within one year or within the normal operating cycle if longer). Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Excess of issue price over par or stated value of the entity's capital stock and amounts received from other transactions involving the entity's stock or stockholders. Includes adjustments to additional paid in capital. Some examples of such adjustments include recording the issuance of debt with a beneficial conversion feature and certain tax consequences of equity instruments awarded to employees. Use this element for the aggregate amount of additional paid-in capital associated with common and preferred stock. For additional paid-in capital associated with only common stock, use the element additional paid in capital, common stock. For additional paid-in capital associated with only preferred stock, use the element additional paid in capital, preferred stock. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Sum of the carrying amounts as of the balance sheet date of all assets that are recognized. Assets are probable future economic benefits obtained or controlled by an entity as a result of past transactions or events. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Sum of the carrying amounts as of the balance sheet date of all assets that are expected to be realized in cash, sold, or consumed within one year (or the normal operating cycle, if longer). Assets are probable future economic benefits obtained or controlled by an entity as a result of past transactions or events. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Unrestricted cash available for day-to-day operating needs, for an entity that has cash equivalents, but does not aggregate cash equivalents with cash on the balance sheet. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Represents the caption on the face of the balance sheet to indicate that the entity has entered into (1) purchase or supply arrangements that will require expending a portion of its resources to meet the terms thereof, and (2) is exposed to potential losses or, less frequently, gains, arising from (a) possible claims against a company's resources due to future performance under contract terms, and (b) possible losses or likely gains from uncertainties that will ultimately be resolved when one or more future events that are deemed likely to occur do occur or fail to occur. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Aggregate par or stated value of issued nonredeemable common stock (or common stock redeemable solely at the option of the issuer). This item includes treasury stock repurchased by the entity. Note: elements for number of nonredeemable common shares, par value and other disclosure concepts are in another section within stockholders' equity. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Sum of the carrying amounts of all intangible assets, excluding goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Carrying amount (lower of cost or market) as of the balance sheet date of inventories less all valuation and other allowances. Excludes noncurrent inventory balances (expected to remain on hand past one year or one operating cycle, if longer). Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Total of all Liabilities and Stockholders' Equity items (or Partners' Capital, as applicable), including the portion of equity attributable to noncontrolling interests, if any. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Total obligations incurred as part of normal operations that are expected to be paid during the following twelve months or within one business cycle, if longer. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Aggregate par or stated value of issued nonredeemable preferred stock (or preferred stock redeemable solely at the option of the issuer). This item includes treasury stock repurchased by the entity. Note: elements for number of nonredeemable preferred shares, par value and other disclosure concepts are in another section within stockholders' equity. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Sum of the carrying amount for an unclassified balance sheet date of expenditures made in advance of when the economic benefit of the cost will be realized, and which will be expensed in future periods with the passage of time or when a triggering event occurs and the carrying amount as of the balance sheet date of assets not otherwise specified in the taxonomy. Also includes assets not individually reported in the financial statements, or not separately disclosed in notes. No definition available.
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| X | ||||||||||
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- Definition
Tangible assets that are held by an entity for use in the production or supply of goods and services, for rental to others, or for administrative purposes and that are expected to provide economic benefit for more than one year; net of accumulated depreciation. Examples include land, buildings, machinery and equipment, and other types of furniture and equipment including, but not limited to, office equipment, furniture and fixtures, and computer equipment and software. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
The cumulative amount of the reporting entity's undistributed earnings or deficit. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Total of all stockholders' equity (deficit) items, net of receivables from officers, directors, owners, and affiliates of the entity which are attributable to the parent. The amount of the economic entity's stockholders' equity attributable to the parent excludes the amount of stockholders' equity which is allocable to that ownership interest in subsidiary equity which is not attributable to the parent (noncontrolling interest, minority interest). This excludes temporary equity and is sometimes called permanent equity. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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- Details
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| X | ||||||||||
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- Definition
The portion of the carrying value of subordinated debt as of the balance sheet date that is scheduled to be repaid within one year or in the normal operating cycle, if longer. Subordinated debt places a lender in a lien position behind debt having a higher priority of repayment in liquidation of the entity's assets. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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Balance Sheets (Parentheticals) (USD $)
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Sep. 30, 2011
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Sep. 30, 2010
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|---|---|---|
| Discount on subordinated notes payable (in Dollars) | $ 0 | $ 263,272 |
| Preferred stock par value (in Dollars per share) | $ 0.001 | $ 0.001 |
| Preferred stock shares authorized | 1,000,000 | 1,000,000 |
| Preferred stock shares issued | 0 | 0 |
| Preferred stock shares outstanding | 0 | 0 |
| Common stock par value (in Dollars per share) | $ 0.001 | $ 0.001 |
| Common stock shares authorized | 50,000,000 | 50,000,000 |
| Common stock shares issued | 19,517,027 | 15,306,064 |
| Common stock shares outstanding | 19,517,027 | 15,306,064 |
| X | ||||||||||
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- Definition
Face amount or stated value of common stock per share; generally not indicative of the fair market value per share. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
The maximum number of common shares permitted to be issued by an entity's charter and bylaws. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Total number of common shares of an entity that have been sold or granted to shareholders (includes common shares that were issued, repurchased and remain in the treasury). These shares represent capital invested by the firm's shareholders and owners, and may be all or only a portion of the number of shares authorized. Shares issued include shares outstanding and shares held in the treasury. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Total number of shares of common stock held by shareholders. May be all or portion of the number of common shares authorized. These shares represent the ownership interest of the common shareholders. Shares outstanding equals shares issued minus shares held in treasury and other adjustments, if any. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
The amount of debt discount that was originally recognized at the issuance of the instrument that has yet to be amortized. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Face amount or stated value per share of nonredeemable preferred stock (or preferred stock redeemable solely at the option of the issuer); generally not indicative of the fair market value per share. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
The maximum number of nonredeemable preferred shares (or preferred stock redeemable solely at the option of the issuer) permitted to be issued by an entity's charter and bylaws. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Total number of nonredeemable preferred shares (or preferred stock redeemable solely at the option of the issuer) issued to shareholders (includes related preferred shares that were issued, repurchased, and remain in the treasury). May be all or portion of the number of preferred shares authorized. Excludes preferred shares that are classified as debt. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Aggregate share number for all nonredeemable preferred stock (or preferred stock redeemable solely at the option of the issuer) held by stockholders. Does not include preferred shares that have been repurchased. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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Statements of Operations (USD $)
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12 Months Ended | |
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Sep. 30, 2011
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Sep. 30, 2010
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| Revenues: | ||
| Product sales | $ 76,695 | $ 599,110 |
| Other revenue | 2,472 | 7,927 |
| Total revenues | 79,167 | 607,037 |
| Cost of revenues | 35,524 | 505,576 |
| Gross profit | 43,643 | 101,461 |
| Operating expenses: | ||
| Selling, general and administrative | 572,325 | 446,857 |
| Research and development | 619,378 | 229,400 |
| Patent and inventory impairment | 28,616 | 346,905 |
| Total operating expenses | 1,220,319 | 1,023,162 |
| Loss from operations | (1,176,676) | (921,701) |
| Other income (expense): | ||
| Interest and note discount amortization | (308,499) | (1,477) |
| Other | 717 | (19) |
| (307,782) | (1,496) | |
| Net loss | $ (1,484,458) | $ (923,197) |
| Loss per basic and diluted common share (in Dollars per share) | $ (0.09) | $ (0.06) |
| Weighted average shares used to compute net loss per basic and diluted common share (in Shares) | 16,968,005 | 15,306,064 |
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- Details
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| X | ||||||||||
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- Definition
The component of interest expense representing the noncash expenses charged against earnings in the period to amortize debt discount and premium associated with the related debt instruments. Excludes amortization of financing costs. Alternate caption: Noncash Interest Expense. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
The aggregate cost of goods produced and sold and services rendered during the reporting period. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
The amount of net income or loss for the period per each share in instances when basic and diluted earnings per share are the same amount and reported as a single line item on the face of the financial statements. Basic earnings per share is the amount of net income or loss for the period per each share of common stock or unit outstanding during the reporting period. Diluted earnings per share includes the amount of net income or loss for the period available to each share of common stock or common unit outstanding during the reporting period and to each share or unit that would have been outstanding assuming the issuance of common shares or units for all dilutive potential common shares or units outstanding during the reporting period. No definition available.
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| X | ||||||||||
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- Definition
Total loss recognized during the period from the impairment of goodwill plus the loss recognized in the period resulting from the impairment of the carrying amount of intangible assets, other than goodwill. No definition available.
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| X | ||||||||||
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- Definition
Aggregate revenue less cost of goods and services sold or operating expenses directly attributable to the revenue generation activity. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
The portion of profit or loss for the period, net of income taxes, which is attributable to the parent. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
The aggregate amount of income or expense from ancillary business-related activities (that is to say, excluding major activities considered part of the normal operations of the business). Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Generally recurring costs associated with normal operations except for the portion of these expenses which can be clearly related to production and included in cost of sales or services. Includes selling, general and administrative expense. No definition available.
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| X | ||||||||||
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- Details
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| X | ||||||||||
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- Definition
The net result for the period of deducting operating expenses from operating revenues. No definition available.
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| X | ||||||||||
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- Definition
The net amount of other income and expense amounts, the components of which are not separately disclosed on the income statement, resulting from ancillary business-related activities (that is, excluding major activities considered part of the normal operations of the business) also known as other nonoperating income (expense) recognized for the period. Such amounts may include: (a) dividends, (b) interest on securities, (c) net gains or losses on securities, (d) unusual costs, (e) gains or losses on foreign exchange transactions, and (f) miscellaneous other income and expense items. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Revenues from the sale of other goods or rendering of other services, not elsewhere specified in the taxonomy; net of (reduced by) sales adjustments, returns, allowances, and discounts. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
The aggregate costs incurred (1) in a planned search or critical investigation aimed at discovery of new knowledge with the hope that such knowledge will be useful in developing a new product or service, a new process or technique, or in bringing about a significant improvement to an existing product or process; or (2) to translate research findings or other knowledge into a plan or design for a new product or process or for a significant improvement to an existing product or process whether intended for sale or the entity's use, during the reporting period charged to research and development projects, including the costs of developing computer software up to the point in time of achieving technological feasibility, and costs allocated in accounting for a business combination to in-process projects deemed to have no alternative future use. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Aggregate revenue recognized during the period (derived from goods sold, services rendered, insurance premiums, or other activities that constitute an entity's earning process). For financial services companies, also includes investment and interest income, and sales and trading gains. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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- Details
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| X | ||||||||||
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- Definition
Aggregate revenue during the period from the sale of goods in the normal course of business, after deducting returns, allowances and discounts. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
The aggregate total costs related to selling a firm's product and services, as well as all other general and administrative expenses. Direct selling expenses (for example, credit, warranty, and advertising) are expenses that can be directly linked to the sale of specific products. Indirect selling expenses are expenses that cannot be directly linked to the sale of specific products, for example telephone expenses, Internet, and postal charges. General and administrative expenses include salaries of non-sales personnel, rent, utilities, communication, etc. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Number of [basic] shares or units, after adjustment for contingently issuable shares or units and other shares or units not deemed outstanding, determined by relating the portion of time within a reporting period that common shares or units have been outstanding to the total time in that period. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Common shares issued upon exercise of warrants at applied to reduce subordinated notes No definition available.
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| X | ||||||||||
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- Definition
Common shares issued upon exercise of warrants applied to reduce subordinated notes No definition available.
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| X | ||||||||||
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- Definition
Net transfers to parent No definition available.
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| X | ||||||||||
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- Definition
Stock options issued for tooling costs No definition available.
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| X | ||||||||||
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- Definition
Increase in additional paid in capital due to warrants issued during the period. Includes also the proceeds of debt securities issued with detachable stock purchase warrants that are allocable to the warrants. These warrants qualify for equity classification and provide the holder with a right to purchase stock from the entity. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
The portion of profit or loss for the period, net of income taxes, which is attributable to the parent. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
The aggregate amount of noncash, equity-based employee remuneration. This may include the value of stock or unit options, amortization of restricted stock or units, and adjustment for officers' compensation. As noncash, this element is an add back when calculating net cash generated by operating activities using the indirect method. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Number of shares of stock issued as of the balance sheet date, including shares that had been issued and were previously outstanding but which are now held in the treasury. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Total of all stockholders' equity (deficit) items, net of receivables from officers, directors, owners, and affiliates of the entity which are attributable to the parent. The amount of the economic entity's stockholders' equity attributable to the parent excludes the amount of stockholders' equity which is allocable to that ownership interest in subsidiary equity which is not attributable to the parent (noncontrolling interest, minority interest). This excludes temporary equity and is sometimes called permanent equity. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Number of shares of stock issued during the period pursuant to acquisitions. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Number of shares issued during the period as a result of the conversion of convertible securities. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Number of new stock issued during the period. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Number of shares of stock issued during the period that is attributable to transactions involving issuance of stock not separately disclosed. No definition available.
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| X | ||||||||||
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- Definition
Value of stock issued pursuant to acquisitions during the period. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
The gross value of stock issued during the period upon the conversion of convertible securities. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Equity impact of the value of new stock issued during the period. Includes shares issued in an initial public offering or a secondary public offering. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Value of shares of stock issued during the period that is attributable to transactions involving issuance of stock not separately disclosed. No definition available.
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| X | ||||||||||
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- Details
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| X | ||||||||||
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- Details
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| X | ||||||||||
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- Definition
Debt discount recorded in connection with issuance of subordinated notes No definition available.
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| X | ||||||||||
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- Definition
Issuance of common stock upon warrant exercise in exchange for reduction in 8% subordinated notes No definition available.
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| X | ||||||||||
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- Definition
Issuance of common stock upon warrant exercise in exchange for reduction in subordinated notes No definition available.
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| X | ||||||||||
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- Definition
Issuance of subordinated notes to related party to reimburse startup costs No definition available.
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| X | ||||||||||
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- Details
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| X | ||||||||||
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- Definition
Stock options issued as payment for tooling deposit No definition available.
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| X | ||||||||||
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- Definition
The component of interest expense representing the noncash expenses charged against earnings in the period to allocate debt discount and premium, and the costs to issue debt and obtain financing over the related debt instruments. Alternate captions include Noncash Interest Expense. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Includes currency on hand as well as demand deposits with banks or financial institutions. It also includes other kinds of accounts that have the general characteristics of demand deposits in that the Entity may deposit additional funds at any time and also effectively may withdraw funds at any time without prior notice or penalty. Cash equivalents, excluding items classified as marketable securities, include short-term, highly liquid investments that are both readily convertible to known amounts of cash, and so near their maturity that they present minimal risk of changes in value because of changes in interest rates. Generally, only investments with original maturities of three months or less qualify under that definition. Original maturity means original maturity to the entity holding the investment. For example, both a three-month US Treasury bill and a three-year Treasury note purchased three months from maturity qualify as cash equivalents. However, a Treasury note purchased three years ago does not become a cash equivalent when its remaining maturity is three months. Compensating balance arrangements that do not legally restrict the withdrawal or usage of cash amounts may be reported as Cash and Cash Equivalents, while legally restricted deposits held as compensating balances against borrowing arrangements, contracts entered into with others, or company statements of intention with regard to particular deposits are not generally reported as cash and cash equivalents. Includes cash and cash equivalents associated with the entity's continuing operations. Excludes cash and cash equivalents associated with the disposal group (and discontinued operation). Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
The increase (decrease) during the reporting period in cash and cash equivalents. While for technical reasons this element has no balance attribute, the default assumption is a debit balance consistent with its label. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
The current period expense charged against earnings on long-lived, physical assets not used in production, and which are not intended for resale, to allocate or recognize the cost of such assets over their useful lives; or to record the reduction in book value of an intangible asset over the benefit period of such asset; or to reflect consumption during the period of an asset that is not used in production. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
The amount of impairment loss recognized in the period resulting from the write-down of the carrying amount of an intangible asset (excluding goodwill) to fair value. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
|
- Definition
The amount of cash paid during the current period to foreign, federal, state, and local authorities as taxes on income. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
|
- Definition
The increase (decrease) during the reporting period in the aggregate amount of liabilities incurred (and for which invoices have typically been received) and payable to vendors for goods and services received that are used in an entity's business. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
The increase (decrease) during the reporting period in amount due within one year (or one business cycle) from customers for the credit sale of goods and services. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
|
- Definition
The increase (decrease) during the reporting period in the aggregate amount of expenses incurred but not yet paid. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
|
- Definition
The increase (decrease) during the period in accrued salaries. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
The increase (decrease) during the reporting period in the aggregate value of all inventory held by the reporting entity, associated with underlying transactions that are classified as operating activities. Reference 1: http://www.xbrl.org/2003/role/presentationRef
|
| X | ||||||||||
|
- Definition
The increase (decrease) during the reporting period in the value of prepaid expenses and other assets not separately disclosed in the statement of cash flows, for example, deferred expenses, intangible assets,or income taxes. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
|
- Definition
The amount of cash paid for interest during the period. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
The change in the inventory reserve representing the cumulative difference in cost between the first in, first out and the last in, first out inventory valuation methods, which change has been reflected in the statement of income during the period. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Charge to cost of goods sold that represents the reduction of the carrying amount of inventory, generally attributable to obsolescence or market conditions. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
|
- Definition
The net cash inflow or outflow from financing activity for the period. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
|
- Definition
The net cash inflow or outflow from investing activity. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
The net cash from (used in) all of the entity's operating activities, including those of discontinued operations, of the reporting entity. Operating activities generally involve producing and delivering goods and providing services. Operating activity cash flows include transactions, adjustments, and changes in value that are not defined as investing or financing activities. While for technical reasons this element has no balance attribute, the default assumption is a debit balance consistent with its label. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
The portion of profit or loss for the period, net of income taxes, which is attributable to the parent. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
|
- Definition
The amount of assets that an Entity acquires in a noncash (or part noncash) acquisition that are not presented as a separate disclosure or not otherwise listed in the existing taxonomy. Noncash is defined as information about all investing and financing activities of an enterprise during a period that affect recognized assets or liabilities but that do not result in cash receipts or cash payments in the period. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Other expenses or losses included in net income that result in no cash outflows or inflows in the period and are not separately disclosed. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
The total of the cash outflow during the period which has been paid to third parties in connection with debt origination, which will be amortized over the remaining maturity period of the associated long-term debt and the cost incurred directly for the issuance of equity securities. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
|
- Definition
The cash outflow for loan and debt issuance costs. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
The cash outflow to acquire asset without physical form usually arising from contractual or other legal rights, excluding goodwill. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
The cash outflow associated with the acquisition of long-lived, physical assets that are used in the normal conduct of business to produce goods and services and not intended for resale; includes cash outflows to pay for construction of self-constructed assets. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
The cash inflow from the additional capital contribution to the entity. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
The cash inflow from a debt initially having maturity due after one year or beyond the operating cycle, if longer. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
The cash inflow associated with the amount received from holders exercising their stock options. This item inherently excludes any excess tax benefit, which the entity may have realized and reported separately. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
Total increases or decreases in the standard and extended product warranty liability during the period. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
The expense charged against earnings for the period pertaining to standard and extended warranties on the entity's goods and services granted to customers. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
|
- Definition
The cash outflow associated with security instruments that either represent a creditor or an ownership relationship with the holder of the investment security with a maturity of beyond one year or normal operating cycle, if longer. Includes repayments of (a) debt, (b) capital lease obligations, (c) mandatory redeemable capital securities, and (d) any combination of (a), (b), or (c). Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
|
- Definition
The aggregate amount of noncash, equity-based employee remuneration. This may include the value of stock or unit options, amortization of restricted stock or units, and adjustment for officers' compensation. As noncash, this element is an add back when calculating net cash generated by operating activities using the indirect method. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
|
- Definition
New liabilities assumed during the reporting period that are subordinated to claims of general creditors. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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| X | ||||||||||
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- Definition
The net change in the difference between the fair value and the carrying value, or in the comparative fair values, of investments, not including unrealized gains or losses on securities separately or otherwise categorized as trading, available-for-sale, or held-to-maturity, held at each balance sheet date and included in earnings for the period. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
|
12 Months Ended |
|---|---|
|
Sep. 30, 2011
|
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| Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block] |
1.
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Organization
and Business Description
Parametric
Sound Corporation (“Parametric Sound” or the
“Company”) is
a technology company focused on delivering novel directed
audio solutions. The Company’s HyperSonic Sound or
“HSS” technology pioneered the practical
application of parametric acoustic technology for
generating audible sound along a directional ultrasonic
column. The Company’s HSS-3000 products are
compatible with standard media players and beam sound to
target a specific listening area without the ambient
noise of traditional speakers. The Company’s
principal markets are North America, Europe and
Asia.
In
April 2010, the board of directors of LRAD Corporation
approved a plan to separate its HSS product line into a
new independent, stand-alone company. In a special
meeting of stockholders held June 2, 2010, the proposal
to separate the HSS business from LRAD was approved, and
on June 2, 2010, LRAD created a new wholly owned
subsidiary, Parametric Sound, into which the HSS business
and substantially all of the assets of the business and
associated intellectual property rights were
contributed.
All
outstanding shares of Parametric Sound common stock were
distributed to the stockholders of LRAD Corporation on
September 27, 2010 (“Spin-Off”), at a ratio
of one share of Parametric Sound common stock for each
two shares of LRAD Corporation’s common stock held
as of the record date of September 10, 2010. LRAD
Corporation retained no ownership or other form of
interest in Parametric Sound subsequent to the Spin-Off.
Following the Spin-Off, the Company’s operations
consist solely of the operations described herein.
In
connection with the Spin-Off, Parametric Sound and LRAD
Corporation entered into a separation agreement and a tax
sharing agreement. See Note 2 for further discussion
regarding these agreements.
Basis
of Accounting
The
balance sheets as of September 30, 2011 and 2010 reflect
the balances of Parametric Sound as an independent
company. The statement of operations for the year ended
September 30, 2011 reflects the activity of Parametric
Sound as a stand-alone company. Amounts included in the
statement of operations for the year ended September 30,
2010 reflect LRAD Corporation’s HSS business
activities through September 27, 2010 adjusted for
activity through September 30, 2010 including
reimbursement of certain start-up, Spin-Off and
technology costs expenditures on the Company’s
behalf during its startup and development (see Note 2).
The Company’s financial statements for the year
ended September 30, 2010 include activity derived from
LRAD Corporation’s historical consolidated
financial statements using LRAD Corporation’s
historical cost basis of assets and liabilities of the
various activities that reflect the results of
operations, financial condition and cash flows of
Parametric Sound as a component of LRAD Corporation.
Historically, the HSS business in LRAD Corporation
operated as a product line and not a separate segment and
not as an independent stand-alone business. For
purposes of preparing the financial statements in the
period prior to the September 27, 2010 Spin-Off,
Parametric Sound was allocated certain expenses from LRAD
Corporation with such expenses reflected in the
statements of operations as expense allocations from LRAD
Corporation. Until the Spin-Off, Parametric Sound
was fully integrated with LRAD Corporation, including
product development, production, sales and distribution,
accounting, finance, treasury, payroll, legal services
and investor relations.
Management
believes that the assumptions and allocation methods
underlying such prior year financial statements are
reasonable in all material respects. However, the costs
allocated to the Company are not necessarily indicative
of the costs that would have been incurred if the Company
operated as a stand-alone entity during the year ended
September 30, 2010.
Going
Concern
The
financial statements have been prepared on a going
concern basis contemplating the realization of assets and
the satisfaction of liabilities in the normal course of
business. The Company had a net loss of $1,484,458 for
the year ended September 30, 2011 and has financed its
operations from debt and equity financing. As of
September 30, 2011 our working capital balance was
approximately $428,000 and the Company has no other
sources of financing. In July 2011 the Company commenced
deliveries of new products based on improved HSS
technology. Prior historical revenues are no indication
of future revenues and there can be no assurance that the
Company’s new products will achieve market success.
The Company will be reliant on existing working capital
or obtaining additional debt or equity financing
sufficient to sustain operations until profitability can
be achieved.
The
continuation of the Company as a going concern is
dependent on its ability to grow revenues, and if
necessary, to obtain additional financing from outside
sources. Management’s plans include (a) increasing
HSS-3000 revenues from legacy customers and by obtaining
new customers, (b) developing and introducing new
products targeted for new directed audio markets, (c)
exercising cost controls to conserve cash, and (d) if
necessary, obtaining additional financing. There is no
assurance that the Company will be successful in its
plans or in generating or raising funds, if necessary, to
sustain its operations for twelve months or beyond.
Should the Company be unable to generate funds from
operations or obtain required financing, it may have to
curtail operations, which may have a material adverse
effect on its financial position and results of
operations. The accompanying financial statements do not
include any adjustments that would be necessary should
the Company be unable to continue as a going concern and,
therefore, be required to liquidate its assets and
discharge its liabilities in other than the normal course
of business and at amounts different from those reflected
in the accompanying financial statements.
LRAD
Corporation Net Investment
Because
historically, the HSS business in LRAD Corporation
operated as a product line and not a separate segment and
not as an independent stand-alone business LRAD
Corporation’s investment in Parametric Sound is
shown in lieu of stockholder’s equity in the
financial statements for periods prior to September 27,
2010. The net investment account represents cumulative
investments in, distributions from and losses of the HSS
business.
No
cash or accounts receivable were transferred at the
Spin-Off and Parametric Sound paid for all Spin-Off
related costs and reimbursed technology development
costs. LRAD Corporation retained certain inventory for
outstanding customer orders and to support outstanding
warranty obligations (See Note 2).
Loss
Per Share
Basic
loss per common share is computed by dividing net loss by
the weighted-average number of shares of common stock
outstanding during the period. Diluted net loss per
common share reflects the potential dilution of
securities that could share in the earnings of an entity.
The Company’s losses for the periods presented
cause the inclusion of potential common stock instruments
outstanding to be antidilutive. Stock options and
warrants for a total of 3,335,000 and 1,400,000 shares of
common stock were outstanding at September 30, 2011 and
2010, respectively. These securities are not included in
the computation of diluted net loss per common share as
their inclusion would be antidilutive.
For
the year ended September 30, 2010 the net loss per basic
and diluted share and the weighted-average shares
outstanding were calculated based on the 15,306,064
shares issued in connection with the Spin-Off.
Use
of Estimates
The
preparation of financial statements in conformity with
accounting principles generally accepted in the United
States of America requires management to make estimates
and assumptions (e.g., inventory valuation, valuation of
intangible assets, warranty reserves, allocations of
expenses incurred by LRAD Corporation and the fair value
of financial instruments) that affect the reported
amounts of assets and liabilities, and disclosure of
contingent assets and liabilities at the date of the
financial statements and affect the reported amounts of
revenues and expenses during the reporting period. Actual
results could materially differ from those
estimates.
Fair
Value of Financial Instruments
The
carrying amounts of cash, accounts payable and accrued
liabilities approximate fair values due to the short
maturity of these instruments. The fair value of warrants
issued in September 2010 were estimated using a
Black-Scholes valuation model (See Note 7).
Concentrations
of Credit Risk
Financial
instruments, which potentially subject the Company to
concentrations of credit risk, consist primarily of cash
equivalents. Due to the relative short nature of such
investments, the carrying amount approximates fair value.
The Company places its cash in demand deposit and money
market accounts at one bank and such balances may at
times be in excess of amounts insured by federal
agencies, which is $250,000 as of September 30, 2011. The
Company does not believe that it is subject to any
unusual financial risk beyond the normal risk associated
with commercial banking relationships. The Company
performs periodic evaluations of the relative credit
standing of these financial institutions. The Company has
not experienced any significant losses on its cash
equivalents.
Accounts
Receivable and Allowance for Doubtful
Accounts
The
Company had no accounts receivable or allowance for
doubtful accounts at September 30, 2011 due to a policy
of payment prior to shipment. The Company may make sales
on credit in future periods whereupon it will make periodic
evaluations of the creditworthiness of its customers and
manage its exposure to losses from bad debts by limiting
the amount of credit extended.
Contract
Manufacturers
The
Company uses contract manufacturers for production of
certain components and sub-assemblies. The Company may
provide parts and components to such parties from time to
time but recognizes no revenue or markup on such
transactions. The Company performs assembly of products
in-house using components and sub-assemblies from a
variety of contract manufacturers and suppliers.
Inventories
Inventories
are valued at the lower of cost or net realizable value.
The cost of substantially all of the Company’s
inventory is determined by the weighted average cost
method. Inventory is comprised of raw materials,
assemblies and finished products intended for sale to
customers.
The
Company evaluates the need for reserves for excess and
obsolete inventories determined primarily based upon
estimates of future demand for the Company’s
products. At September 30, 2011 and 2010, the
reserve for obsolescence related to certain raw materials
obtained at the Spin-Off, some of which are being used to
produce the Company’s HSS-3000 products.
Equipment,
Tooling and Depreciation
Equipment
and tooling is stated at cost. Depreciation on equipment
and tooling is computed over the estimated useful lives
of two to three years using the straight-line method.
Upon retirement or disposition of equipment or tooling,
the related cost and accumulated depreciation or
amortization is removed and a gain or loss is
recorded.
Intangibles
Patents,
licenses and trademarks are carried at cost less
accumulated amortization. Legal cost incurred to file,
renew, or extend the term of recognized intangible assets
are capitalized. Intangible assets are amortized over
their estimated useful lives, which have been estimated
to be 15 years for patents, licenses and trademarks
protecting the Company’s products. The Company
amortizes certain patents acquired in the Spin-Off,
classified as defensive patents, over a weighted average
of three years. The carrying value of intangibles is
periodically reviewed and impairments, if any, are
recognized when the expected future benefit to be derived
from an individual intangible asset is less than its
carrying value.
Revenue
Recognition
The
Company derives its revenue primarily from product sales.
Product sales are recognized in the periods that products
are shipped to customers (FOB shipping point) or when
product is received by the customer (FOB destination),
when the fee is fixed and determinable, when collection
of resulting receivables is probable and there are no
remaining obligations on the part of the Company.
Shipping
and Handling Costs
Shipping
and handling costs are included in cost of revenues. The
amount of shipping and handling costs invoiced to
customers is included in revenue. Shipping and handling
costs were $628 and $9,469 for the fiscal years ended
September 30, 2011 and 2010, respectively.
Research
and Development Costs
Research
and development costs are expensed as incurred.
Warranty
Reserves
The
Company warrants its products to be free from defects in
materials and workmanship for a period of one year from
the date of purchase. The warranty is generally a limited
warranty. The Company currently provides direct warranty
service. The Company establishes a warranty reserve based
on anticipated warranty claims at the time revenue from
product sales is recognized. Factors affecting warranty
reserve levels include the number of units sold and
anticipated cost of warranty repairs and anticipated
rates of warranty claims. The Company evaluates the
adequacy of the provision for warranty costs each
reporting period.
Deferred
Financing Costs
Costs
related to the issuance of debt are capitalized and
amortized to interest expense over the life of the
related debt on a straight line basis which is not
materially different from the results obtained using the
effective interest method.
Classification
of Warrants
The
Company accounts for warrants as either equity or
liabilities based upon the characteristics and provisions
of each particular instrument. Warrants valued and
classified as equity are recorded as additional paid-in
capital on the Company’s balance sheet and no
further adjustment to valuation is made. The Company has
no warrants or other derivative financial instruments
that require separate accounting as liabilities and
periodic revaluation.
Income
Taxes
The
Company accounts for its income taxes under the asset and
liability method. Under this method, deferred tax assets
and liabilities are determined based on temporary
differences between financial statement and tax basis of
assets and liabilities and net operating loss and credit
carry-forwards using enacted tax rates in effect for the
year in which the differences are expected to reverse.
Valuation allowances are established when it is more
likely than not that some portion of the deferred tax
assets will not be realized.
The
Company’s operations were included in LRAD
Corporation’s consolidated U.S. federal and state
income tax returns prior to the Spin-Off, therefore, the
Company was not subject to taxation by federal and state
authorities for the tax periods before the Spin-Off.
The Company filed a separate return for the short
year tax period ended September 30, 2010. The provision
for income taxes through the Spin-Off was determined on a
separate return basis and based on earnings reported in
the Company's statement of operations and comprehensive
income. The historical net operating loss
carryforwards and tax credits generated by Parametric
Sound prior to the Spin-Off remained with LRAD
Corporation subsequent to the separation.
Comprehensive
Loss
Comprehensive
loss consists of net loss and other gains and losses
affecting stockholders’ equity that under U.S.
generally accepted accounting principles are excluded
from reported net loss. There were no differences between
net loss and comprehensive loss for any of the periods
presented.
Impairment
of Long-Lived Assets
Long-lived
assets and identifiable intangibles held for use are
reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not
be recoverable. If the sum of undiscounted expected
future cash flows is less than the carrying amount of the
asset or if changes in facts and circumstances indicate,
an impairment loss is recognized and measured using the
asset’s fair value.
Share-Based
Compensation
The
Financial Accounting Standards Board (“FASB”)
Accounting Standards Codification
(“ASC”) 718, Compensation-Stock
Compensation (“ASC 718”) and
ASC 505-50, Equity-Based
Payments to Non-Employees (“ASC
505-50”). ASC
718 requires
measurement of all employee stock-based awards using a
fair-value method and recording of related compensation
expense in the financial statements over the requisite
service period. Further, as required under ASC 718, the
Company estimates forfeitures for stock-based awards that
are not expected to vest.
Share-Based
Payments for Goods and Services
Under
ASC 505-50 options or stock awards issued to
non-employees who are not directors of the Company are
recorded at the fair value of the consideration received,
when more reliably measurable, otherwise at the estimated
value of the stock options issued at the measurement
date. Non-employee options are periodically revalued as
the options vest so the cost ultimately recognized is
equivalent to the fair value on the date performance is
complete with such expense recognized over the related
service period on a graded vesting method.
Reclassifications
Where
necessary, the prior year’s information has been
reclassified to conform to the fiscal 2011 statement
presentation.
Recent
Accounting Pronouncements
In
September 2011, the FASB issued Accounting Standards
Update ("ASU") 2011-08, Intangibles -
Goodwill and Other which allows an entity to first
assess qualitative factors to determine whether it is
necessary to perform the two-step quantitative
goodwill impairment test. Under these
amendments, an entity would not be required to calculate
the fair value of a reporting unit unless the entity
determines, based on a qualitative assessment, that it is
more likely than not that its fair value is less than its
carrying amount. ASU 2011-08 will be effective for the
Company in fiscal 2013, with early adoption permitted.
The Company does not expect the adoption of this update
will have a material effect on its financial
statements.
In
June 2011, the FASB issued ASU 2011-05, Comprehensive
Income providing guidance regarding the
presentation of comprehensive income. The new standard
requires the presentation of comprehensive income, the
components of net income and the components of other
comprehensive income either in a single continuous
statement of comprehensive income or in two separate but
consecutive statements. The new standard also requires
presentation of adjustments for items that are
reclassified from other comprehensive income to net
income in the statement where the components of net
income and the components of other comprehensive income
are presented. The updated guidance of ASU 2011-05 is
effective on a retrospective basis for financial
statements issued for fiscal years, and interim periods
within those fiscal years, beginning with the
Company’s fiscal 2012 year. The
Company does not expect the adoption of this update will
have a material effect on its financial
statements.
In
May 2011, the FASB issued ASU 2011-04, Fair Value
Measurement providing additional guidance on fair
value measurements that clarifies the application of
existing guidance and disclosure requirements, changes
certain fair value measurement principles and requires
additional disclosures about fair value measurements. The
updated guidance of ASU 2011-04 is effective on a
prospective basis for financial statements issued for
fiscal years, and interim periods within those fiscal
years, beginning with the Company’s fiscal 2012
year. The
Company does not expect the adoption of this update will
have a material effect on its financial
statements.
Subsequent
Events
Management
has evaluated events subsequent to September 30, 2011
through the date that the accompanying financial
statements were filed with the Securities and Exchange
Commission for transactions and other events which may
require adjustment of and/or disclosure in such financial
statements.
|
| X | ||||||||||
|
- Definition
The entire disclosure for organization, consolidation and basis of presentation of financial statements disclosure. Reference 1: http://www.xbrl.org/2003/role/presentationRef
|
|
2. SPIN-OFF OF HSS BUSINESS
|
12 Months Ended |
|---|---|
|
Sep. 30, 2011
|
|
| Mergers, Acquisitions and Dispositions Disclosures [Text Block] |
2.
SPIN-OFF OF HSS BUSINESS
On
September 27, 2010, LRAD Corporation separated its HSS
business through the Spin-Off of Parametric Sound. LRAD
Corporation contributed most of its HSS business assets
to Parametric Sound. All outstanding shares of the
Company were distributed to LRAD Corporation’s
stockholders of record at the close of business on
September 10, 2010 as a pro-rata, tax-free dividend of
one share of Parametric Sound common stock for every two
shares of LRAD Corporation common stock.
On
September 27, 2010, the Company entered into a Separation
and Distribution Agreement (“Separation
Agreement”) with LRAD Corporation that set forth
the terms and conditions of the separation of the Company
from LRAD Corporation, provided the framework for the
relationship between the Company and LRAD Corporation
following the separation and provided for the allocation
of assets, liabilities and obligations between the
Company and LRAD Corporation in connection with the
separation. The Separation Agreement provided for a
transition related to HSS business and customers with
LRAD
Corporation fulfilling orders received through
September 27, 2010.
Thereafter LRAD Corporation could fulfill continuing
purchase orders for one project with customer Cardinal
Health through the completion of the project and through
December 31, 2010 could accept unsolicited follow-on
orders for HSS products from prior customers. LRAD
Corporation retained inventory and supplies to fulfill
such anticipated orders and retained responsibility for
warranty, returns and related liabilities for such
customers and sales. On September 27, 2010 the Company
also entered into a Tax Sharing Agreement with LRAD
Corporation that generally governs the parties’
respective rights, responsibilities and obligations after
the separation with respect to taxes.
The
total value of the LRAD Corporation stock dividend of
$454,006 was based on the net book value of the net
assets that were transferred from LRAD Corporation in
connection with the Spin-Off in accordance with ASC
845-10-30-10, Nonreciprocal
Transfers with Owners.
In
connection with the Spin-Off, on September 27, 2010, the
Company entered into a License and Royalty Agreement with
related party Syzygy Licensing LLC (“Syzygy”)
relating to new technology invented by the
Company’s President and CEO, Elwood G. Norris. This
technology has been implemented in the Company’s
new HSS-3000 product line. In connection with the new
technology the Company reimbursed $91,415 of prior
technology and patent costs paid by Syzygy and assumed
$90,500 of technology and product development costs
incurred prior to the Spin-Off including $25,000 owed to
Mr. Norris for product development services.
On
September 27, 2010, the Company also agreed to reimburse
$160,580 of Parametric Sound related Spin-Off and startup
costs paid by Syzygy and assumed $62,037 of Spin-Off and
startup costs and expenses incurred prior to the Spin-Off
including $25,000 owed to Sunrise Capital, Inc. for the
services of Treasurer, Secretary and CFO, Mr.
Barnes.
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- Definition
The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings. No definition available.
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3. INVENTORIES, NET
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Sep. 30, 2011
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| Inventory Disclosure [Text Block] |
3.
INVENTORIES, NET
Inventories
consist of the following:
The
Company relies on one supplier for film for its HSS
products. The Company’s ability to manufacture its
HSS product could be adversely affected if it were to
lose a sole source supplier and was unable to find an
alternative supplier.
The
reserve for obsolescence increased by $63,094 in the year
ended September 30, 2010 due to obsolete legacy HSS parts
and components. The reserve for obsolescence was reduced
by a $32,062 non-cash inventory reserve reduction in the
year ended September 30, 2011 through the use of such
parts in the production of prototypes and HSS-3000
products. The Company may continue to incur non-cash
inventory reserve reductions through the use of reserved
legacy HSS parts obtained in connection with the
Spin-Off.
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- Definition
The entire disclosure for inventory. This may include, but is not limited to, the basis of stating inventory, the method of determining inventory cost, the major classes of inventory, and the nature of the cost elements included in inventory. If inventory is stated above cost, accrued net losses on firm purchase commitments for inventory and losses resulting from valuing inventory at the lower-of-cost-or-market may also be included. For LIFO inventory, may disclose the amount and basis for determining the excess of replacement or current cost over stated LIFO value and the effects of a LIFO quantities liquidation that impacts net income. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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4. EQUIPMENT AND TOOLING, NET
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Sep. 30, 2011
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| Property, Plant and Equipment Disclosure [Text Block] |
4.
EQUIPMENT AND TOOLING, NET
Equipment
and tooling consist of the following:
Depreciation
expense was $23,400 and $231 for the years ended
September 30, 2011 and 2010, respectively.
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- Definition
The entire disclosure for long-lived, physical assets that are used in the normal conduct of business to produce goods and services and not intended for resale. Examples include land, buildings, machinery and equipment, and other types of furniture and equipment including, but not limited to, office equipment, furniture and fixtures, and computer equipment and software. This disclosure may include property plant and equipment accounting policies and methodology, a schedule of property, plant and equipment gross, additions, deletions, transfers and other changes, depreciation, depletion and amortization expense, net, accumulated depreciation, depletion and amortization expense and useful lives, income statement disclosures, assets held for sale and public utility disclosures. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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5. INTANGIBLE ASSETS, NET
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Sep. 30, 2011
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| Goodwill and Intangible Assets Disclosure [Text Block] |
5.
INTANGIBLE ASSETS, NET
Intangible
assets consist of the following:
Aggregate
amortization expense for the Company’s intangible
assets was $39,557 and $71,762 during the years ended
September 30, 2011 and 2010, respectively. In
addition to amortization, the Company wrote off $28,616
and $325,818 of impaired patent costs during the years
ended September 30, 2011 and 2010,
respectively.
The
following table shows the estimated amortization expense
for intangible assets for each of the five succeeding
fiscal years and thereafter:
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- Definition
The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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6. DEFERRED COMPENSATION AND ACCRUED LIABILITIES
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Sep. 30, 2011
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| Other Liabilities Disclosure [Text Block] |
6.
DEFERRED COMPENSATION AND ACCRUED LIABILITIES
Deferred
Compensation
Effective
October 1, 2010 the Company began accruing monthly
compensation for the services of its two executive
officers in the aggregate amount of $17,500 per
month. The balance accrued as of September 30,
2011 of $224,400 includes related employment taxes and
accrues without interest until the Board of Directors
determines there are sufficient funds available to pay
the accrued balances.
Accrued
Liabilities
Accrued
liabilities consist of the following:
The
Company establishes a warranty reserve based on
anticipated warranty claims at the time product revenue
is recognized. Factors affecting warranty reserve levels
include the number of units sold, anticipated cost of
warranty repairs and anticipated rates of warranty
claims. The Company evaluates the adequacy of the
provision for warranty costs each reporting period. In
accordance with the Separation Agreement, LRAD
Corporation is obligated for warranty claims related to
sales prior to the Spin-Off and any subsequent HSS
related product sales made by LRAD in accordance with the
Separation Agreement.
Details
of the estimated warranty liability are as
follows:
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- Definition
The entire disclosure for other liabilities. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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7. SUBORDINATED NOTES PAYABLE AND WARRANTS
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12 Months Ended |
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Sep. 30, 2011
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| Debt Disclosure [Text Block] |
7.
SUBORDINATED NOTES PAYABLE AND WARRANTS
In
September 2010 the Company sold $700,000 of 8%
Subordinated Promissory Notes, due September 28, 2011
(the “Notes”), and accompanying warrants to
purchase an aggregate of 1,400,000 shares of common stock
exercisable at $0.30 per common share
(“Warrants”). Of the total Notes and Warrants
issued, $260,000 of the Notes and 520,000 Warrants were
purchased by Syzygy, a company owned and controlled by
the Company’s President and CEO (Mr. Norris) and
its Chief Financial Officer (“CFO”) (James A.
Barnes). An additional $100,000 of the Notes and 200,000
Warrants were purchased by an entity owned by the
Company’s President and CEO, Mr. Norris.
The
relative fair value of the Warrants of $264,427 was
estimated by management using the Black-Scholes pricing
model and estimates of expected investor discount rates
(the Company’s effective market borrowing rate) on
the Note and Warrant financing. Significant Level 3
inputs used to calculate the fair value of the Warrants
included stock price, peer company volatility (99%),
risk-free interest rate (1.22%) and management’s
assumption regarding effective market borrowing rates
(30%). The
relative fair value of the Warrants was recorded as a
note discount and was amortized as additional interest
expense using the effective interest method over the term
of the Notes. During the years ended September 30,
2011 and 2010, $263,272 and $1,155, respectively,
was amortized.
On
June 30, 2011, all 1,400,000 Warrants were exercised by
the holders, and pursuant to the terms of the Note
agreement, the Company exercised its right to offset the
purchase price of the Warrants against the outstanding
Note principal amount. Accordingly, as a result of
the Warrant exercise, the principal balance of the Notes
was reduced by $420,000 (See Note 9). The Warrants
exercised included an aggregate 720,000 Warrants held by
the companies controlled by the Company’s President
and its CFO as described above, resulting in the
reduction of the Note principal amounts held by these
companies of $216,000.
Also
on June 30, 2011 the Company and certain Note holders
entered into an agreement pursuant to which the Note
holders agreed to convert an additional $250,000 of Note
principal plus $37,674 of accrued interest on the Notes
into 410,963 shares of the Company’s common stock
based on a conversion price of $0.70 per share. As
the addition of the conversion feature to the Note was
deemed to be a substantial modification of the Note
agreement, this transaction was accounted for as a debt
extinguishment. The Company determined that the
reacquisition price of the debt was equal to the
outstanding Note principal plus accrued interest, and
accordingly, no gain or loss on the debt extinguishment
transaction was recorded. The Notes and accrued interest
converted pursuant to this agreement included aggregate
Note principal and accrued interest of $144,000 and
$21,698, respectively, relating to Notes held by the
companies controlled by the Company’s President and
CFO.
On
September 28, 2011 the Company paid the remaining balance
of Notes of $30,000 and related accrued interest. The
Company incurred interest expense of $42,477 and $307,
respectively for the years ended September 30, 2011 and
2010 in connection with the Notes.
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- Definition
The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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8. INCOME TAXES
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Sep. 30, 2011
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| Income Tax Disclosure [Text Block] |
8.
INCOME TAXES
The
Company’s operations have historically been
included in LRAD Corporation’s consolidated U.S.
federal and state income tax returns. The income tax
provision included in these financial statements has been
determined as if the Company had filed separate income
tax returns under its existing structure for the periods
presented. The Company recorded no income tax expense in
2011 or 2010 due to losses incurred. LRAD Corporation's
tax filings for 2010 included Parametric Sounds
operations prior to the Spin-Off. The net operating
losses (NOL’s) and research and development credits
generated prior to the Spin-Off, remain with LRAD
Corporation.
The
Company generated federal tax net operating loss
carryforwards related to expenditures incurred after
September 27, 2010 including technology costs reimbursed
to Syzygy Licensing and other expenses incurred after
incorporation and paid after the Spin-Off. At September
30, 2011 the Company had a federal and state net
operating loss carryforward of approximately $1,400,000
that will expire beginning in 2030 unless previously
utilized.
The
provision for income taxes consists of the
following:
A
reconciliation of income taxes at the federal statutory
rate of 34% to the effective tax rate for the years ended
September 30, 2011 and 2010 is as follows:
Upon
the Spin-Off, Parametric Sound did not benefit from any
of the carryforward tax attributes from prior periods
including net operating loss carryforwards. A valuation
allowance has been established to offset the deferred tax
assets as realization of such assets is uncertain. The
components of the net deferred tax assets are as
follows:
The
Company adopted FASB ASC 740-10-25, Income
Taxes—Recognition (formerly FIN 48) as of
the date of incorporation. As of the date of the
adoption, the Company had no unrecognized tax benefits
and there were no material changes during the years ended
September 30, 2011 and 2010. Due to the existence of the
valuation allowance, future changes in the
Company’s unrecognized tax benefits will not impact
its effective tax rate. The Company’s practice is
to recognize interest and/or penalties related to income
tax matters in income tax expense. Upon adoption of ASC
740-10-25, the Company did not record any interest or
penalties. The
Company is subject to income tax in the U.S. federal
jurisdiction and the state of California. All years since
the Company’s 2010 organization remain subject to
examination but there are currently no ongoing exams in
any taxing jurisdiction.
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- Definition
The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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9. CAPITAL STOCK
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Sep. 30, 2011
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| Stockholders' Equity Note Disclosure [Text Block] |
9.
CAPITAL STOCK
Pursuant to
the Spin-Off, effective on September 27, 2010 a total of
15,306,064 shares of common stock were distributed as a
stock dividend to the stockholders of LRAD Corporation,
the Company’s then sole stockholder. Parametric
Sound was incorporated on June 2, 2010 with authorized
capital stock consisting of 50,000,000 shares of common
stock, par value $0.001, and 1,000,000 shares of
preferred stock, par value $0.001.
The Company
is authorized under its certificate of incorporation and
bylaws to issue shares of preferred stock without any
further action by the stockholders. The board of
directors has the authority to divide any and all shares
of preferred stock into series and to fix and determine
the relative rights and preferences of the preferred
stock, such as the designation of series and the number
of shares constituting such series, dividend rights,
redemption and sinking fund provisions, liquidation and
dissolution preferences, conversion or exchange rights
and voting rights, if any. Issuance of preferred stock by
the board of directors could result in such shares having
dividend and or liquidation preferences senior to the
rights of the holders of common stock and could dilute
the voting rights of the holders of common stock. No
shares of preferred stock have been issued and none were
outstanding at September 30, 2011 or 2010.
Sale
of Common Stock and Warrants
On February
22, 2011, the Company entered into a Securities Purchase
Agreement with existing institutional shareholders
(considered related parties due to greater than 10%
ownership) and entities affiliated with its two executive
officers, pursuant to which the Company issued and sold
for cash 2,000,000 shares of common stock at a purchase
price of $0.50 per share. In connection with the
financing, the Company also issued warrants to the
investors exercisable for an aggregate of 2,000,000
shares of common stock at an exercise price of $0.75 per
share. The warrants are exercisable until February 22,
2016. On September 30, 2011, entities affiliated with the
two executive officers exercised 400,000 of the warrants
for cash of $300,000.
In
connection with the financing, the Company also entered
into a registration rights agreement with the investors,
pursuant to which the Company agreed to prepare, file and
effect a registration statement covering the resale of
the shares of common stock sold in the financing and the
shares of common stock issuable upon the exercise of the
warrants. The required registration statement became
effective on March 28, 2011 and the Company has agreed to
use commercially reasonable efforts to maintain
effectiveness. If the registration statement becomes
ineffective other than for certain allowable periods, the
Company will be obligated to pay liquidated damages to
the purchasers in the amount of 1.5% of the invested
amount for each 30-day period thereafter with the
obligation terminating when the securities are sold or
otherwise available for unrestricted sale. The Company
evaluates this registration payment arrangement under ASC
825-20 Financial
Instruments - Registration Payment Arrangements
and has determined no obligation for future potential
penalties is accruable under ASC 450-20 Contingencies
- Loss Contingencies as of September 30,
2011.
Warrant
Exercise
On
June 30, 2011 a total of 1,400,000 warrants issued in
September 2010 were exercised at a price of $0.30 per
share. Pursuant to the terms of the 8% Subordinated
Promissory Note agreement entered into in September 2010,
the Company exercised its right to offset the purchase
price of the Warrants against the outstanding Note
principal amount. Accordingly, as a result of the
warrant exercise, the principal balance of the Notes was
reduced by $420,000 (See Note 7).
As
described above, on September 30, 2011, entities
affiliated with the two executive officers exercised
400,000 warrants for cash of $300,000.
Conversion
of Subordinated Promissory Notes and Accrued
Interest
On
June 30, 2011, subordinated promissory notes with an
outstanding principal balance of $250,000 plus related
accrued interest of $37,674 were converted into an
aggregate of 410,963 shares of common stock (See Note
7).
Summary
of Stock Purchase Warrants
The
following table summarizes information on warrant
activity during the years ended September 30, 2010 and
2011:
The
Company has outstanding share warrants as of September
30, 2011 all held by related parties, as follows:
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- Definition
The entire disclosure for shareholders' equity, comprised of portions attributable to the parent entity and noncontrolling interest, if any, including other comprehensive income (as applicable). Including, but not limited to: (1) balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings; (2) accumulated balance for each classification of other comprehensive income and total amount of comprehensive income; (3) amount and nature of changes in separate accounts, including the number of shares authorized and outstanding, number of shares issued upon exercise and conversion, and for other comprehensive income, the adjustments for reclassifications to net income; (4) rights and privileges of each class of stock authorized; (5) basis of treasury stock, if other than cost, and amounts paid and accounting treatment for treasury stock purchased significantly in excess of market; (6) dividends paid or payable per share and in the aggregate for each class of stock for each period presented; (7) dividend restrictions and accumulated preferred dividends in arrears (in aggregate and per share amount); (8) retained earnings appropriations or restrictions, such as dividend restrictions; (9) impact of change in accounting principle, initial adoption of new accounting principle and correction of an error in previously issued financial statements; (10) shares held in trust for Employee Stock Ownership Plan (ESOP); (11) deferred compensation related to issuance of capital stock; (12) note received for issuance of stock; (13) unamortized discount on shares; (14) description, terms, and number of warrants or rights outstanding; (15) shares under subscription and subscription receivables, effective date of new retained earnings after quasi-reorganization and deficit eliminated by quasi-reorganization and, for a period of at least ten years after the effective date, the point in time from which the new retained dates; and (16) retroactive effective of subsequent change in capital structure. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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10. SHARE-BASED COMPENSATION
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Sep. 30, 2011
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| Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block] |
10.
SHARE-BASED COMPENSATION
Pursuant
to LRAD Corporation’s 2005 Equity Incentive Plan,
the Company recorded $5,521 of share-based compensation
expense for the year ended September 30, 2010 related to
personnel whose salary and benefit costs were allocated
to the Company. No stock options were granted to such
allocated personnel during fiscal 2010 and no legacy
options were assumed by the Company in connection with
the Spin-Off.
On
September 27, 2010 the Company adopted the 2010 Stock
Option Plan (the “2010 Plan”). The 2010 Plan
authorizes the grant of options to purchase up to
3,000,000 shares of the Company’s common stock to
directors, officers, employees and
consultants. During the year ended September
30, 2011 the Company granted options on 1,735,000 shares
of common stock under the 2010 Plan.
The
Company uses the Black-Scholes option pricing model to
determine the estimated fair value of each option as of
its grant date or any revaluation date. These inputs are
subjective and generally require significant analysis and
judgment to develop. The following table sets forth the
significant weighted-average assumptions used in the
Black-Scholes model and the
calculation of stock-based compensation cost
(annualized percentages):
Since
the Company’s stock only commenced trading after
the Spin-Off, the Company’s management estimated
its expected volatility by reviewing the historical
volatility of the common stock of a group of selected
peer public companies that operate in similar industries
and are similar in terms of stage of development or size
and then projecting this information toward its future
expected results. Judgment was used in selecting these
companies, as well as in evaluating the available
historical volatility for these peer companies. The
risk-free interest rate is based on rates published by
the Federal Reserve Board. The dividend yield of zero is
based on the fact that the Company has never paid cash
dividends and has no present intention to pay cash
dividends. The Company has a small number of option
grants and no exercise history and accordingly has for
all new option grants applied the simplified method
prescribed by SEC Staff Accounting Bulletin 110, Share-Based
Payment: Certain Assumptions Used in Valuation Methods -
Expected Term, to estimate expected life (computed
as vesting term plus contractual term divided by two). An
estimated forfeiture rate was determined to be zero as
the number of grantees is limited and all are currently
expected to serve in their capacities during the vesting
period. Forfeitures are estimated at the time of the
grant and revised in subsequent periods if actual
forfeitures differ from those estimates or if the Company
updates its estimated forfeiture rate. Such amounts, if
any, will be recorded as a cumulative adjustment in the
period in which the estimate is changed.
F-17
The
Company recorded share-based compensation in its
statements of operations for the relevant periods as
follows:
In
addition the Company issued stock options valued at
$20,000 during the year ended September 30, 2011 to a
vendor as payment for tooling costs which was capitalized
and included in equipment and tooling at September 30,
2011. The recorded value of these options was determined
based on the value of the services provided as this was
deemed to be a more reliable measurement of the
consideration received.
As
of September 30, 2011 total estimated compensation cost
relating to stock options granted but not yet vested was
$234,857. This cost is expected to be recognized over the
weighted average period of 1.1 years.
The
following table summarizes stock option activity for the
period:
The
following table summarizes information about stock
options outstanding at September 30, 2011:
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- Definition
Disclosure of accounting policy for stock option and stock incentive plans. This disclosure may include (1) the types of stock option or incentive plans sponsored by the entity (2) the groups that participate in (or are covered by) each plan (3) significant plan provisions and (4) how stock compensation is measured, and the methodologies and significant assumptions used to determine that measurement. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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11. COMMITMENTS, CONTINGENCIES AND CONFLICTS OF INTEREST
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12 Months Ended |
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Sep. 30, 2011
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| Commitments and Contingencies Disclosure [Text Block] |
11.
COMMITMENTS, CONTINGENCIES AND CONFLICTS OF
INTEREST
Facility
Lease
Commencing
June 1, 2011 the Company leased 3,498 square feet of
improved assembly and warehouse space in Poway,
California for a period of 25 months terminating June 30,
2013. The gross monthly base rent is $3,498 through May
31, 2012 thereafter increasing to $3,603 per month for
the term of the lease, subject to certain future
adjustments. The Company’s President and CEO, Mr.
Norris, executed a personal guarantee of the lease
without compensation.
The
Company’s executive office in Henderson, Nevada was
occupied in July 2011 under a lease agreement that
expired on June 30, 2011. The Company is continuing
month-to-month rental at $500 per month for reduced space
of approximately 500 square feet.
The
Company has no other operating leases and the remaining
future annual minimum lease payment obligation under the
foregoing facility lease is $42,396 and $32,427 for the
years ending September 30, 2012 and 2013,
respectively.
Technology
License Agreement
The Company
is obligated to pay royalties and make certain future
expenditures pursuant to a license and royalty agreement
dated September 27, 2010 with Syzygy, a company owned and
controlled by executive officers Mr. Norris and Mr.
Barnes. The agreement provides for royalties
of 5% of revenues from products employing the licensed
parametric sound technology and a term of 20 years or the
life of any resulting patent, whichever is greater. In
the event no patent covering the licensed technology is
issued after four years, then the royalty rate reduces to
3% in any territory until or if a patent is issued for
any such territory. The Company may not sublicense
without the permission of Syzygy, and sublicense royalty
rates are subject to future negotiation in good faith.
The license may terminate if the Company does not use
commercially reasonable efforts to pursue the parametric
sound business. The Company incurred and accrued $3,835
as royalties pursuant to this agreement for the year
ended September 30, 2011.
In addition
to the reimbursed costs paid as outlined in Note 2, the
Company is obligated to reimburse Syzygy’s future
costs, in filing for, prosecuting and maintaining any of
the licensed patents in the United States. The Company
incurred and capitalized $28,237 and $6,486 related to
such licensed patents during the fiscal year ended
September 30, 2011 and 2010, respectively. The Company
may request that Syzygy file patent applications in
additional territories, in which case the Company shall
reimburse Syzygy for all costs associated
therewith.
Conflicts
of Interest
Certain
conflicts of interest now exist and will continue to
exist between the Company and its executive officers and
directors due to the fact that they have other
employment, business and investment interests to which
they devote some attention and they are expected to
continue to do so. Company executive officers also manage
and control Syzygy a licensing company that owns and is
licensing to the Company certain technology for producing
parametric sound (see the discussion above and Note 2)
and certain conflicts could arise in future dealings
between Syzygy and the Company. The Company has not
established policies or procedures for the resolution of
current or potential conflicts of interest between the
Company and management or management-affiliated entities
including Syzygy. There can be no assurance that
members of management will resolve all conflicts of
interest in the Company’s favor. Officers and
directors are accountable to the Company as fiduciaries,
which means that they are legally obligated to exercise
good faith and integrity in handling the Company’s
affairs. Failure by them to conduct the
Company’s business in its best interests may result
in liability to them. While the Company’s directors
and officers may be excluded from liability for certain
actions (see Indemnification below), there is no
assurance that the Company’s officers and directors
would be excluded from liability or indemnified if they
breached their loyalty to the Company.
Guarantees
and Indemnifications
Our officers
and directors are indemnified as to personal liability as
provided by the Nevada Revised Statutes, the
Company’s articles of incorporation and bylaws and
by indemnification agreements with the Company. The
Company may also undertake indemnification obligations in
the ordinary course of business related to its products
and the issuance of securities with customers, investors,
vendors and business parties. The Company is unable to
estimate with any reasonable accuracy the liability that
may be incurred pursuant to any such indemnification
obligations now or in the future. Because of the
uncertainty surrounding these circumstances, the
Company’s current or future indemnification
obligations could range from immaterial to having a
material adverse impact on its financial position and its
ability to continue in the ordinary course of business.
The Company has no liabilities recorded for such
indemnities.
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- Definition
The entire disclosure for commitments and contingencies. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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12. MAJOR CUSTOMERS AND SUPPLIERS
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Sep. 30, 2011
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| Concentration Risk Disclosure [Text Block] |
12.
MAJOR CUSTOMERS AND SUPPLIERS
Major
Customers
For
the fiscal year ended September 30, 2011, revenues
from two customers accounted for 46% and 35% of total
revenues. No other single customer represented more than
10% of total revenues. For the fiscal year ended
September 30, 2010, revenues from three customers
accounted for 34%, 13% and 11% of total revenues. No
other single customer represented more than 10% of total
revenues.
Suppliers
The
Company has a number of components and sub-assemblies
produced by outside suppliers, some of which are sourced
from a single supplier, which can magnify the risk of
shortages and decrease the Company’s ability to
negotiate with suppliers on the basis of price. In
particular, the Company depends on its HSS piezo-film
supplier to provide expertise and materials used in the
Company’s proprietary HSS emitters. If supplier
shortages occur, or quality problems arise, then
production schedules could be significantly delayed or
costs significantly increased, which could in turn have a
material adverse effect on the Company’s financial
condition, results of operation and cash flows.
At
September 30, 2011 the Company was committed for
approximately $125,000 for future inventory deliveries
that are generally subject to modification or
rescheduling in the normal course of business.
Segment
and Related Information
The
Company business consists of only one product line.
Accordingly, the Company operates in one reportable
segment.
The
following table summarizes revenues by geographic region.
Revenues are attributed to countries based on customer
location.
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- Definition
The entire disclosure for any concentrations existing at the date of the financial statements that make an entity vulnerable to a reasonably possible, near-term, severe impact. This disclosure informs financial statement users about the general nature of the risk associated with the concentration, and may indicate the percentage of concentration risk as of the balance sheet date. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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13. RELATED PARTY TRANSACTIONS
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12 Months Ended |
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Sep. 30, 2011
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| Related Party Transactions Disclosure [Text Block] |
13.
RELATED PARTY TRANSACTIONS
The
financial statements have been prepared on a stand-alone
basis and results through September 27, 2010 were derived
from the consolidated financial statements and accounting
records of LRAD Corporation.
Allocation
of Expenses
For
the period ended September 30, 2010, the Company’s
operations were fully integrated with LRAD Corporation,
including, but not limited to, general corporate expenses
related to finance, legal, information technology, human
resources, employee benefits and incentives. These
expenses were allocated to the Company on the basis of
direct usage when identifiable, with the remainder
allocated on the basis of revenue or other measure.
During the fiscal years ended September 30, 2010, the
Company was allocated $215,667 of general corporate
expenses incurred by LRAD Corporation included within
selling, general and administrative expenses in the
statements of operations. During the fiscal year ended
September 30, 2010, the Company was allocated $62,798 of
research and development expenses incurred by LRAD
Corporation included within research and development
expenses in the statements of operations. During the
fiscal years ended September 30, 2010, the Company was
allocated $56,462 of manufacturing overhead expenses for
warehousing, materials management and production
management, included within cost of sales. Operating
expenses for the year ended September 30, 2011, reflect
the costs associated with being an independent publicly
traded company.
Other
Related Party Transactions
See Notes 2,
5, 6, 7, 9 and 11 for additional related party
transactions and information.
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- Definition
The entire disclosure for related party transactions, including the nature of the relationship(s), a description of the transactions, the amount of the transactions, the effects of any change in the method of establishing the terms of the transaction from the previous period, stated interest rate, expiration date, terms and manner of settlement per the agreement with the related party, and amounts due to or from related parties. If the entity and one or more other entities are under common ownership or management control and this control affects the operating results or financial position, disclosure includes the nature of the control relationship even if there are no transactions between the entities. Disclosure may also include the aggregate amount of current and deferred tax expense for each statement of earnings presented where the entity is a member of a group that files a consolidated tax return, the amount of any tax related balances due to or from affiliates as of the date of each statement of financial position presented, the principal provisions of the method by which the consolidated amount of current and deferred tax expense is allocated to the members of the group and the nature and effect of any changes in that method. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates. Reference 1: http://www.xbrl.org/2003/role/presentationRef
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