10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549 

FORM 10-Q

☑ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2015

☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF 1934

For the transition period from:

Commission File Number 000-54730

AIRWARE LABS CORP.

(Exact name of registrant as specified in its charter)

Delaware	98-0665018
(State of incorporation)	(I.R.S. Employer Identification No.)

7377 E Doubletree Ranch Rd., Suite 260

Scottsdale, AZ 85258

(Address of principal executive offices)

(480) 463-4246

(Registrant’s telephone number)

Indicate by check mark whether the registrant (1) has 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 the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

☑ Yes     ☐ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ☑ Yes    ☐ No (Not required)

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ☐ Accelerated Filer ☐

Non-Accelerated Filer ☐ Smaller Reporting Company ☑

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). 

 ☐ Yes  ☑ No

As of May 11, 2015, there were 67,107,677 shares of the registrant’s $0.0001 par value common stock issued and outstanding.

AIRWARE LABS CORP.

TABLE OF CONTENTS

		Page
PART I.	FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS	3
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	12
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	14
ITEM 4.	CONTROLS AND PROCEDURES	14
PART II.	OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS	15
ITEM 1A.	RISK FACTORS	15
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	16
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	16
ITEM 4.	MINE SAFETY DISCLOSURES	16
ITEM 5.	OTHER INFORMATION	16
ITEM 6.	EXHIBITS	16

Special Note Regarding Forward-Looking Statements

Information included in this Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”). This information may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Airware Labs Corp. (the “Company”), to be materially different from future results, performance or achievements expressed or implied by any forward-looking statements. Forward-looking statements, which involve assumptions and describe future plans, strategies and expectations of the Company, are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” or “project” or the negative of these words or other variations on these words or comparable terminology. These forward-looking statements are based on assumptions that may be incorrect, and there can be no assurance that these projections included in these forward-looking statements will come to pass. Actual results of the Company could differ materially from those expressed or implied by the forward-looking statements as a result of various factors. Except as required by applicable laws, the Company has no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events occur in the future.

*Please note that throughout this Quarterly Report, and unless otherwise noted, the words "we," "our," "us," the "Company," "AIRW," or “Airware” refers to Airware Labs Corp.

PART I - FINANCIAL INFORMATION

ITEM 1. CONDENSED FINANCIAL STATEMENTS

INDEX	F-1
Unaudited Condensed Consolidated Balance Sheet as of March 31, 2015 and Audited Consolidated Balance Sheet as of September 30, 2014	F-2
Unaudited Condensed Consolidated Statements of Operations for the Three and Six Months Ended March 31, 2015 and 2014	F-3
Unaudited Condensed Consolidated Statements of Cash Flows for the Six Months Ended March 31, 2015 and 2014	F-4
Notes to Condensed Consolidated Financial Statements (Unaudited)	F-5

F-1

AIRWARE LABS CORP. AND SUBSIDIARY
(FORMERLY CROWN DYNAMICS CORP.)
CONDENSED CONSOLIDATED BALANCE SHEETS
		As of			As of
		March 31,			September 30,
		2015			2014
		(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	49,138		$	42,582
Accounts receivable		530			3,137
Inventory		66,633			71,614
Deposits		10,000			10,000
Prepaid expenses and other current assets		47,789			66,205
Total current assets		174,090			193,538
Other Assets:
Property and equipment, net		23,180			20,039
Intangible assets, net		270,646			292,402
Deposits		2,387			2,387
Investment in Breathe Active, LLC		290			290
Total Assets	$	470,593		$	508,656
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Accounts payable	$	1,674,419		$	1,639,529
Accrued interest - related parties		37,255			32,076
Accrued interest		1,444			1,244
Accrued expenses		119,637			72,172
Notes payable to former officer		23,750			—
Convertible notes payable		5,000			27,678
Convertible notes payable to related parties, net of discount		2,144,850			1,324,659
Total current liabilities		4,006,355			3,097,358
Accrued interest to related parties		170			106
Notes payable to former officer		23,750			47,500
Total liabilities		4,030,275			3,144,964
Commitments and Contingencies
Stockholders' Deficit:
Common stock, par value $.0001 per share, 200,000,000 and 200,000,000 shares authorized; 66,133,720 and 62,256,379 shares issued and outstanding at March 31, 2015 and September 30, 2014, respectively		6,613			6,226
Common stock to be issued, 200,000 shares, par value $.0001		20			—
Additional paid-in capital		30,450,327			29,452,379
Accumulated deficit		(34,016,642	)		(32,094,913	)
Total stockholders' deficit		(3,559,682	)		(2,636,308	)
Total Liabilities and Stockholders' Deficit	$	470,593		$	508,656

The accompanying notes are an integral part of these financial statements.

F-2

AIRWARE LABS CORP. AND SUBSIDIARY
(FORMERLY CROWN DYNAMICS CORP.)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
	Three Months Ended						Six Months Ended
	March 31,			March 31,			March 31,			March 31,
	2015			2014			2015			2014
Revenues, net	$	10,487		$	44,633		$	103,771		$	55,340
Cost of products sold		8,043			39,062			64,800			43,607
Gross profit		2,444			5,571			38,971			11,733
Operating expenses
General and administrative		261,159			241,408			472,592			508,193
Sales and marketing		94,755			68,828			155,739			83,522
Total expenses		355,914			310,236			628,331			591,715
Loss from operations		(353,470	)		(304,665	)		(589,360	)		(579,982	)
Other income (expense)
Interest income		—			—			—			289
Forgiveness of debt		—			—			—			20
Induced note conversion expense		—			(2,697	)		—			(2,697	)
Interest expense		(645,124	)		(331,481	)		(1,332,368	)		(518,316	)
Valuation (loss) - common stock warrants		—			—			—			(707,400	)
Loss on warrants exercised		—			(13,914,034	)		—			(13,914,034	)
Total other income (expense)		(645,124	)		(14,248,212	)		(1,332,368	)		(15,142,138	)
Loss before income taxes		(998,594	)		(14,552,877	)		(1,921,728	)		(15,722,120	)
Income tax expense		—			—			—			—
Net loss	$	(998,594	)	$	(14,552,877	)	$	(1,921,728	)	$	(15,722,120	)
Basic and diluted net loss per common share	$	(0.02	)	$	(0.36	)	$	(0.03	)	$	(0.40	)
Basic and diluted weighted average common
shares outstanding		65,258,629			40,953,071			64,322,891			39,281,951

The accompanying notes are an integral part of these financial statements.

F-3

AIRWARE LABS CORP. AND SUBSIDIARY
(FORMERLY CROWN DYNAMICS CORP.)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
	Six Months Ended
	March 31,			March 31,
	2015			2014
Operating Activities:
Net loss	$	(1,921,728	)	$	(15,722,120	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		33,615			30,538
Common stock issued for services		74,000			375,722
Options and warrants issued for services		36,097			30,958
Interest expense from amortization of debt discount		820,190			387,773
Induced conversion expense		—			2,697
Stock issued for interest expense		506,258			107,982
Forgiveness of debt		—			(20	)
Loss on warrants exercised		—			13,914,034
Valuation (gain)/expense - common stock warrants		—			707,400
Changes in operating assets and liabilities:
Accounts receivable		2,607			7,343
Inventory		4,981			3,452
Prepaid expenses		18,416			(3,321	)
Deposits		—			(44,307	)
Accounts payable		34,890			(229,691	)
Accrued interest		5,443			8,872
Customer deposit		—			80,437
Accrued expenses		47,465			27,641
Net Cash Used in Operating Activities		(337,766	)		(314,610	)
Investing Activities:
Purchases of property and equipment		(15,000	)		—
Net Cash Used in Investing Activities		(15,000	)		—
Financing Activities:
Stock issued for cash		32,000			—
Proceeds from convertible notes payable		350,000			1,002,000
Repayment of notes payable		(22,678	)		(22,735	)
Options re-purchased		—			(2,500	)
Stock re-purchased		—			(601,762	)
Net Cash Provided by Financing Activities		359,322			375,003
Net Increase in Cash		6,556			60,393
Cash - Beginning of Period		42,582			19,942
Cash - End of Period	$	49,138		$	80,335
Supplemental disclosure of cash flow information:
Interest paid in cash	$	84		$	1,365
Non-cash investing and financing activities:
Stock issued for convertible notes		—			5,000
Debt discount on note payable, related party		350,000			—

The accompanying notes are an integral part of these financial statements.

F-4

AIRWARE LABS CORP. AND SUBSIDIARY

(FORMERLY CROWN DYNAMICS CORP.)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. Summary of Significant Accounting Policies and Use of Estimates

Basis of Presentation and Organization

Airware Labs Corp. (“Airware Labs” or the “Company”), formerly Crown Dynamics Corp., is a Delaware corporation. The Company was incorporated under the laws of the State of Delaware on June 15, 2010. On October 26, 2012, the Articles of Incorporation were amended to reflect a name change to Airware Labs Corp. On November 13, 2012, the Board approved a change in fiscal year end from December 31 to September 30.

On March 20, 2012, through an equity exchange agreement, the Company acquired all of the issued and outstanding stock of Airware Holdings, Inc., a Nevada corporation (“Airware”), in exchange for shares of the Company’s newly-issued common stock. Airware Holdings, Inc. was formed in February 2010 and is a non-prescription medical products company. The principal business purpose of the Company is to develop, manufacture and distribute breathing solutions that address major respiratory challenges impacting human health.

Accounting Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could materially differ from those estimates. Significant estimates of the Company include accounting for depreciation and amortization, recoverability of intangible assets, deferred income taxes, accruals and contingencies, the imputed interest rate of the note payable to related party and the fair value of common stock, and the estimated fair value of stock options and warrants.

Unaudited Interim Financial Statements

The interim consolidated financial statements of the Company as of March 31, 2015 and 2014, and for the periods then ended, are unaudited. However, in the opinion of management, the interim financial statements include all adjustments, consisting of only normal recurring adjustments, necessary to present fairly the Company’s financial position as of March 31, 2015 and the results of its operations and its cash flows for the periods ended March 31, 2015 and 2014. These results are not necessarily indicative of the results expected for the fiscal year ended September 30, 2015. The accompanying financial statements and notes thereto do not reflect all disclosures required under accounting principles generally accepted in the United States (U.S. “GAAP”).

Net Loss per Share

Basic earnings per share does not include dilution and is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of an entity. Dilutive securities are not included in the weighted average number of shares when inclusion would be anti-dilutive. Due to the net losses for the periods ended March 31, 2015 and 2014, basic and diluted loss per common share were the same, as the effect of potentially dilutive securities would have been anti-dilutive.

As of March 31, 2015, there were total shares of 35,148,622 issuable upon conversion of notes payable, exercise of warrants and options that were not included in the earnings per share calculation as they were anti-dilutive.

F-5

2. Going Concern

The Company has incurred losses since inception and requires additional funds for future operating activities. The Company’s selling activity has not yet reached a level of revenue sufficient to fund its operating activities. These factors create an uncertainty as to how the Company will fund its operations and maintain sufficient cash flow to operate as a going concern.

In response to these financial difficulties, management is continuing to pursue financing from various sources, including private placements from investors and institutions. Management believes these efforts will contribute toward funding the Company’s activities until sufficient revenue can be earned from future operations. In addition, the Company is seeking additional distribution partners in both domestic and foreign markets. Management believes these combined efforts, if successful, will be sufficient to meet its working capital needs and its currently anticipated expenditure levels for the next year.

The Company’s ability to meet its cash requirements in the next year is dependent upon obtaining this financing and achieving improved sales levels. If this is not achieved, the Company may be unable to obtain sufficient cash flow to fund its operations and obligations, and therefore, may be unable to continue as a going concern. The accompanying financial statements have been prepared on a going concern basis, and accordingly, do not include any adjustments relating to the recoverability and classification of recorded asset amounts; nor do they include adjustments to the amounts and classification of liabilities that might be necessary should the Company be unable to continue operations or be required to sell its assets.

3. Convertible Notes Payable

Convertible notes payable consist of the following:

8.00% notes payable, due August 22, 2012, convertible to common stock at $.50 per share, interest payments are due at maturity, unsecured $ 5,000

4. Notes Payable to Former Officer

Notes payable to former officer consists of the following:

0.27% note payable, due August 1, 2016, interest due at maturity, unsecured	$	47,500
Less current portion		(23,750	)
	$	23,750

On December 5, 2013, the Company entered into a revised promissory note with former officer David Dolezal calling for four equal payments to begin on November 1, 2015 and ending August 1, 2016. Interest was reduced from 2.0% to 0.27%.

F-6

5. Convertible Notes Payable to Related Parties

Convertible notes payable to related parties consist of the following:

12% note payable to significant shareholder, net of unamortized debt discount of $933,150, due September 30, 2015, convertible to common stock at $.10 per share, interest payments are due monthly.  Debt is secured by substantially all of the assets of the Company	$	2,124,850
8.00 % note payable to advisory board member, due August 26, 2012, convertible to common stock at $.50 per share, interest payments are due at maturity, unsecured		20,000
	$	2,144,850

On August 21, 2013, the Company entered into a ninth allonge to a convertible secured bridge note with Stockbridge Enterprises, L.P. (“Stockbridge”) which provided for up to $3,206,000 principal and a maturity date of September 30, 2015. As of March 31, 2015, the Company has borrowed $3,058,000 against this line of credit.

6. Related Party Transactions

As detailed in Notes Payable to Former Officer Footnote 4, the Company has a note payable to its former President and Executive Chairman, David Dolezal.

As discussed in Convertible Notes Payable to Related Parties Footnote 5, the Company has a convertible secured bridge note with Stockbridge. During the six months ended March 31, 2015, the Company borrowed $350,000 against this note.

7. Commitments and Contingencies

The Company has agreed to indemnify its officers and directors for certain events or occurrences that may arise as a result of the officers or director serving in such capacity. The term of the indemnification period is for the officer’s or director’s lifetime. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited.

The Company enters into indemnification provisions under its agreements with other companies in its ordinary course of business, typically with business partners, customers, landlords, lenders and lessors. Under these provisions, the Company generally indemnifies and holds harmless the indemnified party for losses suffered or incurred by the indemnified party as a result of the Company’s activities or, in some cases, as a result of the indemnified party’s activities under the agreement. The maximum potential amount of future payments the Company could be required to make under these indemnification provisions is unlimited.

The Company has not incurred material costs to defend lawsuits or settle claims related to these indemnification agreements. As a result, the Company believes the estimated fair value of these agreements is minimal. Accordingly, the Company has no liabilities recorded for these agreements as of March 31, 2015.

F-7

On December 22, 2011, the Company entered into a distribution agreement that provides for the issuance of common stock warrants, with an expiration date of 3 years, for the purchase of the Company’s common stock in an amount equal to 15% of the total products purchased by the distributor from the Company at the invoice price against the previous year’s purchases of paid invoices. The warrant price will be equal to the closing price of Airware Labs Corp.’s stock price at the anniversary date of the agreement.

The Company is in default on a convertible note payable totaling $5,000 and a convertible note payable to a related party totaling $20,000. The Company has attempted communication with the note holders to request extensions or conversion.

On April 8, 2013, the Company entered into an exclusive agency agreement with National United Trading and Investment FZ LLC. This is a performance-based agreement to develop new markets in the United Arab Emirates and other Middle Eastern markets of relevance. There has been no expense recognized through March 31, 2015 as a result of this agreement.

On July 16, 2013, the Company entered into a Severance Agreement with Jeffrey Rassas, the Company’s Chief Executive Officer pursuant to which Mr. Rassas will be entitled to the following severance benefits: (i) the Company shall pay to Mr. Rassas his base salary for a period of 12 months following termination without cause; (ii) Mr. Rassas shall be paid any earned and unpaid bonus due; and, (iii) and all unvested stock-based compensation held by Mr. Rassas shall vest as of the date of termination.

On January 6, 2014, the Company entered into a license agreement with Eastar Industries, Co., pursuant to which the Company granted Eastar an exclusive license to sell its products in China for a term of five years in exchange for a royalty equal to 18% of gross profits generated by the sales of products in China. Additionally, the Company and Eastar agree to establish a joint venture company in Hong Kong of Shanghai which will be assigned Eastar’s rights under the agreement and of which 18% of the joint venture will be owned by the Company.

On April 23, 2014, the Company entered into a product development agreement with Dan Pool of Designer Products. This agreement was modified on June 16, 2014. As compensation, the Company will pay $5,000 monthly, as well as issue up to two million stock options as the Company’s stock price hits certain benchmarks. Additionally, the Company will pay a monthly royalty of 5% of net sales of any products created by Dan Pool as inventor. There has been no expense recognized through March 31, 2015 as a result of the royalty portion of this agreement.

On August 28, 2014, the Company was named as a Defendant in a lawsuit by a former officer alleging wrongful termination. On March 31, 2015, the Company entered into a settlement agreement with the former officer wherein the Company shall pay $30,000 over the course of six months, starting on April 7, 2015. This amount is recorded on the balance sheet as part of accrued expenses.

On October 13, 2014, the Company entered into a consulting agreement with Mr. Adam Herschman. Mr. Herschman has been engaged to provide marketing, advertising, and social media-related services. He has been compensated by the issuance of 250,000 shares of stock.

The Company sells the majority of its products through major distributors. The Company warrants to the distributors that the product will be free from defects in material and workmanship. The Company has determined its product warranty to be immaterial at March 31, 2015. The likelihood that the Company’s estimate of the accrued product warranty claims will materially change in the near term is considered remote.

F-8

8. Stockholders’ Deficit

Common Stock

During the six months ended March 31, 2015, the Company issued 3,473,040 shares of stock in payment of interest on the Stockbridge convertible note.

On November 20, 2014, the Company issued 322,250 shares of stock for the payment of consulting services. 72,250 shares were valued using the average closing price ($0.166) for the previous quarter. 250,000 shares were valued at the closing stock price on the date of agreement ($0.20).

On January 28, 2015, the Company issued 82,051 shares of stock for the payment of consulting services. They were valued using the average closing price ($0.146) for the previous quarter.

On March 24, 2015, the Company received $40,000 towards the purchase of 200,000 shares of stock. This was part of a subscription agreement totaling $50,000. The shares were not issued as of the end of the quarter.

Warrants

The balance of warrants outstanding for purchase of the Company’s common stock as of March 31, 2015 is as follows:

	Common Shares Issuable Upon Exercise of Warrants	Exercise Price of Warrants	Date Issued	Expiration Date
Issued for financing expense	20,000	$0.25	3/08/2012	3/07/2017
Issued under a consultant settlement agreement	40,000	$0.50	4/30/2012	4/29/2015
Issued per distribution agreement	125,464	$0.75	12/22/2012	12/21/2015
Issued under a private placement memorandum	140,000	$0.40	6/25/2013	6/25/2015
Issued under a private placement memorandum	120,000	$0.40	6/26/2013	6/26/2015
Issued per distribution agreement	172,028	$0.14	12/22/2013	12/22/2016
Issued under a private placement memorandum	25,000	$0.40	7/2/2014	6/1/2016
Issued under a private placement memorandum	50,000	$0.60	7/2/2014	6/1/2016
Issued under a private placement memorandum	25,000	$0.80	7/2/2014	6/1/2016
Issued per distribution agreement	145,510	$0.13	12/22/2014	12/22/2017
Balance of Warrants at March 31, 2015	863,002

F-9

Stock Options

The Company had the following options outstanding at March 31, 2015:

	Common Shares Issuable Upon Exercise of Options	Exercise Price of Options	Date Issued	Expiration Date
Options granted to former officer & two former senior advisory board members	775,000	$0.50	4/20/2011	4/19/2021
Options granted to former employee and three consultants	500,000	$0.50	7/19/2011	7/18/2016
Options granted under a consultant agreement settlement	52,844	$0.25	4/30/2012	4/29/2022
Options granted to Board member	150,000	$0.30	1/25/2013	1/24/2023
Options granted to employee and two consultants	1,550,000	$0.30	1/25/2013	1/24/2023
Options granted to medical advisory board member	250,000	$0.26	5/20/2013	5/19/2016
Options granted to consultant	250.000	$0.28	9/5/2013	9/4/2016
Options issued for investment in Breathe Active, LLC	500,000	$0.25	9/28/2013	12/31/2014
Options issued for investment in Breathe Active, LLC	500,000	$0.50	9/28/2013	12/31/2014
Options granted to Board member	150,000	$0.11	10/4/2013	10/3/2023
Options granted to Officers	433,333	$0.11	10/4/2013	10/3/2023
Options granted to Board member	150,000	$0.25	9/5/2014	9/4/2024
Options granted to Officers and consultants	633,333	$0.25	9/5/2014	9/4/2024
Balance of Options at March 31, 2015	5,894,510

During the six months ended March 31, 2015, $32,104 was expensed for the pro-rata vesting of stock-based compensation. As of March 31, 2015, the balance of unrecognized compensation cost related to non-vested stock-based compensation to be expensed in future periods was $69,170.

F-10

9. Significant Customer

For the six months ended March 31, 2015, 83% of the Company’s revenues were from one customer. Accounts receivable for this customer as of March 31, 2015 totaled $0.

10. Subsequent Events

On April 28, 2015, the Company issued 629,987 shares of restricted common stock as payment for interest on loans to the Company for March 2015, at a cost basis of $.05 per share.

On April 28, 2015, the Company issued 93,970 shares of restricted common stock to one holder as compensation for services rendered to the Company from January 1 to March 31, 2015, at a cost basis of $0.128 per share.

On April 28, 2015, the Company issued 250,000 shares of restricted common stock per a subscription agreement of $50,000.

On April 2, 2015, the Company and Gerdz Investments Limited Partnership, RLLP (“Gerdz”) entered into a Cancellation Agreement with regards to 200,000 options originally issued on July 19, 2011, exercisable at $0.50.

On April 2, 2015, the Company issued 200,000 options to Gerdz, exercisable at $0.10 per share, which vest immediately and shall expire on April 2, 2025.

End of Notes to Financial Statements

F-11

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following Management's Discussion and Analysis should be read in conjunction with Airware Labs Corp. financial statements and the related notes thereto. The Management's Discussion and Analysis contains forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations and intentions. Any statements that are not statements of historical fact are forward-looking statements. When used, the words “believe,” “plan,” “intend,” “anticipate,” “target,” “estimate,” “expect,” and the like, and/or future-tense or conditional constructions (“will,” “may,” “could,” “should,” etc.), or similar expressions, identify certain of these forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements in this Report on Form 10-Q. The Company’s actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of several factors. The Company does not undertake any obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this Report on Form 10-Q.

The following discussion should be read in conjunction with our unaudited consolidated financial statements and related notes and other financial data included elsewhere in this report. See also the notes to our consolidated financial statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the year ended September 30, 2014, filed with the SEC on January 9, 2015.

Results of Operations

Total revenue for the three months ended March 31, 2015 was $10,487, as compared to $44,633 for the three months ended March 31, 2014. Operating expenses in the quarter ended March 31, 2015 amounted to $355,914 as compared to $310,236 for the quarter ended March 31, 2014. The increase in expenses is primarily result of an increase in marketing consultant fees.

The net loss for the quarter ended March 31, 2015 was $998,594 as compared to $14,552,877 for the quarter ended March 31, 2014. This is due to a significant increase in interest expense offset by a decrease in the loss on warrants exercised.

Liquidity and Capital Resources

Our balance sheet as at March 31, 2015 reflects $49,138 in cash and cash equivalents as compared to $42,582 as at September 30, 2014. We intend to raise the balance of our cash requirements for the next 12 months from private placements or a registered public offering (either self-underwritten or through a broker-dealer). Additionally, we have the Stockbridge secured bridge note to draw from, which as of May 11, 2015 has an available balance of $98,000. If we are unsuccessful in raising enough money through future capital-raising efforts, we may review other financing possibilities such as bank loans. At this time, our Company does not have a commitment from any broker/dealer to provide additional financing. There is no assurance that any additional financing will be available or if available, on terms that will be acceptable.

Cash Flow from Operating Activities

During the six months ended March 31, 2015, the Company’s operating activities used $337,766 in cash as compared to $314,610 used by operating activities for the six months ended March 31, 2014. The increase in cash used for operating activities is primarily due to decreased revenues and accounts receivable collections.

Cash Flow from Investing Activities

During the six-month periods ended March 31, 2015 and 2014, the Company used $15,000 and $0, respectively, in cash for investing activities. The increase in cash used for investing activities is primarily due to there not having been any purchases of fixed assets in the six months ended March 31, 2015.

Cash Flow from Financing Activities

During the six months ended March 31, 2015, the Company received $359,322 in cash from financing activities. This consisted of $327,322 in net financing from notes payable and $32,000 in stock to be issued for cash. This compares with $375,003 provided during the six months ended March 31, 2014 which consisted of $979,265 in net financing from notes payable less $604,262 in payments for the re-purchase of common stock and options.

12

Going Concern

We have not attained profitable operations and are dependent upon obtaining financing to pursue any extensive acquisitions and activities. For these reasons, our auditors stated in their report on our audited financial statements that they have substantial doubt that we will be able to continue as a going concern without further financing.

Future Financings

We will continue to rely on equity sales of our common shares in order to continue to fund our business operations. Issuances of additional shares will result in dilution to existing stockholders. There is no assurance that we will achieve any additional sales of the equity securities or arrange for debt or other financing to fund our operations and other activities.

Off-Balance Sheet Arrangements

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.

Critical Accounting Policies

Our financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

We regularly evaluate the accounting policies and estimates that we use to prepare our financial statements. A complete summary of these policies is included in the notes to our financial statements. In general, management's estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.

Recently Issued Accounting Pronouncements

The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

13

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by our company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our management carried out an evaluation under the supervision and with the participation of our Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 ("Exchange Act"). Based upon that evaluation, our Principal Executive Officer and Principal Financial Officer have concluded that our disclosure controls and procedures were effective as of March 31, 2015.

Changes in Internal Control over Financial Reporting

Our management has also evaluated our internal control over financial reporting, and there have been no significant changes in our internal controls or in other factors that could significantly affect those controls subsequent to the date of our last evaluation.

The Company is not required by current SEC rules to include, and does not include, an auditor's attestation report. The Company's registered public accounting firm has not attested to Management's reports on the Company's internal control over financial reporting.

14

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, the Company may become subject to various legal proceedings that are incidental to the ordinary conduct of its business. Although the Company cannot accurately predict the amount of any liability that may ultimately arise with respect to any of these matters, it makes provision for potential liabilities when it deems them probable and reasonably estimable. These provisions are based on current information and legal advice and may be adjusted from time to time according to developments.

On August 28, 2014, the Company was named as a Defendant in a lawsuit in Maricopa County, Arizona by a former officer alleging wrongful termination. On March 31, 2015, the Company and the former officer entered into a Settlement Agreement wherein: (i) the Corporation shall pay $30,000.00 to the former officer, commencing with an initial payment of $5,000.00 on April 7, 2015 and monthly payments of $5,000.00 for the five successive months thereafter, commencing on May 7, 2015; (ii) both the Corporation and the former officer shall cause their attorneys to execute a stipulation for dismissal with prejudice and a proposed form of order, which shall be filed with the court after the Corporation has completed its payment obligations; and, (iii) the Corporation and Defendant shall enter into a Share Re-Purchase Agreement through which the Corporation or its assignee shall purchase from the former officer 176,078 shares of common stock.

Other than the foregoing and those certain events as reported in our Annual Report on Form 10-K for the year ended September 30, 2014, filed with the Commission on January 9, 2015, we know of no material, existing or pending legal proceedings against our Company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any director, officer or any affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

ITEM 1A. RISK FACTORS

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

15

  ITEM 2.   UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

1. Quarterly Issuances:

On January 28, 2015 the Company issued 599,987 restricted shares of common stock as payment for interest on loans to the Company for December 2014, at a cost basis of $0.05 per share.

On January 28, 2015 the Company issued 591,600 restricted shares of common stock as payment for interest on loans to the Company for January 2015, at a cost basis of $0.05 per share.

On January 28, 2015 the Company issued 82,051 restricted shares of common stock as payment for services rendered to the Corporation form October 31, 2014 to December 31, 2014, at a cost basis of $0.15 per share.

On March 17, 2015, the Company issued 591,600 restricted shares of common stock as payment for interest on loans to the Company for February 2015, at a cost basis of $0.05 per share

2. Subsequent Issuances:

On April 28, 2015, the Company issued 629,987 restricted shares of common stock as payment for interest on loans to the Company for March 2015, at a cost basis of $0.05 per share.

On April 28, 2015, the Company issued 250,000 restricted shares of common stock to one shareholder at a cost basis of $50,000.00 pursuant to a subscription agreement dated April 10, 2015.

On April 28, 2015, the Company issued 93,970 restricted shares of common stock as compensation to a consultant for services rendered to the Company between January and March 31, 2015.

  ITEM 3.   DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

N/A.

ITEM 5. OTHER INFORMATION

Subsequent Events:

On April 2, 2015, the Company and Gerdz Investments Limited Partnership, RLLP (“Gerdz”) entered into a Cancellation Agreement with regards to 200,000 options originally issued on July 19, 2011, exercisable at $0.50. On April 2, 2015, the Company issued 200,000 options to Gerdz, exercisable at $0.10 per share, which vest immediately and shall expire on April 2, 2025.

ITEM 6. EXHIBITS

Exhibit
Number	Description of Exhibit
3.01a	Articles of Incorporation	Filed with the SEC on May 12, 2011 as part of our Registration Statement on Form S-1/A.
3.01b	Certificate of Amendment to Articles of Incorporation dated October 26, 2012	Filed with the SEC on November 13, 2012 as part of our Current Report on Form 8-K
3.02	Bylaws	Filed with the SEC on May 12, 2011 as part of our Registration Statement on Form S-1/A.
10.01	Patent Sale Agreement	Filed with the SEC on May 12, 2011 as part of our Registration Statement on Form S-1/A.
10.02	License Agreement between Crown Dynamics Corp. and Zorah LLC	Filed with the SEC on January 20, 2012 as part of our Current Report on Form 8-K.
10.03	Share Exchange Agreement between Crown Dynamics Corp. and Airware Dated March 20, 2012	Filed with the SEC on March 26, 2012 as part of our current report on Form 8-K.
10.04	Severance Agreement between Airware Labs Corp and Jeffrey Rassas, effective July 16, 2013	Filed with the SEC on July 19, 2013 as part of our Current Report on Form 8-K.
10.05	Share Re-Purchase Agreement between Airware Labs Corp. and DCI, LLC, Technoflex, LLC, and Viadox, LLC, dated December 5, 2013.	Filed with the SEC on December 24, 2013 as part of our Current Report on Form 8-K.
31.01	Certification of Principal Executive Officer Pursuant to Rule 13a-14	Filed herewith.
31.02	Certification of Principal Financial Officer Pursuant to Rule 13a-14	Filed herewith.
32.01	CEO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act	Filed herewith.
32.02	CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act	Filed herewith.
99.1	Crown Dynamics Corp. Subscription Agreement	Filed with the SEC on May 12, 2011 as part of our Registration Statement on Form S-1/A.
101.INS*	XBRL Instance Document	Filed herewith.
101.SCH*	XBRL Taxonomy Extension Schema Document	Filed herewith.
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document	Filed herewith.
101.LAB*	XBRL Taxonomy Extension Labels Linkbase Document	Filed herewith.
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document	Filed herewith.
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document	Filed herewith.

*Pursuant to Regulation S-T, this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.

16

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	AIRWARE LABS CORP.
Date: May 19, 2015	By:	/s/  Jeffrey Rassas
	Name:                    Jeffrey Rassas
	Title:                      Chief Executive Officer and Director
Date: May 19, 2015	By :	/s/  Jessica Smith
	Name :                   Jessica Smith
	Title :                     Chief Accounting and Financial Officer

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Date: May 19, 2015	By:	/s/  Jeffrey Rassas
	Name:                    Jeffrey Rassas
	Title:                      Chief Executive Officer and Director
Date: May 19, 2015	By :	/s/  Jessica Smith
	Name :                   Jessica Smith
	Title :                     Chief Accounting and Financial Officer

Date: May 19, 2015	By :	/s/  Ronald L. Miller
	Name :                   Ronald L. Miller, Jr.
	Title :                     Director

17

EX-31.01

EXHIBIT 31.01

CERTIFICATION OF

PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO SECTION 302(a) OF THE SARBANES-OXLEY ACT OF 2002

I, Jeffrey Rassas, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of the Registrant for the period ended March 31, 2015;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4. As the Registrant’s certifying officer, I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. As the Registrant’s certifying officer, I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant auditors and the audit committee of the Registrant’s Board of Directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

	Airware Labs Corp.
Date: May 19, 2015
	By: /s/ Jeffrey Rassas
	Name:  Jeffrey Rassas
	Title:    Chief Executive Officer

EX-31.02

EXHIBIT 31.02

CERTIFICATION OF

PRINCIPAL ACCOUNTING OFFICER

PURSUANT TO SECTION 302(a) OF THE SARBANES-OXLEY ACT OF 2002

I, Jessica Smith, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of the Registrant for the period ended March 31, 2015;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4. As the Registrant’s certifying officer, I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. As the Registrant’s certifying officer, I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant auditors and the audit committee of the Registrant’s Board of Directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

  b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

	Airware Labs Corp.
Date: May 19, 2015
	By: /s/ Jessica Smith
	Name: Jessica Smith
	Title: Chief Accounting and Financial Officer

EX-32.01

EXHIBIT 32.01

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Jeffrey Rassas, the Chief Executive Officer of Airware Labs Corp., certify, under the standards set forth and solely for the purposes of 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge, the Quarterly Report on Form 10-Q of the Registrant for the period ended March 31, 2015, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in that Form 10-Q fairly presents, in all material respects, the financial condition and  results of operations of the Registrant.

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

	Airware Labs Corp.
Date: May 19, 2015
	By: /s/ Jeffrey Rassas
	Name:  Jeffrey Rassas
	Title:    Chief Executive Officer

A signed original of this written statement required by Section 906 has been provided to the Registrant and will be retained by the Registrant and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.02

EXHIBIT 32.02

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Jessica Smith, the Chief Accounting and Financial Officer of Airware Labs Corp., certify, under the standards set forth and solely for the purposes of 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge, the Quarterly Report on Form 10-Q of the Registrant for the period ended March 31, 2015, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in that Form 10-Q fairly presents, in all material respects, the financial condition and  results of operations of the Registrant.

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

	Airware Labs Corp.
Date: May 19, 2015
	By: /s/ Jessica Smith
	Name: Jessica Smith
	Title: Chief Accounting and Financial Officer

A signed original of this written statement required by Section 906 has been provided to the Registrant and will be retained by the Registrant and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Significant Customer (Details Narrative) (USD $)	6 Months Ended
	Mar. 31, 2015
Significant Customer Details Narrative
Percentage of Company's revenues from one customer	83.00%
Accounts receivable from one customer	$ 0

XML

Convertible Notes Payable to Related Parties - Convertible notes payable to related parties (Details) (USD $)	6 Months Ended
	Mar. 31, 2015
Convertible notes payable to related parties A
Note payable, amount	$ 2,124,850
Note payable, interest rate	12.00%
Unamortized debt discount	933,150
Note payable, due date	Sep. 30, 2015
Note payable, conversion to common stock price per share	$ 0.10
Convertible notes payable to related parties B
Note payable, amount	20,000
Note payable, interest rate	8.00%
Note payable, due date	Aug. 26, 2012
Note payable, conversion to common stock price per share	$ 0.50
Convertible notes payable to related parties Total
Note payable, amount	$ 2,144,850

XML

Notes Payable to Former Officer

6 Months Ended

Mar. 31, 2015

Debt Disclosure [Abstract]

Notes Payable to Former Officer

4. Notes Payable to Former Officer

Notes payable to former officer consists of the following:

0.27% note payable, due August 1, 2016, interest due at maturity, unsecured	$	47,500
Less current portion		(23,750	)
	$	23,750

On December 5, 2013, the Company entered into a revised promissory note with former officer David Dolezal calling for four equal payments to begin on November 1, 2015 and ending August 1, 2016. Interest was reduced from 2.0% to 0.27%.

XML

Stockholders' Deficit - Balance of warrants outstanding for purchase of Company's common stock (Details) (USD $)	6 Months Ended
	Mar. 31, 2015
Issued for financing expense
Common shares issued upon exercise of warrants	20,000
Exercise price of warrants	$ 0.25
Date issued	Mar. 08, 2012
Expiration date	Mar. 07, 2017
Issued under a consultant settlement agreement
Common shares issued upon exercise of warrants	40,000
Exercise price of warrants	$ 0.50
Date issued	Apr. 30, 2012
Expiration date	Apr. 29, 2015
Issued per distribution agreement (a)
Common shares issued upon exercise of warrants	125,464
Exercise price of warrants	$ 0.75
Date issued	Dec. 22, 2012
Expiration date	Dec. 21, 2015
Issued under a private placement memorandum (a)
Common shares issued upon exercise of warrants	140,000
Exercise price of warrants	$ 0.40
Date issued	Jun. 25, 2013
Expiration date	Jun. 25, 2015
Issued under a private placement memorandum (b)
Common shares issued upon exercise of warrants	120,000
Exercise price of warrants	$ 0.40
Date issued	Jun. 26, 2013
Expiration date	Jun. 26, 2015
Issued per distribution agreement (b)
Common shares issued upon exercise of warrants	172,028
Exercise price of warrants	$ 0.14
Date issued	Dec. 22, 2013
Expiration date	Dec. 22, 2016
Issued under a private placement memorandum (c)
Common shares issued upon exercise of warrants	25,000
Exercise price of warrants	$ 0.40
Date issued	Jul. 02, 2014
Expiration date	Jun. 01, 2016
Issued under a private placement memorandum (d)
Common shares issued upon exercise of warrants	50,000
Exercise price of warrants	$ 0.60
Date issued	Jul. 02, 2014
Expiration date	Jun. 01, 2016
Issued under a private placement memorandum (e)
Common shares issued upon exercise of warrants	25,000
Exercise price of warrants	$ 0.80
Date issued	Jul. 02, 2014
Expiration date	Jun. 01, 2016
Issued per distribution agreement (c)
Common shares issued upon exercise of warrants	145,510
Exercise price of warrants	$ 0.13
Date issued	Dec. 22, 2014
Expiration date	Dec. 22, 2017
Balance of Warrants
Common shares issued upon exercise of warrants	863,002

XML

Commitments and Contingencies (Details Narrative) (USD $)	0 Months Ended		6 Months Ended	11 Months Ended	15 Months Ended
	Oct. 13, 2014	Dec. 23, 2011	Oct. 07, 2015	Mar. 31, 2015	Mar. 31, 2015	Aug. 26, 2012	Aug. 22, 2012
Distribution Agreement
Expiration of common stock warrants made available for issuance by agreement		3 years
Amount of common stock available for purchase, percentage of total products purchased by distributor at invoice price against previous year's purchase of paid invoices		15.00%
Defaults on Convertible Notes Payable
Default on convertible note payable							$ 5,000
Default on convertible note payable to a related party						20,000
License Agreement with Eastar Industries, Co.
Sales license term					5 years
Royalty to Company, percentage of gross profits generated by sales of products in China					18.00%
Percentage of joint venture company established with Eastar owned by Company					18.00%
Product Development Agreement with Dan Pool or Designer Products
Monthly development fee				5,000
Monthly royalty paid, percentage of net sales				5.00%
Lawsuits
Settlement agreement with former officer			$ 30,000
Consulting Agreement
Shares issued as compensation for services	250,000

XML

Stockholders' Deficit - Options outstanding (Details) (USD $)	6 Months Ended
	Mar. 31, 2015
Options granted to former officer & two former senior advisory board members
Common shares issuable upon exercise of options	775,000
Exercise price of options	$ 0.50
Date issued	Apr. 20, 2011
Expiration date	Apr. 19, 2021
Options granted to former employee and three consultants
Common shares issuable upon exercise of options	500,000
Exercise price of options	$ 0.50
Date issued	Jul. 19, 2011
Expiration date	Jul. 18, 2016
Options granted under consultant settlement agreement
Common shares issuable upon exercise of options	52,844
Exercise price of options	$ 0.25
Date issued	Apr. 30, 2012
Expiration date	Apr. 29, 2022
Options granted to Board member (a)
Common shares issuable upon exercise of options	150,000
Exercise price of options	$ 0.30
Date issued	Jan. 25, 2013
Expiration date	Jan. 24, 2023
Options granted to employee and two consultants
Common shares issuable upon exercise of options	1,550,000
Exercise price of options	$ 0.30
Date issued	Jan. 25, 2013
Expiration date	Jan. 24, 2023
Options granted to medical advisory board member
Common shares issuable upon exercise of options	250,000
Exercise price of options	$ 0.26
Date issued	May 20, 2013
Expiration date	May 19, 2016
Options granted to consultant
Common shares issuable upon exercise of options	250,000
Exercise price of options	$ 0.28
Date issued	Sep. 05, 2013
Expiration date	Sep. 04, 2016
Options issued for investment in Breathe Active, LLC (a)
Common shares issuable upon exercise of options	500,000
Exercise price of options	$ 0.25
Date issued	Sep. 28, 2013
Expiration date	Dec. 31, 2014
Options issued for investment in Breathe Active, LLC (b)
Common shares issuable upon exercise of options	500,000
Exercise price of options	$ 0.50
Date issued	Sep. 28, 2013
Expiration date	Dec. 31, 2014
Options granted to Board member (b)
Common shares issuable upon exercise of options	150,000
Exercise price of options	$ 0.11
Date issued	Oct. 04, 2013
Expiration date	Oct. 03, 2023
Options granted to Officers
Common shares issuable upon exercise of options	433,333
Exercise price of options	$ 0.11
Date issued	Oct. 04, 2013
Expiration date	Oct. 03, 2023
Options granted to Board member (c)
Common shares issuable upon exercise of options	150,000
Exercise price of options	$ 0.25
Date issued	Sep. 05, 2014
Expiration date	Sep. 04, 2024
Options granted to Officers and consultants
Common shares issuable upon exercise of options	633,333
Exercise price of options	$ 0.25
Date issued	Sep. 05, 2014
Expiration date	Sep. 04, 2024
Balance of Options
Common shares issuable upon exercise of options	5,894,510

XML

Stockholders' Deficit - Common Stock (Details Narrative) (USD $)	0 Months Ended	6 Months Ended
	Mar. 24, 2015	Mar. 31, 2015	Jan. 28, 2015	Nov. 20, 2014
Equity [Abstract]
Shares issued in payment of interest on Stockbridge convertible note\		3,473,040
Shares issued for payment of consulting services			82,051	322,250
Consulting services shares valued under average closing price of previous quarter				72,250
Previous quarter average closing price			$ 0.146	$ 0.166
Consulting services shares valued at closing price on date of agreement				250,000
Sale of stock, funds received	$ 40,000
Sale of stock, shares	200,000
Sale of stock, subscription agreement total	$ 50,000

XML

Convertible Notes Payable

6 Months Ended

Mar. 31, 2015

Debt Disclosure [Abstract]

Convertible Notes Payable

3. Convertible Notes Payable

Convertible notes payable consist of the following:

8.00% notes payable, due August 22, 2012, convertible to common stock at $.50 per share, interest payments are due at maturity, unsecured $ 5,000

XML

Stockholders' Deficit - Stock Options (Details Narrative) (USD $)	6 Months Ended
	Mar. 31, 2015
Stockholders Deficit - Stock Options Details Narrative
Expenses for pro-rata vesting of stock-based compensation	$ 32,104
Balance of unrecognized compensation cost related to non-vested stock-based compensation to be expensed in future periods	$ 69,170

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (USD $)	Mar. 31, 2015	Sep. 30, 2014
Current Assets:
Cash and cash equivalents	$ 49,138	$ 42,582
Accounts receivable	530	3,137
Inventory	66,633	71,614
Deposits	10,000	10,000
Prepaid expenses and other current assets	47,789	66,205
Total current assets	174,090	193,538
Other Assets:
Property and equipment, net	23,180	20,039
Intangible assets, net	270,646	292,402
Deposits	2,387	2,387
Investment in Breathe Active, LLC	290	290
Total Assets	470,593	508,656
Current Liabilities:
Accounts payable	1,674,419	1,639,529
Accrued interest - related parties	37,255	32,076
Accrued interest	1,444	1,244
Accrued expenses	119,637	72,172
Notes payable to former officer	23,750
Convertible notes payable	5,000	27,678
Convertible notes payable to related parties - current portion, net of discount	2,144,850	1,324,659
Total current liabilities	4,006,355	3,097,358
Accrued interest to related parties	170	106
Notes payable to former officer	23,750	47,500
Total liabilities	4,030,275	3,144,964
Stockholders' Deficit:
Common stock, par value $.0001 per share, 200,000,000 and 200,000,000 shares authorized; 66,133,720 and 62,256,379 shares issued and outstanding at March 31, 2015 and September 30, 2014, respectively	6,613	6,226
Common stock to be issued, 200,000 shares, par value $.0001	20
Additional paid-in capital	30,450,327	29,452,379
Accumulated deficit	(34,016,642)	(32,094,913)
Total stockholders' deficit	(3,559,682)	(2,636,308)
Total Liabilities and Stockholders' Deficit	$ 470,593	$ 508,656

XML

Summary of Significant Accounting Policies and Use of Estimates

6 Months Ended

Mar. 31, 2015

Accounting Policies [Abstract]

Summary of Significant Accounting Policies and Use of Estimates

1. Summary of Significant Accounting Policies and Use of Estimates

Basis of Presentation and Organization

Airware Labs Corp. (“Airware Labs” or the “Company”), formerly Crown Dynamics Corp., is a Delaware corporation. The Company was incorporated under the laws of the State of Delaware on June 15, 2010. On October 26, 2012, the Articles of Incorporation were amended to reflect a name change to Airware Labs Corp. On November 13, 2012, the Board approved a change in fiscal year end from December 31 to September 30.

On March 20, 2012, through an equity exchange agreement, the Company acquired all of the issued and outstanding stock of Airware Holdings, Inc., a Nevada corporation (“Airware”), in exchange for shares of the Company’s newly-issued common stock. Airware Holdings, Inc. was formed in February 2010 and is a non-prescription medical products company. The principal business purpose of the Company is to develop, manufacture and distribute breathing solutions that address major respiratory challenges impacting human health.

Accounting Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could materially differ from those estimates. Significant estimates of the Company include accounting for depreciation and amortization, recoverability of intangible assets, deferred income taxes, accruals and contingencies, the imputed interest rate of the note payable to related party and the fair value of common stock, and the estimated fair value of stock options and warrants.

Unaudited Interim Financial Statements

The interim consolidated financial statements of the Company as of March 31, 2015 and 2014, and for the periods then ended, are unaudited. However, in the opinion of management, the interim financial statements include all adjustments, consisting of only normal recurring adjustments, necessary to present fairly the Company’s financial position as of March 31, 2015 and the results of its operations and its cash flows for the periods ended March 31, 2015 and 2014. These results are not necessarily indicative of the results expected for the fiscal year ended September 30, 2015. The accompanying financial statements and notes thereto do not reflect all disclosures required under accounting principles generally accepted in the United States (U.S. “GAAP”).

Net Loss per Share

Basic earnings per share does not include dilution and is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of an entity. Dilutive securities are not included in the weighted average number of shares when inclusion would be anti-dilutive. Due to the net losses for the periods ended March 31, 2015 and 2014, basic and diluted loss per common share were the same, as the effect of potentially dilutive securities would have been anti-dilutive.

As of March 31, 2015, there were total shares of 35,148,622 issuable upon conversion of notes payable, exercise of warrants and options that were not included in the earnings per share calculation as they were anti-dilutive.

XML

Convertible Notes Payable - Convertible notes payable (Details) (Convertible Notes Payable A, USD $)	6 Months Ended
	Mar. 31, 2015
Convertible Notes Payable A
Notes payable, amount	$ 5,000
Notes payable, interest rate	8.00%
Notes payable, due date	Aug. 22, 2012
Notes payable, conversion to common stock price per share	$ 0.50

XML

Notes Payable to Former Officer (Details Narrative) (Interest rate information)	0 Months Ended
	Dec. 05, 2013
Interest rate information
Notes payable to former officer, original interest rate	2.00%
Notes payable to former officer, reduced interest rate	0.27%

XML

Going Concern

6 Months Ended

Mar. 31, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Going Concern

2. Going Concern

The Company has incurred losses since inception and requires additional funds for future operating activities. The Company’s selling activity has not yet reached a level of revenue sufficient to fund its operating activities. These factors create an uncertainty as to how the Company will fund its operations and maintain sufficient cash flow to operate as a going concern.

In response to these financial difficulties, management is continuing to pursue financing from various sources, including private placements from investors and institutions. Management believes these efforts will contribute toward funding the Company’s activities until sufficient revenue can be earned from future operations. In addition, the Company is seeking additional distribution partners in both domestic and foreign markets. Management believes these combined efforts, if successful, will be sufficient to meet its working capital needs and its currently anticipated expenditure levels for the next year.

The Company’s ability to meet its cash requirements in the next year is dependent upon obtaining this financing and achieving improved sales levels. If this is not achieved, the Company may be unable to obtain sufficient cash flow to fund its operations and obligations, and therefore, may be unable to continue as a going concern. The accompanying financial statements have been prepared on a going concern basis, and accordingly, do not include any adjustments relating to the recoverability and classification of recorded asset amounts; nor do they include adjustments to the amounts and classification of liabilities that might be necessary should the Company be unable to continue operations or be required to sell its assets.

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)	Mar. 31, 2015	Sep. 30, 2014
Statement of Financial Position [Abstract]
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, authorized	200,000,000	200,000,000
Common stock, issued	66,133,720	62,256,379
Common stock, outstanding	66,133,720	62,256,379
Common stock to be issued, shares	200,000

XML

Convertible Notes Payable (Tables)

6 Months Ended

Mar. 31, 2015

Debt Disclosure [Abstract]

Convertible notes payable

8.00% notes payable, due August 22, 2012, convertible to common stock at $.50 per share, interest payments are due at maturity, unsecured $ 5,000

XML

Document and Entity Information	6 Months Ended
	Mar. 31, 2015	May 11, 2015
Document And Entity Information
Entity Registrant Name	AIRWARE LABS CORP.
Entity Central Index Key	0001500123
Document Type	10-Q
Document Period End Date	Mar. 31, 2015
Amendment Flag	false
Current Fiscal Year End Date	--09-30
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		67,107,677
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2015

XML

Notes Payable to Former Officer (Tables)

6 Months Ended

Mar. 31, 2015

Debt Disclosure [Abstract]

Notes payable to former officer

0.27% note payable, due August 1, 2016, interest due at maturity, unsecured	$	47,500
Less current portion		(23,750	)
	$	23,750

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (USD $)	3 Months Ended		6 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2015	Mar. 31, 2014
Income Statement [Abstract]
Revenues, net	$ 10,487	$ 44,633	$ 103,771	$ 55,340
Cost of products sold	8,043	39,062	64,800	43,607
Gross profit	2,444	5,571	38,971	11,733
Operating expenses
General and administrative	261,159	241,408	472,592	508,193
Sales and marketing	94,755	68,828	155,739	83,522
Total expenses	355,914	310,236	628,331	591,715
Loss from operations	(353,470)	(304,665)	(589,360)	(579,982)
Other income (expense)
Interest income				289
Forgiveness of debt				20
Induced note conversion expense		(2,697)		(2,697)
Interest expense	(645,124)	(331,481)	(1,332,368)	(518,316)
Valuation (loss) - common stock warrants				(707,400)
Loss on warrants exercised		(13,914,034)		(13,914,034)
Total other income (expense)	(645,124)	(14,248,212)	(1,332,368)	(15,142,138)
Loss before income taxes	(998,594)	(14,552,877)	(1,921,728)	(15,722,120)
Income tax expense
Net loss	$ (998,594)	$ (14,552,877)	$ (1,921,728)	$ (15,722,120)
Basic and diluted net loss per common share	$ (0.02)	$ (0.36)	$ (0.03)	$ (0.40)
Basic and diluted weighted average common shares outstanding	65,258,629	40,953,071	64,322,891	39,281,951

XML

Commitments and Contingencies

6 Months Ended

Mar. 31, 2015

Commitments and Contingencies

Commitments and Contingencies

7. Commitments and Contingencies

The Company has agreed to indemnify its officers and directors for certain events or occurrences that may arise as a result of the officers or director serving in such capacity. The term of the indemnification period is for the officer’s or director’s lifetime. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited.

The Company enters into indemnification provisions under its agreements with other companies in its ordinary course of business, typically with business partners, customers, landlords, lenders and lessors. Under these provisions, the Company generally indemnifies and holds harmless the indemnified party for losses suffered or incurred by the indemnified party as a result of the Company’s activities or, in some cases, as a result of the indemnified party’s activities under the agreement. The maximum potential amount of future payments the Company could be required to make under these indemnification provisions is unlimited.

The Company has not incurred material costs to defend lawsuits or settle claims related to these indemnification agreements. As a result, the Company believes the estimated fair value of these agreements is minimal. Accordingly, the Company has no liabilities recorded for these agreements as of March 31, 2015.

On December 22, 2011, the Company entered into a distribution agreement that provides for the issuance of common stock warrants, with an expiration date of 3 years, for the purchase of the Company’s common stock in an amount equal to 15% of the total products purchased by the distributor from the Company at the invoice price against the previous year’s purchases of paid invoices. The warrant price will be equal to the closing price of Airware Labs Corp.’s stock price at the anniversary date of the agreement.

The Company is in default on a convertible note payable totaling $5,000 and a convertible note payable to a related party totaling $20,000. The Company has attempted communication with the note holders to request extensions or conversion.

On April 8, 2013, the Company entered into an exclusive agency agreement with National United Trading and Investment FZ LLC. This is a performance-based agreement to develop new markets in the United Arab Emirates and other Middle Eastern markets of relevance. There has been no expense recognized through March 31, 2015 as a result of this agreement.

On July 16, 2013, the Company entered into a Severance Agreement with Jeffrey Rassas, the Company’s Chief Executive Officer pursuant to which Mr. Rassas will be entitled to the following severance benefits: (i) the Company shall pay to Mr. Rassas his base salary for a period of 12 months following termination without cause; (ii) Mr. Rassas shall be paid any earned and unpaid bonus due; and, (iii) and all unvested stock-based compensation held by Mr. Rassas shall vest as of the date of termination.

On January 6, 2014, the Company entered into a license agreement with Eastar Industries, Co., pursuant to which the Company granted Eastar an exclusive license to sell its products in China for a term of five years in exchange for a royalty equal to 18% of gross profits generated by the sales of products in China. Additionally, the Company and Eastar agree to establish a joint venture company in Hong Kong of Shanghai which will be assigned Eastar’s rights under the agreement and of which 18% of the joint venture will be owned by the Company.

On April 23, 2014, the Company entered into a product development agreement with Dan Pool of Designer Products. This agreement was modified on June 16, 2014. As compensation, the Company will pay $5,000 monthly, as well as issue up to two million stock options as the Company’s stock price hits certain benchmarks. Additionally, the Company will pay a monthly royalty of 5% of net sales of any products created by Dan Pool as inventor. There has been no expense recognized through March 31, 2015 as a result of the royalty portion of this agreement.

On August 28, 2014, the Company was named as a Defendant in a lawsuit by a former officer alleging wrongful termination. On March 31, 2015, the Company entered into a settlement agreement with the former officer wherein the Company shall pay $30,000 over the course of six months, starting on April 7, 2015. This amount is recorded on the balance sheet as part of accrued expenses.

On October 13, 2014, the Company entered into a consulting agreement with Mr. Adam Herschman. Mr. Herschman has been engaged to provide marketing, advertising, and social media-related services. He has been compensated by the issuance of 250,000 shares of stock.

The Company sells the majority of its products through major distributors. The Company warrants to the distributors that the product will be free from defects in material and workmanship. The Company has determined its product warranty to be immaterial at March 31, 2015. The likelihood that the Company’s estimate of the accrued product warranty claims will materially change in the near term is considered remote.

XML

Related Party Transactions

6 Months Ended

Mar. 31, 2015

Related Party Transactions [Abstract]

Related Party Transactions

6. Related Party Transactions

As detailed in Notes Payable to Former Officer Footnote 4, the Company has a note payable to its former President and Executive Chairman, David Dolezal.

As discussed in Convertible Notes Payable to Related Parties Footnote 5, the Company has a convertible secured bridge note with Stockbridge. During the six months ended March 31, 2015, the Company borrowed $350,000 against this note.

XML

Notes Payable to Former Officer - Notes payable to former officer (Details) (USD $)	6 Months Ended
	Mar. 31, 2015	Sep. 30, 2014
Notes payable to former officer, amount	$ 23,750	$ 47,500
Notes payable to former officer
Notes payable to former officer, amount	47,500
Notes payable to former officer, interest rate	0.27%
Notes payable to former officer, due date	Aug. 01, 2016
Less Current Portion
Notes payable to former officer, amount	(23,750)
Balance
Notes payable to former officer, amount	$ 23,750

XML

Convertible Notes Payable to Related Parties (Tables)

6 Months Ended

Mar. 31, 2015

Convertible Notes Payable To Related Parties Tables

Convertible notes payable to related parties

12% note payable to significant shareholder, net of unamortized debt discount of $933,150, due September 30, 2015, convertible to common stock at $.10 per share, interest payments are due monthly.  Debt is secured by substantially all of the assets of the Company	$	2,124,850
8.00 % note payable to advisory board member, due August 26, 2012, convertible to common stock at $.50 per share, interest payments are due at maturity, unsecured		20,000
	$	2,144,850

XML

Subsequent Events

6 Months Ended

Mar. 31, 2015

Subsequent Events [Abstract]

Subsequent Events

10. Subsequent Events

On April 28, 2015, the Company issued 629,987 shares of restricted common stock as payment for interest on loans to the Company for March 2015, at a cost basis of $.05 per share.

On April 28, 2015, the Company issued 93,970 shares of restricted common stock to one holder as compensation for services rendered to the Company from January 1 to March 31, 2015, at a cost basis of $0.128 per share.

On April 28, 2015, the Company issued 250,000 shares of restricted common stock per a subscription agreement of $50,000.

On April 2, 2015, the Company and Gerdz Investments Limited Partnership, RLLP (“Gerdz”) entered into a Cancellation Agreement with regards to 200,000 options originally issued on July 19, 2011, exercisable at $0.50.

On April 2, 2015, the Company issued 200,000 options to Gerdz, exercisable at $0.10 per share, which vest immediately and shall expire on April 2, 2025.

XML

Stockholders' Deficit

6 Months Ended

Mar. 31, 2015

Equity [Abstract]

Stockholders' Deficit

8. Stockholders’ Deficit

Common Stock

During the six months ended March 31, 2015, the Company issued 3,473,040 shares of stock in payment of interest on the Stockbridge convertible note.

On November 20, 2014, the Company issued 322,250 shares of stock for the payment of consulting services. 72,250 shares were valued using the average closing price ($0.166) for the previous quarter. 250,000 shares were valued at the closing stock price on the date of agreement ($0.20).

On January 28, 2015, the Company issued 82,051 shares of stock for the payment of consulting services. They were valued using the average closing price ($0.146) for the previous quarter.

On March 24, 2015, the Company received $40,000 towards the purchase of 200,000 shares of stock. This was part of a subscription agreement totaling $50,000. The shares were not issued as of the end of the quarter.

Warrants

The balance of warrants outstanding for purchase of the Company’s common stock as of March 31, 2015 is as follows:

	Common Shares Issuable Upon Exercise of Warrants	Exercise Price of Warrants	Date Issued	Expiration Date
Issued for financing expense	20,000	$0.25	3/08/2012	3/07/2017
Issued under a consultant settlement agreement	40,000	$0.50	4/30/2012	4/29/2015
Issued per distribution agreement	125,464	$0.75	12/22/2012	12/21/2015
Issued under a private placement memorandum	140,000	$0.40	6/25/2013	6/25/2015
Issued under a private placement memorandum	120,000	$0.40	6/26/2013	6/26/2015
Issued per distribution agreement	172,028	$0.14	12/22/2013	12/22/2016
Issued under a private placement memorandum	25,000	$0.40	7/2/2014	6/1/2016
Issued under a private placement memorandum	50,000	$0.60	7/2/2014	6/1/2016
Issued under a private placement memorandum	25,000	$0.80	7/2/2014	6/1/2016
Issued per distribution agreement	145,510	$0.13	12/22/2014	12/22/2017
Balance of Warrants at March 31, 2015	863,002

Stock Options

The Company had the following options outstanding at March 31, 2015:

	Common Shares Issuable Upon Exercise of Options	Exercise Price of Options	Date Issued	Expiration Date
Options granted to former officer & two former senior advisory board members	775,000	$0.50	4/20/2011	4/19/2021
Options granted to former employee and three consultants	500,000	$0.50	7/19/2011	7/18/2016
Options granted under a consultant agreement settlement	52,844	$0.25	4/30/2012	4/29/2022
Options granted to Board member	150,000	$0.30	1/25/2013	1/24/2023
Options granted to employee and two consultants	1,550,000	$0.30	1/25/2013	1/24/2023
Options granted to medical advisory board member	250,000	$0.26	5/20/2013	5/19/2016
Options granted to consultant	250.000	$0.28	9/5/2013	9/4/2016
Options issued for investment in Breathe Active, LLC	500,000	$0.25	9/28/2013	12/31/2014
Options issued for investment in Breathe Active, LLC	500,000	$0.50	9/28/2013	12/31/2014
Options granted to Board member	150,000	$0.11	10/4/2013	10/3/2023
Options granted to Officers	433,333	$0.11	10/4/2013	10/3/2023
Options granted to Board member	150,000	$0.25	9/5/2014	9/4/2024
Options granted to Officers and consultants	633,333	$0.25	9/5/2014	9/4/2024
Balance of Options at March 31, 2015	5,894,510

During the six months ended March 31, 2015, $32,104 was expensed for the pro-rata vesting of stock-based compensation. As of March 31, 2015, the balance of unrecognized compensation cost related to non-vested stock-based compensation to be expensed in future periods was $69,170.

XML

Significant Customer

6 Months Ended

Mar. 31, 2015

Risks and Uncertainties [Abstract]

Significant Customer

9. Significant Customer

For the six months ended March 31, 2015, 83% of the Company’s revenues were from one customer. Accounts receivable for this customer as of March 31, 2015 totaled $0.

XML

Summary of Significant Accounting Policies and Use of Estimates (Policies)

6 Months Ended

Mar. 31, 2015

Accounting Policies [Abstract]

Basis of Presentation and Organization

Basis of Presentation and Organization

Airware Labs Corp. (“Airware Labs” or the “Company”), formerly Crown Dynamics Corp., is a Delaware corporation. The Company was incorporated under the laws of the State of Delaware on June 15, 2010. On October 26, 2012, the Articles of Incorporation were amended to reflect a name change to Airware Labs Corp. On November 13, 2012, the Board approved a change in fiscal year end from December 31 to September 30.

On March 20, 2012, through an equity exchange agreement, the Company acquired all of the issued and outstanding stock of Airware Holdings, Inc., a Nevada corporation (“Airware”), in exchange for shares of the Company’s newly-issued common stock. Airware Holdings, Inc. was formed in February 2010 and is a non-prescription medical products company. The principal business purpose of the Company is to develop, manufacture and distribute breathing solutions that address major respiratory challenges impacting human health.

Accounting Estimates

Accounting Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could materially differ from those estimates. Significant estimates of the Company include accounting for depreciation and amortization, recoverability of intangible assets, deferred income taxes, accruals and contingencies, the imputed interest rate of the note payable to related party and the fair value of common stock, and the estimated fair value of stock options and warrants.

Unaudited Interim Financial Statements

Unaudited Interim Financial Statements

The interim consolidated financial statements of the Company as of March 31, 2015 and 2014, and for the periods then ended, are unaudited. However, in the opinion of management, the interim financial statements include all adjustments, consisting of only normal recurring adjustments, necessary to present fairly the Company’s financial position as of March 31, 2015 and the results of its operations and its cash flows for the periods ended March 31, 2015 and 2014. These results are not necessarily indicative of the results expected for the fiscal year ended September 30, 2015. The accompanying financial statements and notes thereto do not reflect all disclosures required under accounting principles generally accepted in the United States (U.S. “GAAP”).

Net Loss per Share

Net Loss per Share

Basic earnings per share does not include dilution and is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of an entity. Dilutive securities are not included in the weighted average number of shares when inclusion would be anti-dilutive. Due to the net losses for the periods ended March 31, 2015 and 2014, basic and diluted loss per common share were the same, as the effect of potentially dilutive securities would have been anti-dilutive.

As of March 31, 2015, there were total shares of 35,148,622 issuable upon conversion of notes payable, exercise of warrants and options that were not included in the earnings per share calculation as they were anti-dilutive.

XML

Subsequent Events (Details Narrative) (USD $)	0 Months Ended
	Mar. 24, 2015	Apr. 28, 2015	Apr. 02, 2015
Subscription agreement, amount	$ 50,000
Issued as payment for interest on loans to Company
Restricted common stock issued, shares		629,987
Restricted common stock issued, cost basis per share		$ 0.05
Issued to one holder as compensation for services rendered
Restricted common stock issued, shares		93,970
Restricted common stock issued, cost basis per share		$ 0.128
Issued per a subscription agreement
Restricted common stock issued, shares		250,000
Subscription agreement, amount		$ 50,000
Gerdz Investments Limited Partnership, RLLP
Options canceled per Cancellation Agreement			200,000
Options canceled per Cancellation Agreement, exercise price			$ 0.50
Options issued			200,000
Options issued, exercise price			$ 0.10
Options issued, expiration date			Apr. 02, 2015

XML

Summary of Significant Accounting Policies and Use of Estimates (Details Narrative)	6 Months Ended
	Mar. 31, 2015
Accounting Policies [Abstract]
Anti-dilutive shares issuable not included in earnings per share calculation	35,148,622

XML

Convertible Notes Payable to Related Parties (Details Narrative) (USD $)	Mar. 31, 2015
Debt Disclosure [Abstract]
Ninth allonge to convertible secured bridge note with Stockbridge, maximum line of credit	$ 3,206,000
Ninth allonge to convertible secured bridge note with Stockbridge, current borrowed portion	$ 3,058,000

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (USD $)	6 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Operating Activities:
Net loss	$ (1,921,728)	$ (15,722,120)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	33,615	30,538
Common stock issued for services	74,000	375,722
Options and warrants issued for services	36,097	30,958
Interest expense from amortization of debt discount	820,190	387,773
Induced conversion expense		2,697
Stock issued for interest expense	506,258	107,982
Forgiveness of debt		(20)
Loss on warrants exercised		13,914,034
Valuation (gain)/expense - common stock warrants		707,400
Changes in operating assets and liabilities:
Accounts receivable	2,607	7,343
Inventory	4,981	3,452
Prepaid expenses	18,416	(3,321)
Deposits		(44,307)
Accounts payable	34,890	(229,691)
Accrued interest	5,443	8,872
Customer deposit		80,437
Accrued expenses	47,465	27,641
Net Cash Used in Operating Activities	(337,766)	(314,610)
Investing Activities:
Purchases of property and equipment	(15,000)
Net Cash Used In Investing Activities	(15,000)
Financing Activities:
Stock issued for cash	32,000
Proceeds from convertible notes payable	350,000	1,002,000
Repayment of notes payable	(22,678)	(22,735)
Options re-purchased		(2,500)
Stock re-purchased		(601,762)
Net Cash Provided by Financing Activities	359,322	375,003
Net Increase in Cash	6,556	60,393
Cash - Beginning of Period	42,582	19,942
Cash - End of Period	49,138	80,335
Supplemental disclosure of cash flow information:
Interest paid in cash	84	1,365
Non-cash investing and financing activities:
Stock issued for convertible notes		5,000
Debt discount on note payable, related party	$ 350,000

XML

Convertible Notes Payable to Related Parties

6 Months Ended

Mar. 31, 2015

Debt Disclosure [Abstract]

Convertible Notes Payable to Related Parties

5. Convertible Notes Payable to Related Parties

Convertible notes payable to related parties consist of the following:

12% note payable to significant shareholder, net of unamortized debt discount of $933,150, due September 30, 2015, convertible to common stock at $.10 per share, interest payments are due monthly.  Debt is secured by substantially all of the assets of the Company	$	2,124,850
8.00 % note payable to advisory board member, due August 26, 2012, convertible to common stock at $.50 per share, interest payments are due at maturity, unsecured		20,000
	$	2,144,850

On August 21, 2013, the Company entered into a ninth allonge to a convertible secured bridge note with Stockbridge Enterprises, L.P. (“Stockbridge”) which provided for up to $3,206,000 principal and a maturity date of September 30, 2015. As of March 31, 2015, the Company has borrowed $3,058,000 against this line of credit.

XML

Related Party Transactions (Details Narrative) (USD $)	6 Months Ended
	Mar. 31, 2015
Related Party Transactions [Abstract]
Amount borrowed against convertible secured note with Stockbridge	$ 350,000

XML

Stockholders' Deficit (Tables)

6 Months Ended

Mar. 31, 2015

Equity [Abstract]

Balance of warrants outstanding for purchase of Company's common stock

	Common Shares Issuable Upon Exercise of Warrants	Exercise Price of Warrants	Date Issued	Expiration Date
Issued for financing expense	20,000	$0.25	3/08/2012	3/07/2017
Issued under a consultant settlement agreement	40,000	$0.50	4/30/2012	4/29/2015
Issued per distribution agreement	125,464	$0.75	12/22/2012	12/21/2015
Issued under a private placement memorandum	140,000	$0.40	6/25/2013	6/25/2015
Issued under a private placement memorandum	120,000	$0.40	6/26/2013	6/26/2015
Issued per distribution agreement	172,028	$0.14	12/22/2013	12/22/2016
Issued under a private placement memorandum	25,000	$0.40	7/2/2014	6/1/2016
Issued under a private placement memorandum	50,000	$0.60	7/2/2014	6/1/2016
Issued under a private placement memorandum	25,000	$0.80	7/2/2014	6/1/2016
Issued per distribution agreement	145,510	$0.13	12/22/2014	12/22/2017
Balance of Warrants at March 31, 2015	863,002

Options outstanding

	Common Shares Issuable Upon Exercise of Options	Exercise Price of Options	Date Issued	Expiration Date
Options granted to former officer & two former senior advisory board members	775,000	$0.50	4/20/2011	4/19/2021
Options granted to former employee and three consultants	500,000	$0.50	7/19/2011	7/18/2016
Options granted under a consultant agreement settlement	52,844	$0.25	4/30/2012	4/29/2022
Options granted to Board member	150,000	$0.30	1/25/2013	1/24/2023
Options granted to employee and two consultants	1,550,000	$0.30	1/25/2013	1/24/2023
Options granted to medical advisory board member	250,000	$0.26	5/20/2013	5/19/2016
Options granted to consultant	250.000	$0.28	9/5/2013	9/4/2016
Options issued for investment in Breathe Active, LLC	500,000	$0.25	9/28/2013	12/31/2014
Options issued for investment in Breathe Active, LLC	500,000	$0.50	9/28/2013	12/31/2014
Options granted to Board member	150,000	$0.11	10/4/2013	10/3/2023
Options granted to Officers	433,333	$0.11	10/4/2013	10/3/2023
Options granted to Board member	150,000	$0.25	9/5/2014	9/4/2024
Options granted to Officers and consultants	633,333	$0.25	9/5/2014	9/4/2024
Balance of Options at March 31, 2015	5,894,510