XML 19 R7.htm IDEA: XBRL DOCUMENT v2.4.0.6
BASIS OF PRESENTATION
6 Months Ended
Dec. 31, 2011
Accounting Policies [Abstract]  
BASIS OF PRESENTATION

 

NOTE 2 - BASIS OF PRESENTATION

 

INTERIM FINANCIAL STATEMENTS - The accompanying unaudited consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Results for interim periods should not be considered indicative of results for a full year. These interim consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes contained in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2011, filed with the Securities and Exchange Commission on October 13, 2011. The accounting policies used in preparing these consolidated financial statements are the same as those described in Note 3 to the consolidated financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2011. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair statement of the results for interim periods have been included.

 

The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclose contingent assets and liabilities at the date of the financial statements and disclose the reported amounts of revenues and expenses during the reporting period. Significant estimates are required as part of determining fair value of allowance for doubtful accounts, estimated lives of property and equipment and intangibles, long-lived asset impairments, valuation allowances on deferred income taxes and the potential outcome of future tax consequences of events recognized in the Company’s financial statements or tax returns. Actual results and outcomes may materially differ from management’s estimates and assumptions. Reclassifications of prior year’s data have been made to conform to 2011 classifications.

 

GOING CONCERN - The accompanying financial statements have been prepared on a going concern basis which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. During the six months ended December 31, 2011, the Company realized net income of $98,461. The Company had an accumulated deficit of $36,786,444 as of December 31, 2011. During the fiscal year ended June 30, 2011, the Company realized net income of $953,885. During the year ended June 30, 2010, the Company incurred losses of $2,238,947. Until fiscal year 2011, the Company had never been profitable and there can be no assurance that it will remain profitable or that it will survive as a public company. We are in violation of the covenants of our Line of Credit (as defined elsewhere herein) as of both June 30, 2011 and December 31, 2011, respectively. These issues raise substantial doubt regarding our ability to continue as a going concern.

 

The Company is taking many measures to improve its operations and ultimate financial position. As seen by the financial results since the ASI Transaction, our revenue and profit generation opportunities have dramatically improved. Internally, the Company has continued to invest in new product and market development resulting in possible new revenue sources. The Company is developing alternative production capacity to ultimately lower manufacturing costs and improve our ability to respond to changing customer needs. We continue to manage our expenses diligently. Externally, we are investigating other alternatives to access additional financing, such as equity financing as well as relationships with new lenders for an increased line of credit. However, there are no guarantees that any of these efforts will be successful.

 

The financial statements do not include any adjustments relating to the recoverability and classification of liabilities that might be necessary should we be unable to continue as a going concern. Our continuation as a going concern is dependent upon our ability to retain our current short term financing and ultimately to generate sufficient cash flow to meet our obligations on a timely basis in order to obtain additional financing, and ultimately to generate consistent positive net income.