UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 Washington,
DC 20549
  Form
10-K
 Amendment No.
1
 (MARK
      ONE)x
                ANNUAL
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934For
      the fiscal year ended June 30, 2010OR ̈
                TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934For
      the transition period from  ______________ to
      ______________
 
 Commission
file number:000-53314
 
 WES Consulting,
Inc.
 (Exact
name of Company as specified in its charter)
  Florida
                59-3581576(State
      of incorporation)
                (IRS
      Employer Identification No.)
  2745 Bankers Industrial
Drive, Atlanta, Georgia 30360
 (Address
of principal executive offices) (Zip Code)
 
 Company's
telephone number: (770)
246-6400
 
 Securities
registered pursuant to Section 12(b) of the Act:  None
  Securities
registered pursuant to Section 12(g) of the Act:  Common Stock, $.01
par value
  Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.   ̈ YES    
x NO
  Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act.   ̈ YES x
NO
  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.  x 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 during the preceding
twelve months (or for such shorter period that the registrant was required to
submit and post such files)    ̈
YES   ̈  NO
  Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or
any amendment to this Form 10-K.  o
  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  x
  Indicate
by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).   ̈ YES    
x NO
 
 State the
aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
last sold, or the average bid and asked price of such common equity, as of the
last business day of the registrant’s most recently completed second fiscal
quarter:  The registrant’s common stock had no active trading market
as of the last business day of its most recently completed second fiscal
quarter.
 
 The
number of shares of Common Stock, $.01 par value, outstanding as of the close of
business on November 12, 2010 was 63,532,647.
  
 
 TABLE
OF CONTENTS
  PAGEEXPLANATORY
      NOTE
                                  
                                  iiFORWARD-LOOKING
      STATEMENTS
                                  
                                  2PART I.
                                  
                                  3ITEM 1.
                                  
                                  Business
                                  
                                  3ITEM 2.
                                  
                                  Properties
                                  
                                  8ITEM 3.
                                  
                                  Legal
      Proceedings
                                  
                                  8PART
      II.
                                  
                                  9ITEM 5.
                                  
                                  Market
      for Registrant’s Common Equity, Related Stockholder Matters and Issuer
      Purchases of Equity Securities
                                  
                                  9ITEM 7.
                                  
                                  Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
                                  
                                  10ITEM 8.
                                  
                                  Financial
      Statements and Supplementary Data
                                  
                                  16ITEM 9.
                                  
                                  Changes
      in and Disagreements with Accountants on Accounting and Financial
      Disclosure
                                  
                                  17ITEM 9A.
                                  
                                  Controls
      and Procedures
                                  
                                  17ITEM 9B.
                                  
                                  Other
      Information
                                  
                                  18PART
      III.
                                  
                                  19ITEM 10.
                                  
                                  Directors,
      Executive Officers and Corporate Governance
                                  
                                  19ITEM 11.
                                  
                                  Executive
      Compensation
                                  
                                  22ITEM 12.
                                  
                                  Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters
                                  
                                  23ITEM 13.
                                  
                                  Certain
      Relationships and Related Transactions, and Director
      Independence
                                  
                                  24ITEM 14.
                                  
                                  Principal
      Accounting Fees and Services
                                  
                                  25PART
      IV.
                                  
                                  26ITEM 15.
                                  
                                  Exhibits, Financial
      Statement Schedules
                                  
                                  26SIGNATURES
                                  
                                  
                                  
                                  28
  i
  EXPLANATORY
NOTE
 
 This
Amendment No. 1 to our annual report on Form 10-K (“Form 10-K/A”) for the fiscal
year ended June 30, 2010 is filed to (i) update the number of outstanding shares
of our common stock reported on the cover page, (ii) update our disclosures in
Part I, Item 3 - Legal Proceedings on page 9, and (iii) add disclosures under
the “Compliance with Section 16(a) of the Exchange Act” section of Item 10 –
Directors, Executive Officers and Corporate Governance on page
21.
 
 Except as
required to reflect the changes noted above, this Form 10-K/A does not attempt
to modify or update any other disclosures set forth in our annual report on Form
10-K. Additionally, this Form 10-K/A does not purport to provide a general
update or discussion of any other developments of the registrant subsequent to
the original filing.  The filing of this Form 10-K/A shall not be
deemed an admission that the original filing, when made, included any untrue
statement of material fact or omitted to state a material fact necessary to make
a statement not misleading.
  ii
  FORWARD-LOOKING
STATEMENTS
 
 This
report may contain "forward-looking statements," which include statements that
are predictive in nature, depend upon or refer to future events or conditions,
and usually include words such as "expects," "anticipates," "intends," "plan,"
"believes," "predicts", "estimates" or similar expressions. In addition, any
statement concerning future financial performance, ongoing business strategies
or prospects and possible future actions are also forward-looking statements.
Forward-looking statements are based upon current expectations and projections
about future events and are subject to risks, uncertainties and the accuracy of
assumptions concerning the Company, the performance of the industry in which
they do business and economic and market factors, among other things. These
forward-looking statements are not guarantees of future
performance.
 
 Forward-looking
statements speak only as of the date of this report, presentation or filing in
which they are made. Except to the extent required by federal securities laws,
the Company undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise. Our forward-looking statements in this report include, but
are not limited to:
 
 ·
              Statements relating to our
      business strategy;
 
 ·
              Statements relating to our
      business objectives; and
 
 ·
              Expectations concerning future
      operations, profitability, liquidity and financial
      resources.
 
 These
forward-looking statements are subject to risk, uncertainties and assumptions
about us and our operations that are subject to change based on various
important factors, some of which are beyond our control. The following factors,
among others, could cause our financial performance to differ significantly from
the goals, plans, objectives, intentions and expectations expressed in our
forward-looking statements:
 
 ·
              competition from other sexual
      wellness retailers and adult-oriented
  websites;
 
 ·
              our ability to generate
      significant sales revenue from magazine, radio and television
      advertising;
 
 ·
              our ability to maintain our
      brands;
 
 ·
              unfavorable economic and market
      conditions;
 
 ·
              our reliance on credit cards as a
      form of payment;
 
 ·
              our ability to keep up with new
      technologies and remain
competitive;
 
 ·
              our ability to continue as a
      going concern;
 
 ·
              our history of operating losses
      and the risk of incurring additional losses in the
      future;
 
 ·
              security breaches may cause harm
      to our systems;
 
 ·
              supply interruptions from raw
      material vendors:
 
 ·
              our ability to enforce and
      protect our intellectual property
rights;
 
 ·
              we may be subject to claims that
      we have violated the intellectual property rights of
      others;
 
 ·
              the loss of our main data center
      or other parts of our
infrastructure;
 
 ·
              systems failures and
      interruptions in our ability to provide access to our websites and
      content;
 
 ·
              companies providing products and
      services on which we rely may refuse to do business with
      us;
 
 ·
                changes in government laws
      affecting our
business;
 
 ·
              we may not be successful in
      integrating any future acquisitions we
  make;
 
 ·
              our dependence on the experience
      and competence of our executive officers and other key
      employees;
  2
  ·
              restrictions to access on the
      internet affecting traffic to our
  websites;
 
 ·
              risks associated with currency
      fluctuations;
 
 ·
              risks associated with litigation
      and legal proceedings; and
 
 ·
              other risks or uncertainties
      described elsewhere in this report and in other periodic reports
      previously and subsequently filed by the Company with the Securities and
      Exchange Commission.
 
 PART
I.
  ITEM 1.        Business
 
 General
 
 We are a
provider of goods and information to consumers who believe that sensual pleasure
and fulfillment are essential to a well-lived and healthy life. The information
that we provide consists primarily of product demonstration videos that we show
on our websites and instructional DVDs that we sell.
  Unless
the context requires otherwise, all references in this report to the “Company,”
“WES,” “we,” “our,” and “us” refer to WES Consulting, Inc. and our
subsidiaries.
  Our
executive offices are located at 2745 Bankers Industrial Dr., Atlanta, GA 30360;
our telephone number is +1-770-246-6400.  Our primary Web site
addresses are www.liberator.com, www.studiooneup.com, and www.foamlabs.com.
  Our
History
 
 The
Company was incorporated in the State of Florida on February 25, 1999. Prior to
our merger with Liberator, Inc. in October 2009, our principal business plan was
to provide consulting services to companies requiring expert guidance and
assistance in successfully upgrading and improving their high-volume commercial
printing businesses. The primary emphasis was on global companies involved in
printing telephone directories.
 
 On
October 19, 2009, the Company entered into a Merger and Recapitalization
Agreement with Liberator, Inc., a Nevada corporation (“Liberator”). 
Pursuant to the agreement, Liberator merged with and into the Company, with the
Company surviving as the sole remaining entity.   As a result of
the merger, Liberator’s wholly owned subsidiary, OneUp Innovations, Inc.
(“OneUp”), a Georgia corporation, became our wholly owned subsidiary. 
OneUp wholly owns Foam Labs, Inc., a Georgia corporation. All of the operations
of the Company are conducted through OneUp.
 
 Liberator,
Inc.
 
 Liberator
was incorporated in the State of Nevada on October 31, 2007 under the name
“Remark Enterprises Inc.”  Since inception, Liberator was engaged in
organizational efforts and obtaining initial financing. Liberator was formed as
a vehicle to pursue a business combination. Liberator formed OneUp Acquisition,
Inc., a Georgia corporation and as a wholly owned subsidiary (the “Subsidiary”)
on March 11, 2009.  On April 3, 2009, Liberator entered into a Stock
Purchase and Recapitalization Agreement with OneUp Innovations, Inc., a
privately held Georgia corporation (“OneUp”), and the Subsidiary.  On June
26, 2009, Liberator consummated the transactions contemplated by the agreement,
as amended.  Pursuant to the agreement, the Subsidiary and OneUp merged,
and all of the issued and outstanding common stock of OneUp was exchanged for an
aggregate of 45,000,000 shares of Liberator’s common stock (90% of the total
issued and outstanding shares of common stock of Liberator).  In addition,
all of the issued and outstanding shares of preferred stock of OneUp was
exchanged for 4,300,000 shares of preferred stock of Liberator.  After the
merger, OneUp became Liberator’s wholly owned subsidiary, and Liberator’s
business operations were conducted through OneUp.  On July 2, 2009,
Liberator changed its name to “Liberator, Inc.”
 
 OneUp
Innovations, Inc.
  Founded
in Atlanta, Georgia in 2000, OneUp is a provider of goods and information to
customers who believe that sensual pleasure and fulfillment are essential to a
well-lived and healthy life. The information that OneUp provides consists
primarily of product demonstration videos that the Company shows on its websites
and instructional DVDs that the Company sells.
  Established
with this conviction, Liberator Bedroom Adventure Gear ® empowers
exploration, fantasy and the communication of desire, no matter the person’s
shape, size or ability. Products include the original Liberator shapes and
furniture, sophisticated lingerie and latex apparel, pleasure objects, as well
as bath and body, bedding and home décor. The Liberator brand of OneUp is a
growing consumer brand that celebrates intimacy by inspiring romantic
imagination.
  3
  Liberator
Bedroom Adventure Gear ® is a
love-style brand that exists in a space where the act of love meets art and
invention. Not prurient enough to be an "adult" product, yet too sexy to be
considered mainstream, we created a retail category and a brand called
“Liberator” to define ourselves in a marketplace that is rapidly gaining in
popularity and acceptance.
  Since we
shipped our first product in 2002, OneUp has evolved into a community of
approximately one hundred people that create, develop, make, market, advertise,
promote and re-invent items and ideas that allow couples to have a fuller sexual
experience of themselves and each other.
  OneUp is
focused on building, developing and marketing its Liberator brand of Bedroom
Adventure Gear products. Since inception, we have spent over $8 million in print
advertising, building awareness of the brand primarily through magazine
advertisements. We now intend to broaden our marketing reach by advertising on
selected cable television and radio channels.
  In
addition to the Liberator Shapes ®, we also
produce a line of casual foam-based furniture that we sell under the Studio
OneUp “Jaxx” brand. These products are produced as a by-product from the
manufacturing of Liberator products, as we re-purpose the scrap foam created
from the cutting of the cushions. The Studio OneUp products are offered directly
to consumers through our web site www.studiooneup.com, to e-Merchants under
drop-ship agreements where we ship directly to their customers, and to other
resellers.
  OneUp is
currently housed in a 140,000 sq. ft. vertically integrated manufacturing
facility on eight acres in a suburb of Atlanta, Georgia. Our products are sold
directly to consumers and through approximately six hundred domestic resellers
and six international resellers, approximately 1,300 marketing affiliates, and
several dozen independent sales consultants within the United States. Other than
the six international resellers, none of our customers are subject to a written
agreement or are required to purchase or sell a specific amount of our products.
Marketing affiliates are companies that operate websites that market our
products on their websites. These marketing affiliates direct visitor traffic to
our websites by using our technology to place banners or links on their websites
to our website.
 
 Industry
Background
 
 WES
participates in the rapidly growing worldwide market of sexual wellness. What
was once called Family Planning has evolved over the last 6 years into a new
category called Sexual Wellness. All of the major retailers, pharmacies and
on-line retailers have embraced this development.
 
 Major
consumer brands are rapidly entering the Sexual Wellness market, with either new
products or repackaged existing products. These brands include:
 
 ·
              K-Y
      Personal Lubricant (a division of $62 billion Johnson &
      Johnson)
 ·
              Trojan
      Condoms (a division of $2.5 billion Church &
  Dwight)
 ·
              Philips
      Electronics (a €23 billion company) recently introduced a line of personal
      vibrators
 ·
              Durex
      Condoms and Durex Play (a £348 million division of UK-based SSL
      International)
 
 We
believe that the category of sexual wellness is in the early stages of consumer
awareness and that it will continue to grow and gain consumer acceptance to
become a major trend in society.
 
 Overview
of our Facilities and Operations
 
 Our
140,000 square foot facility on eight acres is located in metro Atlanta, Georgia
and includes manufacturing and distribution, sales and marketing, product
development, customer service and administrative staff.  Our
manufacturing operation has CAD controlled fabric cutting and foam contouring
equipment and two state-of-the-art conveyor unit production sewing
systems.
 
 Business
Strategy
 
 As one of
the few recognized brands in the sexual wellness market, our goals are to
achieve long-term growth and profitability and diversify our sales base. We plan
to achieve these goals using the following strategies:
 
 ·
              Expand
      Advertising Beyond Magazines. Since inception, 95% of our
      advertising expenditures have been for print advertisements in magazines.
      While we plan to continue with print advertising, we also believe that we
      may be more successful by advertising on adult and mainstream cable
      television and network channels, and satellite and terrestrial radio
      stations and expanding our efforts in internet advertising. We are
      currently developing television advertisements in order to test their
      effectiveness in driving traffic to our Liberator.com
      website.
  4
  ·
              Pursue
      Targeted Acquisitions. We believe that the sexual
      wellness industry is highly fragmented, with few market leaders, and we
      seek to pursue acquisitions that meet our values, strategic focus and
      economic criteria. We believe there is a significant opportunity to expand
      our business by acquiring and integrating companies that manufacture or
      market high-quality products to the sexual wellness consumer market and
      that, in many cases, such companies could increase their sales as a result
      of offering their products for sale under the Liberator
      brand.
 
 ·
              Capitalize on
      the Liberator brand.
      We intend to extend the Liberator brand through the introduction of
      Liberator brand pleasure objects and consumables, like personal lubricants
      and massage oils.
 
 ·
              Expand our
      Channels of Distribution. In 2008, we began licensing the
      Liberator brand to entrepreneurs in foreign countries and we now have
      licensees in 11 European and Asian countries with a total population of
      250 million. We intend to continue to add to our list of international
      licensees. We also believe there is a significant opportunity to open
      Liberator Love Artist stores in specific domestic markets like Atlanta,
      New York, Los Angeles and Miami. Not only will such stores increase
      awareness of the brand, but they will serve as regional hubs to support
      local networks of independent sales agents that purchase products from our
      stores and resell them to their friends and family members through in-home
      parties.
 
 ·
              Expand
      Distribution of our Studio OneUp “Jaxx” products. We have developed a unique
      point-of-purchase packaging system for our Jaxx “foam bag” line of Studio
      OneUp seating. This system allows the retailer to stock a variety of foam
      bag colors and fabric types while maintaining minimal inventory of the
      foam-based filling. The foam-based filling is re-purposed scrap foam
      created from the manufacturing of the Liberator cushions. The foam-based
      filling is compressed into square capsules with a maximum weight of 25
      pounds, which makes it easier for the consumer to transport the product,
      and it reduces the amount of shelf space required by the retailer. To
      purchase one of the various sizes of foam bags, consumers simply select
      the required size and number of compressed foam capsules that match the
      selected cover.
 
 Our
Competitive Strengths
 
 We
believe that we have the following competitive strengths that we can leverage to
implement our strategy:
 
 Leading market position. Since
our first magazine advertisements appeared in 2002, we have been one of only a
handful of companies that are permitted to advertise sexual wellness products in
mainstream publications. Because of our upscale presentation and mainstream
appeal, Liberator product advertisements have passed the approval of magazines
that have never before permitted an adult product to advertise. As a result, we
believe that we enjoy a somewhat exclusive franchise in this category. Because
of our ability to reach mainstream consumers through print advertisements, we
believe that we have established a leading market position in the category of
sexual wellness products. To some degree, we believe this is evidenced by our
product position on leading e-commerce websites as a product category and as a
brand name.
 
 Vertically integrated operations
which includes product and packaging design, website design, manufacturing, and
marketing capabilities. Our state-of-the-art design and production
facility allows us to rapidly bring new products to market and respond quickly
to changes in consumer preference, and our in-house website design capabilities
allows us to create a constant stream of website content that provides our
consumers with an entertainment venue, which in turn creates a catalyst for them
to revisit our website after their initial purchase.
 
 Broad product offering. We
currently manufacture approximately 1,500 products and purchase for resale an
additional 1,300 products.
 
 Established and diversified customer
base. We have approximately 175,000 unique individual customers in
addition to leading retailers and e-merchants.
 
 Experienced executive team. We
have an experienced team of corporate managers. Our founder and Chief Executive
Officer, Louis Friedman, is an entrepreneur and investor whose management
experience spans the past 30 years. Our Chief Financial Officer, Ronald Scott,
has over 30 years of experience in accounting and financial management, with 13
years as the Chief Financial Officer for a NASDAQ-listed natural products
company.
 
 Products
and Services
 
 Liberator
Products
  We
developed a product line of Bedroom Adventure Gear which
consists of 15 differently shaped cushions being marketed as Liberator
Shapes.  Liberator Shapes are positioning props that rock, elevate, and
create surfaces and textures that expand the sexual repertoire and make the act
of love more exciting. As human bodies come in different sizes, so do Liberator
Shapes, and Liberator Shapes are available in an assortment of fabric colors and
prints to add to the visual excitement. The Shapes are covered under United
States Patent #6,925,669. Each of the 15 Liberator Shapes has a unique shape,
designed to introduce to the sexual experience positions that were previously
difficult to achieve. The Liberator Shapes are manufactured from structured
urethane foam cut at angles, in large cubes, rounds and in platform shapes. The
urethane base is encased in a tight, fluid resistant polyester shell, helping
the cushions to maintain their shape.  Our best-selling lines of the
Liberator Shapes products are the Wedge, Ramp, and Wedge/Ramp combination.
  5
   We have
also developed a unique a line of furniture pieces, called “sex furniture”,
which set the benchmark for relaxed interaction and creative sex. Three of the
sex furniture pieces are made from contoured urethane foam and covered in a
variety of fabrics and colors. These items are marketed as the Esse®, the
Esse Chaise, and the EquusTM. 
The sex furniture line also includes products based on shredded polyurethane
foam encased in a wide range of fabric types and colors and sold as the
ZeppelinTM, the
Zeppelin Lounger, the Zeppelin Cocoon, the Zeppelin Rest, the Palooza, and the
Zeppelin Pillow.
  The
products sold under the Liberator Shapes line, including the sex furniture,
provided 59.1%, 67.5%, and 69.9% of our revenues for our fiscal years ended June
30, 2010, 2009, and 2008, respectively.  Revenues from the Wedge, Ramp, and
Wedge/Ramp combination products made up approximately 62% of the revenue from
the Liberator Shapes in fiscal 2010 and approximately 50% of the revenues from
the Liberator Shapes line in fiscal years 2009 and 2008.
 
 Studio
OneUp Products
 
 In
addition to the Liberator product line, we also produce a line of casual
foam-based furniture sold under the Studio OneUp brand. These products are
offered directly to consumers through our Studio OneUp web site and to
e-Merchants under drop-ship arrangements where we ship directly to customers and
to other resellers.  Our Studio OneUp products provided 17.2%, 13.7%, and
9.8% of our revenues for our fiscal years ended June 30, 2010, 2009, and 2008,
respectively.
  Resale
Products
 
 Beginning
in 2006, we began importing high-quality pleasure objects and erotica from
around the world. This collection now includes products for the body and mind,
including erotic books and gifts. These resale products provided 17.1%, 10.9%,
and 12.2% of our revenues for our fiscal years ended June 30, 2010, 2009, and
2008, respectively.
 
 Miscellaneous
Products and Contract Manufacturing
 
 We also
manufacture couture lingerie, latex garments, fetish wear, and a line of boudoir
bedding items that are sold under the FascinatorTM
line.  The Fascinator line provided an immaterial portion of our revenues
during the last 3 fiscal years. Beginning in early fiscal 2007, we began
providing contract manufacturing services to companies seeking private label
specialty products made from fabric and foam. These products are typically
designed by the client companies and manufactured to their specifications and,
to date, have not been a material part of our business.
 
 Competition
 
 The
markets for the sexual wellness products offered by the Company are highly
fragmented and are characterized by thousands of small and often
undercapitalized businesses. We believe that we compete on the basis of
integrity, the distinctiveness, quality and performance of our products, quality
of customer service, creative presentations and brand name
recognition.
 
 We
believe that the primary competitive factors in e-commerce are brand
recognition, site content, ease of use, price, fulfillment speed, customer
support, reliability and integrity. Our success, particularly against larger and
better financed competitors, will continue to depend upon our ability to provide
a compelling and satisfying shopping experience for the consumer, both on-line
and at our current and future retail stores.
 
 Intellectual
Property
 
 Liberator,
Wedge, Ramp, Cube, Stage, Esse, Zeppelin, Jaxx, Hipster, Wing, “Explore More”,
“Bedroom Adventure Gear“, and the Liberator logo are subject to trademark
applications of the Company.
 
 We also
currently hold 28 web domain names relating to our brand.
 
 In August
2005, we were issued a United States utility patent number US 6,925,669,
“Support Cushion and System of Cushions.”
 
 Marketing
 
 Through
advertisements in a broad range of national magazines, consumers are directed to
one of our primary e-commerce websites to learn more about our products and
place their orders.
  6
   We intend
to expand our advertising efforts beyond magazines to reach broader segments of
the population and increase our consumer base. These initiatives may include
expanded use of internet advertising, television advertising, and radio
advertising.
 
 Through
our in-house wholesale sales organization, we engage retailers directly and then
either ship to them on a wholesale basis or provide fulfillment services by
drop-shipping directly to their customers.
 
 Through
attendance at a variety of domestic and international consumer and industry
trade shows, we gain valuable feedback from consumers and retailers regarding
our product offering. Attendance at these trade shows also provides us with an
opportunity to monitor the competitive environment and be made aware of any
emerging trends in the sexual wellness industry.
 
 Licenses
 
 In
mid-2008, we launched an international expansion program through a licensing
program. Through a co-manufacturing arrangement whereby the foam is contoured in
the local country, the Company has created a way for local partners to launch
the brand quickly and aggressively. Each licensee has the full capability to
sell directly to consumers and traditional resellers, and has made significant
financial commitments to marketing the Liberator brand through country specific
advertising channels which include print, television, and radio. These licensees
are also empowered to interpret the brand so as to be culturally sensitive to
their respective territories.
 
 Since
September 2008, we have issued six license agreements that cover 11 countries
around the world including the UK, Germany, Netherlands, Belgium, France, Italy,
Australia / New Zealand, Singapore, Indonesia, and Malaysia (with a combined
population greater than 250 million residents.) All territories will have, if
not already, a fully functional consumer website, and in some cases, our
partners will develop Liberator Lovestyle retail stores.
 
 International
websites are now offering Liberator products in Singapore, the United Kingdom,
the Netherlands, Germany, Belgium, France, and Australia/New
Zealand.
  These
international licensees are expected to eventually be distribution pipelines
which will market the Liberator branded products, ranging from consumables and
toys to shapes and furniture. Under the licensing agreements, the licensees are
encouraged to open all sales channels within their territories including big box
retailers, drugstores, and other retail channels. Sales to licensees consist of
an initial license fee plus recurring product sales. Product sales and license
fees from international licensees was less than 3% of total net sales in fiscal
2009 and less than 1% of total net sales during fiscal 2010. The international
license agreements, which have a term of three to six years, appoint the
companies or individuals as exclusive distributors in their respective
territories (with no minimum annual purchase requirements) and require the
licensees to spend specific amounts on advertising in their local markets.
However, to date, these advertising requirements have not been enforced by the
Company. The international license agreements may be terminated at any time upon
the mutual written agreement of the parties, and upon the occurrence of any
event of default, as defined in the agreements.
 
 Sales
Channels
 
 We
conduct our business through two primary sales channels: Direct (consisting of
our Internet website and telephone sales) and Wholesale (consisting of our
stocking reseller, drop-ship, contract manufacturing and distributor accounts).
The following is a summary of our revenues:
 
 (Dollars in thousands)
                    
                    Fiscal
                      2008
                    
                    
                    Fiscal
                      2009
                    
                    
                    Fiscal
                      2010Direct
                    
                    $
                    6,703
                    
                    
                    $
                    5,144
                    
                    
                    $
                    5,355Wholesale
                    
                    
                    3,550
                    
                    
                    
                    4,022
                    
                    
                    
                    4,736Other
                    
                    
                    1,498
                    
                    
                    
                    1,095
                    
                    
                    
                    989Total
      Net Sales
                    
                    $
                    11,751
                    
                    
                    $
                    10,261
                    
                    
                    $
                    11,080
 
 Other
revenues consist principally of shipping and handling fees derived from our
Direct business.
   Direct
   The
following is a summary of our Direct business net sales and the percentage
relationship to total revenues:
 
 (Dollars in thousands)
                      
                      Fiscal
                        2008
                      
                      
                      Fiscal
                        2009
                      
                      
                      Fiscal
                        2010Internet
                      
                      $
                      6,096
                      
                      
                      $
                      4,536
                      
                      
                      $
                      4,637Phone
                      
                      
                      607
                      
                      
                      
                      608
                      
                      
                      
                      718Total
      Direct Net Sales
                      
                      $
                      6,703
                      
                      
                      $
                      5,144
                      
                      
                      $
                      5,355Direct
      net sales as a percentage of total revenues
                      
                      
                      57.0
                      %
                      
                      
                      50.1
                      %
                      
                      
                      48.3
                      %
 
 Since inception, OneUp has sold directly to approximately 200,000
consumers, many of these consumers have ordered from the Company more than
once.
 
 Wholesale
 
 The
following is a summary of our net sales to Wholesale customers and the
percentage relationship to total revenues:
 
 (Dollars in thousands)
                    
                    Fiscal
                      2008
                    
                    
                    Fiscal
                      2009
                    
                    
                    Fiscal
                      2010Wholesale
      customers
                    
                    $
                    3,550
                    
                    
                    $
                    4,022
                    
                    
                    $
                    4,736Percentage
      of total revenues
                    
                    
                    30.2
                    %
                    
                    
                    39.2
                    %
                    
                    
                    42.7
                    %
 
 As of
June 30, 2010, the Company has approximately 600 active wholesale accounts, most
of which are located in the United States.
 
 Internet
Website
 
 Since
2002, our main website located at www.liberator.com has allowed our customers to
purchase our merchandise over the Internet. Using a consistent standard measure,
our website logged over 3.2 million visits in fiscal 2010, as compared to 3.1
million visits in fiscal 2009, representing a 3% increase in website
visits.  Internet revenues represented 87% of the Direct business in fiscal
2010, compared to 88% of the Direct business in fiscal 2009. We design and
operate our websites using an in-house technical and creative staff. Our
www.liberator.com website is intended to be an entertainment and educational
venue where consumers can watch product demonstration videos, videos on sexual
wellness topics and humorous videos on the many facets of human
sexuality.
 
 In
response to declining sales on our main website between fiscal 2008 and 2009, in
fiscal 2009 (the year ended June 30, 2009) we began an implementation project of
a new e-commerce platform and a new enterprise resource planning (ERP) system.
The implementation of both of these systems was substantially completed during
the first quarter of fiscal 2010 (the year ended June 30, 2010).
 
 Liberator®
“Lovestyle” Store
 
 Sex and
love are inherently essential to life, but we do not believe they have been
properly presented in retailing. Couples seeking products to enhance intimacy
have limited choices beyond that of the local sex shop.  In our 3,500
square foot factory store we present “lovestyle” and sexual adventure in an
interactive environment that is couple friendly and appeals to a broad consumer
market.
 
 Products
offered include:
 
 ·
              Liberator Shapes, sexual
      furniture, playful
restraints
 ·
              Bedding – silk / satin sheets,
      duvets, pillows
 ·
              Pleasure objects (imported
      high-end)
 ·
              Leather
      products.
 ·
              Erotic prints, books and
      sculptures
 ·
              Borosilicate glass art and
      pleasure objects
 ·
              Lingerie – leather, silk, latex,
      and high end dress-up
costumes
 ·
              Dance wear & accessories –
      burlesque, belly dance, strip tease plus
  DVDs
 ·
              Sensual Massage, bath and body
      products
 ·
              Music, educational DVDs, limited
      erotic DVDs
 ·
              Personal
      lubricants
 ·
              Scents, fragrances and
      candles
 ·
              Instructional monthly
      presentations or
salons
  7
   Our
factory store has demonstrated the power of the Liberator brand – customers want
to feel and touch Liberator products and are willing to travel to the store,
return repeatedly and refer friends.
 
 The
Liberator Lovestyle Store serves as a laboratory to observe consumer reaction to
new products and to evaluate price points and merchandising
techniques.
 
 We
believe that our retail store concept is ready to be expanded beyond our single
location and either franchised or licensed throughout the United States,
providing an upscale experience in-sync with the mainstreaming of sexual
well-being.
 
 Government
Regulation
 
 We are
subject to customs, truth-in-advertising and other laws, including consumer
protection regulations that regulate the promotion and sale of merchandise and
the operation of warehouse facilities. We monitor changes in these laws and
believe that we are in material compliance with applicable laws.
 
 Seasonality
 
 Our
business has a seasonal pattern. During the past three years, we have realized
an average of approximately 28% of our annual revenues in our second quarter,
which includes Christmas, and an average of approximately 29% of our revenues in
the third quarter, which includes Valentine’s Day.
 
 Employees
and Labor Relations
 
 As of
September 25, 2010, we had 108 employees. In addition, approximately 12
employees will be hired on a seasonal basis to meet demand during the peak
season which includes the Christmas holiday and Valentine’s Day. None of our
employees are represented by a union. We have had no labor-related work
stoppages, and we believe our relationships with our employees are
good.
 
 ITEM 2. 
      Properties
 
 We
operate our business from one facility. We lease 140,000 square feet on eight
acres located at 2745 Bankers Industrial Drive, Atlanta, GA 30360. This facility
serves as our manufacturing facility, design and creative center, fulfillment
warehouse, retail store, and administrative and corporate headquarters. 
The lease for this facility expires on December 31, 2015.
 
 We
believe our facilities are currently adequate for their intended purposes and
are adequately maintained.
 
 ITEM 3. 
      Legal Proceedings
 
 As of the
date of this Annual Report, there are no material pending legal or governmental
proceedings relating to our company or properties to which we are a party, and
to our knowledge there are no material proceedings to which any of our
directors, executive officers or affiliates are a party adverse to us or which
have a material interest adverse to us, other than the following:
 
 ·
              On
      June 30, 2010, an Austin, Texas-based company, Interactive Life Forms, LLC
      (“ILF”) initiated an investigation before the International Trade
      Commission (“ITC”) by filing a complaint with the ITC (the
      “Investigation”) against the Company and 26 other manufacturers,
      distributors, and retailers of various elastomeric gel-based male
      masturbator products.  In the Investigation, ILF accused the
      companies of violating Section 337 of the Tariff Act of 1930, as amended,
      19 U.S.C. § 1337, by importing or selling imported products that allegedly
      infringe certain U.S. patents.  ILF’s claims against some of the
      respondents have been dismissed pursuant to settlement agreements. 
      With respect to the Company, ILF alleged that by distributing the Flip
      Hole product of TENGA Co. Ltd. (TENGA), the Company was importing or
      selling imported products that infringe U.S. Patent Nos. 5,782,818 (“the
      ’818 Patent”) and 5,807,360 (“the ’360 Patent).  ILF asked the ITC to
      issue orders that would prohibit the future sale in the United States of
      any such products by any company found to have violated the Tariff
      Act.  The Company believes that it has meritorious defenses to the
      claims and has answered the complaint in the Investigation, and denied
      liability on all claims.  The ITC proceeding is currently in its
      discovery phase and is set for evidentiary hearing on May 16-20,
      2011.
 
 ·
              On
      June 30, 2010, the same day ILF filed its complaint with the ITC, ILF also
      filed a complaint in the United States District Court for the Western
      District of Texas against mostly the same parties (“the
      Litigation”).  ILF has dismissed its claims against some of the
      Defendants ostensibly pursuant to the same settlement agreements mentioned
      in connection with the ITC proceeding, above.  In the Litigation, ILF
      seeks injunctive relief and unspecified monetary damages for patent
      infringement.  On August 27, 2010, the parties jointly filed a motion
      that would stay the proceedings in the Litigation until the Investigation
      has concluded based on a federal statute that provides for such a
      stay.  The motion to stay is pending.  If granted, the
      proceedings in the Litigation will be suspended until resolution of the
      Investigation.  If the motion is not granted or ruled upon by
      November 19, 2010, the Company will file an answer to the complaint. 
      As with the Investigation, the Company believes that it has meritorious
      defenses to all of the ILF claims made against the Company, and the
      Company intends to vigorously pursue such defenses.  Furthermore,
      TENGA Co., Ltd. has agreed to indemnify the Company for reasonable and
      actual costs and expenses associated with the Investigation and
      Litigation, as well as provide a defense in both
  matters.
  8
  ·
              On
      September 1, 2010, Donald Cohen, a former officer, director and
      independent sales representative of Liberator, Inc., commenced an action
      against the Company and other defendants including certain current
      officers and directors, Cohen v. WES Consulting, Inc.,
      OneUp Innovations, Inc., OneUp Acquisitions, Inc., Liberator, Inc., f/k/a
      Remark Enterprises, Inc., Remark Enterprises, Inc., Belmont Partners LLC,
      Louis Friedman, Ronald Scott and Leslie Vogelman, Civil Action File
      No. 100V10590-8. in the Superior Court of Dekalb County,
      Georgia. The
      plaintiff seeks repayment of a shareholder loan in the amount of $29,948
      and unspecified amounts of compensatory, punitive, and statutorily trebled
      damages. The plaintiff alleges breach of fiduciary duty, breach of
      contract, fraud, and violation of the Georgia Securities Act, among other
      claims. The Company intends to vigorously contest the case and filed a
      Motion to Dismiss the lawsuit on October 15,
  2010.
  Although
we believe that we have meritorious defenses to Mr.
Cohen’s claims and will prevail against those claims, this matter
is at a preliminary stage and we are not in a position to predict or
assess the likely outcome of these proceedings.  Accordingly, other than
the amount of the shareholder loan, we have not reserved for any future loss
that may arise as a result of an adverse outcome in this
litigation.
 
 PART
II.
  ITEM 5.
              Market for Registrant’s Common
      Equity, Related Stockholder Matters and Issuer Purchases of Equity
      Securities
 
 Market
Information
 
 Our
common stock is quoted on the Over-the-Counter Bulletin Board (“OTCBB”) under
the symbol “WSCU.”  The following table sets forth, for the periods
indicated, the reported high and low closing bid quotations for our common stock
as reported on the OTCBB.  The bid prices reflect inter-dealer quotations,
do not include retail markups, markdowns, or commissions, and do not necessarily
reflect actual transactions.
 
 Fiscal
      Year2010
                        
                        High
      Bid
                        
                        
                        Low
      BidFourth
      Quarter: 4/1/10 to 6/30/10
                        
                        
                        0.34
                        
                        
                        
                        0.25Third
      Quarter: 1/1/10 to 3/31/10
                        
                        
                        *
                        
                        
                        
                        *Second
      Quarter: 10/1/09 to 12/31/09
                        
                        
                        *
                        
                        
                        
                        *First
      Quarter: 7/1/09 to 9/30/09
                        
                        
                        *
                        
                        
                        
                        *
 
 Fiscal
      Year2009
                      
                      High
      Bid
                      
                      
                      Low
      BidFourth
      Quarter: 4/1/09 to 6/30/09
                      
                      
                      *
                      
                      
                      
                      *Third
      Quarter: 1/1/09 to 3/31/09
                      
                      
                      *
                      
                      
                      
                      *Second
      Quarter: 10/1/08 to 12/31/08
                      
                      
                      *
                      
                      
                      
                      *First
      Quarter: 7/1/08 to 9/30/08
                      
                      
                      *
                      
                      
                      
                      *
 
 * Our
common stock had no trading price until May 3, 2010.
 
 Holders
 
 As of
September 28, 2010, we had approximately 73 stockholders of record of our common
stock.
 
 Transfer
Agent
 
 The
transfer agent and registrar for our common stock is Pacific Stock Transfer
Company, 500 E. Warm Springs Road, Suite 240, Las Vegas, NV,
89119-4355.
  Dividend
Policy
  We plan
to retain all earnings generated by our operations, if any, for use in our
business. We do not anticipate paying any cash dividends to our stockholders in
the foreseeable future. The payment of future dividends on the common stock and
the rate of such dividends, if any, and when not restricted, will be determined
by our board of directors in light of our earnings, financial condition, capital
requirements, and other factors. Additionally, under the terms of our credit
facility, we are precluded from paying a dividend.
  9
   Securities
Authorized for Issuance under Equity Compensation Plans
 
 The
following table sets forth information regarding securities authorized for
issuance under our equity compensation plans as of June 30, 2010.
   Number of securities
                            to beissued upon
                            exercise of
                            outstanding options,
                          
                          
                          Weighted
                            average
                            exercise price
                            ofoutstanding
                            options
                          
                          
                          Number of securitiesremaining
                            available for
                            future issuance underequity
                            compensation plans(excluding
                            securitiesreflected in column (a))(a)
                          
                          
                          (b)
                          
                          
                          (c)Equity
      compensation plans approved by security holders (1)
                          
                          
                          872,000
                          
                          
                          $
                          .25
                          
                          
                          
                          4,128,000
                          (2)Equity
      compensation plans not approved by security holders (3)
                          
                          
                          438,456
                          
                          
                          
                          .228
                          
                          
                          
                          -0-Total
                          
                          
                          1,310,456
                          
                          
                          $
                          .243
                          
                          
                          
                          4,128,000
  (1)
              Includes
      option awards outstanding under our 2009 Stock Option
  Plan.
 (2)
              Includes
      shares remaining available for future issuance under our 2009 Stock Option
      Plan.
 (3)
              Non-qualified
      stock option issued to the Company’s Chief Financial Officer, Ronald
      Scott.
 
 Recent
Sales of Unregistered Securities
  None.
  Repurchases.
 
 None.
  ITEM 7. 
      Management’s Discussion and Analysis of Financial Condition
and Results of Operations
 
 This
discussion summarizes the significant factors affecting the results of
operations and financial condition of the Company during the fiscal years ended
June 30, 2010 and 2009 and should be read in conjunction with our financial
statements and accompanying notes thereto included elsewhere herein. Certain
information contained in this “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” are “forward-looking statements.”
Statements that are not historical in nature and which may be identified by the
use of words like “expects,” “assumes,” “projects,” “anticipates,” “estimates,”
“we believe,” “could be” and other words of similar meaning, are forward-looking
statements. These statements are based on management’s expectations and
assumptions and are subject to risks and uncertainties that may cause actual
results to differ materially from those expressed. Our actual results may differ
materially from the results discussed in this section because of various
factors, including those set forth elsewhere herein. See “Forward-Looking
Statements” included in this report.
 
 Overview
of the Company and Business Segments
 
 We are a
provider of goods and information to consumers who believe that sensual pleasure
and fulfillment are essential to a well-lived and healthy life. The information
that we provide consists primarily of product demonstration videos that the
Company shows on its websites and instructional DVDs that the Company
sells.
  Established
with the conviction that sensual pleasure and fulfillment are essential to a
well-lived and healthy life, Liberator Bedroom Adventure Gear®was
created to empower exploration, fantasy and the communication of desire, no
matter the person’s shape, size or ability. Products include the original
Liberator shapes and furniture, sophisticated lingerie and latex apparel,
pleasure objects, as well as bath and body, bedding and home décor. Liberator is
a growing consumer brand that celebrates intimacy by inspiring romantic
imagination.
 
 Liberator
Bedroom Adventure Gear is a love-style brand that exists in a space where the
act of love meets art and invention. Not prurient enough to be an "adult"
product, yet too sexy to be considered mainstream, we created a retail product
category and brand called “Liberator” to define ourselves in a marketplace that
is rapidly gaining in popularity and acceptance.
  10
   Since we
shipped our first products in 2002, the Company has evolved into a community of
dedicated employees that create, develop, make, market, advertise, and promote
products and ideas that allow couples to have a fuller sexual experience of
themselves and each other.
 
 We are
focused on building, developing and marketing our Liberator brand of Bedroom
Adventure Gear products. Since inception, we have spent over $8 million in print
advertising, building awareness of the Liberator brand primarily through
magazine advertisements. We now intend to broaden our marketing reach by
advertising on selected cable television and radio channels, and through
expanded internet advertising.
 
 In
addition to the Liberator Shapes, we also produce a line of casual foam-based
furniture that we sell under the Studio OneUp “Jaxx” brand. These products are
produced as a by-product from the manufacturing of Liberator products, as we
re-purpose the scrap foam created from the cutting of the cushions. The Studio
OneUp products are offered directly to consumers through our web site
www.studiooneup.com, to e-Merchants under drop-ship agreements where we ship
directly to their customers, and to other resellers.
 
 We are
currently housed in a 140,000 sq. ft. vertically integrated manufacturing
facility on eight acres in a suburb of Atlanta, Georgia. Since our first sale in
May 2002, we have grown to include 108 employees, with our products being sold
directly to consumers and through hundreds of domestic resellers and on-line
affiliates and six international resellers.
 
 The
following information should be read together with the consolidated financial
statements and notes thereto included elsewhere herein.
 
 Critical
Accounting Policies and Estimates
 
 Our
consolidated financial statements included under Item 8 in this report have
been prepared in accordance with U.S. generally accepted accounting principles
(GAAP). Our significant accounting policies are described in the notes to our
consolidated financial statements. The preparation of financial statements in
accordance with GAAP requires that we make estimates and assumptions that affect
the amounts reported in our financial statements and their accompanying notes.
We have identified certain policies that we believe are important to the
portrayal of our financial condition and results of operations. These policies
require the application of significant judgment by our management. We base our
estimates on our historical experience, industry standards, and various other
assumptions that we believe are reasonable under the circumstances. Actual
results could differ from these estimates under different assumptions or
conditions. An adverse effect on our financial condition, changes in financial
condition, and results of operations could occur if circumstances change that
alter the various assumptions or conditions used in such estimates or
assumptions. Our critical accounting policies include those listed
below.
 
 Revenue Recognition.To
recognize revenue, four basic criteria must be met: 1) there is evidence that an
arrangement exists; 2) delivery has occurred; 3) the fee is fixed or
determinable; and 4) collectability is reasonably assured. Revenue from sales
transactions where the buyer has the right to return the product is recognized
at the time of sale only if (1) the seller’s price to the buyer is
substantially fixed or determinable at the date of sale; (2) the buyer has
paid the seller, or the buyer is obligated to pay the seller and the obligation
is not contingent on resale of the product; (3) the buyer’s obligation to
the seller would not be changed in the event of theft or physical destruction or
damage of the product; (4) the buyer acquiring the product for resale has
economic substance apart from that provided by the seller; (5) the seller
does not have significant obligations for future performance to directly bring
about resale of the product by the buyer; and (6) the amount of future
returns can be reasonably estimated. We recognize revenue upon determination
that all criteria for revenue recognition have been met. The criteria are
usually met at the time title passes to the customer, which usually occurs upon
shipment. Revenue from shipments where title passes upon delivery is deferred
until the shipment has been delivered.
 
 Net sales
are comprised of the total product sales billed during the period plus amounts
paid for shipping and handling, less the actual returns, customer allowances,
and customer discounts.
 
 Allowance for Doubtful
Account.We
maintain an allowance for doubtful accounts to reflect our estimate of current
and past due receivable balances that may not be collected. The allowance for
doubtful accounts is based upon our assessment of the collectability of specific
customer accounts, the aging of accounts receivable and our history of bad
debts. We believe that the allowance for doubtful accounts is adequate to cover
anticipated losses in the receivable balance under current conditions. However,
significant deterioration in the financial condition of our customers, resulting
in an impairment of their ability to make payments, could materially change
these expectations and an additional allowance may be required.
 
 Inventories.We value
inventory at the lower of cost or market on an item-by-item basis and establish
reserves equal to all or a portion of the related inventory to reflect
situations in which the cost of the inventory is not expected to be recovered.
This requires us to make estimates regarding the market value of our inventory,
including an assessment for excess and obsolete inventory. Once we establish an
inventory reserve amount in a fiscal period, the reduced inventory value is
maintained until the inventory is sold or otherwise disposed of. In evaluating
whether inventory is stated at the lower of cost or market, management considers
such factors as the amount of inventory on hand, the estimated time required to
sell such inventory, the foreseeable demand within a specified time horizon and
current and expected market conditions. Based on this evaluation, we record
adjustments to cost of goods sold to adjust inventory to its net realizable
value. These adjustments are estimates, which could vary significantly, either
favorably or unfavorably, from actual requirements if future economic
conditions, customer demand or other factors differ from expectations.Finished goods and goods
in process include a provision for manufacturing overhead, including
depreciation.
  11
   Accounting for Income
Taxes.We
account for uncertain tax positions using the more-likely-than-not recognition
threshold. Our practice is to recognize interest and/or penalties related to
income tax matters in income tax expense. As of June 30, 2010 and
June 30, 2009, we had not recorded any tax liabilities for uncertain tax
positions.
 
 We
estimate income taxes in each of the jurisdictions in which we operate. This
process involves estimating our actual current tax exposure, together with
assessing temporary differences resulting from differing treatment of items,
such as property and equipment depreciation, for tax and financial reporting
purposes. Actual income taxes could vary from these estimates due to future
changes in income tax law or results from final tax examination
reviews.
 
 We record
valuation allowances to reduce our deferred tax assets to an amount that we
believe is more likely than not to be realized. We consider estimated future
taxable income and ongoing prudent and feasible tax planning strategies in
assessing the need for a valuation allowance. If we determine that it is more
likely than not that we will not realize all or part of our deferred tax assets
in the future, we will record an adjustment to the carrying value of the
deferred tax asset, which would be reflected as income tax expense. Conversely,
if we determine we will realize a deferred tax asset, which currently has a
valuation allowance, we will reverse the valuation allowance, which would be
reflected as an income tax benefit.
 
 During
fiscal 2009 and 2010, we recorded valuation allowances against deferred income
tax assets of $700,419 and $378,803, respectively, representing the amount of
our deferred income tax assets in excess of our deferred income tax liabilities.
We recorded the valuation allowance because management was unable to conclude,
in light of the cumulative losses we have realized for the three year period
ended June 30, 2010, that realization of the net deferred income tax asset
was more likely than not.
 
 Impairment of Long-Lived Assets.Long-lived assets are reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount of such assets may not be
recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amounts of such assets to future net cash flows
expected to be generated by the assets. If such assets are considered to be
impaired, the impairment to be recognized is measured by the amount by which the
carrying amount of the assets exceeds the fair value of the assets.
 
 New
Accounting Pronouncements
 
 Please
refer to Note C, “Summary of Significant Accounting Policies—Recent Accounting
Pronouncements” to our financial statements included in this report for a
discussion on the impact of the adoption of new accounting
pronouncements.
 
 Results
of Operations
 
 Overview
 
 Comparisons
of selected consolidated statements of operations data as reported herein follow
for the periods indicated:
 
 Total Company:
                    
                    Year Ended
                      June 30, 2010
                    
                    
                    Year Ended
                      June 30, 2009
                    
                    
                    %
                      ChangeNet
      sales
                    
                    $
                    11,079,760
                    
                    
                    $
                    10,260,552
                    
                    
                    
                    8
                    %Gross
      profit
                    
                    $
                    3,680,399
                    
                    
                    $
                    3,116,444
                    
                    
                    
                    18
                    %Loss
      from operations
                    
                    $
                    (624,257
                    )
                    
                    $
                    (1,000,869
                    )
                    
                    
                    —Diluted
      (loss) per share
                    
                    $
                    (0.02
                    )
                    
                    $
                    (0.07
                    )
                    
                    
                    —
 
 Net Sales by Channel:
                    
                    Year Ended
                      June 30, 2010
                    
                    
                    Year Ended
                      June 30, 2009
                    
                    
                    %
                      ChangeDirect
                    
                    $
                    5,354,622
                    
                    
                    $
                    5,143,604
                    
                    
                    
                    4
                    %Wholesale
                    
                    $
                    4,735,789
                    
                    
                    $
                    4,022,127
                    
                    
                    
                    18
                    %Other
                    
                    $
                    989,349
                    
                    
                    $
                    1,094,821
                    
                    
                    
                    (10
                    )%Total
      Net Sales
                    
                    $
                    11,079,760
                    
                    
                    $
                    10,260,552
                    
                    
                    
                    8
                    %
 
 Other
revenues consist principally of shipping and handling fees derived from our
Direct business.
  12
 
 Year Ended
                      
                      
                      Margin
                      
                      
                      Year Ended
                      
                      
                      Margin
                      
                      
                      %Gross Profit by Channel:
                      
                      June 30, 2010
                      
                      
                      %
                      
                      
                      June 30, 2009
                      
                      
                      %
                      
                      
                      ChangeDirect
                      
                      $
                      2,601,700
                      
                      
                      
                      49
                      %
                      
                      $
                      2,017,835
                      
                      
                      
                      39
                      %
                      
                      
                      29
                      %Wholesale
                      
                      $
                      1,177,732
                      
                      
                      
                      25
                      %
                      
                      $
                      975,404
                      
                      
                      
                      24
                      %
                      
                      
                      21
                      %Other
                      
                      $
                      (99,033
                      )
                      
                      
                      (10
                      )%
                      
                      $
                      123,205
                      
                      
                      
                      11
                      %
                      
                      
                      (180
                      )%Total
      Gross Profit
                      
                      $
                      3,680,399
                      
                      
                      
                      33
                      %
                      
                      $
                      3,116,444
                      
                      
                      
                      30
                      %
                      
                      
                      18
                      %
 
 Fiscal
Year ended June 30, 2010 Compared to the Fiscal Year Ended June 30,
2009
 
 Net sales
for the twelve months ended June 30, 2010 increased from the comparable prior
year period by $819,208, or 8%. The increase in sales was substantially due to
an increase in sales through the Wholesale channel and, to a lesser extent,
higher sales of Liberator products through the Direct sales channel.  The
Direct sales channel, which consists of consumer sales through our two websites
and, to a lesser extent, our factory store, increased from approximately $5.1
million in the twelve months ended June 30, 2009 to approximately $5.4 million
in the twelve months ended June 30, 2010, an increase of approximately 4%. We
attribute this increase to a stabilization of the U.S. economy and more typical
levels of consumer spending on discretionary purchases. As a result of an
ongoing focus on our Wholesale business, sales to wholesale customers increased
approximately 18% from the prior year. Wholesale customers include Liberator
products sold to distributors and retailers and private label items sold to
other resellers. The Wholesale category also includes contract manufacturing
services, which consists of specialty items that are manufactured in small
quantities for certain customer, and which, to date, has not been a material
part of our business.
 
 Gross
profit, derived from net sales less the cost of product sales, includes the cost
of materials, direct labor, manufacturing overhead and depreciation. Gross
margin as a percentage of sales increased slightly from 30% for the year ended
June 30, 2009 to 33% for the year ended June 30, 2010. The improvement in gross
margin was primarily the result of a selling price increase that was implemented
in January 2010 in both the Direct and Wholesale channels.  This impact of
the price increase was partially offset by more frequent consumer promotions
offering “free” or significantly reduced shipping and handling, which accounts
for the decrease in the Other category revenue and gross profit. Because product
gross profit margins for all products in a given distribution channel are
comparable, we analyze and manage our business based on changes in distribution
channels and not by product mix.
 
 Total
operating expenses for the year ended June 30, 2010 were 39% of net sales, or
$4,304,656, compared to 40% of sales, or $4,117,313, for the year ended June 30,
2009. Operating expenses increased 5% from fiscal 2009 to fiscal 2010. This
increase in operating expenses was primarily the result of a 23% increase in
General and Administrative expense which was primarily the result of higher
personnel related costs.  The increase in General and Administrative
expense was partially offset by a decrease in Advertising and Promotion expense
of $182,358, or a 21% decrease.  Advertising and promotion expenses were
reduced during fiscal 2010 as part of a plan to improve the targeting, timing
and effectiveness of advertising spending.
 
 Other
income (expense) decreased from ($2,586,234) to ($409,695) in fiscal 2010. 
Expense related to the issuance of the convertible note payable to acquire
majority control of WES Consulting, Inc. during the first quarter of fiscal 2010
totaled $192,167.  This item consists of the discounted face value of the
$250,000 convertible note payable to Hope Capital, which is net of the value of
the embedded derivative.  Interest expense and financing costs during
fiscal 2010 decreased by 29% from $314,719 in fiscal 2009 to $222,071 in fiscal
2010. The decrease was primarily the result of lower interest rates on lower
average interest bearing debt balances.
 
 No
expense or benefit from income taxes was recorded in the twelve months ended
June 30, 2010 or 2009. We do not expect any U.S. federal or state income taxes
to be recorded for the current fiscal year because of available net operating
loss carry-forwards.
 
 We had a
net loss of $1,033,952, or ($0.02) per diluted share, for the twelve months
ended June 30, 2010 compared with a net loss of $3,587,103, or $(0.07) per
diluted share, for the twelve months ended June 30, 2009.
 
 Liquidity
and Capital Resources
  Our
primary sources of liquidity and capital resources are the availability of
borrowings under our credit facility and through sales of debt and equity
securities.
  The loss
from operations decreased to $624,257 during fiscal 2010 as compared to a loss
from operations of $1,000,869 in the prior fiscal year. At June 30, 2010,
increases in accounts receivable, consisting primarily of amounts due from our
wholesale customers, required $216,442 in cash during fiscal 2010 compared to
requiring $16,710 in fiscal 2009. At June 30, 2010, increases in inventory
required $208,448 in cash during fiscal 2010 compared to $552,400 of cash
provided in fiscal 2009. The increase in inventory in fiscal 2010 was primarily
related to increasing sales demand and management’s continued efforts to reduce
delivery lead times to customers.
  13
  At June
30, 2010, decreases in accounts payable required $668,707 in cash during fiscal
2010 compared to providing $633,674 in cash during fiscal 2009. At June 30,
2010, increases in accrued payroll and related expenses provided $129,802 in
cash compared to $16,916 in the prior fiscal year. The increase in accrued
payroll and related expenses is primarily due to the timing of the pay day at
the end of the fiscal year relative to the end of the pay period and the accrual
of $76,838 in deferred compensation expense.
  Operating
activities required $1,661,640 of our cash flow in fiscal 2010. This compares
with net cash provided by operating activities of $252,097 in fiscal
2009.
  Cash used
in investing activities in fiscal 2010 was $189,178 compared to $352,392 in
fiscal 2009 and consisted of capital expenditures for machinery, equipment and
software.
  At
June 30, 2010, we had $320,184 outstanding on our line of credit, compared
to an outstanding balance of $171,433 at June 30, 2009.
  On May
17, 2010, OneUp Innovations, Inc., our wholly owned subsidiary, entered into a
credit facility to provide it with an asset based line of credit of up to
$600,000 against 80% of eligible accounts receivable (as defined in the
agreement.)  The term of the agreement is one year, renewable for
additional one-year terms unless either party provides written notice of
non-renewal at least 60 days prior to the end of the current financing period.
The credit facility is secured by our accounts receivable and other rights to
payment, general intangibles, inventory and equipment, and are subject to
eligibility requirements for current accounts receivable and inventory balances.
Advances under the agreement bear interest at a rate of 2% over the prime rate
(5.25% as of June 30, 2010) for the accounts receivable portion of the advances
and the inventory portion of the borrowings.  In addition there are
collateral management fees of 0.4% for each 10-day period that an advance on an
accounts receivable invoice remains outstanding and a 1.9% collateral management
fee on the average monthly loan outstanding on the inventory portion of any
advance. As of June 30, 2010, we had $320,184 outstanding on this line of
credit.  The Company’s CEO, Louis Friedman, has personally guaranteed the
repayment of the loan obligation.  On June 30, 2010, we were in
compliance with all of the financial and other covenants required under this
credit facility.
 
 On
November 10, 2009, the Company entered into a loan agreement for a line of
credit with a commercial finance company that provided credit of up to 80% of
domestic accounts receivable aged less than 90 days up to $250,000. Borrowings
under the agreement bear interest at Prime rate plus 6% (9.25% as of November
10, 2009) plus a 2% annual facility fee and a .25% monthly collateral monitoring
fee, as defined in the agreement.  The balance owed under this revolving
line of credit was repaid on May 17, 2010.
 
 As of
June 30, 2009, we had a line of credit with a commercial finance company which
provided up to $500,000 credit against 85% of eligible accounts receivable (aged
less than 90 days) and eligible inventory (as defined in the agreement) up to a
sub-limit of $220,000, such inventory loan not to exceed 30% of the accounts
receivable loan. Borrowings under the agreement bear interest at the Prime rate
plus two percent (5.25 percent at June 30, 2009), payable monthly. As of June
30, 2009, we were in full compliance with the terms of this revolving line of
credit. As of June 30, 2009, the amount owed on the line of credit was $171,433
and it was repaid in full in August, 2009.
 
 As of
June 30, 2010, we had $388,659 in cash and cash equivalents.
 
 The
accompanying financial statements have been prepared in accordance with U.S.
generally accepted accounting principles, which contemplates continuation of the
Company as a going concern. The Company incurred a net loss of $1,033,952 and
$3,587,103 for the years ended June 30, 2010 and 2009, respectively, and, as of
June 30, 2010, the Company has an accumulated deficit of $6,175,531 and a
working capital deficit of $676,989.
 
 In view
of these matters, realization of a major portion of the assets in the
accompanying balance sheet is dependent upon continued operations of the
Company, which in turn is dependent upon the Company's ability to meet its
financing requirements, and the success of its future operations. Management
believes that actions presently being taken to revise the Company's operating
and financial requirements provide the opportunity for the Company to continue
as a going concern.
 
 These
actions include initiatives to increase gross profit margins through improved
production controls and internal reporting. To that end, the Company recently
implemented a new Enterprise Resource Planning (ERP) software system. We also
plan to reduce discretionary expense levels to be better in line with current
revenue levels. Furthermore, our plan of operation in the next twelve months
continues a strategy for growth within our existing lines of business with an
on-going focus on growing domestic sales. We estimate that the operational and
strategic development plans we have identified will require approximately
$2,300,000 of funding. We expect to invest approximately $500,000 for additional
inventory of sexual wellness products and $1,800,000 on sales and marketing
programs, primarily sexual wellness advertising in magazines and on cable
television. We will also be exploring the opportunity to acquire other
compatible businesses.
  14
  We plan
to finance the required $2,300,000 with a combination of cash flow from
operations as well as cash on hand and cash raised through equity and debt
financings.
 
 If our
business plans and cost estimates are inaccurate and our operations require
additional cash or if we deviate from our current plans, we could be required to
seek debt financing for particular projects or for ongoing operational needs.
This indebtedness could harm our business if we are unable to obtain additional
financing on reasonable terms. In addition, any indebtedness we incur in the
future could subject us to restrictive covenants limiting our flexibility in
planning for, or reacting to changes in, our business. If we do not comply with
such covenants, our lenders could accelerate repayment of our debt or restrict
our access to further borrowings, which in turn could restrict our operating
flexibility and endanger our ability to continue operations.
 
 Off-Balance
Sheet Arrangements
 
 As of
June 30, 2010, we did not have any significant off-balance sheet debt nor
did we have any transactions, arrangements, obligations (including contingent
obligations) or other relationships with any unconsolidated entities or other
persons that have or are reasonably likely to have a material current or future
effect on our financial condition, changes in financial condition, results of
operations, liquidity, capital expenditures, capital resources, or significant
components of revenue or expenses material to investors.
 
 Inflation
 
 During
early fiscal 2009, we experienced increases in various product raw material
costs, transportation costs and the cost of petroleum based raw materials and
packaging supplies used in our business, which were associated with higher oil
and fuel costs. We currently believe petroleum related raw material and product
cost pricing pressures have stabilized and will remain relatively constant
throughout fiscal 2011, although there is no assurance this will occur. We do
not believe current inflation rates will have a material impact on our future
operations or profitability.
 
 Variability
of Results
 
 We have
experienced significant quarterly fluctuations in operating results and
anticipate that these fluctuations may continue in future periods. As described
in previous paragraphs, operating results have fluctuated as a result of changes
in sales levels to consumers and wholesalers, competition, costs associated with
new product introductions and increases in raw material costs. In addition,
future operating results may fluctuate as a result of factors beyond our control
such as foreign exchange fluctuation, changes in government regulations, and
economic changes in the markets we operate in and sell to. A portion of our
operating expenses are relatively fixed and the timing of increases in expense
levels is based in large part on forecasts of future sales. Therefore, if net
sales are below expectations in any given period, the adverse impact on results
of operations may be magnified by our inability to meaningfully adjust spending
in certain areas, or the inability to adjust spending quickly enough, as in
personnel and administrative costs, to compensate for a sales shortfall. We may
also choose to reduce prices or increase spending in response to market
conditions, and these decisions may have a material adverse effect on financial
condition and results of operations.
  15
  ITEM 8. 
        Financial Statements and Supplementary
Data
  INDEX
TO CONSOLIDATED FINANCIAL STATEMENTS
  PageConsolidated
      Financial Statements:Report
      of Independent Registered Public Accounting Firm
                
                F-1Consolidated
      Balance Sheets as of June 30, 2010 and 2009
                
                F-2Consolidated
      Statements of Operations for the years ended June 30, 2010 and
      2009
                
                F-3Consolidated
      Statements of Changes in Stockholders' Equity (Deficit) from July 1, 2008
      to June 30, 2010
                
                F-4Consolidated
      Statements of Cash Flows for the years ended June 30, 2010 and
      2009
                
                F-5Notes
      to Consolidated Financial Statements
                
                F-6
  16
  REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 To the
Board of Directors and Stockholders of WES Consulting, Inc.
 
 We have
audited the accompanying consolidated balance sheets of WES Consulting, Inc. as
of June 30, 2010 and 2009, and the related consolidated statements of
operations, changes in stockholders’ equity (deficit), and cash flows for each
of the years in the two year period ended June 30, 2010.  WES Consulting,
Inc.’s management is responsible for these consolidated financial statements.
Our responsibility is to express an opinion on these financial statements based
on our audits.
 
 We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
 
 In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the financial position of WES Consulting, Inc. as of
June 30, 2010 and 2009, and the results of its consolidated operations and
its consolidated cash flows for each of the years in the two year period ended
June 30, 2010, in conformity with accounting principles generally accepted in
the United States of America.
 
 The
accompanying consolidated financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note B to the
financial statements, conditions exist which raise substantial doubt about the
Company’s ability to continue as a going concern unless it is able to generate
sufficient cash flows to meet its financing requirements and attain profitable
operations. Management’s plans in regard to these matters are also described in
Note B.  The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
 
 Gruber
& Company, LLC
 
 /s/ Gruber & Company,
LLC
 
 Lake
Saint Louis, Missouri
 October
8, 2010
  F-1
  WES
Consulting, Inc. and Subsidiaries
 
 Consolidated
Balance Sheets
  June 30,
                                            2010
                                          
                                          
                                          (restated)
                                            June 30,
                                            2009Assets:Current
      assets:Cash
      and cash equivalents
                                          
                                          $
                                          388,659
                                          
                                          
                                          $
                                          1,815,633Accounts
      receivable, net of allowance for doubtful accounts of $14,143 in 2010 and
      $5,740 in2009
                                          
                                          
                                          562,872
                                          
                                          
                                          
                                          346,430Inventories
                                          
                                          
                                          908,851
                                          
                                          
                                          
                                          700,403Prepaid
      expenses
                                          
                                          
                                          212,438
                                          
                                          
                                          
                                          95,891Total
      current assets
                                          
                                          
                                          2,072,820
                                          
                                          
                                          
                                          2,958,357Property
      and equipment, net
                                          
                                          
                                          1,075,315
                                          
                                          
                                          
                                          1,135,517Total
      assets
                                          
                                          $
                                          3,148,135
                                          
                                          
                                          $
                                          4,093,874Liabilities
      and stockholders’ equity:Current
      liabilities:Accounts
      payable
                                          
                                          $
                                          1,579,138
                                          
                                          
                                          $
                                          2,247,845Accrued
      compensation
                                          
                                          
                                          284,796
                                          
                                          
                                          
                                          154,994Accrued
      expenses and interest
                                          
                                          
                                          125,869
                                          
                                          
                                          
                                          145,793Line
      of credit
                                          
                                          
                                          320,184
                                          
                                          
                                          
                                          171,433Short-term
      notes payable
                                          
                                          
                                          362,812
                                          
                                          
                                          
                                          –Current
      portion of long-term debt
                                          
                                          
                                          77,010
                                          
                                          
                                          
                                          145,481Credit
      card advance
                                          
                                          
                                          –
                                          
                                          
                                          
                                          198,935Total
      current liabilities
                                          
                                          
                                          2,749,809
                                          
                                          
                                          
                                          3,064,481Long-term
      liabilities:Note
      payable – equipment
                                          
                                          
                                          12,136
                                          
                                          
                                          
                                          72,812Leases
      payable
                                          
                                          
                                          140,749
                                          
                                          
                                          
                                          225,032Notes
      payable – related party
                                          
                                          
                                          105,948
                                          
                                          
                                          
                                          125,948Convertible
      notes payable – shareholder (net)
                                          
                                          
                                          523,731
                                          
                                          
                                          
                                          285,750Unsecured
      lines of credit
                                          
                                          
                                          99,664
                                          
                                          
                                          
                                          124,989Deferred
      rent payable
                                          
                                          
                                          331,570
                                          
                                          
                                          
                                          356,308Less:
      current portion of long-term debt
                                          
                                          
                                          (77,010
                                          )
                                          
                                          
                                          (145,481
                                          )Total
      long-term liabilities
                                          
                                          
                                          1,136,788
                                          
                                          
                                          
                                          1,045,358Total
      Liabilities
                                          
                                          
                                          3,886,597
                                          
                                          
                                          
                                          4,109,839Commitments
      and contingenciesStockholders’
      deficit:Series
      A Convertible Preferred stock, zero shares authorized, 4,300,000 shares
      are obligated to be issued by the Company with a liquidation preference
      of  $1,000,000 as of June 30, 2010. On June 30, 2009, 4,300,000
      shares of ConvertiblePreferred
      Stock, $0.0001 par value, with a liquidation preference of $1,000,000 were
      outstanding
                                          
                                          
                                          –
                                          
                                          
                                          
                                          430Common
      stock, $0.01 par value, 175,000,000 shares authorized, 63,182,647 and
      60,932,981 shares issued and outstanding in 2010 and 2009,
      respectively
                                          
                                          
                                          631,826
                                          
                                          
                                          
                                          609,330Additional
      paid-in capital
                                          
                                          
                                          4,805,243
                                          
                                          
                                          
                                          4,515,854Retained
      deficit
                                          
                                          
                                          (6,175,531
                                          )
                                          
                                          
                                          (5,141,579
                                          )Total
      stockholders’ deficit
                                          
                                          
                                          (738,462
                                          )
                                          
                                          
                                          (15,965
                                          )Total
      liabilities and stockholders’ equity
                                          
                                          $
                                          3,148,135
                                          
                                          
                                          $
                                          4,093,874
  The
accompanying notes are an integral part of these consolidated financial
statements.
  F-2
  WES
Consulting, Inc. and Subsidiaries
  Consolidated
Statements of Operations
  Years
Ended June 30, 2010 and 2009
  2010
                
                
                (restated)
                    2009Net
      Sales
                
                $
                11,079,760
                
                
                $
                10,260,552Cost
      of goods sold
                
                
                7,399,361
                
                
                
                7,144,108Gross
      profit
                
                
                3,680,399
                
                
                
                3,116,444Operating
      expenses:Advertising
      and Promotion
                
                
                682,332
                
                
                
                864,690Other
      Selling and Marketing
                
                
                1,184,391
                
                
                
                1,201,054General
      and Administrative
                
                
                2,188,553
                
                
                
                1,781,352Depreciation
                
                
                249,380
                
                
                
                270,217Total
      operating expenses
                
                
                4,304,656
                
                
                
                4,117,313Loss
      from Operations
                
                
                (624,257
                )
                
                
                (1,000,869
                )Other
      Income (Expense):Interest
      income
                
                
                4,543
                
                
                
                1,980Interest
      (expense) and financing costs
                
                
                (222,071
                )
                
                
                (314,719
                )Expenses
      related to merger
                
                
                (192,167
                )
                
                
                (2,273,495
                )Total
      Other Income (Expense)
                
                
                (409,695
                )
                
                
                (2,586,234
                )Net
      Loss Before Income taxes
                
                
                (1,033,952
                )
                
                
                (3,587,103
                )Provision
      for Income Taxes
                
                
                –
                
                
                
                –Net
      Loss
                
                $
                (1,033,952
                )
                
                $
                (3,587,103
                )Loss
      per share:Basic
                
                $
                (0.02
                )
                
                $
                (0.07
                )Diluted
                
                $
                (0.02
                )
                
                $
                (0.07
                )Weighted-average
      number of common shares outstanding:Basic
                
                
                62,103,434
                
                
                
                48,341,549Diluted
                
                
                62,103,434
                
                
                
                48,341,549
 
 The
accompanying notes are an integral part of these consolidated financial
statements.
  F-3
  WES
Consulting, Inc. and Subsidiaries
  Consolidated
Statements of Changes in Stockholders’ Equity (Deficit) (Restated)
  From
July 1, 2008 to June 30, 2010
  TotalSeries A Preferred
                                    
                                    
                                    
                                    
                                    
                                    Additional
                                    
                                    
                                    
                                    
                                    
                                    Stockholders'Stock
                                    
                                    
                                    Common Stock
                                    
                                    
                                    Paid-in
                                    
                                    
                                    Accumulated
                                    
                                    
                                    EquityShares
                                    
                                    
                                    $
                                    
                                    
                                    Shares
                                    
                                    
                                    $
                                    
                                    
                                    Capital
                                    
                                    
                                    Deficit
                                    
                                    
                                    (Deficit)Balance, July
      1, 2008
                                    
                                    
                                    
                                    
                                    
                                    $
                                    -
                                    
                                    
                                    
                                    45,000,001
                                    
                                    
                                    $
                                    450,000
                                    
                                    
                                    $
                                    156,284
                                    
                                    
                                    $
                                    (1,554,476
                                    )
                                    
                                    $
                                    (948,192
                                    )Stock
      issued for cash
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    5,000,000
                                    
                                    
                                    
                                    50,000
                                    
                                    
                                    
                                    (47,000
                                    )
                                    
                                    
                                    -
                                    
                                    
                                    
                                    3,000Related
      party debt and interest exchanged for convertible preferred
      stock
                                    
                                    
                                    4,300,000
                                    
                                    
                                    $
                                    430
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    831,690
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    832,120Common
      stock issued in private placement, net of $303,535 in issuance costs, fees
      and expenses
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    8,000,000
                                    
                                    
                                    
                                    80,000
                                    
                                    
                                    
                                    1,616,465
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    1,696,465Shares
      issued for services in connection with the private
    placement
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    2,932,980
                                    
                                    
                                    
                                    29,330
                                    
                                    
                                    
                                    (29,330
                                    )
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -Fair
      market value of shares issued for services in connection with the private
      placement
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    733,245
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    733,245Fair
      market value of shares issued in merger
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    1,250,000
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    1,250,000Fair
      market value of warrant issued to Hope Capital
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    4,500
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    4,500Net
      loss (restated)
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    (3,587,103
                                    )
                                    
                                    
                                    (3,587,103
                                    )Ending
      balance, June 30, 2009
                                    
                                    
                                    4,300,000
                                    
                                    
                                    $
                                    430
                                    
                                    
                                    
                                    60,932,981
                                    
                                    
                                    $
                                    609,330
                                    
                                    
                                    $
                                    4,515,854
                                    
                                    
                                    $
                                    (5,141,579
                                    )
                                    
                                    $
                                    (15,965
                                    )Obligation
      to issue preferred stock
                                    
                                    
                                    (4,300,000
                                    )
                                    
                                    
                                    (430
                                    )
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    430
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    -Recapitalization
      in connectionwith
      merger with Liberator, Inc.
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    983,000
                                    
                                    
                                    
                                    9,830
                                    
                                    
                                    
                                    (9,830
                                    )
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -Common
      stock issued in privateplacement,
      net of $48,500 inissuance
      costs, fees and expenses
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    1,000,000
                                    
                                    
                                    
                                    10,000
                                    
                                    
                                    
                                    241,500
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    251,500Shares
      issued for services inconnection
      with the privateplacement
                                    
                                    
                                    
                                    -
                                    
                                    
                                    -
                                    
                                    
                                    
                                    100,000
                                    
                                    
                                    
                                    1,000
                                    
                                    
                                    
                                    (1,000
                                    )
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -Common
      stock issued in privateplacement
                                    
                                    
                                    
                                    -
                                    
                                    
                                    -
                                    
                                    
                                    
                                    166,666
                                    
                                    
                                    
                                    1,666
                                    
                                    
                                    
                                    48,334
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    50,000Stock-based
      compensation
                                    
                                    
                                    
                                    -
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    9,955
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    9,955Net
      loss
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    (1,033,952
                                    )
                                    
                                    
                                    (1,033,952
                                    )Ending
      balance, June 30, 2010
                                    
                                    
                                    -
                                    
                                    
                                    $
                                    -
                                    
                                    
                                    
                                    63,182,647
                                    
                                    
                                    $
                                    631,826
                                    
                                    
                                    $
                                    4,805,243
                                    
                                    
                                    $
                                    (6,175,531
                                    )
                                    
                                    $
                                    (738,462
                                    )
 
 The
accompanying notes are an integral part of these consolidated financial
statements.
  F-4
  WES
Consulting, Inc. and Subsidiaries
 
 Consolidated
Statements of Cash Flows
 
 Years
Ended June 30, 2010 and 2009
 
 2010
                                  
                                  
                                  (restated)
                                    2009CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      loss
                                  
                                  $
                                  (1,033,952
                                  )
                                  
                                  $
                                  (3,587,103
                                  )Adjustments to reconcile (loss)
      from continued operations to net cash from
    operations:Depreciation
                                  
                                  
                                  249,380
                                  
                                  
                                  
                                  270,217Equity
      compensation
                                  
                                  
                                  9,955
                                  
                                  
                                  
                                  -Expenses
      related to merger
                                  
                                  
                                  192,167
                                  
                                  
                                  
                                  2,273,495Amortization
      of debt issuance costs
                                  
                                  
                                  45,815
                                  
                                  
                                  
                                  -Change
      in operating assets and liabilities:Accounts
      Receivable
                                  
                                  
                                  (216,442
                                  )
                                  
                                  
                                  (16,710
                                  )Inventory
                                  
                                  
                                  (208,448
                                  )
                                  
                                  
                                  552,400Prepaid
      expenses
                                  
                                  
                                  (116,547
                                  )
                                  
                                  
                                  17,107Accounts
      payable
                                  
                                  
                                  (668,707
                                  )
                                  
                                  
                                  633,674Accrued
      expenses
                                  
                                  
                                  (19,924
                                  )
                                  
                                  
                                  72,947Accrued
      Payroll and Related
                                  
                                  
                                  129,802
                                  
                                  
                                  
                                  16,916Deferred
      rent payable
                                  
                                  
                                  (24,738
                                  )
                                  
                                  
                                  19,153Net
      cash (used in) provided by operating activities
                                  
                                  
                                  (1,661,640
                                  )
                                  
                                  
                                  252,097CASH
      FLOWS FROM INVESTING ACTIVITIES:Investments
      in equipment
                                  
                                  
                                  (189,178
                                  )
                                  
                                  
                                  (352,392
                                  )Net
      cash used in investing activities
                                  
                                  
                                  (189,178
                                  )
                                  
                                  
                                  (352,392
                                  )CASH
      FLOWS FROM FINANCING ACTIVITIES:Net
      proceeds from sale of common stock
                                  
                                  
                                  301,500
                                  
                                  
                                  
                                  1,699,465Borrowings
      under line of credit
                                  
                                  
                                  2,056,071
                                  
                                  
                                  
                                  2,710,368Repayment
      of line of credit
                                  
                                  
                                  (1,907,320
                                  )
                                  
                                  
                                  (2,817,075
                                  )Borrowings
      (repayments) of loans from related party
                                  
                                  
                                  (20,000
                                  )
                                  
                                  
                                  120,948Proceeds
      from credit card advance
                                  
                                  
                                  -
                                  
                                  
                                  
                                  550,000Repayment
      of credit card advance
                                  
                                  
                                  (198,935
                                  )
                                  
                                  
                                  (351,065
                                  )Proceeds
      from short term note and unsecured notes
                                  
                                  
                                  465,000
                                  
                                  
                                  
                                  100,000Repayment
      of short term note and unsecured notes
                                  
                                  
                                  (127,513
                                  )
                                  
                                  
                                  (214,160
                                  )Principle
      payments on note payable and capital leases
                                  
                                  
                                  (144,959
                                  )
                                  
                                  
                                  (83,260
                                  )Additions
      to capital leases
                                  
                                  
                                  -
                                  
                                  
                                  
                                  111,188Net
      cash provided by financing activities
                                  
                                  
                                  423,844
                                  
                                  
                                  
                                  1,826,409NET
      INCREASE (DECREASE) IN CASH AND EQUIVALENTS
                                  
                                  
                                  (1,426,974
                                  )
                                  
                                  
                                  1,726,114CASH
      AND CASH EQUIVALENTS, BEGINNING OF PERIOD
                                  
                                  
                                  1,815,633
                                  
                                  
                                  
                                  89,519CASH
      AND CASH EQUIVALENTS AT END OF PERIOD
                                  
                                  $
                                  388,659
                                  
                                  
                                  $
                                  1,815,633Supplemental
      Disclosure of Cash Flow Information:Non
      cash items:Common
      stock issued in acquisition of subsidiary
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  1,987,745Note
      payable issued in acquisition of majority control, net of embedded
      derivative
                                  
                                  $
                                  192,167
                                  
                                  
                                  $
                                  285,750Cash
      paid during the year for:Interest
                                  
                                  $
                                  153,763
                                  
                                  
                                  $
                                  245,256Income
      Taxes
                                  
                                  
                                  –
                                  
                                  
                                  
                                  –
 
 The
accompanying notes are an integral part of these consolidated financial
statements.
  F-5
  WES
Consulting, Inc. and Subsidiaries
 Notes
to Consolidated Financial Statements
  NOTE
A – ORGANIZATION AND NATURE OF BUSINESS
  WES
Consulting, Inc. (the “Company”) was incorporated February 25, 1999 in the State
of Florida. Until October 19, 2009, the Company was in the business of
consulting and commercial property management.  On October 19, 2009, the
Company entered into a Merger and Recapitalization Agreement (the “Merger
Agreement”) with Liberator, Inc., a Nevada corporation (“Liberator”). 
Pursuant to the Agreement, Liberator merged with and into the Company, with the
Company surviving as the sole remaining entity (the “Merger”).  References
to the “Company” in these notes includes the Company and its wholly owned
subsidiaries, OneUp Innovations, Inc. and Foam Labs, Inc.
 
 As a
result of the Merger, each issued and outstanding share of the common stock of
Liberator (the “Liberator Common Shares”) were converted into one share of the
Company’s common stock, $0.01 par value, which, after giving effect to the
Merger, equaled, in the aggregate, 98.4% of the total issued and outstanding
common stock of the Company (the “WES Common Stock”).  Pursuant to the
Merger Agreement, each issued and outstanding share of preferred stock of
Liberator (the “Liberator Preferred Shares”) was to be converted into one share
of the Company’s preferred stock with the provisions, rights, and designations
set forth in the Merger Agreement (the “WES Preferred Stock”).  On the
execution date of the Merger Agreement, the Company was not authorized to issue
any preferred stock, and the parties agreed that the Company will file an
amendment to its Articles of Incorporation authorizing the issuance of the WES
Preferred Stock, and at such time the WES Preferred Stock will be exchanged
pursuant to the terms of the Merger Agreement.  As of the execution date of
the Merger Agreement, Liberator owned eighty-one point seven (80.7%) percent of
the issued and outstanding shares of the Company’s common stock.  Upon the
consummation of the Merger, the shares of WES Common Stock owned by Liberator
prior to the Merger were cancelled.
 
 The
Merger has been accounted for as a reverse merger, and as such the historical
financial statements of Liberator are being presented herein with those of the
Company.  Also, the capital structure of the Company for all periods
presented herein is different from that appearing in the historical financial
statements of the Company due to the recapitalization accounting.
 
 The
Company is a designer and manufacturer of various specialty furnishings for the
sexual wellness market.  The Company's sales and manufacturing operation
are located in the same facility in Atlanta, Georgia.  Sales are generated
through the internet and print advertisements. We have a diversified customer
base with no one customer accounting for 10% or more of consolidated net sales
and no particular concentration of credit risk in one economic sector. 
Foreign operations and foreign net sales are not material.
 
 NOTE
B – GOING CONCERN
 
 The
accompanying financial statements have been prepared in accordance with U.S.
generally accepted accounting principles, which contemplates continuation of the
Company as a going concern. The Company incurred a net loss of $1,033,952 and
$3,587,103 (as restated) for the years ended June 30, 2010 and 2009,
respectively and as of June 30, 2010 the Company had an accumulated deficit of
$6,175,531 and a working capital deficit of $676,989.
 
 In view
of these matters, realization of a major portion of the assets in the
accompanying balance sheet is dependent upon continued operations of the
Company, which in turn is dependent upon the Company's ability to meet its
financing requirements and the success of its future operations. 
Management believes that actions presently being taken to revise the Company's
operating and financial requirements provide the opportunity for the Company to
continue as a going concern.
 
 These
actions include initiatives to increase gross profit margins through improved
production controls and reporting and additional manufacturing equipment to
improve production efficiencies. To that end, the Company recently implemented a
new Enterprise Resource Planning (ERP) software system and installed a second
unit production sewing system. We also plan to reduce discretionary expense
levels to be better in line with current revenue levels.  Furthermore, our
plan of operation in the next twelve months continues a strategy for growth
within our existing lines of business with an on-going focus on growing domestic
sales. We estimate that the operational and strategic development plans we have
identified will require approximately $2,300,000 of funding. We expect to invest
approximately $500,000 for additional inventory of sexual wellness products and
$1,800,000 on sales and marketing programs, primarily sexual wellness
advertising in magazines and on cable television. We will also be exploring the
opportunity to acquire other compatible businesses.
  We plan
to finance the required $2,300,000 with a combination of cash flow from
operations as well as cash on hand, borrowings under our line of credit, and
cash raised through equity and debt financings.
 
 The
ability of the Company to continue as a going concern is dependent upon its
ability to successfully accomplish the plans described in the preceding
paragraph and eventually secure other sources of financing and attain profitable
operations.  However, management cannot provide any assurances that the
Company will be successful in accomplishing these plans.  The accompanying
financial statements do not include any adjustments that might be necessary if
the Company is unable to continue as a going concern.
  F-6
  WES
Consulting, Inc. and Subsidiaries
 Notes
to Consolidated Financial Statements
  NOTE
C – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  Basis
of Presentation
 
 These
consolidated financial statements include the accounts and operations of the
Company and our wholly owned subsidiaries.  Intercompany accounts and
transactions have been eliminated in consolidation.  Certain prior period
amounts have been reclassified to conform to the current year
presentation.
 
 Use
of Estimates
 
 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 in determining the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and reported amounts of revenues and
expenses during the reporting period.  Significant estimates in these
consolidated financial statements include estimates of: asset impairment; income
taxes; tax valuation reserves; restructuring reserve; loss contingencies;
allowances for doubtful accounts; share-based compensation; and useful lives for
depreciation and amortization.  Actual results could differ materially from
these estimates.
 
 Revenue
Recognition
 
 The
Company recognizes revenue in accordance with SEC Staff Accounting Bulletin
(“SAB”) No. 104, “Revenue
Recognition”(“SAB No. 104”).  SAB No. 104
requires that four basic criteria must be met before revenue can be recognized:
(1) persuasive evidence of an arrangement exists; (2) title has
transferred; (3) the fee is fixed or determinable; and
(4) collectability is reasonably assured.  The Company uses contracts
and customer purchase orders to determine the existence of an arrangement. The
Company uses shipping documents and third-party proof of delivery to verify that
title has transferred. The Company assesses whether the fee is fixed or
determinable based upon the terms of the agreement associated with the
transaction. To determine whether collection is probable, the Company assesses a
number of factors, including past transaction history with the customer and the
creditworthiness of the customer. If the Company determines that collection is
not reasonably assured, then the recognition of revenue is deferred until
collection becomes reasonably assured, which is generally upon receipt of
payment.
  The
Company records product sales net of estimated product returns and discounts
from the list prices for its products. The amounts of product returns and the
discount amounts have not been material to date. The Company includes shipping
and handling costs in cost of product sales.
 
 Cash
and Cash Equivalents
 
 For
purposes of reporting cash flows, the Company considers all highly liquid debt
instruments purchased with a maturity of three months or less to be cash
equivalents.
 
 Allowance
for Doubtful Accounts
 
 The
allowance for doubtful accounts reflects management's best estimate of probable
credit losses inherent in the accounts receivable balance.  The Company
determines the allowance based on historical experience, specifically identified
nonpaying accounts and other currently available evidence.  The Company
reviews its allowance for doubtful accounts monthly with a focus on significant
individual past due balances over 90 days.  Account balances are charged
off against the allowance after all means of collection have been exhausted and
the potential for recovery is considered remote. The Company does not have any
off-balance sheet credit exposure related to its customers.  At June 30,
2010, accounts receivable totaled $562,872 net of $14,143 in the allowance for
doubtful accounts.
 
 Inventories
 
 Inventories
are stated at the lower of cost or market. Cost is determined using the
first-in, first-out (FIFO) method. Market is defined as sales price less cost to
dispose and a normal profit margin.  Inventory costs include materials,
labor, depreciation and overhead.
  F-7
  WES
Consulting, Inc. and Subsidiaries
 Notes
to Consolidated Financial Statements
 
 NOTE
C – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
 
 Concentration
of Credit Risk
 
 Financial
instruments that potentially subject us to significant concentration of credit
risk consist primarily of cash, cash equivalents, and accounts receivable. 
As of June 30, 2010, substantially all of our cash and cash equivalents were
managed by a single financial institution.  As of June 30, 2010 none of our
cash and cash equivalents exceeded the FDIC insured limits.  Accounts
receivable are typically unsecured and are derived from revenue earned from
customers primarily located in the United States, Canada and
Europe.
 
 Fair
Value of Financial Instruments
 
 The
Company values its financial instruments in accordance with accounting guidance
on fair value measurements, which, for certain financial assets and liabilities,
requires that assets and liabilities carried at fair value be classified and
disclosed in one of the following three categories:
 
 •
              Level
      1 — Quoted prices in active markets for identical assets or liabilities.
      We have no assets or liabilities valued with Level 1
    inputs.
 •
              Level
      2 — Inputs other than quoted prices included in Level 1, such as quoted
      prices for similar assets and liabilities in active markets; quoted prices
      for identical or similar assets and liabilities in markets that are not
      active; or other inputs that are observable or can be corroborated by
      observable market data.  We have no assets or liabilities valued with
      Level 2 inputs.
 •
              Level
      3 — Unobservable inputs that are supported by little or no market activity
      and that are significant to the fair value of the assets or liabilities.
      This includes certain pricing models, discounted cash flow methodologies,
      and similar techniques that use significant unobservable inputs. We have
      no assets or liabilities valued with Level 3
  inputs.
 
 At June
30, 2010, our financial instruments included cash and cash equivalents, accounts
receivable, accounts payable, obligations under capital leases, and other
long-term debt. The fair values of these financial instruments approximated
their carrying values based on either their short maturity or current terms for
similar instruments.
 
 Advertising
Costs
 
 Advertising
costs are expensed in the period when the advertisements are first aired or
distributed to the public. Prepaid advertising (included in prepaid expenses)
was $60,427 at June 30, 2010 and $57,625 at June 30, 2009. Advertising expense
for the years ended June 30, 2010 and 2009 was $682,332 and $864,690,
respectively.
 
 Research
and Development
 
 Research
and development expenses for new products are expensed as they are
incurred.  Expenses for new product development totaled $140,547 for the
year ended June 30, 2010 and $173,583 for the year ended June 30, 2009. Research
and development costs are included in general and administrative
expense.
 
 Shipping
and Handling
 
 We
account for shipping and handling costs in accordance with FASB ASC 605, Revenue
Recognition.  Amounts billed to customers in sale transactions related to
shipping and handling costs are recorded as revenue. Shipping and handling costs
incurred by us are included in cost of sales in the consolidated statements of
operations.
 
 Net sales
for the year ended June 30, 2010 and 2009 includes amounts charged to customers
of $954,924 and $1,071,978, respectively, for shipping and handling
charges.
  F-8
 
 WES
Consulting, Inc. and Subsidiaries
 Notes
to Consolidated Financial Statements
 
 NOTE
C – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
 
 Property
and Equipment
 
 Property
and equipment are stated at cost. Depreciation and amortization are computed
using the straight-line method over estimated service lives for financial
reporting purposes.
 
 Expenditures
for major renewals and betterments that extend the useful lives of property and
equipment are capitalized. Expenditures for maintenance and repairs are charged
to expense as incurred. When properties are disposed of, the related costs and
accumulated depreciation are removed from the respective accounts, and any gain
or loss is recognized currently.
 
 Operating
Leases
 
 The
Company leases its facility under a ten year operating lease that was signed in
September 2005 and expires on December 31, 2015.  The lease is on an
escalating schedule with payments during the final year of the lease at $34,358
per month.  The liability for this difference in the monthly payments is
accounted for as a deferred rent liability and the balance in this account at
June 30, 2010 is $331,570.  The rent expense under this lease for the years
ended June 30, 2010 and 2009 was $323,723.
 
 Segment
Information
 
 During
fiscal 2010 and 2009, the Company only operated in one segment; therefore,
segment information has not been presented.
 
 Recent Accounting
Pronouncements
 
 In
June 2008, the FASB issued revisions to FASB ASC 260, Earnings Per Share
(“FASB ASC 260”) that prescribe guidelines on determining whether instruments
granted in share-based payment transactions are participating securities prior
to vesting and, therefore, need to be included in the earnings allocation in
computing earnings per share. Further, the revisions clarify that unvested
share-based payment awards that contain non-forfeitable rights to dividends or
dividend equivalents (whether paid or unpaid) are participating securities and
shall be included in the computation of earnings per share pursuant to the two
class method. As required, we adopted these revisions to FASB ASC 260 effective
July 1, 2009.
 
 In
June 2009, the Financial Accounting Standards Board (“FASB”) issued
the Accounting Standards Codification TM (“ASC”) as the sole source of
authoritative non-governmental GAAP. The ASC supersedes all non-grandfathered,
non-SEC accounting literature but does not change how the Company accounts for
transactions or the nature of related disclosures made. Instead, when referring
to guidance issued by the FASB, the Company refers to topics in the ASC rather
than individual pronouncements. The Company has adopted the ASC, which became
effective for interim and annual periods ending after September 15, 2009,
and adoption did not have a material impact on its consolidated financial
statements.
  In
July 2009, the Company adopted authoritative guidance for business
combinations in accordance with ASC 805, “Business Combinations.” The
guidance retains the fundamental requirements that the acquisition method of
accounting (previously referred to as the purchase method of accounting) be used
for all business combinations but introduced a number of changes, including the
way assets and liabilities are valued, recognized, and measured as a result of
business combinations. ASC 805 requires an acquisition date fair value
measurement of assets acquired and liabilities assumed. It also requires the
capitalization of in-process research and development at fair value and requires
acquisition-related costs to be expensed as incurred. The Company has applied
this guidance to business combinations completed since July 1,
2009.
 
 In
January 2010, the FASB issued ASU 2010-06 “Improving Disclosures about Fair
Value Measurements”, which is an update to Topic 820, “Fair Value Measurement
and Disclosures.” This update establishes further disclosure requirements
regarding transfers in and out of levels 1 and 2, and activity in level 3 fair
value measurements. In addition, companies will be required to disclose
quantitative information about the inputs used in determining fair values. ASU
2010-06 is effective for interim and annual reporting periods beginning after
December 15, 2009, except for the new Level 3 disclosures which become
effective after December 15, 2010. The Company adopted ASU 2010-06 on
January 1, 2010, and the adoption had no impact on the Company’s financial
position or results of operations as it only amends required
disclosures.
  F-9
  WES
Consulting, Inc. and Subsidiaries
 Notes
to Consolidated Financial Statements
 
 NOTE
C – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
 
 Recent Accounting Pronouncements
(continued)
 
 In
February 2010, the FASB issued ASU 2010-09, “Subsequent Events (Topic
855).”  The amendments remove the requirements for an SEC filer to
disclose a date, in both issued and revised financial statements, through which
subsequent events have been reviewed.  Revised financial statements include
financial statements revised as a result of either correction of an error or
retrospective application of U.S. GAAP.  ASU 2010-09 is effective for
interim or annual financial periods ending after June 15, 2010.  The
Company does not expect the provisions of ASU 2010-09 to have a material effect
on its consolidated financial statements.
 
 We have
determined that all other recently issued accounting standards will not have a
material impact on our consolidated financial statements, or do not apply to our
operations.
 
 Basic and Diluted Net Loss Per
Share
 
 The loss
per share (“EPS”) is presented in accordance with the provisions of the
Accounting Standards Codification (“ASC”).  Basic EPS is calculated by
dividing the income or loss available to common shareholders by the weighted
average number of common shares outstanding for the period.  Diluted EPS
reflects the potential dilution that could occur if securities or other
contracts to issue common stock were exercised or converted into common
stock.  Basic and diluted EPS were the same for fiscal 2010 and 2009, as
the Company had losses from operations during both years and therefore the
effect of all potential common stock equivalents is anti-dilutive (reduces loss
per share).
  There
were approximately 5,650,849 and 4,400,849 securities excluded from the
calculation of diluted loss per share because their effect was anti-dilutive for
the years ended June 30, 2010 and 2009, respectively.
  Income
Taxes
  Income
taxes are accounted for under the asset and liability method. The asset and
liability method requires the recognition of deferred tax assets and liabilities
for the expected future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities and
their tax bases and operating loss and tax credit carry forwards. Deferred tax
assets and liabilities are measured using enacted income tax rates applicable to
the period that includes the enactment date.
  As a
result of the implementation of accounting for uncertain tax positions effective
July 1, 2008, the Company did not recognize a liability for unrecognized
tax benefits and, accordingly, was not required to record any cumulative effect
adjustment to beginning of year retained earnings. As of both the date of
adoption and June 30, 2010, there was no significant liability for income
tax associated with unrecognized tax benefits.
  In
evaluating a tax position for recognition, management evaluates whether it is
more-likely-than-not that a position will be sustained upon examination,
including resolution of related appeals or litigation processes, based on
technical merits of the position. If the tax position meets the
more-likely-than-not recognition threshold, the tax position is measured and
recognized in the Company's financial statements as the largest amount of tax
benefit that, in management's judgment, is greater than 50% likely of being
realized upon settlement.
  The
Company recognizes accrued interest related to unrecognized tax benefits as well
as any related penalties in interest expense in its consolidated statements of
operations. As of the date of adoption and during the years ended June 30,
2010 and 2009, there was no accrual for the payment of interest and penalties
related to uncertain tax positions.
  Stock
Based Compensation
 
 We
account for stock-based compensation in accordance with FASB ASC 718,
Compensation – Stock Compensation. We measure the cost of each stock option and
restricted stock award at its fair value on the grant date. Each award vests
over the subsequent period during which the recipient is required to provide
service in exchange for the award (the vesting period). The cost of each award
is recognized as expense in the financial statements over the respective vesting
period. The expense recognized reflects an estimated forfeiture rate for
unvested awards of 25%.
  F-10
  WES
Consulting, Inc. and Subsidiaries
 Notes
to Consolidated Financial Statements
 
 NOTE
D – IMPAIRMENT OF LONG-LIVED ASSETS
  We follow
Financial Accounting Standards Board Accounting Standards Codification (“FASB
ASC”) 360, Property, Plant, and Equipment, regarding impairment of our other
long-lived assets (property, plant and equipment). Our policy is to assess our
long-lived assets for impairment annually in the fourth quarter of each year or
more frequently if events or changes in circumstances indicate that the carrying
amount of these assets may not be recoverable.
  An
impairment loss is recognized only if the carrying value of a long-lived asset
is not recoverable and is measured as the excess of its carrying value over its
fair value. The carrying amount of a long-lived asset is considered not
recoverable if it exceeds the sum of the undiscounted cash flows expected to
result from the use of the long-lived asset.
 
 Assets to
be disposed of and related liabilities would be separately presented in the
consolidated balance sheet. Assets to be disposed of would be reported at the
lower of the carrying value or fair value less costs to sell and would not be
depreciated.  There was no impairment as of June 30, 2010 or
2009.
  NOTE
E – INVENTORIES
  All
inventories are stated at the lower of cost or market using the first-in,
first-out method of valuation.
  The
Company's inventories consisted of the following components at June 30, 2010 and
2009:
  2010
                    
                    
                    2009Raw
      materials
                    
                    $
                    443,043
                    
                    
                    $
                    366,355Work
      in Process
                    
                    
                    170,996
                    
                    
                    
                    176,637Finished
      Goods
                    
                    
                    294,812
                    
                    
                    
                    157,411$
                    908,851
                    
                    
                    $
                    700,403
 
 NOTE
F – PROPERTY AND EQUIPMENT, NET
  Property
and equipment at June 30, 2010 and 2009 consisted of the following:
  2010
                    
                    2009
                    
                    Estimated
                      Useful LifeFactory
      Equipment
                    
                    $
                    1,531,734
                    
                    
                    $
                    1,506,147
                    
                    7-10 yearsComputer
      Equipment and Software
                    
                    
                    819,870
                    
                    
                    
                    665,135
                    
                    5-7 yearsOffice
      Equipment and Furniture
                    
                    
                    166,996
                    
                    
                    
                    166,996
                    
                    5-7 yearsLeasehold
      Improvements
                    
                    
                    321,288
                    
                    
                    
                    312,433
                    
                    15
      yearsSubtotal
                    
                    
                    2,839,888
                    
                    
                    
                    2,650,711Accumulated
      Depreciation & Amortization
                    
                    
                    (1,764,573
                    )
                    
                    
                    (1,515,194
                    )$
                    1,075,315
                    
                    
                    $
                    1,135,517
 
 Depreciation
expense was $249,380 and $270,217 for the years ended June 30, 2010 and 2009,
respectively.
  F-11
  WES
Consulting, Inc. and Subsidiaries
 Notes
to Consolidated Financial Statements
 
 NOTE
G – NOTE PAYABLE - EQUIPMENT
  Note
payable – equipment, at June 30, 2010 and 2009 consisted of the
following:
  June 30,2010
                              
                              
                              2009Note
      payable to Fidelity Bank in monthly installments of $5,364
      includingInterest
      at 8%, maturing October 25, 2010, secured by equipment
                              
                              $
                              12,136
                              
                              
                              $
                              72,812Long
      term debt portion
                              
                              $
                              0
                              
                              
                              $
                              12,136
  The
schedule of minimum maturities of the note payable for fiscal years subsequent
to June 30, 2010 is as follows:
  Year
      ending June 30,2011
                          
                          $
                          12,136
 
 NOTE H
– LINE OF CREDIT
  On
May 17, 2010, our wholly owned subsidiary, OneUp Innovations, Inc., entered into
a financing agreement with an “asset-based” lender for the purpose of improving
working capital.  The agreement provides for up to $600,000 and is secured
primarily by accounts receivable, inventory, equipment, and all general
intangibles. Under the financing agreement, the lender will make loans at our
request and in the lender’s discretion (a) based on purchases of our
accounts by the lender, with recourse against us and an advance rate of 80% (or
such other percentage determined by the lender in its discretion), and
(b) based on certain acceptable inventory not to exceed certain amounts,
including an aggregate maximum of $200,000, not to exceed 50% of the aggregate
amount of outstanding accounts on which an advance has been made.  The
inventory component of the financing agreement is available to the Company, at
the discretion of the lender and based upon the certain acceptable inventory,
from October 1 through November 30 of each year.  The term of the agreement
is one year, renewable for additional one-year terms unless either party
provides written notice of non-renewal at least 60 days prior to the end of the
current financing period. Advances under the agreement bear interest at a rate
of 2% over the prime rate (5.25% as of June 30, 2010) for the accounts
receivable portion of the advances and the inventory portion of the
borrowings.  In addition there are collateral management fees of 0.4% for
each 10-day period that an advance on an accounts receivable invoice remains
outstanding and a 1.9% collateral management fee on the average monthly loan
outstanding on the inventory portion of any advance. The agreement provides that
no change in control concerning us or any of our active subsidiaries shall occur
except with the prior written consent of the lender. Events of default include,
but are not limited to, the failure to make a payment when due or a default
occurring on any of our indebtedness.  The financing agreement is
personally guaranteed by the Company's CEO and majority shareholder, Louis
Friedman and by the Company.  On June 30, 2010, the balance due under this
financing agreement was $320,184.
 
 On
November 10, 2009, the Company entered into a loan agreement for a line of
credit with a commercial finance company that provided credit to 80% of domestic
accounts receivable aged less than 90 days up to $250,000. Borrowings under the
agreement bear interest at Prime rate plus 6% (9.25% as of November 10, 2009)
plus a 2% annual facility fee and a .25% monthly collateral monitoring fee, as
defined in the agreement.  The balance owed under this revolving line of
credit was repaid on May 17, 2010.
 
 On March
19, 2008, our wholly owned subsidiary, OneUp Innovations, Inc., entered into a
loan agreement for a line of credit with a commercial finance company that
provided credit to 85% of accounts receivable aged less than 90 days up to
$500,000 and eligible inventory (as defined in the agreement) up to a sub-limit
of $220,000, with such inventory loan not to exceed 30% of the accounts
receivable loan. Borrowings under the agreement bear interest at the prime rate
plus 2% (5.25% at June 30, 2009), payable monthly.  At June 30, 2009, the
balance owed under the revolving line of credit was $171,433 and the line of
credit was fully repaid in August 2009.
  Management
believes cash flows generated from operations, along with current cash and
investments as well as borrowing capacity under the line of credit and other
credit facilities should be sufficient to finance capital requirements required
by operations. If new business opportunities do arise, additional outside
funding may be required.
  F-12
  WES
Consulting, Inc. and Subsidiaries
 Notes
to Consolidated Financial Statements
  NOTE
I – SHORT TERM NOTES PAYABLE
 
 Current
notes payable are comprised of the following at June 30:
 
 2010
                        
                        
                        2009Unsecured
      note payable to an individual, with interest at 16%, principal and
      interest due on January 3, 2011
                        
                        $
                        200,000
                        
                        
                        $
                        -Unsecured
      note payable to an individual, with interest at 20%, principal and
      interest paid bi-weekly, maturing April 16, 2011
                        
                        
                        78,659
                        
                        
                        
                        -Unsecured
      note payable to an individual, with interest at 20%, principal and
      interest paid bi-weekly, maturing January 19, 2011
                        
                        
                        60,109
                        
                        
                        
                        -Unsecured
      note payable to an individual, with interest at 20%, principal and
      interest paid bi-weekly, maturing January 13, 2011
                        
                        
                        24,044
                        
                        
                        
                        -$
                        362,812
                        
                        
                        $
                        -
 
 NOTE
J – CREDIT CARD ADVANCE
  On July
2, 2008, the Company received $350,000 from a finance company under the
terms of a credit facility that was secured by the Company's future credit
card receivables.  Terms of the credit facility required repayment on each
business day of principal and interest at a daily rate of $1,507 over a twelve
month period. The credit facility had a financing fee of 12% (equal to
$42,000) on the principal amount, which equated to an effective annual
interest rate of 21.1%.  The credit facility was personally guaranteed by
the Company's CEO and majority shareholder, Louis Friedman.  On June
3, 2009, the Company borrowed an additional $200,000 under this credit facility.
Terms of this loan required repayment on each business day of principal and
interest at a daily rate of $1,723.08 over a six month period. This six month
$200,000 loan had a financing fee of 12% (equal to $24,000) on the principal
amount, which equated to an effective annual interest rate of 43.2%.  The
$200,000 loan was fully repaid in December, 2009.
  NOTE
K – CONVERTIBLE NOTES PAYABLE - SHAREHOLDER
 
 On June
24, 2009, the Company issued a 3% convertible note payable to Hope Capital with
a face amount of $375,000. The note is convertible, at the holder’s option, into
common stock at $.25 per share and may be converted at any time prior to the
maturity date of August 15, 2012. Upon maturity, the issuer has the option to
either repay the note plus accrued interest in cash or issue the equivalent
number of shares of common stock at $.25 per share. As of June 30, 2010, the 3%
convertible note payable is carried net of the fair market value of the embedded
conversion feature of $59,500.  This amount will be amortized over the
remaining life of the note as additional interest expense.
 
 On
September 2, 2009, the Company issued a 3% convertible note payable to Hope
Capital with a face amount of $250,000. The note is convertible, at the holder’s
option, into common stock at $.25 per share and may be converted at any time
prior to the maturity date of September 2, 2012. As of June 30, 2010, the 3%
convertible note payable is carried net of the fair market value of the embedded
conversion feature of $41,769.  This amount will be amortized over the life
of the note as additional interest expense.
  NOTE
L – UNSECURED LINES OF CREDIT
  The
Company has drawn cash advances on three unsecured lines of credit that are in
the name of the Company and Louis S. Friedman. The terms of these unsecured
lines of credit call for monthly payments of principal and interest, with
interest rates ranging from 4.5% to 11.2%. The aggregate amount owed on the
three unsecured lines of credit was $99,664 at June 30, 2010 and $124,989 at
June 30, 2009.
  F-13
  WES
Consulting, Inc. and Subsidiaries
 Notes
to Consolidated Financial Statements
 
 NOTE
M – COMMITMENTS AND CONTINGENCIES
  Operating
Leases
 
 The
Company leases its facility under a ten year operating lease that was signed in
September 2005 and expires on December 31, 2015. The lease is on an escalating
schedule with payment during the final year of the lease at $34,358 per month.
The liability for this difference in the monthly payments is accounted for as a
deferred rent liability and the balance in this account at June 30, 2010 and
2009 is $331,570 and $356,308, respectively. The rent expense under this lease
for the years ended June 30, 2010 and 2009 was $323,723.
 
 The lease
for the facility requires the Company to provide a standby letter of credit
payable to the lessor in the amount of $225,000 until December 31, 2010. The
majority shareholder agreed to provide this standby letter of credit on the
Company's behalf.  Upon expiration of the initial letter of credit, a
letter of credit in the amount of $25,000 in lieu of a security deposit is
required to be provided.
 
 The
Company leases certain material handling equipment under an operating
lease.  The monthly lease amount is $4,082 per month and expires in
September 2012.
 
 The
Company also leases certain warehouse equipment under an operating lease. 
The monthly lease is $508 per month and expires in February 2011.
 
 The
Company also leases certain postage equipment under an operating lease. 
The monthly lease is $144 per month and expires in January 2013.
 
 Future
minimum lease payments under non-cancelable operating leases at June 30,
2010 are as follows:
 
 Year
      ending June 30,2011
                      
                      $
                      412,8582012
                      
                      
                      413,9402013
                      
                      
                      392,0282014
                      
                      
                      391,6852015
                      
                      
                      404,985Thereafter
      through 2016
                      
                      
                      206,150Total
      minimum lease payments
                      
                      $
                      2,221,646
  Capital
Leases
 
 The
Company has acquired equipment under the provisions of long-term leases. For
financial reporting purposes, minimum lease payments relating to the equipment
have been capitalized. The leased properties under these capital leases have a
total cost of $349,205. These assets are included in the fixed assets listed in
Note F and include computers, software, furniture, and equipment. The capital
leases have stated or imputed interest rates ranging from 7% to
21%.
 
 The
following is an analysis of the minimum future lease payments subsequent to the
year ended June 30, 2010:
 
 Year ending June 302011
                                      
                                      $
                                      94,2092012
                                      
                                      
                                      43,8432013
                                      
                                      
                                      27,1782014
                                      
                                      
                                      7,6012015
                                      
                                      
                                      -Total
      minimum lease payments
                                      
                                      
                                      172,831Less
      amount representing interest
                                      
                                      
                                      (32,082)Present
      value of net minimum lease payments
                                      
                                      
                                      140,749Less
      current portion
                                      
                                      
                                      (77,010)Long-term
      obligations under leases payable
                                      
                                      $
                                      63,739
  F-14
  WES
Consulting, Inc. and Subsidiaries
 Notes
to Consolidated Financial Statements
 
 NOTE
M – COMMITMENTS AND CONTINGENCIES (continued)
  Preferred
Stock
 
 On
October 19, 2009 (the “Closing Date”), the Company entered into a Merger and
Recapitalization Agreement (the “Agreement”) with Liberator.  Pursuant to
the Agreement, Liberator merged with and into the Company, with the Company
surviving as the sole remaining entity (the “Merger”).
 
 On the
Closing Date, pursuant to the Agreement, each Series A Preferred Share of
Liberator (the “Liberator Preferred Shares”) were to be converted into one share
of the Company’s preferred stock with the provisions, rights, and designations
set forth in the Agreement (the “WES Preferred Stock”).  On the Closing
Date, the Company was not authorized to issue any preferred stock and therefore
pursuant to the agreement, it was agreed that the Company will file an amendment
to its Articles of Incorporation authorizing the issuance of the WES Preferred
Stock, and at such time the WES Preferred Stock will be exchanged pursuant to
the terms of the Agreement.
 
 The
Company has an obligation to issue 4,300,000 shares of Series A Convertible
Preferred Stock to its President and CEO, Louis S. Friedman and will do so once
it complies with the proxy rules and is able to file an amendment to it Articles
of Incorporation and a certificate of designation with the Florida Secretary of
State. The Series A Convertible Preferred Stock will have the following rights
and privileges:
 
 (i)
              Liquidation
      rights - Upon the voluntary or involuntary dissolution, liquidation
      or winding up of the Company, the holders of the shares of the Series A
      Convertible Preferred Stock then outstanding shall be entitled to receive
      out of the assets of the Company (whether representing capital or
      surplus), before any payment or distribution shall be made on the Common
      Stock, or upon any other class or series of stock ranking junior to the
      Series A Convertible Preferred Stock as to liquidation rights or
      dividends, $0.232 for each share of Series A Preferred Stock, subject to
      appropriate adjustment in the event of any stock dividend, stock split,
      combination or other similar recapitalization with respect to the Series A
      Preferred Stock, plus any dividends declared but unpaid
      thereon.
  (ii)
              Voting
      Rights.  Each issued and outstanding Series A Convertible
      Preferred Share shall be entitled to the number of votes equal to the
      result of: (i) the number of shares of common stock of the Company (the
      “Common Shares”) issued and outstanding at the time of such vote
      multiplied by 1.01; divided by (ii) the total number of Series A
      Convertible Preferred Shares issued and outstanding at the time of such
      vote. At each meeting of shareholders of the Company with respect to any
      and all matters presented to the shareholders of the Company for their
      action or consideration, including the election of directors, holders of
      Series A Convertible Preferred Shares shall vote together with the holders
      of Common Shares as a single class.
 
 (iii)
              Conversion. The
      holder of shares of Series A Convertible Preferred Stock shall have the
      right, subject to the terms and conditions set forth below, to convert
      each such stock into one share of fully paid and non-assessable Common
      Stock of the Corporation as hereinafter provided.  Such conversion
      right shall vest and shall first be available on July 1,
    2011.
 
 NOTE
N – RELATED PARTY TRANSACTIONS
  On June
30, 2008, the Company had a subordinated note payable to the majority
shareholder and CEO in the amount of $310,000 and the majority shareholder's
wife in the amount of $395,000. During fiscal 2009, the majority shareholder
loaned the Company an additional $91,000 and a director loaned the Company
$29,948.  In connection with Liberator’s merger with OneUp on June 26,
2009, the majority shareholder and his wife agreed to convert $700,000 of
principal balance and $132,120 of accrued but unpaid interest into shares of
Series A Convertible Preferred Stock.  Interest during fiscal 2009 was
accrued by the Company at the prevailing prime rate (which is currently at
3.25%) and totaled $34,647.  The accrued interest balance on these notes,
as of June 30, 2010 and 2009, was $3,544 and $8,210, respectively. These notes
are subordinate to all other credit facilities currently
outstanding.
  F-15
 
 WES
Consulting, Inc. and Subsidiaries
 Notes
to Consolidated Financial Statements
 
 NOTE
N – RELATED PARTY TRANSACTIONS (continued)
 
 The
Company issued a 3% convertible note payable to Hope Capital with a face amount
of $375,000. Hope Capital is a shareholder of the Company and was the majority
shareholder of Liberator before its merger with OneUp on June 26, 2009. 
The note is convertible, at the holders option, into common stock at $.25 per
share and may be converted at any time prior to the maturity date of August 15,
2012. Upon maturity, the Company has the option to either repay the note plus
accrued interest in cash or issue the equivalent number of shares of common
stock at $.25 per share.  At June 30, 2010, this 3% convertible note
payable is carried net of the fair market value of the embedded conversion
feature of $59,500.  This amount will be amortized over the life of the
note as additional interest.
  On
September 2, 2009, Liberator, Inc. acquired the majority of our issued
and outstanding common stock pursuant to a common stock purchase agreement
entered into with Belmont Partners, LLC, a Virginia limited liability company
(the “Seller”), our former majority shareholder.  Pursuant to the
terms of the purchase agreement, Liberator acquired 972,000 shares (81%) of our
common stock from the Seller for a total of two hundred forty thousand five
hundred dollars ($240,500) ) in addition to the issuance by the Company of two
hundred and fifty thousand (250,000) warrants to purchase an equal number of
shares of the Company’s common stock with an exercise price of twenty five cents
($0.25), the issuance by the Company to Belmont of a total of one million five
hundred thousand (1,500,000) shares of the Company’s common stock with seven
hundred and fifty thousand (750,000) shares delivered at closing and the balance
of seven hundred fifty thousand (750,000) shares to be delivered on the one (1)
year anniversary of the closing.  The first block of 750,000 shares
were issued to Belmont on December 9, 2009. The Company was required to deliver
the balance of 750,000 shares of common stock on September 2, 2010, provided,
however, that in the event that the Company or Liberator made a claim for
indemnification pursuant to Section 7(a) of the Stock Purchase Agreement prior
to such date, the number of balance shares would have been reduced by the result
of the following amount: (a) the amount of the indemnity claim pursuant to
Section 7(a); divided by (b) the five (5) day average price per share of the
Company’s common stock as quoted on the Over-the-Counter Bulletin Board or other
electronic quotation system.  As of September 2, 2010, the Company has
not issued the 750,000 shares of common stock, and the Company is currently
re-negotiating the terms of this agreement with Belmont.
 
 Funds for
the September 2, 2009 purchase by Liberator, Inc., came from a convertible note
in the amount of $250,000 issued to Hope Capital Inc., a shareholder of
Liberator. The note bears interest at 3% annually and is due September 2, 2012.
The note is convertible at any time prior to maturity, at the holders’ option,
into common stock at a conversion price of $.25 per share, subject to
adjustment.  As of June 30, 2010, this 3% convertible note payable is
carried net of the fair market value of the embedded conversion feature of
$41,769.  This amount will be amortized over the life of the note as
additional interest expense.
 
 The lease
for the Company’s current facility required the Company to provide a standby
letter of credit payable to the lessor in the amount of $225,000 until December
31, 2010. Upon expiration of the initial letter of credit, a letter of credit in
the amount of $25,000 (in lieu of a security deposit) is required to be
secured.  Fidelity Bank issued a standby letter of credit on September 29,
2005. This letter of credit is secured by an assignment by Leslie Vogelman to
Fidelity Bank of a Certificate of Deposit in the amount of
$225,000.
  Pursuant
to the Merger and Recapitalization Agreement dated October 19, 2009 between the
Company and Liberator, each of Liberator’s preferred stock were required to be
converted into one share of our Series A Convertible Preferred Stock. On the
closing date of the merger, we were not authorized to issue any preferred stock
and therefore pursuant to the agreement, it was agreed that we will issue our
shares of Series A Convertible Preferred Stock to the holder of Liberator’s
preferred stock immediately prior to the merger pursuant to the terms of the
agreement once we file an amendment to our Articles of Incorporation authorizing
the issuance of preferred stock and filing a certificate of designation for
Series A Convertible Preferred Stock with the Florida Secretary of State. 
The sole holder of Liberator’s preferred stock immediately prior to our merger
with Liberator was our CEO, Louis S. Friedman.  Thus, we have an obligation
to issue 4,300,000 shares of Series A Convertible Preferred Stock to Mr.
Friedman and will do so once we file an amendment to our Articles of
Incorporation and the certificate of designation.
  NOTE
O – STOCK OPTIONS, WARRANTS AND COMMON STOCK ISSUANCES
  Options
 
 On
October 16, 2009, the Company’s Board of Director approved the 2009 Stock Option
Plan (the “Plan”), subject to approval by a majority vote of the shareholders.
The Plan reserves a total of 5,000,000 shares of common stock for issuance under
the Plan. On that date, the Board of Directors also approved the grant of
1,077,000 stock options to 80 employees, including two officers of the
Company.  These options have a five year term and are exercisable at 25% a
year, beginning on the first anniversary of the grant date.  As of
June 30, 2010, 4,128,000 shares of common stock were available for grant
under the Company’s Plan.
 
 Stock-based
employee compensation cost is measured at the grant date, based on the estimated
fair value of the award, and is recognized as expense over the requisite service
period. The Company has no awards with market or performance
conditions.
 
 Stock-based
compensation expense recognized in the consolidated statements of operations for
the twelve month period ended June 30, 2010 is based on awards ultimately
expected to vest, and is reduced for estimated forfeitures. Forfeitures are
estimated at the time of grant and revised, if necessary, in subsequent periods
if actual forfeitures differ from those estimates.  Pre-vesting forfeitures
are estimated to be approximately 25%, based on historical
experience.
  F-16
 
 WES
Consulting, Inc. and Subsidiaries
 Notes
to Consolidated Financial Statements
 
 NOTE
O – STOCK OPTIONS, WARRANTS AND COMMON STOCK ISSUANCES (continued)
  Options(continued)
 
 The
following table summarizes the Company’s stock option activities for the year
ended June 30, 2010:
  Number of Shares
                          Underlying
                          Outstanding
                          Options
                        
                        
                        Weighted
                          Average
                          Remaining
                          Contractual
                          Life (Years)
                        
                        
                        Weighted
                          Average
                          Exercise
                          Price
                        
                        
                        Intrinsic
                          ValueOptions
      outstanding as of June 30, 2009
                        
                        
                        438,456
                        
                        
                        
                        3.3
                        
                        
                        $
                        .228
                        
                        
                        $
                        9,646Granted
                        
                        
                        1,077,000
                        
                        
                        
                        4.3
                        
                        
                        $
                        .25
                        
                        
                        $
                        —Exercised
                        
                        
                        —
                        
                        
                        
                        —
                        
                        
                        $
                        —
                        
                        
                        
                        —Forfeited
                        
                        
                        (205,000
                        )
                        
                        
                        —
                        
                        
                        $
                        (.25
                        )
                        
                        
                        —Options
      outstanding as of June 30, 2010
                        
                        
                        1,310,456
                        
                        
                        
                        3.6
                        
                        
                        $
                        .243
                        
                        
                        $
                        9,646Options
      exercisable as of June 30, 2010
                        
                        
                        438,456
                        
                        
                        
                        2.3
                        
                        
                        $
                        .228
                        
                        
                        $
                        9,646
  The
weighted average fair value per underlying share of options granted during the
year ended June 30, 2010 was $0.056. The aggregate intrinsic value in the table
above is before applicable income taxes and represents the amount optionees
would have received if all options had been exercised on the last business day
of the period indicated. Since the Company’s stock has no significant trading
volume, the stock price is assumed to be $.25 per share.
  Options
outstanding by exercise price at June 30, 2010 were as
follows:
  Options Outstanding
                                                                        
                                                                        
                                                                        Options ExercisableExercise Price
                                                                        
                                                                        
                                                                        Number of Shares
                                                                          Underlying
                                                                          Outstanding Options
                                                                        
                                                                        
                                                                        Weighted
                                                                          Average
                                                                          Exercise Price
                                                                        
                                                                        
                                                                        Weighted
                                                                          Average
                                                                          Remaining
                                                                          Contractual
                                                                          Life (Years)
                                                                        
                                                                        
                                                                        Number of Shares
                                                                          Underlying
                                                                          Vested and
                                                                          Exercisable Options
                                                                        
                                                                        
                                                                        Weighted
                                                                          Average
                                                                          Exercise Price$
                                                                        0.228
                                                                        
                                                                        
                                                                        
                                                                        438,456
                                                                        
                                                                        
                                                                        $
                                                                        0.228
                                                                        
                                                                        
                                                                        
                                                                        2.3
                                                                        
                                                                        
                                                                        
                                                                        438,456
                                                                        
                                                                        
                                                                        $
                                                                        0.228$
                                                                        0.25
                                                                        
                                                                        
                                                                        
                                                                        872,000
                                                                        
                                                                        
                                                                        $
                                                                        0.25
                                                                        
                                                                        
                                                                        
                                                                        4.4
                                                                        
                                                                        
                                                                        
                                                                        4—
                                                                        
                                                                        
                                                                        $
                                                                        —1,310,456
                                                                        
                                                                        
                                                                        $
                                                                        0.243
                                                                        
                                                                        
                                                                        
                                                                        3.7
                                                                        
                                                                        
                                                                        
                                                                        438,456
                                                                        
                                                                        
                                                                        $
                                                                        0.228
  Stock-based
compensation
  The
following table summarizes stock-based compensation expense by line item in the
consolidated statements of operations, all relating to employee stock
plans:
  Three Months Ended June 30,
                      
                      
                      Twelve Months Ended June 30,2010
                      
                      
                      2009
                      
                      
                      2010
                      
                      
                      2009Cost
      of Goods Sold
                      
                      $
                      1,442
                      
                      
                      $
                      —
                      
                      
                      $
                      3,189
                      
                      
                      $
                      —Other
      Selling and Marketing
                      
                      
                      1,338
                      
                      
                      
                      —
                      
                      
                      
                      3,317
                      
                      
                      
                      —General
      and Administrative
                      
                      
                      2,088
                      
                      
                      
                      —
                      
                      
                      
                      3,449
                      
                      
                      
                      —Total
                      
                      $
                      4,868
                      
                      
                      $
                      —
                      
                      
                      $
                      9,955
                      
                      
                      $
                      —
  As
stock-based compensation expense recognized in the consolidated statement of
operations is based on awards ultimately expected to vest, it has been reduced
for estimated forfeitures in accordance with authoritative guidance.  The
Company estimates forfeitures at the time of grant and revises the original
estimates, if necessary, in subsequent periods if actual forfeitures differ from
those estimates.
  F-17
  WES Consulting, Inc. and
Subsidiaries
 Notes
to Consolidated Financial Statements
 
 NOTE
O – STOCK OPTIONS, WARRANTS AND COMMON STOCK ISSUANCES (continued)
 
 Stock-based compensation
(continued)
 
 As of
June 30, 2010, the Company’s total unrecognized compensation cost was $49,839,
which will be recognized over the vesting period of 4 years. The Company
calculated the fair value of stock-based awards in the periods presented using
the Black-Scholes option pricing model and the following weighted average
assumptions:
  Three Months Ended June 30,
                      
                      
                      Twelve Months Ended June 30,2010
                      
                      
                      2009
                      
                      
                      2010
                      
                      
                      2009Stock Option Plan:Risk-free
      interest rate
                      
                      
                      2.50
                      %
                      
                      
                      —
                      
                      
                      
                      2.5
                      %
                      
                      
                      —Expected
      life (in years)
                      
                      
                      3.5
                      
                      
                      
                      —
                      
                      
                      
                      3.5
                      
                      
                      
                      —Volatility
                      
                      
                      25
                      %
                      
                      
                      —
                      
                      
                      
                      25
                      %
                      
                      
                      —Dividend
      yield
                      
                      
                      0
                      %
                      
                      
                      —
                      
                      
                      
                      0
                      %
                      
                      
                      —
  Warrants
 
 As of
June 30, 2010, outstanding warrants to purchase approximately 2,712,393 shares
of common stock at exercise prices of $.25 to $1.00 will expire at various dates
within four years of June 30, 2010.
 
 The
Company issued 2,462,393 warrants during fiscal 2009 in conjunction with
Liberator’s reverse merger with OneUp.  All of these warrants are
exercisable immediately and expire five years from the date of issuance, June
26, 2014. These warrants were valued using a volatility rate of 25% and a
risk-free interest rate of 4.5%, as more fully described below:
 
 1.
              A
      total of 1,462,393 warrants were issued for services rendered by the
      placement agent in the private placement that closed on June 26, 2009.
      These warrants have fixed exercise prices of $.50 per share (292,479
      warrants), $.75 per share (292,479 warrants), and $1.00 per share (877,435
      warrants.) The Company valued these warrants at $8,716 using the above
      assumptions, and the expense was fully recognized during fiscal
      2009.
 
 2.
              A
      total of 1,000,000 warrants were issued to Hope Capital at a fixed
      exercise price of $.75. The Company valued the warrants at $4,500 using
      the above assumptions and the expense was fully recognized during fiscal
      2009.
 
 On
September 2, 2009, the Company issued 250,000 warrants to Belmont Partners LLC
in conjunction with the purchase of majority control by Liberator to purchase
250,000 shares of the Company’s common stock at a fixed price of $.25 per share.
The warrants were fully vested when granted and expire on September 2,
2012.  These warrants were valued using a volatility rate of 25%, a
risk-free interest rate of 4.5% and a fair market value on the date of grant of
$.25.  The warrants were valued at $14,458 and were expensed as an expense
related to the purchase of majority control by Liberator during the three months
ended September 30, 2009.
 
 A summary
of the status of warrants granted at June 30, 2010 and June 30, 2009 and changes
during the periods then ended is presented below:
  For the Twelve Months
                              
                              
                              For the Twelve MonthsEnded June 30, 2010
                              
                              
                              Ended June 30, 2009Shares
                              
                              
                              Weighted
                                Average Exercise
                                Price
                              
                              
                              Shares
                              
                              
                              Weighted Average
                                Exercise PriceOutstanding
      at beginning of period
                              
                              
                              2,462,393
                              
                              
                              $
                              0.809
                              
                              
                              
                              —
                              
                              
                              $
                              —Issued
                              
                              
                              250,000
                              
                              
                              
                              0.25
                              
                              
                              
                              2,462,393
                              
                              
                              
                              0.809Exercised
                              
                              
                              —
                              
                              
                              
                              —
                              
                              
                              
                              —
                              
                              
                              
                              —Forfeited
                              
                              
                              —
                              
                              
                              
                              —
                              
                              
                              
                              —
                              
                              
                              
                              —Expired
                              
                              
                              —
                              
                              
                              
                              —
                              
                              
                              
                              —
                              
                              
                              
                              —Outstanding
      at end of period
                              
                              
                              2,712,393
                              
                              
                              $
                              0.757
                              
                              
                              
                              2,462,393
                              
                              
                              $
                              0.809Weighted
      average fair value of warrants issued during the period
                              
                              
                              —
                              
                              
                              $
                              0.058
                              
                              
                              
                              —
                              
                              
                              $
                              0.0053
  F-18
  WES Consulting, Inc. and
Subsidiaries
 Notes
to Consolidated Financial Statements
 
 NOTE
O – STOCK OPTIONS, WARRANTS AND COMMON STOCK ISSUANCES (continued)
  Warrants
(continued)
  A summary
of the warrants outstanding at June 30, 2010 is presented below:
  Warrants Outstanding
                  
                  
                  Warrants ExercisableExercise
                    Prices
                  
                  Number
                    Outstanding
                  
                  
                  Weighted-Average
                    Remaining
                    Contractual Life
                  
                  
                  Weighted
                    Average
                    Exercise Price
                  
                  
                  Number
                    Exercisable
                  
                  
                  Weighted-
                    Average
                    Exercise Price$
                  0.25
                  
                  
                  250,000
                  
                  
                  
                  2.20
                  
                  
                  $
                  0.25
                  
                  
                  
                  250,000
                  
                  
                  $
                  0.25$
                  0.50
                  
                  
                  292,479
                  
                  
                  
                  4.00
                  
                  
                  $
                  0.50
                  
                  
                  
                  292,479
                  
                  
                  $
                  0.50$
                  0.75
                  
                  
                  1,292,479
                  
                  
                  
                  4.00
                  
                  
                  $
                  0.75
                  
                  
                  
                  1,292,479
                  
                  
                  $
                  0.75$
                  1.00
                  
                  
                  877,435
                  
                  
                  
                  4.00
                  
                  
                  $
                  1.00
                  
                  
                  
                  877,435
                  
                  
                  $
                  1.00
 
 Common
Stock Issued
  On
September 2, 2009, Liberator acquired the majority of the issued and outstanding
common stock of the Company in accordance with a common stock purchase agreement
(the “Stock Purchase Agreement”) by and among Liberator, Belmont Partners, LLC,
a Virginia limited liability company (“Belmont”) and the Company. At closing,
Liberator acquired 972,000 shares (80.7%) of the Company from Belmont for a
total of two hundred forty thousand five hundred dollars ($240,500) in addition
to the issuance by the Company of two hundred fifty thousand (250,000) warrants
to purchase an equal number of shares of the Company’s common stock with an
exercise price of twenty five cents ($0.25), the issuance by the Company to
Belmont of a total of one million five hundred thousand (1,500,000) shares of
the Company’s common stock with seven hundred fifty thousand (750,000)
shares delivered at closing and the balance of seven hundred fifty thousand
(750,000) shares to be delivered on the one (1) year anniversary of the closing.
The first block of 750,000 shares were issued to Belmont on December 9, 2009.
The Company was required to deliver the balance of 750,000 shares of common
stock on September 2, 2010, provided, however, that in the event that the
Company or Liberator made a claim for indemnification pursuant to Section 7(a)
of the Stock Purchase Agreement prior to such date, the number of balance shares
would have been reduced by the result of the following amount: (a) the amount of
the indemnity claim pursuant to Section 7(a); divided by (b) the five (5) day
average price per share of the Company’s common stock as quoted on the
Over-the-Counter Bulletin Board or other electronic quotation system. As of
September 2, 2010, the Company has not issued the 750,000 shares of common
stock, and the Company is currently re-negotiating the terms of this agreement
with Belmont.
 
 Pursuant
to a private placement memorandum and subscription agreement, on January 29,
2010, the Company issued 1,000,000 shares of common stock to 12 individuals and
entities for an aggregate amount of $300,000.  All of the shares were sold
to “accredited investors” as defined in 501(a) of the Securities Act. 
Pursuant to Rule 506, all shares purchased in the Regulation D Rule 506 offering
were restricted in accordance with Rule 144 of the Securities Act of
1933.
 
 Pursuant
to an engagement letter with New Castle Financial Services, on January 29, 2010,
the Company issued 100,000 shares of common stock to New Castle Financial
Services with respect to investment banking and financial services performed by
New Castle Financial Services in connection with the above private placement.
Such securities were not registered under the Securities Act of 1933. The
issuance of these shares was exempt from registration pursuant to
Section 4(2) of the Securities Act of 1933. In addition, the Company paid
New Castle Financial Services a fee of 10% of the gross proceeds, plus a 2%
non-accountable expense allowance, and reimbursed them for $12,500 in
expenses.
 
 Pursuant
to a private placement memorandum and subscription agreement, on April 30, 2010,
the Company issued 166,666 shares of common stock to 1 individual for an
aggregate amount of $50,000.  All of the shares were sold to an “accredited
investor” as defined in 501(a) of the Securities Act.  Pursuant to Rule
506, all shares purchased in the Regulation D Rule 506 offering were restricted
in accordance with Rule 144 of the Securities Act of 1933.
  F-19
 
 WES Consulting, Inc. and
Subsidiaries
 Notes
to Consolidated Financial Statements
 
 NOTE
P – INCOME TAXES
  Deferred
tax assets and liabilities are computed by applying the effective U.S. federal
income tax rate to the gross amounts of temporary differences and other tax
attributes. Deferred tax assets and liabilities relating to state income taxes
are not material. In assessing the realizability of deferred tax assets,
management considers whether it is more likely than not that some portion or all
of the deferred tax assets will not be realized. The ultimate realization of
deferred tax assets is dependent upon the generation of future taxable income
during the periods in which those temporary differences become deductible.
Management considers the scheduled reversal of deferred tax liabilities,
projected future taxable income, and tax planning strategies in making this
assessment. As of June 30, 2010 and 2009, the Company believed it was more
likely than not that future tax benefits from net operating loss carryforwards
and other deferred tax assets would not be realizable through generation of
future taxable income; therefore, they were fully reserved.
  The
components of the net deferred federal income tax assets (liabilities) at
June 30, 2010 and 2009 were as follows:
 
 As of June 30, 2010
                    
                    
                    As of June 30, 2009Deferred
      tax assets:Net
      operating loss carry-forwards
                    
                    $
                    4,248,684
                    
                    
                    $
                    3,406,899Gross
      deferred tax assets
                    
                    $
                    1,684,320
                    
                    
                    $
                    1,305,517Valuation
      allowance
                    
                    
                    (1,684,320
                    )
                    
                    
                    (1,305,517
                    )Net
      deferred tax assets
                    
                    $
                    0
                    
                    
                    $
                    0
 
 The
income tax provision differs from the amount of income tax determined by
applying the U.S. federal and state income tax rates of 45% to pretax income
(loss) from continuing operations for the years ended June 30, 2010 and 2009 due
to the following:
  Year ended
                            June 30, 2010
                          
                          
                          Year ended
                            June 30, 2009Book
      loss from operations
                          
                          $
                          378,803
                          
                          
                          $
                          700,419Valuation
      (allowance)
                          
                          
                          (378,803
                          )
                          
                          
                          (700,419
                          )Net
      tax benefit
                          
                          $
                          0
                          
                          
                          $
                          0
 
 At June
30, 2010, the Company had net operating loss carry forwards of approximately
$4,248,684 that may be offset against future taxable income. The net operating
loss carry forwards expire in the year 2024 through 2029. A tax benefit of $0
was recognized in the year ended June 30, 2010, as management believes that it
is more likely than not that the deferred tax assets will not be
utilized.
 
 NOTE
Q – SUBSEQUENT EVENTS
 
 On
September 1, 2010, Donald Cohen, a former officer, director and independent
sales representative of Liberator, Inc., commenced an action against the Company
and other defendants including certain current officers and directors, Cohen v. WES Consulting, Inc., OneUp
Innovations, Inc., OneUp Acquisitions, Inc., Liberator, Inc., f/k/a Remark
Enterprises, Inc., Remark Enterprises, Inc., Belmont Partners LLC, Louis
Friedman, Ronald Scott and Leslie Vogelman, Civil Action File No.
100V10590-8. in the Superior Court of Dekalb County, Georgia.  The
plaintiff seeks repayment of a shareholder loan in the amount of $29,948 and
unspecified amounts of compensatory, punitive, and statutorily trebled damages.
The plaintiff alleges breach of fiduciary duty, breach of contract, fraud, and
violation of the Georgia Securities Act, among other claims. The Company intends
to vigorously contest the case and intends to file a Motion to Dismiss the
lawsuit on or before October 15, 2010.
 Although
we believe that we have meritorious defenses to Mr.
Cohen’s claims and will prevail against those claims, this matter
is at a preliminary stage and we are not in a position to predict or
assess the likely outcome of these proceedings.  Accordingly, other than
the amount of the shareholder loan, we have not reserved for any future loss
that may arise as a result of an adverse outcome in this
litigation.
  F-20
  WES Consulting, Inc. and
Subsidiaries
 Notes
to Consolidated Financial Statements
 
 NOTE
R – RESTATEMENT OF FINANCIAL STATEMENTS
  Background
  In June
2009, the Company converted Notes Payable from Stockholders into preferred
stock.  At the time of conversion the difference between the converted
value and preferred stock liquidation value, equal to $167,880, was deducted
from income on the consolidated financial statements as interest
expense.
   Restatements
  The
Company’s comprehensive loss for the year ended June 30, 2009 was restated based
on the Company’s determination that it was not appropriate to take a deduction
from income for the difference between the converted value and preferred stock
liquidation value, equal to $167,880.
 
 Certain
items were restated on the Company’s consolidated balance sheet as of June 30,
2009, consolidated statement of operations for the year ended June 30, 2009,
consolidated  statement of cash flows for the year ended June 30, 2009, and
consolidated statement of stockholders’ equity for the year ended June 20 2009
as described below.
 
 ·
              on the consolidated balance sheet
      at June 30, 2009, additional paid in capital decreased by $167,880 to
      reflect the reversal of the interest expense.  Accordingly, at June
      30, 2009, the retained deficit decreased by
    $167,880.
 
 ·
              on the consolidated statement of
      operations for the year ended June 30, 2009, interest expense decreased by
      $167,880 thus reducing the Net Loss to
  ($3,587,103).
 
 ·
              on the consolidated statement of
      stockholders' equity for the year ended June 30, 2009, the reversal of the
      additional interest expense recorded on preferred stock decreased by
      $167,880 and Net Loss decreased by
  $167,880.
 
 ·
              on the consolidated statement of
      cash flows for the year ended June 30, 2009, the supplemental disclosure
      for a non-cash item titledAdditional
      interest expense on the issuance of preferred stockwas reduced by $167,880, the net
      loss decreased by $167,880 and the Additional interest expense on issuance
      of preferred stock decreased by
$167,880.
  F-21




WES
Consulting, Inc. and Subsidiaries


Notes
to Consolidated Financial Statements





NOTE
R – RESTATEMENT OF FINANCIAL STATEMENTS (continued)




The
consolidated balance sheet for the year ended June 30, 2009, was restated as
follows:




Consolidated
Balance Sheet




As of June 30, 2009As Previously
                                  Reported
                                
                                
                                Adjustments
                                
                                
                                As Restated$
                                
                                
                                $
                                
                                
                                $ASSETSCurrent
      assets:Cash
      and cash equivalents
                                
                                
                                1,815,633
                                
                                
                                
                                -
                                
                                
                                
                                1,815,633Accounts
      Receivable, net of allowance for doubtful accounts
                                
                                
                                346,430
                                
                                
                                
                                -
                                
                                
                                
                                346,430Inventories
                                
                                
                                700,403
                                
                                
                                
                                -
                                
                                
                                
                                700,403Prepaid
      Expenses
                                
                                
                                95,891
                                
                                
                                
                                -
                                
                                
                                
                                95,891Total
      current assets
                                
                                
                                2,985,357
                                
                                
                                
                                -
                                
                                
                                
                                2,985,357Property
      and equipment, net
                                
                                
                                1,135,517
                                
                                
                                
                                -
                                
                                
                                
                                1,135,517TOTAL
      ASSETS
                                
                                
                                4,093,874
                                
                                
                                
                                
                                
                                
                                
                                4,093,874LIABILITIES
      AND STOCKHOLDERS’ EQUITYCurrent
      liabilities:Accounts
      Payable
                                
                                
                                2,247,845
                                
                                
                                
                                -
                                
                                
                                
                                2,247,845Accrued
      Compensation
                                
                                
                                154,994
                                
                                
                                
                                -
                                
                                
                                
                                154,994Accrued
      Expenses and Interest
                                
                                
                                145,793
                                
                                
                                
                                -
                                
                                
                                
                                145,793Revolving
      Line of Credit
                                
                                
                                171,433
                                
                                
                                
                                -
                                
                                
                                
                                171,433Current
      Portion of Long-Term Debt
                                
                                
                                145,481
                                
                                
                                
                                -
                                
                                
                                
                                145,481Credit
      Card Advance
                                
                                
                                198,935
                                
                                
                                
                                -
                                
                                
                                
                                198,935Total
      current liabilities
                                
                                
                                3,064,481
                                
                                
                                
                                -
                                
                                
                                
                                3,064,481Long-term
      liabilities:Note
      payable- equipment
                                
                                
                                72,812
                                
                                
                                
                                -
                                
                                
                                
                                72,812Leases
      payable
                                
                                
                                225,032
                                
                                
                                
                                -
                                
                                
                                
                                225,032Notes
      payable- related party
                                
                                
                                125,948
                                
                                
                                
                                -
                                
                                
                                
                                125,948Convertible
      notes payable- shareholder (net)
                                
                                
                                285,750
                                
                                
                                
                                -
                                
                                
                                
                                285,750Unsecured
      lines of credit
                                
                                
                                124,989
                                
                                
                                
                                -
                                
                                
                                
                                124,989Deferred
      rent payable
                                
                                
                                356,308
                                
                                
                                
                                -
                                
                                
                                
                                356,308Less:
      current portion of long-term debt
                                
                                
                                (145,481
                                )
                                
                                
                                -
                                
                                
                                
                                (145,481
                                )Total
      Long Term Liabilities
                                
                                
                                1,045,358
                                
                                
                                
                                -
                                
                                
                                
                                1,045,358TOTAL
      LIABILITIES
                                
                                
                                4,109,839
                                
                                
                                
                                -
                                
                                
                                
                                4,109,839Commitments
      and contingenciesStockholders’
      deficit:Preferred
      Stock
                                
                                
                                430
                                
                                
                                
                                -
                                
                                
                                
                                430Common
      Stock
                                
                                
                                609,330
                                
                                
                                
                                
                                
                                
                                
                                609,330Additional
      Paid-In Capital
                                
                                
                                4,683,734
                                
                                
                                
                                (167,880
                                )
                                
                                
                                4,515,854Retained
      Deficit
                                
                                
                                (5,309,458
                                )
                                
                                
                                167,880
                                
                                
                                
                                (5,141,579
                                )TOTAL
      STOCKHOLDERS’ DEFICIT
                                
                                
                                (15,965
                                )
                                
                                
                                -
                                
                                
                                
                                (15,965
                                )TOTAL
      LIABILITIES AND STOCKHOLDERS’ EQUITY
                                
                                
                                4,093,874
                                
                                
                                
                                -
                                
                                
                                
                                4,093,874




F-22






WES Consulting, Inc. and
Subsidiaries


Notes
to Consolidated Financial Statements




NOTE
R – RESTATEMENT OF FINANCIAL STATEMENTS (continued)






The
consolidated statement of operations for the year ended June 30, 2009 was
restated as follows:





Consolidated
Statement of Operations




For the year ended June 30, 2009As Previously
                            Reported
                          
                          
                          Adjustments
                          
                          
                          As RestatedNet
      Sales
                          
                          $
                          10,260,552
                          
                          
                          $
                          -
                          
                          
                          $
                          10,260,552Cost
      of Goods Sold
                          
                          
                          7,144,108
                          
                          
                          
                          -
                          
                          
                          
                          7,144,108Gross
      Profit
                          
                          
                          3,116,444
                          
                          
                          
                          -
                          
                          
                          
                          3,116,444Operating
      Expenses:Advertising
      and Promotion
                          
                          
                          864,690
                          
                          
                          
                          -
                          
                          
                          
                          864,690Other
      Selling and Marketing
                          
                          
                          1,201,054
                          
                          
                          
                          -
                          
                          
                          
                          1,201,054General
      and Administrative
                          
                          
                          1,781,352
                          
                          
                          
                          -
                          
                          
                          
                          1,781,352Depreciation
                          
                          
                          270,217
                          
                          
                          
                          -
                          
                          
                          
                          270,217Total
      Operating Expenses
                          
                          
                          4,117,313
                          
                          
                          
                          
                          
                          
                          
                          4,117,313Loss
      from Operations
                          
                          
                          (1,000,869
                          )
                          
                          
                          -
                          
                          
                          
                          (1,000,869
                          )Other
      Income (Expense)Interest
      Income
                          
                          
                          1,980
                          
                          
                          
                          -
                          
                          
                          
                          1,980Interest
      (expense) and financing costs
                          
                          
                          (482,598
                          )
                          
                          
                          (167,880
                          )
                          
                          
                          (314,719
                          )Expense
      Related to Merger
                          
                          
                          (2,273,495
                          )
                          
                          
                          -
                          
                          
                          
                          (2,273,495
                          )Total
      Other Income (Expense)
                          
                          
                          (2,754,113
                          )
                          
                          
                          (167,880
                          )
                          
                          
                          (2,586,234
                          )Net
      Loss Before Income Taxes
                          
                          
                          (3,754,982
                          )
                          
                          
                          (167,880
                          )
                          
                          
                          (3,587,103
                          )Provision
      for Income TaxesNet
      Loss
                          
                          $
                          (3,754,982
                          )
                          
                          $
                          (167,880
                          )
                          
                          $
                          (3,587,103
                          )Loss
      per share:Basic
                          
                          $
                          .08
                          
                          
                          $
                          (.01
                          )
                          
                          $
                          .07Diluted
                          
                          $
                          .08
                          
                          
                          $
                          (.01
                          )
                          
                          $
                          .07Weighted
      average number of shares outstandingBasic
                          
                          
                          48,341,549
                          
                          
                          
                          -
                          
                          
                          
                          48,341,549Diluted
                          
                          
                          48,341,549
                          
                          
                          
                          -
                          
                          
                          
                          48,341,549




F-23


WES Consulting, Inc. and
Subsidiaries


Notes
to Consolidated Financial Statements





NOTE
R – RESTATEMENT OF FINANCIAL STATEMENTS (continued)





The
consolidated statement of stockholders’ equity for the year ended June 30, 2009
was restated as follows:





For
the year ended June 30, 2009




Additional
                          
                          
                          
                          
                          
                          TotalPreferred stock
                          
                          
                          Common stock
                          
                          
                          paid-in
                          
                          
                          Accumulated
                          
                          
                          stockholders’Shares
                          
                          
                          Amount
                          
                          
                          Shares
                          
                          
                          Amount
                          
                          
                          capital
                          
                          
                          deficit
                          
                          
                          equityAs
      PreviouslyReported
                          
                          
                          4,300,000
                          
                          
                          
                          430
                          
                          
                          
                          60,932,981
                          
                          
                          
                          609,330
                          
                          
                          
                          4,683,734
                          
                          
                          
                          (5,309,458
                          )
                          
                          
                          (15,965
                          )Adjustments
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          (167,880
                          )
                          
                          
                          167,880
                          
                          
                          
                          -As
      Restated
                          
                          
                          4,300,000
                          
                          
                          
                          430
                          
                          
                          
                          60,932,981
                          
                          
                          
                          609,330
                          
                          
                          
                          4,515,854
                          
                          
                          
                          (5,141,579
                          )
                          
                          
                          (15,965
                          )




F-24


WES Consulting, Inc. and
Subsidiaries


Notes
to Consolidated Financial Statements




NOTE
R – RESTATEMENT OF FINANCIAL STATEMENTS (continued)




The
consolidated statement of cash flows for the year ended June 30, 2009 was
restated as follows:





Consolidated
Statement of Cash Flows




For the year ended June 30, 2009As Previously
                      Reported
                    
                    
                    Adjustments
                    
                    
                    As RestatedCash
      flows from operating activities:Net
      loss
                    
                    $
                    (3,754,982
                    )
                    
                    $
                    167,880
                    
                    
                    $
                    (3,587,103
                    )Adjustments
      to reconcile net (loss)/earnings to net cash provided byoperating 
      activitiesDepreciation
                    
                    
                    270,217
                    
                    
                    
                    -
                    
                    
                    
                    270,217Additional
      interest expense on issuance of preferred stock
                    
                    
                    167,880
                    
                    
                    
                    (167,880
                    )
                    
                    
                    -Expense
      related to merger
                    
                    
                    2,273,495
                    
                    
                    
                    -
                    
                    
                    
                    2,273,495Change
      in operating assets and liabilities:Accounts
      Receivable
                    
                    
                    (16,710
                    )
                    
                    
                    -
                    
                    
                    
                    (16,710
                    )Inventory
                    
                    
                    552,400
                    
                    
                    
                    -
                    
                    
                    
                    552,400Prepaid
      Expenses
                    
                    
                    17,107
                    
                    
                    
                    -
                    
                    
                    
                    17,107Accounts
      Payable
                    
                    
                    633,674
                    
                    
                    
                    -
                    
                    
                    
                    633,674Accrued
      Expenses
                    
                    
                    72,947
                    
                    
                    
                    -
                    
                    
                    
                    72,947Accrued
      Payroll
                    
                    
                    16,916
                    
                    
                    
                    -
                    
                    
                    
                    16,916Deferred
      Rent Payable
                    
                    
                    19,153
                    
                    
                    
                    
                    
                    
                    
                    19,153Net
      cash provided by operating activities
                    
                    
                    252,097
                    
                    
                    
                    -
                    
                    
                    
                    252,097Cash
      flows from investing activities:Investments
      in equipment
                    
                    
                    (352,392
                    )
                    
                    
                    -
                    
                    
                    
                    (352,392
                    )Net
      cash provided by investing activities
                    
                    
                    (352,392
                    )
                    
                    
                    -
                    
                    
                    
                    (352,392
                    )Cash
      flows from financing activities:Net
      proceeds from sale of common stock
                    
                    
                    1,699,465
                    
                    
                    
                    
                    
                    
                    
                    1,699,465Borrowings
      under line of credit
                    
                    
                    2,710,368
                    
                    
                    
                    -
                    
                    
                    
                    2,710,368Repayment
      of line of credit
                    
                    
                    (2,817,075
                    )
                    
                    
                    -
                    
                    
                    
                    (2,817,075
                    )Loans
      from related party
                    
                    
                    120,948
                    
                    
                    
                    -
                    
                    
                    
                    120,948Proceeds
      from credit card advance
                    
                    
                    550,000
                    
                    
                    
                    -
                    
                    
                    
                    550,000Repayment
      of credit card advance
                    
                    
                    (351,065
                    )
                    
                    
                    -
                    
                    
                    
                    (351,065
                    )Proceeds
      from short term notes and unsecured notes
                    
                    
                    100,000
                    
                    
                    
                    -
                    
                    
                    
                    100,000Repayment
      of short term note and unsecured notes
                    
                    
                    (214,160
                    )
                    
                    
                    -
                    
                    
                    
                    (214,160
                    )Principle
      payments on note payable and capital leases
                    
                    
                    (83,260
                    )
                    
                    
                    
                    
                    
                    
                    (83,260
                    )Additions
      to capital leases
                    
                    
                    111,188
                    
                    
                    
                    
                    
                    
                    
                    111,188Net
      cash provided by financing
                    
                    
                    1,826,409
                    
                    
                    
                    -
                    
                    
                    
                    1,826,409Net
      Increase in Cash and Cash Equivalents
                    
                    
                    1,726,114
                    
                    
                    
                    -
                    
                    
                    
                    1,726,114Cash
      and Cash Equivalents, Beginning of Period
                    
                    
                    89,519
                    
                    
                    
                    -
                    
                    
                    
                    89,519Cash
      and Cash Equivalents at End of Period
                    
                    $
                    1,815,633
                    
                    
                    $
                    -
                    
                    
                    $
                    1,815,633Supplemental
      disclosure of cash flows information:Interest
                    
                    $
                    245,256
                    
                    
                    $
                    -
                    
                    
                    $
                    245,256Income
      taxes
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    -Supplemental
      disclosure of non-cash information:Common
      stock issued in acquisition of subsidiary
                    
                    $
                    1,987,745
                    
                    
                    $
                    -
                    
                    
                    $
                    1,987,745Additional
      interest expense on issuance of preferred stock
                    
                    $
                    167,880
                    
                    
                    $
                    (167,880
                    )
                    
                    $
                    -Note
      Payable issued in acquisition of subsidiary
                    
                    $
                    285,750
                    
                    
                    $
                    
                    
                    
                    $
                    285,750





[End
of Consolidated financial statements.]


F-25


ITEM 9. 
       Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure





There are
no events required to be disclosed under this Item.





ITEM 9A. 
Controls and Procedures





Disclosure
Controls and Procedures




Regulations
under the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
require public companies to maintain “disclosure controls and procedures,” which
are defined to mean a company’s controls and other procedures that are designed
to ensure that information required to be disclosed in the reports that it files
or submits under the Exchange Act is recorded, processed, summarized, and
reported, within the time periods specified in the SEC’s rules and forms. 
Our Chief Executive Officer and Chief Financial Officer carried out an
evaluation of the effectiveness of our disclosure controls and procedures as of
the end of the period covered by this report.  Based on those evaluations,
as of June 30, 2010, our CEO and CFO believe that:






(i)
            our disclosure controls and
      procedures are designed to ensure that information required to be
      disclosed by us in the reports we file under the Exchange Act is recorded,
      processed, summarized, and reported within the time periods specified in
      the SEC’s rules and forms, and that such information is accumulated and
      communicated to our management, including the CEO and CFO, as appropriate,
      to allow timely decisions regarding required disclosure;
      and





(ii)
            our disclosure controls and
      procedures are effective.





Internal
Control over Financial Reporting





(a) 
         Management’s annual report on internal control
over financial reporting





Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting.  Internal control over financial
reporting is defined in Rule 13a-15(f) and 15d-15(f) promulgated
under the Exchange Act as a process designed by, or under the supervision of,
the Company’s principal executive officer and principal financial officer and
effected by the Company’s board of directors, management, and other personnel,
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 and includes those policies and
procedures that:





·
            Pertain to the maintenance of
      records that in reasonable detail accurately and fairly reflect the
      transactions and dispositions of the assets of the
      Company;





·
            Provide reasonable assurance that
      transactions are recorded as necessary to permit preparation of financial
      statements in accordance with generally accepted accounting principles,
      and that receipts and expenditures of the Company are being made only in
      accordance with authorizations of management and directors of the Company;
      and





·
            Provide reasonable assurance
      regarding prevention or timely detection of unauthorized acquisition, use,
      or disposition of the Company’s assets that could have a material effect
      on the financial statements.





Because
of its inherent limitations, the Company’s internal control over financial
reporting may not prevent or detect misstatements.  Therefore, even those
systems determined to be effective can provide only reasonable assurance with
respect to financial statement preparation and presentation.  Projections
of any evaluation of effectiveness to future periods are subject to the risk
that controls may become inadequate because of changes in conditions, or that
the degree of compliance with the policies or procedures may
deteriorate.





Our
management assessed the effectiveness of our internal control over financial
reporting as of June 30, 2010.  In making this assessment, management used
the criteria set forth by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO) in Internal Control Integrated
Framework.  Based on our assessment, management believes that, as of
June 30, 2010, our internal control over financial reporting is effective based
on those criteria.





This
annual report does not include an attestation report of the Company's registered
public accounting firm regarding internal control over financial
reporting.  Internal control over financial reporting was not subject to
attestation by the Company’s independent registered public accounting firm in
accordance with recent amendments to Section 404 of the Sarbanes-Oxley Act
of 2002 pursuant to Section 989G of the Dodd-Frank Wall Street Reform and
Consumer Protection Act that permit the Company to provide only management’s
report in this Annual Report.





17






(b) 
         Changes in
internal control over financial reporting





There
were no changes in our internal control over financial reporting identified in
connection with the evaluation required by Rule 13a-15(d) or
Rule15d-15(d) promulgated under the Exchange Act that occurred during our
fourth fiscal quarter that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.




ITEM 9B. 
Other Information






On May
17, 2010, OneUp Innovations, Inc., our wholly owned subsidiary (“OneUp”), and
its wholly owned subsidiary, Foam Labs, Inc. (“Foam Labs”), entered into a
Financing Agreement with Summit Financial Resources, L.P. (“Summit”). 
Pursuant to the terms of the agreement, OneUp and Foam Labs may request Summit
to purchase certain of its accounts, and Summit may purchase certain accounts
for a purchase price of the face value of the account.  Summit is not
obligated to make an advance of any portion of the purchase price to or on
behalf of OneUp or Foam Labs if, after making the advance, the amount of all
outstanding advances will exceed $600,000.  Interest on all outstanding
advances will accrue at the prime rate as announced in the Wall Street Journal
plus 2%; in the event of default, interest will accrue at the prime rate as
announced in the Wall Street Journal plus 10%.  Advances over the $600,000
limit that are authorized by Summit will accrue interest at the prime rate as
announced in the Wall Street Journal plus 3%.  There is a collateral
management fee for the monitoring of collateral, collection of the accounts, and
administration of the Financing Agreement of 0.4% of the face amount of each
purchased account for each 10-day period, or any portion thereof, that the
purchased account remains outstanding.





Events of
default under the Financing Agreement are (a) failure by OneUp and Foam Labs to
pay any amount to Summit when due, (b) failure to pay or perform any obligation,
covenant, agreement, or liability created by the agreement, (c) the proving
materially false or materially misleading when made or furnished of any
representation, warranty, or financial statement made by or on behalf of OneUp
or Foam Labs, (d) the occurrence of any default or event on any indebtedness of
OneUp or Foam Labs, or a guarantor of their obligations under the Financing
Agreement, that, with the giving of notice or the passage of time or both, would
constitute a default;  (e) the dissolution or termination, death, or
business failure of OneUp or Foam Labs; (f) the appointment of a receiver,
trustee, or custodian for any part of property of OneUp or Foam Labs, or a
guarantor of their obligations under the Financing Agreement, assigned for the
benefit of creditors; (g) the commencement of a proceeding or filing of a
petition under any bankruptcy or insolvency law by or against OneUp or Foam
Labs, or a guarantor of their obligations under the Financing Agreement; (h) the
entering of a judgment against OneUp or Foam Labs, or a guarantor of their
obligations under the Financing Agreement, that materially affects any of their
financial condition; (i) the insolvency or inability to pay debts as they mature
of OneUp or Foam Labs, or a guarantor of their obligations under the Financing
Agreement; and (j) substantial delinquency or uncollectability of a purchase
account.  Upon a default event, at Summit’s election and without notice,
Summit may terminate OneUp and Foam Lab’s right to request an advance, treat all
outstanding purchased accounts as being past due or no longer an acceptable
account, and accelerate, and make immediately due and payable, all obligations
of OneUp and Foam Labs to Summit.  Summit will also have all the rights and
remedies created by or arising from the Financing Agreement.





OneUp,
Foam Labs, and all guarantors of their obligations under the Financing Agreement
are jointly and severally liable for OneUp’s and Foam Labs’ obligations under
the Financing Agreement.





Pursuant
to an Addendum dated May 17, 2010 of the Financing Agreement, OneUp, Foam Labs,
and Summit agreed that, during the period starting October 1 of each calendar
year through November 30 of the same calendar year, Summit may make advances
based upon certain inventory of OneUp and Foam Labs.  OneUp and Foam Labs
may request an advance on inventory as long as the aggregate amount of all
advances based on such inventory that is outstanding does not exceed the lesser
of (i) 40% of the lower of book value or other value as determined by Summit of
the advanced inventory, (ii) $200,000, (iii) 50% of the aggregate amount of
outstanding accounts on which an advance was made, and, (iv) together with the
aggregate amount of all other outstanding advances, $600,000.  Advances on
inventory are subject to the same interest, fees, and charges as advances on
accounts, except that the collateral management fee is 1.9% of the average
monthly balance of outstanding advances on inventory for each month, or any
portion thereof.  If OneUp and Foam Labs fails to repay in full all
outstanding advances based on inventory, plus all interest, fees, and charges,
by November 30 of the calendar year in which the advance on inventory was made,
such event will constitute an event of default.





The above
descriptions of the Financing Agreement and Addendum are qualified in their
entirety by a copy of the Financing Agreement and Addendum, which are attached
hereto as Exhibits 10.22 and 10.25.





We issued
a guarantee to Summit on May 17, 2010 guaranteeing the prompt and full
performance, payment, and discharge of any and all of OneUp and Foam Labs owing
to Summit arising from or relating to the Financing Agreement, including the
Addendum.  Our guarantee is secured in accordance with the terms of the
Security Agreement described below.  Our Chairman of the Board and Chief
Executive Officer, Louis Friedman, also personally guaranteed OneUp’s and Foam
Lab’s obligations under the Financing Agreement, including the Addendum. 
We and Mr. Friedman agreed to pay any indebtedness from the Financing Agreement
that OneUp and Foam Labs fails to pay when due.  This description of our
guarantee and Mr. Friedman’s guarantee is qualified in its entirety by a copy of
the guarantees, which are attached hereto as Exhibits 10.23 and
10.24.





18


On May
17, 2010, we entered into a Security Agreement with Summit pursuant to the WES
Guarantee to induce Summit to enter into the Financing Agreement with OneUp and
Foam Labs.  Pursuant to the terms of the Security Agreement, we granted to
Summit a security interest in certain of its property as described in the
agreement.  This description of the Security Agreement is qualified in its
entirety by a copy of the Security Agreement, which is attached hereto as
Exhibit 10.21.






PART
III.





ITEM 10. 
    Directors. Executive Officers and Corporate
Governance.




The
following table sets forth certain information with respect to our directors and
executive officers.




Name
                  
                  Age
                  
                  PositionLouis
      S. Friedman
                  
                  58
                  
                  Chief
      Executive Officer, President, DirectorRonald
      P. Scott
                  
                  55
                  
                  Chief
      Financial Officer, Secretary, DirectorLeslie
      Vogelman
                  
                  58
                  
                  TreasurerDavid
      Wirth
                  
                  32
                  
                  Vice
      President -
Operations





All
directors serve for one-year terms until their successors are elected or they
are re-elected at the annual stockholders' meeting.  Officers hold their
positions at the pleasure of the board of directors.





There is
no arrangement, agreement or understanding between any of the directors or
officers and any other person pursuant to which any director or officer was or
is to be selected as a director or officer.  Also, there is no arrangement,
agreement or understanding between management and non-management stockholders
under which non-management stockholders may directly or indirectly participate
in or influence the management of our affairs.





Directors
are not presently compensated for their service on the board, other than the
repayment of actual expenses incurred.  There are no present plans to
compensate directors for their service on the board.




Background
of Executive Officers and Directors





The
business experience of each of the persons listed above during the past five
years is as follows:





Louis S. Friedman, President, Chief
Executive Officer and Director.  Mr. Friedman has served as
President, Chief Executive Officer, and director since our merger with
Liberator, Inc. in October 2009.  Prior to that, he served as Liberator’s
Chief Executive Officer and a director since June 2009, when OneUp Innovations,
Inc. merged with Liberator in June 2009.  Mr. Friedman founded OneUp in
2000.




Ronald Scott, Chief Financial
Officer, Secretary and Director.  Mr. Scott joined the Company in
October 2009 in connection with our merger with Liberator, Inc.  Prior to
that, he served as Liberator’s Chief Financial Officer, Secretary, and a
director since June 2009, when OneUp Innovations, Inc. merged with Liberator in
June 2009.  Mr. Scott joined OneUp Innovations as a part-time consultant in
July, 2006 and as a full-time consultant in October, 2007, serving as its Chief
Financial Officer.  From 2004 to 2009, Mr. Scott was president of Impact
Business Solutions, LLC, a consulting business that provides financial
management services. Mr. Scott holds a B.S. degree in Finance and Management
from San Jose State University and an M.B.A. degree with a concentration in
Accounting from Santa Clara University.




Leslie Vogelman,
Treasurer.  Ms. Vogelman joined the Company in October 2009 in
connection with our merger with Liberator, Inc.  Prior to that, she served
as Liberator’s Treasurer since June 2009, when OneUp Innovations, Inc. merged
with Liberator in June 2009.  Ms. Vogelman joined OneUp Innovations at its
inception in 2000 as Secretary and Treasurer.  Ms. Vogelman holds a B.A.
from the State University of New York in Binghamton and an M.B.A. from Adelphi
University.





David Wirth, Vice President –
Operations.  Mr. Wirth joined the Company in October 2009 in
connection with our merger with Liberator, Inc.  Prior to that, he served
as Liberator’s Vice President of Operations since June 2009, when OneUp
Innovations, Inc. merged with Liberator in June 2009.  Prior to that, he
served as Purchasing Manager at OneUp Innovations.  From October 2006 to
May 2008, he was the Logistics Manager for Distilled Resources, Inc.  Mr.
Wirth is a graduate of Colorado College with a Bachelor of Arts degree in
Biology and a Graduate Certificate in Business Administration from Idaho State
University.






The
experience and background of each of the directors, as summarized above, were
significant factors in their previously being nominated as directors of the
Company.






19




None of
our directors or executive officers has, during the past ten years:





·
            had any petition under the
      federal bankruptcy laws or any state insolvency law filed by or against,
      or had a receiver, fiscal agent, or similar officer appointed by a court
      for the business or property of such person, or any partnership in which
      he was a general partner at or within two years before the time of such
      filing;





·
            been convicted in a criminal
      proceeding or a named subject of a pending criminal proceeding (excluding
      traffic violations and other minor
  offenses);





·
            been the subject of any order,
      judgment, or decree, not subsequently reversed, suspended, or vacated, of
      any court of competent jurisdiction, permanently or temporarily enjoining
      him from, or otherwise limiting, the following
      activities:





(i)
            acting as a futures commission
      merchant, introducing broker, commodity trading advisor, commodity pool
      operator, floor broker, leverage transaction merchant, any other person
      regulated by the Commodity Futures Trading Commission, or an associated
      person of any of the foregoing, or as an investment adviser, underwriter,
      broker or dealer in securities, or as an affiliated person, director or
      employee of any investment company, bank, savings and loan association or
      insurance company, or engaging in or continuing any conduct or practice in
      connection with such
activity;





(ii)
            engaging in any type of business
      practice; or





(iii)
            engaging in any activity in
      connection with the purchase or sale of any security or commodity or in
      connection with any violation of federal or state securities laws or
      federal commodities laws;





·
            been the subject of any order,
      judgment, or decree, not subsequently reversed, suspended, or vacated, of
      any federal or state authority barring, suspending, or otherwise limiting
      for more than 60 days the right of such person to engage in any activity
      described in (i) above, or to be associated with persons engaged in any
      such activity;





·
            been found by a court of
      competent jurisdiction in a civil action or by the SEC to have violated
      any federal or state securities law, where the judgment in such civil
      action or finding by the SEC has not been subsequently reversed,
      suspended, or vacated;





·
            been found by a court of
      competent jurisdiction in a civil action or by the Commodity Futures
      Trading Commission to have violated any federal commodities law, where the
      judgment in such civil action or finding by the Commodity Futures Trading
      Commission has not been subsequently reversed, suspended, or
      vacated;





·
            been the subject of, or a party
      to, any federal or state judicial or administrative order, judgment,
      decree, or finding, not subsequently reversed, suspended or vacated,
      relating to an alleged violation
of:





(i)
            any federal or state securities
      or commodities law or regulation;
or





(ii)
            any law or regulation respecting
      financial institutions or insurance companies including, but not limited
      to, a temporary or permanent injunction, order of disgorgement or
      restitution, civil money penalty or temporary or permanent
      cease-and-desist order, or removal or prohibition order;
      or





(iii)
            any
      law or regulation prohibiting mail or wire fraud or fraud in connection
      with any business entity; or





·
            been the subject of, or a party
      to, any sanction or order, not subsequently reversed, suspended or
      vacated, of any self-regulatory organization (as defined in Section
      3(a)(26) of the Securities Exchange Act of 1934), any registered entity
      (as defined in Section 1(a)(29) of the Commodity Exchange Act), or any
      equivalent exchange, association, entity or organization that has
      disciplinary authority over its members orpersons
      associated with a member.






Family
Relationships






Louis
Friedman, our President, Chief Executive Officer and Chairman, and Leslie
Vogelman, our Treasurer, are husband and wife.  There are no other
relationships between the officers or directors of the
Company.




20


Committees




As of
June 30, 2010, we have not appointed members to an audit committee and,
therefore, the respective role of an audit committee has been conducted by our
Board of Directors as a whole. When established, the audit committee's primary
function will be to provide advice with respect to our financial matters and to
assist our Board of Directors in fulfilling its oversight responsibilities
regarding finance, accounting, tax and legal compliance. The audit committee's
primary duties and responsibilities will be to: (i) serve as an independent and
objective party to monitor our financial reporting process and internal control
system; (ii) review and appraise the audit efforts of our independent
accountants; (iii) evaluate our Annual financial performance as well as our
compliance with laws and regulations; (iv) oversee management's establishment
and enforcement of financial policies and business practices; and (v) provide an
open avenue of communication among the independent accountants, management and
our Board of Directors.





Diversity





While the
Company does not have a policy regarding diversity of its board members,
diversity is one of a number of factors that is typically taken into account in
identifying board nominees.  We only have two members on our board of
directors, but we hope to add more members for a diverse board in terms of
previous business experience and educational and personal background of the
members of our board.





Compliance
with Section 16(a) of the Exchange Act





Section
16(a) of the Exchange Act requires our executive officers, directors, and
persons who beneficially own more than 10% of a registered class of our equity
securities to file with the SEC initial statements of beneficial ownership,
reports of changes in ownership, and annual reports concerning their ownership
of our common shares and other equity securities on Forms 3, 4, and 5
respectively.  Executive officers, directors, and greater than 10%
stockholders are required by SEC regulations to furnish us with copies of all
Section 16(a) reports they file.  Based on a review of the copies of such
forms received by us, and to the best of our knowledge, during the fiscal year
ended June 30, 2010:


·
              2 reports
      were untimely filed and 2 transactions were untimely reported by
      Belmont  Partners, LLC, a beneficial holder of more than 10% of our
      common stock, as detailed below:
  (1)
                Form
      3 for Belmont’s purchase of securities on July 24, 2009 by which Belmont
      became a reporting person;
 (2)
                Form
      4 for Belmont’s sale of securities on September 2,
  2009;
  ·        3
      reports were untimely filed and 3 transactions were untimely reported by
      Joseph Meuse, our President and Secretary and a member of our Board from
      July 23, 2009 to October 19, 2009, as detailed below:(1)Form
      3 for the appointment and election of Mr. Meuse as an officer and director
      of WES on July 23, 2009;
                    (2)Form
      4 for the change in his indirect beneficial ownership due to securities
      purchased by Belmont Partners, LLC on July 24, 2009;
                    (3)Form
      4 for the change in his indirect beneficial ownership due to Belmont’s
      sale of securities on September 2,
2009;
  ·
              1
      report was untimely filed and 1 transaction was untimely reported by
      Sanford Barber, our Chairman of the Board and President, Chief Executive
      Officer, and Chief Financial Officer from January 4, 2006 to July 23,
      2009, which was a Form 4 that was required to be filed by Mr. Barber for
      the transaction that was a sale of his shares to Belmont on July 24,
      2009;
  ·
              1
      report was untimely filed and 1 transaction was untimely reported by
      William Snell, our Vice President and a member of our Board from January
      4, 2006 to August 5, 2009, which was a Form 4 that was required to be
      filed by Mr. Snell for the transaction that was a sale of his shares to
      Belmont on July 24, 2009;·
              1
      report was untimely filed and 1 transaction was untimely reported by
      Allison Snell, our Treasurer and a member of our Board from January 4,
      2006 to August 5, 2009, which was a Form 4 that was required to be filed
      by Mrs. Snell for the transaction that was a sale of her shares to Belmont
      on July 24, 2009; and·
              1
      report was untimely filed and 1 transaction was untimely reported by
      Thomas Burress, a member of our Board from January 4, 2006 to August 5,
      2009, which was a Form 4 that was required to be filed by Mr. Burress for
      the transaction that was a sale of his shares to Belmont on July 24,
      2009.









Code
of Ethics




We have
not yet adopted a code of business conduct and ethics that applies to all
directors, officers and employers as we have not had the resources to do
so.




21


ITEM 11. 
    Executive Compensation.





Summary
Compensation Table





The
following summary compensation table indicates the cash and non-cash
compensation earned during the fiscal years ended June 30, 2010, 2009, and 2008
by (i) our Chief Executive Officer (principal executive officer), (ii) our Chief
Financial Officer (principal financial officer), (iii) the three most highly
compensated executive officers other than our CEO and CFO who were serving as
executive officers at the end of our last completed fiscal year, whose total
compensation exceeded $100,000 during such fiscal year ends, and (iv) up to two
additional individuals for whom disclosure would have been provided but for the
fact that the individual was not serving as an executive officer at the end of
our last completed fiscal year, whose total compensation exceeded $100,000
during such fiscal year ends (collectively, the “Named Executive
Officers”).





Fiscal
                              
                              Salary
                              
                              
                              Bonus
                              
                              
                              Stock
                                Awards
                              
                              
                              Option
                                Awards
                              
                              
                              Non-Equity
                                Incentive Plan
                                Compensation
                              
                              
                              All Other
                                Comp-
                                ensation
                              
                              
                              TotalName and Principal Position
                              Year
                              
                              ($)
                              
                              
                              ($)
                              
                              
                              ($)
                              
                              
                              ($)(1)
                              
                              
                              ($)
                              
                              
                              ($)
                              
                              
                              ($)Louis
      S. Friedman (2)
                              2010
                              
                              
                              152,994
                              
                              
                              
                              —
                              
                              
                              
                              —
                              
                              
                              
                              —
                              
                              
                              
                              —
                              
                              
                              
                              —
                              
                              
                              
                              152,994President,
      Chief Executive
                              2009
                              
                              
                              78,000
                              
                              
                              
                              —
                              
                              
                              
                              —
                              
                              
                              
                              —
                              
                              
                              
                              —
                              
                              
                              
                              —
                              
                              
                              
                              78,000Officer
      and Chairman of the Board
                              2008
                              
                              
                              71,500
                              
                              
                              
                              —
                              
                              
                              
                              —
                              
                              
                              
                              —
                              
                              
                              
                              —
                              
                              
                              
                              —
                              
                              
                              
                              71,500Ronald
      P. Scott
                              2010
                              
                              
                              124,527
                              
                              
                              
                              —
                              
                              
                              
                              —
                              
                              
                              
                              —
                              
                              
                              
                              —
                              
                              
                              
                              —
                              
                              
                              
                              124,527Chief
      Financial Officer, Secretary
                              2009
                              
                              
                              128,500
                              
                              
                              
                              —
                              
                              
                              
                              —
                              
                              
                              
                              —
                              
                              
                              
                              —
                              
                              
                              
                              —
                              
                              
                              
                              128,500And
      Director
                              2008
                              
                              
                              101,280
                              
                              
                              
                              —
                              
                              
                              
                              —
                              
                              
                              
                              866
                              
                              
                              
                              —
                              
                              
                              
                              —
                              
                              
                              
                              102,146




(1)
            Awards consist of stock options
      granted to the Named Executive Officer in the fiscal year specified as
      well as prior fiscal years. Amounts shown do not reflect whether the Named
      Executive Officer has actually realized a financial benefit from the
      awards (such as by exercising stock options). Amounts listed in this
      column represent the compensation cost recognized by us for financial
      statement reporting purposes. These amounts have been calculated in
      accordance with
  SFAS No. 123(R).





(2)
            Mr. Friedman’s current annual
      salary, effective July 1, 2009, is
  $150,000.





Outstanding
Equity Awards at Fiscal Year End






The
following table shows, for the fiscal year ended June 30, 2010, certain
information regarding outstanding equity awards at fiscal year end for our Named
Executive Officers.






Outstanding
Equity Awards at Fiscal Year-End 2010





Option Awards(1)
                  
                  
                  Stock Awards(1)Name
                  
                  Number of
                    Securities
                    Underlying
                    Unexercised
                    Options (#)
                    Exercisable
                  
                  
                  Number of
                    Securities
                    Underlying
                    Unexercised
                    Options (#)
                    Unexercisable
                  
                  
                  Option
                    Exercise
                    Price ($)
                  
                  
                  Option
                    Expiration
                    Date
                  
                  
                  Number of Shares
                    or Units of Stock
                    That Have Not
                    Vested (#)
                  
                  
                  Market Value
                    of Shares or
                    Units of Stock
                    That Have
                    Not Vested ($)Louis
      S. Friedman
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  $
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  $
                  —Ronald
      P. Scott (1)
                  
                  
                  438,456
                  
                  
                  
                  —
                  
                  
                  
                  0.228
                  
                  
                  10/1/2012
                  
                  
                  
                  —
                  
                  
                  
                  —





(1)
            Options granted to the Named
      Executive Officers expire five years after the grant date.  These
      options were not granted pursuant to a Section 16(b)(3)
      Plan.





Options/SAR
Grants in the Last Fiscal Year






None.




Aggregated
Options/SAR Exercises in Last Fiscal Year and Year End Option/SAR
Values




None.




Directors’
Compensation




For the
fiscal year ended June 30, 2010, our directors did not receive any compensation
in their capacity as a director.






22


Compensation
Consultants




None.




ITEM 12. 
    Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters.






The
following table sets forth certain information known to us with respect to the
beneficial ownership of our common stock by:





•
            all persons who are beneficial
      owners of five percent (5%) or more of any class of our voting
      securities;





•
            each of our
      directors;





•
            each of our executive officers;
      and





•
            all current directors and
      executive officers as a
group.





Except as
otherwise indicated, and subject to applicable community property laws, the
persons named in the table below have sole voting and investment power with
respect to all shares of common stock held by them.





Applicable
percentage ownership in the following table is based on 63,182,647 shares of
common stock outstanding as of September 30, 2010.





Beneficial
ownership is determined in accordance with the rules of the SEC. In computing
the number of shares beneficially owned by a person and the percentage ownership
of that person, shares of common stock subject to options held by that person
that are currently exercisable or exercisable within 60 days of September
30, 2010, are deemed outstanding. Such shares, however, are not deemed
outstanding for the purpose of computing the percentage ownership of any other
person.





Title of
                                  Class
                                
                                Name and Address of Beneficial Owner
                                
                                Amount and Nature of
                                  Beneficial Ownership
                                
                                
                                Percent
                                  of ClassExecutive
      Officers and DirectorsCommon
                                
                                Louis
      S. Friedman (1)
                                
                                
                                28,394,376
                                
                                
                                
                                44.9
                                %Common
                                
                                Ronald
      P. Scott (1)
                                
                                
                                438,456
                                (2)
                                
                                
                                0.7
                                %Common
                                
                                Leslie
      Vogelman (1)(7)
                                
                                
                                17,500
                                
                                
                                
                                0.0
                                %Common
                                
                                David
      Wirth (1)(7)
                                
                                
                                17,500
                                
                                
                                
                                0.0
                                %5%
      ShareholdersCommon
                                
                                Hope
      Capital, Inc. (4)
                                
                                
                                6,378,001
                                (5)
                                
                                
                                9.9
                                %Common
                                
                                Donald
      Cohen (3)
                                
                                
                                13,022,127
                                
                                
                                
                                20.6
                                %Common
                                
                                All
      directors and executive officers as a group (4 persons)
                                
                                
                                28,867,833
                                
                                
                                
                                45.3
                                %Executive
      Officers and DirectorsSeries
      A Convertible Preferred Stock
                                
                                Louis
      S. Friedman (1) (6)
                                
                                
                                4,300,000
                                
                                
                                
                                100.0
                                %Series
      A Convertible Preferred Stock
                                
                                Ronald
      P. Scott (1)
                                
                                
                                0
                                
                                
                                
                                0.0
                                %Series
      A Convertible Preferred Stock
                                
                                Leslie
      Vogelman (1)
                                
                                
                                0
                                
                                
                                
                                0.0
                                %Series
      A Convertible Preferred Stock
                                
                                David
      Wirth (1)
                                
                                
                                0
                                
                                
                                
                                0.0
                                %Series
      A Convertible Preferred Stock
                                
                                All
      directors and executive officers as a group (4 persons)
                                
                                
                                4,300,000
                                
                                
                                
                                100.0
                                %





(1)
            This person’s address is
      c/o WES Consulting, Inc., 2745 Bankers Industrial Drive, Atlanta, GA
      30360.





(2)
            Includes options to purchase
      438,456 shares of common
stock.





(3)
            This person’s address is c/o Paul
      M. Spizzirri, Esq., 1170 Peachtree Street NE, Suite 1200, Atlanta, GA
      30309.




23




(4)
            This person’s address is 1 Linden
      Place, Suite 207, Great Neck, NY 11021. Curt Kramer is the sole
      shareholder of Hope Capital, Inc. and the natural control person over
      these securities.





(5)
            Includes 1,000,000 shares of the
      1,500,000 shares that are issuable upon conversion of the $375,000
      convertible note payable held by Hope Capital, Inc.  Such note is
      convertible only to the extent that Hope Capital’s total ownership does
      not exceed 9.9% of the total shares issued and outstanding.  The
      reported amount does not include a warrant to purchase 1,000,000 shares of
      common stock to Hope Capital. Such warrant is exercisable at the holder’s
      option until June 26, 2014 and allows the holder to purchase shares of the
      Company at $.75 per share. The warrant is only exercisable to the extent
      that Hope Capital’s total share ownership does not exceed 9.9% of the
      total shares issued and outstanding. The reported amount also does not
      include 1,000,000 shares that are issuable upon conversion of the $250,000
      convertible note payable held by Hope Capital, Inc.  Such note is
      convertible only to the extent that Hope Capital’s total ownership does
      not exceed 9.9% of the total shares issued and
      outstanding.





(6)
            These
      securities are obligated to be issued by the Company once the Certificate
      of Designation of Rights is filed with the Secretary of State of Florida
      for Series A Convertible Preferred
Stock.





(7)
            Includes
      options to purchase 17,500 shares of common
  stock.




ITEM 13. 
    Certain Relationships and Related Transactions, and Director
Independence.




Related
Party Transactions





The lease
for the Company’s current facility required the Company to provide a standby
letter of credit payable to the lessor in the amount of $225,000 until December
31, 2010. Upon expiration of the initial letter of credit, a letter of credit in
the amount of $25,000 (in lieu of a security deposit) is required to be
secured.  Fidelity Bank issued a standby letter of credit on September 29,
2005. This letter of credit is secured by an assignment by Leslie Vogelman, our
Treasurer, to Fidelity Bank of a Certificate of Deposit in the amount of
$225,000.





On
September 2, 2009, Liberator, Inc. acquired the majority of our issued
and outstanding common stock pursuant to a common stock purchase agreement
entered into with Belmont Partners, LLC, a Virginia limited liability company
(the “Seller”), our former majority shareholder.  Pursuant to the terms of
the purchase agreement, Liberator acquired 972,000 shares (81%) of our common
stock from the Seller for a total of two hundred forty thousand five hundred
dollars ($240,500) ) in addition to the issuance by the Company of two hundred
and fifty thousand (250,000) warrants to purchase an equal number of shares of
the Company’s common stock with an exercise price of twenty five cents ($0.25),
the issuance by the Company to Belmont of a total of one million five hundred
thousand (1,500,000) shares of the Company’s common stock with seven hundred and
fifty thousand (750,000) shares delivered at closing and the balance of seven
hundred fifty thousand (750,000) shares to be delivered on the one (1) year
anniversary of the closing.  The first block of 750,000 shares were issued
to Belmont on December 9, 2009. The Company was required to deliver the balance
of 750,000 shares of common stock on September 2, 2010, provided, however, that
in the event that the Company or Liberator made a claim for indemnification
pursuant to Section 7(a) of the Stock Purchase Agreement prior to such date, the
number of balance shares would have been reduced by the result of the following
amount: (a) the amount of the indemnity claim pursuant to Section 7(a); divided
by (b) the five (5) day average price per share of the Company’s common stock as
quoted on the Over-the-Counter Bulletin Board or other electronic quotation
system.  As of September 2, 2010, the Company has not issued the 750,000
shares of common stock, and the Company is currently re-negotiating the terms of
this agreement with Belmont.





Funds for
the September 2, 2009 purchase by Liberator, Inc., came from a convertible note
in the amount of $250,000 issued to Hope Capital Inc., a shareholder of
Liberator. The note bears interest at 3% annually and is due September 2, 2012.
The note is convertible at any time prior to maturity, at the holders’ option,
into common stock at a conversion price of $.25 per share, subject to
adjustment.  In connection with the purchase, all of our officers and
directors resigned and were succeeded by the directors and officers of
Liberator.





On
October 19, 2009, we entered into a Merger and Recapitalization Agreement with
Liberator under which Liberator merged with and into the Company, with the
Company surviving as the sole remaining entity.   As a result of the
merger, Liberator’s wholly owned subsidiary, OneUp, became our wholly owned
subsidiary, and OneUp’s wholly owned subsidiary, Foam Labs, Inc., became our
indirect wholly owned subsidiary. Pursuant to the terms of the agreement, each
of Liberator’s issued and outstanding shares of common stock were converted into
one share of our common stock, which, after giving effect to the merger, equaled
in the aggregate, 98.4% of our total issued and outstanding common stock. 
Pursuant to the agreement, each of Liberator’s preferred stock will be converted
into one share of our Series A Convertible Preferred Stock once we have
designated such series of preferred stock and filed with the State of Florida
such series’ provisions, rights, and designations. The shares of our common
stock owned by Liberator prior to execution of the agreement were immediately
cancelled.





24


On May
17, 2010, Louis Friedman, our Chairman and Chief Executive Officer, personally
guaranteed the full and prompt payment, performance, and discharge of OneUp’s
obligations to Summit Financial Resources, L.P. under a Financing Agreement
dated May 17, 2010. As of June 30, 2010, $320,184 was borrowed under this
Financing Agreement.




Also
pursuant to the Merger and Recapitalization Agreement, each of Liberator’s
preferred stock were required to be converted into one share of our Series A
Convertible Preferred Stock. On the closing date of the merger, we were not
authorized to issue any preferred stock and therefore pursuant to the agreement,
it was agreed that we will issue our shares of Series A Convertible Preferred
Stock to the holder of Liberator’s preferred stock immediately prior to the
merger pursuant to the terms of the agreement once we file an amendment to our
Articles of Incorporation authorizing the issuance of preferred stock and filing
a certificate of designation for Series A Convertible Preferred Stock with the
Florida Secretary of State.  The sole holder of Liberator’s preferred stock
immediately prior to our merger with Liberator was our CEO, Louis S.
Friedman.  Thus, we have an obligation to issue 4,300,000 shares of Series
A Convertible Preferred Stock to Mr. Friedman and will do so once we file an
amendment to our Articles of Incorporation and the certificate of
designation.




Director
Independence





Our board
of directors has determined that none of its current members qualifies as
“independent” as the term is used in Item 407 of Regulation S-K as promulgated
by the SEC and Nasdaq’s Marketplace Rule 5605(a)(2).




ITEM 14. 
    Principal Accounting Fees and Services.





The
aggregate fees billed by our principal accountant for each of the last two
fiscal years for Audit Fees, Audit-Related Fees, Tax Fees and All Other Fees are
as follows:


Fiscal Year Ended June 30,2009
                    
                    
                    2010Audit
      Fees(1)
                    
                    $
                    21,500
                    
                    
                    $
                    23,000Audit-Related
      Fees(2)
                    
                    $
                    -
                    
                    
                    $
                    -Tax
      Fees(3)
                    
                    $
                    -
                    
                    
                    $
                    -All
      Other Fees(4)
                    
                    $
                    -
                    
                    
                    $
                    -




(1)
            Audit
      Fees– This category
      includes the audit of our annual financial statements, review of financial
      statements included in our Quarterly Reports on Form 10-Q, and services
      that are normally provided by independent auditors in connection with the
      engagement for fiscal years.  This category also includes advice on
      audit and accounting matters that arose during, or as a result of, the
      audit or the review of interim financial
  statements.





(2)
            Audit-Related
      Fees– This category
      consists of assurance and related services by our independent auditors
      that are reasonably related to the performance of the audit or review of
      our financial statements and are not reported above under "Audit
      Fees."  The services for the fees disclosed under this category
      include consultation regarding our correspondence with the
      SEC.





(3)
            Tax
      Fees– This category
      consists of professional services rendered by our independent auditors for
      tax compliance and tax advice.  The services for the fees disclosed
      under this category include tax return preparation and technical tax
      advice.





(4)
            All Other
      Fees– This category
      consists of fees for other miscellaneous
  items.





Our board
of directors reviews and approves audit and permissible non-audit services
performed by its independent accountants, as well as the fees charged for such
services.  In its review of non-audit service fees and its appointment of
Gruber & Company LLC as our independent accountants, the Board considered
whether the provision of such services is compatible with maintaining
independence.  All of the services provided and fees charged by Gruber
& Company LLC were approved by the Board.




25




PART
IV.




ITEM 15.      Exhibits, Financial
Statement Schedules.




Financial
Statements; Schedules




Our
consolidated financial statements for the fiscal years ended June 30, 2010 and
2009 begin on page F-1 of this annual report.  We are not required to
file any financial statement schedules.




Exhibit
Table




Exhibit No.
                    
                    Description2.1
                    
                    Merger
      and Recapitalization Agreement between WES Consulting, Inc., the majority
      shareholder of WES Consulting, Inc., Liberator, Inc., and the majority
      shareholder of Liberator, Inc., dated as of October 19, 2009
      (2)2.2
                    
                    Stock
      Purchase and Recapitalization Agreement between OneUp Acquisition, Inc.,
      Remark Enterprises, Inc., OneUp Innovations, Inc., and Louis S. Friedman,
      dated March 31, 2009 and fully executed on April 3, 2009
    (3)2.3
                    
                    Amendment
      No. 1 to Stock Purchase and Recapitalization Agreement, dated June 22,
      2009 (3)3.1
                    
                    Articles
      of Incorporation for WES Consulting, Inc.
  (1)3.2
                    
                    Bylaws
      of WES Consulting, Inc. (1)4.1
                    
                    3%
      Convertible Note Due August 15, 2012 issued by Liberator, Inc. to Hope
      Capital, Inc. on June 24, 2009 (3)4.2
                    
                    3%
      Convertible Note Due September 2, 2012 issued by Liberator, Inc. to Hope
      Capital, Inc. on September 2, 2009 (3)10.1
                    
                    Distribution
      Agreement between OneUp Innovations, Inc. and InJoy Innovations Pty Ltd.,
      dated May 12, 2008 (3)10.2
                    
                    Distribution
      Agreement between OneUp Innovations, Inc. and Ong S.C. Ian, dated May 21,
      2008 (3)10.3
                    
                    Distribution
      Agreement between OneUp Innovations, Inc. and UpOne Trading B.V., dated
      May 31, 2008 (3)10.4
                    
                    Distribution
      Agreement between OneUp Innovations, Inc. and Freedom Worldwide Limited,
      dated June 2, 2008 (3)10.5
                    
                    Distribution
      Agreement between OneUp Innovations, Inc. and Dahlab Pascal, dated October
      20, 2008 (3)10.6
                    
                    Distribution
      Agreement between OneUp Innovations, Inc. and TRE PI SRL, dated January
      12, 2009 (3)10.7
                    
                    Lease
      Agreement between Bedford Realty Company, LLC and OneUp Innovations, Inc.,
      dated September 26, 2005 (3)10.8
                    
                    Written
      Description of Oral Agreement between OneUp Innovations, Inc. and
      Downshire Capital, dated March 11, 2009 (3)10.9
                    
                    Receivables
      Financing Agreement between Advance Financial Corporation and OneUp
      Innovations, Inc., dated March 19, 2008 (3)10.10
                    
                    Credit
      Cash Receivables Advance Agreement between CC Funding and OneUp
      Innovations, Inc., dated June 25, 2008 (3)10.11
                    
                    Irrevocable
      Standby Letter of Credit issued by Fidelity Bank to Bedford Realty
      Company, LLC for the account of OneUp Innovations, Inc., dated September
      29, 2005 (3)10.12
                    
                    Common
      Stock Purchase Agreement dated September 2, 2009 by and between Liberator,
      Inc, Belmont Partners, LLC, and WES Consulting, Inc.
(3)10.13
                    
                    Written
      Description of Oral Agreement between OneUp Innovations, Inc. and Leslie
      Vogelman, dated June 23, 2006 (3)10.14
                    
                    Written
      Description of Oral Agreement between OneUp Innovations, Inc. and Don
      Cohen, dated July 25, 2008 (3)10.15
                    
                    Guaranty
      by Louis Friedman, dated June 25, 2008 (3)10.16
                    
                    Engagement
      Letter between WES Consulting, Inc. and New Castle Financial Services LLC,
      dated December 14, 2009 (3)10.17
                    
                    Form
      of WES Subscription Agreement (3)10.18
                    
                    Loan
      and Security Agreement between Entrepreneur Growth Capital LLC and OneUp
      Innovations, Inc and Foam Labs, Inc., dated November 10, 2009
      (3)10.19
                    
                    Common
      Stock Purchase Agreement between Belmont Partners, LLC, Sanford H. Barber,
      Carol B. Barber, and WES Consulting, Inc., dated July 24, 2009
      (4)10.20
                    
                    Distributorship
      Agreement between OneUp Innovations, Inc. and TENGA Co. Ltd., date
      February 17, 2010 (5)10.21
                    
                    Security
      Agreement between WES Consulting, Inc. and Summit Financial Resources,
      L.P., dated May 17, 2010 (6)10.22
                    
                    Financing
      Agreement between One Up Innovations, Inc., FoamLabs, Inc. and Summit
      Financial Resources, L.P., dated May 17, 2010 (6)10.23
                    
                    Guarantee
      between WES Consulting, Inc. and Summit Financial Resources, L.P., dated
      May 17, 2010 (6)
  26
  10.24
                    
                    Guarantee
      between Louis S. Friedman and Summit Financial Resources, L.P., dated May
      17, 2010 (6)10.25
                    
                    Addendum
      to Financing Agreement between One Up Innovations, Inc., FoamLabs, Inc.
      and Summit Financial Resources, L.P., date May 17, 2010
  (6)10.26
                    
                    Settlement
      Agreement and General Release between WES Consulting, Inc. and Belmont
      Partners, LLC, effective October 14, 2010 (7)10.27
                    
                    Credit
      Card Receivables Advance Agreement between OneUp Innovations, Inc., Foam
      Labs, Inc. and CC Funding, a division of Credit Cash NJ, LLC, dated
      November 4, 2010 (8)10.28
                    
                    Advance
      Schedule No. 01 to Credit Card Receivables Advance Agreement between OneUp
      Innovations, Inc., Foam Labs, Inc. and CC Funding, a division of Credit
      Cash NJ, LLC, dated November 4, 2010 (8)10.29
                    
                    Corporate
      Guaranty between WES Consulting, Inc. and Credit Cash NJ, LLC, dated
      November 3, 2010 (8)10.30
                    
                    Guaranty
      between Louis Friedman and Credit Cash NJ, LLC, dated November 4, 2010
      (8)10.31
                    
                    Guaranty
      between Ronald Scott and Credit Cash NJ, LLC, dated November 4, 2010
      (8)10.32
                    
                    Control
      Account Agreement between OneUp Innovations, Inc., Credit Cash NJ, LLC,
      and Signature Bank, dated November 3, 2010 (8)16.1
                    
                    Letter
      from Randall  N. Drake, CPA PA (2)21.1
                    
                    Subsidiaries
      (3)31.1
                    
                    Section
      302 Certificate of Chief Executive Officer *31.2
                    
                    Section
      302 Certificate of Chief Financial Officer *32.1
                    
                    Section
      906 Certificate of Chief Executive Officer *32.2
                    
                    Section
      906 Certificate of Chief Financial Officer
*


*         Filed herewith.




(1)
                            Filed
      on March 2, 2007 as an exhibit to our Registration Statement on Form SB-2,
      and incorporated herein by reference.(2)
                            Filed
      on October 22, 2009 as an exhibit to our Current Report on Form 8-K, and
      incorporated herein by reference.(3)
                            Filed
      on March 24, 2010 as an exhibit to Amendment No. 1 to our Current Report
      on Form 8-K, and incorporated herein by reference.(4)
                            Filed
      on August 5, 2010 as an exhibit to our Current Report on Form 8-K, and
      incorporated herein by reference.(5)
                            Filed
      on February 19, 2010 as an exhibit to our Current Report on Form 8-K, and
      incorporated herein by reference.(6)
                            Filed
      on October 13, 2010 as an exhibit to our Annual Report on Form 10-K, and
      incorporated herein by reference.(7)
                            Filed
      on October 19, 2010 as an exhibit to our Current Report on Form 8-K, and
      incorporated herein by reference.(8)
                            Filed
      on November 9, 2010 as an exhibit to our Current Report on Form 8-K, and
      incorporated herein by
reference.




27


SIGNATURES




Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act
of 1934, as amended, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.





WES
      CONSULTING, INC.Date:
      November 12, 2010
                /s/
      Louis S. FriedmanLouis
      S. Friedman, Chief Executive Officer and
  President




In
accordance with the Securities Exchange Act of 1934, as amended, this report has
been signed below by the following persons on behalf of the registrant and in
the capacities and on the dates indicated.





NAME
                          
                          TITLE
                          
                          DATE/s/ Louis S. Friedman
                          
                          Chairman
      of the Board, Chief Executive Officer,
                            and
      President (Principal Executive Officer)
                          
                          November
      12, 2010Louis
      S.
Friedman/s/ Ronald P. Scott
                          
                          Chief
      Financial Officer (Principal Financial and
                            Accounting
      Officer), Secretary, and Director
                          
                          November
      12, 2010Ronald
      P. Scott




28