WES Consulting, Inc. (Form: 8-K, Received: 10/22/2009 12:17:52)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (date of earliest event reported): October 19, 2009

WES Consulting, Inc.

(Exact name of registrant as specified in charter)

Florida

(State or other jurisdiction of incorporation)

333-141022

(Commission File Number)

59-3581576

(IRS Employer Identification No.)

2745 Bankers Industrial Drive

Atlanta, GA 30360

(Address of principal executive offices and zip code)

(770) 246-6400

(Registrant’s telephone number including area code)

(Former Name and Former Address)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Forward Looking Statements

This Form 8-K and other reports filed by the Registrant from time to time with the Securities and Exchange Commission (collectively, the “Filings”) contain or may contain forward looking statements and information that is based upon beliefs of, and information currently available to, Registrant’s management as well as estimates and assumptions made by Registrant’s management. When used in the Filings the words “anticipate”, “believe”, “estimate”, “expect”, “future”, “intend”, “plan” or the negative of these terms and similar expressions as they relate to Registrant or Registrant’s management identify forward looking statements. Such statements reflect the current view of Registrant with respect to future events and are subject to risks, uncertainties, assumptions and other factors (including the risks contained in the section of this report entitled “Risk Factors”) relating to Registrant’s industry, Registrant’s operations and results of operations. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended or planned.

Except as required by applicable law, including the securities laws of the United States, Registrant does not intend to update any of the forward-looking statements to conform these statements to actual results. The following discussion should be read in conjunction with Registrant’s audited financial statements for the fiscal years ended December 31, 2007 and 2008 and the related notes thereto, the unaudited financial statements for the three and six months ended June 30, 2009 and the related notes thereto, and the pro forma financial statements and the related notes filed with this Form 8-K.

In this Form 8-K, references to “we,” “our,” “us,” “WES Consulting,” “WES,” or the “Registrant” refer to WES Consulting, Inc., a Florida corporation.

Incorporation by Reference

Statements contained in this Current Report, or in any document incorporated in this Current Report by reference regarding the contents or other document, are not necessarily complete and each such statement is qualified in its entirety by reference to that contract or other document filed as an exhibit with the SEC. The SEC allows us to “incorporate by reference” into this Current Report certain documents we file with the SEC. This means that we can disclose important information to you by referring you to another document filed separately with the SEC. The information incorporated by reference is considered to be part of this Current Report, and later information that we file with the SEC, prior to the closing of the Exchange Agreement, will automatically update and supersede that information. We incorporate by reference the documents listed below. These include periodic reports, such as Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as well as information or proxy statements (except for information furnished to the SEC that is not deemed to be “filed” for purposes of the Exchange Act).

Item 1.01 Entry Into a Material Definitive Agreement.

Merger Agreement

As described in 2.01 below, On October 19, 2009 (the “Closing Date”), WES Consulting, Inc., a Florida corporation (the “Company” or “WES”) entered into a Merger and Recapitalization Agreement (the “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”).

On the Closing Date, 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 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 within ten (10) days of the Closing Date 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. As of the Closing Date, Liberator owned eighty-one (80.7%) percent of the issued and outstanding shares of the Company’s common stock. Upon the consummation of the transactions contemplated by this Agreement, the WES Common Stock owned by Liberator prior to the Agreement will be immediately cancelled (the “Cancellation”).

Both the Company and Liberator provided customary representations and warranties, pre-closing covenants and closing conditions in the Agreement, by which customary indemnification provisions secure any and all breaches of such representations and warranties.

A copy of the Agreement is incorporated herein by reference and is filed as an exhibit to this Form 8-K. The description of the transactions contemplated by the Agreement set forth herein does not purport to be complete and is qualified in its entirety by reference to the full text of the exhibits filed herewith and incorporated herein by reference.

Item 2.01 Completion of Acquisition or Disposition of Assets.

As more fully described in Section 1.01 above, on October 19, 2009 (the “Closing Date”), WES Consulting, Inc., a Florida corporation (the “Company” or “WES”) entered into a Merger and Recapitalization Agreement (the “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”).

The following is a description of the Company’s business:

General

WES Consulting, Inc.

The Company was incorporated in the State of Florida on February 25, 1999, under the name Wes Consulting, Inc. The Company’s executive offices are located at 2745 Bankers Industrial Drive, Atlanta, Georgia 30360. The Company’s 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.

Liberator, Inc.

Liberator, Inc. (formerly known as Remark Enterprises, Inc.) was founded in Nevada on October 31, 2007. Liberator’s executive offices are located at 2745 Bankers Industrial Drive, Atlanta, Georgia 30360. Liberator is a Georgia-based sexual wellness retailer, providing goods and information to customers who believe that sensual pleasure and fulfillment are essential to a well-lived and healthy life.

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. Liberator is a growing consumer brand that celebrates intimacy by inspiring romantic imagination. Our primary website address is www.liberator.com .

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 called “lovestyle” to define ourselves in a marketplace that is rapidly gaining in popularity and acceptance.

Since we shipped our first product in 2002, Liberator has evolved into a community of dedicated employees 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.

From the year ended December 2002 to the year ended December 2008, our annual revenues increased from $522,000 to $11.3 million, representing a compound annual growth rate of approximately 67%. Our growth is the result of increased consumer awareness of our products, led by the emerging trend in society called “sexual wellness.”

Liberator is focused on building, developing and marketing its Liberator brand of Bedroom Adventure Gear products. Since inception, we have spent over $7 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 and in newspaper ads.

In addition to the Liberator Shapes ® , we also produce a line of casual foam-based furniture that we sell under the Studio OneUp 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 Liberator 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.

Liberator is currently housed in a 140,000 sq. ft. vertically integrated manufacturing facility in a suburb of Atlanta, Georgia. Since our first sale in May 2002, Liberator has grown to include 95 employees, with our products being sold directly to consumers and through hundreds of domestic and international resellers, on-line affiliates, and independent sales consultants within the United States.

Liberator’s fiscal year end is June 30 and any subsequent reference to the Company’s fiscal year end is a reference to the years ended June 30. Please see Item 5.03.

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 , www.TheOoh.com and www.FoamLabs.com . Information contained on our Web sites does not constitute a part of this Memorandum.

INDUSTRY BACKGROUND

Liberator participates in the rapidly growing worldwide market of sexual wellness. What was once called Family Planning has evolved over the last 5 years into a new category called Sexual Wellness. All of the major retailers, pharmacies and on-line retailers have embraced this development including:

Walmart.com – Sexual Wellness products are sold in their Health & Beauty section

Amazon.com – Has a dedicated section called Sexual Wellness

Walgreens.com – Has a dedicated section called Sexual Wellness

CVS.com – Has a dedicated section called Sexual Health

Rite-Aid.com – Has a dedicated section called Sexual Well-being

Target.com – Has a dedicated section called Sexual Health

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 $63 billion Johnson & Johnson)

Trojan Condoms (a division of $2.4 billion Church & Dwight)

Philips Electronics (a $26 billion company) recently introduced a line a personal vibrators

Durex Condoms (a $250 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.

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, this is evidenced by our product position on leading e-commerce websites such as www.walgreens.com and www.drugstore.com .

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 creates a catalyst for them to revisit our website after their initial purchase.

Broad product offering . Liberator currently manufactures approximately 1,200 products and purchases for resale an additional 400 products.

Established and diversified customer base . Liberator has approximately 145,000 unique individual customers in addition to leading retailers and e-merchants like Walgreens, Overstock.com, Amazon.com, Brookstone, drugstore.com and Playboy.com. Although no single customer accounted for 10% or more of net sales during the past two fiscal years, Overstock.com and drugstore.com were both one of our top 10 customers during fiscal 2008 and 2009. The other named customers were counted in our top 25 customer category during those same years.

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

Since the first products were sold in 2002, Liberator has continued to evolve and expand its product offering.

Liberator has developed a product line of “Bedroom Adventure Gear ® ” which consists of six 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 produced by Liberator are marketed under Liberator’s registered trademark “Liberator ® ” and covered under United States Patent #6,925,669. Each of the Liberator Shapes has a unique shape, designed to introduce to the sexual experience positions which were previously difficult to achieve. The Liberator Shapes are manufactured from structured urethane foam cut at an angle, in large cubes and in platform shapes. The urethane base is encased in a tight, fluid resistant nylon shell, helping the cushions to maintain their shape.

The Company has 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 Equus ™ , and the Freestyle ™ . The sex furniture line also includes products based on re-purposed shredded polyurethane foam encased in a wide range of fabric types and colors and sold as the Zeppelin ™ , the Zeppelin ™ Lounger, the Zeppelin ™ Cocoon, and the Zeppelin ™ Pillow.

In addition to the above Liberator products, the Company manufactures couture lingerie, latex garments, fetish wear and a line of boudoir bedding items that are sold under the Fascinator ™ line. Beginning in mid-2006, the Company 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, music and gifts.

In addition to the Liberator product line, the Company also produces a line of casual foam-based furniture that it sells under the Studio OneUp brand. These products are offered directly to consumers through the Company's web site www.StudioOneUp.com , to e-Merchants under drop-ship agreements where the Company ships directly to their customers, and to other resellers.

Beginning in early fiscal 2007, the Company 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. This is not a material segment of our business.

Beginning in early calendar 2008, the Company introduced The Ooh web site www.TheOoh.com . This web site was designed as a health and wellness site where the Liberator intimacy products could be presented in a more conservative format. To date, this has not been a material segment of our business.

COMPETITION

The markets for the products and information offered by Liberator 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.

STRATEGY

As one of the few recognized brands in the sexual wellness market, our goal is to enhance revenue opportunities while improving our profitability. 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 and grow this effort, we also believe that we can be more successful by advertising on adult and mainstream cable television and network channels, and satellite and terrestrial radio stations.

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 six licensees in 11 European and Asian countries with a total population of 250 million people. 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 and TheOoh products . We have developed a unique line of point-of-purchase packaging system for our “bean bag” line of Studio OneUp seating. This system allows the retailer to stock a variety of bean 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 bean bags, consumers simply select the required size and number of compressed foam capsules that match the selected cover.

INTELLECTUAL PROPERTY

Liberator, Wedge, Ramp, Cube, Stage, Esse, Zeppelin, Jaxx, “Explore More”, “Bedroom Adventure Gear”, and the Liberator logo are subject to trademark or pending trademark applications of Liberator.

We also currently hold various web domain names relating to our brand, including the domain names listed below:

www.liberator.com	www.theliberator.com	www.liberatormusic.com
www.studiooneup.com	www.sulibertador.com	www.liberatormail.com
www.theooh.com	www.ourliberator.com	www.liberatorextreme.com
www.foamlabs.com	www.oneupinnovations.com	www.liberatoraffiliates.com
www.liberatorcushions.com	www.loveliberator.com	www.liberater.com
www.sexcushions.com	www.liberatorworks.com	www.hisliberator.com
www.liberator-scentuelle.com	www.liberatorshop.com	www.herliberator.com
www.oneupstore.com	www.liberatorshapes.com	www.foamrx.com
www.yourliberator.com	www.liberatorpads.com
www.thezerk.com	www.liberatoroffers.com

In August, 2005, we were issued a United States utility patent number US 6,925,669, “Support Cushion and System of Cushions.”

MARKETING

We believe one of our key strengths is the Liberator brand. While most products in the sexual wellness market are advertised by the manufacturers to the retailer who then sells the sexual wellness products to consumers, Liberator products are advertised directly to consumers through advertisements in national print magazines. As a result, we believe we have created a level of consumer awareness for the Liberator brand of sexual positioning products which we believe can be extended to other Liberator branded products, included personal products and consumables.

Through advertisements in a broad range of national magazines, consumers are directed to one the Company’s three e-commerce websites to learn more about the products and place their orders. These websites include www.liberator.com, www.StudioOneUp.com and www.TheOoh.com.

The Company intends to expand its advertising efforts beyond magazines to reach broader segments of the population and increase its consumer base.

Through its in-house sales organization, the Company engages retailers directly and then either ships to them on a wholesale basis and provides fulfillment services by drop-shipping directly to their customers.

Through attendance at a variety of domestic and international consumer and industry trade shows, the Company gains valuable feedback from consumers and retailers regarding the Company’s product offering. Attendance at these trade shows also provides the Company with an opportunity to monitor the competitive environment and be made aware of any emerging trends in the sexual wellness industry.

Liberator International

Liberator launched its international expansion program in mid-2008 through a licensing program. Through a co-manufacturing arrangement whereby the foam is contoured locally, Liberator 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. Net sales to these licensees totaled $64,885 in fiscal 2008 (the year ended June 30, 2008) and $239,704 in fiscal 2009 (the year ended June 30, 2009).

Since September 2008, Liberator has licensed 11 countries around the world to 6 licensees including the UK, Germany, Netherlands, Belgium, France, Italy, Australia / New Zealand, Singapore, Indonesia, and Malaysia (with a combined population greater than 250 million residents.) There are currently five other territories under negotiation with licensees. 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 of licensees include:

Singapore		www.liberator.sg

UK		www.theliberatoruk.co.uk

Netherlands		www.liberatorshop.nl

Germany		www.liberatorship.de

Belgium		www.liberatorshop.be

Australia / New Zealand		www.theliberator.com.au

Italy		http://liber ator.it

These international licensees are expected to eventually be successful 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 1% of total net sales in fiscal 2008 and less than 3% of total net sales during fiscal 2009.

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 2007		Fiscal 2008		Fiscal 2009
Direct	$	6,547	$	6,703	$	5,144
Wholesale		2,369		3,550		4,022
Other		1,218		1,498		1,095
Total Net Sales	$	10,134	$	11,751	$	10,261

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 2007			Fiscal 2008			Fiscal 2009
Internet	$	5,883		$	6,096		$	4,536
Phone		664			607			608
Total Direct Net Sales	$	6,547		$	6,703		$	5,144
Direct net sales as a percentage of total revenues		64.6	%		57.0	%		50.1	%

Since inception, the Company has sold directly to approximately 200,000 consumers, many of these consumers have ordered from the Company more than once.

Internet Website

Since 2002, our 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 3.1 million visits in fiscal 2009, as compared to over 3.5 million visits in fiscal 2008, representing an 11% decrease in website visits. Internet revenues represented 88% of the Direct business in fiscal 2009, compared to 91% of the Direct business in fiscal 2008. 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 addition to our www.Liberator.com website, we also maintain the www.StudioOneUp.com website and the www.TheOoh.com website.

In response to declining sales on our Liberator.com website, 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).

Wholesale

The following is a summary of our net sales to Wholesale customers and the percentage relationship to total revenues:

(Dollars in thousands)	Fiscal 2007			Fiscal 2008			Fiscal 2009
Wholesale Net Sales	$	2,369		$	3,550		$	4,022
Percentage of total revenues		23.4	%		30.2	%		39.2	%

As of June 30, 2009, we have approximately 800 wholesale accounts, most of which are located inthe United States.

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. Liberator will present “lovestyle” and sexual adventure in an interactive environment that is couple friendly, mainstream and not faced with the zoning restrictions of adult shops.

Products offered may 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 DVD’s

Sensual Massage, bath and body products

Music, educational DVD’s, limited erotic DVD’s

Personal lubricants

Scents, fragrances and candles

Gift baskets

Instructional monthly presentations or salons

Our 3,500 square foot 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 rolled out 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. In 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. Also, during these past three years, we have had net income in our second and third quarters and generated losses in our first and fourth quarters.

Employees and Labor Relations

As of October 20, 2009, we had 95 employees. In addition, approximately 35 employees are hired on a seasonal basis to meet demand during the peak season. None of our employees are represented by a union. We have had no labor-related work stoppages and we believe our relationship with our employees is good.

Legal Proceedings

The Company is not currently aware of any pending or threatened legal proceedings against us.

RISK FACTORS

You should carefully consider the following risks, as well as the other information contained in this Current Report. If any of the following risks actually occur, our business could be materially harmed.

RISKS RELATED TO OUR BUSINESS

Limited operating history and limited experience of management

We have a limited operating history upon which investors may base an evaluation of our performance. We have experienced significant growth in sales from inception through June 30, 2008, growing at a compound annual growth rate of approximately 67%; however, there is no guarantee that we will be able to return to the rate of growth we achieved in the past. To that point, sales decreased 13% between fiscal 2008 and fiscal 2009. Continuation of our existence as a going concern requires us to generate sufficient cash flows to meet our obligations, to successfully market our products and to achieve a level of sales adequate to support our cost structure. There can be no assurances that these requirements will be met. We must be evaluated in light of the expenses, delays, uncertainties, and other difficulties frequently encountered by an unseasoned business enterprise. The experience and ability of management are often considered the most significant factors in the success of a business. No assurance can be given that we will achieve or maintain profitable operations in the future.

We have a history of significant operating losses and we may incur additional losses in the future.

Liberator has historically generated significant operating losses. As of June 30, 2009, Liberator had an accumulated deficit of approximately $5,309,458. Liberator had net losses of approximately $3,754,982 for the twelve months ended June 30, 2009 and a net loss of $153,113 for the fiscal year ended June 30, 2008. We expect our operating expenses will continue to increase during the next several years as a result of the promotion of our products and the expansion of our operations, including the launch of new products, the opening of one or more stand-alone retail stores and entering into acquisitions, strategic alliances and joint ventures. If Liberator’s revenue does not grow at a substantially faster rate than these expected increases in our expenses or if our operating expenses are higher than we anticipate, we may not be profitable and we may incur additional losses, which could be significant.

We must dedicate significant resources to market our products to consumers.

We plan to continue to dedicate significant resources to market our products to consumers and create awareness of the benefits of our products. Although our prior advertising campaigns have generally been successful, there is no assurance that our future marketing programs will achieve the desired results. Failure to achieve the desired success in our marketing programs may have a material adverse effect on our business, financial condition and results of operations.

Our quarterly operating results may fluctuate significantly and you should not rely on them as an indication of our future results.

Our future revenues and results of operations may fluctuate significantly due to a combination of factors, many of which are outside of our control. The most important of these factors include:

seasonality;

the timing and effectiveness of our marketing programs;

the timing and effectiveness of capital expenditures;

our ability to enter into or renew marketing agreements with other sexual wellness companies; and

competition.

We may be unable to adjust spending quickly enough to offset any unexpected revenue shortfall. If we have a shortfall in revenue in relation to our expenses, our operating results will suffer. Our operating results for any particular quarter may not be indicative of future operating results. You should not rely on quarter-to-quarter comparisons of our results of operations as an indication of our future performance. It is possible that, in future periods, our results of operations may be below the expectations of investors.

Consumer spending on sexual wellness products and other products we sell may vary with general economic conditions. If general economic conditions deteriorate and our customers have less disposable income, consumers will likely spend less on our products and our quarterly operating results will suffer.

Our business, financial condition and results of operations may be adversely affected by unfavorable economic and market conditions.

Changes in global economic conditions could adversely affect the profitability of our business. Economic conditions worldwide have continued to deteriorate and have contributed to slowdowns in the consumer products industry, as well as in the specific segments and markets in which we operate, resulting in reduced demand and increased price competition for our products. If economic and market conditions in the United States or other key markets, remain unfavorable or persist, spread or deteriorate further, we may experience an adverse impact on our business, financial condition and results of operation. In addition, the current or future tightening of credit in financial markets could result in a decrease in demand for our products. The demand for entertainment and leisure activities tends to be highly sensitive to consumers’ disposable incomes, and thus a decline in general economic conditions may lead to our customers and potential new customers having less discretionary income to spend. This could lead to a reduction in our revenue and have a material adverse effect on our operating results. Accordingly, this economic downturn in the U.S. and other countries may hurt our financial performance. We are unable to predict the likely duration and severity of the current disruption in financial markets and adverse economic conditions and the effects they may have on our business and financial condition and results of operations. In addition, any significant increase in the cost of raw materials, utilities, wages, transportation costs and other production costs could have a material adverse effect on our business, financial condition and results of operations.

Our operating results will suffer if sales during our peak seasons do not meet our expectations.

Sales of our products are seasonal, concentrated in the fourth calendar quarter, due to the Christmas holiday, and the first calendar quarter, due to Valentine's Day. In anticipation of increased sales activity during these periods, we hire a number of temporary employees to supplement our permanent staff and we increase our inventory levels. If sales during these periods do not meet our expectations, we may not generate sufficient revenue to offset these increased costs and our operating results will suffer.

If we fail to develop and increase awareness of our brand, we will not increase or maintain our customer base or our revenues.

We must develop and increase awareness of the Liberator brand in order to expand our customer base and our revenues. In addition, we may introduce or acquire other brands in the future. We believe that the importance of brand recognition will increase as we expand our product offerings. Many of our customers may not be aware of the variety of products we offer. We intend to substantially increase our expenditures for creating and maintaining brand loyalty and raising awareness of our current and additional product offerings. However, if we fail to advertise and market our products effectively, we may not succeed in maintaining our brands, we will lose customers and our revenues will decline.

Our success in promoting and enhancing the Liberator brand will also depend on our success in providing our customers high-quality products and a high level of customer service. If our customers do not perceive our products to be of high quality, the value of the Liberator brand would be diminished, we will lose customers and our revenues will decline.

Because there are a limited number of suppliers of a key component of our products, we may suffer cost and supply difficulties if we are forced to change suppliers.

A limited number of domestic suppliers currently manufacture the microfiber fabric included in the outer shell of our main product line. This concentration in supply by two domestic manufacturers for this item subjects us to certain economic and production risks that are beyond our control. The two suppliers are Spectro Coating Corporation and Microfibres, Inc. To date, we have been able to purchase the required levels of microfiber fabric on an as-needed basis and we believe that these suppliers can meet our expected future demand requirements. However, should one or both of these suppliers experience any disruptions in their businesses, we may be forced to seek out other sources of supply. While foreign suppliers of the microfiber fabric are available, cost of goods sold and other costs may increase and order lead times may increase, in the event a change in supplier is necessitated.

We will need to successfully manage our growth for the foreseeable future.

If we experiences significant growth, this growth may place a significant strain on our managerial, operational, financial and other resources. We believe that our performance and success depends in part on our ability to manage our growth effectively. This, in turn, will require ongoing enhancement of our operating, administrative, financial and accounting systems, and the expansion of our work force and the training and management of our personnel. There can be no assurance that we will be able to manage our growth effectively, or that our facilities, systems, procedures or controls will be adequate to support our operations. Our inability to manage our growth effectively could have a material adverse effect on our business, prospects, operating results and financial condition.

We are dependent on key personnel, whose loss may be difficult to replace.

We are highly dependent on the technical and managerial skills of our key employees, including sales, marketing, information systems, financial and executive personnel. Therefore, the success of our business is highly dependent upon our ability to retain existing employees and to identify, hire and retain additional personnel as the need arises.

Currently, we particularly depend upon the efforts and skills of Louis S. Friedman. Mr. Friedman, one of the founders and current President and Chief Executive Officer of the Company, is the driving force behind our overall direction and our growth. The loss of services of Mr. Friedman could materially adversely affect our business, financial condition or results of operations. If Mr. Friedman left the Company’s employ, we might not be able to employ an equally qualified person or persons on suitable terms.

Competition for key personnel is intense and there can be no assurance that we will be able to retain existing personnel or to identify or hire additional qualified personnel as needed. The need for such personnel is particularly important in light of the anticipated demands of future growth. Our inability to attract, hire or retain necessary personnel could have a material adverse effect on our business, prospects, operating results and financial condition.

There are no contractual limits on compensation of our officers.

There are no contractual limitations on compensation that may become payable to officers or directors or on our ability to enter into contracts with related parties, all of which remain in the control of our Board of Directors (the “Board”).

We are controlled by our Chief Executive Officer, whose interests may differ from other stockholders.

Our Series A Convertible Preferred Stock has voting rights that always exceed the voting rights of all the Common Stock holders. The Common Stock has one vote per share and the Series A Convertible Preferred Stock has votes per share equal to the result of the total number of Common Stock outstanding times 1.01 divided by the number of Series A Convertible Preferred Stock outstanding. 100% of the Series A Convertible Preferred Stock will be owned by Louis S. Friedman, our Chairman and Chief Executive Officer. Accordingly, Mr. Friedman will own 73.1 % of the combined voting power of the Common Stock and Series A Convertible Preferred Stock, voting as a single class and will control the outcome of any corporate transaction or other matter submitted to the stockholders for approval, including mergers, consolidations and the sale of all or substantially all of our assets, and also the power to prevent or cause a change in control. The interests of Mr. Friedman may differ from the interests of the other stockholders.

The market for our products is highly competitive, our products are not necessities and there can be no assurance that we will have sufficient resources to compete successfully.

Although we have unique and proprietary products, the market for adult products and sexual enhancements is extremely competitive and highly fragmented and we believe that competition in this market will intensify. We cannot assure that our existing competitors and potential competitors will not succeed in developing or marketing products that will be more accepted in the marketplace or render our products non-competitive. We sell products that are not required by the vast majority of the general public and, as such, sales of such items are subject to fluctuations in the economy as well as fluctuations in individual preference for sexual wellness products. Any delay in developing, marketing and releasing new products in accordance with market demand could materially adversely affect our business, operating results and financial condition.

We believe that our ability to compete successfully will depend on a number of factors, including strong market presence directed to our ideal demographics; our pricing policies, our competitors and our suppliers; the timing of introduction of our new products and the products of our competitors; and industry and general economic trends. There can be no assurance that we will have the financial resources, technical expertise or marketing and support capabilities to compete successfully.

We have acquired certain copyrights and trademarks (the “Marks”) and patents and has applied for registration of certain other copyrights, patents, trademarks and service marks (collectively, the “Intellectual Property”), but there can be no assurance that our Marks and our other efforts to protect our rights in our Intellectual Property will prevent duplication or provide a competitive advantage.

If we are unable to obtain or maintain key website addresses, our ability to operate and grow our business may be impaired.

Our website addresses, or domain names, are critical to our business. However, the regulation of domain names is subject to change, and it may be difficult for us to prevent third parties from acquiring domain names that are similar to ours, that infringe our trademarks or that otherwise decrease the value of our brands. If we are unable to obtain or maintain key domain names for the various areas of our business, our ability to operate and grow our business may be impaired.

The loss of our main data center or other parts of our systems and network infrastructure would adversely affect our business.

Our main data center and most of our servers are located at external third-party facilities in Atlanta, Georgia. If our main data center or other parts of our systems and network infrastructure was destroyed by, or suffered significant damage from, an earthquake, fire, flood, or other similar catastrophes, or if our main data center was closed because of natural disaster or the operator having financial difficulties, our business would be adversely affected. Our casualty insurance policies may not adequately compensate us for any losses that may occur due to the occurrence of a natural disaster.

Our internet operations are subject to system failures and interruptions that could hurt our ability to provide customers’ with access to our websites, which could adversely affect our business and results of operations.

The uninterrupted performance of our computer systems is critical to the operation of our websites. Our ability to provide access to our websites and content may be disrupted by power losses, telecommunications failures or break-ins to the facilities housing our servers. Our customers may become dissatisfied by any disruption or failure of our computer systems that interrupts our ability to provide access to our websites. Repeated or prolonged system failures could substantially reduce the attractiveness of our websites and/or interfere with commercial transactions, negatively affecting our ability to generate revenue as approximately 60% of our revenues are derived from online sales. Our websites must accommodate a high volume of traffic and deliver regularly-updated content. Some of our network infrastructure is not fully redundant, meaning that we do not have back-up infrastructure on site for our entire network, and our disaster recovery planning cannot account for all eventualities. Our websites have, on occasion, experienced slow response times and network failures. These types of occurrences in the future could cause our customers’ to perceive our websites as not functioning properly and therefore induce them to abandon our websites. We are also subject to risks from failures in computer systems other than our own because our customers depend on their own internet service providers in order to access our websites and view our product offerings. Our revenue could be negatively affected by outages or other difficulties customers experience in accessing our websites due to internet service providers’ system disruptions or similar failures unrelated to our systems. Any disruption in the ability of customers to access our websites could result in fewer visitors to our websites and reduced sales, which could adversely affect our business and results of operations. We may not carry sufficient levels of business interruption insurance to compensate us for losses that may occur as a result of any events that cause interruptions in our websites.

In pursuing acquisitions, we may not be successful in identifying appropriate acquisition candidates or consummating acquisitions on favorable or acceptable terms. Furthermore, we may face significant integration issues and may not realize the anticipated benefits of the acquisitions due to integration difficulties or other operating issues.

If appropriate opportunities become available, we may acquire businesses, products or technologies that we believe are strategically advantageous to our business. Transactions of this sort could involve numerous risks, including:

unforeseen operating difficulties and expenditures arising from the process of integrating any acquired business, product or technology, including related personnel, and maintaining uniform standards, controls, procedures and policies;

diversion of a significant amount of management’s attention from the ongoing development of our business;

dilution of existing stockholders’ ownership interests;

incurrence of additional debt;

exposure to additional operational risks and liabilities, including risks and liabilities arising from the operating history of any acquired businesses;

negative effects on reported results of operations from acquisition-related charges and amortization of acquired intangibles;

entry into markets and geographic areas where we have limited or no experience;

the potential inability to retain and motivate key employees of acquired businesses;

adverse effects on our relationships with suppliers and customers; and

adverse effects on the existing relationships of any acquired companies, including suppliers and customers.

In addition, we may not be successful in identifying appropriate acquisition candidates or consummating acquisitions on favorable or acceptable terms, or at all. Failure to effectively manage our growth through acquisitions could adversely affect our growth prospects, business, results of operations and financial condition.

The prices we charge for our products may decline over time, which would reduce our revenues and adversely affect our profitability.

As our products continue to gain consumer acceptance and attract the attention of competitors, we may experience pressure to decrease the prices for our products, which could adversely affect our revenues and gross margin. If we are unable to sell our products at acceptable prices, or if we fail to develop and offer new products with sufficient profit margins, our revenue growth will slow and our business and financial results will suffer.

Continued imposition of tighter processing restrictions by credit card processing companies and acquiring banks would make it more difficult to generate revenue from our websites.

We rely on third parties to provide credit card processing services allowing us to accept credit card payments from the majority of our customers. Our business could be disrupted if these companies become unwilling or unable to provide these services to us. We are also subject to the operating rules, certification requirements and rules governing electronic funds transfers imposed by the payment card industry seeking to protect credit cards issuers, which could change or be reinterpreted to make it difficult or impossible for us to comply with such rules or requirements. If we fail to comply, we may be subject to fines and higher transaction fees and lose our ability to accept credit card payments from our customers, and our business and operating results would be adversely affected. Our ability to accept credit cards as a form of payment for our online products sales could also be restricted or denied for a number of other reasons, including but not limited to:

if we experience excessive charge backs and/or credits;

if we experience excessive fraud ratios;

if there is an adverse change in policy of the acquiring banks and/or card associations with respect to the processing of credit card charges for sexual wellness products;

an increase in the number of European and U.S. banks that will not accept accounts selling sexual wellness products;

if there is a breach of our security resulting in the theft of credit card data;

continued tightening of credit card association chargeback regulations in international commerce; and

association requirements for new technologies that consumers are less likely to use.

Our ability to keep pace with technological developments is uncertain.

Our failure to respond in a timely and effective manner to new and evolving technologies could harm our business, financial condition and operating results.

The internet industry is characterized by rapidly changing technology, evolving industry standards, changes in consumer needs and frequent new service and product introductions. Our business, financial condition and operating results will depend, in part, on our ability to develop the technical expertise to address these rapid changes and to use leading technologies effectively. We may experience difficulties that could delay or prevent the successful development, introduction or implementation of new features used to promote our products.

Further, if the new technologies on which we intend to focus our investments fail to achieve acceptance in the marketplace or our technology does not work and requires significant cost to replace or fix, our competitive position could be adversely affected, which could cause a reduction in our revenue and earnings. Further, after incurring substantial costs, one or more of the technologies under development could become obsolete prior to its introduction.

To access technologies and provide products that are necessary for us to remain competitive, we may make future acquisitions and investments and may enter into strategic partnerships with other companies. Such investments may require a commitment of significant capital and human and other resources. The value of such acquisitions, investments and partnerships and the technology accessed may be highly speculative. Arrangements with third parties can lead to contractual and other disputes and dependence on the development and delivery of necessary technology on third parties that we may not be able to control or influence. These relationships may commit us to technologies that are rendered obsolete by other developments or preclude the pursuit of other technologies which may prove to be superior.

Our business, financial condition and results of operations could be adversely affected if we fail to provide adequate security to protect our customers’ data and our systems.

Online security breaches could adversely affect our business, financial condition and results of operations. Any well-publicized compromise of security could deter use of the internet in general or use of the internet to conduct transactions that involve transmitting confidential information or downloading sensitive materials. In offering online payment services, we may increasingly rely on technology licensed from third parties to provide the security and authentication necessary to effect secure transmission of confidential information, such as customer credit card numbers. Advances in computer capabilities, new discoveries in the field of cryptography or other developments could compromise or breach the algorithms that we use to protect our customers’ transaction data. If third parties are able to penetrate our network security or otherwise misappropriate confidential information, we could be subject to liability, which could result in litigation. In addition, experienced programmers or “hackers” may attempt to misappropriate proprietary information or cause interruptions in our services that could require us to expend significant capital and resources to protect against or remediate these problems.

Our business is exposed to risks associated with online commerce security and credit card fraud.

Consumer concerns over the security of transactions conducted on the internet or the privacy of users may inhibit the growth of the internet and online commerce. To transmit confidential information such as customer credit card numbers securely, we rely on encryption and authentication technology. Unanticipated events or developments could result in a compromise or breach of the systems we use to protect customer transaction data. Furthermore, our servers may also be vulnerable to viruses and other attacks transmitted via the internet. While we proactively check for intrusions into our infrastructure, a new and undetected virus could cause a service disruption. Under current credit card practices, we may be held liable for fraudulent credit card transactions and other payment disputes with customers. A failure to control fraudulent credit card transactions adequately would adversely affect our business.

We may not be able to protect and enforce our intellectual property rights.

We believe that our marks, particularly the “Liberator,” “Wedge,” “Ramp,” “Cube,” “Stage,” “Esse,” “Zeppelin,” “Jaxx,” “Explore More,” “Bedroom Adventure Gear,” and the Liberator logo, and other proprietary rights are critical to our success, potential growth and competitive position. Our inability or failure to protect or enforce these trademarks and other proprietary rights could materially adversely affect our business. Accordingly, we devote substantial resources to the establishment, protection and enforcement of our trademarks and other proprietary rights. Our actions to establish, protect and enforce our marks and other proprietary rights may not prevent imitation of our products or brands or control piracy by others or prevent others from claiming violations of their trademarks and other proprietary rights by us. There are factors outside of our control that pose a threat to our intellectual property rights. For example, effective intellectual property protection may not be available in every country in which our products are distributed or made available through the internet.

Intellectual property litigation could expose us to significant costs and liabilities and thus negatively affect our business, financial condition and results of operations.

Although not currently, we have in the past been subject to claims of infringement or other violations of intellectual property rights. Intellectual property claims are generally time-consuming and expensive to litigate or settle. To the extent that any future claims against us are successful, we may have to pay monetary damages or discontinue sales of any of our products that are found to be in violation of another party’s rights. Successful claims against us could also result in us having to seek a license to continue sales of such products, which may significantly increase our operating burden and expenses, potentially resulting in a negative effect on our business, financial condition and results of operations.

Because of the adult nature of our products, companies providing products and services on which we rely may refuse to do business with us.

Many companies that provide products and services we need are concerned that associating with a company in our industry will somehow hurt their reputation. As a result of these concerns, these companies may be reluctant to enter into or continue business relationships with us. For example, some credit card companies have declined to be affiliated with us. This has caused us, in some cases, to seek out and establish business relationships with other providers of the services we need to operate our business. There can be no assurance however, that we will be able to maintain our existing business relationships with the companies that currently provide us with services and products. Our inability to maintain such business relationships, or to find replacement service providers, would materially adversely affect our business, financial condition and results of operations. We could be forced to enter into business arrangements on terms less favorable to us than we might otherwise obtain, which could lead to our doing business with less competitive terms, higher transaction costs and more inefficient operations than if we were able to maintain such business relationships or find replacement service providers.

Workplace and other restrictions on access to the internet may limit user traffic on our websites.

Many offices, businesses, libraries and educational institutions restrict employee and student access to the internet or to certain types of websites, including websites containing sexual wellness content. Since much of our revenue is dependent on customer traffic to our websites, an increase in these types of restrictions, or other similar policies, could harm our business, financial condition and operating results. In addition, access to our websites outside the U.S. may be restricted by governmental authorities or internet service providers. If these restrictions become more prevalent, our growth could be hindered.

If one or more states or countries successfully assert that we should collect sales or other taxes on the online sales of goods, our expenses will increase, resulting in lower margins.

In the United States, federal and state tax authorities are currently exploring the appropriate tax treatment of companies engaged in e-commerce and new state tax regulations may subject us to additional state sales and income taxes, which could increase our expenses and decrease our profit margins. The application of indirect taxes (such as sales and use tax, value added tax, goods and services tax, business tax and gross receipt tax) to e-commerce businesses such as ours and to our customers is a complex and evolving issue. Many of the statutes and regulations that impose these taxes were established before the growth in internet technology and e-commerce. In many cases, it is not clear how existing statutes apply to the internet or e-commerce or communications conducted over the internet. In addition, some jurisdictions have implemented or may implement laws specifically addressing the internet or some aspect of e-commerce or communications on the internet. The application of existing or future laws could have adverse effects on our business.

Under current law, as outlined in the U.S. Supreme Court’s decision in Quill Corp. v. North Dakota, 504 U.S. 298 (1992), a seller with substantial nexus (usually defined as physical presence) in its customer’s state is required to collect state (and local) sales tax on sales arranged over the internet (or by telephone, mail order, or other means). In contrast, an out-of-state seller without substantial nexus in the customer’s state is not required to collect the sales tax. The U.S. federal government’s moratorium on states and other local authorities imposing new taxes on internet access or multiple or discriminatory taxes on internet commerce is scheduled to expire in October 31, 2014. This moratorium, however, does not prohibit the possibility that U.S. Congress will be willing to grant state or local authorities the authority to require remote (out-of-state) sellers to collect sales and use taxes on interstate sales of goods over the internet. Several proposals to that extent have been made at the U.S. federal, state and local levels (for example, the Streamlined Sales and the Use Tax initiative). These proposals, if adopted, would likely result in our having to charge state sales tax to some or all of our customers in connection with the sale of our products, which would harm our business if the added cost deterred customers from visiting our websites and could substantially impair the growth of our e-commerce opportunities and diminish our ability to derive financial benefit from our activities.

We presently do not intend to pay cash dividends on our common stock.

We have never declared or paid any cash dividends or distributions on our capital stock. We currently intend to retain our future earnings, if any, to support operations and to finance expansion and therefore we do not anticipate paying any cash dividends on our common stock in the foreseeable future.

The declaration, payment and amount of any future dividends will be made at the discretion of the board of directors, and will depend upon, among other things, the results of our operations, cash flows and financial condition, operating and capital requirements, and other factors as the board of directors considers relevant. There is no assurance that future dividends will be paid, and, if dividends are paid, there is no assurance with respect to the amount of any such dividend.

The price of the Common Shares may be volatile.

In the event a public market does develop for the common shares, market prices will be influenced by many factors, and will be subject to significant fluctuation in response to variations in operating results and other factors such as investor perceptions, supply and demand of the common shares, interest rates, general economic conditions, and those economic conditions specific to the industry, and developments with regard to our activities, future financial condition and management.

Our ability to generate the cash we need depends on many events beyond our control, and we may have to raise additional capital on terms unfavorable to our shareholders to pursue our business plan.

The actual amount of capital required to fund our operations and development may vary materially from our estimates. To obtain additional funding in the future, we may have to sell assets, seek debt financing or obtain additional equity capital. If we raise funds by selling more shares of our common stock, your ownership percentage in us will be diluted, and we may grant future investors rights superior to those of the Common Shares that you are purchasing. If we are unable to obtain additional capital when needed, we may have to delay, modify or abandon some of our expansion plans. This could slow our growth, negatively affect our ability to compete in the marketplace and adversely affect our financial condition.

We may incur substantial debt in the future that may impair our financial and operating flexibility.

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.

The availability of shares for sale in the future could reduce the market price of our common stock.

In the future, we may issue additional securities to raise cash for acquisitions. We may also pay for interests in additional subsidiary companies by using a combination of cash and shares of our common stock or just shares of our common stock. We may also issue securities convertible into shares of our common stock. Any of these events may dilute shareholders’ ownership interests in our company and have an adverse impact on the price of our common stock.

In addition, sales of a substantial amount of our common stock in the public market, or the perception that these sales may occur, could reduce the market price of our common stock. This could also impair our ability to raise additional capital through the sale of our securities.

Our stock prices may be highly volatile, and this volatility may depress the price of our common stock.

The stock market has experienced significant price and volume fluctuations, and the market prices of early stage companies have been highly volatile. We believe that various factors may cause the market price of our common stock to fluctuate, perhaps substantially, including, among others, the following:

announcements by us or our competitors of significant contracts, acquisitions, strategic partnerships, joint ventures, capital commitments, new technologies or patents;

failure to complete significant transactions;

developments or disputes concerning our patents;

developments in relationships with licensees;

variations in our quarter operating results;

our failure to meet or exceed securities analysts’ expectations of our financial results;

changes in management’s or securities analysts’ estimates of our financial performance; and

changes in market valuations of similar companies.

If we are unable to establish appropriate internal financial reporting controls and procedures, it could cause us to fail to meet our reporting obligations, result in the restatement of our financial statements, harm our operating results, subject us to regulatory scrutiny and sanction, cause investors to lose confidence in our reported financial information and have a negative effect on the market price for our common stock.

Effective internal controls are necessary for us to provide reliable financial reports and effectively prevent fraud. As a public company, we will have significant additional requirements for enhanced financial reporting and internal controls. We will be required to document and test our internal control procedures in order to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act of 2002, which requires annual management assessments of the effectiveness of our internal controls over financial reporting and a report by our independent registered public accounting firm addressing these assessments. The process of designing and implementing effective internal controls is a continuous effort that requires us to anticipate and react to changes in our business and the economic and regulatory environments and to expend significant resources to maintain a system of internal controls that is adequate to satisfy our reporting obligations as a public company.

We cannot assure you that we will not, in the future, identify areas requiring improvement in our internal control over financial reporting. We cannot assure you that the measures we will take to remediate any areas in need of improvement will be successful or that we will implement and maintain adequate controls over our financial processes and reporting in the future as we continue our growth. If we are unable to establish appropriate internal financial reporting controls and procedures, it could cause us to fail to meet our reporting obligations, result in the restatement of our financial statements, harm our operating results, subject us to regulatory scrutiny and sanction, cause investors to lose confidence in our reported financial information and have a negative effect on the market price for our common stock.

We are subject to the periodic reporting requirements of the Exchange Act, which will require us to incur audit fees and legal fees in connection with the preparation of such reports. These additional costs will reduce or might eliminate our profitability.

We are required to file periodic reports with the SEC pursuant to the Exchange Act and the rules and regulations promulgated thereunder. To comply with these requirements, our independent registered auditors will have to review our quarterly financial statements and audit our annual financial statements. Moreover, our legal counsel will have to review and assist in the preparation of such reports. The costs charged by these professionals for such services cannot be accurately predicted at this time, because factors such as the number and type of transactions that we engage in and the complexity of our reports cannot be determined at this time and will have a major affect on the amount of time to be spent by our auditors and attorneys. However, the incurrence of such costs will obviously be an expense to our operations and thus have a negative effect on our ability to meet our overhead requirements and earn a profit. We may be exposed to potential risks resulting from new requirements under Section 404 of the Sarbanes-Oxley Act of 2002. If we cannot provide reliable financial reports or prevent fraud, our business and operating results could be harmed, investors could lose confidence in our reported financial information, the trading price of our common stock, if a market ever develops, could drop significantly, or we could become subject to SEC enforcement proceedings.

As currently required under Section 404 of the Sarbanes-Oxley Act of 2002, we will be required to include in our annual report our assessment of the effectiveness of our internal control over financial reporting. Furthermore, our independent registered public accounting firm will be required to attest to whether our assessment of the effectiveness of our internal control over financial reporting is fairly stated in all material respects and separately report on whether it believes we have maintained, in all material respects, effective internal control over financial reporting as of December 31, 2009. We have not yet completed our assessment of the effectiveness of our internal control over financial reporting. We expect to incur additional expenses and diversion of management's time as a result of performing the system and process evaluation, testing, and remediation required to comply with the management certification and auditor attestation requirements.

During the course of our testing, we may identify deficiencies that we may not be able to remediate in time to meet the deadline imposed by the Sarbanes-Oxley Act for compliance with the requirements of Section 404. In addition, if we fail to achieve and maintain the adequacy of our internal controls, as such standards are modified, supplemented, or amended from time to time, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act. Moreover, effective internal controls, particularly those related to revenue recognition, are necessary for us to produce reliable financial reports and are important to help prevent financial fraud. If we cannot provide reliable financial reports or prevent fraud, our business and operating results would be harmed, investors could lose confidence in our reported financial information, the trading price of our common stock, if a market ever develops, could drop significantly, or we could become subject to SEC enforcement proceedings.

Because we are becoming public by means of a Merger, we have no history of compliance with United States securities laws and accounting rules.

Because we are becoming public by means of a Merger, we have no history of compliance with United States securities laws and accounting rules. In order to be able to comply with United States securities laws, we recently had an initial audit of our financial statements in accordance with U.S. generally accepted auditing standards. As the management of Liberator does not have a long term familiarity with the preparation of financial statements prepared in accordance with generally accepted accounting principles or with the preparation of periodic reports filed with the SEC, it may be more difficult for such management, when they become managers of the Company following the Merger, to comply on a timely basis with SEC reporting requirements than a comparable public company.

Our Common Stock is classified as a “penny stock” as the term is generally defined in the Securities Exchange Act of 1934 to mean equity securities with a price of the than $5.00. Our Common Stock will be subject to rules that impose sales practice and disclosure requirements on broker-dealers who engage in certain transactions involving a penny stock.

We will be subject to the penny stock rules adopted by the Securities and Exchange Commission that require brokers to provide extensive disclosure to its customers prior to executing trades in penny stocks. These disclosure requirements may cause a reduction in the trading activity of our Common Stock, which in all likelihood would make it difficult for our stockholders to sell their securities.

Rule 3a51-1 of the Securities Exchange Act of 1934 establishes the definition of a “penny stock,” for purposes relevant to us, as any equity security that has a minimum bid price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to a limited number of exceptions which are not available to us. It is likely that our shares will be considered to be penny stocks for the immediately foreseeable future. This classification severely and adversely affects any market liquidity for our Common Stock.

For any transaction involving a penny stock, unless exempt, the penny stock rules require that a broker or dealer approve a person's account for transactions in penny stocks and the broker or dealer receive from the investor a written agreement to the transaction setting forth the identity and quantity of the penny stock to be purchased. In order to approve a person's account for transactions in penny stocks, the broker or dealer must obtain financial information and investment experience and objectives of the person and make a reasonable determination that the transactions in penny stocks are suitable for that person and that that person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.

The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prepared by the SEC relating to the penny stock market, which, in highlight form, sets forth:

the basis on which the broker or dealer made the suitability determination, and

that the broker or dealer received a signed, written agreement from the investor prior to the transaction.

Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.

Because of these regulations, broker-dealers may not wish to engage in the above-referenced necessary paperwork and disclosures and/or may encounter difficulties in their attempt to sell shares of our Common Stock, which may affect the ability of selling shareholders or other holders to sell their shares in any secondary market and have the effect of reducing the level of trading activity in any secondary market. These additional sales practice and disclosure requirements could impede the sale of our common stock, if and when our common stock becomes publicly traded. In addition, the liquidity for our common stock may decrease, with a corresponding decrease in the price of our common stock. Our Common Stock, in all probability, will be subject to such penny stock rules for the foreseeable future and our shareholders will, in all likelihood, find it difficult to sell their common stock.

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND PLAN OF OPERATION

You should read the following description of Liberator’s financial condition and results of operations in conjunction with the financial statements and accompanying notes.

Overview

Comparisons of selected consolidated statements of operations data as reported herein follow for the periods indicated:

Total:	Year Ended June 30, 2009			Year Ended June 30, 2008			Change

Net sales:	$	10,260,552		$	11,750,832			(13	)%
Gross profit	$	3,116,444		$	4,234,099			(26	)%
Operating income (loss)	$	(1,000,869	)	$	73,625			—
Diluted (loss) per share	$	(0.08	)	$	(0.00	)		—

Net Sales by Channel:	Year Ended June 30, 2009		Year Ended June 30, 2008		Change

Direct	$	5,143,604	$	6,703,172		(23	)%
Wholesale	$	4,022,127	$	3,549,808		13	%
Other	$	1,094,821	$	1,497,852		(27	)%
Total Net Sales	$	10,260,552	$	11,750,832		(13	)%

Other revenues consist principally of shipping and handling fees derived from our Direct business.

Gross Profit by Channel:	Year Ended June 30, 2009		%			Year Ended June 30, 2008		%			Change

Direct	$	1,896,561		37	%	$	2,993,815		45	%		(37	)%
Wholesale	$	1,096,678		27	%	$	866,899		24	%		27	%
Other	$	123,205		11	%	$	373,385		25	%		(67	)%
Total Gross Profit	$	3,116,444		30	%	$	4,234,099		36	%		(26	)%

Fiscal Year ended June 30, 2009 Compared to the Fiscal Year Ended June 30, 2008

Net sales for the twelve months ended June 30, 2009 decreased from the comparable prior year period by $1,490,280, or 13%. The decrease in sales is due to a decrease in consumer sales of $1,265,000. Consumer sales decreased from approximately $6.7 million in the twelve months ended June 30, 2008 to approximately $5.1 million in the twelve months ended June 30, 2009, a decrease of approximately 23%. We attribute this decrease to the current economic uncertainty and changes in consumer spending, as our products are typically a discretionary purchase. As a result of an increased focus on our wholesale and contract business, sales to wholesale and contract manufacturing customers increased approximately 13% from the prior year.

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 decreased to 30% for the year ended June 30, 2009 from 36% in the prior year. This is primarily the result of a decrease in Direct to consumer sales combined with more frequent order level and product specific discount offers for consumers. One of the most frequent consumer discount offers during fiscal 2009 was “free” or significantly reduced shipping and handling, which accounts for the decrease in the Other category revenue and gross profit. Gross profit on wholesale and contract manufacturing sales increased as a result of a price increase that was implemented during the third quarter of fiscal 2009.

Total operating expenses for the year ended June 30, 2009 were 40% of net sales, or $4,117,313, compared to 35% of net sales, or $4,160,474, for the year ended June 30, 2008. This slight decrease in operating expenses was primarily the result of lower advertising and promotion costs offset by higher sales and marketing personnel costs to support greater domestic and international wholesale distribution efforts. Advertising and promotion expenses decreased by 18% (or $190,269) from $1,054,959 in fiscal 2008 to $864,690 in fiscal 2009. Advertising and promotion expenses were reduced during fiscal 2009 as part of a plan to improve the targeting, timing and effectiveness of advertising spending. Other Selling and Marketing costs increased 18% (or $181,365) from fiscal 2008 to fiscal 2009, primarily as a result of increased sales staff and related personnel costs and additional website hosting costs.

Other income (expense) increased from ($153,113) to ($2,754,113) in fiscal 2009. Interest (expense) and financing costs in fiscal 2009 included $167,879 in additional interest expense related to the issuance of the Series A Preferred shares. This additional interest expense was recorded to bring the carrying value of the shares to their stated liquidation value. Expenses related to the reverse acquisition during fiscal 2009 total $2,273,495. This item consists of $285,750 for the discounted face value of the convertible note payable to Hope Capital, $4,500 for the fair market value of the warrant for 1 million shares issued to Hope Capital, $1,250,000 for the fair market value of the Company shares deemed issued to Remark shareholders, and $733,245 for the fair market value of shares issued for services in connection with the private placement that closed on June 26, 2009. All of the expenses related to the reverse acquisition included in other income (expense) are non-cash expenses.

No expense or benefit from income taxes was recorded in the twelve months ended June 30, 2009 or 2008. The Company does 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.

The Company had a net loss of $3,754,982, or ($0.08) per diluted share, for the twelve months ended June 30, 2009 compared with a net loss of $153,113, or $0.00 per diluted share, for the year ended March 31, 2008.

Fiscal Year ended June 30, 2008 Compared to the Fiscal Year Ended June 30, 2007

Net sales for the twelve months ended June 30, 2008 increased from the comparable prior year period by $1,616,810, or 16%. The increase in sales was substantially due to an increase in contract services revenue and, to a lesser extent, higher sales of Liberator products through wholesale distribution channels.

Total operating expenses for the year ended June 30, 2008 were 35% of net sales, or $4,160,474, compared to 42% of sales, or $4,236,136, for the year ended June 30, 2007. This decrease in operating expenses was primarily the result of a 26% reduction in advertising spending, from $1,422,263 in fiscal 2007 to $1,054,959 in fiscal 2008.

No expense or benefit from income taxes was recorded in the twelve months ended June 30, 2008 or 2007. The Company does 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.

The Company has a net loss of $153,113, or ($0.00) per diluted share, for the twelve months ended June 30, 2008 compared with a net loss of $864,127, or $(0.02) per diluted share, for the twelve months ended June 30, 2007.

Variability of Results

The Company has experienced significant quarterly fluctuations in operating results and anticipates 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 the Company’s control such as foreign exchange fluctuation, changes in government regulations, and economic changes in the regions it operates in and sells 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.

Financial Condition

Cash and cash equivalents increased $1,726,114 to $1,815,633 at June 30, 2009 from $89,519 at June 30, 2008. This increase in cash resulted from cash provided by operating activities of $252,097 and cash provided by financing activities of $1,826,409, offset by cash used in investing activities of $352,392. Cash provided by operating activities for the year ended June 30, 2009 represents the results of operations adjusted for non-cash depreciation and the non-cash deferred rent accrual of $289,370, a decrease in inventory of $552,400 and increases in accounts payable of $633,674, offset by a slight increase in accounts receivable and other less significant changes. Cash flow used in investing activities reflects capital expenditures during the year ended June 30, 2009. The largest component of capital expenditures during the year ended June 30, 2009, is the Company’s project to upgrade its e-commerce platform and ERP system. Expenditures on the e-commerce platform and ERP system, as of June 30, 2009, total approximately $274,000. Cash flows provided by financing activities are attributable to the net proceeds from the sale of common stock of $1,699,465, proceeds of $550,000 from the credit card cash advance, loans from related parties of $120,948, and $111,188 in proceeds from new capital leases, offset in part by repayment of the credit card advance and repayment of a short-term note payable and unsecured notes.

As of June 30, 2009, the Company’s net accounts receivable increased by $16,710, or 5%, to $346,430 from $329,720 at June 30, 2008. The increase in accounts receivable is primarily the result of increased sales to wholesale accounts. Management believes that its accounts receivable are collectible net of the allowance for doubtful accounts of $5,740 at June 30, 2009.

The Company’s net inventory decreased $552,400, or 44%, to $700,430 as of June 30, 2009 compared to $1,252,803 as of June 30, 2008. The decrease is greater than the year-to-date reduction in sales of 13% and also reflects better management of raw materials and finished goods.

Accounts payable increased $633,674, or 39%, to $2,247,845 as of June 30, 2009 compared to $1,614,170 as of June 30, 2008. The increase in accounts payable was due to the Company’s working capital deficiency and the necessity to extend the payment periods to vendors.

Liquidity and Capital Resources

At June 30, 2009, the Company’s working capital deficiency was $106,124, an improvement of $583,350 compared to $689,474 at June 30, 2008. Cash and cash equivalents at June 30, 2009 totaled $1,815,633, an increase of $1,726,114 from $89,519 at June 30, 2008.

As of June 30, 2009, the Company has a revolving line of credit with a commercial finance company which provides 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 (7 percent at June 30, 2008 and 5.25 percent at June 30, 2009), payable monthly. The amount owed on the revolving line of credit was $287,140 at June 30, 2008 and $171,433 at June 30, 2009.

Management believes cash flows generated from operations, along with current cash as well as borrowing capacity under the line of credit and other credit facilities, should be sufficient to finance operating and capital requirements through the end of fiscal 2010. If new business opportunities do arise, additional outside funding may be required.

Sufficiency of Liquidity

Based upon our current operating plan, analysis of our consolidated financial position and projected future results of operations, we believe that our cash balances and operating cash flows, together with additional borrowing of less than $300,000, will be sufficient to finance current operating requirements, debt service, and planned capital expenditures, for the next 12 months.

Capital Resources

The Company does not currently have any material commitments for capital expenditures. The Company expects total fiscal 2010 capital expenditures to be under $100,000 and to be funded by capital leases and, to a lesser extent, operating cash flows. This includes capital expenditures in support of the Company’s normal operations, and expenditures that we may incur in conjunction with initiatives to upgrade our e-commerce platform and enterprise resource planning system (ERP system.)

Properties

Liberator maintains its principal manufacturing and business offices at 2745 Bankers Industrial Drive, Atlanta, GA 30360, which consists of 140,000 square feet of manufacturing, warehouse and office space. Lease payments are currently $28,595 per month and increase approximately 3% annually to a maximum of $34,358 per month in the year 2015, which is when the lease expires.

Market Information

There is presently no established market for the Company’s securities.

Security Ownership of Certain Beneficial Owners and Managers

The following table sets forth certain information known to us with respect to the beneficial ownership of our common stock as of October 20, 2009 (immediately following the consummation of the Merger Agreement) by:

•	all persons who are beneficial owners of five percent (5%) or more of our common stock;

•	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 61,915,981 shares of common stock outstanding as of October 20 2009.

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 October 20, 2009, are deemed outstanding. Such shares, however, are not deemed outstanding for the purpose of computing the percentage ownership of any other person.

			Amount Owned			Percentage Of
Title of Class	Name and Address of Owner	Title	Following the Merger			Issued Stock
		President, Chief
		Executive Officer
Common	Louis S. Friedman*	and Director		28,394,376	(1)		45.9	%

		Chief Financial Officer,
Common	Ronald P. Scott*	Secretary and Director		438,456	(2)		.7	%

Common	Hope Capital, Inc.**			5,150,001			8.3	%

Common	Don Cohen ***			13,022,127			19.0	%

All directors and executive officers as a group (4 persons)				28,832,832	(1)		46.6	%

*	The address for all directors and executive officers of the Company is c/o Liberator, Inc., 2745 Bankers Industrial Drive, Atlanta, GA 30360

**	1 Linden Place, Suite 207, Great Neck, NY 11021. Curt Kramer is the sole shareholder of Hope Capital, Inc.

***	Don Cohen, c/o Paul M. Spizzirri, Esq., 1170 Peachtree Street NE, Suite 1200, Atlanta, GA 30309

(1)

Does not include the votes that Mr. Friedman controls by virtue of his ownership of 100% of the Series A Convertible Preferred Stock. Each share of Series A Convertible Preferred Stock is entitled to the number of votes equal to the result of: (i) the number of shares of Common Stock of the Company issued and outstanding at the time of such vote multiplied by 1.01; divided by (ii) the total number of Series A Convertible Preferred Stock issued and outstanding at the time of such vote. Accordingly, Mr. Friedman will own 73.1 % of the combined voting power of the Common Stock and Series A Convertible Preferred Stock, voting as a single class and will control the outcome of any corporate transaction or other matter submitted to the stockholders for approval, including mergers, consolidations and the sale of all or substantially all of our assets, and also the power to prevent or cause a change in control. The interests of Mr. Friedman may differ from the interests of the other stockholders.

(2)	Includes options to purchase 438,456 shares of Common Stock.

EXECUTIVE COMPENSATION

BOARD OF DIRECTORS

All of our directors hold office until the next annual meeting of stockholders and the election and qualification of their successors. Our executive officers are elected annually by the board of directors to hold office until the first meeting of the board following the next annual meeting of stockholders and until their successors are chosen and qualified.

DIRECTORS’ COMPENSATION

For the fiscal year ended June 30, 2009, directors did not receive any remuneration in their capacity as a director.

EXECUTIVE COMPENSATION

Summary Compensation Table

The compensation discussion addresses all compensation awarded to, earned by, or paid to the Company’s named executive officers which, following the consummation of the Merger, includes Liberator, Inc. (collectively, the “Named Executive Officers”.) Set forth below is the aggregate compensation for services rendered in all capacities to Company during our fiscal years ended June 30, 2008 and 2009 by the Company’s executive officers. The table below also sets forth the compensation paid to Louis Friedman, our President, Chief Executive Officer and Chairman, and Ronald P. Scott, our Secretary, Chief Financial Officer, and Director which was paid by Liberator which, as a result of the consummation of the Merger Agreement, is the surviving corporation.

											Non-Equity
							Stock		Option		Incentive Plan		All Other
	Fiscal		Salary		Bonus		Awards		Awards		Compensation		Compensation		Total
Name and Principal Position	Year		($)		($)		($)		($)(1)		($)		($)		($)

Louis S. Friedman (2)
President, Chief Executive		2009		78,000		—		—		—		—		—
Officer and Chairman of the Board		2008		71,500		—		—		—		—		—		71,500
Ronald P. Scott (3)
Chief Financial Officer, Secretary and		2009		128,500		—		—		—		—		—		129,366
Director		2008		101,280		—		—		866		—		—		101,280
Sanford H. Barber (4)
President, Chief Executive Officer,		2009		—		—		—		—		—		—		—
Chief Financial Officer and Director		2008		—		—		—		—		—		—		—

(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)	Louis Friedman has been the Company’s Chief Executive Officer and Chairman of the Board of Directors since inception. On November 7, 2008 Mr. Friedman assumed the additional title of President from Don Cohen. Mr. Friedman’s current annual salary is $150,000.

(3)	Ronald Scott joined Liberator as a part-time consultant in July 2006, serving as the Company’s Chief Financial Officer. In October, 2007 he became a full-time consultant and Chief Financial Officer and as of July 1, 2009, became a full-time employee of the Company at an annual salary of $125,000.

(4)

On July 23, 2009, Sanford Barber resigned as Chief Executive Office, Chief Financial Officer and Director and was succeeded by Joseph Meuse who also assumed the position of Secretary. Mr. Meuse was not compensated in any capacity with the Company. On October 19, 2009 we acquired Liberator, Inc. in a reverse acquisition structure that was structured as a share exchange and in connection with that transaction, Joseph Meuse tendered his resignation from the board and from all offices held in the Company, effective immediately.

Outstanding Equity Awards at Fiscal Year End 2009

The following table shows, for the fiscal year ended June 30, 2009, certain information regarding outstanding equity awards at fiscal year end for our Named Executive Officers.

Option Awards

Stock Awards

Equity

Incentive

Equity

Plan

Incentive

Awards:

Plan Awards:

Number of

Market or

Number of

Market

Unearned

Payout Value

Securities

Number of

Value of

Shares,

of Unearned

Underlying

Securities

Shares or

Units or

Shares, Units

Unexercised

Underlying

Units of

Other

or Other

Options

Unexercised

Option

Stock That

Rights That

(#)

Options

Exercise

Option

Have Not

Exercisable

(#)

Price

Expiration

Vested

Name

(1)

Unexercisable

($)

Date

(#)

($)

(#)

($)(3)

Louis S. Friedman

—

Ronald P. Scott

438,456

—

.228

10/1/2012

—

Sanford H. Barber

—

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

OPIONS/SAR GRANTS IN THE LAST FISCAL YEAR

On October 1, 2007, the Board of Directors granted a non-qualified stock option to Ronald Scott, the Company’s Chief Financial Officer. The five-year option provides for the purchases of up to438,456 shares at an exercise price of $.228 per share.

On October 16, 2009, the Board of Directors implemented a stock option plan (the “2009 Stock Option Plan”). The 2009 Stock Option Plan provides (i) key employees (including officers) of the Corporation (or its subsidiary corporations) and (ii) consultants and other independent contractors who provide valuable services to the Corporation (or its subsidiary corporations) with the opportunity to acquire, or increase their proprietary interest in the Corporation as an incentive for them to join or remain in the service of the Corporation. The 2009 Stock Option Plan has reserved 5,000,000 shares for issuance and to date, has issued 1,411,000 options to 80 employees.

AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION/SAR VALUES

None.

Certain Relationships and Related Transactions

Except as set forth below, there were no transactions during the last fiscal year, and there are no proposed transactions, to which the Company was or is to become a party in which any director, executive officer, director nominee, beneficial owner of more than five percent (5%) of any class of our stock, or members of their immediate families had, or is to have, a direct or indirect material interest:

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. On June 26, 2009, in connection with the merger into Remark Enterprises, Inc., the majority shareholder and his wife agreed to convert $700,000 of principal balance and $132,120 of accrued but unpaid interest to 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 interest accrued on these notes for the year ended June 30, 2008 was $47,576. The accrued interest balance on these notes, as of June 30, 2009, is $8,210. The notes are subordinate to all other credit facilities currently in place.

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. 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. The 3% convertible note payable is carried net of the fair market value of the embedded conversion feature of $89,250. This amount will be amortized over the life of the note as additional interest.

On September 2, 2009 (“Closing Date”) the Company acquired the majority of the issued and outstanding common stock of WES Consulting, Inc., a Florida corporation (“WES”) in accordance with a common stock purchase agreement (the “Stock Purchase Agreement”) by and among the Company and Belmont Partners, LLC, a Virginia limited liability company (the “Seller”). On the Closing Date, pursuant to the terms of the Stock Purchase Agreement, the Company acquired 972,000 shares ( 81%) of the Company from the Seller for a total of two hundred forty thousand five hundred dollars ($240,500). Funds for the purchase came from a convertible note in the amount of $250,000, payable to Hope Capital Inc., a shareholder of the Company. 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. On the Closing Date, all of the officers and directors of WES resigned and were succeeded by the directors and officers of the Company.

Louis Friedman, our President, Chief Executive Officer and Chairman, and Leslie Vogelman, our Treasurer, are married.

Legal Proceedings

The Company is not currently a party to any material legal action.

Indemnification of Directors and Officers

Our Articles of Incorporation provide for the indemnification of our directors, officers, employees and agents to the fullest extent permitted by the laws of the State of Florida. Florida law permits a corporation to indemnify any of its directors, officers, employees or agents against expenses actually and reasonably incurred by such person in connection with any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (except for an action by or in right of the corporation) by reason of the fact that such person is or was a director, officer, employee or agent of the corporation, provided that it is determined that such person acted in good faith and in a manner which he reasonably believed to be in, or not opposed to, the best interests of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful.

Florida law requires that the determination that indemnification is proper in a specific case must be made by: (a) the stockholders, (b) the board of directors by majority vote of a quorum consisting of directors who were not parties to the action, suit or proceeding or (c) independent legal counsel in a written opinion (i) if a majority vote of a quorum consisting of disinterested directors is not possible or (ii) if such an opinion is requested by a quorum consisting of disinterested directors.

Article VII of our By-laws provides that:

(a) no director shall be liable to the Company or any of its stockholders for monetary damages for breach of fiduciary duty as a director except with respect to (i) a breach of the director’s loyalty to the Company or its stockholders, (ii) acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) liability which may be specifically defined by law or (iv) a transaction from the director derived an improper personal benefit; and

(b) the Company shall indemnify to the fullest extent permitted by law each person that such law grants to the Company power to indemnify.

Any amendment to or repeal of our Articles of Incorporation or by-laws shall not adversely affect any right or protection of any of our directors or officers for or with respect to any acts or omissions of such director or officer occurring prior to such amendment or repeal.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Company pursuant to the foregoing provisions, or otherwise, the Company has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.

Dividend Policy

Any future determination as to the declaration and payment of dividends on shares of our Common Stock will be made at the discretion of our board of directors out of funds legally available for such purpose. We are under no contractual obligations or restrictions to declare or pay dividends on our shares of Common Stock. In addition, we currently have no plans to pay such dividends. Our board of directors currently intends to retain all earnings for use in the business for the foreseeable future. See “Risk Factors.”

Item 4.01 Change in Registrant’s Certifying Accountant

On October 19, 2009, we terminated Randall N. Drake, CPA, PA (“Drake”) as our independent registered public accounting firm in connection with the reverse merger. We engaged a new independent registered public accounting firm, Gruber & Company LLC (“Gruber”) who provided the audit of Liberator, Inc. Pursuant to Item 304(a) of Regulation S-K under the Securities Act of 1933, as amended, and under the Securities Exchange Act of 1934, as amended, we report as follows:

(a)

(i)

Drake was terminated as our independent registered public accounting firm effective on October 19, 2009.

(ii)

For the two most recent fiscal years ended December 31, 2008 and 2007, Drake’s report on the financial statements did not contain any adverse opinions or disclaimers of opinion, and were not qualified or modified as to uncertainty, audit scope, or accounting principles, other than for a going concern.

(iii)

The termination of Drake and engagement of Gruber was approved by our Board of Directors.

(iv)

We and Drake did not have any disagreements with regard to any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure for the audited financials for the fiscal years ended December 31, 2008 and 2007, and subsequent interim period from January 1, 2009 through the date of dismissal on October 19, 2009, which disagreements, if not resolved to the satisfaction of Drake, would have caused it to make reference to the subject matter of the disagreements in connection with its reports.

(v)

During our fiscal years ended December 31, 2008 and 2007, and subsequent interim period from January 1, 2009 through the date of dismissal on October 19, 2009, we did not experience any reportable events.

(b)	On October 19, 2009, we engaged Gruber to be our independent registered public accounting firm.

(i)

Prior to engaging Gruber, we had not consulted Gruber regarding the application of accounting principles to a specified transaction, completed or proposed, the type of audit opinion that might be rendered on our financial statements or a reportable event, nor did we consult with Gruber regarding any disagreements with its prior auditor on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of the prior auditor, would have caused it to make a reference to the subject matter of the disagreements in connection with its reports.

(ii)

We did not have any disagreements with Drake and therefore did not discuss any past disagreements with Drake.

(c)	We have requested Drake to furnish it with a letter addressed to the SEC stating whether it agrees with the statements made by us regarding Drake. Attached hereto as Exhibit 16.1 is a copy of Drake’s letter to the SEC dated October 19, 2009.

Item 5.01 Changes in Control of Registrant

As explained more fully in Item 2.01, in connection with the Agreement, on October 19, 2009, 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 Agreement, 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 within ten (10) days of the Closing Date 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.

As explained more fully in the above Item 2.01, on October 19, 2009, we acquired Liberator, Inc. in a merger transaction that was structured as a share exchange. In connection with the merger of Liberator on the Closing Date, the officers and directors of the Company remained the same.

Item 5.03 Amendments to the Articles of Incorporation; Change in Fiscal Year

On October 19, 2009, we entered into a merger and Recapitalization Agreement (the “Merger Agreement”) with Liberator, Inc., a privately held Nevada corporation (“Liberator”). On October 19, 2009, the Company consummated the transactions contemplated by the Merger Agreement. Pursuant to the Merger Agreement, Liberator and the Company merged and all of the issued and outstanding common stock of Liberator was exchanged for an aggregate of 60,932,981 shares of the Company’s common stock. In addition, all of the issued and outstanding shares of preferred stock of Liberator was exchanged for 4,300,000 shares of preferred stock of the Company. Liberator is the surviving corporation; all business operations of the Company are now the business operations of Liberator. Prior to the Merger, the Company’s fiscal year end was December 31, and the fiscal year end of Liberator was June 30.

Accordingly, and following the interpretive guidelines of the Commission, the Company has elected to formally change its fiscal year end to the fiscal year end of Liberator. On October 19, 2009, the Board of Directors of the Company acted by unanimous written consent to change the Company’s fiscal year end from December 31 to June 30. As a result of the interpretive guidelines of the Commission referenced above, no transition report is required in connection with such change in fiscal year end. Accordingly, the Company intends to file an annual report on Form 10-K for the year ended June 30, 2010 and file a quarterly report on Form 10-Q for the period ending September 30, 2009.

Item 9.01 Financial Statements and Exhibits

(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.

The Audited Consolidated Financial Statements of Liberator, Inc. as of June 30, 2008 and 2009 are filed as Exhibit 99.1 to this current report and are incorporated herein by reference.

(b) PRO FORMA FINANCIAL INFORMATION.

The unaudited condensed combined pro forma statement of operations for the year ended June 30, 2009 and the unaudited condensed combined pro forma balance sheet as of June 30, 2009 are filed as Exhibit 99.3 to this current report and are incorporated herein by reference.

(d) EXHIBITS

Exhibit No.		Description
2.1		Merger and Recapitalization Agreement, dated as of October 19, 2009

3.1		Articles of Incorporation for WES Consulting, Inc. *Filed as an exhibit to the SB-2 filed on 03/02/07
3.2		Bylaws of WES Consulting, Inc. *Filed as an exhibit to the SB-2 filed on 03/02/07
3.3		Articles of Incorporation for Liberator, Inc.
3.4		Bylaws of Liberator, Inc.

16.1		Letter from Randall N. Drake, CPA PA

99.1		Audited Consolidated Financial Statements of Liberator, Inc. as of June 30, 2008 and 2009
99.2		Unaudited condensed combined pro forma statement of operations for the year ended June 30, 2009 and the unaudited condensed combined pro forma balance sheet as of June 30, 2009
99.3		Press Release
99.4		Liberator, Inc. 2009 Stock Option Plan

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	Wes Consulting, Inc.

Date: October 20, 2009	By:	/s/ Louis S. Friedman
		Louis S. Friedman

		Chairman, Chief Executive Officer, and President of Liberator, Inc.

MERGER AND RECAPITALIZATION AGREEMENT

This Agreement made and entered into as of this 19 th day of October, 2009 (the “ Agreement ”), by and among WES Consulting, Inc., a Florida corporation with its principal place of business located at 2745 Bankers Industrial Drive, Doraville, Georgia 30360 (“ WES ”); the undersigned shareholder of WES which represents a majority of the issued and outstanding common stock of WES (the “ WES Shareholder ”); Liberator, Inc., a Nevada Corporation, with its registered office at 2745 Bankers Industrial Drive, Doraville, Georgia 30360 (“ Liberator ”) and the undersigned shareholders of Liberator which represents a majority vote of the issued and outstanding equity of Liberator (the “ Liberator Shareholders ”).

RECITALS

A. The respective Boards of Directors and shareholders representing a majority of the issued and outstanding common stock of each of Liberator and WES have approved and declared advisable the merger of Liberator with and into WES (the “ Merger ”) and approved the Merger upon the terms and subject to the conditions set forth in this Agreement, whereby each issued and outstanding share of the common stock of Liberator (a “ Liberator Common Share ” or, collectively, the “ Liberator Common Shares ”), will be converted into one share of common stock, $0.01 par value, of WES (“ WES Common Stock ”) which, after giving effect to the Merger, shall equal, in the aggregate, 99.6% of the total issued and outstanding common stock of WES. At the Approval Time (as defined herein), each Series A Preferred Share of Liberator (a “ Liberator Preferred Share ” or, collectively, the “ Liberator Preferred Shares ”) will be converted into one share of preferred stock of WES (the “ WES Preferred Stock ”). Liberator Common Shares and Liberator Preferred Shares are referred to herein, collectively, as the “ Liberator Shares .” The WES Common Stock owned by Liberator will be cancelled upon the consummation of the transactions contemplated by this Agreement.

B. The respective Boards of Directors and shareholders representing a majority of the issued and outstanding common stock of each of Liberator and WES have determined that the Merger is in furtherance of and consistent with their respective long-term business strategies and is fair to and in the best interests of their respective stockholders.

C. It is intended that, for federal income tax purposes, the Merger shall qualify as a reorganization under the provisions of Section 368(a) of the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder (the “ Code ”);

D. For financial accounting purposes, it is intended that the Merger will be accounted for as a “ purchase ”;

NOW, THEREFORE , in consideration of the premises, and of the representations, warranties, covenants and agreements contained herein, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

ARTICLE I

THE MERGER; CLOSING; EFFECT OF MERGER

SECTION 1.1 The Merger . Upon the terms and subject to the conditions set forth in this Agreement and in accordance with the laws of the state of Florida (“ Florida Law ”) and the laws of the State of Nevada (“ Nevada Law ”) at the Effective Time, Liberator shall be merged with and into WES and the separate corporate existence of Liberator shall thereupon cease. WES shall be the surviving corporation in the Merger (sometimes hereinafter referred to as the “ Surviving Corporation ”), and the separate corporate existence of WES with all its rights, privileges, immunities, powers and franchises shall continue unaffected by the merger, except as set forth herein. The Merger shall have the effects specified in the Florida Law.

SECTION 1.2 Closing . Subject to the terms and conditions of this Agreement, the closing of the Merger and the consummation of the other transactions contemplated hereby (the “ Closing ”) shall take place at the offices of Anslow & Jaclin LLP, 195 Route 9 South, Manalapan, NJ 07726 not later than October 19, 2009 and at such other date, time and place as the parties hereto shall agree.

SECTION 1.3 Effective Time . On the date of Closing, Liberator and WES will cause a Certificate of Merger (the “ Florida Certificate of Merger ”) to be executed, acknowledged and filed with the Secretary of State of the State of Florida. On the date of Closing, Liberator and WES will cause a Certificate of Merger (the "“ Nevada Certificate of Merger ”) to be executed, acknowledged and filed with the Secretary of State of the State of Nevada. The Merger shall become effective at the time when the Florida Certificate of Merger has been filed with the Secretary of State of the State of Florida, or, as otherwise agreed by Liberator and WES (the “ Effective Time ”).

SECTION 1.4 Certificate of Incorporation . The certificate of incorporation of WES as in effect immediately prior to the Effective Time shall be the certificate of incorporation of the Surviving Corporation (the “ Certificate of Incorporation ”), until duly amended as provided therein or by applicable law.

SECTION 1.5 By-Laws . The by-laws of WES in effect immediately prior to the Effective Time shall be the by-laws of the Surviving Corporation (the “By-Laws”), until thereafter amended as provided therein or by applicable law.

SECTION 1.6 Directors . As of the Effective Time, the authorized number of directors comprising the Board of Directors of WES shall consist of not less than two (2) and not more than five (5) individuals. The following individuals shall be elected to the Board Directors of WES at the Effective Time: (i) Louis S. Friedman (Chairman of the Board); and (ii) Ronald P. Scott.

SECTION 1.7 Officers . As of the Effective Time, the officers of WES shall be (i) Louis S. Friedman (Chief Executive Officer, President), (ii) Ronald P. Scott (Chief Financial Officer and Secretary) and (iii) Leslie Vogelman (Treasurer), until their successors have been duly elected or appointed and qualified or until their earlier death, resignation or removal in accordance with the Certificate of Incorporation and the By-Laws.

SECTION 1.8 Effect on Capital Stock . As a result of the Merger and without any action on the part of the holder of any capital stock of WES:

(a) Merger Consideration .

(i) At the Effective Time, each Liberator Common Share issued and outstanding immediately prior to the Effective Time shall be converted into, and become exchangeable for one (1) validly issued, fully paid and non-assessable share of WES Common Stock (the “ WES Common Shares ”).

(ii) At the Approval Time, each Liberator Preferred Share issued and outstanding immediately prior to the Effective Time shall be converted into and become exchangeable for one (1) share of WES Preferred Stock.

(iii) WES Common Shares and WES Preferred Stock, collectively, are referred to herein as the “ WES Merger Stock ,” and the conversion of Liberator Shares into WES Merger Stock is referred to as the “ Merger Purchase Price ”);

(b) At the Effective Time, all Liberator Shares shall be canceled and Liberator shall cease to exist, and each certificate (a “ Certificate ”) formerly representing:

(i) any Liberator Common Shares shall thereafter represent only the right to receive the shares of WES Common Stock into which such Liberator Common Shares have been converted; and

(ii) any Liberator Preferred Shares shall thereafter represent only the right to receive, at the Approval Time, the shares of WES Preferred Stock into which such Liberator Preferred Shares have been converted.

(c) At the Effective Time, all WES Common Stock owned by Liberator shall be immediately cancelled and returned to the treasury of WES.

SECTION 1.9 Exchange of Certificates for Shares.

(a) Exchange .

(i) At the Effective Time, WES shall deliver or cause to be delivered to each respective owner of the Liberator Common Shares and in each of their respective names certificates representing WES Common Stock into which Liberator Common Shares that such shareholders owns are to be converted as set forth on Schedule 1 attached hereto.

(ii) At the Approval Time, WES shall deliver or cause to be delivered to each respective owner of the Liberator Preferred Shares and in each of their respective names certificates representing WES Preferred Stock into which Liberator Preferred Shares that such shareholders owns are to be converted as set forth on Schedule 1 attached hereto.

(b) Fractional Shares . No certificates or scrip representing fractional shares of WES Common Stock or WES Preferred Stock shall be issued upon the surrender for exchange of Certificates pursuant to this Article I; no dividend or other distribution by WES and no stock split, combination or reclassification shall relate to any such fractional share; and no such fractional share shall entitle the record or beneficial owner thereof to vote or to any other rights of a stockholder of WES. In lieu of any such factional share, each holder of Liberator Shares who would otherwise have been entitled thereto upon the surrender of Certificate(s) for exchange pursuant to this Article I will be paid an additional share of WES Common Stock or WES Preferred Stock.

(c) Adjustments of Conversion Number . In the event that WES changes the number of shares of WES Common Stock or WES Preferred Stock , issued and outstanding prior to the Effective Time as a result of a reclassification, stock split (including a reverse split), dividend or distribution, recapitalization, merger (other than the Merger, Stock Purchase or the cancellation of options previously granted by Liberator), subdivision, or other similar transaction with a dilutive effect, or if a record date with respect to any of the foregoing shall occur prior to the Effective Time, the conversion number shall be equitably adjusted.

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF LIBERATOR

Liberator represents, warrants and covenants to WES as follows and acknowledges that WES is relying upon such representations and warranties in connection with the Contemplated Transactions (as hereinafter defined):

SECTION 2.1 Capitalization . The outstanding and issued capital stock of Liberator consists of 60,932,981 shares of common stock and 4,300,000 shares of Series A Preferred Shares. Schedule 1 sets forth the name of each record and beneficial shareholder of Liberator (each a “ Shareholder ” and collectively the “ Shareholders ”) and the number of Liberator Shares held by each such person. One Up Innovations, Inc., a Georgia corporation is wholly owned by Liberator (“ OneUp ”); Foam Labs, Inc., a Georgia corporation is wholly owned by OneUp (together with OneUp, jointly and severally, the “ Subsidiaries ”), is wholly owned by Liberator and are its only subsidiaries. Except as set forth on Schedule 1 , Liberator and Subsidiaries do not and, at the Closing, Liberator and Subsidiaries will not, have outstanding any capital stock or other securities or any rights, warrants or options to acquire securities of Liberator or the Subsidiaries, or any convertible or exchangeable securities and, other than WES pursuant to this Agreement, no person has or, at Closing will have, any right to purchase or otherwise acquire any securities of Liberator or the Subsidiaries. There are, and at Closing there will be, no outstanding obligations of Liberator or the Subsidiaries to repurchase, redeem or otherwise acquire any securities of Liberator or the Subsidiaries. All of Liberator Shares are, and at Closing will be, duly authorized, duly and validly issued, fully paid and non-assessable, and none were issued in violation of any preemptive rights, rights of first refusal or any other contractual or legal restrictions of any kind except as otherwise disclosed.

SECTION 2.2 Title to the Shares . The Shareholders are the beneficial owner and holds good and valid title to its Liberator Shares free and clear of any Lien. At the Closing, each Shareholder of Liberator will deliver Liberator Shares to WES free and clear of any Lien, other than restrictions imposed by the Securities Act and applicable securities Laws including the laws of the State of Florida.

SECTION 2.3 Authority Relative to this Agreement . At the Closing, Liberator will have full power, capacity and authority to execute and deliver each Transaction Document to which it is or, at Closing, will be, a party and to consummate the transactions contemplated hereby and thereby (the “ Contemplated Transactions ”). The execution, delivery and performance by Liberator of each Transaction Document and the consummation of the Contemplated Transactions to which Liberator is, or at Closing, will be, a party will have been duly and validly authorized by Liberator and no other acts by or on behalf of Liberator will be necessary or required to authorize the execution, delivery and performance by each of Liberator of each Transaction Document and the consummation of the Contemplated Transactions to which it is or, at Closing, will be, a party. This Agreement and the other Transaction Documents to which Liberator is a party have been duly and validly executed and delivered by Liberator and (assuming the valid execution and delivery thereof by the other parties thereto) will constitute the legal, valid and binding agreements of Liberator enforceable against Liberator in accordance with their respective terms, except as such obligations and their enforceability may be limited by applicable bankruptcy and other similar Laws affecting the enforcement of creditors' rights generally and except that the availability of equitable remedies is subject to the discretion of the court before which any proceeding therefor may be brought (whether at law or in equity).

SECTION 2.4 No Conflicts; Consents . The execution, delivery and performance by Liberator of each Transaction Document to which it is a party and the consummation of the Contemplated Transactions to which Liberator is a party, upon approval of the Shareholders will not: (i) violate any provision of the certificate of incorporation or by-laws of Liberator; (ii) require Liberator to obtain any consent, approval or action of or waiver from, or make any filing with, or give any notice to, any Governmental Body or any other person, except as otherwise disclosed (the “ Liberator Required Consents ”); (iii) violate, conflict with or result in a breach or default under (with or without the giving of notice or the passage of time or both), or permit the suspension or termination of, any material Contract (including any Real Property Lease) to which Liberator is a party or by which it or any of its assets is bound or subject, or to the best of Liberator’s knowledge and information result in the creation of any Lien upon any of Liberator Shares or upon any of the Assets of Liberator; (iv) violate any Order, any Law, of any Governmental Body against, or binding upon, Liberator or upon any of their respective assets or the Business; or (v) violate or result in the revocation or suspension of any Permit.

SECTION 2.5 Corporate Existence and Power . Liberator is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada, and has all requisite powers, authority and all Permits required to own and/or operate its Assets and to carry on the Business as now conducted, including all qualifications under any statute in effect in any state or foreign jurisdiction in which Liberator operates its Business. Liberator is duly qualified to do business and is in good standing in each state of the United States and in each other jurisdiction where the character of the property owned or leased by it or the nature of its activities makes such qualification necessary.

SECTION 2.6 Charter Documents and Corporate Records . Liberator has heretofore delivered to WES true and complete copies of the Articles of Incorporation, By-Laws and minute books, or comparable instruments, of Liberator as in effect on the date hereof. The stock transfer books of Liberator have been made available to WES for its inspection and are true and complete in all respects.

SECTION 2.7 Financial Statements .

(a) Schedule 2.7A sets forth true, complete and correct copies of: Liberator's audited financial statements as of and for the fiscal years ended June 30, 2009 and June 30, 2008 (the “ Annual Statements ”) and all management letters, management representation letters and attorney response letters issued in connection with the Annual Statements. The Annual Statements present fairly and accurately in all material respects the financial position of Liberator and the Subsidiaries as of its date, and the earnings, changes in stockholders' equity and cash flows thereof for the periods then ended in accordance with GAAP, consistently applied. Each balance sheet contained therein or delivered pursuant hereto fully sets forth all consolidated Assets and Liabilities of Liberator existing as of its date which, under GAAP, should be set forth therein, and each statement of earnings contained therein or delivered pursuant hereto sets forth the items of income and expense of Liberator which should be set forth therein in accordance with GAAP.

(b) All financial, business and accounting books, ledgers, accounts and official and other records relating to Liberator have been properly and accurately kept and completed, and Liberator has no knowledge, notice belief or information there are any material inaccuracies or discrepancies contained or reflected therein.

SECTION 2.8 Liabilities . Liberator has not incurred any Liabilities since June 30, 2009 (the “ Latest Balance Sheet Date ”) except (i) current Liabilities for trade or business obligations incurred in connection with the purchase of goods or services in the ordinary course of the Business and consistent with past practice, and (ii) Liabilities reflected on any balance sheet referred to in Section 2.7(a).

SECTION 2.9 Liberator Receivables . Except to the extent of the amount of the allowance for doubtful accounts reflected in the Annual Statements and the Interim Statements, all the Receivables of Liberator reflected therein, and all Receivables that have arisen since the Latest Balance Sheet Date (except Receivables that have been collected since such date), are valid and enforceable Claims subject to no known defenses, offsets, returns, allowances or credits of any kind, and constitute bona fide Receivables collectible in the ordinary course of the Business except as enforceability may be limited by applicable bankruptcy, reorganization, insolvency, moratorium, fraudulent conveyance or similar laws or principles of equity affecting the enforcement of creditors rights generally.

SECTION 2.10 Absence of Certain Changes . (a) Since June 30, 2009, Liberator has conducted the Business in the ordinary course consistent with past practice, except as otherwise disclosed hereof, and there has not been:

(i) Any material adverse change in the Condition of the Business;

(ii) Any material damage, destruction or other casualty loss (whether or not covered by insurance), condemnation or other taking affecting the Business or the Assets of Liberator;

(iii) Any change in any method of accounting or accounting practice by Liberator;

(iv) Except for normal increases granted in the ordinary course of business, any increase in the compensation, commission, bonus or other direct or indirect remuneration paid, payable or to become payable to any officer, stockholder, director, consultant, agent or employee of Liberator, or any alteration in the benefits payable or provided to any thereof;

(v) Any material adverse change in the relationship of Liberator with its employees, customers, suppliers or vendors;

(vi) Except for any changes made in the ordinary course of Business, any material change in any of Liberator's business policies, including advertising, marketing, selling, pricing, purchasing, personnel, returns or budget policies;

(vii) Any agreement or arrangement whether written or oral to do any of the foregoing.

SECTION 2.11 Leased Real Property . (a) Liberator has no fee interest, purchase options or rights of first refusal in any real property and Liberator has no leasehold or other interest in any real property, except for the real property lease between Bedford Realty Company, LLC and OneUp Innovations, Inc. dated September 26, 2005 covering approximately 140,000 square feet of floor space known as 2745 Bankers Industrial Drive, Doraville, GA 30360 (the “ Leased Real Property ”), and all leases including all amendments, modifications, extensions, renewals and/or supplements thereto (collectively, “ Real Property Leases ”).

SECTION 2.12 Personal Property; Assets . Liberator has good and valid title to (or valid leasehold interest in) all of its personal property and Assets, free and clear of all Liens, except the Liabilities reflected on any balance sheet referred to in Section 2.7(a). The machinery, equipment, computer software and other tangible personal property constituting part of the Assets and all other Assets (whether owned or leased) are in good condition and repair (subject to normal wear and tear) and are reasonably sufficient and adequate in quantity and quality for the operation of the Business as previously and presently conducted. The Assets constitute all of the assets, which are necessary to operate the Business of Liberator as currently conducted.

SECTION 2.13 Contracts . (a) Except as disclosed in the financial statements referred to in Section 2.7(a), Liberator is not a party or by which it or its Assets are bound or subject to Contracts that: (i) cannot be canceled upon thirty (30) days' notice without the payment or penalty of less than one thousand dollars ($1,000); or (ii) involve aggregate annual future payments by or to any person of more than five thousand dollars ($5,000). True and complete copies of all written Contracts (including all amendments thereto and waivers in respect thereof) and summaries of the material provisions of all oral Contracts so listed have been made available to WES.

(b) All Contracts to which Liberator is a party are valid, subsisting, in full force and effect and binding upon Liberator and the other parties thereto, in accordance with their terms, except that no representation or warranty is given as to the enforceability of any oral Contracts. Liberator is not in default (or alleged default) under any such Contract.

SECTION 2.14 Patents and Intellectual Property Rights . (a) The disclosures in the SEC Documents sets forth each patent, trademark, trade name, service mark, brand mark, brand name, and registered copyright as well as all registrations thereof and pending applications therefor, and each license or other contract relating thereto (collectively, the “ Intellectual Property ”) owned or used in connection with the Business by Liberator and indicates, with respect to each item of Liberator's Intellectual Property that is licensed by Liberator, the name of the licensor thereof and, with respect to oral Contracts, the terms of such license relating thereto. The use of the foregoing by Liberator does not conflict with, infringe upon, violate or interfere with or constitute an appropriation of any right, title, interest or goodwill, including, without limitation, any intellectual property right, patent, trademark, trade name, service mark, brand name, computer program, database, industrial design, trade secret, copyright or any pending application thereto of any other person and there have been no claims made and Liberator has not received any notice or otherwise know that any of the foregoing is invalid or conflicts with the asserted rights of other Persons or have not been used or enforced or have been failed to be used or enforced in a manner that would result in the abandonment, cancellation or unenforceability of the Intellectual Property, except as otherwise disclosed.

(b) Liberator owns or has rights to use all Intellectual Property, know-how, formulae and other proprietary and trade rights necessary to conduct the Business as it is now conducted. Liberator has not forfeited or otherwise relinquished any such Intellectual Property, know-how, formulae or other proprietary right used in the conduct of the Business as now conducted.

(c) To the extent used in the conduct of the Business by Liberator, each of the licenses or other contracts relating to Liberator's Intellectual Property (collectively, the “ Intellectual Property Licenses ”) is in full force and effect and is valid and enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally, and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity), and there is no notice or claim of default under any Intellectual Property License either by Liberator or, to Liberator's knowledge, by any other party thereto, and to Liberator’s knowledge, no event has occurred that with the lapse of time or the giving of notice or both would constitute a default by Liberator thereunder.

SECTION 2.15 Claims and Proceedings . There are no outstanding Orders of any Governmental Body against or involving Liberator, its Assets, the Business, or Liberator Shares. There are no actions, suits, claims or counterclaims, examinations, Liberator Required Consents or legal, administrative, governmental or arbitral proceedings or investigations (collectively, “ Claims ”) (whether or not the defense thereof or Liabilities in respect thereof are covered by insurance), pending or, to the best of Liberator's knowledge, threatened on the date hereof, against or involving Liberator, its Assets, the Business or Liberator Shares.

SECTION 2.16 Taxes . (a) Except as otherwise disclosed in the SEC Documents:

(i) Liberator has timely filed or, if not yet due but due before Closing, will timely file all Tax Returns required to be filed by it for all taxable periods ending on or before the date of Closing and all such Tax Returns are or, if not yet filed, will be, upon filing, true, correct and complete in all material respects;

(ii) Liberator has paid, or if payment is not yet due but due before Closing, will promptly pay when due to each appropriate Tax Authority, all Taxes of Liberator shown as due on the Tax Returns required to be filed by it for all taxable periods ending on or before the date of Closing;

(iii) the accruals for Taxes currently payable as well as for deferred Taxes shown on the financial statements of Liberator as of the date of the Annual Statements, the Interim Statements or the date of any financial statements delivered hereunder: (A) adequately provide for all contingent Tax Liabilities of Liberator as of the date thereof; and (B) accurately reflect, as of the date thereof, all unpaid Taxes of Liberator whether or not disputed, in each case as required to be reflected thereon in order for such statements to be in accordance with GAAP;

(iv) no extension of time has been requested or granted for Liberator to file any Tax Return that has not yet been filed or to pay any Tax that has not yet been paid and Liberator has not granted a power of attorney that remains outstanding with regard to any Tax matter;

(v) Liberator has not received notice of a determination by a Tax Authority that Taxes are currently owed by Liberator (such determination to be referred to as a “ Tax Deficiency ”) and, to Liberator's knowledge, no Tax Deficiency is proposed or threatened;

(vi) all Tax Deficiencies have been paid or finally settled and all amounts determined by settlement to be owed have been paid;

(vii) there are no Tax Liens on or pending against Liberator or any of the Assets, other than those which constitute Permitted Liens;

(viii) there are no presently outstanding waivers or extensions or requests for a waiver or extension of the time within which a Tax Deficiency may be asserted or assessed;

(ix) no issue has been raised in any examination, investigation, Liberator Required Consents, suit, action, claim or proceeding relating to Taxes (a “ Tax Liberator Required Consents ”) which, by application of similar principles to any past, present or future period, would result in a Tax Deficiency for such period;

(x) there are no pending or threatened Tax audits of Liberator;

(xi) Liberator has no deferred inter-company gains or losses that have not been fully taken into income for income Tax purposes;

(xii) there are no transfer or other taxes (other than income taxes) imposed by any state on Liberator by virtue of the Contemplated Transactions; and

(xiii) no claim has been made by any Tax Authority that Liberator is subject to Tax in a jurisdiction in which Liberator is not then paying Tax of the type asserted.

Each reference to a provision of the Code in this Section 2.16 shall be treated for state and local Tax purposes as a reference to analogous or similar provisions of state and local law.

(b) To Liberator’s knowledge, Liberator has collected and remitted to the appropriate Tax Authority all sales and use or similar Taxes required to be collected on or prior to the date of Closing and has been furnished properly completed exemption certificates for all exempt transactions and has no information otherwise or notice of any claim by any government or jurisdiction with regards thereto. Liberator has maintained and has in its possession all records, supporting documents and exemption certificates required by applicable sales and use Tax statutes and regulations to be retained in connection with the collection and remittance of sales and use Taxes for all periods up to and including the date of Closing. With respect to sales made by Liberator prior to the date of Closing for which sales and use Taxes are not yet due as of the date of Closing, all applicable sales and use Taxes payable with respect to such sales will have been collected or billed by Liberator and will be included in the Assets of Liberator as of the date of Closing.

SECTION 2.17 Compliance with Laws . Liberator is not in violation of any order, judgment, injunction, award, citation, decree, consent decree or writ (collectively, “ Orders ”) and to the best of Liberator’s knowledge, belief and information, any Laws of any Governmental Bodies affecting Liberator, Liberator Shares or the Business.

SECTION 2.18 Permits . Liberator has obtained all licenses, permits, certificates, certificates of occupancy, orders, authorizations and approvals (collectively, “ Permits ”), and has made all required registrations and filings with all Governmental Bodies, that are necessary to the ownership of the Assets, the use and occupancy of the Leased Real Property, as presently used and operated, and the conduct of the Business or otherwise required to be obtained by Liberator. All Permits required to be obtained or maintained by Liberator have been provided and disclosed and are in full force and effect; no violations are or have been recorded, nor have any notices or violations thereof been received, in respect of any Permit; and no proceeding is pending or threatened to revoke or limit any Permit; and the consummation of the Contemplated Transactions will not (or with the giving of notice or the passage of time or both will not) cause any Permit to be revoked or limited.

SECTION 2.19 Environmental Matters . To the best of Liberator’s knowledge, belief and information, Liberator is, and at all times has been, in full compliance with, and has not been and is not in violation of or liable under, any Environmental Law.

SECTION 2.20 SEC Filings . As of their respective dates, the SEC Documents were prepared in accordance with the Exchange Act and the Securities Act and did not contain any untrue statement of a material fact or omit to state a material fact required to be stated in those documents or necessary to make the statements in those documents not misleading, in light of the circumstances under which they were made. As of their respective dates, these reports and statements will not contain any untrue statement of a material fact or omit to state a material fact required to be stated in them or necessary to make the statements in them not misleading, in light of the circumstances under which they are made and these reports and statements will comply in all material respects with all applicable requirements of the Exchange Act and the Securities Act.

SECTION 2.21 Finders’ Fees . There is no investment banker, broker, finder or other intermediary which has been retained by or is authorized to act on behalf of Liberator who might be entitled to any fee or commission from Liberator in connection with the consummation of the Contemplated Transactions.

SECTION 2.22 Disclosure . Neither this Agreement, the Schedules hereto, nor any reviewed or unaudited financial statements, documents or certificates furnished or to be furnished to WES or by or on behalf of Liberator o pursuant to this Agreement contains or will contain any untrue statement of a material fact or omits or will omit to state a material fact necessary in order to make the statements contained herein or therein not misleading. Except for general current economic conditions effecting the entire economy or Liberator’s entire industry and not specific to the Business, there are no events, transactions or other facts known by Liberator, which, either individually or in the aggregate, may give rise to circumstances or conditions which would have a material adverse effect on the general affairs or Condition of the Business.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF WES

WES represents, warrants and covenants to Liberator as follows and acknowledges that Liberator is relying upon such representations and warranties in connection with the Contemplated Transactions:

SECTION 3.1 Authority Relative to this Agreement . WES has full power and authority to execute and deliver each Transaction Document to which they are or, at Closing, will be, a party and to consummate the Contemplated Transactions. Following the approval of the boards of directors of WES and the shareholders of WES with respect to the Contemplated Transactions, the execution, delivery and performance by WES of each Transaction Document and the consummation of the Contemplated Transactions to which it is or, at Closing, will be, a party have been duly and validly authorized and approved by WES and no other acts by or on behalf of WES are necessary or required to authorize the execution, delivery and performance by WES of each Transaction Document and the consummation of the Contemplated Transactions to which it is or, at Closing, will be a party. This Agreement and the other Transaction Documents to which WES is a party have been, duly and validly executed and delivered by WES and (assuming the valid execution and delivery thereof by the other parties thereto) constitutes, or will, at the Closing, constitute, as the case may be, the legal, valid and binding agreements of WES enforceable against it in accordance with their respective terms, except as such obligations and their enforceability may be limited by applicable bankruptcy and other similar Laws affecting the enforcement of creditors' rights generally and except that the availability of equitable remedies is subject to the discretion of the court before which any proceeding therefor may be brought (whether at law or in equity).

SECTION 3.2 No Conflicts; Consents . The execution, delivery and performance by WES of each Transaction Document to which it is a party and the consummation of the Contemplated Transactions to which WES is a party does not and will not: (i) violate any provision of the certificate of incorporation or by-laws of WES; (ii) require WES to obtain any consent, approval or action of or waiver from, or make any filing with, or give any notice to, any Governmental Body or any other person, except as set forth on Schedule 3.2 (the “ WES Required Consents ”); (iii) except as set forth in Schedule 3.2, violate, conflict with or result in the breach or default under (with or without the giving of notice or the passage of time), or permit the suspension or termination of, any material Contract to which WES is a party or any of its assets is bound or subject or result in the creation or any Lien upon any of WES Merger Stock or upon any assets of WES or WES; or (iv) violate any Order or, to WES’s knowledge, any Law of any Governmental Body against, or binding upon, WES or WES, or upon any of their respective assets or businesses.

SECTION 3.3 Corporate Existence and Power of WES . WES is a corporation duly organized, validly existing and in good standing under the laws of the State of Florida, and has all requisite corporate powers and all material governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted. Other than the execution of this Agreement, WES has not conducted any business of any nature.

SECTION 3.4 WES Merger Stock . At the closing, WES Merger Stock will have been duly authorized by WES and, when issued to Shareholders pursuant to this Agreement, will be duly issued, fully paid and non-assessable shares of WES Merger Stock. WES Merger Stock, when issued pursuant hereto: (i) will not be issued in violation of or subject to any preemptive rights, rights of first refusal or, other than as set forth in this Agreement, contractual restrictions of any kind; and (ii) will vest in Shareholders, respectively, good title to WES Merger Stock free and clear of all Liens.

SECTION 3.5 Capitalization . At the closing, the authorized capital stock of WES consists of 175,000,000 shares of common stock, $0.01 par value. WES has [1,205,000] shares of common stock issued and outstanding. Except as set forth on Schedule 3.5 , to the knowledge of WES, WES will not have outstanding any capital stock or other securities or any rights, warrants or options to acquire securities of WES or any convertible or exchangeable securities and, other than WES pursuant to this Agreement, to the knowledge of WES, no person has or at Closing will have, any right to purchase or otherwise acquire any securities of WES. There are, and at Closing there will be, to the knowledge of WES, no outstanding obligations of WES to repurchase, redeem or otherwise acquire any securities of WES. All of WES Merger Stock is, and at Closing will be, duly authorized, duly and validly issued, fully paid and non-assessable, and to the knowledge of WES, none were issued in violation of any preemptive rights, rights of first refusal or any other contractual or legal restrictions of any kind.

SECTION 3.6 Disclosure of Information . WES has been given the opportunity: (i) to ask questions of, and to receive answers from, persons acting on behalf of Liberator concerning the terms and conditions of the Contemplated Transactions and the business, properties, prospects and financial conditions of Liberator; and (ii) to obtain any additional information (to the extent Liberator or any of the Shareholders possesses such information or is able to acquire it without unreasonable effort or expense and without breach of confidentiality obligations) necessary to verify the accuracy of information provided about Liberator.

SECTION 3.7 Charter Documents and Corporate Records . WES has heretofore delivered to Liberator true and complete copies of the certificate of incorporation, by-laws and minute books, or comparable instruments, of WES as in effect on the date hereof. The stock transfer books of WES have been made available to Liberator for its inspection and are true and complete in all respects.

SECTION 3.8 Financial Statements .

(a) Schedule 3.8 sets forth true, complete and correct copies of: WES's audited financial statements as of and for the fiscal years ended December 31, 2008 and December 31, 2007 (the “ WES Annual Statements ”) and the unaudited financial statements as of and for the fiscal period ended June 30, 2009 (the “ WES Interim Statements ”) and all management letters, management representation letters and attorney response letters issued in connection with the WES Annual Statements and the WES Interim Statements. The WES Annual Statements and the WES Interim Statements present fairly and accurately in all material respects the financial position of WES as of its date, and the earnings, changes in stockholders' equity and cash flows thereof for the periods then ended in accordance with GAAP, consistently applied. Each balance sheet contained therein or delivered pursuant hereto fully sets forth all consolidated Assets and Liabilities of WES existing as of its date which, under GAAP, should be set forth therein, and each statement of earnings contained therein or delivered pursuant hereto sets forth the items of income and expense of WES which should be set forth therein in accordance with GAAP.

(b) All financial, business and accounting books, ledgers, accounts and official and other records relating to WES have been properly and accurately kept and completed, and WES has no knowledge, notice belief or information there are any material inaccuracies or discrepancies contained or reflected therein.

SECTION 3.9 Liabilities . WES has not incurred any Liabilities since June 30, 2009 (the “ Latest Balance Sheet Date ”) except (i) current Liabilities for trade or business obligations incurred in connection with the purchase of goods or services in the ordinary course of the business of WES and consistent with past practice, and (ii) Liabilities reflected on any balance sheet referred to in Section 3.8(a).

SECTION 3.10 Absence of Certain Changes . Since December 31, 2008, WES has conducted its business in the ordinary course consistent with past practice there has not been:

(a) Any change in any method of accounting or accounting practice by WES;

(b) Any increase in the compensation, commission, bonus or other direct or indirect remuneration paid, payable or to become payable to any officer, stockholder, director, consultant, agent or employee of WES, or any alteration in the benefits payable or provided to any thereof;

(d) Except for any changes made in the ordinary course of business, any material change in any of WES's business policies, including advertising, marketing, selling, pricing, purchasing, personnel, returns or budget policies;

(e) Any agreement or arrangement whether written or oral to do any of the foregoing; and

(f) WES has no Liability that is past due.

SECTION 3.11 Contracts .

(a) To the knowledge of WES, there are no Contracts to which WES is a party or by which it or its assets are bound or subject that: (i) cannot be canceled upon 30 days' notice without the payment or penalty of less than one thousand dollars ($1,000); or (ii) involve aggregate annual future payments by or to any person of more than five thousand dollars ($5,000). True and complete copies of all written Contracts (including all amendments thereto and waivers in respect thereof) and summaries of the material provisions of all oral Contracts so listed have been made available to Liberator.

(b) All Contracts to which WES is a party, to the knowledge of WES, are valid, subsisting, in full force and effect and binding upon WES and the other parties thereto, in accordance with their terms, except that no representation or warranty is given as to the enforceability of any oral Contracts. To the best of WES’s knowledge and belief, WES is not in default (or alleged default) under any such Contract.

SECTION 3.12 Claims and Proceedings . To the knowledge of WES, there are no outstanding Orders of any Governmental Body against or involving WES, its assets or its business. To the knowledge of WES, there are no Claims (whether or not the defense thereof or Liabilities in respect thereof are covered by insurance), pending or, to the best of WES's knowledge, threatened on the date hereof, against or involving WES, its assets or its business.

SECTION 3.13 Compliance with Laws . WES is not in violation of any Orders or any Laws related to or promulgated under the Securities Act or the Exchange Act (15 USC § 78a et seq. ) and to the best of WES’s knowledge, belief and information, any Laws of any Governmental Bodies affecting WES or WES Merger Stock.

SECTION 3.14 Environmental Matters . To the best of WES’s knowledge, belief and information, WES is, and at all times has been, in full compliance with, and has not been and is not in violation of or liable under, any Environmental Law.

SECTION 3.15 SEC Filings . WES has filed with the SEC all forms, reports, schedules, and statements that were required to be filed by it with the SEC within the period beginning on the date of inception of WES and ending on the Effective Time, and previously has furnished or made available to the Company accurate and complete copies of all the SEC Documents. As of their respective dates, the SEC Documents were prepared in accordance with the Exchange and the Securities Act and did not contain any untrue statement of a material fact or omit to state a material fact required to be stated in those documents or necessary to make the statements in those documents not misleading, in light of the circumstances under which they were made. As of their respective dates, these reports and statements will not contain any untrue statement of a material fact or omit to state a material fact required to be stated in them or necessary to make the statements in them not misleading, in light of the circumstances under which they are made and these reports and statements will comply in all material respects with all applicable requirements of the Exchange Act and the Securities Act.

SECTION 3.16 Finders’ Fees . There is no investment banker, broker, finder or other intermediary which has been retained by or is authorized to act on behalf of WES who might be entitled to any fee or commission from WES in connection with the consummation of the Contemplated Transactions.

ARTICLE IV

COVENANTS AND AGREEMENTS

Liberator covenants to WES and WES covenants to Liberator that:

SECTION 4.1 Filings and Authorizations . The parties hereto shall cooperate and use their respective best efforts to make, or cause to be made, all registrations, filings, applications and submissions, to give all notices and to obtain all governmental or other third party consents, transfers, approvals, Orders and waivers necessary or desirable for the consummation of the Contemplated Transactions in accordance with the terms of this Agreement; and shall furnish copies thereof to each other party prior to such filing and shall not make any such registration, filing, application or submission to which WES or Liberator, as the case may be, reasonably objects in writing. All such filings shall comply in form and content in all material respects with applicable Law. The parties hereto also agree to furnish each other with copies of such filings and any correspondence received from any Governmental Body in connection therewith.

SECTION 4.2 Confidentiality . Each Party (the “ Receiving Party ”) shall, and shall cause its respective Affiliates and Representatives to (each such Affiliate or Representative of either Liberator or WES, as the case may be, a “ Receiving Party Representative ”) to, maintain in confidence all information received from the other Party or a Liberator (the “ Disclosing Party ”) (other than disclosure to that Person’s Representatives in connection with the evaluation and consummation of the Transactions), and such Disclosing Party’s Affiliates or Representatives (as the case may be, a “ Disclosing Party Representative ”) in connection with this Agreement or the transactions contemplated by the Transaction Documents (including the existence and terms of this Agreement and the such transactions) and use such information solely to evaluate such transactions, unless i) such information can be shown to be already known to the Receiving Party or a Receiving Party Representative before the time of disclosure to such Person, ii) such information can be shown to be subsequently disclosed to the Receiving Party or a Receiving Party Representative by a third party that, to the knowledge of the Receiving Party or such Receiving Party Representative, is not bound by a duty of confidentiality to the Disclosing Party or any Disclosing Party Representative, iii) such information is or becomes publicly available through no breach of this Agreement by, or other fault of, the Receiving Party or any Receiving Party Representative or iv) the Receiving Party or Receiving Party Representative in good faith believes that the furnishing or use of such information is required by, or necessary in connection with, any proceeding, Law or any listing or trading agreement concerning its publicly traded securities (in which case the Receiving Party or such Receiving Party Representative shall, as promptly as practicable, advise the Disclosing Party in writing before making the disclosure and cooperate with the Disclosing Party to limit the scope of such disclosure).

SECTION 4.3 Expenses . Liberator and WES shall bear their respective expenses, in each case, incurred in connection with the preparation, execution and performance of the Transaction Documents and the Contemplated Transactions, including, without limitation, all fees and expenses of their respective Representatives.

SECTION 4.4 Tax Matters . Liberator and WES shall reasonably cooperate, and shall cause their respective Representatives reasonably to cooperate, in preparing and filing all Tax Returns, including maintaining and making available to each other all records necessary in connection with the preparation and filing of Tax Returns, the payment of Taxes and the resolution of Tax audits and Tax Deficiencies with respect to all taxable periods. Refunds or credits of Taxes that were paid by Liberator with respect to any periods shall be for the account of Liberator.

SECTION 4.5 Further Assurances . At any time and from time to time after the date of Closing, upon the reasonable request of any party hereto, the other party(ies), shall do, execute, acknowledge and deliver, or cause to be done, executed, acknowledged or delivered, all such further documents, instruments or assurances, as may be necessary, desirable or proper to carry out the intent and accomplish the purposes of this Agreement.

SECTION 4.6 Restricted Securities . The parties acknowledge and agree that Liberator Shares and WES Merger Stock being issued or transferred pursuant to the Contemplated Transactions are being issued or transferred pursuant to the exemption from the registration requirements of the Securities Act and constitute “restricted securities” within the meaning of the Securities Act. Such securities may not be transferred absent compliance with the provisions of the Securities Act, other applicable Laws, and all stock certificates evidencing such securities shall bear a legend to such effect and to the effect that such shares are subject to the terms and provisions of this Agreement; provided, however, that it is anticipated that for purposes of Rule 144 of the Securities Act, that the holding period of WES Merger Stock for each shareholder of Liberator shall be determined to commence on the date of acquisition of Liberator Shares (as converted pursuant to this Agreement) for each such respective holder.

SECTION 4.7 Due Diligence . Prior to Closing, WES agrees that Liberator shall be entitled, through its Representatives, to make such investigation of the properties, businesses and operations of WES, and such examination of the books, records and financial condition of WES, as Liberator reasonably deems necessary. Any such investigation and examination shall be conducted at reasonable times, under reasonable circumstances and upon reasonable notice.

SECTION 4.8 Amendments to the Articles of Incorporation . No later than the tenth business day after Closing, WES will file an amendment to its Articles of Incorporation authorizing the issuance of the WES Preferred Stock, and upon approval from the WES Shareholder, the WES Preferred Stock will be exchanged pursuant to the terms of this Agreement (the “Approval Time”).

ARTICLE V

CONDITIONS TO CLOSING

SECTION 5.1 Conditions to the Obligations of the Parties . The obligations of the Parties to consummate the Contemplated Transactions are subject to the satisfaction of the following conditions:

(a) No Injunction . No provision of any applicable Law and no Order shall prohibit the consummation of the Contemplated Transactions.

(b) No Proceedings or Litigation . No Claim instituted by any person (other than WES, Liberator or their respective Affiliates) shall have been commenced or pending against any Liberator, WES or any of their respective Affiliates, officers or directors, which Claim seeks to restrain, prevent, change or delay in any respect the Contemplated Transactions or seeks to challenge any of the terms or provisions of this Agreement or seeks damages in connection with any of such transactions.

SECTION 5.2 Conditions to the Obligations of Liberator and WES Shareholder . The obligations of Liberator and WES hereunder to consummate the Contemplated Transactions are subject, at the option of Liberator, to the fulfillment prior to or at the Closing of each of the following further conditions:

(a) Performance . WES shall have performed and complied in all material respects with all agreements, obligations and covenants required by this Agreement to be performed or complied with by it at or prior to the the Closing.

(b) Representations and Warranties . The representations and warranties of WES contained in this Agreement and in any certificate or other writing delivered by WES pursuant hereto shall be true in all material respects at and as of the Closing, as if made at and as of such time (except for those representations and warranties made as of a specific date which shall be true in all material respects as of the date made).

(c) No Material Adverse Change . From the date hereof through the Closing, there shall not have occurred any event or condition that has had or could have a material adverse effect on WES.

(d) Documentation . There shall have been delivered to Liberator the following:

(i) A certificate, dated at Closing, of the Chairman of the Board and the President of WES and WES confirming the matters set forth in Section 5.2(a) (b) and (c) hereof;

(ii) WES Merger Stock certificates, registered in the name of each Shareholder as set forth on Schedule 1 attached hereto, (with the appropriate restrictive legends as applicable), evidencing satisfaction of the Merger Purchase Price in accordance with Section 1.8;

(iii) WES shareholder approval of the contemplated transactions including but not limited to the proper delivery and notice period of an information statement pursuant to Florida laws and the Exchange Act;

(iv) Nevada Certificate of Merger; and

(v) Florida Certificate of Merger.

SECTION 5.3 Conditions to the Obligations of WES . All obligations of WES to consummate the Contemplated Transactions hereunder are subject, at the option of WES, to the fulfillment prior to or at the Closing of each of the following further conditions:

(a) Performance . Liberator shall have performed and complied in all material respects with all agreements, obligations and covenants required by this Agreement to be performed or complied with by them at or prior to the Closing.

(b) Representations and Warranties . The representations and warranties of Liberator, contained in this Agreement and in any certificate or other writing delivered by Liberator pursuant hereto shall be true in all material respects at and as of the Closing, as if made at and as of such time (except for those representations and warranties made as of a specific date which shall be true in all material respects as of the date made).

(c) No Material Adverse Change . From the date hereof through the Closing, there shall not have occurred any event or condition that has had or could have a material adverse effect on Liberator.

(d) Documentation . There shall have been delivered to WES the following:

(i) A certificate, dated at Closing, of the Chairman of the Board, the President or Chief Financial Officer of Liberator confirming the matters set forth in Section 5.3(a) (b) and (c) hereof;

(ii) A certificate, dated at Closing, of the Secretary of Liberator certifying, among other things, that attached or appended to such certificate: (i) is a true and correct copy of Liberator's certificate of incorporation and all amendments thereto, if any, as of the date thereof certified by the Secretary of State of the State of Nevada; and (ii) is a true and correct copy of Liberator's memorandum of association as of the date thereof;

(iii) Nevada Certificate of Merger;

(iv) Florida Certificate of Merger; and

(v) Liberator Share certificates representing the number of Liberator Shares duly endorsed in blank or accompanied by stock powers duly endorsed in blank and in suitable form for transfer to WES by delivery.

ARTICLE VI

INDEMNIFICATION

SECTION 6.1 Survival of Representations, Warranties and Covenants . Notwithstanding any right of WES fully to investigate the affairs of Liberator and the rights of Liberator to fully investigate the affairs of WES, and notwithstanding any knowledge of facts determined or determinable by WES or Liberator, pursuant to such investigation or right of investigation, WES and Liberator, have the right to rely fully upon the representations, warranties, covenants and agreements of Liberator and WES respectively, contained in this Agreement, or listed or disclosed on any Schedule hereto or in any instrument delivered in connection with or pursuant to any of the foregoing. All such representations, warranties, covenants and agreements shall survive the execution and delivery of this Agreement and the Closing hereunder. Notwithstanding the foregoing, all representations and warranties of Liberator and WES respectively, contained in this Agreement, on any Schedule hereto or in any instrument delivered in connection with or pursuant to this Agreement shall terminate and expire twelve (12) months after the date of Closing; provided, however, that liability any party shall not terminate as to any specific claim or claims which arise or result from or are related to a Claim for fraud.

SECTION 6.2 Obligation of Liberator to Indemnify . Liberator agrees to indemnify, defend and hold harmless WES (and its respective directors, officers, employees, Affiliates, successors and assigns) from and against all Claims, losses, Liabilities, Regulatory Actions, damages, deficiencies, judgments, settlements, costs of investigation or other expenses (including Taxes, interest, penalties and reasonable attorneys' fees and fees of other experts and disbursements and expenses incurred in enforcing this indemnification) (collectively, the “ Losses ”) suffered or incurred by WES, or any of the foregoing persons arising out of any breach of the representations and warranties of Liberator contained in this Agreement, or of the covenants and agreements of Liberator contained in this Agreement or in the Schedules or any other Transaction Document.

SECTION 6.3 Obligation of WES to Indemnify . WES agrees to indemnify, defend and hold harmless Liberator (and its respective directors, officers, employees, Affiliates, successors, heirs and assigns) from and against any Losses suffered or incurred by Liberator or any of the foregoing persons arising out of any breach of the representations and warranties of WES, or of the covenants and agreements of WES contained in this Agreement or in the Schedules or any other Transaction Document.

SECTION 6.4 Notice and Opportunity to Defend Third Party Claims .

(a) Within ten (10) days following receipt by any party hereto (the “ Indemnitee ”) of notice of any demand, claim, circumstance or Tax audit which would or might give rise to a claim, or the commencement (or threatened commencement) of any action, proceeding or investigation that may result in a Loss (an “ Asserted Liability ”), the Indemnitee shall give notice thereof (the “ Claims Notice ”) to the party or parties obligated to provide indemnification pursuant to Sections 6.2, or 6.3 (collectively, the “ Indemnifying Party ”). The Claims Notice shall describe the Asserted Liability in reasonable detail and shall indicate the amount (estimated, if necessary, and to the extent feasible) of the Loss that has been or may be suffered by the Indemnitee.

(b) The Indemnifying Party may elect to defend, at its own expense and with its own counsel, any Asserted Liability unless: (i) the Asserted Liability includes a Claim seeking an Order for injunction or other equitable or declaratory relief against the Indemnitee, in which case the Indemnitee may at its own cost and expense and at its option defend the portion of the Asserted Liability seeking equitable or declaratory relief against the Indemnitee, or (ii) the Indemnitee shall have reasonably, and in good faith, after consultation with the Indemnifying Party, concluded that: (x) there is a conflict of interest between the Indemnitee and the Indemnifying Party which could prevent or negatively influence the Indemnifying Party from impartially or adequately conducting such defense; or (y) the Indemnitee shall have one or more defenses not available to the Indemnifying Party but only to the extent such defense cannot legally be asserted by the Indemnifying Party on behalf of the Indemnitee. If the Indemnifying Party elects to defend such Asserted Liability, it shall within ten (10) days (or sooner, if the nature of the Asserted Liability so requires) notify the Indemnitee of its intent to do so, and the Indemnitee shall cooperate, at the expense of the Indemnifying Party, in the defense of such Asserted Liability. If the Indemnifying Party elects not to defend the Asserted Liability, is not permitted to defend the Asserted Liability by reason of the first sentence of this Section 6.4(b), fails to notify the Indemnitee of its election as herein provided or contests its obligation to indemnify under this Agreement with respect to such Asserted Liability, the Indemnitee may pay, compromise or defend such Asserted Liability at the sole cost and expense of the Indemnifying Party. Notwithstanding the foregoing, neither the Indemnifying Party nor the Indemnitee may settle or compromise any claim over the reasonable written objection of the other, provided that the Indemnitee may settle or compromise any claim as to which the Indemnifying Party has failed to notify the Indemnitee of its election under this Section 6.4(b) or as to which the Indemnifying Party is contesting its indemnification obligations hereunder. If the Indemnifying Party desires to accept a reasonable, final and complete settlement of an Asserted Liability so that such Indemnitee’s Loss is paid in full and the Indemnitee refuses to consent to such settlement, then the Indemnifying Party’s liability to the Indemnitee shall be limited to the amount offered in the settlement. The Indemnifying Party will exercise good faith in accepting any reasonable, final and complete settlement of an Asserted Liability. In the event the Indemnifying Party elects to defend any Asserted Liability, the Indemnitee may participate, at its own expense, in the defense of such Asserted Liability. In the event the Indemnifying Party is not permitted by the Indemnitee to defend the Asserted Liability, it may nevertheless participate at its own expense in the defense of such Asserted Liability. If the Indemnifying Party chooses to defend any Asserted Liability, the Indemnitee shall make available to the Indemnifying Party any books, records or other documents within its control that are necessary or appropriate for such defense. Any Losses of any Indemnitee for which an Indemnifying Party is liable for indemnification hereunder shall be paid upon written demand therefor.

SECTION 6.5 Limits on Indemnification .

(a) Notwithstanding the foregoing or the limitations set forth in Section 6.5(b) below, in the event such Losses arise out of any fraud related matter on the part of any Indemnifying Party, then such Indemnifying Party shall be obligated to indemnify the Indemnitee in respect of all such Losses.

(b) Liberator shall not be liable to indemnify WES pursuant to Section 6.2 above and WES shall not be liable to indemnify Liberator pursuant to Section 6.3 above: (i) unless a Claims Notice describing the loss is delivered to the Indemnifying Party within 12 months after the Closing (except for Losses arising out of an Indemnifying Party’s fraud); (ii) with respect to special, consequential or punitive damages; and (iii) in respect of any individual Loss of less than twenty five thousand dollars ($25,000).

SECTION 6.6 Exclusive Remedy . The parties agree that the indemnification provisions of this Article VI shall constitute the sole or exclusive remedy of any party in seeking damages or other monetary relief with respect to this Agreement and the Contemplated Transactions, provided that, nothing herein shall be construed to limit the right of any party to seek: (i) injunctive relief for a breach of this Agreement; or (ii) legal or equitable relief for a Claim for fraud.

ARTICLE VII

SPECIFIC PERFORMANCE; TERMINATION

SECTION 7.1 Specific Performance . Liberator and WES acknowledges and agrees that, if any of Liberator or WES fails to proceed with the Closing in any circumstance other than those described in clauses (a), (b), (c) or (d) of Section 7.2 below, the others will not have adequate remedies at law with respect to such breach. In such event, and in addition to each party's right to terminate this Agreement, each party shall be entitled, without the necessity or obligation of posting a bond or other security, to seek injunctive relief, by commencing a suit in equity to obtain specific performance of the obligations under this Agreement or to sue for damages, in each case, without first terminating this Agreement. Liberator or WES specifically affirms the appropriateness of such injunctive, other equitable relief or damages in any such action.

SECTION 7.2 Termination . This Agreement may be terminated and the Contemplated Transactions may be abandoned at any time prior to the Closing:

(a) By mutual written consent of Liberator and WES;

(b) By Liberator if: (i) there has been a misrepresentation or breach of warranty on the part of WES in the representations and warranties contained herein and such misrepresentation or breach of warranty, if curable, is not cured within thirty days after written notice thereof from Liberator, respectively; (ii) WES has committed a breach of any covenant imposed upon it hereunder and fails to cure such breach within thirty days after written notice thereof from Liberator; or (iii) any condition to Liberator's obligations under Section 5.2 becomes incapable of fulfillment through no fault of Liberator, and is not waived by WES;

(c) By WES if: (i) there has been a misrepresentation or breach of warranty on the part of Liberator in the representations and warranties contained herein and such misrepresentation or breach of warranty, if curable, is not cured within thirty days after written notice thereof from WES; (ii) Liberator has committed a breach of any covenant imposed upon it hereunder and fails to cure such breach within thirty days after written notice thereof from WES; or (iii) any condition to WES’s obligations under Section 5.3 becomes incapable of fulfillment through no fault of WES and is not waived by Liberator; and

(d) By Liberator or WES, if any condition under Section 5.1 becomes incapable of fulfillment through no fault of the party seeking termination and is not waived by the party seeking termination.

SECTION 7.3 Effect of Termination; Right to Proceed . Subject to the provisions of Section 7.1 hereof, in the event that this Agreement shall be terminated pursuant to Section 7.2, all further obligations of the parties under this Agreement shall terminate without further liability of any party hereunder except that: (i) the agreements contained in Section 4.2 shall survive the termination hereof; and (ii) termination shall not preclude any party from seeking relief against any other party for breach of Section 4.2. In the event that a condition precedent to its obligation is not met, nothing contained herein shall be deemed to require any party to terminate this Agreement, rather than to waive such condition precedent and proceed with the Contemplated Transactions.

ARTICLE VIII

MISCELLANEOUS

SECTION 8.1 Representations and Warranties for Purposes of this Agreement Only . The representations and warranties in this Agreement were made for the purposes of allocated contractual risk between the parties and not as a means of establishing facts. This Agreement may have different standards of materiality than standards of materiality under applicable securities laws. Only parties to this Agreement and specified third-party beneficiaries (if any) have a right to enforce this Agreement

SECTION 8.2 Notices . (a) Any notice or other communication required or permitted hereunder shall be in writing and shall be delivered personally by hand or by recognized overnight courier, or mailed (by registered or certified mail, postage prepaid return receipt requested) as follows:

If to WES, one copy to:

WES CONSULTING, INC.

2745 Bankers Industrial Drive

Doraville, GA 30360

If to Liberator, one copy to:

LIBERATOR, INC.

Attn: Ronald P. Scott

2745 Bankers Industrial Drive

Doraville, GA 30360

Facsimile: (770) 246-6440

With a copy to (which shall not constitute notice):

Anslow and Jaclin, LLP

Attn: Joseph M. Lucosky

195 Route 9 South, Suite 204

Manalapan, NJ 07726

Facsimile: (732) 577-1188

(b) Each such notice or other communication shall be effective when delivered at the address specified in Section 8.1(a). Any party by notice given in accordance with this Section 8.1 to the other parties may designate another address or person for receipt of notices hereunder. Notices by a party may be given by counsel to such party.

SECTION 8.3 Entire Agreement . This Agreement (including the Schedules and Exhibits hereto) and the collateral agreements executed in connection with the consummation of the Contemplated Transactions contain the entire agreement among the parties with respect to the subject matter hereof and related transactions and supersede all prior agreements, written or oral, with respect thereto.

SECTION 8.4 Waivers and Amendments; Non-Contractual Remedies; Preservation of Remedies . This Agreement may be amended, superseded, cancelled, renewed or extended only by a written instrument signed by Liberator and WES. The provisions hereof may be waived in writing by Liberator or WES, as the case may be. Any such waiver shall be effective only to the extent specifically set forth in such writing. No failure or delay on the part of any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof. Nor shall any waiver on the part of any party of any such right, power or privilege, nor any single or partial exercise of any such right, power or privilege, preclude any other or further exercise thereof or the exercise of any other such right, power or privilege. Except as otherwise provided herein, the rights and remedies herein provided are cumulative and are not exclusive of any rights or remedies that any party may otherwise have at law or in equity.

SECTION 8.5 Governing Law . This Agreement shall be governed and construed in accordance with the laws of the State of Georgia applicable to agreements made and to be performed entirely within such State without regard to the conflict of laws rules thereof.

SECTION 8.6 Binding Effect; No Assignment . This Agreement and all of its provisions, rights and obligations shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors, heirs and legal representatives. This Agreement may not be assigned (including by operation of Law) by any party hereto without the express written consent of WES (in the case of assignment by Liberator) or Liberator (in the case of assignment by WES) and any purported assignment, unless so consented to, shall be void and without effect.

SECTION 8.7 Exhibits . All Exhibits and Schedules attached hereto are hereby incorporated by reference into, and made a part of, this Agreement.

SECTION 8.8 Severability . If any provision of this Agreement for any reason shall be held to be illegal, invalid or unenforceable, such illegality shall not affect any other provision of this Agreement, this Agreement shall be amended so as to enforce the illegal, invalid or unenforceable provision to the maximum extent permitted by applicable law, and the parties shall cooperate in good faith to further modify this Agreement so as to preserve to the maximum extent possible the intended benefits to be received by the parties.

SECTION 8.9 Counterparts . The Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original as against any party whose signature appears thereon, and all of which shall together constitute one and the same instrument. This Agreement shall become binding when one or more counterparts hereof, individually or taken together, shall bear the signatures of all of the parties reflected hereon as the signatories.

SECTION 8.10 Third Parties . Except as specifically set forth or referred to herein, nothing herein express or implied is intended or shall be construed to confer upon or give to any person other than the parties hereto and their permitted heirs, successors, assigns and legal representatives, any rights or remedies under or by reason of this Agreement or the Contemplated Transactions.

ARTICLE IX

DEFINITIONS

SECTION 9.1 Definitions . The following terms, as used herein, have the following meanings:

“ Affiliate ” of any person means any other person directly or indirectly through one or more intermediary persons, controlling, controlled by or under common control with such person.

“ Agreement ” or “ this Agreement ” shall mean, and the words “ herein ”, “ hereof ” and “ hereunder ” and words of similar import shall refer to, this agreement as it from time to time may be amended.

“ Assets ” shall mean all cash, instruments, properties, rights, interests and assets of every kind, real, personal or mixed, tangible and intangible, used or usable in the Business.

The term “ audit ” or “ audited ” when used in regard to financial statements shall mean an examination of the financial statements by a firm of independent certified public accountants in accordance with generally accepted auditing standards for the purpose of expressing an opinion thereon.

“ Business ” shall mean the ownership and operation of the business of Liberator.

“ Condition of the Business ” shall mean the financial condition, prospects or the results of operations of the Business, the Assets or Liberator.

“ Contract ” shall mean any contract, agreement, indenture, note, bond, lease, conditional sale contract, mortgage, license, franchise, instrument, commitment or other binding arrangement, whether written or oral.

The term “ control ,” with respect to any person, shall mean the power to direct the management and policies of such person, directly or indirectly, by or through stock ownership, agency or otherwise, or pursuant to or in connection with an agreement, arrangement or understanding (written or oral) with one or more other persons by or through stock ownership, agency or otherwise; and the terms “ controlling ” and “ controlled ” shall have meanings correlative to the foregoing.

“ GAAP ” shall mean generally accepted accounting principles in effect on the date hereof (or, in the case of any opinion rendered in connection with an audit, as of the date of the opinion) as set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as may be approved by a significant segment of the accounting profession of the United States.

“ Governmental Bodies ” shall mean any government, municipality or political subdivision thereof, whether federal, state, local or foreign, or any governmental or quasi-governmental agency, authority, board, bureau, commission, department, instrumentality or public body, or any court, arbitrator, administrative tribunal or public utility.

“ knowledge ” with respect to: (a) any individual shall mean actual knowledge of such individual; and (b) any corporation shall mean the actual knowledge of the directors and executive officers of such corporation; and “ knows ” and “ known ” has a correlative meaning. The terms “any Shareholder's knowledge,” and “Shareholder's knowledge,” including any correlative meanings, shall mean the knowledge of any Shareholder.

“ Laws ” shall mean any law, statute, code, ordinance, rule, regulation or other requirement of any Governmental Bodies.

“ Liability ” shall mean any direct or indirect indebtedness, liability, assessment, claim, loss, damage, deficiency, obligation or responsibility, fixed or unfixed, choate or inchoate, liquidated or unliquidated, secured or unsecured, accrued, absolute, actual or potential, contingent or otherwise (including any liability under any guaranties, letters of credit, performance credits or with respect to insurance loss accruals).

“ Lien ” shall mean any mortgage, lien (including mechanics, warehousemen, laborers and landlords liens), claim, pledge, charge, security interest, preemptive right, right of first refusal, option, judgment, title defect, covenant, restriction, easement or encumbrance of any kind.

“ person ” shall mean an individual, corporation, partnership, joint venture, limited liability Liberator, association, trust, unincorporated organization or other entity, including a government or political subdivision or an agency or instrumentality thereof.

“ Receivables ” shall mean as of any date any trade accounts receivable, notes receivable, sales representative advances and other miscellaneous receivables of Liberator.

“ Representative ” means, with respect to a particular Person, any director, officer, employee, agent, consultant, advisor or other representative of such Person, including legal counsel, accountants and financial advisors.

“ SEC ” means the United States Securities and Exchange Commission.

“ SEC Documents ” means all forms, notices, reports, schedules, statements, and other documents filed by Parent with the SEC, whether or not constituting a “filed” document, and includes all proxy statements, registration statements, amendments to registration statements, periodic reports on Forms 10-KSB, 10-QSB, and 8-K, and annual and quarterly reports to shareholders.

“ Tax ” (including, with correlative meaning, the terms “ Taxes ” and “ Taxable ”) shall mean: (i)(A) any net income, gross income, gross receipts, sales, use, ad valorem, transfer, transfer gains, franchise, profits, license, withholding, payroll, employment, excise, severance, stamp, rent, recording, occupation, premium, real or personal property, intangibles, environmental or windfall profits tax, alternative or add-on minimum tax, customs duty or other tax, fee, duty, levy, impost, assessment or charge of any kind whatsoever (including but not limited to taxes assessed to real property and water and sewer rents relating thereto), together with; (B) any interest and any penalty, addition to tax or additional amount imposed by any Governmental Body (domestic or foreign) (a “ Tax Authority ”) responsible for the imposition of any such tax and interest on such penalties, additions to tax, fines or additional amounts, in each case, with respect to any party hereto, the Business or the Assets (or the transfer thereof); (ii) any liability for the payment of any amount of the type described in the immediately preceding clause (i) as a result of a party hereto being a member of an affiliated or combined group with any other person at any time on or prior to the date of Closing; and (iii) any liability of a party hereto for the payment of any amounts of the type described in the immediately preceding clause (i) as a result of a contractual obligation to indemnify any other person.

“ Tax Return ” shall mean any return or report (including elections, declarations, disclosures, schedules, estimates and information returns) required to be supplied to any Tax Authority.

“ Transaction Documents ” shall mean, collectively, this Agreement, and each of the other agreements and instruments to be executed and delivered by all or some of the parties hereto in connection with the consummation of the transactions contemplated hereby.

SECTION 9.2 Interpretation . Unless the context otherwise requires, the terms defined in this Agreement shall be applicable to both the singular and plural forms of any of the terms defined herein. All accounting terms defined in this Agreement, and those accounting terms used in this Agreement except as otherwise expressly provided herein, shall have the meanings customarily given thereto in accordance with GAAP as of the date of the item in question. When a reference is made in this Agreement to Sections, such reference shall be to a Section of this Agreement unless otherwise indicated. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. The use of the neuter gender herein shall be deemed to include the masculine and feminine genders wherever necessary or appropriate, the use of the masculine gender shall be deemed to include the neuter and feminine genders and the use of the feminine gender shall be deemed to include the neuter and masculine genders wherever necessary or appropriate. Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.”

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF , the undersigned have executed this MERGER and Recapitalization Agreement as of the date set forth above.

WES:

WES CONSULTING, INC.

/s/ Louis S. Friedman

Name: Louis S. Friedman

Title: Chief Executive Officer

LIBERATOR:

LIBERATOR, INC.

/s/ Louis S. Friedman

Name: Louis S. Friedman

Title: Chief Executive Officer

WES SHAREHOLDERS :

LIBERATOR, INC.

/s/ Louis S. Friedman

Name: Louis S. Friedman

Title: Chief Executive Officer

LIBERATOR SHAREHOLDER:

/s/ Louis S. Friedman

Louis S. Friedman

Liberator, Inc.

Schedule 1

Shareholder List

Louis S. Friedman		28,394,376
Don Cohen, Inc.		13,022,127
Hope Capital, Inc.		4,750,001
New Castle Financial Services, Inc.		2,044,980
David Stauffacher		2,000,000
Steven Gallant		1,315,366
Thomas McQueeney IRA		1,000,000
Lee Silverstein		876,911
Canterbury Securities Holdings, Inc.		600,000
AES International, Inc.		548,069
Jay Scheinberg		526,147
George Eason		452,000
Hope Capital, Inc.		400,000
Jabro Funding Corp.		400,000
Harold & Connie Estes		300,000
Lawrence Rothberg		250,000
Jay & Norine Hackney		200,000
Rolf Nelson		200,000
Ron DelGaudio		200,000
Bruce Federman		200,000
Joseph Wallace		200,000
Downshire Capital		200,000
Charles Fitch		192,000
Kevin Murphy		140,000
James D. Yau		105,229
Mark W. Testerman IRA		100,000
Alan Gibstein		100,000
Mark Timm		100,000
Tekplan Solutions Georgia LLC		100,000
Thomas Powers		100,000
Artice Allen		100,000
Vincent Yacono		100,000
Todd & Kimilee Morgan		100,000
Anthony Westreich		100,000
Brian Miller		100,000
Wolfe Family Trust		100,000
Joseph Wallace		100,000
Nadir Eltahir		100,000
Mitchel & Sherri Adler		100,000
Gregory Newell		100,000
Scott Silverman		100,000

Gordon Downie		92,000
Perry Weitz		88,000
Russell Lewandowski		87,691
Joseph Tedesco		80,000
Martin & Joyce Scher		50,000
Edward Custer		50,000
Cary & Andrea Crane		50,000
Jeffrey Lubalin		50,000
Monte & Janet Anglin		50,000
Jonathan Glassman		50,000
Brad Unsicker		44,000
Frank DeMarco		43,846
Alan Lewandowski		43,846
Michael Ra Bouchard		36,392

Total shares outstanding		60,932,981

Warrants outstanding :	Shares		Price

Hope Capital Warrant		1,000,000	$	0.75
New Castle Financial Warrant		292,479	$	0.50
New Castle Financial Warrant		292,479	$	0.75
New Castle Financial Warrant		877,435	$	1.00

Total Warrants		2,462,393

Stock options outstanding :

Ronald P. Scott	438,456	$	0.228	NQ Stock Option
Options granted on Oct. 16, 2009 to 80 employees	1,411,000	$	0.250
Total Options	1,849,456

Convertible Notes:		Principal

3% Convertible Note 1.01 payable to Hope Capital		$ 375,000 at $0.30 converts into 1,250,000 shares

3% Convertible Note 1.02 payable to Hope Capital		$ 250,000 at $0.25, converts into 1,000,000 shares

Convertible Preferred Series A Shares :
Louis S. Friedman		4,300,000		100% of the class

Schedule 2.7

See Public Filings.

Schedule 3.2

None.

Schedule 3.5

The rights of Belmont Partners in connection with the Stock Purchase Agreement by and between Belmont Partners and the Company with respect to the purchase by the Company of a majority of the issued and outstanding common stock of WES.

Schedule 3.8

See Public Filings.

AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

REMARK ENTERPRISES INC.

REMARK ENTERPRISES INC. (hereinafter the “Corporation”), a Nevada corporation organized and existing under and by virtue of the State of Nevada, does hereby certify that:

1. The original Certificate of Incorporation of the Corporation was filed with the Secretary of State of the State of Nevada on October 31, 2007.

2. This Amended and Restated Certificate of Incorporation has been duly adopted in accordance with the provisions of the laws of the State of Nevada (“Nevada Law”) by the Board of Directors and sole shareholder of the Corporation.

3. The Certificate of Incorporation is hereby amended to effect, among other things, the following amendments authorized by Nevada Law:

To increase the total number of authorized shares of capital stock of the Corporation from Two Hundred (200) shares of common stock with no par value per share; to Two Hundred and Sixty Million (260,000,000) which shall consist of (i) Two Hundred and Fifty Million (250,000,000) shares of common stock, par value $0.0001 per share, and (ii) Ten Million (10,000,000) shares of blank check preferred stock, par value $0.0001 per share; and

To add provisions with respect to indemnification, amendments and limitation of liability of directors, officers and shareholders of the Corporation.

4. To accomplish the foregoing, the text of the Certificate of Incorporation is hereby amended and restated to read as herein set forth in full:

ARTICLE I

NAME

The name of the Corporation shall be: REMARK ENTERPRISES INC.

ARTICLE II

PERIOD OF DURATION

The Corporation shall exist in perpetuity, from and after the date of filing these Articles of Incorporation with the Secretary of State of the State of Nevada unless dissolved according to law.

ARTICLE III

PURPOSES AND POWERS

1. Purposes. Except as restricted by these Articles of Incorporation, the Corporation is organized for the purpose of transacting all lawful business for which corporations may be incorporated pursuant to the Nevada Business Corporation Act.

2. General Powers. Except as restricted by these Articles of Incorporation, the Corporation shall have and may exercise all powers and rights which a corporation may exercise legally pursuant to the Nevada Business Corporation Act.

3. Issuance of Shares. The board of directors of the Corporation may divide and issue any class of stock of the Corporation in series pursuant to a resolution properly filed with the Secretary of State of the State of Nevada.

ARTICLE IV

CAPITAL STOCK

1. The total number of shares of stock which the Corporation shall have authority to issue is Two Hundred and Sixty Million (260,000,000) which shall consist of (i) Two Hundred and Fifty Million (250,000,000) shares of common stock, par value $0.0001 per share (the "Common Stock"), and (ii) Ten Million (10,000,000) shares of blank check preferred stock, par value $0.0001 per share (the "Preferred Stock").

The Preferred Stock may be issued in one or more series, from time to time, with each such series to have such designation, relative rights, preferences or limitations, as shall be stated and expressed in the resolution or resolutions providing for the issue of such series adopted by the Board of Directors of the Corporation (the "Board"), subject to the limitations prescribed by law and in accordance with the provisions hereof, the Board being hereby expressly vested with authority to adopt any such resolution or resolutions. The authority of the Board with respect to each series of Preferred Stock shall include, but not be limited to, the determination or fixing of the following:

(i) The distinctive designation and number of shares comprising such series, which number may (except where otherwise provided by the Board increasing such series) be increased or decreased (but not below the number of shares then outstanding) from time to time by like action of the Board;

(ii) The dividend rate of such series, the conditions and time upon which such dividends shall be payable, the relation which such dividends shall bear to the dividends payable on any other class or classes of Stock or series thereof, or any other series of the same class, and whether such dividends shall be cumulative or non-cumulative;

(iii) The conditions upon which the shares of such series shall be subject to redemption by the Corporation and the times, prices and other terms and provisions upon which the shares of the series may be redeemed;

(iv) Whether or not the shares of the series shall be subject to the operation of a retirement or sinking fund to be applied to the purchase or redemption of such shares and, if such retirement or sinking fund be established, the annual amount thereof and the terms and provisions relative to the operation thereof;

(v) Whether or not the shares of the series shall be convertible into or exchangeable for shares of any other class or classes, with or without par value, or of any other series of the same class, and, if provision is made for conversion or exchange, the times, prices, rates, adjustments and other terms and conditions of such conversion or exchange;

(vi) Whether or not the shares of the series shall have voting rights, in addition to the voting rights provided by law, and, if so, the terms of such voting rights;

(vii) The rights of the shares of the series in the event of voluntary or involuntary liquidation, dissolution or upon the distribution of assets of the Corporation; and

(viii) Any other powers, preferences and relative participating, optional or other special rights, and qualifications, limitations or restrictions thereof, of the shares of such series, as the Board may deem advisable and as shall not be inconsistent with the provisions of this Articles of Incorporation.

2. The holders of shares of the Preferred Stock of each series shall be entitled to receive, when and as declared by the Board, out of funds legally available for the payment of dividends, dividends (if any) at the rates fixed by the Board for such series before any cash dividends shall be declared and paid or set apart for payment, on the Common Stock with respect to the same dividend period.

3. The holders of shares of the Preferred Stock of each series shall be entitled, upon liquidation or dissolution or upon the distribution of the assets of the Corporation, to such preferences as provided in the resolution or resolutions creating such series of Preferred Stock, and no more, before any distribution of the assets of the Corporation shall be made to the holders of shares of the Common Stock. Whenever the holders of shares of the Preferred Stock shall have been paid the full amounts to which they shall be entitled, the holders of shares of the Common Stock shall be entitled to share ratably in all remaining assets of the Corporation.

ARTICLE V

CUMULATIVE VOTING

Each outstanding share of Common Stock shall be entitled to one vote and each fractional share of Common Stock shall be entitled to a corresponding fractional vote on each matter submitted to a vote of shareholders. A majority of the shares of Common Stock entitled to vote, represented in person or by proxy, shall constitute a quorum at a meeting of shareholders. Except as otherwise provided by these Articles of Incorporation or the Nevada Business Corporation Act, if a quorum is present, the affirmative vote of a majority of the shares represented at the meeting and entitled to vote on the subject matter shall be the act of the shareholders. Cumulative voting shall not be allowed in the election of directors of this Corporation.

Shares of Preferred Stock shall only be entitled to such vote as is determined by the Board of Directors prior to the issuance of such stock, except as required by law, in which case each share of Preferred Stock shall be entitled to one vote.

ARTICLE VI

TRANSACTIONS WITH INTERESTED DIRECTORS OR OFFICERS

No contract or other transaction between the Corporation and one or more of its directors or officers, or between the Corporation and any corporation, firm or association in which one or more of its directors or officers are directors or officers or are financially interested, shall be either void or voidable solely because of such relationship or interest or solely because such director or officer is present at the meeting of the board of directors or a committee thereof which authorizes, approves, or ratifies such contract or transaction or solely because their votes are counted for such purpose, if:

(i) The fact of such relationship or interest is disclosed or known to the board of directors or committee and noted in the minutes, and the board or committee authorizes, approves, or ratifies the contract or transaction in good faith by a vote or consent sufficient for the purpose without counting the votes or consents of such interested directors; or

(ii) The fact of such relationship or interest is disclosed or known to the shareholders entitled to vote and they authorize, approve, or ratify such contract or transaction in good faith by a majority vote or written consent. The votes of the common or interested directors or officers must be counted in any such vote of stockholders; or

(iii) The fact of such relationship or interest is not disclosed or known to the director or officer at the time the transaction is brought before the board of directors of the corporation for action; or

(iv) The contract or transaction is fair and reasonable as to the Corporation at the time it is authorized or approved.

Common or interested directors may be counted in determining the presence of a quorum at a meeting of the board of directors or a committee thereof which authorizes, approves, or ratifies such contract or transaction, and if the votes of the common or interested directors are not counted at the meeting, then a majority of the disinterested directors may authorize, approve or ratify the contract or transaction.

ARTICLE VII

INDEMNIFICATION

The Corporation is authorized to provide indemnification of its directors, officers, employees and agents; whether by bylaw, agreement, vote of shareholders or disinterested directors or otherwise, in excess of the indemnification expressly permitted by Section 78.751 of the Nevada Business Corporation Act for breach of duty to the Corporation and its shareholders, subject only to the applicable limits upon such indemnification as set forth in the Nevada Business Corporation Act. Any repeal or modification of this Article VII or Article XI shall not adversely affect any right or protection of a director or officer of the Corporation existing at the time of such repeal or modification.”

ARTICLE VIII

ADOPTION AND AMENDMENT OF BYLAWS

The initial Bylaws of the Corporation shall be adopted by its board of directors. Subject to repeal or change by action of the shareholders, the power to alter, amend or repeal the Bylaws or adopt new Bylaws shall be vested in the board of directors. The Bylaws may contain any provisions for the regulation and management of the affairs of the Corporation not inconsistent with law or these Articles of Incorporation.

ARTICLE IX

RESIDENT AGENT

The name of the Corporation's resident agent and the street address in Clark County, Nevada for such resident agent where process may be served are Vcorp Services, LLC, 1409 Bonita Avenue, Las Vegas, NV 89104.

The resident agent may be changed in the manner permitted by law.

ARTICLE X

BOARD OF DIRECTORS

The number of directors of the Corporation shall be fixed by the Bylaws of the Corporation, and the number of directors of the Corporation may be changed from time to time by consent of the Corporation's directors. The initial board of directors of the Corporation shall consist of one (1) director. The names and addresses of the person who shall serve as director until the first annual meeting of shareholders and/or until their successors are elected and shall qualify are:

Lawrence Rothberg

1 Linden Pl., Suite 207

Great Neck, NY. 11021

ARTICLE XI

LIMITATION OF LIABILITY OF

DIRECTORS AND OFFICERS TO CORPORATION AND SHAREHOLDERS

No director or officer shall be liable to the Corporation or any shareholder for damages for breach of fiduciary duty as a director or officer, except for any matter in respect of which such director or officer (a) shall be liable under Section 78.300 of the Nevada Business Corporation Act or any amendment thereto or successor provision thereto; or (b) shall have acted or failed to act in a manner involving intentional misconduct, fraud or a knowing violation of law. Neither the amendment nor repeal of this Article, nor the adoption of any provision in the Articles of Incorporation inconsistent with this Article, shall eliminate or reduce the effect of this Article in respect of any matter occurring prior to such amendment, repeal or adoption of an inconsistent provision. This Article shall apply to the full extent now permitted by Nevada law or as may be permitted in the future by changes or enactments in Nevada law, including without limitation Section 78.300 and/or the Nevada Business Corporation Act.

The date of the adoption of the Amendments is November 6, 2008.

The Amendments were duly adopted by a majority of the shareholders of record on November 6, 2008 and the vote was 1 vote in favor out of 1 total issued and outstanding.

IN WITNESS WHEREOF , REMARK ENTERPRISES INC. has authorized this Amended and Restated Certificate of Incorporation to be signed by Lawrence Rothberg, its sole Director and President, as of this 6th day of November, 2008.

Dated: November 6, 2008

/s/

Lawrence Rothberg, President and Director

BY-LAWS

REMARK ENTERPRISES INC.

ARTICLE I

OFFICES

SECTION 1. REGISTERED OFFICE. – The corporation shall at all times maintain a registered office in the State of Nevada and appoint a registered agent at such address to accept service of process against the corporation and for all purposes required by the Nevada Revised Statutes.

SECTION 2. OTHER OFFICES. – The corporation may have other offices, either within or without the State of Nevada, at such place or places as the Board of Directors may from time to time appoint or the business of the corporation may require.

ARTICLE II

MEETINGS OF STOCKHOLDERS

SECTION 1. ANNUAL MEETINGS. – Annual meetings of stockholders for the election of directors and for such other business as may be stated in the notice of the meeting, shall be held at such place, either within or without the State of Nevada, and at such time and date as the Board of Directors, by resolution, shall determine and as set forth in the notice of the meeting.

If the date of the annual meeting shall fall upon a legal holiday, the meeting shall be held on the next succeeding business day. At each annual meeting, the stockholders entitled to vote shall elect a Board of Directors and they may transact such other corporate business as shall be stated in the notice of the meeting.

SECTION 2. OTHER MEETINGS. – Meetings of stockholders for any purpose other than the election of directors may be held at such time and place, within or without the State of Nevada, as shall be stated in the notice of the meeting.

SECTION 3. VOTING. – Each stockholder entitled to vote in accordance with the terms of the Articles of Incorporation and in accordance with the provisions of these By-laws shall be entitled to one vote, in person or by proxy, for each share of stock entitled to vote held by such stockholder, but no proxy shall be voted after three years from its date unless such proxy provides for a longer period. Upon the demand of any stockholder, the vote for directors and the vote upon any question before the meeting, shall be by ballot. All elections for directors shall be decided by plurality vote; all other questions shall be decided by majority vote except as otherwise provided by the Articles of Incorporation or the laws of the State of Nevada.

A complete list of the stockholders entitled to vote at the ensuing election, arranged in alphabetical order, with the address of each, and the number of shares held by each, shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present.

SECTION 4. QUORUM. – Except as otherwise required by law, by the Articles of Incorporation or by these By-laws, the presence, in person or by proxy, of stockholders holding a majority of the stock of the corporation entitled to vote shall constitute a quorum at all meetings of the stockholders. In case a quorum shall not be present at any meeting, a majority in interest of the stockholders entitled to vote thereat, present in person or by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until the requisite amount of stock entitled to vote shall be present. At any such adjourned meeting at which requisite amount of stock entitled to vote shall be represented, any business may be transacted which might have been transacted at the meeting as originally noticed; but only those stockholders entitled to vote at the meeting as originally noticed shall be entitled to vote at any adjournment or adjournments thereof. If the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote the meeting.

SECTION 5. SPECIAL MEETINGS. – Special meetings of the stockholders for any purpose or purposes may be called by the President or Secretary, or by resolution of the directors.

SECTION 6. NOTICE OF MEETINGS. – Written notice, stating the place, date and time of the meeting, and the general nature of the business to be considered, shall be given to each stockholder entitled to vote thereat at his address as it appears on the records of the corporation, not less than ten nor more than sixty (60) days before the date of the meeting. No business other than that stated in the notice shall be transacted at any meeting without the unanimous consent of all the stockholders entitled to vote thereat.

SECTION 7. ACTION WITHOUT MEETING. – Unless otherwise provided by the Articles of Incorporation, any action required to be taken at any annual or special meeting of stockholders, or any action which may be taken at any annual or special meeting, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing.

ARTICLE III

DIRECTORS

SECTION 1. NUMBER AND TERM. – The authorized number of directors of the corporation shall be not less than one (1) nor more than thirteen (13) as fixed from time to time by resolution of the Board of Directors; provided that no decrease in the number of directors shall shorten the term of any incumbent directors. The directors shall be elected at the annual meeting of the stockholders and each director shall be elected to serve until his successor shall be elected and shall qualify. A director need not be a stockholder.

SECTION 2. RESIGNATIONS. – Any director, member of a committee or other officer may resign at any time. Such resignation shall be made in writing, and shall take effect at the time specified therein, and if no time be specified, at the time of its receipt by the President or Secretary. The acceptance of a resignation shall not be necessary to make it effective.

SECTION 3. VACANCIES. – If the office of any director, member of a committee or other officer becomes vacant, the remaining directors in office, though less than a quorum by a majority vote, may appoint any qualified person to fill such vacancy, who shall hold office for the unexpired term and until his successor shall be duly chosen.

SECTION 4. REMOVAL. – Any director or directors may be removed either for or without cause at any time by the affirmative vote of the holders of a majority of all the shares of stock outstanding and entitled to vote, at a special meeting of the stockholders called for the purpose and the vacancies thus created may be filled, at the meeting held for the purpose of removal, by the affirmative vote of a majority in interest of the stockholders entitled to vote.

SECTION 5. INCREASE OF NUMBER. – The number of directors may be increased by amendment by these By-laws by the affirmative vote of a majority of the directors, though less than a quorum, or, by the affirmative vote of a majority in interest of the stockholders, at the annual meeting or at a special meeting called for that purpose, and by like vote the additional directors may be chosen at such meeting to hold office until the next annual election and until their successors are elected and qualify.

SECTION 6. POWERS. – The Board of Directors shall exercise all of the powers of the corporation except such as are by law, or by the Articles of Incorporation of the corporation or by these By-laws conferred upon or reserved to the stockholders.

SECTION 7. COMMITTEES. – The Board of Directors may, by resolution or resolutions passed by a majority of the whole board, designate one or more committees, each committee to consist of two or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of any member or such committee or committees, the member or members thereof present at any such meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member.

Any such committee, to the extent provided in the resolution of the Board of Directors, or in these By-laws, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power of authority in reference to amending the Articles of Incorporation, adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the corporation’s property and assets, recommending to the stockholders a dissolution of the corporation or a revocation of a dissolution, or amending the By-laws of the corporation; and unless the resolution, these By-laws, or the Articles of Incorporation expressly so provide, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock.

SECTION 8. MEETINGS. – The newly elected Board of Directors may hold their first meeting for the purpose of organization and the transaction of business, if a quorum be present, immediately after the annual meeting of the stockholders; or the time and place of such meeting may be fixed by consent, in writing, of all the directors.

Unless restricted by the incorporation document or elsewhere in these By-laws, members of the Board of Directors or any committee designated by such Board may participate in a meeting of such Board or committee by means of conference telephone or similar communications equipment allowing all persons participating in the meeting to hear each other at the same time. Participation by such means shall constitute presence in person at such meeting.

Regular meetings of the Board of Directors may be scheduled by a resolution adopted by the Board. The Chairman of the Board or the President or Secretary may call, and if requested by any two directors, must call a special meeting of the Board and give five (5) days notice by mail, or two (2) days notice personally or by telegraph or cable to each director. The Board of Directors may hold an annual meeting, without notice, immediately after the annual meeting of shareholders.

SECTION 9. QUORUM. – A majority of the directors shall constitute a quorum for the transaction of business. If at any meeting of the Board there shall be less than a quorum present, a majority of those present may adjourn the meeting from time to time until a quorum is obtained, and no further notice thereof need be given other than by announcement at the meeting which shall be so adjourned.

SECTION 10. COMPENSATION. – Directors shall not receive any stated salary for their services as directors or as members of committees, but by resolution of the Board a fixed fee and expenses of attendance may be allowed for attendance at each meeting. Nothing herein contained shall be construed to preclude any director from serving the corporation in any other capacity as an officer, agent or otherwise, and receiving compensation therefor.

SECTION 11. ACTION WITHOUT MEETING. – Any action required or permitted to be taken at any meeting of the Board of Directors, or of any committee thereof, may be taken without a meeting, it prior to such action a written consent thereto is signed by all members of the Board, or of such committee as the case may be, and such written consent is filled with the minutes of proceedings of the Board or committee.

ARTICLE IV

OFFICERS

SECTION 1. OFFICERS. – The officers of the corporation shall be a President, a Treasurer, and a Secretary, all of whom shall be elected by the Board of Directors and who shall hold office until their successors are elected and qualified. In addition, the Board of Directors may elect a Chairman, one or more Vice-Presidents and such Assistant Secretaries and Assistant Treasurers as they may deem proper. None of the officers of the corporation need be directors. The officers shall be elected at the first meeting of the Board of Directors after each annual meeting. More than two offices may be held by the same person.

SECTION 2. OTHER OFFICERS AND AGENTS. – The Board of Directors may appoint such other officers and agents as it may deem advisable, who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board of Directors.

SECTION 3. CHAIRMAN. – The Chairman of the Board of Directors, if one be elected, shall preside at all meetings of the Board of Directors and he shall have and perform such other duties as from time to time may be assigned to him by the Board of Directors.

SECTION 4. PRESIDENT. – The President shall be the chief executive officer of the corporation and shall have the general powers and duties of supervision and management usually vested in the office of President of a corporation. He shall preside at all meetings of the stockholders if present thereat, and in the absence or non-election of the Chairman of the Board of Directors, at all meetings of the Board of Directors, and shall have general supervision, direction and control of the business of the corporation. Except as the Board of Directors shall authorize the execution thereof in some other manner, he shall execute bonds, mortgages and other contracts on behalf of the corporation, and shall cause the seal to be affixed to any instrument requiring it and when so affixed the seal shall be attested by the signature of the Secretary or the Treasurer or Assistant Secretary or an Assistant Treasurer.

SECTION 5. VICE-PRESIDENT. – Each Vice-President shall have such powers and shall perform such duties as shall be assigned to him by the directors.

SECTION 6. TREASURER. – The Treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate account of receipts and disbursements in books belonging to the corporation. He shall deposit all monies and other valuables in the name and to the credit of the corporation in such depositaries as may be designated by the Board of Directors.

The Treasurer shall disburse the funds of the corporation as may be ordered by the Board of Directors, or the President, taking proper vouchers for such disbursements. He shall render to the President and Board of Directors at the regular meetings of the Board of Directors, or whenever they may request it, an account of all his transactions as Treasurer and of the financial condition of the corporation. If required by the Board of Directors, he shall give the corporation a bond for the faithful discharge of his duties in such amount and with such surety as the Board shall prescribe.

SECTION 7. SECRETARY. – The Secretary shall give, or cause to be given, notice of all meetings of stockholders and directors, and all other notices required by the law or by these By-laws, and in case of his absence or refusal to neglect so to do, any such notice may be given by any person thereunto directed by the President, or by the directors, or stockholder, upon whose requisition the meeting is called as provided in these By-laws. He shall record all the proceedings of the meetings of the corporation and of the directors in a book to be kept for that purpose, and shall perform such other duties as may be assigned to him by the directors or the President. He shall have the custody of the seal of the corporation and shall affix the same to all instruments requiring it, when authorized by the directors or the President, and attest the same.

SECTION 8. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES. – Assistant Treasurers and Assistant Secretaries, if any, shall be elected and shall have such powers and shall perform such duties as shall be assigned to them, respectively, by the directors.

ARTICLE V

MISCELLANEOUS

SECTION 1. CERTIFICATES OF STOCK. – A certificate of stock, signed by the Chairman or Vice-Chairman of the Board of Directors, if they be elected, President or Vice-President, and the Treasurer or an Assistant Treasurer, or Secretary or Assistant Secretary, shall be issued to each stockholder certifying the number of shares owned by him in the corporation. When such certificates are countersigned (1) by a transfer agent other than the corporation or its employee, or, (2) by a registrar other than the corporation or its employee, the signatures of such officers may be facsimiles.

SECTION 2. LOST CERTIFICATES. – A new certificate of stock may be issued in the place of any certificate theretofore issued by the corporation, alleged to have been lost or destroyed, and the directors may, in their discretion, require the owner of the lost or destroyed certificate, or his legal representatives, to give the corporation a bond, in such sum as they may direct, not exceeding double the value of the stock, to indemnify the corporation against any claim that may be against it on account of the alleged loss of any such certificate, or the issuance of any such new certificate.

SECTION 3. TRANSFER OF SHARES. – The shares of stock of the corporation shall be transferable only upon its books by the holders thereof in person or by their duly authorized attorneys or legal representatives, and upon such transfer the old certificate shall be surrendered to the corporation by the delivery thereof to the person in charge of the stock and transfer books and ledgers, or to such other person as the directors may designate, by whom they shall be cancelled, and new certificates shall thereupon be issued. A record shall be made of each transfer and whenever a transfer shall be made for collateral security, and not absolutely, it shall be so expressed in the entry of the transfer.

SECTION 4. STOCKHOLDERS RECORD DATE. – (a) In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.

(b) In order that the corporation may determine the stockholders entitled to consent to corporate action in writing without a meeting, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record is adopted by the Board of Directors.

(c) In order that the corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted.

SECTION 5. DIVIDENDS. – Subject to the provisions of the Articles of Incorporation, the Board of Directors may, out of funds legally available therefor at any regular or special meeting, declare dividends upon the capital stock of the corporation as and when they deem expedient. Before declaring any dividend there may be set apart out of any funds of the corporation available for dividends, such sum or sums as the directors from time to time in their discretion deem proper for working capital or as a reserve fund to meet contingencies or for equalizing dividends or for such other purposes as the directors shall deem conductive to the interests of the corporation.

SECTION 6. SEAL. – The corporate seal shall be circular in form and shall contain the name of the corporation, the year of its creation and the words “Corporate Seal, Nevada, 2007”. Said seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise.

SECTION 7. FISCAL YEAR. – The fiscal year of the corporation shall be determined by resolution of the Board of Directors.

SECTION 8. CHECKS. – All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the corporation shall be signed by such officer or officers, agent or agents of the corporation, and in such manner as shall be determined from time to time by resolution of the Board of Directors.

SECTION 9. NOTICE AND WAIVER OF NOTICE. – Whenever any notice is required by these By-laws to be given, personal notice is not meant unless expressly so stated, and any notice so required shall be deemed to be sufficient if given by depositing the same in the United States mail, postage, prepaid, addressed to the person entitled thereto at his address as it appears on the records of the corporation, and such notice shall be deemed to have been given on the day of such mailing. Stockholders not entitled to vote shall not be entitled to receive notice of any meetings except as otherwise provided by Statute.

Whenever any notice whatever is required to be given under the provisions of any law, or under the provisions of the Articles of Incorporation of the corporation of these By-laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto.

ARTICLE VI

AMENDMENTS

These By-laws may be altered or repealed and By-laws may be made at any annual meeting of the stockholders or at any special meeting thereof if notice of the proposed alteration or repeal of By-law or By-laws to be made be contained in the notice of such special meeting, by the affirmative vote of a majority of the stock issued and outstanding and entitled to vote thereat, or by the affirmative vote of a majority of the Board of Directors, at any regular meeting of the Board of Directors, or at any special meeting of the Board of Directors, if notice of the proposed alteration or repeal of By-law or By-laws to be made, be contained in the notice of such special meeting.

ARTICLE VII

INDEMNIFICATION

No director shall be liable to the corporation or any of its stockholders for monetary damages for breach of fiduciary duty as a director, except with respect to (1) a breach of the director’s duty of loyalty to the corporation or its stockholders, (2) acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (3) liability which may be specifically defined by law or (4) a transaction from which the director derived an improper personal benefit, it being the intention of the foregoing provision to eliminate the liability of the corporation’s directors to the corporation or its stockholders to the fullest extent permitted by law. The corporation shall indemnify to the fullest extent permitted by law each person that such law grants the corporation the power to indemnify.

Randall N. Drake, C.P.A., P.A.

1981 Promenade Way

Clearwater, Florida 33760

Phone: (727) 536-4863

October 19, 2009

Securities and Exchange Commission

450 Fifth Street, NW

Washington, D.C. 20549

In re:

WES Consulting, Inc.

File #:

333-141022

FEI #:

59-3581576

Ladies and Gentlemen:

We have read the statements by WES Consulting, Inc. included under Item 4.01 of its Report on Form 8-K dated October 19, 2009, and we agree with such statements as they relate to our firm.

This is to confirm that the client-auditor relationship between WES Consulting, Inc. and Randall N. Drake, CPA, PA has ceased.

Very truly yours,

/s/ Randall N. Drake, CPA PA

Randall N. Drake, CPA, PA

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page
Consolidated Financial Statements:

Report of Independent Registered Public Accounting Firm	2

Consolidated Balance Sheets as of June 30, 2009 and 2008	3

Consolidated Statements of Operations for each of the two years in the period ended June 30, 2009	4

Consolidated Statements of Stockholders' Equity (Deficit) for each of the two years in the period ended June 30,2009	5

Consolidated Statements of Cash Flows for each of the two years in the period ended June 30, 2009	6

Notes to Consolidated Financial Statements	7

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Liberator, Inc.

We have audited the accompanying consolidated balance sheets of Liberator, Inc. (f/k/a Remark Enterprises, Inc.) as of June 30, 2009 and 2008, 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, 2009. Liberator, 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 provide 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 Liberator, Inc. as of June 30, 2009 and 2008, 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, 2009, 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 attaint 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

Lake Saint Louis, Missouri

October 8, 2009

PART 1. FINANCIAL INFORMATION

ITEM 1. Financial Statements

LIBERATOR, INC.

(f/k/a Remark Enterprises, Inc.)

CONSOLIDATED BALANCE SHEETS

	June 30, 2009			June 30, 2008
Assets:
Current assets:
Cash and cash equivalents	$	1,815,633		$	89,519
Accounts receivable, net of allowance for doubtful accounts of $5,740 in 2009 and 2008		346,430			329,720
Inventories		700,403			1,252,803
Prepaid expenses		95,891			112,998
Total current assets		2,958,357			1,785,040

Property and equipment, net of accumulated depreciation of $1,515,194 in 2009 and $1,244,976 in 2008		1,135,517			1,053,343

Total assets	$	4,093,874		$	2,838,383
Liabilities and stockholders’ equity:
Current liabilities:
Accounts payable	$	2,247,845		$	1,614,171
Accrued compensation		154,994			138,078
Accrued expenses and interest		145,793			204,966
Revolving line of credit		171,433			278,140
Short-term note payable		–			100,000
Current portion of long-term debt		145,481			139,159
Credit card advance		198,935			–
Total current liabilities		3,064,481			2,474,514
Long-term liabilities:
Note payable – equipment		72,812			128,787
Leases payable		225,032			141,129
Notes payable – related party		125,948			705,000
Convertible note payable – shareholder (net of $89,250 in unamortized discount)		285,750			–
Unsecured lines of credit		124,989			139,149
Deferred rent payable		356,308			337,155
Less: current portion of long-term debt		(145,481	)		(139,159	)
Total long-term liabilities		1,045,358			1,312,061
Total Liabilities		4,109,839			3,786,575
Commitments and contingencies
Stockholders’ equity:
Series A Convertible Preferred stock, $0.0001 par value, 10,000,000 shares authorized, 4,300,000 shares issued and outstanding in 2009, zero shares outstanding in 2008, liquidation preference of $1,000,000		430			–
Common stock, $0.0001 par value, 250,000,000 shares authorized, 60,932,981 shares issued and outstanding in 2009; 45,000,001 shares in 2008		6,093			4,500
Additional paid-in capital		5,286,970			601,784
Retained deficit		(5,309,458	)		(1,554,476	)

Total stockholders’ deficit		(15,965	)		(948,192	)
Total liabilities and stockholders’ equity	$	4,093,874		$	2,838,383

The accompanying notes are an integral part of these statements.

LIBERATOR, INC.

(f/k/a Remark Enterprises, Inc.)

CONSOLIDATED STATEMENTS OF OPERATIONS

Years Ended June 30, 2009 and 2008

	2009				2008

Net Sales		$	10,260,552			$	11,750,832
Cost of goods sold			7,144,108				7,516,733
Gross profit			3,116,444				4,234,099

Operating expenses
Advertising and Promotion			864,690				1,054,959
Other Selling and Marketing			1,201,054				1,019,689
General and Administrative			1,781,352				1,776,628
Depreciation			270,217				309,198

Total operating expenses			4,117,313				4,160,474
Income (Loss) from Operations			(1,000,869	)			73,625

Other Income (Expense):
Interest income			1,980				780
Interest (expense) and financing costs			(482,598	)			(227,518	)
Expenses related to reverse acquisition			(2,273,495	)			–
Total Other Income (Expense)			(2,754,113	)			(226,738	)
Net Loss Before Income taxes			(3,754,982	)			(153,113	)

Provision for Income Taxes			–				–
Net Loss			(3,754,982	)			(153,113	)

Loss per share
Basic		$	(0.08	)		$	(0.00	)
Diluted		$	(0.08	)		$	(0.00	)

Weighted-average number of common shares outstanding
Basic			48,341,549				45,000,001
Diluted			48,341,549				45,000,001

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

Liberator, Inc.

(f/k/a/ Remark Enterprises, Inc.)

Statement of Changes in Stockholders’ Equity (Deficit)

From July 1, 2007 to June 30, 2009

														Total
	Series A Preferred							Additional						Stockholders'
	Stock				Common Stock			Paid-in			Accumulated			Equity
	Shares		$		Shares	$		Capital			Deficit			(Deficit)

Balance, July 1, 2007		-		-	45,000,000	$	4,500	$	595,284		$	(1,401,363	)	$	(801,579	)

Stock issued for cash and contribution		-		-	1				6,500			-			6,500
Net loss		-		-	-		-		-			(153,113	)		(153,113	)
Ending balance, June 30, 2008					45,000,001		4,500		601,784			(1,554,476	)		(948,192	)

Stock issued for cash		-		-	5,000,000		500		2,500			-			3,000
Related party debt and interest exchanged for convertible preferred stock		4,300,000	$	430	-		-		831,690			-			832,120
Common stock issued in private placement, net of $303,535 in issuance costs, fees and expenses		-		-	8,000,000		800		1,695,665			-			1,696,465
Shares issued for services in connection with the private placement		-		-	2,932,980		293		(293	)		-			-
Fair market value of shares issued for services in connection with the private placement									733,245						733,245
Fair market value of shares issued in reverse merger		-		-	-		-		1,250,000			-			1,250,000
Fair market value of warrant issued to Hope Capital		-		-	-		-		4,500			-			4,500
Additional interest expense recorded on value of Series A Convertible Preferred Shares									167,879						167,879

Net loss		-		-	-		-		-			(3,754,982	)		(3,754,982	)
Ending balance, June 30, 2009		4,300,000	$	430	60,932,981	$	6,093	$	5,286,970		$	(5,309,458	)	$	(15,965	)

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

LIBERATOR, INC.

(f/k/a Remark Enterprises, Inc.)

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended June 30, 2009 and 2008

	2009			2008
Operations
Net loss	$	(3,754,982	)	$	(153,113	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation		270,217			309,198
Additional interest expense on issuance of preferred shares		167,880
Expenses related to reverse acquisition		2,273,495
Net (increase) decrease in assets:
Accounts Receivable		(16,710	)		(110,227	)
Inventory		552,400			(62,535	)
Prepaid expenses		17,107			(14,851	)
Net increase (decrease) in liabilities:
Accounts payable		633,674			(9,058	)
Accrued expenses		72,947			72,312
Accrued compensation		16,916			32,711
Deferred rent payable		19,153			88,933

Net cash provided by operating activities		252,097			153,370
Investing
Investments in equipment		(352,392	)		(85,342	)

Net cash used in investing		(352,392	)		(85,342	)
Financing
Net proceeds from sale of common stock		1,699,465			6,500
Borrowings under revolving line of credit		2,710,368			734,968
Repayment of revolving line of credit		(2,817,075	)		(965,179	)
Loans from related party		120,948			–
Proceeds from credit card advance		550,000			–
Repayment of credit card advance		(351,065	)		–
Proceeds from short term note and unsecured notes		100,000			247,500
Repayment of short term note and unsecured notes		(214,160	)		–
Principle payments on note payable and capital leases		(83,260	)		(175,545	)
Additions to capital leases		111,188			37,556
Net cash provided by (used in) financing		1,826,409			(114,200	)

Net change in cash and cash equivalents		1,726,114			(46,172	)
Cash and cash equivalents, beginning of period		89,519			135,691
Cash and cash equivalents, end of period	$	1,815,633		$	89,519

Supplemental Disclosure of Cash Flow Information:
Non cash items:
Additional equipment acquired with direct financing		–		$	218,500
Common stock issued in acquisition of subsidiary	$	1,987,745			–
Additional interest expense on issuance of preferred shares	$	167,880			–
Note payable issued in acquisition of subsidiary	$	285,750			–
Cash paid during the year for:
Interest	$	245,256		$	209,528
Income Taxes		–			–

The accompanying notes are an integral part of these statements.

LIBERATOR, INC.

(f/k/a Remark Enterprises, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE A—NATURE OF BUSINESS

Remark Enterprises Inc. (“Remark”) was incorporated in Nevada on November 1, 2007. On April 3, 2009, we entered into a Stock Purchase and Recapitalization Agreement (the “Merger Agreement”) with One Up Innovations, Inc., a privately held Georgia corporation (“Liberator”), and One Up Acquisition, Inc. (“Subsidiary”), our newly formed wholly-owned Georgia subsidiary. On June 26, 2009, the Company consummated the transactions contemplated by the Merger Agreement, as amended. Pursuant to the Merger Agreement, the Subsidiary and Liberator merged and all of the issued and outstanding common stock of Liberator was exchanged for an aggregate of 45,000,000 shares of the Company’s common stock (90% of the total issued and outstanding shares of common stock of the Company). In addition, all of the issued and outstanding shares of Series A convertible preferred stock of Liberator was exchanged for 4,300,000 shares of Series A convertible preferred stock of the Company. Liberator is the surviving corporation and is a wholly owned by the Company; all business operations of the Company are now the business operations of Liberator. Effective with the consummation of the merger, we changed our name to Liberator, Inc. Prior to the Merger, the Company’s fiscal year end was December 31, and the fiscal year end of Liberator was June 30. On August 10, 2009, the Board of Directors of the Company acted by unanimous written consent to change the Company’s fiscal year end from December 31 to June 30.

Prior to the merger, the Company was a non-operating “shell” corporation. For financial statement purposes, the merger has been reflected in the financial statements as though it occurred on June 30, 2007. The historical statements prior to the date of merger are those of Remark. Since the merger is a recapitalization and not a business combination, pro-forma information is not presented.

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 Doraville, Georgia (a suburb of Atlanta.) Sales are generated through the internet and print ads. 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 $3,754,982 and $153,113 for the years ended June 30, 2009 and 2008, respectively, and as of June 30, 2009 the Company has an accumulated deficit of $15,965 and a working capital deficit of $106,124.

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. 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.

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.

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.

LIBERATOR, INC.

(f/k/a Remark Enterprises, Inc.)

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 Liberator, Inc. and our wholly-owned domestic and international operating 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) collectibility 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, 2009, accounts receivable totaled $346,430 net of $5,740 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.

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, 2009, substantially all of our cash and cash equivalents were managed by a number of financial institutions. As of June 30, 2009 our cash and cash equivalents and restricted cash with certain of these financial institutions exceed FDIC insured limits. Accounts receivable are typically unsecured and are derived from revenue earned from customers primarily located in the United States and Europe.

LIBERATOR, INC.

(f/k/a Remark Enterprises, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Fair Value of Financial Instruments

At June 30, 2009, our financial instruments included cash and cash equivalents, accounts receivable, accounts payable, 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 $63,020 at June 30, 2008 and $57,625 at June 30, 2009. Advertising expense for the years ended June 30, 2008 and 2009 was $1,054,959 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 $12,119 for the year ended June 30, 2008 and $173,583 for the year ended June 30, 2009.

Shipping and Handling

Net sales for the year ended June 30, 2009 and 2008 includes amounts charged to customers of $1,071,978 and $1,465,262, respectively, for shipping and handling charges.

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 which 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 which was signed in September 2005 and expires December 31, 2015. The lease is on an escalating schedule with the final year on 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, 2009 is $356,308. The Rent expense under this lease for the years ended June 30, 2009 and 2008 was $323,723.

Segment Information

During fiscal 2009 and 2008, the Company only operated in one segment; therefore, segment information has not been presented.

Recent Accounting Pronouncements

(Recently adopted)

In September 2006, the FASB issued Statement of Financial Accounting Standard (“SFAS”) No. 157, Fair Value Measurements (“SFAS No. 157”). The standard defines fair value, outlines a framework for measuring fair value, and details the required disclosures about fair value measurements. The standard was effective for fiscal years beginning after November 15, 2007 (our fiscal 2009). In February 2008, the FASB issued FASB Staff Position (“FSP”) 157-1, Application of FASB Statement No. 157 to FASB Statement No. 13 and Other Accounting Pronouncements That Address Fair Value Measurements for Purposes of Lease Classification or Measurement under Statement 13 (“FSP 157-1”) and 157-2, Effective Date of FASB Statement No. 157 (“FSP 157-2”). FSP157-1 amends SFAS No. 157 to exclude FASB Statement No. 13, Accounting for Leases, and other accounting pronouncements that address fair value measurements of leases from the provisions of SFAS No. 157. FSP 157-2 delays the effective date of SFAS No. 157 for most nonfinancial assets and nonfinancial liabilities to fiscal years beginning after November 15, 2008 (our fiscal 2010). As a result, the application of the definition of fair value and related disclosures of SFAS No. 157 (as impacted by these FSPs) was effective for our Company beginning with the first quarter of fiscal 2009. This adoption did not have a material impact on our consolidated results of operations or financial condition for the first quarter of our fiscal 2009. We have not completed our evaluation of the potential impact, if any, from the remaining aspects of SFAS No. 157 for which the effective date was deferred under FSP 157-2, on our consolidated financial position, results of operations and cash flows. On October 10, 2008, the FASB issued FSP 157-3, Fair Value Measurements (“FSP 157-3”), which clarifies the application of SFAS No. 157 in an inactive market and provides an example to demonstrate how the fair value of a financial asset is determined when the market for that financial asset is inactive. FSP 157-3 was effective upon issuance, including prior periods for which financial statements had not been issued. The adoption of this standard as of October 25, 2008 did not have a material impact on our results of operations, cash flows or financial positions.

LIBERATOR, INC.

(f/k/a Remark Enterprises, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Recent Accounting Pronouncements (continued)

(Recently adopted)

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities (“SFAS No. 159”). SFAS No. 159 permits an entity to choose, at specified election dates, to measure eligible financial instruments and certain other items at fair value that are not currently required to be measured at fair value. An entity reports unrealized gains and losses on items for which the fair value option has been elected in earnings at each subsequent reporting date. Upfront costs and fees related to items for which the fair value option is elected are recognized in earnings as incurred and not deferred. SFAS No. 159 also established presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. As a result, the application of the fair value option for financial assets and financial liabilities of SFAS No. 159 was effective for our Company beginning with the first quarter of fiscal 2009. At the effective date, an entity could elect the fair value option for eligible items that existed at that date and is required to report the effect of the first remeasurement to fair value as a cumulative-effect adjustment to the opening balance of retained earnings. We chose not to elect the fair value option for our financial assets and liabilities existing on July 30, 2008, and did not elect the fair value option for any financial assets and liabilities transacted during the twelve months ended July 30, 2009.

In April 2009, the FASB issued FSP No. FAS 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly (“FSP FAS 157-4”). This FSP clarifies the application of SFAS No. 157 when there is no active market or where the price inputs being used represent distressed sales. Additional guidance is provided regarding estimating the fair value of an asset or liability (financial and nonfinancial) when the volume and level of activity for the asset or liability have significantly decreased and identifying transactions that are not orderly. FSP FAS 157-4 is effective for interim and annual periods ending after June 15, 2009. The adoption of SFAS 157-4 did not impact our results of operations, cash flows or financial positions.

In April 2009, the FASB issued FSP No. FAS 115-2, Recognition and Presentation of Other-Than-Temporary Impairments (“FSP FAS 115-2”). This FSP provides additional guidance to provide greater clarity about the credit and noncredit component of an other-than-temporary impairment event and to more effectively communicate when an other-than-temporary impairment event has occurred. This FSP applies to debt securities. FSP FAS 115-2 will be effective for interim and annual periods ending after June 15, 2009. The adoption of FSP FAS 115-2 did not impact our results of operations, cash flows or financial positions.

In April 2009, the FASB issued FSP No. FAS 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial Instruments (“FSP FAS 107-1 and APB 28-1”). This FSP amends FASB Statement No. 107, Disclosures about Fair Value of Financial Instruments, to require disclosures about fair value of financial instruments in interim as well as in annual financial statements. This FSP also amends APB Opinion No. 28, Interim Financial Reporting, to require those disclosures in all interim financial statements. FSP FAS 107-1 and APB 28-1 is effective for interim and annual periods ending after June 15, 2009. The adoption of FSP FAS 107-1 and APB 28-1 did not impact our results of operations, cash flows or financial positions.

In May 2009, the FASB issued SFAS No. 165, Subsequent Events (“SFAS No. 165”). SFAS No. 165 was issued in order to establish principles and requirements for reviewing and reporting subsequent events and requires disclosure of the date through which subsequent events are evaluated and whether the date corresponds with the time at which the financial statements were available for issue (as defined) or were issued. SFAS No. 165 is effective for interim reporting periods ending after June 15, 2009. The adoption of SFAS No. 165 did not impact our results of operations, cash flows or financial positions. We have evaluated events and transactions that occurred after July 30, 2009 through October 8, 2009, the date we issued these financial statements. See further discussion in Note O.

LIBERATOR, INC.

(f/k/a Remark Enterprises, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Recently Issued Accounting Pronouncements

In December 2007, the FASB issued SFAS No. 141R (revised 2007), Business Combinations (“SFAS No. 141R”), which replaces SFAS No. 141, Business Combinations. SFAS No. 141R was issued to improve the relevance, representational faithfulness, and comparability of the information that a reporting entity provides in its financial reports about a business combination and its effects. In April 2009, the FASB issued FSP No. 141R-1, Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies (“FSP 141 R-1”). FSP 141 R-1 was issued to deal with the initial recognition and measurement of an asset acquired or a liability assumed in a business combination that arises from a contingency provided the asset or liability’s fair value on the date of acquisition can be determined. This Statement is effective as of the beginning of an entity’s fiscal year that begins after December 15, 2008 (our fiscal 2010) and will be applied to the pending merger with WES Consulting, Inc.

In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements – an amendment of Accounting Research Bulletin No. 51 (“SFAS No. 160”), which establishes accounting and reporting standards for ownership interests in subsidiaries held by parties other than the parent, the amount of consolidated net income attributable to the parent and to the noncontrolling interest, changes in a parent’s ownership interest and the valuation of retained noncontrolling equity investments when a subsidiary is deconsolidated. The Statement also establishes reporting requirements that provide sufficient disclosures that clearly identify and distinguish between the interests of the parent and the interests of the noncontrolling owners. SFAS No.160 is effective as of the beginning of an entity’s fiscal year that begins after December 15, 2008 (our fiscal 2010). The adoption of SFAS No. 160 will not have a material impact on our consolidated financial statements.

In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133 (“SFAS No. 161”). SFAS No. 161 amends and expands the disclosure requirements of SFAS No. 133 with the intent to provide users of financial statements with an enhanced understanding of: (i) how and why an entity uses derivative instruments; (ii) how derivative instruments and related hedged items are accounted for under SFAS No. 133 and its related interpretations and (iii) how derivative instruments and related hedged items affect an entity’s financial position, financial performance and cash flows. This Statement is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008 (our fiscal 2010), with early application encouraged. The adoption of SFAS No. 161 will not have a material impact on our consolidated financial statements.

In April 2008, the FASB issued FSP 142-3, Determination of the Useful Life of Intangible Assets (“FSP 142-3”). FSP 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS No. 142, Goodwill and Other Intangible Assets (“SFAS No. 142”). The objective of FSP 142-3 is to improve the consistency between the useful life of a recognized intangible asset under SFAS No. 142 and the period of expected cash flows used to measure the fair value of the asset under SFAS No. 141R, and other generally accepted accounting principles in the United States (“GAAP”). FSP 142-3 applies to all intangible assets, whether acquired in a business combination or otherwise, and shall be effective for financial statements issued for fiscal years beginning after December 15, 2008 (our fiscal 2010), and interim periods within those fiscal years and should be applied prospectively to intangible assets acquired after the effective date. Early adoption is prohibited. We are in the process of evaluating FSP 142-3 and do not expect it to have a significant impact on our consolidated financial statements.

In June 2009, the FASB issued SFAS No. 166, Accounting for Transfers of Financial Assets — an amendment of FASB Statement No. 140 (“SFAS No. 166”) . SFAS No. 166 improves the relevance, representational faithfulness, and comparability of the information that a reporting entity provides in its financial statements about a transfer of financial assets, the effects of a transfer on its financial position, financial performance, and cash flows, and a transferor’s continuing involvement, if any, in transferred financial assets. Additionally, SFAS No. 166 removes the concept of a qualifying special-purpose entity from Statement 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities” , and removes the exception from applying FASB Interpretation No. 46 (revised December 2003), “Consolidation of Variable Interest Entities”, to qualifying special-purpose entities. SFAS No. 166 is effective for financial statements issued for interim and annual periods beginning after November 15, 2009 (our fiscal 2011). We have not completed our evaluation of the potential impact, if any, of the adoption of SFAS No. 166 on our consolidated financial statements.

LIBERATOR, INC.

(f/k/a Remark Enterprises, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Recently Issued Accounting Pronouncements (continued)

In June 2009, the FASB issued SFAS No. 167, Amendments to FASB Interpretation No. 46(R) (“SFAS No. 167”) . This statement amends Interpretation 46(R) to require an enterprise to perform an analysis to determine whether the enterprise’s variable interest or interests give it a controlling financial interest in a variable interest entity. SFAS No. 167 is effective for financial statements issued for interim and annual periods beginning after November 15, 2009 (our fiscal 2011). Earlier application is prohibited. We have not completed our evaluation of the potential impact, if any, of the adoption of SFAS No. 167 on our consolidated financial statements.

In June 2009, the FASB issued SFAS No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles, a replacement of FASB Statement No. 162 (“SFAS No. 168”) . SFAS No. 168 identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements of nongovernmental entities that are presented in conformity with GAAP. The FASB Accounting Standards Codification (the “Codification”) will become the source of authoritative GAAP recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the SEC under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. On the effective date of this statement, the Codification will supersede all then-existing non-SEC accounting and reporting standards. With limited exceptions, non-SEC accounting literature not included in the Codification will become nonauthoritative. SFAS No. 168 is effective for financial statements issued for interim and annual periods ending after September 15, 2009. The adoption of SFAS No. 168 will be effective in the first quarter of fiscal 2010.

NOTE D—IMPAIRMENT OF LONG-LIVED ASSETS

The Company accounts for impairment of its equipment or leasehold improvements in accordance with SFAS No. 144. Pursuant to SFAS No. 144, long-lived assets, such as property, plant and equipment and purchased intangibles subject to amortization shall be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized to the extent that the carrying amount exceeds the asset's fair value. 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, 2008 or 2009.

NOTE E—INVENTORY

All inventories are stated at the lower of cost or market using the first-in, first-out method of valuation.

The Company's inventories consist of the following components at June 30, 2009 and 2008:

	2009		2008
Raw materials	$	366,355	$	561,124
Work in Process		176,637		152,363
Finished Goods		157,411		539,316
	$	700,403	$	1,252,803

LIBERATOR, INC.

(f/k/a Remark Enterprises, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE F—PROPERTY AND EQUIPMENT

Property and equipment at June 30, 2009 and 2008 consisted of the following:

	2009			2008			Estimated Useful Life
Factory Equipment	$	1,506,147		$	1,451,158		7-10 years
Computer Equipment and Software		665,135			389,688		5-7 years
Office Equipment and Furniture		166,996			164,746		5-7 years
Leasehold Improvements		312,433			292,727		15 years
Subtotal		2,650,711			2,298,319
Accumulated Depreciation & Amortization		(1,515,194	)		(1,244,976	)
	$	1,135,517		$	1,053,343

Depreciation expense was $270,217 and $309,198 for the years ended June 30, 2009 and 2008, respectively.

NOTE G—NOTE PAYABLE - EQUIPMENT

Note payable – equipment, at June 30, 2009 and 2008 consisted of the following:

	June 30,
	2009			2008
Note payable to Fidelity Bank in monthly installments of $5,364 including
Interest at 8%, maturing October 25, 2010, secured by equipment	$	72,812		$	128,787
Less: Current Portion		(61,244	)		(56,550	)
Long term debt	$	11,568		$	72,237

The schedule of minimum maturities of the note payable for fiscal years subsequent to June 30, 2009 is as follows:

Year ending June 30,
2010	$	61,244
2011		11,568
Total note payments	$	72,812

LIBERATOR, INC.

(f/k/a Remark Enterprises, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE H—REVOLVING LINE OF CREDIT

On March 19, 2008, the company entered into a loan agreement for a revolving line of credit with a commercial finance company which provides 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, 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 and 7 percent at June 30, 2008), payable monthly. At June 30, 2008 and 2009, the balance owed under the revolving line of credit was $278,140 and $171,433, respectively.

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.

NOTE I—CREDIT CARD ADVANCE

On July 2, 2008 the Company received $350,000 from a finance company under the terms of a credit facility that is secured by the Company's future credit card receivables. Terms of the credit facility require repayment on each business day of principal and interest at a daily rate of $1,507 over a twelve month period. The credit facility has a financing fee of 12% (equal to $42,000) on the principal amount, which equates to an effective annual interest rate of 21.1%. The credit facility is 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 the current loan require repayment on each business day of principal and interest at a daily rate of $1,723.08 over a six month period. The current loan has a financing fee of 12% (equal to $24,000) on the principal amount, which equates to an effective annual interest rate of 43.2%. On June 30, 2009, the balance due on the credit card advance was $198,935.

NOTE J – UNSECURED LINES OF CREDIT

The Company has drawn cash advances on three unsecured lines of credit that are personally guaranteed by Louis S. Friedman. The terms of these unsecured lines of credit call for monthly payments of principal and interest, with interest rates ranging from 12% to 18%. The aggregate amount owed on the three unsecured lines of credit was $139,149 at June 30, 2008 and $124,989 at June 30, 2009.

NOTE K—COMMITMENTS AND CONTINGENCIES

Operating Leases

The Company leases its facility under a ten year operating lease which was signed in September 2005 and expires December 31, 2015. The lease is on an escalating schedule with the final year on 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, 2008 and 2009 is $356,308 and $337,155. The rent expense under this lease for the years ended June 30, 2009 and 2008 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 September 2012.

The Company also leases certain warehouse equipment under an operating lease. The monthly lease is $508 per month and expires February 2011.

The Company also leases certain postage equipment under an operating lease. The monthly lease is $144 per month and expires January 2013.

LIBERATOR, INC.

(f/k/a Remark Enterprises, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Operating Leases (continued)

Future minimum lease payments under non-cancelable operating leases at June 30, 2009 are as follows:

Year ending June 30,
2010	$	405,265
2011		412,858
2012		413,940
2013		392,028
2014		391,685
Thereafter through 2016		1,002,816

Total minimum lease payments	$	3,018,592

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 1 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, 2009:

Year ending June 30
2010	$	84,237
2011		76,956
2012		34,074
2013		22,930
2014		6,835
Present value of capital lease obligations	$	225,032
Imputed interest		46,397
Future minimum lease payments	$	271,429

NOTE L—RELATED PARTY TRANSACTIONS

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 the Company before the reverse merger with OneUp Innovations. 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. The 3% convertible note payable is carried net of the fair market value of the embedded conversion feature of $89,250. This amount will be amortized over the life of the note as additional interest.

LIBERATOR, INC.

(f/k/a Remark Enterprises, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE M—STOCK OPTIONS, WARRANTS AND COMMON STOCK ISSUANCES

Stock Options

On October 1, 2007, the Company granted a five-year option to purchase 438,456 shares at an exercise price of $.228 per share to its non-employee Chief Financial Officer. The option became 100% vested on October 1, 2008.

Stock-based compensation expense related to stock options granted to non-employees is recognized as the stock options are earned in accordance with SFAS 123 and Emerging Issues Task Force No. 96-18, Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services . We believe that the fair value of the stock options is more reliably measurable than the fair value of the services received. The estimated fair value of the stock options granted is calculated using the Black-Scholes option pricing model, as prescribed by SFAS 123, using a fair value of common stock of $.067 per share

We recognized $0 and $866 during the years ended June 30, 2009 and 2008, respectively, of stock-based compensation expense for stock options granted to a non-employee. These options were valued using a volatility rate of 25% and a risk-free interest rate of 4.5% and an expected life of 5 years. There were no grants made during the fiscal year ended June 30, 2009.

Changes for the years ending June 30, 2009 and 2008, with respect to options outstanding, is detailed in the following table:

	For the Year Ended June 30, 2009				For the Year Ended June 30, 2008
	Shares		Weighted Average Exercise Price		Shares		Weighted Average Exercise Price
Outstanding at beginning of period		438,456	$	0.228		—	$	—
Issued		—		—		438,456		.228
Exercised		—		—		—		—
Expired		—		—		—		—
Outstanding at end of period		438,456	$	0.228		438,456	$	0.228
Exercisable at end of period		438,456	$	0.228		0	$	0
Weighted-average fair value of options granted during the period					$		$	.002

Information about stock options outstanding at June 30, 2009 is summarized as follows:

		Options Outstanding					Options Exercisable
Exercise Price		Shares Outstanding		Weighted Average Remaining Contract Life	Weighted Average Exercise Price		Shares Exercisable		Weighted Average Exercise Price
$	0.228		438,456	3.3 Years	$	0.228		438,456	$	0.228

Warrants

The Company issued 2,462,393 warrants during fiscal 2009 in conjunction with the reverse merger with OneUp Innovations. 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%.

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 exercise prices of $.50 per share (292,479 warrants), $.75 per share (292,479 warrants) and $1.00 per share (877,435 warrants.)

LIBERATOR, INC.

(f/k/a Remark Enterprises, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Warrants (continued)

A total of 1,000,000 warrants were issued to Hope Capital (the former majority shareholder of the Company prior to the reverse merger) at an exercise price of $.75.

A summary of the status of warrants granted at June 30, 2009 and June 30, 2008 and changes during the periods then ended is presented below:

	For the Twelve Months				For the Twelve Months
	Ended June 30, 2009				Ended June 30, 2008
	Shares		Weighted Average Exercise Price		Shares		Weighted Average Exercise Price
Outstanding at beginning of period		—	$	—		—	$	—
Granted		2,462,393		0.809		—		—
Exercised		—		—		—		—
Forfeited		—		—		—		—
Expired		—		—		—		—
Outstanding at end of period		2,462,393	$	0.809		—	$	—

Weighted average fair value of warrants granted during the period		—	$	0.0057		—	$	—

A summary of the warrants outstanding at June 30, 2009 is presented below:

		Warrants Outstanding						Warrants Exercisable
Exercise Prices		Number Outstanding		Weighted-Average Remaining Contractual Life		Weighted Average Exercise Price		Number Exercisable		Weighted- Average Exercise Price
$	0.50		292,479		5.00	$	0.50		292,479	$	0.50
$	0.75		1,292,479		5.00	$	0.75		1,292,479	$	0.75
$	1.00		877,435		5.00	$	1.00		877,435	$	1.00

Common Stock Issued

On June 26, 2009, we issued 8,000,000 shares of our Common Stock to individuals and entities pursuant to a private placement memorandum and subscription agreement in the aggregate amount of $2,000,000. Such securities were not registered under the Securities Act of 1933. The issuance of these shares was exempt from registration, pursuant to Regulation D under the Securities Act of 1933 and in part pursuant to Section 4(2) of the Securities Act of 1933. The net proceeds to the Company, after deducting placement agent fees and expenses was $1,696,465.

Pursuant to the engagement letter with New Castle Financial Services, on June 26, 2009, we issued 2,732,980 shares of our Common Stock to New Castle Financial Services with respect to services performed by New Castle Financial Services in connection with the Offering. Such securities were not registered under the Securities Act of 1933. The issuance of these shares was exempt from registration, pursuant to Regulation D under the Securities Act of 1933 and in part pursuant to Section 4(2) of the Securities Act of 1933. The fair market value of these shares totaled $683,245 and was charged to expense during fiscal 2009.

In addition, in connection with a consulting agreement, we issued 200,000 shares of our Common Stock to Downshire Capital with respect to services performed by Downshire Capital in connection with the Merger. Such securities were not registered under the Securities Act of 1933. The issuance of these shares was exempt from registration, pursuant to Regulation D under the Securities Act of 1933 and in part pursuant to Section 4(2) of the Securities Act of 1933. The fair market value of these shares totaled $50,000 and was charged to expense during fiscal 2009.

In connection with the reverse merger of Remark and Liberator, the shares issued to former Remark shareholders were deemed to have a value equal to the value of the shares issued pursuant to the private placement memorandum. As a result, the value of the 5,000,001 shares issued to former Remark shareholders was equal to $1,250,000 and was charged to expense during fiscal 2009.

LIBERATOR, INC.

(F/k/a Remark Enterprises, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE N—INCOME TAXES

The Company provides for income taxes under Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes. SFAS No. 109 requires the use of an asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect when these differences are expected to reverse

SFAS No. 109 requires the reduction of deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. At this time, Management believes that it is more likely than not that the deferred tax assets will not be utilized.

	As of June 30, 2009			As of June 30, 2008
Deferred tax assets:

Net operating loss carry-forwards	$	3,161,019		$	1,850,412

Gross deferred tax assets		1,194,871			605,098
Valuation allowance		(1,194,871	)		(605,098	)

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 year ended June 30, 2008 due to the following:

	Year ended			Year ended
	June 30, 2009			June 30, 2008
Book loss from operations	$	589,773		$	65,976
Valuation (allowance)		(589,773	)		(65,976	)
Net tax benefit	$	-0-		$	-0-

At June 30, 2009, the Company had net operating loss carry forwards of approximately $3,161,019 that may be offset against future taxable income. The net operating loss carry forwards expire in the year 2024 through 2028. A tax benefit of $0 was recognized in the year ended June 30, 2009, as management believes that it is more likely than not that the deferred tax assets will not be utilized.

Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards for Federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur, net operating loss carry forwards may be limited as to use in future years.

NOTE O— SUBSEQUENT EVENTS

LIBERATOR, INC.

UNAUDITED CONDENSED COMBINED PRO FORMA BALANCE SHEET

				WES											Adjusted
	Liberator, Inc.			Consulting, Inc.			Combined			Pro Forma					ProForma
	June 30, 2009			June 30, 2009			Totals			Adjustments			AE		Totals
				(Unaudited)
ASSETS
Current Assets:
Cash	$	1,815,633		$	4,213		$	1,819,846		$	-				$	1,819,846
Accounts receivable		346,430						346,430								346,430
Inventories		700,403						700,403								700,403
Prepaid Expenses		95,891			-			95,891			-					95,891
Total Current Assets		2,958,357			4,213			2,962,570			-					2,962,570
Property and Equipment, net		1,135,517			475			1,135,992			-					1,135,992

TOTAL ASSETS	$	4,093,874		$	4,688		$	4,098,562		$	-				$	4,098,562

LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT)
Current Liabilities:
Accounts payable	$	2,247,845		$	-		$	2,247,845		$	-				$	2,247,845
Accrued compensation		154,994			-			154,994			-					154,994
Accrued expenses		145,793			-			145,793			-					145,793
Revolving line of credit		171,433			-			171,433			-					171,433
Current long-term debt		145,481			31,382			176,863			(31,382	)		1		145,481
Credit card advance		198,935			-			198,935			-					198,935
Total Current Liabilities		3,064,481			31,382			3,095,863			(31,382	)				3,064,481
Long-term liabilities:
Note payable -equipment		72,812			-			72,812			-					72,812
Lease payable		225,032			-			225,032			-					225,032
Note payable -related		125,948			-			125,948			-					125,948
Convertible note payable		285,750			-			285,750			-					285,750
Unsecured lines of credit		124,989			-			124,989			-					124,989
Deferred rent payable		356,308			-			356,308			-					356,308
Less: current portion		(145,481	)		-			(145,481	)		-					(145,481	)
Total long-term liabilities		1,045,358			-			1,045,358			-					1,045,358
Total Liabilities		4,109,839			31,382			4,141,221			(31,382	)				4,109,839

Stockholders' Equity:
Preferred Stock		430			-			430			-					430
Common Stock		6,093			12,050			18,143			609,330			2		611,660
											(19,440	)		3
											3,627			4
Additional Paid-in Capital		5,286,970			1,487			5,288,457			31,382			1		4,726,322
											(609,330	)		2
											19,440			3
											(3,627	)		4
Accumulated Deficit		(5,309,458	)		(40,231	)		(5,349,689	)		-					(5,349,689	)

Total Stockholders' Deficit		(15,965	)		(26,694	)		(42,659	)		31,382					(11,277	)

TOTAL LIABILITIES
AND STOCKHOLDERS'
EQUITY (DEFICIT)	$	4,093,874		$	4,688		$	4,098,562		$	-				$	4,098,562

1	To record gain on forgiveness of debt which occurred on August 11, 2009.

2	To record issuance of 60,932,981 shares of common stock to acquire 100% of the common shares of Liberator, Inc. at $0.01 per share.

3	To cancel 972,000 shares of common stock owned by Liberator, Inc.

4	To reflect increase in par value from $.0001 per share to $.01 per share.

LIBERATOR, INC.

UNAUDITED CONDENSED COMBINED PRO FORMA STATEMENT OF OPERATIONS

				WES Consulting
	Liberator, Inc.			Inc.									Pro-Forma
	For the Year			For the Year									Adjusted
	Ended			Ended			Combined			Pro Forma			Combined
	June 30, 2009			June 30, 2009			Totals			Adjustments		AJE	Totals
				(Unaudited)

REVENUES	$	10,260,552		$	69,300		$	10,329,852		$	-		$	10,329,852
COST OF SALES		7,144,108			-			7,144,108			-			7,144,108

GROSS PROFIT		3,116,444			69,300			3,185,744			-			3,185,744

OPERATING EXPENSES

Advertising and Promotion		864,690			-			864,690			-			864,690
Other Selling and Marketing		1,201,054			-			1,201,054			-			1,201,054
General and Administrative		1,781,352			92,732			1,874,084			-			1,874,084
Depreciation		270,217			569			270,786			-			270,786

Total Costs and Expenses		4,117,313			93,301			4,210,614			-			4,210,614

OPERATING LOSS		(1,000,869	)		(24,001	)		(1,024,870	)		-			(1,024,870	)

OTHER INCOME (EXPENSE)

Interest Income		1,980			-			1,980			-			1,980
Interest Expense		(482,598	)					(482,598	)					(482,598	)
Expenses related to reverse acquisition of Remark		(2,273,495	)		-			(2,273,495	)		-			(2,273,495	)

Total Other Income (Expense)		(2,754,113	)		-			(2,754,113	)		-			(2,754,113	)

Loss Before Taxes		(3,754,982	)		(24,001	)		(3,778,983	)		-			(3,778,983	)

INCOME TAX PROVISION (BENEFIT)		-			-			-			-			-

NET LOSS	$	(3,754,982	)	$	(24,001	)	$	(3,778,983	)	$	-		$	(3,778,983	)

WES Consulting, Inc.

Notes to Pro Forma Consolidated Financial Statements

June 30, 2009

NOTE 1 - Summary of Transaction

On October 19, 2009, WES Consulting, Inc. (the “Company”) completed a stock exchange with Liberator Inc., a Nevada corporation (“Liberator”). The Company exchanged all of the issued and outstanding shares of Liberator for shares of the Company. Liberator is now a wholly-owned subsidiary of the Company.

NOTE 2 - Management Assumptions

The pro forma balance sheet and statements of operations assumes that the entities were together at the beginning of the year ended June 30, 2009.

The pro forma balance sheets assume that through the issuance of 60,932,981 shares of common stock, the Company acquires all of outstanding shares of Liberator.

The proforma statements of operations assume that the Company’s revenues and expenses have been combined with Liberator’s at the beginning of the year ended June 30, 2009.

NOTE 3 – Pro forma Adjusting Entries

To record gain on forgiveness of debt which occurred on August 11, 2009.

To record issuance of 60,932,981 shares of common stock to acquire 100% of the common shares of Liberator, Inc. at $0.01 per share.

To cancel 972,000 shares of common stock owned by Liberator, Inc.

To reflect increase in par value from $.0001 per share to $.01 per share.

WES Consulting, Inc. Completes Reverse Merger with Liberator, Inc.

Doraville, Georgia, October 21 – WES Consulting, Inc. (OTC Bulletin Board: WSCU) has completed a reverse merger with Liberator Inc. (“Liberator”), (www.liberator.com), a Georgia-based provider of erotic luxury items to consumers who believe that sensual pleasure and fulfillment are essential to sexual well-being and a well-lived and healthy life. The effective date of the merger was October 19, 2009.

Under the terms of the Merger Agreement, WES Consulting has issued a total of 60,932,981 shares to the shareholders of Liberator in return for the transfer of a 100% ownership interest in Liberator. The Company intends to change its name to Liberator, Inc. to reflect its new business and the symbol will remain WSCU.OB until such time as the name is changed in the state of Florida and an application for a symbol change is submitted to FINRA and FINRA issues a new symbol for the Company.

Since Liberator shipped its first product in 2002, the Company has evolved into a community of dedicated employees that create, develop, manufacture, market, advertise, and promote products and ideas that inspire sensuality and allow couples to have a fuller sexual experience of themselves and each other.

Louis S. Friedman, President and CEO of Liberator commented “Liberator is focused on building, developing and marketing its LIBERATOR ® brand of Bedroom Adventure Gear ™ products. Since inception, we have spent over $7 million in marketing campaigns and advertising to build awareness of the brand which, to date, has generated product sales in excess of $60 million. As a result of the merger with WES Consulting, we now have access to the public capital markets which should make available the financial resources to continue increasing the value and awareness of the LIBERATOR brand.”

About Liberator Inc. (formerly known as WES Consulting, Inc.)

Liberator is the creator and manufacturer of LIBERATOR, the luxury and lovestyle brand that celebrates intimacy by inspiring romantic imagination. Established with the conviction that sensual pleasure and fulfillment are essential to a well-lived life, LIBERATOR Bedroom Adventure Gear empowers exploration, fantasy and the communication of desire, for persons of all shapes, sizes and abilities. Products include LIBERATOR shapes and positioning systems, pleasure objects, original lingerie, couture latex and exotic dress-up fashions, and sensual accessories for the body and home décor.

Liberator, Inc. is currently housed in a 140,000 square foot vertically integrated manufacturing facility in a suburb of Atlanta, Georgia. Liberator has 93 employees, with products being sold directly to consumers and through hundreds of domestic resellers and on-line affiliates and six international licensees.

For more information, visit www.liberator.com or call 1-866-542-7283.

Contact:

Ronald Scott, CFO

Tel:

770-246-6426

Email:

ron.scott@liberator.com

LIBERATOR, INC.

2009 Stock Option Plan

I.	PURPOSE OF THE PLAN; DEFINITIONS

A. This 2009 Stock Option Plan (the "Plan") is intended to promote the interests of Liberator, Inc., a Nevada corporation (the "Corporation"), by providing (i) key employees (including officers) of the Corporation (or its subsidiary corporations) and (ii) consultants and other independent contractors who provide valuable services to the Corporation (or its subsidiary corporations) with the opportunity to acquire, or increase their proprietary interest in the Corporation as an incentive for them to join or remain in the service of the Corporation (or its subsidiary corporations).

B. The Plan becomes effective immediately upon approval of the Corporation's stockholders at the 2009 Annual Stockholders Meeting. Such date is hereby designated as the Effective Date of the Plan.

C. For purposes of the Plan, the following definitions apply:

Board: the Corporation's Board of Directors.

Committee: The Committee of the Corporation's Board of Directors appointed by the Board to administer the plan.

Common Stock: shares of the Corporation's common stock, par value $0.0001 per share.

Change in Control: a change in ownership or control of the Corporation effected through either of the following transactions:

(i) any person or related group of persons (other than the Corporation or a person that directly or indirectly controls, is controlled by, or is under common control with, the Corporation) directly or indirectly acquires beneficial ownership (within the meaning of Rule 13d-3 of the Securities Exchange Act of 1934, as amended, "1934 Act") of stock possessing more than fifty percent (50%) of the total combined voting power of the Corporation's outstanding stock pursuant to a tender or exchange offer made directly to the Corporation's stockholders which the Board does not recommend such stockholders accept; or

(ii) there is a change in the composition of the Board over a period of thirty-six (36) consecutive months or less such that a majority of the Board members (rounded up to the next whole number) ceases, by reason of one or more proxy contests for the election of Board members, to be comprised of persons who either (A) have been Board members continuously since the beginning of such period or (B) have been elected or nominated for election as Board members during such period by at least a majority of the Board members described in clause (A) who were still in office at the time such election or nomination was approved by the Board.

Corporate Transaction: any of the following stockholder-approved transactions to which the Corporation is a party:

(i) a merger or consolidation in which the Corporation is not the surviving entity, except for a transaction the principal purpose of which is to change the State in which the Corporation is incorporated,

(ii) the sale, transfer or other disposition of all or substantially all of the assets of the Corporation in complete liquidation or dissolution of the Corporation, or

(iii) any reverse merger in which the Corporation is the surviving entity but in which stock possessing more than fifty percent (50%) of the total combined voting power of the Corporation's outstanding stock are transferred to person or persons different from those who held such stock immediately prior to such merger.

Employee: a person who performs services while in the employ of the Corporation or one or more subsidiary corporations, subject to the control and direction of the employer entity not only as to the work to be performed but also as to the manner and method of performance.

Hostile Take-Over: a change in ownership of the Corporation through the following transaction:

(i) any person or related group of persons (other than the Corporation or a person that directly or indirectly controls, is controlled by, or is under common control with, the Corporation) directly or indirectly acquires beneficial ownership (within the meaning of Rule 13d-3 of the Securities Exchange Act of 1934, as amended) of stock possessing more than fifty percent (50%) of the total combined voting power of the Corporation's outstanding stock pursuant to a tender or exchange offer made directly to the Corporation's stockholders which the Board does not recommend such stockholders to accept, and

(ii) more than fifty percent (50%) of the stock so acquired in such tender or exchange offer are accepted from holders other than the officers and directors of the Corporation who are subject to the short-swing profit restrictions of Section 16 of the 1934 Act.

Market Value: the last reported price per share of the Common Stock on the day in question on the NASDAQ Small-Cap Market, or if the Common Stock is regularly traded in some other market or on an exchange the closing selling price per share of the Common Stock on the date in question, as such price is officially quoted by a national reporting service. If there is no such reported price on the date in question, then the market value is the price on the last preceding date for which such quotation exists or the l ast price at which the shares were sold in a private transaction .

Service: the performance of services on a periodic basis to the Corporation (or any subsidiary corporation) in the capacity of an Employee or from time to time as an independent consultant, except to the extent otherwise specifically provided in the applicable stock option agreement.

Take-Over Price: the greater of (a) the Market Value per share of Common Stock on the date the option is surrendered to the Corporation in connection with a Hostile Take-Over or (b) the highest reported price per share of Common Stock paid by the tender offerer in effecting such Hostile Take-Over. However, if the surrendered option is an Incentive Option, as defined in Section IV (C) of this Article One, the Take-Over Price shall not exceed the clause (a) price per share.

D. The following provisions shall be applicable in determining the subsidiary corporations of the Corporation:

Each corporation (other than the Corporation) in an unbroken chain of corporations beginning with the Corporation shall be considered to be a subsidiary of the Corporation, provided each such corporation (other than the last corporation) in the unbroken chain owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in any other corporation in such chain.

II.	ADMINISTRATION OF THE PLAN

A. Except as otherwise determined by the Board, the Plan shall be administered by the Board of Directors or by the Stock Option and Compensation Committee of the Board ("Committee") or other named Committee of the Board designated by the Board of Directors subject to the requirements of 1934 Act Rule 16b-3:

(i) The Committee of three (3) or more non-employee Board members shall be appointed by the Board to administer the Plan. No Board member is eligible to serve on the Committee unless such person qualifies as a "Non-Employee Director" as permitted by 1934 Act Rule 16b-3.

(ii) Members of the Committee serve for such term as the Board may determine and are subject to removal by the Board at any time.

B. The Committee by majority action thereof has the power and authority (subject to the express provisions of the Plan) to establish such rules and regulations as it may deem appropriate for the proper administration of the Plan and to make such determinations under, and issue such interpretations of, the provisions of the Plan and any outstanding option grants thereunder as it may deem necessary or advisable. All decisions of the Committee within the scope of its administrative functions under the Plan are final and binding on all parties.

C. Service on the Committee is service as a Board member, and members of the Committee are entitled to full indemnification and reimbursement as Board members for their service on the Committee. No member of the Committee is liable for any act or omission made in good faith with respect to the Plan or any option grant under the Plan.

III.	ELIGIBILITY

A. The persons eligible to participate in the Plan ("Optionees") are as follows:

(i) officers and other employees of the Corporation (or its subsidiary corporations) who render services which contribute to the management, growth and financial success of the Corporation (or its subsidiary corporations); and

(ii) those consultants or other independent contractors who provide valuable services to the Corporation (or its subsidiary corporations).

B. Non-employee Board members are not eligible to participate in the Plan.

C. The Committee by majority action thereof has the power and authority to determine which eligible persons are to receive option grants, the number of shares to be covered by each such grant, the status of the granted option as either an incentive stock option ("Incentive Option") which satisfies the requirements of Section 422 of the Internal Revenue Code or a non-qualified option not intended to meet such requirements, the time or times at which each granted option is to become exercisable, the maximum term for which the Option may remain outstanding and the terms and provisions of the Stock Option Agreement evidencing the Option.

IV.	STOCK SUBJECT TO THE PLAN

A. Shares of the Corporation's Common Stock available for issuance under the Plan shall be drawn from either the Corporation's authorized but unissued shares of Common Stock or from reacquired shares of Common Stock, including shares repurchased by the Corporation on the open market. The maximum number of shares of Common Stock which may be issued over the term of the Plan shall not exceed five million ( 5,000,000) shares, subject to adjustment from time to time in accordance with the provisions of this Section IV.

B. If one or more outstanding options under this Plan expire or terminate for any reason prior to exercise in full then the shares subject to the portion of each option not so exercised shall be available for subsequent option grant under the Plan. All share issuances under the Plan reduce on a share-for-share basis the number of shares of Common Stock available for subsequent option grants under the Plan. In addition, if the exercise price of an outstanding option under the Plan is paid with shares of Common Stock or shares of Common Stock otherwise issuable under the Plan are withheld by the Corporation in satisfaction of the withholding taxes incurred in connection with the exercise of an outstanding option under the Plan, then the number of shares of Common Stock available for issuance under the Plan is reduced by the gross number of shares for which the option is exercised, and not by the net number of shares of Common Stock actually issued to the option holder.

C. If any change is made to the Common Stock issuable under the Plan by reason of any stock split, stock dividend, recapitalization, combination of shares, exchange of shares or other change affecting the outstanding Common Stock as a class without the Corporation's receipt of consideration, then appropriate adjustments shall be made to (i) the maximum number and/or class of stock issuable under the Plan and (ii) the number and/or class of stock and price per share in effect under each option outstanding under the Plan. Such adjustments to the outstanding options are to be effected in a manner which precludes the enlargement or dilution of rights and benefits under such options. Such adjustments made by the Committee are final, binding and conclusive.

V.	TERMS AND CONDITIONS OF OPTIONS

Options under the Plan are granted by action of the Committee and may, at the Committee's discretion, be either Incentive Options or non-qualified options. Persons who are not Employees of the Corporation may only be granted non-qualified options. Each granted option shall be evidenced by a Stock Option Agreement in the form approved by the Committee; provided , however, that each such agreement complies with the terms and conditions specified herein. Each Stock Option Agreement evidencing an Incentive Option shall, in addition, be subject to the applicable provisions of Section VI hereof.

A. Option Price.

1. The option price per share is determined by the Committee in accordance with the following provisions:

(i) The option price per share of the Common Stock subject to an Incentive Option must in no event be less than one hundred percent (100%) of the Market Value of such Common Stock on the grant date.

(ii) The option price per share of the Common Stock subject to a non-qualified stock option is the amount determined by the Committee at the time of grant and may be less than, equal to or more than the Market Value of such Common Stock on the grant date.

2. The option price is immediately due upon exercise of the option and payable in one of the alternative forms specified below;

(i) full payment in cash or check made payable to the Corporation's order:

(ii) full payment in shares of Common Stock held for the requisite period necessary to avoid a charge to the Corporation's earnings for financial reporting purposes and valued at Market Value on the Exercise Date;

(iii) full payment in a combination of shares of Common Stock held for the requisite period necessary to avoid a charge to the Corporation's reported earnings and valued at Market Value on the Exercise Date and cash or check payable to the Corporation's order; or

(iv) full payment through a broker-dealer sale and remittance procedure pursuant to which the Optionee (a) provides irrevocable written instructions to a designated brokerage firm to effect the immediate sale of the purchased shares and remit to the Corporation, out of the sale proceeds available on the settlement date, sufficient funds to cover the aggregate option price payable for the purchased shares plus all applicable Federal and State income and employment taxes required to be withheld by the Corporation in connection with such purchase and (b) provides written directives to the Corporation to deliver the certificates for the purchased shares directly to such brokerage firm in order to complete the sale transaction.

For purposes of this subparagraph 2, the Exercise Date is the date on which written notice of the option exercise is delivered to the Corporation. Except to the extent the sale and remittance procedure is utilized in connection with the exercise of the option, payment of the option price for the purchased shares must accompany such notice.

B. Term and Exercise of Options.

Each option granted hereunder is exercisable at such time or times,and excluding all specified vesting periods during the specified term period, and for such number of shares as is determined by the Committee and set forth in the Stock Option Agreement evidencing such option. No granted option shall, however, have a term in excess of ten (10) years. Subject to Paragraph E of this Section V, during the lifetime of the Optionee, the option is exercisable only by the Optionee and shall not be assignable or transferable other than by transfer of the option effected by will or by the laws of descent and distribution following the Optionee's death, or pursuant to a qualified domestic relations order as defined by the Internal Revenue Code of 1986, as amended, or Title I of the Employment Retirement Income Security Act, or the rules thereunder.

C. Termination of Service.

1. If the Optionee ceases Service while holding one or more options hereunder, each such option will not remain exercisable beyond the limited post-Service exercise period specified by the Committee in the Stock Option Agreement evidencing the grant, unless the Committee otherwise extends such period in accordance with subparagraph C.5 below.

2. During the post-Service exercise period, the option may not be exercised for more than the number of option shares (if any) in which the Optionee is vested at the time of cessation of Service. Upon the expiration of such post-Service exercise period or (if earlier) upon the expiration of the option term, the option shall terminate and cease to be outstanding. In any case, each option terminates and ceases to be outstanding, at the time of the Optionee's cessation of Service with respect to any option shares for which such option is not otherwise at the time exercisable.

3. If the Optionee dies while holding one or more outstanding options hereunder, each such option may be exercised, subject to the limitations of subparagraph 2 above, by the personal representative of the Optionee's estate or by the person or persons to whom the option is transferred pursuant to the Optionee's will or the laws of descent and distribution or as otherwise permitted herein.

4. If (i) the Optionee's Service is terminated for misconduct (including, but not limited to, any act of dishonesty, willful misconduct, fraud or embezzlement) or (ii) the Optionee makes any unauthorized use or disclosure of confidential information or trade secrets of the Corporation or its subsidiaries, then in any such event all outstanding options held by the Optionee hereunder terminate immediately and cease to be outstanding.

5. Except as otherwise determined by the Board the Committee has full power and authority to extend the period of time for which the option is to remain exercisable following the Optionee's cessation of Service or death from the limited period specified in the instrument evidencing such grant to such greater period of time as the Committee deems appropriate under the circumstances. In no event, however, shall such option be exercisable after the specified expiration date of the option term.

6. The Committee has complete discretion, exercisable either at the time the option is granted or at any time the option remains outstanding, to permit one or more options granted hereunder to be exercised not only for the number of shares for which each such option is exercisable at the time of the Optionee's cessation of Service but also for one or more subsequent installments of purchasable shares for which the option would otherwise have become exercisable had such cessation of Service not occurred.

D. Stockholder Rights.

An Optionee has none of the rights of a stockholder with respect to any option shares until such person or its nominee, guardian or legal representative has exercised the option and paid the option price for the purchased shares.

E. Assignment; Limited Transferability of Stock Options

No option granted under the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, otherwise than by will, by the laws of decent and distribution or by a qualified domestic relations order as provided in Section V, Paragraph B. Notwithstanding the foregoing, the Committee may, in its discretion, authorize all or a portion of the options granted to be on terms that permit transfer to:

i) the spouse, children or grandchildren of the Optionee ("Immediate Family Members");

ii) a trust or trusts for the exclusive benefit of such Immediate Family Members, or;

iii) a partnership in which such Immediate Family Members are the only partners, provided that:

(A) there may be no consideration for any such transfer;

(B) the Stock Option Agreement pursuant to which such Options are granted expressly provides for transferability in a manner consistent with this Section V, Paragraph E; and

(C) subsequent transfers of transferred Options shall be prohibited except those in accordance with this Section V, Paragraph E.

Following transfer, any such options continue to be subject to the same terms and conditions as were applicable immediately prior to transfer, provided that for purposes of this Section V, Paragraph E the term Optionee shall be deemed to refer to the transferee. The provisions of the option relating to the period of exercisability and expiration of the Option continue to apply with respect to the original Optionee, and the Options exercisable or received by the transferee only to the extent, and for the periods, set forth in said option.

VI.	INCENTIVE OPTIONS

The terms and conditions specified in this Section VI are applicable to all Incentive Options granted hereunder. The Stock Option Agreement relating to Incentive Options must be in accordance with Section 422(b) of the Internal Revenue Code or a succession Section thereof. Incentive Options may only be granted to persons who are Employees of the Corporation. Options which are specifically designated as "non-qualified" options when issued under the Plan are not subject to this Section VI.

A. Dollar Limitation. The aggregate Market Value (determined as of the respective date of dates of grant of the Common Stock for which one or more options granted to any Employee under this Plan (or any other option Plan of the Corporation or its subsidiary corporations) may for the first time become exercisable as incentive stock options under the Federal tax laws during any one calendar year shall not exceed the sum of One Hundred Thousand dollars ($100,000). To the extent the Employee holds two (2) or more such options which become exercisable for the first time in the same calendar year, the foregoing limitation on the exercisability of such options as incentive stock options under the federal tax laws shall be applied on the basis of the order in which such options are granted. If the shares of Common Stock for which any Incentive Option first becomes exercisable in any calendar year exceed the applicable one hundred thousand dollar ($100,000) limitation, then the option may nevertheless be exercised in that calendar year for the excess number of shares as a non-qualified option under the Federal tax laws.

B. 10% Stockholder. If any person to whom an Incentive Option is granted is the owner of stock (as determined under Section 424(d) of the Internal Revenue Code) possessing ten percent (10%) or more of the total combined voting power of all classes of stock of the corporation, the option price per share must not be less than one hundred and ten percent (110%) of the market value per share of Common Stock on the grant date, and the option term must not exceed five (5) years, measured from the grant date.

Except as modified by the preceding provisions of this Section VI, the provisions of the Plan apply to all Incentive Options granted hereunder.

VII.	CORPORATE TRANSACTIONS/CHANGES IN CONTROL

A. Each option outstanding at the time of a Corporate Transaction automatically accelerates so that each such option shall, immediately prior to the specified effective date for such Corporate Transaction, become fully exercisable with respect to the total number of shares of Common Stock at the time subject to such option and may be exercised for all or any portion of such shares. However, an outstanding option does not so accelerate if and to the extent: (i) such option is, in connection with the Corporate Transaction, either to be assumed by the successor corporation or parent thereof or to be replaced with a comparable option to purchase shares of the capital stock of the successor corporation or parent thereof, (ii) such option is to be replaced with a cash incentive program of the successor corporation which preserves the option spread existing at the time of the Corporate Transaction and provides for subsequent payout in accordance with the same exercise schedule applicable to such option, or (iii) the acceleration of such option is subject to other limitations imposed by the Committee, at the time of the option grant. The determination of option comparability by the Committee under clause (i) above is final, binding and conclusive. The Committee also has full power and authority to grant options under the Plan which are to automatically accelerate in whole or in part immediately prior to the Corporate Transaction or upon the subsequent termination of the Optionee's Service, whether or not those options are otherwise to be assumed or replaced in connection with the consummation of such Corporate Transaction.

B. Upon the consummation of the Corporate Transaction, all outstanding options shall terminate and cease to be outstanding, except to the extent assumed by the successor corporation or its parent company.

C. Each outstanding option which is assumed in connection with the Corporate Transaction or is otherwise to continue in effect shall be appropriately adjusted, immediately after such Corporate Transaction, to apply and pertain to the number and class of stock which would have been issued to the option holder, in consummation of such Corporate Transaction, had such person exercised the option immediately prior to such Corporate Transaction. Appropriate adjustments shall also be made to the Option price payable per share, provided the aggregate option price payable for such stock shall remain the same. In addition, the class and number of stock available for issuance under the Plan following the consummation of the Corporate Transaction shall be appropriately adjusted.

D. The grant of options shall in no way affects the right of the Corporation to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.

E. Except as otherwise determined by the Board, the Committee has the discretionary authority, exercisable either in advance of any actually-anticipated Change in Control or at the time of an actual Change in Control, to provide for the automatic acceleration of one or more outstanding options upon the occurrence of the Change in Control and to condition any such option acceleration upon the subsequent termination of the Optionee's Service within a specified period following the Change in Control.

F. Any options accelerated in connection with the Change in Control remain fully exercisable until the expiration of the option term.

G. The exercisability as incentive stock options under the Federal tax laws of any options accelerated under this Section VII in connection with a Corporate Transaction or Change in Control remain subject to the dollar limitation of Section VI, Paragraph A.

VIII.

CANCELLATION AND REGRANT OF OPTIONS

Except as otherwise determined by the Board, the Committee has the authority to effect, at any time and from time to time, with the consent of the affected Optionees, the cancellation of any or all outstanding options hereunder and to grant in substitution new options under the Plan covering the same or different numbers of shares of Common Stock but with an option price per share based upon the Market Value of the Common Stock on the new grant date.

IX.	AMENDMENT OF THE PLAN AND AWARDS

The Board has complete and exclusive power and authority to amend or modify the Plan in any or all respects, provided that no such amendment or modification shall adversely affect rights and obligations with respect to options at the time outstanding under the Plan, unless the Optionee consents to such amendment. In addition, the Board may not, without the approval of the Corporation's stockholders, amend the Plan to (i) materially increase the maximum number of shares issuable under the Plan, except for permissible adjustments under Section IV Paragraph C, (ii) materially modify the eligibility requirements for the Plan participation or (iii) materially increase the benefits accruing to Optionees.

X.	TAX WITHHOLDING

A. The Corporation's obligation to deliver shares of Common Stock upon exercise of stock options or the vesting of shares acquired upon exercise of such options under the Plan is subject to the satisfaction of all applicable Federal, State and local income tax and employment tax withholding requirements.

B. The Committee may, in its discretion and in accordance with the provisions of this Section X and such supplemental rules as the Committee may from time to time adopt (including the applicable safe-harbor provisions of 1934 Act Rule 16b-3), provide any or all holders of non-qualified options under the Plan with the right to use shares of Common Stock in satisfaction of all or part of the Federal, State and local income tax and employment tax liabilities incurred by such holders in connection with the exercise of their options. Such right may be provided to any such holder in either or both of the following formats:

(i) Stock Withholding: The holder of a non-qualified option may be provided with the election to have the Corporation withhold, from the shares of Common Stock otherwise issuable upon the exercise of such non-qualified option, a portion of those shares with an aggregate Market Value equal to the percentage of the applicable Taxes (up to one hundred (100%)) as specified by such holder.

(ii) Stock Delivery: The Committee may, in its discretion, provide the holder of a non-qualified option with the election to deliver to the Corporation, at the time the non-qualified option is exercised, one or more shares of Common Stock already held by such person with an aggregate Market Value (100%) as specified by such person) of the Taxes incurred in connection with such option exercise.

XI.	TERM OF THE PLAN

The Plan terminates upon the earlier of (i) ten years from the date of approval by stockholders or (ii) the date on which all shares available for issuance under the Plan have been issued or canceled pursuant to the exercise of options granted under the Plan. If the date of termination is determined under clause (i) above, then all option grants and unvested stock issuances outstanding on such date continue to have force and effect in accordance with the provisions of the Stock Option Agreements evidencing such grants or issuances.

XII.	USE OF PROCEEDS

Any cash proceeds received by the Corporation from the sale of shares pursuant to option grants under the Plan may be used for general corporate purposes.

XIII.

REGULATORY APPROVALS

A. The implementation of the Plan, the granting of any option under the Plan, and the issuance of Common Stock upon the exercise or surrender of the option grants made hereunder is subject to the Corporation's procurement of all approvals and permits required by regulatory authorities having jurisdiction over the Plan, the options granted under it, and the Common Stock issued pursuant to it.

B. No shares of Common Stock or other assets are to be issued or delivered under the Plan unless and until there is compliance with all applicable requirements of Federal and State securities laws, including the filing and effectiveness of the Form S-8 registration statement for the shares of Common Stock issuable under the Plan, and all applicable listing requirements of any securities exchange on which the Common Stock is then listed.

XIV.	NO EMPLOYMENT/SERVICE RIGHTS

Neither the action of the Corporation in establishing the Plan, nor any action taken by the Committee hereunder, nor any provision of the Plan is to be construed so as to grant any person the right to remain in the employ or service of the Corporation (or any subsidiary corporation) for any period of specific duration, and the Corporation (or any subsidiary corporation retaining the services of such person) may terminate such person's employment or service at any time and for any reason, with or without cause.

XV.	MISCELLANEOUS PROVISIONS

A. The right to acquire Common Stock under the Plan may not be assigned, encumbered or otherwise transferred by any Optionee, except as specifically provided in the Plan.

B. The provisions of the Plan relating to the exercise of options and the vesting of shares shall be governed by the laws of the State of Georgia, as such laws are applied to contracts entered into.

C. The provisions of the Plan shall inure to the benefit of, and be binding upon, the Corporation and its successors or assigns, whether by Corporate Transaction or otherwise, and the Optionees, the legal representatives of their respective estates, their respective heirs or legatees and their permitted assignees.

D. Except to the extent that federal laws control, the Plan and all Stock Option Agreements hereunder are to be construed in accordance with and governed by the law of the State of Georgia.