Attached files
file | filename |
---|---|
EX-31.2 - Boomerang Systems, Inc. | v174307_ex31-2.htm |
EX-3.2 - Boomerang Systems, Inc. | v174307_ex3-2.htm |
EX-3.1H - Boomerang Systems, Inc. | v174307_ex3-1h.htm |
EX-31.1 - Boomerang Systems, Inc. | v174307_ex31-1.htm |
EX-32.2 - Boomerang Systems, Inc. | v174307_ex32-2.htm |
EX-32.1 - Boomerang Systems, Inc. | v174307_ex32-1.htm |
EX-3.1I - Boomerang Systems, Inc. | v174307_ex3-1i.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
FORM
10-Q
(Mark
One)
x QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) SECURITIES
EXCHANGE
ACT OF 1934
For the
quarterly period ended December 31, 2009
OR
¨ TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934.
For the
transition period from _____________ to _____________
Commission
file number 0-10176
BOOMERANG
SYSTEMS, INC.
(Exact
name of small business issuer as specified in its charter)
Delaware
|
22-2306487
|
(State
or other jurisdiction of
|
(IRS
Employer
|
incorporation
or organization)
|
Identification
No.)
|
355
Madison Avenue, Morristown, NJ
|
07960
|
(Address
of principal executive offices)
|
(Zip
Code)
|
(973)
538-1194
(Issuer’s
telephone number, including area code)
(Former
name, former address, and former fiscal year,
if
changed since last report.)
Check
whether the issuer (1) has filed all reports required to be filed
by
Section
13 or 15(d) of the Securities Exchange Act during the past 12 months
(or
for such
shorter period that the registrant was required to file such
reports)
and (2)
has been subject to such filing requirements for the past 90 days.
Yes x No
¨
Indicate
by check mark whether the registrant is a shell company (as defined
in
Rule
12b-2 of the Exchange Act).
Yes ¨ No
x
APPLICABLE
ONLY TO CORPORATE ISSUERS:
State the
number of shares outstanding of each of the issuer's classes of
common
equity,
as of the latest practicable date.
Class -
Common Stock, $0.001 par value
91,879,425
shares Outstanding at January 20, 2010
Transitional
Small Business Disclosure Format (Check
one): Yes ¨ No
x
PART
I
FINANCIAL
INFORMATION
ITEM
1. FINANCIAL STATEMENTS
The
attached unaudited financial statements of Boomerang Systems, Inc. and its
wholly owned subsidiaries (the "Company") reflect all adjustments, which are, in
the opinion of management, necessary to present a fair statement of the
operating results for the interim period presented.
Consolidated
balance sheets
|
3
|
Consolidated
statements of operations
|
4
|
Consolidated
statements of cash flows
|
5
|
Notes
to consolidated financial statements
|
6-16
|
ITEM
2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
|
17-20
|
ITEM
3. Quantitative and Qualitative Disclosure About Market
Risk
|
20
|
ITEM
4. Controls and Procedures
|
20-21
|
PART
II
|
|
OTHER
INFORMATION
|
|
ITEM
1. Legal Proceedings
|
22
|
ITEM
1A. Risk Factors
|
22-24
|
ITEM
2. Unregistered Sales of Equity Securities and Use of
Proceeds
|
24-25
|
ITEM
3. Defaults Upon Senior Securities
|
25
|
ITEM
4. Submission of Matters to a Vote of Security
Holders
|
25
|
ITEM
5. Other Information
|
25
|
ITEM
6. Exhibits
|
25-26
|
2
PART I
FINANCAL INFORMATION
ITEM
1. FINANCIAL STATEMENTS
BOOMERANG
SYSTEMS INC. AND SUBSIDIARIES
CONSOLIDATED
BALANCE SHEETS
December 31,
|
September 30,
|
|||||||
2009
|
2009
|
|||||||
(Unaudited)
|
(Audited)
|
|||||||
ASSETS
|
||||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ | 957,569 | $ | 1,032,160 | ||||
Accounts
receivable
|
37,000 | 37,000 | ||||||
Investment
|
20,420 | 20,420 | ||||||
Inventories
|
332,504 | 180,890 | ||||||
Prepaid
expenses and other assets
|
50,961 | 42,740 | ||||||
Total
current assets
|
1,398,454 | 1,313,210 | ||||||
Property,
plant and equipment, net
|
252,257 | 263,252 | ||||||
$ | 1,650,711 | $ | 1,576,462 | |||||
LIABILITIES
AND STOCKHOLDERS' (DEFICIT)
|
||||||||
Current
liabilities:
|
||||||||
Accounts
payable and accrued liabilities
|
$ | 618,971 | $ | 563,797 | ||||
Due
to related party
|
487,785 | 446,288 | ||||||
Deposit
payable
|
79,304 | 19,403 | ||||||
Debt,
current portion - net of discount
|
586,780 | 2,303,460 | ||||||
Total
current liabilities
|
1,772,840 | 3,332,948 | ||||||
Long
term liabilities:
|
||||||||
Debt-
less current portion
|
433,695 | 429,522 | ||||||
Debt-
related party
|
1,000,000 | 1,000,000 | ||||||
Total
long term liabilities
|
1,433,695 | 1,429,522 | ||||||
Total
liabilities
|
3,206,535 | 4,762,470 | ||||||
Stockholders'
deficit:
|
||||||||
Common
stock, $0.001 par value; authorized shares 100,000,000
|
||||||||
91,879,425
and 61,193,610 issued and outstanding
|
91,879 | 61,193 | ||||||
Additional
paid in capital
|
17,950,384 | 14,673,734 | ||||||
Accumulated
(deficit)
|
(19,598,087 | ) | (17,920,935 | ) | ||||
Total
stockholders' (deficit)
|
(1,555,824 | ) | (3,186,008 | ) | ||||
$ | 1,650,711 | $ | 1,576,462 |
See
accompanying notes.
3
BOOMERANG
SYSTEMS INC. AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF OPERATIONS
FOR THE
THREE MONTHS ENDED DECEMBER 31, 2009 AND 2008
(UNAUDITED)
2009
|
2008
|
|||||||
(Restated)
|
||||||||
Revenues:
|
||||||||
System
sales
|
$ | - | $ | - | ||||
Total
revenues
|
- | - | ||||||
Cost
of Goods Sold
|
- | - | ||||||
Gross
Loss
|
- | - | ||||||
Expenses:
|
||||||||
Sales
and marketing
|
229,524 | 229,263 | ||||||
General
and administrative expenses
|
851,117 | 526,182 | ||||||
Research
and development
|
523,287 | 286,190 | ||||||
Depreciation
and amortization
|
12,130 | 15,540 | ||||||
Total
expenses
|
1,616,058 | 1,057,175 | ||||||
Loss
from operations
|
(1,616,058 | ) | (1,057,175 | ) | ||||
Other
income (expenses):
|
||||||||
Interest
income
|
1,742 | 1,057 | ||||||
Interest
expense
|
(60,001 | ) | (276,991 | ) | ||||
Interest
expense- debt discount
|
- | (187,500 | ) | |||||
Total
other income (expenses)
|
(58,259 | ) | (463,434 | ) | ||||
Loss
before provision for income taxes
|
(1,674,317 | ) | (1,520,609 | ) | ||||
Provision
for income taxes
|
2,835 | 4,116 | ||||||
Net
loss
|
$ | (1,677,152 | ) | $ | (1,524,725 | ) | ||
Net
loss per common share - basic and diluted
|
$ | (0.02 | ) | $ | (0.09 | ) | ||
Weighted
average number of shares - basic and diluted
|
70,718,179 | 16,490,363 |
See
accompanying notes.
4
BOOMERANG
SYSTEMS INC. AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF CASH FLOWS
FOR THE
THREE MONTHS ENDED DECEMBER 31, 2009 AND 2008
(UNAUDITED)
2009
|
2008
|
|||||||
(Restated)
|
||||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net
loss
|
$ | (1,677,152 | ) | $ | (1,524,725 | ) | ||
Adjustments
to reconcile net loss operations to net cash (used in) operating
activities:
|
||||||||
Depreciation
|
12,130 | 15,540 | ||||||
Grant
of options for services
|
138,104 | 26,952 | ||||||
Amortization
of debt discount
|
- | 375,000 | ||||||
Post-Maturity
Warrants
|
100,619 | - | ||||||
Changes
in assets and liabilities:
|
||||||||
(Increase)/
decrease in accounts receivable
|
- | 98,049 | ||||||
Decrease
in costs and estimated earned profits in excess of billings on
completed contracts
|
- | 28,814 | ||||||
(Increase)/
decrease in inventories
|
(151,614 | ) | 27,214 | |||||
(Increase)/
decrease in prepaid expenses and other assets
|
(8,221 | ) | 34,181 | |||||
Increase
in accounts payable and accrued liabilities
|
55,174 | 37,536 | ||||||
Increase
in accrued interest payable
|
31,260 | - | ||||||
Increase
in due to related party
|
41,497 | - | ||||||
Increase
in deposit payable
|
59,901 | - | ||||||
NET
CASH (USED IN) OPERATING ACTIVITIES
|
(1,398,302 | ) | (881,439 | ) | ||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Purchase
of property, plant and equipment
|
(1,135 | ) | - | |||||
NET
CASH (USED IN) INVESTING ACTIVITIES
|
(1,135 | ) | - | |||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Proceeds
from loans payable
|
- | 608,651 | ||||||
Repayment
of loans payable
|
(65,729 | ) | (6,489 | ) | ||||
Proceeds
from private placement- common stock
|
1,390,575 | - | ||||||
NET
CASH PROVIDED BY FINANCING ACTIVITIES
|
1,324,846 | 602,162 | ||||||
DECREASE
IN CASH AND CASH EQUIVALENTS
|
(74,591 | ) | (279,277 | ) | ||||
CASH
AND CASH EQUIVALENTS - beginning of period
|
1,032,160 | 425,614 | ||||||
CASH
AND CASH EQUIVALENTS- end of period
|
$ | 957,569 | $ | 146,337 | ||||
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION:
|
||||||||
Cash
paid for:
|
||||||||
Interest
|
$ | 8,810 | $ | 23,810 | ||||
Income
taxes
|
$ | 2,835 | $ | 4,116 | ||||
Non-cash
investing and financing activites:
|
||||||||
Conversion
of promissory notes and accrued interest into common stock
|
$ | 1,678,038 | $ | - |
See
accompanying notes.
5
BOOMERANG
SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
THREE
MONTHS ENDED DECEMBER 31, 2009 AND 2008
(Unaudited)
NOTE 1 –
ORGANIZATION AND NATURE OF OPERATIONS:
The
Company:
Boomerang
Systems, Inc. a Utah corporation (“Boomerang Utah”) was incorporated under the
laws of the State of Utah on December 6, 2006.
On
February 6, 2008, Boomerang Utah entered into an agreement with Digital
Resources, Inc, (“Digital”) (formerly Dominion Resources, Inc.), a Delaware
corporation. Under the terms of the agreement (the “Acquisition”) Digital issued
as consideration for all the business, assets and liabilities of Boomerang Utah
13,333,333 shares (on a post one-for-fifteen reverse split basis) of Digital.
Subsequent to the Acquisition, Boomerang Utah became a wholly owned subsidiary
of Digital, with the shareholders of Boomerang Utah owning approximately 80.9%
of Digital. Under generally accepted accounting principles, the acquisition by
Digital of Boomerang Utah is considered to be capital transactions in substance,
rather than a business combination. That is, the acquisition is equivalent, to
the acquisition by Boomerang Utah of Digital. As the Acquisition was a capital
transaction, and not a business combination, there is no assigned goodwill or
other intangible asset resulting from the Acquisition.
This
transaction is reflected as a recapitalization, and is accounted for as a change
in capital structure. Accordingly, the accounting for the acquisition is
identical to that resulting from a reverse acquisition. Under reverse
acquisition accounting, the comparative historical financial statements of
Digital, as the legal acquirer, are those of the accounting acquirer, Boomerang
Utah. The accompanying financial statements reflect the recapitalization of the
stockholders’ equity as if the transactions occurred as of the beginning of the
first period presented. Thus, the 13,333,333 shares of common stock issued to
the former Boomerang Utah stockholders are deemed to be outstanding for all
periods reported prior to the date of the reverse acquisition. Hereinafter
Digital or Boomerang Utah are to be referred to as the “Company”, unless
specific reference is made to a particular company or a subsidiary of a
company.
Concurrent
with the Acquisition on February 6, 2008, and required as part of the
Acquisition, the Company (i) completed a private placement of 2,000,000
post-split shares of our Common Stock pursuant to a transaction exempt from the
registration requirements of the Securities Act of 1933, as amended, (the
“Securities Act”) resulting in net proceeds to us of approximately $1,700,000,
(ii) completed a one-for-fifteen reverse stock split of our outstanding shares,
and (iii) the Company completed all filing requirements under the Securities
Exchange Act of 1934, as amended, and the passage of all notice
periods.
Concurrently
with the closing of the Acquisition, Digital changed its corporate name to
Boomerang Systems, Inc. The Company, through its wholly owned subsidiary,
Boomerang Utah, is engaged in the design, development, and marketing of
automated racking and retrieval systems for automobile parking and automated
racking and retrieval of containerized self-storage units. The Company was a
developmental stage company through the first quarter of fiscal
2008.
Our
fiscal year end is September 30th. We
define fiscal year 2010 as the twelve month period ending September 30,
2010.
Basis of
Presentation:
The
accompanying unaudited consolidated financial statements of the Company have
been prepared for the interim period and are unaudited (consisting only of
normal recurring adjustments) which are in the in opinion of management,
necessary for a fair presentation of the financial position and operating
results for the periods presented. These statements should be read in
conjunction with Form 10-K for fiscal 2009, and other filings of the Company,
including, but not limited to, the Company’s Form DEF 14C filed on January 4,
2010, all of which are on file with the Securities and Exchange Commission. The
results of operations for the three months ended December 31, 2009 are not
necessarily indicative of the results for the Company to be expected for the
full fiscal year ending September 30, 2010.
6
BOOMERANG
SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
THREE
MONTHS ENDED DECEMBER 31, 2009 AND 2008
(Unaudited)
Going
Concern:
The
Company's financial statements have been prepared on a going-concern basis,
which contemplates continuity of operations, realization of assets and
liquidation of liabilities in the ordinary course of business. The Company
sustained a substantial loss in fiscal
2009 of $9,693,734 which includes non-cash expenses of $184,150 for stock
options and $3,635,992 for warrants that were issued during the fiscal year, and
$41,290 for depreciation. For the first three months of fiscal 2010, the Company
incurred a net loss of $1,677,152 which includes non-cash expenses of $138,104
for stock options, $100,619 for warrants and $12,130 for depreciation. The
Company had negative cash flow from operations for the first three months of
fiscal 2010 and during the year ended September 30, 2009 in the amount of
$1,398,302 and
$3,737,008, respectively. As of December 31, 2009 and September 30, 2009,
the Company's liabilities exceeded its assets by $1,555,824 and $3,186,008,
respectively.
These
factors create uncertainty whether the Company can continue as a going concern.
The Company's plans to mitigate the effects of the uncertainties of the
Company's continued existences are: 1) to raise additional debt and equity
capital and 2) to develop and implement a business plan involving the marketing
and sale of our products which will generate positive operating cash flow.
Management believes that these plans can be effectively implemented in the next
twelve-month period.
Restatement
and Correction of Error of Previously Issued Financial Statements:
The
financial statements for the period ended December 31, 2008 have been restated
to correct the accounting treatment of previously recorded
transactions.
|
·
|
During
the second quarter of fiscal year 2008 the company issued stock options.
We have recognized an expense for this in the amount of $26,952 for the
three months ended December 31,
2008.
|
|
·
|
During
the fourth quarter of fiscal year 2008 the company issued debt with
warrants attached. The value of these warrants was capitalized and
accounted for as a discount on debt in the Company’s restated Form 10K/A
for the year ended September 30, 2008. We have amortized $375,000 of this
debt discount, and accounted it for as interest expense for the three
months ended December 31, 2008.
|
7
BOOMERANG
SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
THREE
MONTHS ENDED DECEMBER 31, 2009 AND 2008
(Unaudited)
Restatement
and Correction of Error of Previously Issued Financial Statements
(continued):
Statements
of Operations components for the restatement data for the Three Months Ended
December 31, 2008:
As Filed
|
Restated
|
Change
|
||||||||||
System
Sales
|
- | - | - | |||||||||
COGS
|
- | - | - | |||||||||
Gross
(Loss)
|
- | - | ||||||||||
Expenses
|
||||||||||||
Other
Operations
|
- | - | - | |||||||||
Sales
& Marketing
|
280,032 | 280,032 | - | |||||||||
General
& Administrative
|
453,076 | 480,028 | (26,952 | ) | ||||||||
Research
& Development
|
281,575 | 281,575 | - | |||||||||
Depreciation
& Amortization
|
15,540 | 15,540 | - | |||||||||
Total
Expenses
|
1,030,223 | 1,057,175 | ||||||||||
(Loss)
from Operations
|
(1,030,223 | ) | (1,057,175 | ) | 26,952 | |||||||
Other
Income(Expenses)
|
||||||||||||
Interest
Income
|
1,057 | 1,057 | - | |||||||||
Interest
Expense
|
(89,491 | ) | (464,491 | ) | 375,000 | |||||||
Debt
Discount
|
- | - | - | |||||||||
Debt
Write Off
|
- | - | - | |||||||||
Total
Other Income(Expenses)
|
(88,434 | ) | (463,434 | ) | ||||||||
(Loss)
Before Provision for Income Taxes
|
(1,118,657 | ) | (1,520,609 | ) | 401,952 | |||||||
Provision
for Income Taxes
|
4,116 | 4,116 | - | |||||||||
Net
(Loss)
|
(1,122,773 | ) | (1,524,725 | ) | 401,952 |
8
BOOMERANG
SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
THREE
MONTHS ENDED DECEMBER 31, 2009 AND 2008
(Unaudited)
Restatement
and Correction of Error of Previously Issued Financial Statements
(continued):
Details/Adjustments on Changes to the Income Statement
|
|||||||||||||
Category
|
Original
|
Note
|
Change
|
Restated
|
|||||||||
General
& Administrative
|
453,076 | 453,076 | |||||||||||
(c)
|
26,952 | 26,952 | |||||||||||
26,952 | 480,028 | ||||||||||||
Interest
Expense
|
(89,491 | ) | (89,491 | ) | |||||||||
(b)
|
(375,000 | ) | (375,000 | ) | |||||||||
(375,000 | ) | (464,491 | ) | ||||||||||
Net
Loss
|
(1,122,773 | ) | (1,122,773 | ) | |||||||||
(b)
|
(375,000 | ) | (375,000 | ) | |||||||||
(c)
|
(26,952 | ) | (26,952 | ) | |||||||||
(401,952 | ) | (1,524,725 | ) | ||||||||||
Earnings
Per Share:
|
|||||||||||||
Basic
Net Loss per Common Share
|
(0.07 | ) |
(e)
|
(0.02 | ) | (0.09 | ) | ||||||
Diluted
Net Loss per Common Share
|
(0.07 | ) |
(e)
|
(0.02 | ) | (0.09 | ) | ||||||
Weighted
Average Number of Shares- Basic
|
16,490,362 |
(f)
|
1 | 16,490,363 | |||||||||
Weighted
Average Number of Shares- Diluted
|
16,490,362 |
(f)
|
1 | 16,490,363 |
(b)-
|
Recording
the amortization of debt discount for the quarter ended December 31,
2008.
|
(c)-
|
To
record expenses for vested portion for granted options that vest over
three years in accordance with FAS No. 123
(R).
|
(e)-
|
As
a result of the above entries that effected earnings, the earnings per
share are affected based on the cumulative effect of these
entries.
|
(f)-
|
To
correct weighting of shares as a result of the recapitalization and the
change in capital structure.
|
Reclassification:
Certain
quarter ended December 31, 2008 items have been reclassified to conform to the
quarter ended December 31, 2009 presentation.
NOTE 2 –
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Revenue
Recognition:
Revenues
from manufacturing contracts are recognized using the percentage-of-completion
method of accounting. Under this method, revenues earned are primarily recorded
based on the contract. Contract costs include all direct material, labor,
freight, and equipment costs, and those indirect costs related to contract
performance such as indirect labor, overhead, supplies, shop, and tool costs.
Selling, general, and administrative costs are charged to expense when incurred.
Provisions for estimated losses on uncompleted contracts are made in the period
in which such losses are determined. Changes in job performance, job conditions,
and estimated profitability, inclusive of those arising from contract penalty
provisions and final contract settlements, may result in revisions to costs and
income and will be recognized in the period in which the changes are
determined.
9
BOOMERANG
SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
THREE
MONTHS ENDED December 31, 2009 AND 2008
(Unaudited)
Revenue
Recognition (continued):
No
revenue has been recorded for the quarter ended December 31, 2009 and
2008.
Principles
of Consolidation
The
accompanying consolidated financial statements include the accounts of Boomerang
Systems, Inc. and the accounts of all majority-owned subsidiaries. The
consolidated balance sheet is a classified presentation, which distinguishes
between current and non-current assets and liabilities. The Company believes
that a classified balance sheet provides a more meaningful presentation
consistent with the business cycles of the Company's operations. All significant
inter-company accounts and transactions have been eliminated in
consolidation.
Codification
of Accounting Standards:
The
issuance of FASB Accounting
Standards Codificationtm
(the “Codification”) on July 1, 2009 (effective for interim or annual
reporting periods ending after September 15, 2009), changes the way that
U.S. generally accepted accounting principles (“GAAP”) are referenced.
Beginning on that date, the Codification officially became the single source of
authoritative nongovernmental GAAP; however, SEC registrants must also consider
rules, regulations, and interpretive guidance issued by the SEC or its staff.
The switch affects the way companies refer to GAAP in financial statements and
in their accounting policies. All existing standards that were used to create
the Codification became superseded. Instead, references to standards will
consist solely of the number used in the Codification’s structural
organization. Consistent with the effective date of the Codification,
financial statements for periods ending after September 15, 2009, refers to
the Codification structure, not pre-Codification historical
GAAP.
Earnings
Per Common Share:
We
adopted ASC 260 (formerly FASB No. 128, “Earnings per Share”). The statement
established standards for computing and presenting earnings per share (“EPS”).
It replaced the presentation of primary EPS with a basic EPS and also requires
dual presentation of basic and diluted EPS on the face of the income statement.
Basic income/ (loss) per share was computed by dividing our net income/(loss) by
the weighted average number of common shares outstanding during the period. The
weighted average number of common shares used to calculate basic and diluted
income/(loss) per common share for the quarter ended December 31, 2009 and 2008
were 70,718,179 and 16,490,363, respectively and the years ended September 30,
2009 and 2008 were 18,239,873 and 15,377,640, respectively. The
Company’s common stock equivalents, of outstanding options and warrants, have
not been included as they are anti-dilutive. As of December 31, 2009, there were
options outstanding for the purchase of 3,027,686 common shares and warrants for
the purchase of 6,852,541 common shares, both of which could potentially dilute
future earnings per share.
Stock-Based
Compensation:
The
analysis and computation was performed based on our adoption of ASC 718-10-25
(formerly FAS No. 123R, share-based payment), which requires the recognition of
the fair value of stock-based compensation. For the fiscal quarter
ended December 31, 2009 and 2008, we conducted an outside independent analysis
and our own review, and based on the results, we recognized $138,104 and
$26,952, respectively, in share-based payments related to non-vested stock
options that were issued during fiscal year 2009.
Research
and Development:
Pursuant
to ASC 730 (formerly SFAS No. 2), research and development costs are expensed as
incurred. The Research and Development expense for the three months
ended December 31, 2009 and 2008 are $523,287 and $286,190
respectively.
10
BOOMERANG
SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
THREE
MONTHS ENDED December 31, 2009 AND 2008
(Unaudited)
Advertising:
Advertising
costs amounted to $55,752 and $83,335 for the three months ended December 31,
2009 and 2008,
respectively. Advertising costs are expensed as incurred.
Use
of Estimates:
Management
of the Company has made estimates and assumptions relating to reporting of
assets, liabilities, revenues and expenses, and the disclosure of contingent
assets and liabilities to prepare these consolidated financial statements in
conformity with accounting principles generally accepted in the United States of
America. Actual results could differ from these
estimates.
Accounts
Receivable:
Accounts
receivable are recorded at the invoiced amount and do not bear interest. The
allowance for doubtful accounts is the Company's best estimate of the amount of
probable credit losses in the Company's existing accounts receivable. Account
balances are charged off against the allowance after all means of collection
have been exhausted and the potential for recovery is considered
remote.
Accordingly,
we have not recorded an allowance for doubtful accounts at December 31, 2009 and
2008, respectively.
NOTE 3–
INVESTMENTS:
The
Company made a minimum capital investment of $20,420 in the United Arab Emirates
“UAE” joint venture, Boomerang Systems Middle East, LLC. This
investment was part of the application process in obtaining a commercial license
in the UAE. This license was granted on October 26,
2009. Boomerang Systems Middle East, LLC is owned by Boomerang
Systems USA Corp. (49%), a subsidiary of Boomerang Systems, Inc., and Tawreed
Companies Representation (51%), a UAE company.
NOTE 4-
INVENTORY:
Inventories
consisting of parts, materials, and assemblies are stated at the lower of cost
or market. Cost is determined using the weighted average cost
method. The components of inventories consisted of raw materials
(parts and assemblies) as of December 31, 2009 and September 30, 2009 and they
were $332,504 and $180,890, respectively. There was no work in
process or finished goods for December 31, 2009 and September 30,
2009.
NOTE 5 -
PROPERTY AND EQUIPMENT:
Property
and equipment are stated at cost. Maintenance and repairs are charged to expense
as incurred. Costs of major additions and betterments are
capitalized. Depreciation is calculated on the straight-line method
over the estimated useful lives of the respective
assets. Depreciation and amortization for the three months ended
December 31, 2009 and 2008 was $12,130 and $15,540, respectively.
Property,
plant and equipment consist of the following at December 31, 2009 and September
30, 2009:
Computer
equipment
|
$ | 133,263 | $ | 132,128 | ||||
Machinery
and equipment
|
96,855 | 96,855 | ||||||
Furniture
and fixtures
|
32,858 | 32,858 | ||||||
Leasehold
improvements
|
62,469 | 62,469 | ||||||
325,445 | 324,310 | |||||||
Less:
Accumulated depreciation
|
73,188 | 61,058 | ||||||
$ | 252,257 | $ | 263,252 |
11
BOOMERANG
SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
THREE
MONTHS ENDED DECEMBER 31, 2009 AND 2008
(Unaudited)
NOTE 6-
DEBT:
During
the fourth quarter of fiscal 2008, we issued the August 2008 Promissory Notes ,
which included $1,500,000 principal amount of the Company’s promissory notes due
twelve months from issuance or in August 2009 with interest accruing at the rate
of 12% per annum payable currently at 1% per month. Issued with the promissory
notes were five-year common stock purchase warrants exercisable at $1.25 per
share to purchase an aggregate of 1,500,000 shares of Common Stock, or one
warrant for each $1.00 of notes purchased. The promissory notes went into
default on August 31, 2009. In the event the promissory notes and any
accrued but unpaid interest were not paid at maturity, the holder of the notes
is to be issued additional five-year common stock purchase warrants exercisable
at a per common share exercise price equal to 80% of the average of the last
sale prices for the Company’s Common Stock during the most recent ten trading
days prior to the date of issuance of the warrants and, in the event last sale
prices are unavailable for a full ten trading days, such additional number of
trading days immediately prior to such ten trading day period so as to total the
most recent ten trading days during which last sale prices are available. The
warrants are issued at the rate of warrants to purchase 1.5 shares for each
dollar of principal and accrued interest that remains unpaid for each 30-day
period after maturity of the notes. The Company used the Black-Scholes Method to
calculate the value of these warrants.
The value
of the initial warrants has been allocated based on their fair value to the
entire debt. The Company valued the warrants to their maximum value in
proportion to the entire $1,500,000 in debt. The warrants were valued at
$2,245,596 using a Black-Scholes valuation model with the following assumptions
were used to calculate the fair value of the warrants: dividend yield of 0%;
expected volatility of 272.9%; risk-free interest rate of 1.61%; an expected
life of five years; fair value of the stock on the date of the debt agreement
was $1.50 per share. The Company has recorded a debt discount with
regards to these warrants to their maximum proportional value relative to the
debt of $1,500,000. This discount was fully amortized as of September 30, 2009.
During the three months ended December 31, 2009 the debt discount was fully
amortized. During the three months ended December 31, 2008 the
Company amortized $375,000 of this debt discount.
As of
September 11, 2009, the Company determined to use its’ resources for Research
and Development and has elected not to pay these Notes when
due. Through December 31, 2009, we have issued Post-Maturity or
Default warrants to purchase an aggregate of 5,302,541 shares of the Company’s
Common Stock of which warrants to purchase 2,551,681 shares are exercisable at
$0.72 for August, warrants to purchase 2,576,350 shares are exercisable at $0.69
for September, warrants to purchase 86,821 shares are exercisable at $0.68 for
October and warrants to purchase 87,689 shares exercisable at $0.58 for
November. The Company is using the Black Scholes Method to calculate
the value of these warrants. As a consequence of the exchange of the
promissory notes for shares of stock and the repayment of the remaining note, as
described below, the additional warrants ceased to be issued commencing in
December 2009.
During
the three months ended December 31, 2009, the holders of $1,450,000 principle
amount of the Company’s 12% promissory notes issued in the fourth
quarter of fiscal 2008 exchanged their principal and accrued interest into the
Company’s common stock at an exchange ratio of $ $0.10 of principle and interest
for each share of common stock. This transaction was completed on
November 30, 2009 and $1,678,038 of principle and accrued interest was exchanged
for 16,780,065 common shares. In December 2009, we repaid the one
note that was not converted.
12
BOOMERANG
SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
THREE
MONTHS ENDED DECEMBER 31, 2009 AND 2008
(Unaudited)
NOTE 6-
DEBT (continued):
Principal
|
||||||||||||||
As of
|
||||||||||||||
|
12/31/09
|
9/30/09
|
Maturity Date
|
Interest Rate
|
Secured
|
|||||||||
Current Debt:
|
||||||||||||||
Loan
Payable- Third Party
|
74,757 | 72,904 |
Due Upon Demand
|
10 | % |
No
|
||||||||
Promissory
Notes- Third Party
|
1,718,963 |
August
2009
|
12 | % |
No
|
|||||||||
Note
Payable- Bank
|
200,000 | 200,000 |
5/16/2010
|
3.50 | % |
Yes
|
||||||||
Note
Payable- Bank
|
285,000 | 285,000 |
5/14/2010
|
3.341 | % |
Yes
|
||||||||
Lease
Payable- Bank (current portion)
|
27,023 | 26,593 |
9/30/2010
|
6.448 | % |
No
|
||||||||
Total
Current Debt:
|
586,780 | 2,303,460 | ||||||||||||
Long-Term Debt:
|
||||||||||||||
Loan
Payable- Third Party
|
374,145 | 363,053 |
12/31/2010
|
12 | % |
No
|
||||||||
Lease
Payable- Bank
|
59,550 | 66,469 |
12/31/2012
|
6.448 | % |
No
|
||||||||
Total
Long-Term Debt:
|
433,695 | 429,522 | ||||||||||||
Long-Term Debt- Related
Party:
|
||||||||||||||
Loan
Payable- Related Party
|
1,000,000 | 1,000,000 |
12/31/2010
|
9 | % |
No
|
||||||||
Total
Long-Term Debt- Related Party:
|
$ | 1,000,000 | 1,000,000 |
NOTE 7-
EQUITY:
Common
Stock:
During
the quarter ended December 31, 2009, the Company sold 13,905,750 shares of its
common stock at $0.10 per share for proceeds of $1,390,575.
Options:
During
October 2009, the Company granted options to employees to purchase common stock;
i) comprised of ten-year non-statutory fully vested options to purchase 20,000
shares exercisable at $0.10 per share and; ii) five-year
non-statutory options to purchase 500,000 shares exercisable at $0.10 per
share. These 500,000 shares are subject to the following
vesting schedule; 25% eighteen months after the grant date of October 15, 2009
and 25% every six months thereafter. The fair value of common shares
on the date of grant for the 520,000 options was $0.81 per
share. These stock options are subject to forfeiture until service
conditions associated with their grant are satisfied. The Company has
valued the 20,000 fully vested options at approximately $16,200 and the 500,000
options at approximately $404,703, to be recognized over the expected term of
their vesting.
The
Company recorded $138,104 and $26,952 of compensation expense, net of related
tax effects, for the options that have been granted to date with a vesting
schedule for the three months ended December 31, 2009 and 2008, respectively, in
accordance with ASC 718-10-25 (formerly SFAS No. 123 (R)). As of December 31,
2009, there is approximately $1,629,200 of total unrecognized costs related to
unvested stock options granted to employees. These costs are expected to be
recognized over a period of approximately two years.
13
BOOMERANG
SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
THREE
MONTHS ENDED DECEMBER 31, 2009 AND 2008
(Unaudited)
NOTE 7-
EQUITY (continued):
When the
stock options are granted, the fair value of each option granted is estimated on
the date of grant using the Black-Scholes valuation model. The following
weighted assumptions were used for all options granted during the three months
ended December 31, 2009: (i) risk free interest rate of 1.61, (ii)
expected life of 5 years (iii) dividend rate of 0.00% and (iv) expected
volatility of 273%.
The
volatility assumption for the period was based on the weighted average for the
most recent year and long term volatility measures of our stock as well as
certain of our peers. Stock-based compensation expense, recognized in the
accompanying consolidated statement of operations for the three months ended
December 31, 2009 and 2008, is based on awards ultimately expected to vest, it
has been reduced for estimated forfeitures. ASC 718-10-25 requires
forfeitures to be estimated at the time of grant and revised, if necessary, in
subsequent periods if actual forfeitures differ from those
estimates. Currently we have no historical data to use for estimating
out forfeitures.
Warrants:
During
September 2009, it was determined to use our resources for research and
development and elected not to pay the $1,500,000 in Promissory Notes, which
constituted a default on the Promissory Notes. Through December 31, 2009, the
Company has granted Post-Maturity, or Default, Warrants to purchase an aggregate
of 5,302,541 shares of the Company’s Common Stock, of which warrants to purchase
2,551,681 shares exercisable at $0.72 were granted in August 2009, warrants to
purchase 2,576,350 shares exercisable at $0.69 were granted in September 2009,
warrants to purchase 86,821 shares exercisable at $0.68 were granted in October
2009 and warrants to purchase 87,689 shares exercisable at $0.58 were granted in
November 2009. The Company used the Black Scholes Method to calculate
the value of these warrants as well. The Company recognized
$3,635,992 in expense with regards to these warrants during fiscal year ended
September 30, 2009 and $100,619 for the three months ended December 31,
2009.
NOTE 8 -
RELATED PARTY TRANSACTIONS:
Certain
beneficial holders of our Company, HSK Funding, Inc., Lake Isle Corp. and
Venturetek, LP are also members of SB&G Properties, LC (“SB&G”), which
is the landlord under a lease with us. Burton Koffman is the individual
who exercises voting and investment control over HSK Funding, Inc. Gail
Mulvihill is the individual who exercises voting and investment control over
Lake Isle Corp., is the mother of Christopher Mulvihill, our
President.
SB&G
Properties, an entity owned by HSK Funding, Lake Isle Corp. and Venturetek, is
the landlord under a lease entered into with Boomerang Utah dated October 1,
2008, relating to premises located at 324 West 2450 North, Building A, Logan,
Utah. The term of the lease is for one year with an annual rent of $260,610 plus
real property and school taxes. This includes accrued rent of $176,610. In
addition, Boomerang Utah is obligated to pay for all utilities and for repairs
and maintenance to the property. The approximately 29,750 square foot leased
premises are used for Boomerang Utah’s manufacturing activities. At
December 31, 2009 the total amount of accrued and unpaid rent due is $311,464
recorded as due to related party on the balance sheet. The Company is
in the process of negotiating a new lease.
Stan
Checketts Properties, L.C.(“SCP), whose sole owner is Mr. Stanley J. Checketts,
is the landlord under a lease entered into with Boomerang Utah dated October 1,
2008 for premises located at 324 West 2450 North, Building B, Logan, Utah. The
term of the lease is for one year at a fixed annual rent of $157,680 plus real
property and school taxes. This includes accrued rent of $106,857. In
addition, Boomerang Utah is obligated to pay for all utilities and for repairs
and maintenance to the property. The approximately 18,000 square foot leased
premises are also used for Boomerang Utah’s manufacturing
activities. At December 31, 2009 the total amount of accrued and
unpaid rent due is $175,522 recorded as due to related party on the balance
sheet. The Company is in the process of negotiating a new
lease.
14
BOOMERANG
SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
THREE
MONTHS ENDED DECEMBER 31, 2009 AND 2008
(Unaudited)
NOTE 8 –
RELATED PARTY TRANSACTIONS (continued):
SB&G
is obligated on a twenty-year promissory note owing to a non-affiliated bank in
the principal amount of $833,688 as of December 31, 2009, bearing interest at
3.807% per annum and due August 1, 2027. The promissory note is collateralized
by the real property that is the subject of the lease from SB&G to Boomerang
Utah. Boomerang Utah, along with Messrs. Gene Mulvihill, Checketts, and Burton
Koffman (“Koffman”), are the joint and several guarantors of the promissory
note. Gene Mulvihill is the father of Christopher Mulvihill, the
President of the Company, and husband of Gail Mulvihill, a principal stockholder
of the Company
Messrs.
Gene Mulvihill and Koffman, are the guarantors of a financing lease entered into
on September 1, 2007 between Boomerang Utah and a nonaffiliated bank. The lease
relates to certain equipment used by Boomerang Utah in its manufacturing
operations. The total cost of the equipment was approximately $900,000. The
rental is payable in sixty monthly installments of approximately $12,750.
Boomerang Utah has the option to purchase the equipment at the conclusion of the
lease term for approximately $315,000 which amount is the parties’
pre-determined fair market value of the equipment at the conclusion of the
lease.
J and A
Financing, Inc., also affiliated with Messrs. Gene Mulvihill and Koffman has
guaranteed two loans to Boomerang Utah from a non-affiliated bank, totaling
$485,000 as of December 31, 2009.
During
fiscal year 2008, J and A Financing Inc. loaned $1,000,000 to the
Company. This loan matures on December 31, 2010. The
interest rate is 9% and the principle amount due at December 31, 2009 is
$1,000,000. There has been no forgiveness of debt on this
loan. This loan is classified as long-term debt- related party and is
unsecured.
During
the quarter ended December 31, 2009, the Company used the services of Coordinate
Services, Inc. for product development. The owner of this
company is Gene Mulvihill, Jr. who is the brother of Christopher Mulvihill, our
President, and the son of Gail Mulvihill, a principal
stockholder. The amount for this expense during the quarter ended is
$38,423; which is recorded under Research and Development.
NOTE 9-
COMMITMENTS AND CONTINGENCIES:
SB&G
is obligated on a twenty-year promissory note owing to a non-affiliated bank in
the principal amount of $881,250, bearing interest at 3.807% per annum and due
August 1, 2027. The promissory note is collateralized by the real
property that is the subject of the lease from SB&G to
Boomerang. Boomerang, along with Messrs. Mulvihill, Checketts, and
Koffman, are the joint and several guarantors of the promissory
note.
The lease
on our principal office is for a term of five years with a 4% annual increase on
the prior year’s base rent. The two renewal terms are for four years
each with 4% annual increases on the prior year’s base rent. The
Company has the option to terminate the lease thirty-six months after the
Commencement Date of January 1, 2009.
The
aggregate future minimum annual rental payments, exclusive of escalation
payments for taxes and operating costs, under operating leases are as
follows:
Fiscal Year Ending September
30,
|
||||
2010
|
$ | 79,001 | ||
2011
|
82,161 | |||
2012
|
85,447 | |||
2013
|
88,865 | |||
2014
|
92,420 | |||
Total
|
$ | 427,894 |
15
BOOMERANG
SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
THREE
MONTHS ENDED DECEMBER 31, 2009 AND 2008
(Unaudited)
NOTE 10–
SUBSEQUENT EVENTS:
In
December 2009, our Board of Directors approved the grant of ten year stock
options exercisable at $0.10 per share to purchase 800,000 shares of Common
Stock and five year warrants exercisable at $0.10 per share to purchase
1,000,000 shares of Common Stock at such time as the Amendment to the
Certificate of Incorporation is filed with the State of Delaware. The
Amendment to the Certificate of Incorporation was filed with the State of
Delaware on January 25, 2010.
On
December 23, 2009, a holder of warrants to purchase 1,766,020 shares agreed to
waive its’ rights to exercise its warrants until our Certificate of
Incorporation was amended with the State of Delaware to increase our authorized
common shares from 100,000,000 to 200,000,000. The warrants will
become exercisable as of the actual date that the Amendment is filed with the
State of Delaware. Since the Amendment to the Certificate of
Incorporation was filed on January 25, 2010 the rights to exercise these
warrants have been reinstated.
On
January 6, 2010, we converted a $26,000 Accounts Receivable balance from a
customer into a Note Receivable bearing interest of 6% with monthly payments
starting February 1, 2010. The monthly payments will be repaying the
principal in the amount of $2,166.67 and the previous month’s accrued
interest.
On
January 25, 2010, the Company issued a 6% Convertible Promissory Note to Ruby
Corp. in the amount of $360,000 due January 25, 2011. The Note is
convertible at a price equal to the price at which the Company sold shares of
its Common Stock in a public or private offering prior to the date in the future
when the Note is converted.
On
February 5, 2010, the Company issued a 6% Convertible Promissory Note to James
Mulvihill, brother of Christopher Mulvihill, our President, in the amount of
$100,000 due February 5, 2011. The Note contains the same terms as
the Note issued to Ruby Corp.
J & A
Financing has agreed to extend the maturity date of the loan to March 31, 2011
on February 9, 2010. Currently outstanding with a principal amount of
$1,000,000. All of the other terms remain the same and there is no
forgiveness of debt. The Company has this classified as long-term
debt- related party and it is unsecured.
16
BOOMERANG
SYSTEMS, INC. AND SUBSIDIARIES
MANAGEMENT'S
DISCUSSION AND ANALYSIS OF
FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
ITEM
2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION
INTRODUCTION
The
following discussion and analysis of financial condition and results of
operations should be read in conjunction with the Company's consolidated
financial statements and accompanying notes appearing elsewhere in this report.
This discussion and analysis contains forward looking statements that involve
risks, uncertainties and assumptions. The actual results may differ materially
from those anticipated in these forward looking statements as a result of
certain factors, including but not limited to the risks discussed in this
report.
The
Company, through its wholly owned subsidiary, Boomerang, which it acquired in
February 2008, is engaged in the design, development, and marketing of automated
racking and retrieval systems for automobile parking and automated racking and
retrieval of containerized self-storage units.
The
Company’s revenues from manufacturing contracts are recognized using the
percentage-of-completion method of accounting. Under this method, revenues
earned are primarily recorded based on the contract. Contract costs include all
direct material, labor, freight, and equipment costs, and those indirect costs
related to contract performance such as indirect labor, overhead, supplies,
shop, and tool costs. Selling, general, and administrative costs are charged to
expense when incurred. Provisions for estimated losses on uncompleted contracts
are made in the period in which such losses are determined. Changes in job
performance, job conditions, and estimated profitability, inclusive of those
arising from contract penalty provisions and final contract settlements, may
result in revisions to costs and income and will be recognized in the period in
which the changes are determined. The asset "Costs and estimated earned profits
in excess of billings on uncompleted contracts" represents revenues recognized
in advance of amounts billed. The liability “Billings in excess of costs and
estimated earned profits on uncompleted contracts" represents billings in
advance of revenues recognized and contemplated losses on contracts in
progress.
LIQUIDITY
AND CAPITAL RESOURCES
During
the first three months of fiscal 2010, the Company had net loss of $1,677,152.
Included in net losses are the non-cash expenses of depreciation of $12,130, the
issuance of stock options of $138,104 and the issuance of warrants of
$100,619.
During
the first three months of fiscal 2010, changes in assets and liabilities
primarily included a decrease in cash and cash equivalents resulting from an
increase in inventories of $151,614, an increase in prepaid and other assets of
$8,221, offset by an increase of accounts payable and accrued liabilities of
$55,174, an increase in accrued interest payables of $31,260, an increase in due
to related party of $41,497 and an increase in deposit payable of $59,901. After
reflecting the net changes in assets and liabilities, net cash used in
operations was $1,398,302.
During
the first three months of fiscal 2010, investing activities used net cash for
the purchase of property, plant and equipment of $1,135, resulting in net cash
used in investing activities of $1,135.
During
the first three months of fiscal 2010, financing activities provided net cash
from proceeds from private placement- of common stock of $1,390,575 with $65,729
used for a repayment of loans. Accordingly, net cash provided by financing
activities was $1,324,846.
These
activities during the first three months of fiscal 2010 resulted in the
Company's cash and cash equivalents decreasing by $74,951.
During
the remaining nine months of the fiscal year ending September 30, 2010, we
expect to require and intend to seek to raise the sum of approximately
$1,500,000 from the private sale of our debt and equity securities intended to
be used for working capital. This sum excludes repayment of
debt. The Company believes that it will be successful in negotiating
an extension of $485,000 of its current debt. It is
presently intended that the securities will be offered in such jurisdictions
where the offering may lawfully be made to those persons who purchased our
securities in our private sales of securities completed in February and August,
2008 and in fiscal year 2009 with any unsold securities purchased by certain of
our affiliates. The foregoing is not and should not be considered to
be an offering of our securities. The foregoing is for informational purposes
only. It is expected that the securities offered will not be registered under
the Securities Act and may not be offered or sold in the United States absent
registration or an applicable exemption from the registration
requirements.
17
There can
be no assurance that the capital the Company requires to meet its operating
needs will be raised on the above terms or any other terms. If the
Company is unsuccessful in raising this capital, it may be required to curtail
its operations.
RESULTS
OF OPERATIONS
FISCAL
PERIOD ENDED DECEMBER 31, 2009 COMPARED WITH PERIOD ENDED DECEMBER 31,
2008
Revenues
and Cost of Goods sold were $0 for both the quarter ended December 31, 2009 and
the quarter ended December 31, 2008.
Sales and
Marketing expenses were $229,524 during the quarter ended December 31, 2009
compared with $229,263 during the quarter ended December 31, 2008, for an
increase of $261. The increase is the result of printing expenses incurred
relating to brochures for the robotic version of our
systems. The advertising expenses for the three months ended December
31, 2009 was $55,752. In addition, as of December 31, 2009, the
Company employed four full time salesmen and one support person compared to
three full-time salesmen in 2008, which are recorded under Sales and Marketing
expense.
General
and administrative expenses were $851,117 during the first three months of
fiscal 2010 compared with $526,182 during the first three months of fiscal 2009,
for an increase of $324,935. This increase is primarily the result of
recording an expense of $134,104 resulting from the grant of stock options and
$100,619 resulting from the grant of warrants plus additional administrative
expenses in connection with the day to day operations of the Company and
construction of a new model prototype, These activities include the expenses
related to five full time employees and one part time employee in 2009 compared
to five full-time and two part-time employees in 2008.
Research
and Development expenses were $523,287 during the first three months of fiscal
2010 compared with $286,190 during the first three months of fiscal 2009, for an
increase of $237,097. This increase is a result of the Company’s
working on a new prototype for the parking product line. In addition,
as of December 31, 2009 the Company employed fifteen full-time employees
compared to eight full-time and 2 part-time employees in 2008.
Depreciation
and amortization was $12,130 during the first three months of fiscal 2010
compared to $15,540 during the first three months of fiscal 2009, for a decrease
of $3,410. This decrease is the result of the depreciable value of the assets
decreasing over time.
Interest
income was $1,742 during the first three months of fiscal 2010, compared with
$1,057 during the first three months of fiscal 2009, for an increase of $685 due
to issuing an employee advance in October 2009.
Interest
expense was $60,001 during the first three months of fiscal 2010, compared with
$464,491 during the first three months of fiscal 2009, for a decrease of
$404,490. This decrease is due to repayment of debt and the full
allocation of the debt discount associated with the August 2008 12% Promissory
Notes.
As of the
end of the first fiscal quarter of 2010 there are three outstanding contracts
awaiting various approvals in order to become unconditional agreements for the
sale of products.
OFF
BALANCE SHEET ARRANGEMENTS
There
were no off-balance sheet arrangements during the fiscal quarter ended December
31, 2009 that have or are reasonably likely to have a current or future effect
on our financial condition, changes in financial condition, revenues or
expenses, results of operations, liquidity, capital expenditures or capital
resources that is material to our interests.
CRITICAL
ACCOUNTING POLICIES AND ESTIMATES:
Our
financial statements and accompanying notes have been prepared in accordance
with accounting principles generally accepted in the United States of
America. The preparation of these financial statements requires our
management to make estimates, judgments and assumptions that affect the reported
amounts of assets, liabilities, revenues and expenses. We continually
evaluate the accounting policies and estimates we use to prepare the
consolidated financial statements. We base our estimates on
historical experiences and assumptions believed to be reasonable under current
facts and circumstances. Actual amounts and results could differ from
these estimates made by management.
18
We do not
participate in, nor have we created, any off-balance sheet special purpose
entities or other off-balance sheet financing.
We have
identified the accounting policies below as critical to our business operations
and the understanding of our results of operations.
Principles
of consolidation – The
accompanying consolidated financial statements include the accounts of Boomerang
Systems, Inc. and its wholly owned subsidiaries (collectively, the
“Company”). All significant inter-company transactions have been
eliminated.
Cash – We
maintain cash in bank accounts which may, at times, exceed federally insured
limits. We have not experienced any loss on these
accounts.
Accounts
receivable – Accounts
receivable are recorded at the invoiced amount and do not bear interest. The
allowance for doubtful accounts is the Company's best estimate of the amount of
probable credit losses in the Company's existing accounts receivable. Account
balances are charged off against the allowance after all means of collection
have been exhausted and the potential for recovery is considered
remote.
For the
period ended December 31, 2009 and 2008, the Allowance for Doubtful Accounts was
$0.
Property
and equipment – Property
and equipment are stated at cost. Maintenance and repairs are charged to expense
as incurred. Costs of major additions and betterments are
capitalized. Depreciation is calculated on the straight-line method
over the estimated useful lives of the respective assets.
Revenue
recognition – Revenues
from manufacturing contracts are recognized using the percentage-of-completion
method of accounting. Under this method, revenues earned are primarily recorded
based on the contract. Contract costs include all direct material, labor,
freight, and equipment costs, and those indirect costs related to contract
performance such as indirect labor, overhead, supplies, shop, and tool costs.
Selling, general, and administrative costs are charged to expense when incurred.
Provisions for estimated losses on uncompleted contracts are made in the period
in which such losses are determined. Changes in job performance, job conditions,
and estimated profitability, inclusive of those arising from contract penalty
provisions and final contract settlements, may result in revisions to costs and
income and will be recognized in the period in which the changes are determined.
The asset "Costs and estimated earned profits in excess of billings on
uncompleted contracts" represents revenues recognized in advance of amounts
billed. The liability “Billings in excess of costs and estimated earned profits
on uncompleted contracts" represents billings in advance of revenues recognized
and contemplated losses on contracts in progress.
Research
and development – Pursuant to ASC 730 (formerly SFAS No. 2), research and
development costs are expensed as incurred.
Inventories
- Inventories consisting of parts, materials, and assemblies are stated at the
lower of cost or market. Cost is determined using the weighted average cost
method.
Stock
options - Pursuant to ASC 718-10-25 (formerly SFAS No. 123 (R)), the Company
uses the Black-Scholes method to calculate the fair value of the
options.
CAUTIONARY
STATEMENT FOR PURPOSES OF THE “SAFE HARBOR” PROVISIONS OF THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1996
This
quarterly report on Form 10-Q includes forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, and Section 21E of the
Exchange Act of 1934. These forward-looking statements are largely
based on our current expectations and projections about future events and
conditions affecting our business, the markets for our products and customer
acceptance of our products and conditions in the construction
industry. Such forward-looking statements include, in particular,
projections about our future results included in our Exchange Act reports,
statements about our plans, strategies, business prospects, changes and trends
in our business and the markets in which we operate and intend to
operate. These forward-looking statements may be identified by the
use of terms and phrases such as “believes”, “can”, “could”,
“estimates”, “expects”, “forecasts”, “intends”, “may”, “plans”, “projects”,
“targets”, “will”, “anticipates”, and similar expressions or variations of these
terms and similar phrases. Comments about our critical need for
additional capital and our ability to raise such capital when and as needed and
on acceptable terms are forward-looking statements. Additionally,
statements concerning future matters such as the costs and expenses we expect to
incur, our ability to realize material revenues, delays we may encounter in
selling our products and gaining market acceptance for our products, the cost of
the further development of our products, and achieving enhancements or improved
technologies, achieving material sales levels, marketing expenses, projected
cash flows, our intentions regarding raising additional capital and when
additional capital may be required, and other statements regarding matters that
are not historical are forward-looking statements. Management cautions that
these forward-looking statements relate to future events or our future financial
performance and are subject to business, economic, and other risks and
uncertainties, both known and unknown, that may cause actual results, levels of
activity, performance or achievements of our business or our industry to be
materially different from those expressed or implied by any forward-looking
statements. Factors that could cause or contribute to such
differences in results and outcomes include without limitation those discussed
under Item 1A - Risk Factors, as well as those discussed elsewhere in this Form
10-Q. The cautionary statements should be read as being applicable to
all forward-looking statements wherever they appear in this Form 10-Q and they
should also be read in conjunction with the consolidated financial statements,
including the related footnotes.
19
Neither
management nor any other person assumes responsibility for the accuracy and
completeness of the forward-looking statements. All forward-looking
statements in this Form 10-Q are made as of the date hereof, based on
information available to us as of the date hereof, and subsequent facts or
circumstances may contradict, obviate, undermine, or otherwise fail to support
or substantiate such statements. We caution you not to rely on these
statements without also considering the risks and uncertainties associated with
these statements and our business that are addressed in this Form
10-Q. Certain information included in this Form 10-Q may supersede or
supplement forward-looking statements in our other Exchange Act reports filed
with the Securities and Exchange Commission. We assume no obligation
to update any forward-looking statement to conform such statements to actual
results or to changes in our expectations, except as required by applicable law
or regulation.
ITEM
3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET
RISK
As a
Smaller Reporting Company, no response is required to this Item.
ITEM
4. CONTROLS AND PROCEDURES
As
required by Rule 13a-15 under the Securities Exchange Act of 1934, as of
December 31, 2009, the end of the period covered by this quarterly report, our
management concluded its evaluation of the effectiveness of the design and
operation of our disclosure controls and procedures.
Our
management, including our Principal Executive Officer and Chief Financial
Officer, does not expect that our disclosure controls and procedures will
prevent all error and all fraud. A control system, no matter how well designed
and operated, can provide only reasonable, not absolute, assurance that the
control system's objectives will be met. Further, the design of a control system
must reflect the fact that there are resource constraints, and the benefits of
controls must be considered relative to their costs. Because of the inherent
limitations in all control systems, no evaluation of controls can provide
absolute assurance that all control issues and instances of fraud, if any, have
been detected. These inherent limitations include the realities that judgments
in decision-making can be faulty, and that breakdowns can occur because of
simple error or mistake. The design of any system of controls is based in part
upon certain assumptions about the likelihood of future events, and there can be
no assurance that any design will succeed in achieving its stated goals under
all potential future conditions.
Disclosure
Controls
Disclosure
controls and procedures means controls and other procedures of an issuer that
are designed to ensure that information required to be disclosed in our reports
we file or submit under the Securities Exchange Act of 1934 is recorded,
processed, summarized and reported, within the time period specified in the
Securities and Exchange Commission's rules and forms. Disclosure controls and
procedures include, without limitation, controls and procedures designed to
ensure that information required to be disclosed in our reports filed or
submitted under the Securities Exchange Act of 1934 is accumulated and
communicated to management including our Principal Executive Officer and Chief
Financial Officer as appropriate, to allow timely decisions regarding required
disclosure.
Based
upon that evaluation, our company's Principal Executive Officer and Chief
Financial Officer have concluded that our disclosure controls and procedures
were not effective because of the significant deficiency and the material
weaknesses described below. Measures are being taken to include documentation of
management oversight and review as part of the appropriate functional
procedures.
20
Material
Weaknesses:
The
financial statements for the quarter and three months ended December 31, 2008
were restated to correct the accounting treatment previously accorded certain
transactions.
|
·
|
During
the second quarter of fiscal year 2008 the company issued stock
options. We have recognized an expense for this in the amount
of $26,952 for this period.
|
|
·
|
During
the fourth quarter of fiscal year 2008 the company issued debt with
warrants attached. The value of these warrants was capitalized
and accounted for as a discount on debt in the Company’s restated Form
10K/A for the year ended September 30, 2008. We have amortized
$375,000 of this debt discount, and accounted it for as interest expense
for the quarter and three months ended December 31,
2008.
|
We have
identified material weaknesses in our internal controls over financial reporting
as of the quarter ended December 31, 2009 that do not require our financial
statements to be restated. Since we are a small business issuer, we
do not maintain a full staff of accounting personnel with full knowledge of the
accounting treatment for all transactions which constitutes a material weakness
in our internal controls over financial reporting. We’ve hired
consultants from time to time as we believe necessary to provide the necessary
experience in accounting for these types of transactions.
Changes in Internal
Controls
Except
for the retention of consultants from time to time as deemed necessary and
described above, no change in the Company’s internal control over financial
reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities
Exchange Act) occurred during the quarter ended December 31, 2009 that has
materially affected, or is reasonably likely to materially affect, our internal
control over financial reporting.
21
PART
II
OTHER
INFORMATION
ITEM
1. LEGAL PROCEEDINGS
None
ITEM
1A. RISK FACTORS
An investment in the Company's
securities involves a high degree of risk, including, but not necessarily
limited to, the risk factors described below. Each prospective
investor should carefully consider the following risk factors inherent in and
affecting the Company and its business before making an investment decision to
purchase the Company’s securities.
The Company Has Limited Current
Revenues and Has a Severe Shortage of Capital. The Company’s
subsidiary, Boomerang Utah, which the Company acquired in February
2008, was organized in January 2007 and is in the early stage of developing its
business plan and operations and has a very limited history of
operations. As a result of Boomerang’s limited operating history,
Boomerang has limited meaningful historical financial data upon which an
evaluation of its current business plans and its prospects can be
based. Boomerang’s anticipated expense levels in the future are based
in part on its expectations as to the subjective views of its management as to
the market for its automated parking and self-storage
systems. Boomerang currently has a severe shortage of working
capital. The Company has $1,772,840 of indebtedness due on demand or
classified as a current liability. Boomerang requires additional
capital to continue its operations.
There are Questions As
to the Company’s Ability to Continue as a Going Concern; There is an Explanatory
Paragraph in the Independent Auditors Report for Fiscal Year Ended September 30,
2009 Concerning These Questions. The Company’s financial
statements have been prepared on a going-concern basis, which contemplates
continuity of operations, realization of assets and liquidation of liabilities
in the ordinary course of business. The Company had a loss in fiscal
2009 of $9,693,734 which includes the non-cash expenses of $184,150 for stock
options and $3,635,992 for warrants that were issued during the fiscal year and
$41,290 for depreciation. It had a net loss for the first three
months of fiscal 2010 in the amount of $1,677,152 including non-cash expenses of
$12,130 for depreciation, $138,104 for stock options and $100,619 for warrants
as a result of the grant of options and warrants during that
period. The Company had a working capital deficiency at December 31,
2009 of $374,386. It had a negative cash flow from operations during the first
three months of fiscal 2010 and in fiscal 2009 of $1,398,302 and $881,439,
respectively. As of December 31, 2009, the Company’s liabilities
exceeded its assets by $1,555,824. All the foregoing factors lead to
questions concerning the Company’s ability to meet its obligations as they come
due. The Company has financed its activities using private debt and
equity financings. As a result of the losses incurred and current
negative working capital and other matters described above, there is no
assurance that the carrying amounts of the Company’s assets will be realized or
that liabilities will be liquidated or settled for the amounts
recorded.
The independent auditor’s report on the
Company’s financial statements as of and for the year ended September 30, 2009
includes an explanatory paragraph which states that the Company has no material
revenues, has suffered recurring losses from operations, and has a net capital
deficiency that raise substantial doubt about its ability to continue as a going
concern.
Extended Sales Cycle in Procuring
Signed Contracts and Revenues. Procuring signed contracts for the sale of
the Company’s systems is characterized by extended periods of time until the
buyer is able to obtain the necessary government approvals to construct the
facility, financing for the project, designs for the entire facility including,
as part of the entire facility, the parking facility to be provided by the
Company, and entering into construction agreements with the numerous contractors
involved. These extended periods can be expected to lead to delays in the
Company entering into contracts, some of which may be for extended periods, the
Company’s realization of material revenues from the project and cause the
Company to be dependent upon its limited amounts of capital to fund its
operations during these periods. Additionally, the Company’s failure
to receive revenues at the times it anticipates and has projected could
materially adversely affect the Company’s financial condition.
Recent Introduction of Advanced
System. In March, 2009, the Company’s management determined to
focus the Company’s activities on the design, manufacture and marketing of an
advanced robotic version of both our parking and self-storage systems. The
consequence of this decision was to redirect the Company’s efforts during the
year 2009 onto these activities rather than on marketing the Company’s automated
racking and retrieval systems. This adversely affected the Company’s
sales in fiscal 2009 and the first quarter of fiscal 2010. Also, the
Company’s presentation of an advanced prototype robotic version delayed the
Company’s marketing efforts. There can be no assurance that the
consequences of this refocus of the Company’s marketing efforts will be fully
overcome within the current year.
22
The Company May Never Become
Profitable. There can be no assurance that the Company, including
Boomerang Utah, will have a significant or successful operating
history. The Company may experience losses, limited or no potential
for earnings, limited assets, negative net worth or other characteristics that
are indicative of development stage companies. There can be no
assurance that the Company can be operated so as to develop significant revenues
and cash flow and become profitable.
The Company Needs Additional Capital
to Pursue its Business Plans and It May be Unable to Raise that
Capital. The Company had cash of $957,569 and current
liabilities of $1,772,840 including accounts payable of $618,971 as of December
31, 2009. As of January 20, 2009, the Company had cash of $647,876
and liabilities in the amount of $3,129,748, including debt in the amount of
$2,611,602 and accounts payable in the amount of $518,146. As of
December 31, 2009, the Company had no outstanding unconditional contracts for
the purchase of its products. Management estimates that it will
require approximately $1,500,000 of capital through September 30, 2010 and that
its fixed expenses are approximately $280,000 per month. The Company
is in need of raising this capital in order to continue its
operations.
Including
the cash required in pursuing the Company’s business plan, the Company estimates
that it may require up to approximately $1,500,000 (stated above) for working
capital during the fiscal year ending September 30, 2010 to fund its intended
level of operations. This sum excludes repayment of
debt. The Company believes that it will be successful in negotiating
an extension of $485,000 of its current debt. Further, in the event
the Company engages in any further material transactions during the fiscal year
ending September 30, 2010, it can be expected that it will require additional
funds. As of February 10, 2010, we had made no firm
arrangements to obtain these funds or to engage in any such material
transactions and there can be no assurance that such funds can be obtained.
However, the Company believes it will be able to obtain such funds from further
financings or sales of equity securities, including debt securities convertible
into equity. The failure to obtain these funds may impair the Company’s ability
to meet its business objectives.
There can be no assurance that the
capital the Company requires to meet its operating needs will be raised on the
above terms or any other terms. If the Company is unsuccessful in
raising this capital, it may be required to curtail its operations.
Limited Management Experience in
Manufacture and Marketing of Automated Parking and Self-storage
Systems. The Company has only recently entered the business of
manufacturing and marketing of automated parking and self-storage systems and
its management has limited experience in the manufacturing and marketing of
automated parking and self storage systems. This limited experience can be
expected to possibly result in disruptions or inefficiencies in these activities
which may adversely affect the Company’s activities and its operating results.
Because of this limited experience, the Company may be unable to achieve its
goals and objectives in sales of its systems which would result in disappointing
revenues and operating results. Mr. Stanley J. Checketts, is
the Chief Executive Officer of the Company has various real estate and other
interests to which he will devote a portion of his time. Such activities are not
expected to interfere with his activities on the Company’s behalf.
Intense
Competition. Management expects that the Company will
experience intense competition. It can be expected that it will experience
intense competition from others in the manufacturing and marketing of automated
parking and self-storage facilities. Management believes that it has more than
ten competitors engaged in the manufacture and marketing of automated parking
facilities and a more limited number engaged in the manufacture and marketing of
the self-storage facilities. Management expects that many of its competitors
will be divisions of large multi-national enterprises and be better capitalized
than the Company. Other automated parking and self-storage facilities
are available from both domestic and foreign manufacturers, and it can be
anticipated that others will seek to enter the market. Manufacturers of
automated materials handling warehouse systems may seek to manufacture systems
in competition with the Company.
Absence of Patent or Other
Protection. The Company has not to date been granted any
patent protection for its automated trolley-operated parking and self-storage
systems and there can be no assurance that, if one or more of the Company’s
pending applications were allowed, any significant patent protection would be
granted. Accordingly, the Company may have limited protection to prevent others
from entering into competition with it. There can be no assurance
that the Company’s systems may not violate the patent or other proprietary
rights of others. If such violations should occur, the Company could be subject
to litigation seeking to enjoin the manufacture and sale of the systems, seeking
to collect royalties or other monetary damages. The existence of such litigation
or the threat of such litigation could disrupt and delay the Company’s ability
to pursue its business plans.
23
Absence of Market
Studies. Other than recent initial marketing efforts conducted
by the Company’s employees, it has not obtained any market studies by outside
consultants or others. Accordingly, there are no independent studies performed
by non-affiliated persons to support the beliefs of the Company’s management as
to the likely market for the automated systems it intends to manufacture and
market. There can be no assurance that the market for these systems will be
significant.
The Requirements of Section 404 of
the Sarbanes-Oxley Act of 2002 Require that the Company Undertake an Evaluation
of Its Internal Controls That May Identify Internal Control
Weaknesses. The Sarbanes-Oxley Act of 2002 imposes
duties on the Company and its executives, directors, attorneys and independent
registered public accounting firm. In order to comply with the Sarbanes-Oxley
Act, the Company is required to evaluate its internal controls systems to allow
management to report on, and its independent auditors to attest to, the
Company’s internal controls. The Company has initiated the establishment of the
procedures for performing the system and process evaluation and testing required
in an effort to comply with the management certification and auditor attestation
requirements of Section 404 of the Sarbanes-Oxley Act. The Company
anticipates being able to fully implement the requirements relating to reporting
on internal controls and all other aspects of Section 404 in a timely fashion.
If the Company is not able to implement the reporting requirements of Section
404 in a timely manner or with adequate compliance, the Company’s management
and/or its auditors may not be able to render the required certification and/or
attestation concerning the effectiveness of the internal controls over financial
reporting, the Company may be subject to investigation and/or sanctions by
regulatory authorities, such as the Securities and Exchange Commission or the
FINRA, and its reputation may be harmed. Any such action could adversely affect
the Company’s financial results and the market price of its common
stock.
Continued Control by Existing
Management and a limited number of Shareholders. The Company’s management
and a limited number of shareholders retain significant control over the Company
and its business plans and investors may be unable to meaningfully influence the
course of action of the Company. The existing management and a
limited number of shareholders are able to control substantially all matters
requiring shareholder approval, including nomination and election of directors
and approval or rejection of significant corporate
transactions. There is also a risk that the existing management of
the Company and a limited number of shareholders will pursue an agenda, which is
beneficial to themselves at the expense of other shareholders.
There Is No Assurance Of An Active
Public Market For The Company’s Common Stock And The Price Of the Company’s
Common Stock May Be Volatile. Given the relatively minimal
public float and trading activity in the Company’s securities, there is little
likelihood of any active and liquid public trading market developing for its
shares. If such a market does develop, the price of the shares may be
volatile. Since the shares do not qualify to trade on any national
securities exchange, if they do actually trade, the only available market will
continue to be through the OTC Bulletin Board or in the "pink
sheets". It is possible that no active public market with significant
liquidity will ever develop. Thus, investors run the risk that
investors may never be able to sell their shares.
Possible Future Issuances of
Additional Shares that are Authorized May Dilute the Interests of
Stockholders. Our Certificate of Incorporation currently authorizes our
Board of Directors to issue up to 200,000,000 shares of Common Stock and
1,000,000 shares of undesignated Preferred Stock. Any additional
issuances of any of our authorized but unissued shares will not require the
approval of shareholders and may have the effect of further diluting the equity
interest of shareholders.
Existence of Limited Market for the
Company’s Common Stock. There has been a very limited market
for the Company’s Common Stock. Accordingly, although quotations for
the Company’s Common Stock have been, and continue to be, published in the “pink
sheets” published by the National Quotation Bureau, Inc., these quotations, in
the light of the Company’s operating history, continuing losses and financial
condition, are not necessarily indicative of the value of the
Company. Such quotations are inter-dealer prices, without retail
mark-up, mark-down or commissions and may not necessarily represent actual
transactions.
ITEM
2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS
During the fiscal quarter ended
December 31, 2009, we issued and sold an aggregate of 13,905,750 shares of
Common Stock at a price of $0.10 per share. These sales were the
third of three tranches of a private offering commenced in May 2009 and
concluded in December 2009. The offer and sale of the shares was made
in a transaction exempt from the registration requirements of the U.S.
Securities Act of 1933, as amended (the “Securities Act”), by virtue of Section
4(2) and Regulation D.
24
Also,
pursuant to agreements entered into in December, 2009, we issued an aggregate of
16,780,065 shares in exchange for an aggregate of $1,450,000 principal amount of
our 12% Promissory Notes and $235,919 of accrued interest on the Notes issued in
2008. The shares were issued as exempt securities under Section
3(a)(9) of the Securities Act.
During
October 2009 we granted options to employees to purchase common stock; i)
comprised of ten-year non-statutory fully vested options to purchase 20,000
shares exercisable at $0.10 per share and; ii) five-year
non-statutory options to purchase 500,000 shares exercisable at $0.10 per
share. These 500,000 shares are subject to the following
vesting schedule; 25% eighteen months after the grant date of October 15, 2009
and 25% every six months thereafter. The issuance of the options and
the issuance of the shares on exercise of the options will be made in
transactions exempt from the registration requirements of the U.S. Securities
Act of 1933, as amended (the “Securities Act”), by virtue of Section
4(2).
During
September 2009, it was determined to use our resources for research and
development and elected not to pay the $1,500,000 principal amount of our
Promissory Notes, which constituted a default on the Promissory Notes. Under the
terms of the notes we were required to issue through December 31, 2009,
Post-Maturity or Default warrants to purchase an aggregate of 5,302,541 shares
of our Common Stock of which warrants to purchase 2,551,681 shares are
exercisable at $0.72 and were issued in August 2009, warrants to purchase
2,576,350 shares are exercisable at $0.69 and were issued in September 2009,
warrants to purchase 86,821 shares are exercisable at $0.68 were issued in
October 2009 and warrants to purchase 87,689 shares exercisable at $0.58 were
issued in November 2009. The issuance of the warrants and
the issuance of the shares on exercise of the warrants will be made in
transactions exempt from the registration requirements of the U.S. Securities
Act of 1933, as amended (the “Securities Act”), by virtue of Section
4(2)
ITEM
3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS
On January 25, 2010, we filed an
amendment to our Certificate of Incorporation with the Secretary of State of the
State of Delaware effecting an increase in our authorized shares of Common Stock
from 100,000,000 shares to 200,000,000 shares. The filing of our
Certificate of Amendment was authorized by the holders of a majority of our
shares of Common Stock outstanding by written consents dated December 21, 2009
pursuant to Section 228 of the Delaware General Corporation Law and was
disclosed in an Information Statement under the Securities and Exchange Act of
1934 mailed to stockholders on or about January 4, 2010.
ITEM
5. OTHER INFORMATION
None
ITEM
6. EXHIBITS
Exhibit
|
||
Number
|
Description
|
|
3.1(a)
|
Certificate
of Incorporation and Amendment No. 1 thereto (1)
|
|
3.1(b)
|
Certificate
of Amendment dated June 24, 1992 to Certificate of Incorporation.
(2)
|
|
3.1(c)
|
Certificate
of Amendment filed in the State of Delaware on November 10, 2004 effecting
an increase in the registrant’s authorized shares of Common Stock.
(3)
|
|
3.1(d)
|
Certificate
of Amendment filed in the State of Delaware on November 10, 2004 effecting
change of corporate name and limit on Directors’ liability under Delaware
law. (3)
|
|
3.1(e)
|
Certificate
of Amendment filed in the State of Delaware on February 6, 2008 effecting
a one-for-fifteen reverse stock split of the registrant’s outstanding
Common Stock.
(4)
|
25
3.1(f)
|
Certificate
of Amendment filed in the State of Delaware on February 6, 2008 effecting
an increase in the registrant’s authorized shares of Common Stock.
(4)
|
|
3.1(g)
|
Certificate
of Ownership and Merger filed in the State of Delaware on February 6, 2008
effecting a change in the Registrant’s corporate name to Boomerang
Systems, Inc. (4)
|
|
3.1(h)
|
Certificate
of Amendment filed in the State of Delaware on September 3, 2009 effecting
an increase in the registrant’s authorized shares of Common Stock.
(5)
|
|
3.1(i)
|
Certificate
of Amendment filed in the State of Delaware on January 25, 2010 effecting
an increase in the registrant’s authorized shares of Common Stock.
(5)
|
|
3.2
|
By-Laws
adopted November 28, 2007 (5)
|
|
14
|
Code
of Ethics, as amended December 28, 2009 (6)
|
|
31.1
|
Certification
of President and Principal Executive Officer Pursuant to Rule
13a-14(a)
|
|
31.2
|
Certification
of Principal Financial Officer Pursuant to Rule
13a-14(a)
|
|
32.1
|
Certification
of President and Principal Executive Officer Pursuant to Section 1350
(Furnished but not filed)
|
|
32.2
|
Certification
of Principal Financial Officer Pursuant to Section 1350 (Furnished but not
filed).
|
(1)
|
Filed
as an exhibit to the Registration Statement on Form S-1 (File No. 2-66471)
of the Company .
|
(2)
|
Filed
as an exhibit to the Company's Annual Report on Form 10-KSB for the year
ended September 30, 1992.
|
(3)
|
Filed
as an Exhibit to Current Report on Form 8-K filed November 11,
2004.
|
(4)
|
Filed
as an Exhibit to Current Report on Form 8-K filed February 7,
2008.
|
(5)
|
Filed
herewith.
|
(6)
|
Filed
as an Exhibit to Current Report on Form 8-K filed December 28,
2009.
|
26
SIGNATURES
In
accordance with the requirements of the Exchange Act, the Registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
BOOMERANG
SYSTEMS, INC.
|
|||
Dated: February
12, 2010
|
By:
/s/ Stanley J. Checketts
|
||
Stanley
J. Checketts
|
|||
Principal
Executive Officer
|
|||
Dated: February
12, 2010
|
By:
/s/ Joseph R. Bellantoni
|
||
Joseph
R. Bellantoni
|
|||
Principal
Financial Officer
|
|||
and
Principal Accounting Officer
|
27