U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

þ		Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act of 1934

o		Transition Report under Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission file number: 001-32624

FieldPoint Petroleum Corporation

(Exact name of small business issuer as specified in its charter)

Colorado		84-0811034
(State or Other Jurisdiction of		(I.R.S. Employer
Incorporation or Organization)		Identification No.)

1703 Edelweiss Drive
Cedar Park, Texas 78613

(512) 250-8692

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “large accelerated filer”, “accelerated filer”, and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o		Accelerated filer o		Non-accelerated filer o		Smaller Reporting Company þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

As of November 14, 2011, the number of shares outstanding of the Registrant’s $.01 par value common stock was 7,983,175.

 

 

PART I

Item 1.		Condensed Consolidated Financial Statements

FieldPoint Petroleum Corporation

CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

		September 30,				December 31,
		2011				2010
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	2,684,569			$	984,770
Short-term investments			44,458				44,422
Accounts receivable:
Oil and natural gas sales			710,852				723,218
Joint interest billings, less allowance for doubtful accounts of $99,000 each period			209,474				246,655
Current derivative asset			164,000				—
Deferred income tax asset			—				99,000
Prepaid income taxes			332,134				206,000
Prepaid drilling expense			975,538				975,538
Prepaid expenses and other current assets			67,850				76,433
Total current assets			5,188,875				3,356,036
PROPERTY AND EQUIPMENT:
Oil and natural gas properties (successful efforts method)			24,206,053				24,434,664
Other equipment			52,113				89,248
Less accumulated depletion and depreciation			(9,504,889	)			(9,318,340	)
Net property and equipment			14,753,277				15,205,572
Total assets		$	19,942,152			$	18,561,608
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses		$	341,302			$	553,760
Oil and natural gas revenues payable			240,392				198,247
Total current liabilities			581,694				752,007
LONG-TERM DEBT			6,740,000				6,740,000
DEFERRED INCOME TAXES			1,671,000				1,033,000
ASSET RETIREMENT OBLIGATION			1,468,002				1,405,002
Total liabilities			10,460,696				9,930,009
STOCKHOLDERS’ EQUITY:
Common stock, $.01 par value, 75,000,000 shares authorized; 8,910,175 shares issued and 7,997,175 and 8,077,175 outstanding, each period, respectively			89,101				89,101
Additional paid-in capital			4,573,580				4,573,580
Retained earnings			6,750,490				5,577,260
Treasury stock, 913,000 and 833,000 shares, at cost			(1,931,715	)			(1,608,342	)
Total stockholders’ equity			9,481,456				8,631,599
Total liabilities and stockholders’ equity		$	19,942,152			$	18,561,608

See accompanying notes to these condensed consolidated financial statements.

FieldPoint Petroleum Corporation

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2011				2010				2011				2010
REVENUE:
Oil and natural gas sales		$	1,707,210			$	1,642,692			$	5,283,169			$	5,174,715
Well operational and pumping fees			17,067				17,067				51,199				51,199
Disposal fees			12,000				12,000				46,269				52,213
Total revenue			1,736,277				1,671,759				5,380,637				5,278,127
COSTS AND EXPENSES:
Production expense			684,391				717,492				1,904,218				1,766,228
Depletion and depreciation			302,500				270,000				793,500				835,000
Accretion of discount on asset retirement obligations			21,000				20,000				63,000				60,000
General and administrative			209,556				207,277				674,480				688,591
Total costs and expenses			1,217,447				1,214,769				3,435,198				3,349,819
OPERATING INCOME			518,830				456,990				1,945,439				1,928,308
OTHER INCOME (EXPENSE):
Interest income			1,503				1,710				3,522				4,270
Interest expense			(58,528	)			(64,598	)			(179,679	)			(188,409	)
Unrealized gain on commodity derivatives			232,000				—				164,000				—
Loss on sale and abandonment of oil and gas property			(69,771	)			—				(80,441	)			—
Miscellaneous expense			—				—				(6,611	)			—
Total other income (expense)			105,204				(62,888	)			(99,209	)			(184,139	)
INCOME BEFORE INCOME TAXES			624,034				394,102				1,846,230				1,744,169
Income tax benefit (provision) — current			194,000				(39,000	)			(23,000	)			(231,000	)
Income tax provision (provision) — deferred			(433,000	)			(115,000	)			(650,000	)			(400,000	)
TOTAL INCOME TAX PROVISION			(239,000	)			(154,000	)			(673,000	)			(631,000	)
NET INCOME		$	385,034			$	240,102			$	1,173,230			$	1,113,169
NET INCOME PER SHARE:
BASIC		$	0.05			$	0.03			$	0.15			$	0.14
DILUTED		$	0.05			$	0.03			$	0.15			$	0.14
WEIGHTED AVERAGE SHARES OUTSTANDING:
BASIC			7,997,175				8,143,173				8,026,060				8,232,302
DILUTED			7,997,175				8,143,173				8,026,060				8,232,302

See accompanying notes to these condensed consolidated financial statements.

FieldPoint Petroleum Corporation

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

		For the Nine Months Ended
		September 30,
		2011				2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income		$	1,173,230			$	1,113,169
Adjustments to reconcile net income to net cash provided by operating activities:
Loss on sale and abandonment of oil and gas property			80,441				—
Unrealized gain on commodity derivatives			(164,000	)			—
Depletion and depreciation			793,500				835,000
Deferred income tax expense			650,000				400,000
Accretion of discount on asset retirement obligations			63,000				60,000
Changes in current assets and liabilities:
Accounts receivable			49,547				37,582
Prepaid expenses and other current assets			(117,550	)			(190,084	)
Accounts payable and accrued expenses			(125,459	)			(25,529	)
Oil and natural gas revenues payable			42,145				(3,106	)
Other			(36	)			(86	)
Net cash provided by operating activities			2,444,818				2,226,946
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and natural gas properties			(462,491	)			(393,218	)
Proceeds from the sale of oil and natural gas properties			68,330				—
Acquisition of transportation equipment			(27,485	)			—
Net cash used in investing activities			(421,646	)			(393,218	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of treasury shares			(323,373	)			(623,315	)
Net cash used in financing activities			(323,373	)			(623,315	)
NET INCREASE IN CASH AND CASH EQUIVALENTS			1,699,799				1,210,413
CASH AND CASH EQUIVALENTS, beginning of the period			984,770				657,942
CASH AND CASH EQUIVALENTS, end of the period		$	2,684,569			$	1,868,355

See accompanying notes to these condensed consolidated financial statements.

FieldPoint Petroleum Corporation

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Nature of Business, Organization and Basis of Preparation and Presentation

FieldPoint Petroleum Corporation (the “Company”, “our”, or “we”) is incorporated under the laws of the state of Colorado. The Company is engaged in the acquisition, operation and development of oil and natural gas properties, which are located in Louisiana, New Mexico, Oklahoma, Texas, and Wyoming.

The condensed consolidated financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. However, in the opinion of management, all adjustments (which consist only of normal recurring adjustments) necessary to present fairly the financial position and results of operations for the periods presented have been made. You should read these condensed consolidated financial statements in conjunction with the consolidated financial statements and the notes thereto included in the Company’s Form 10-K filing for the year ended December 31, 2010.

2. Earnings Per Share

Basic earnings per share are computed based on the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share take common stock equivalents (such as options and warrants) into consideration. The Company had no dilutive or potentially dilutive common stock equivalents outstanding during the three or nine months ended September 30, 2011 or 2010.

3. Treasury Stock Repurchase Program

We repurchased a total of 80,000 common shares with an aggregate cost of $323,373 during the nine months ended September 30, 2011. We repurchased a total of 235,800 common shares with an aggregate cost of $623,315 during the nine months ended September 30, 2010.

4. Related Party Transactions

The Company leases office space from its president. Rent expense for this month-to-month lease was $22,500 for each of the nine month periods ended September 30, 2011 and 2010 and $7,500 for each of the three month periods ended September 30, 2011 and 2010. The Company also paid Roger Bryant, and Karl Reimers, both directors, $2,500 and $500, respectively, in consulting fees during the nine months ended September 30, 2010. None were paid in 2011.

5. Prepaid Drilling Expense

Prepaid drilling expense at September 30, 2011 includes the amount paid related to a non-operated well expected to be completed in the fourth quarter of 2011.

6. Long-Term Debt

On October 17, 2011, we entered into the fourth amendment to our loan agreement with citibank which extended the maturity date to Oct 18, 2014 and decreased our borrowing base from $9,250,000 to $8,500,000.

7. Sale of Property

We sold our Whistler property during the first quarter 2011 for approximately $68,000, which resulted in a loss on the sale of $10,670. We abandoned unproved leases totalling $69,771 in the third quarter of 2011.

8. Commodity Derivatives

In June 2011, we entered into the following commodity derivative positions to hedge our oil production price risk. These positions were outstanding at September 30, 2011:

		Volume (Barrels)								$/Barrel
Description and Period		Daily				Total				Floor				Ceiling
NYMEX —WTI Collars October 2011 — December 2011			200				18,400			$	85.00			$	102.50

The following table summarizes the fair value of our open commodity derivatives as of September 30, 2011 and December 31, 2010:

		Liability Derivatives
				Fair Value
		Balance Sheet		September 30,				December 31,
		Location		2011				2010
Derivatives not designated as hedging instruments
Commodity derivatives		Current Assets		$	164,000			$	—

				Fair Value
				3 Months Ended								Nine Months Ended
		Income Statement		September 30,								September 30,
		Location		2011				2010				2011				2010
Derivatives not designated as hedging instruments
Commodity derivatives		Other Income (Expense)		$	232,000			$	—			$	164,000			$	—

Unrealized gains and losses, at fair value, are included on our consolidated balance sheets as current or non-current assets or liabilities based on the anticipated timing of cash settlements under the related contracts. Changes in the fair value of our commodity derivative contracts are recorded in earnings as they occur and included in other income (expense) on our consolidated statements of operations. We estimate the fair values of collar contracts based on the present value of the difference in exchange-quoted forward price curves and contractual settlement prices multiplied by notional quantities. We internally valued the option contracts using industry-standard option pricing models and observable market inputs. We use our internal valuations to determine the fair values of the contracts that are reflected on our consolidated balance sheets. Realized and unrealized gains and losses are also included in other income (expense) on our consolidated statements of operations.

We are exposed to credit losses in the event of non-performance by the counterparties on our commodity derivatives positions and have considered the exposure in our internal valuations. However, we do not anticipate non-performance by the counterparties over the term of the commodity derivatives positions.

To estimate the fair value of our commodity derivatives positions, we use market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated or generally unobservable. We primarily apply the market approach for recurring fair value measurements and attempt to use the best available information. We determine the fair value based upon the hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and lowest priority to unobservable inputs (Level 3 measurement). The three levels of fair value hierarchy are as follows:

•

Level 1 — Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. At September 30, 2011, we had no Level 1 measurements

•

Level 2 — Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Our derivatives, which consist of commodity collars, are valued using commodity market data which is derived by combining raw inputs and quantitative models and processes to generate forward curves. Where observable inputs are available, directly or indirectly, for substantially the full term of the asset or liability, the instrument is categorized in Level 2. At September 30, 2011, all of our commodity derivatives were valued using Level 2 measurements.

•

Level 3 — Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value. At September 30, 2011, we had no Level 3 measurements.

9. Subsequent Events

Subsequent to September 30, 2011, we repurchased in market transactions a total of 14,000 shares of common stock totalling approximately $35,168.

* * * * * * *

PART I

Item 2

MANAGEMENT’S DISCUSSION AND ANALYSIS

The following discussion should be read in conjunction with the Company’s Condensed Consolidated Financial Statements, and respective notes thereto, included elsewhere herein. The information below should not be construed to imply that the results discussed herein will necessarily continue into the future or that any conclusion reached herein will necessarily be indicative of actual operating results in the future. Such discussion represents only the best present assessment of the management of FieldPoint Petroleum Corporation.

General

FieldPoint Petroleum Corporation derives its revenues from its operating activities including sales of oil and natural gas and operating oil and natural gas properties. The Company’s capital for investment in producing oil and natural gas properties has been provided by cash flow from operating activities and bank financing. The Company categorizes its operating expenses into the categories of production expenses and other expenses.

Results of Operations

Comparison of Three Months Ended September 30, 2011 to the Three Months Ended September 30, 2010

		Quarter Ended September 30,
		2011				2010
Revenue:
Oil sales		$	1,486,546			$	1,496,520
Natural gas sales			220,664				146,172
Total oil and natural gas sales revenue		$	1,707,210			$	1,642,692
Sales volume:
Oil (Bbls)			17,203				19,089
Natural gas (Mcf)			50,300				39,653
Total sales volume (BOE)			25,586				25,698
Average sales prices:
Oil ($/Bbl)		$	86.41			$	78.40
Natural gas ($/Mcf)		$	4.39			$	3.69
Average total sales price ($/BOE)		$	66.72			$	63.92
Costs and expenses ($/BOE):
Lease operating expense		$	26.75			$	27.92
Depletion and depreciation			11.82				10.51
Accretion of discount on asset retirement obligations			0.82				0.78
General and administrative			8.19				8.07
Total costs and expenses ($/BOE):		$	47.58			$	47.28

Oil and natural gas sales revenue increased 4% or $64,518 to $1,707,210 for the three month period ended September 30, 2011 from the comparable 2010 period. This was due to higher oil and natural gas commodity prices. Average oil sales prices increased 10% to $86.41 for the three-month period ended September 30, 2011 compared to $78.40 for the three-month period ended September 30, 2010. Average natural gas sales prices increased 19% to $4.39 for the three-month period ended September 30, 2011 compared to $3.69 for the three-month period ended September 30, 2010. The higher commodity prices accounted for approximately $173,000 of the increase in revenue but were offset by approximately $108,000 due to slightly lower sales volumes on a BOE basis in the three-month period ending September 30, 2011 compared to the same period in 2010. We anticipate volumes to remain stable in the coming quarters as additional remedial work is completed.

Lease operating expenses decreased 5% or $33,101 to $684,391 for the three month period ended September 30, 2011 from the comparable 2010 period. This was primarily due to lower workover expense and remedial repairs in 2011 as compared to 2010. Lifting cost per BOE decreased by 4% or $1.17 to $26.75 for the period. We anticipate lease operating expenses to increase over the following quarters due to additional remedial repairs and workover expenses.

Depletion and depreciation increased 11% or $32,500 to $302,500 for the three month period ended September 30, 2011 versus $270,000 in the 2010 comparable period. This was due to increases in production primarily from the Bilbrey well which was previously down for repairs.

General and administrative overhead cost increased 1% or $2,279 to $209,556 for the three-month period ended September 30, 2011 from the three-month period ended September 30, 2010. This was primarily attributable to an increase in professional services such as consulting and administration services. At this time due to the growth of the Company, we anticipate general and administrative expenses to increase in the coming quarters.

Other income, net for the quarter ended September 30, 2011, was $105,204 compared to other expenses, net of $62,888 for 2010. During the 2011 period, the net increase was primarily due to an unrealized gain of $164,000 on commodity derivatives. We anticipate oil prices to trade in the range of our collar during the fourth quarter of 2011, and thus anticipate the unrealized gain recognized in the third quarter of 2011 will reverse in the fourth quarter of 2011.

Results of Operations

Comparison of Nine Months Ended September 30, 2011 to the Nine Months Ended September 30, 2010

		Nine Months Ended September 30,
		2011				2010
Revenue:
Oil sales		$	4,771,225			$	4,500,354
Natural gas sales			511,944				674,361
Total oil and natural gas sales revenue		$	5,283,169			$	5,174,715
Sales volume:
Oil (Bbls)			51,213				58,824
Natural gas (Mcf)			105,519				120,968
Total sales volume (BOE)			68,800				78,985
Average sales price:
Oil ($/Bbl)		$	93.16			$	76.51
Natural gas ($/Mcf)		$	4.85			$	5.57
Average total sales prices ($/BOE)		$	76.79			$	65.52
Costs and expenses ($/BOE):
Lease operating expense		$	27.68			$	22.36
Depletion and depreciation			11.53				10.57
Accretion of discount on asset retirement obligations			0.92				0.76
General and administrative			9.80				8.72
Total costs and expenses ($/BOE)		$	49.93			$	42.41

Oil and natural gas sales revenues increased 2% or $108,454 to $5,283,169 for the nine-month period ended September 30, 2011 from $5,174,715 for the comparable 2010 period. This was due primarily to the overall increase in oil and natural gas commodity pricing offset by a decline in production. Sales volumes decreased 13% on a BOE basis, primarily due to downtime on wells waiting for repairs and to natural declines. Average oil sales prices increased 22% to $93.16 for the nine month period ended September 30, 2011 compared to $76.51 for the nine month period ended September 30, 2010. Average natural gas sales prices decreased 13% to $4.85 for the nine month period ended September 30, 2011 compared to $5.57 for the nine month period ended September 30, 2010. The overall higher commodity prices accounted for an increase of approximately $776,000 in revenue but were offset by approximately $667,000 as a result of lower sales volumes. We anticipate volumes to remain stable in the coming quarters as additional remedial work is complete.

Lease operating expenses increased 8% or $137,990 to $1,904,218 for the nine month period ended September 30, 2011 from the comparable 2010 period. This was primarily due to the increase in additional repairs, workover expenses and production expenses on properties in 2011. Lifting cost per BOE increased 24% or $5.32 to $27.68 for the period. We anticipate lease operating expense to increase over the following quarters due to additional remedial repairs and workover expenses.

Depletion and depreciation expense decreased 5% to $793,500, compared to $835,000 for the comparable 2010 period. This was primarily due to lower production in the 2011 period.

General and administrative overhead cost decreased 2% or $14,111 to $674,480 for the nine month period ended September 30, 2011 from the comparable 2010 period. This was attributable primarily to a decrease in administrative services such as contract labor and administrative services. In the coming quarters we anticipate general and administrative expenses to increase.

Other expense, net for the nine months ended September 30, 2011, was $99,209 compared to other expense, net of $184,139 for the comparable 2010 period. The decrease in other expense, net was primarily due to the unrealized gain on derivatives of $164,000 during 2011. We anticipate oil prices to trade in the range of our collar during the fourth quarter of 2011, and thus anticipate the unrealized gain recognized in the third quarter of 2011 will reverse in the fourth quarter of 2011.

Liquidity and Capital Resources

Cash flow provided by operating activities was $2,444,817 for the nine month period ended September 30, 2011, as compared to cash flow provided by operating activities of $2,226,946 in the comparable 2010 period. The increase in cash flows from operating activities was primarily due to changes in current assets and liabilities in 2011.

Cash flow used in investing activities was $421,646 for the nine month period ended September 30, 2011 as compared to $393,218 in the comparable period primarily due to the additions to oil and natural gas properties and equipment in each period.

Cash flow used in financing activities was used to repurchase 80,000 shares of common stock for a total of $323,373 during the nine-month period ended September 30, 2011. Cash flow was used in financing activities to repurchase 235,800 common shares with an aggregate cost of $623,315 for the nine months ended September 30, 2010.

We may continue to raise financing through draws from our line of credit. Effective October 17, 2011, the borrowing base under our line of credit with Citibank, N.A. was decreased to $8.5 million. We anticipate our operating cash flow and other capital resources, including our Citibank revolving credit facility, if needed, will adequately fund planned capital expenditures and other capital uses over the near term. Based on industry outlook for the remainder of 2011, prices for oil and natural gas could remain higher than the prior year.

PART I

Item 3

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We periodically enter into certain commodity price risk management transactions to manage our exposure to oil and natural gas price volatility. These transactions may take the form of futures contracts, swaps or options. All data relating to our derivative positions is presented in accordance with requirements of FASB ASC Topic No. 815. Accordingly, unrealized gains and losses related to the change in fair market value of derivative contracts that qualify and are designated as cash flow hedges are recorded as other comprehensive income or loss and such amounts are reclassified to oil and natural gas sales revenues as the associated production occurs. Derivative contracts that do not qualify for hedge accounting treatment are recorded as derivative assets and liabilities at market value in the consolidated balance sheet, and the associated unrealized gains and losses are recorded as current expense or income in the consolidated statement of operations. While such derivative contracts do not qualify for hedge accounting, management believes these contracts can be utilized as an effective component of commodity price risk management activities. At September 30, 2011, there were no open positions. We have an unrealized gain of $232,000 and $164,000 on commodity derivative transactions during the three-month and nine-month periods ending September 30, 2011 respectively. We did not have any derivative transactions in 2010.

PART I

Item 4.

CONTROLS AND PROCEDURES

a)		Disclosure Controls and Procedures
		The Company’s Principal Executive Officer and Principal Financial Officer, Ray Reaves, has established and is currently maintaining disclosure controls and procedures for the Company. The disclosure controls and procedures have been designed to provide reasonable assurance that the information required to be disclosed by the Company in reports that it files under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and to ensure that information required to be disclosed by the Company is accumulated and communicated to the Company’s management as appropriate to allow timely decisions regarding required disclosure.
		The Principal Executive Officer and Principal Financial Officer conducted a review and evaluation of the effectiveness of the Company’s disclosure controls and procedures and have concluded, based on his evaluation as of the end of the period covered by this Report, that our disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and to ensure that information required to be disclosed by the Company is accumulated and communicated to management, including our principal executive officer and our principal financial officer, to allow timely decisions regarding required disclosure and we refer you to Exchange Act Rule 13a-15(e).

b)		Changes in Internal Control over Financial Reporting
		There have been no changes in our internal control over financial reporting during the three or nine months ended September 30, 2011 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
c)		Limitations of any Internal Control Design
		Our principal executive and financial officer do not expect that our disclosure controls or internal controls will prevent all error and all fraud. Although our disclosure controls and procedures were designed to provide reasonable assurance of achieving their objectives and our principal executive and financial officer have determined that our disclosure controls and procedures are effective at doing so, a control system, no matter how well conceived and operated, can provide only reasonable, not absolute assurance that the objectives of the system are 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, within the Company 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. Additionally, controls can be circumvented if there exists in an individual a desire to do so. There can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

PART II

OTHER INFORMATION

Item 1.		Legal Proceedings

None.

Item 1A.		Risk Factors

None.

Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds

There were no unregistered sales of equity securities during the period ended September 30, 2011. The following table sets forth our repurchases in market transactions of shares of our common stock during the periods ended September 30, 2011:

ISSUER PURCHASES OF EQUITY SECURITIES

														(d) Maximum
														Number (or
														Approximate
										(c) Total Number				Dollar Value) of
										of Shares (or				Shares (or Units)
										Units) Purchased				that May Yet Be
		(a) Total Number				(b) Average Price				as Part of Publicly				Purchased Under
		of shares (or				Paid per Share (or				Announced Plans				the Plans or
Period		Units) Purchased				Unit)				or Programs				Programs
4/1/11 — 4/30/11			38,000			$	4.37				38,000			$	84,391
5/1/11 — 5/31/11			23,000			$	3.35				23,000			$	7,443
6/1/11 — 6/30/11			2,000			$	3.32				2,000			$	797
TOTAL			63,000								63,000

Item 3.		Default Upon Senior Securities

None.

Item 4.		Removed and Reserved

Item 5.		Other Information

None.

Item 6.		Exhibits

Exhibits
	10.1			Fourth Amendment to Loan and Security Agreement with Citibank, N.A.
	31			Certification
	32			Certification Pursuant to U.S.C. Section 1350

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.