10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2011 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)

Not Applicable

(Former name, former address, and former fiscal year,

if changed since last report.)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x    No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes ¨    No ¨

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

Large accelerated filer   ¨	Accelerated filer                     ¨
Non-accelerated filer     ¨	Smaller reporting company    x
(Do not check if a smaller reporting company)

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:

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Class - Common Stock, $0.001 par value

145,543,832 shares Outstanding at May 3, 2011

PART I
FINANCIAL INFORMATION
ITEM 1.  FINANCIAL STATEMENTS	3
Consolidated Balance Sheets	3
Consolidated Statements of Operations	4
Consolidated Statements of Cash Flows	5
Notes to Consolidated Financial Statements	6-15
ITEM 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations	16-20
ITEM 3.  Quantitative and Qualitative Disclosures About Market Risk	20
ITEM 4.  Controls and Procedures	20-21
PART II
OTHER INFORMATION
ITEM 1.  Legal Proceedings	22
ITEM 1A.  Risk Factors	22-29
ITEM 2.  Unregistered Sales of Equity Securities and Use of Proceeds	29-30
ITEM 3.  Defaults Upon Senior Securities	30
ITEM 4.  [Removed and Reserved]	30
ITEM 5.  Other Information	30
ITEM 6.  Exhibits	30

2

PART I FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS

BOOMERANG SYSTEMS INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	March 31,			September 30,
	2011			2010
	(Unaudited)			(Audited)
ASSETS
Current assets:
Cash and cash equivalents	$	1,037,791		$	4,284,362
Accounts receivable		405,781			235,605
Note receivable		-			8,710
Inventory		306,633			265,761
Prepaid expenses and other assets		85,596			56,717
Costs in excess of billings		437,144			-
Total current assets		2,272,945			4,851,155
Property, plant and equipment, net		2,593,055			1,295,388
Other assets:
Investment		49,066			45,460
Total assets	$	4,915,066		$	6,192,003
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	1,102,895		$	1,412,081
Due to related party		212,600			70,867
Deposit payable		219,403			219,403
Billings in excesss of costs and estimated earned profits on  uncompleted contracts		-			48,186
Estimated loss on uncompleted contract		94,385			-
Debt- current portion		1,109,821			506,908
Debt- current portion - related party		1,712,666			546,000
Total current liabilities		4,451,770			2,803,445
Long term liabilities:
Debt- less current portion		23,233			38,111
Total long term liabilities		23,233			38,111
Total liabilities		4,475,003			2,841,556
Stockholders' equity:
Preferred stock, $0.01 par value; authorized shares 1,000,000; 0 shares issued and outstanding		-			-
Common stock, $0.001 par value; authorized shares 400,000,000 and 200,000,000; 145,543,832 and 140,428,057 issued and outstanding		145,543			140,428
Additional paid in capital		46,425,530			36,920,513
Accumulated (deficit)		(46,131,010	)		(33,710,494	)
Total stockholders' equity		440,063			3,350,447
Total liabilities and stockholders' equity	$	4,915,066		$	6,192,003

See accompanying notes.

3

BOOMERANG SYSTEMS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	Six Months Ended March 31,						Three Months Ended March 31,
	2011			2010			2011			2010
Revenues:
System sales	$	1,319,620		$	86,975		$	153,487		$	86,975
Total revenues		1,319,620			86,975			153,487			86,975
Cost of Goods Sold		2,022,533			75,945			763,614			75,945
Gross Profit (Loss)		(702,913	)		11,030			(610,127	)		11,030
Expenses:
Sales and marketing		592,940			503,837			288,166			274,314
General and administrative expenses		1,794,488			1,504,231			920,448			791,218
Stock-based compensation - services		4,987,194			6,771,298			1,461,095			6,633,194
Research and development		1,321,631			1,001,548			590,786			478,260
Depreciation and amortization		25,103			24,317			12,782			12,187
Total expenses		8,721,356			9,805,231			3,273,277			8,189,173
Loss from operations		(9,424,269	)		(9,794,201	)		(3,883,404	)		(8,178,143	)
Other income (expenses):
Interest income		1,224			2,511			407			769
Interest expense		(28,149	)		(104,376	)		(16,810	)		(44,375	)
Stock-based compensation - financing		(2,924,927	)		-			(1,949,942	)		-
Loss on disposal of equipment		(1,893	)		-			-			-
Loss on equity investment		(34,910	)		-			(18,193	)		-
Total other income (expenses)		(2,988,655	)		(101,865	)		(1,984,538	)		(43,606	)
Loss before provision for income taxes		(12,412,924	)		(9,896,066	)		(5,867,942	)		(8,221,749	)
Provision for income taxes		7,592			4,380			4,928			1,545
Net loss	$	(12,420,516	)	$	(9,900,446	)	$	(5,872,870	)	$	(8,223,294	)
Net loss per common share - basic and diluted	$	(0.09	)	$	(0.12	)	$	(0.04	)	$	(0.09	)
Weighted average number of shares - basic and diluted		141,994,571			81,246,669			144,242,245			92,009,127

See accompanying notes.

4

BOOMERANG SYSTEMS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED MARCH 31, 2011 AND 2010

(UNAUDITED)

	2011			2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(12,420,516	)	$	(9,900,446	)
Adjustments to reconcile net loss operations to net cash (used in) operating activities:
Depreciation		25,103			24,317
Loss on disposal of equipment		1,893			-
Grant of options for services		1,652,243			5,869,982
Issuance of warrants for services		3,334,951			901,316
Issuance of warrants for financing		2,924,927
Loss on equity investment		34,910			20,420
Post-Maturity Warrants		-			100,619
Changes in assets and liabilities:
(Increase)/ decrease in accounts receivable		(170,176	)		37,000
(Increase)/ decrease in notes receivable		8,710			(21,779	)
(Increase) in costs and estimated earned profits in excess of billings on completed contracts		(437,144	)		-
(Increase) in inventories		(40,872	)		(257,049	)
(Increase) in prepaid expenses and other assets		(28,879	)		(29,977	)
Increase/ (decrease) in accounts payable and accrued liabilities		(309,186	)		253,754
Increase in due to related party		141,733			111,565
Increase in deposit payable		-			100,000
Increase/ (decrease) in billings in excess of costs and estimated earned profits on uncompleted contracts		(48,186	)		208,531
Increase in estimated loss on uncompleted contract		94,385			-
NET CASH (USED IN) OPERATING ACTIVITIES		(5,236,104	)		(2,581,747	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment		(1,324,663	)		(74,315	)
Additional equity investment		(38,516	)		-
NET CASH (USED IN) INVESTING ACTIVITIES		(1,363,179	)		(74,315	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from loans payable		2,166,664			507,522
Repayment of loans payable		(13,951	)		(71,892	)
Proceeds from private placement- common stock		1,199,999			1,690,575
NET CASH PROVIDED BY FINANCING ACTIVITIES		3,352,712			2,126,205
DECREASE IN CASH AND CASH EQUIVALENTS		(3,246,571	)		(529,857	)
CASH AND CASH EQUIVALENTS - beginning of period		4,284,362			1,032,160
CASH AND CASH EQUIVALENTS- end of period	$	1,037,791		$	502,303
SUPPLEMENTAL DISCLOSURE OF CASH FLOW  INFORMATION:
Cash paid for:
Interest	$	-		$	8,810
Income taxes	$	7,592		$	4,380
Non-cash investing and financing activites:
Conversion of promissory notes and accrued interest into common stock	$	-		$	2,141,691
Conversion of debt and accrued interest into common stock	$	398,012		$	-

See accompanying notes.

5

BOOMERANG SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE SIX MONTHS ENDED MARCH 31, 2011

NOTE 1 – ORGANIZATION AND NATURE OF OPERATIONS:

The Company

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 containerized self-storage units. The Company was a developmental stage company through the first quarter of fiscal 2008.

Unless the context otherwise requires, the terms “Company,” “we,” “our,” and “us,” means Boomerang Systems, Inc. and its consolidated subsidiaries.

Our fiscal year end is September 30th.  We define fiscal year 2011 as the twelve month period ended September 30, 2011.

Basis of Presentation

The accompanying unaudited consolidated financial statements of the Company have been prepared for the interim period and consist only of normal recurring adjustments, which are in the opinion of management, necessary for a fair presentation of the financial position and operating results for the periods presented. The results of operations for the six months ended March 31, 2011 are not necessarily indicative of the results for the Company to be expected for the full fiscal year ending September 30, 2011.

Reclassification

Certain quarter ended March 31, 2010 items have been reclassified to conform to the quarter ended March 31, 2011 presentation.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Revenue Recognition

Revenues from the sales of RoboticValet systems will be recognized at such time as the title and risk of loss of the system passes to the customer, which Management expects will generally occur within one year of the start of production under the terms of the related sales agreement.

Revenue from a project that is rail based and generally completed over a period exceeding one year is recognized using the percentage of completion method, whereby revenue and the related gross profit is determined by comparing the actual costs incurred to date for the project to the total estimated project costs at completion. Project costs generally include all material and shipping costs, our direct labor, subcontractor costs and an allocation of indirect costs related to the direct labor. Changes in the project scope, site conditions, staff performance and delays or problems with the equipment used on the project can result in increased costs that may not be billable or accepted by the customer and a loss or lower profit from what was originally anticipated at the time of the proposal.

Estimates for the costs to complete the project are periodically updated by management during the performance of the project. Provisions for changes in estimated costs and losses, if any, on uncompleted projects are made in the period in which such losses are determined.

When the current estimate of total contract costs exceeds the current estimate of total contract revenues, a provision for the entire loss on the contract is made.  Losses are recognized in the period in which they become evident under the percentage-of-completion method.  The loss is computed on the basis of the total estimated costs to complete the contract, including the contract costs incurred to date plus the estimated costs to complete. 

6

BOOMERANG SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE SIX MONTHS ENDED MARCH 31, 2011

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued):

The Company may have service contracts in the future after the contract warranty period is expired, which are separate and distinct agreements from project agreements and will be billed according to the terms of the contract. 

Revenue of $1,319,620 and $86,975 has been recorded for the six months ended March 31, 2011 and 2010, respectively.

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. 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 six months ended March 31, 2011 and 2010 were 141,994,571 and 81,246,669, respectively and the three months ended March 31, 2011 and 2010 were 144,242,245 and 92,009,127, respectively. The Company’s common stock equivalents, net of outstanding options and warrants, have not been included as to include them would be anti-dilutive. As of March 31, 2011, there were options outstanding for the purchase of 13,827,686 common shares and warrants for the purchase of 76,473,261 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, which requires the recognition of the fair value of stock-based compensation.  For the six months ended March 31, 2011 and 2010, we recognized $402,246 and $243,808, respectively, in share-based payments related to non-vested stock options that were issued from fiscal year 2008 through 2010, and $1,249,997 and $5,626,174 for fully vested options issued during the six months ended March 31, 2011 and 2010, respectively. In addition, during the sixth months ended March 31, 2011, we recognized $6,259,878 for the issuance of warrants, of which $3,309,950 was for warrants issued to the Chief Executive Officer of the Company in connection with his employment agreement.  See Note 8.

7

BOOMERANG SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE SIX MONTHS ENDED MARCH 31, 2011

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued):

Research and Development

Pursuant to ASC 730, research and development costs are expensed as incurred.  Research and Development expense for the six months ended March 31, 2011 and 2010 were $1,321,631 and $1,001,548, respectively.

Advertising

Advertising costs amounted to $138,783 and $118,894 for the six months ended March 31, 2011 and 2010, respectively. Advertising costs are expensed as incurred.

Use of Estimates

Management of the Company has made estimates and assumptions relating to the 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

Trade receivables are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is our best estimate of the amount of probable credit losses in our 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.  We consider our accounts receivables to be favorably collectible.  Accordingly, we have not recorded an allowance for doubtful accounts at March 31, 2011 and September 30, 2010.

NOTE 3– INVESTMENTS:

The Company made an initial 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 to obtain 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.  The equity method is used to account for this investment.

During the six months ended March 31, 2011, the Company made additional investments in the UAE joint venture of $38,516.  Based on the equity method, the 49% loss we have recognized on this investment for the six months ended March 31, 2011 was $34,910.  After factoring in the loss, our carrying value on this investment was $49,066 at March 31, 2011.

8

BOOMERANG SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE SIX MONTHS ENDED MARCH 31, 2011

NOTE 4- INVENTORY:

The components of Inventory as of March 31, 2011 and September 30, 2010 were:

	March 31, 2011		September 30, 2010
	(Unaudited)		(Audited)
Parts, materials and assemblies	$	306,633	$	265,761
Total Inventory	$	306,633	$	265,761

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 six months ended March 31, 2011 and 2010 were $25,103 and $24,317, respectively.

Property, plant and equipment consist of the following at March 31, 2011 and September 30, 2010:

	March 31, 2011		September 30, 2010
	(Unaudited)		(Audited)
Computer equipment	$	164,635	$	138,823
Machinery and equipment		96,855		96,855
Furniture and fixtures		34,720		34,720
Leasehold improvements		62,469		62,469
Construction in progress (1)		2,365,889		1,072,668
		2,724,568		1,405,535
Less: Accumulated depreciation		131,513		110,147
	$	2,593,055	$	1,295,388

(1) All construction in progress at March 31, 2011 and September 30, 2010 is for the demonstration facility currently being built at Crystal Springs Resort

NOTE 6 – BILLINGS IN EXCESS OF COSTS/COSTS IN EXCESS OF BILLINGS

The Company entered into a contract in fiscal 2010 for the construction of a rack and rail-based parking system and will be recognizing revenue on the percentage of completion method.

Information with respect to uncompleted contracts at March 31, 2011 and September 30, 2010 is as follows:

	March 31, 2011		September 30, 2010
	(Unaudited)		(Audited)
Earnings on billings in progress	$	2,038,150	$	718,530
Less: Billings		1,601,006		766,716
Costs in excess of billings/(Billings in excess of costs)	$	437,144	$	(48,186	)

NOTE 7- DEBT:

The Company entered into a 60 month equipment lease with a third party commencing in December 2007.  The total principal balance of this lease was $135,675 at an annual rate of 6.45%.   At March 31, 2011, the outstanding principal balance was $52,518, of which $29,285 was classified as current debt.  The remaining $23,233 was classified as long-term debt.

9

BOOMERANG SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE SIX MONTHS ENDED MARCH 31, 2011

NOTE 7- DEBT (continued):

Effective February 6, 2008, subsequent to the reverse merger, the Company was indebted for an unsecured loan to a third party.  The loan is not collateralized,  bears interest at an annual rate of 10% and is due on demand.  As of March 31 2011, the balance of the loan including accrued interest was $84,638.

In May 2010, the Company entered into a 6% line of credit with Sail Energy, a company owned by Gail Mulvihill, a principal stockholder of the Company and the mother of the Company’s President, Christopher Mulvihill, for up to $1,300,000 which is due on December 31, 2011.  At March 31, 2011, the Company has drawn down a principal amount of $273,000.  The total amount outstanding under this line of credit, including accrued interest, as of March 31, 2011 was $291,929.  The line of credit is convertible into shares of the Company’s common stock and warrants to purchase shares of common stock at a conversion rate of $0.25 for one share of our common stock and one five-year warrant to purchase one additional share with an exercise price of $0.25 per share.The conversion, if any, will be based on the outstanding amount of indebtedness at the time of conversion.

In July 2010, the Company entered into a 6% Convertible Promissory Note with Venturetek, LP, a principal stockholder of the Company, with a principal amount of $273,000 which is due on December 31, 2011.  The total amount outstanding under this note, including accrued interest, as of March 31, 2011 was $284,249.  The note, together with accrued but unpaid interest, is convertible into shares of the Company’s common stock and warrants to purchase shares of common stock at a rate of $0.25 for a unit consisting of one share of our common stock and one five-year warrant to purchase one additional share at an exercise price of $0.25 per share.  The conversion, if any, will be based on the outstanding amount of indebtedness at the time of conversion.

In November 2010, the Company converted a third party loan of $398,012, including accrued interest, that was due to mature on December 31, 2010 and had an interest rate of 12%, into 1,592,049 shares of the Company’s common stock, $0.001 par value and an equal number of five-year warrants, each to purchase a share of the Company’s common stock with an exercise price of $0.25 per share.

Between December 23 and December 29, 2010, the Company obtained commitments for a line of credit for an aggregate of $3,250,000 provided by nine accredited investors, including four related parties in the amount of $1,750,000, pursuant to the terms of a commitment letter entered into between these lenders and the Company.  If the Company draws down on the line of credit, each lender will receive a note for the amount borrowed, which will bear interest from the date of the borrowing thereunder at a rate of 3% per annum.  Under the terms of the commitment letter, each lender received one five-year warrant to purchase one share of the Company’s common stock for every dollar that lender committed under the line of credit, with an exercise price of $0.30 per share, see Note 8.  In addition, if the Company draws down on the line of credit, each lender will receive additional warrants at a rate of three warrants for each dollar drawn down from that lender's commitment, with the amount of the draw down attributable to each investor’s commitment to be determined on a pro rata basis.

In February and March 2011, the Company drew down a total of $2,166,664 on its line of credit of $3,250,000.  In connection with the draw down, the Company issued notes in an aggregate amount of $2,166,664, bearing interest of 3% per annum to a total of nine investors, including $1,166,666 to four related parties.  In addition, in connection with the draw down, five-year warrants were issued to purchase 6,499,992 shares of common stock at an exercise price of $0.30 per share, including a total of 3,499,998 warrants issued to four related parties.

10

BOOMERANG SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE SIX MONTHS ENDED MARCH 31, 2011

NOTE 7- DEBT (continued):

Debt as of March 31, 2011 and September 30, 2010 is summarized below:

	Principal
	As of
Current Debt- Third Party:	3/31/2011		9/30/2010		Maturity Date	Interest Rate			Secured
Loan Payable- Third Party		80,538		80,538	Upon Demand		10	%	No
Loan Payable- Third Party		-		398,012	12/31/2010 (1)		12	%	No
Promissory Notes – Line of Credit		999,998		-	1/1/2012		3	%	No
Lease Payable- Bank (current portion)		29,285		28,358	9/30/2011		6.45	%	Yes
Total Current Debt- Third Party		1,109,821		506,908
Current Debt- Related Party:
Loan Payable- Related Party		273,000		273,000	12/31/2011		6	%	No
Loan Payable- Related Party		273,000		273,000	12/31/2011		6	%	No
Promissory Notes – Line of Credit		1,166,666		-	1/1/2012		3	%	No
Total Current Debt- Related Party		1,712,666		546,000
Long-Term Debt:
Lease Payable- Bank		23,233		38,111	12/31/2012		6.45	%	Yes
Total Long-Term Debt		23,233		38,111

(1) This note was converted into common stock and warrants during the quarter ended 12/31/2010. See Note 8.

NOTE 8- EQUITY:

Common Stock:

In September 2010, the Board of Directors unanimously approved an amendment to the Company’s Certificate of Incorporation, increasing the Company’s authorized shares of common stock from 200,000,000 to 400,000,000, which was approved by the written consent of the holders of a majority of our issued and outstanding shares of common stock on September 29, 2010. The increase was affected by the filing of an amendment to our certificate of incorporation with the Secretary of State of Delaware on November 23, 2010.

In November 2010, the holder of $398,012 of outstanding indebtedness, exchanged its indebtedness for units consisting of shares of the Company’s common stock and common stock purchase warrants.  The exchange was for 1,592,049 shares of the Company’s common stock and an equal number of common stock purchase warrants to purchase shares of common stock, which are exercisable for a period of five years at an exercise price of $0.25.  The exchange was at a rate of $0.25 for one share of common stock and one warrant.  See Note 7.

In November 2010, the Company sold 666,583 shares of common stock at $0.30 per share in a private placement for proceeds of approximately $200,000.  These investors also received five year warrants to purchase 666,583 shares with an exercise price of $0.30 per share.

On February 9, 2011, the Company filed an Information Statement on Schedule 14C with the Securities and Exchange Commission, disclosing that the holders of a majority of our outstanding shares of common stock executed a written consent dated January 19, 2011 authorizing, but not requiring, our Board of Directors to amend our Certificate of Incorporation to effect a reverse split of our common stock at a ratio of not less than one-for-ten nor more than one-for-thirty shares (the “Reverse Split”) at any time prior to January 1, 2012, at the sole discretion of the Board. Our Board currently believes it will effect a reverse split of our common stock at a ratio of one-for-twenty shares, although it has the authority to effect the Reverse Split anywhere within the range, or not at all.  Regardless of whether the Reverse Split is effected, the par value of our common stock will remain $0.001 per share and the number of shares of common stock authorized to be issued will remain at 400,000,000.

11

BOOMERANG SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE SIX MONTHS ENDED MARCH 31, 2011

NOTE 8- EQUITY (continued):

On February 11, 2011, the Company sold 2,857,143 shares of common stock at $0.35 per share in private placements for proceeds of $1,000,000. 

Options:

On October 6, 2010, the Company granted ten-year non-qualified, fully vested options to the Company’s President, Christopher Mulvihill, to purchase 4,000,000 shares of common stock exercisable at $0.25 per share.  The Company has valued and expensed these options at $1,000,000 for the six months ended March 31, 2011, based on the Black-Scholes Model.

On November 24, 2010, the Company granted options to the Company’s then Chief Operating Officer, Ryan Burleson, to purchase common stock comprised of five-year, non-qualified, fully vested options to purchase 1,000,000 shares exercisable at $0.25 per share.  The Company has valued and expensed these options at $249,997 for the six months ended March 31, 2011, based on the Black-Scholes Model. As a result of his departure, these options are scheduled to expire in June 2011.

Warrants:

On October 1, 2010, the Company entered into an amended and restated employment agreement with our Chief Executive Officer, Mark Patterson.  The amended agreement provides for a base salary of $200,000 per year and provides for a grant of an aggregate of 21,600,000 five-year warrants with an exercise price of $0.25 per share that vest and become exercisable as follows: (i) 5,400,000 on October 1, 2010, (ii) 4,200,000 on each of February 1, August 1, 2011 and February 1, 2012, and (iii) 3,600,000 on August 1, 2012.  The amended agreement provides Mr. Patterson with a right of first refusal, pursuant to which Mr. Patterson has the right, but not the obligation, to maintain his then pro rata share of the Company’s issued and outstanding shares and warrants by purchasing additional shares and warrants each time the Company offers shares and/or warrants for sale.  The Company has valued and expensed a total of 5,400,000 vested warrants at $1,349,991 during the quarter ended December 31, 2010, and an additional 4,200,000 vested warrants at $1,259,972 during the quarter ended March 31, 2011, based on the Black-Scholes Model.

On November 12, 2010, the Company issued five-year warrants to our Chief Executive Officer, Mark Patterson, in connection with the amendment and termination of his prior employment agreement, to purchase 5,600,000 shares of the Company’s common stock at an exercise price of $0.25 per share.  These warrants were issued in conjunction with an amendment to the Executive employment agreement entered into with Mr. Patterson in June 2010.  The Company has valued these warrants at approximately $1,399,985 of which $699,998 was expensed during the fiscal year ended September 30, 2010 and the remaining $699,987 was expensed during the six months ended March 31, 2011.

On November 30, 2010, the Company granted options to a consultant to purchase up to 100,000 shares of the Company’s common stock at an exercise price of $0.25 per share.  These options vest immediately and shall expire after a period of 5 years.  The Company has valued and expensed these warrants at approximately $25,000 during the six months ended March 31, 2011, based on the Black-Scholes Model.

Between December 23 and December 29, 2010, the Company received commitments from nine accredited investors for a line of credit of up to $3,250,000, including commitments of an aggregate of $1,750,000 by four related parties. Each lender received one warrant to purchase one share of the Company’s common stock for each dollar that was committed. Accordingly, the Company granted an aggregate of 3,250,000 five year warrants at an exercise price of $0.30 per share to these lenders, 1,750,000 of which were issued to related parties. The Company has valued and expensed these warrants at $974,985 during the six months ended March 31, 2011, of which $524,992 pertains to related parties.

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BOOMERANG SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE SIX MONTHS ENDED MARCH 31, 2011

NOTE 8- EQUITY (continued):

In February and March 2011, in connection with the line of credit draw, five-year warrants were issued to purchase 6,499,992 shares of common stock at an exercise price of $0.30 per share, including a total of 3,499,998 warrants issued to four related parties.  The Company has valued and expensed these warrants at $1,949,942 during the six months ended March 31, 2011, including $1,049,969 for the four related parties.  See Note 7.

NOTE 9 - RELATED PARTY TRANSACTIONS:

HSK Funding, Inc., Lake Isle Corp., and Venturetek, LP, are beneficial holders of shares of our Company’s common stock and certain of their members and stockholders are also the members of SB&G Properties, LC. (“SB&G”), which is the landlord under a lease with us.  Gail Mulvihill, the individual who exercises sole voting and investment control over Lake Isle Corp., is the mother of Christopher Mulvihill, our President, and is a principal stockholder of our Company.  SB&G entered into a lease with Boomerang Utah dated October 1, 2008, relating to premises located at 324 West 2450 North, Building A, Logan, Utah (“Building A”).  The Company assumed this lease in February 2008.  The initial term of the lease was for one year with an annual rent of $260,610 plus real property and school taxes. In addition, Boomerang is obligated to pay for all utilities, repairs and maintenance to the property. The approximately 29,750 square foot leased premises are used for Boomerang’s manufacturing activities.  On March 15, 2010, Boomerang and SB&G agreed to maintain these terms until September 30, 2011.  Deferred rental payments totaling $132,458 have been accrued as of March 31, 2011, and are classified under due to related party on our balance sheet.

Stan Checketts Properties (“SCP”), a company owned by the chief executive officer of Boomerang’s wholly owned subsidiary, Boomerang Sub, Inc., entered into a lease with Boomerang Utah dated October 1, 2008 for premises located at 324 West 2450 North, Building B, Logan, Utah.  The Company assumed this lease in February 2008.  The initial term of the lease was for one year at a fixed annual rent of $157,680 plus real property and school taxes. In addition, Boomerang is obligated to pay for all utilities and for repairs and maintenance to the property.  The approximately 18,000 square foot leased premises are, in addition to Building A, also used for Boomerang’s manufacturing activities.  On March 15, 2010, Boomerang and SCP agreed to maintain these terms until September 30, 2011.  We are currently leasing an additional 2,400 square feet of office and conference room space with Stan Checketts Properties on a month to month basis at a rental rate of $1,800 per month.  Deferred rental payments totaling $80,142 have been accrued as of March 31, 2011, and are classified under due to related party on our balance sheet.

SB&G is obligated on a twenty-year promissory note due August 1, 2027 owing to a non-affiliated bank. The principal amount due was $791,475 as of March 31, 2011, and the note bears interest at 3.807% per annum. The promissory note is collateralized by the real property that is the subject of the lease from SB&G to Boomerang Utah. Boomerang and Messrs. Gene Mulvihill, Stan Checketts, and Burton Koffman (“Koffman”) are the joint and several guarantors of this promissory note.  Gene Mulvihill is the husband of Gail Mulvihill and the father of Christopher Mulvihill, the President 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.

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.  The amount of this expense for the six months ended March 31, 2011 and 2010 was $88,763 and $63,840 respectively; which is recorded under Research and Development expenses.

13

BOOMERANG SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE SIX MONTHS ENDED MARCH 31, 2011

NOTE 9 - RELATED PARTY TRANSACTIONS (continued):

The Company reimbursed North Jersey Management Services, Inc. for payroll related expenses for the services of Joseph Bellantoni, the Company’s Chief Financial Officer, and Maureen Cowell, the Company’s Corporate Secretary.  Mr. Bellantoni is also the President and Mrs. Cowell is the Vice President of North Jersey Management Services, Inc.  The amount of this expense for the six months ended March 31, 2011 and 2010 was $39,000 and $4,800 respectively; which is recorded under General and Administrative expenses.

In April 2010, we entered into a twenty-year ground lease with Route 94 Development Corporation to lease a portion of an approximately fifteen acre parcel in the town of Hamburg, located in Hardyston Township, New Jersey, on which we intend to construct a Robotic Valet parking facility.  The leased property is within the Crystal Springs Golf and Spa Resort (“the Resort”) adjacent to Grand Cascades Lodge. The parking facility is being constructed by Crystal Springs Builders, LLC.  Gail Mulvihill is a principal shareholder of Route 94 Development Corporation, the Resort and Crystal Springs Builders, LLC.  It is intended that this facility will be used by us primarily for demonstration and marketing purposes in the eastern portion of the United States.  In consideration of the benefits to us under the terms of the lease, we agree to provide to the lessor and its affiliates parking and storage space within the facility at no cost to the lessor and its affiliates subject to our right to use the facility for demonstration purposes.  In addition, we are required to pay the operating costs, premiums on the insurance required under the terms of the lease and incremental property taxes resulting from our construction of the facility.  For a period of 60 months, commencing five years after execution of the lease, the lessor has the option to purchase the facility from us and we have a right to cause the lessor to buy from us the facility we construct.  The price to be paid by the lessor upon exercise of its option to purchase the facility is 110% of the greater of (i) the depreciated value of the facility, or (ii) the fair market value of the facility, and the price to be paid by the lessor upon exercise of our right to cause the lessor to buy the facility is $1.00.

On May 14, 2010, the Company entered into a 6% convertible line of credit for up to $1,300,000 with Sail Energy, a company owned by Gail Mulvihill, who has sole voting and investment control.  The amount outstanding on this line of credit, including accrued interest, as of March 31, 2011 is $291,929.  See Note 7.

In July 2010, Venturetek, LP, a principal stockholder of the Company, entered into a 6% convertible promissory note with the Company for $273,000.  The amount outstanding on this note, including accrued interest, as of March 31, 2011 is $284,249.  See Note 7.

In February and March 2011, the Company drew down a total of $2,166,664 on its line of credit of $3,250,000.  In connection with the draw down, the Company issued notes in an aggregate amount of $1,166,666 to four related parties.  In addition, in connection with the draw down, five-year warrants were issued to these related parties to purchase a total of 3,499,998 shares of common stock at an exercise price of $0.30 per share.

Our management believes that the terms of the above transactions are as favorable to our company as could have been obtained from nonaffiliated persons at the time and under the circumstances as when the transactions were entered into.

NOTE 10- COMMITMENTS AND CONTINGENCIES:

Between December 23 and December 29, 2010, the Company obtained commitments for a line of credit for an aggregate of $3,250,000 provided by nine accredited investors, including four related parties in the amount of $1,750,000, pursuant to the terms of a commitment letter entered into between these lenders and the Company; see Note 7.  When the Company draws down on this line of credit, each lender receives a note for the amount borrowed with an interest rate of 3% per annum, and additional warrants at a rate of three warrants for each dollar drawn down from that lender's commitment, with the amount of the draw down attributable to each investor’s commitment to be determined on a pro rata basis.  Based on these terms, the Company will issue up to an additional 9,750,000 five-year warrants to purchase a share of common stock exercisable at $0.30 per share if the entire line of credit is drawn down, in addition to the 3,250,000 warrants already issued at the time of the commitment.  As of March 31, 2011, the Company had drawn down a total of $2,166,664 on this line of credit.

14

BOOMERANG SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE SIX MONTHS ENDED MARCH 31, 2011

NOTE 10- COMMITMENTS AND CONTINGENCIES (continued):

Boomerang Utah is a joint and several guarantor on a twenty-year promissory note owing to a non-affiliated bank in the principal amount of $791,495, 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.  Messrs. Gene Mulvihill, Checketts, and Koffman, are the other joint and several guarantors of the promissory note.

The lease on our principal office in Morristown, NJ 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.  During the quarter ended March 31, 2011, the Company has given notice to terminate this lease effective December 31, 2011.

The aggregate future minimum annual rental payments, exclusive of escalation payments for taxes and operating costs, under operating leases are as follows:

Twelve months ended:
March 31, 2012	$	403,886
Total	$	403,886

NOTE 11– SUBSEQUENT EVENTS:

In May 2011, the Company drew down the remaining $1,083,336 on its line of credit of $3,250,000.  In connection with the draw down, the Company issued notes in an aggregate amount of $1,083,336, bearing interest of 3% per annum to a total of nine investors, including $583,334 to four related parties.  In addition, in connection with the draw down, five-year warrants were issued to purchase 3,250,008 shares of common stock at an exercise price of $0.30 per share, including a total of 1,750,002 warrants issued to four related parties.

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ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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.

LIQUIDITY AND CAPITAL RESOURCES

Cash and cash equivalents for the six months ended March 31, 2011 decreased by $3,246,571 to $1,037,791 and was primarily due to expenses incurred on our ongoing rack and rail project as well as the demonstration facility being built in New Jersey. We expect to raise additional funds during the balance of the fiscal year ended September 30, 2011 to implement our business plan. We anticipate seeking to raise these funds through public or private debt or equity offerings, including offerings to our existing security holders. In addition, we may seek to restructure our existing liabilities and debt. There can be no assurance that the capital we require to meet our operating needs will be available to us on favorable terms, or at all. If we are unsuccessful in raising sufficient capital, we may be required to curtail our operations.

For the six months ended March 31, 2011, the Company had a net loss of $12,420,516. Included in the net loss were non-cash expenses for depreciation of $25,103, a loss on the disposal of equipment of $1,893 and a loss on equity investment of $34,910. Additionally, expenses related to the issuance of stock options for services amounted to $1,652,243, expenses for the issuance of warrants for services totaled $3,334,951, and expenses for the issuance of warrants for financing totaled $2,924,927. Offsetting the use of cash from operations were year-over-year increases in due to related party of $141,733 and estimated loss on uncompleted contract of $94,385, and a decrease in notes receivable of $8,710. These items were partially offset by increases in prepaid and other assets of $28,879, accounts receivable of $170,176, inventory of $40,872, and decreases in accounts payable and accrued liabilities of $309,186, billings in excess of costs and estimated earned profits on uncompleted contracts of $48,186 incurred in connection with the Company starting to fulfill the terms of the railed based parking contract under construction and an increase in costs and estimated earned profits in excess of billings on completed contracts of $437,144.After reflecting the net changes in assets and liabilities, net cash used in operations was $5,236,104 for the six months ended March 31, 2011.

Financing activities provided cash of $3,352,712 for the six months ended March 31, 2011.  Net cash provided by financing activities consisted of $1,199,999 of proceeds from private placements of common stock and $2,166,664 of proceeds from loans payable, offset by of $13,951 of repayments of loans payable.

During the six months ended March 31, 2011, net cash used in investing activities consisted of an increase in equity investment of $38,516 and an increase in property, plant and equipment of $1,324,663, which includes $1,293,221 of construction in progress for the demonstration robotic system currently being built in the town of Hamburg, located in Hardyston Township, New Jersey. Accordingly, net cash used in investing activities was $1,363,179.

These activities during the six months ended March 31, 2011 resulted in the Company's cash and cash equivalents decreasing by $3,246,571.

RESULTS OF OPERATIONS

FISCAL PERIOD FOR THE SIX MONTHS ENDED MARCH 31, 2011 COMPARED WITH THE SIX MONTHS ENDED MARCH 31, 2010

Revenues were $1,319,620 for the six months ended March 31, 2011, compared with $86,975 for the six months ended March 31, 2010, for an increase of $1,232,645.  The increase was due to the continuing construction of a rail-based parking system that commenced in fiscal 2010.  This revenue was recognized using the percentage of completion method.

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Cost of Goods sold were $2,022,533 for the six months ended March 31, 2011, compared with $75,945 for the six months ended March 31, 2010, for an increase of $1,946,588.  The increase was due to the continuing construction of the same rail-based parking system that commenced in fiscal 2010.  The Company recognized a gross loss of $702,913 for the six months ended March 31, 2011, which included an expense of $94,385 as a provision for the remaining loss to be incurred on the project.

Sales and Marketing expenses were $592,940 for the six months ended March 31, 2011, compared with $503,837 for the six months ended March 31, 2010, for an increase of $89,103. The increase was primarily the result of payroll, travel and trade show related expenses incurred by our salesmen.  Advertising expenses for the six months ended March 31, 2011 and 2010 were $138,783 and $118,894, respectively.

General and administrative expenses were $1,794,488 for the six months ended March 31, 2011, compared with $1,504,231 for the six months ended March 31, 2010, for an increase of $290,257.  This increase is primarily the result of expenses related to nine full-time employees and one part-time employee in 2011 compared to five full-time employees and one part-time employee in 2010.

Stock-based compensation expenses for services were $4,987,194 for the six months ended March 31, 2011, compared with $6,771,298 for the six months ended March 31, 2010, for a decrease of $1,784,104.  In the first six months of 2011, this expense is the result of recording an aggregating $1,652,243 resulting from the grant of stock options to purchase a total of 5,000,000 fully vested shares, 340,000 shares that have vested during the six months ended March 31, 2011 and 1,250,000 shares that vest in the future.  These issuances were used to attract and retain employees and management and we intend to continue to issue equity as necessary to retain our employees and management.  Additional expenses resulting from the grant of warrants include $3,309,951 as executive compensation to purchase a total of 15,200,000 shares of common stock and $25,000 as compensation to a consultant to purchase a total of 100,000 shares of common stock.

Research and Development expenses were $1,321,631 for the six months ended March 31, 2011, compared with $1,001,548 for the six months ended March 31, 2010, for an increase of $320,083.  As of March 31, 2011, the Company employed thirty full-time and two part-time employees focused on research and development of a RoboticValet system compared to fourteen full-time employees in 2010.

Depreciation and amortization was $25,103 for the six months ended March 31, 2011, compared with $24,317 for the six months ended March 31, 2010, for an increase of $786. This increase is the result of purchasing additional fixed assets.

Interest income was $1,224 for the six months ended March 31, 2011, compared with $2,511 for the six months ended March 31, 2010, for a decrease of $1,287.  This decrease is the result of a Note Receivable to CSExpress, LLC being repaid in full by December 2010 as well as a decrease in our overall cash balance in the bank.

Interest expense was $28,149 for the six months ended March 31, 2011, compared with $104,376 for the six months ended March 31, 2010, for a decrease of $76,227.  This decrease is due to repayment and conversion of debt during the fiscal year ended 2010 as well as the conversion of debt to equity that took place on November 24, 2010.

Stock-based compensation expenses for financing were $2,924,927 for the six months ended March 31, 2011, compared with $0 for the six months ended March 31, 2010.  This increase is the result of recording expenses from the issuance of warrants to purchase a total of 9,749,992 shares of common stock in connection with a line of credit.

As of the end of the second fiscal quarter of 2011 there were five outstanding contracts awaiting various approvals which, if obtained, we expect will enable them to become unconditional agreements for the sale of products.

RESULTS OF OPERATIONS

FISCAL PERIOD FOR THE THREE MONTHS ENDED MARCH 31, 2011 COMPARED WITH THREE MONTHS ENDED MARCH 31, 2010

Revenues were $153,487 during the quarter ended March 31, 2011, compared with $86,975 during the quarter ended March 31, 2010, for an increase of $66,512.  The increase was due to the continuing construction of a rail-based parking system that commenced in fiscal 2010.  This revenue was recognized using the percentage of completion method.

Cost of Goods sold were $763,614 during the quarter ended March 31, 2011, compared with $75,945 during the quarter ended March 31, 2010, for an increase of $687,669.  The increase was due to the continuing construction of the same rail-based parking system that commenced in fiscal 2010.  The Company recognized a gross loss of $610,127 on the project for the three months ended March 31, 2011.

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Sales and Marketing expenses were $288,166 during the quarter ended March 31, 2011, compared with $274,314 during the quarter ended March 31, 2010, for an increase of $13,852.

General and administrative expenses were $920,448 during the quarter ended March 31, 2011, compared with $791,218 during the quarter ended March 31, 2010, for an increase of $129,230.  This increase is primarily the result of expenses related to nine full-time employees and one part-time employee in 2011 compared to five full-time employees and one part-time employee in 2010.

Stock-based compensation expenses for services were $1,461,095 for the quarter ended March 31, 2011, compared with $6,633,194 for the quarter ended March 31, 2010, for a decrease of $5,172,099.  

Research and Development expenses were $590,786 for the quarter ended March 31, 2011, compared with $478,260 for the quarter ended March 31, 2010, for an increase of $112,526.  As of March 31, 2011, the Company employed thirty full-time and two part-time employees focused on research and development of a RoboticValet system compared to fourteen full-time employees in 2010.

Depreciation and amortization was $12,782 for the quarter ended March 31, 2011, compared with $12,187 for the quarter ended March 31, 2010, for an increase of $595.

Interest income was $407 for the quarter ended March 31, 2011, compared with $769 for the quarter ended March 31, 2010, for a decrease of $362.

Interest expense was $16,810 for the quarter ended March 31, 2011, compared with $44,375 for the quarter ended March 31, 2010, for a decrease of $27,565.  This decrease is due to repayment and conversion of debt during the fiscal year ended 2010 as well as the conversion of debt to equity that took place on November 24, 2010.

Stock-based compensation expenses for financing were $1,949,942 for the three months ended March 31, 2011, compared with $0 for the three months ended March 31, 2010.  This increase is the result of recording expenses from the issuance of warrants to purchase a total of 6,499,992 shares of common stock in connection with the Company drawing down on a line of credit.

OFF BALANCE SHEET ARRANGEMENTS

There were no off-balance sheet arrangements during the six months ended March 31, 2011 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.

The Company has 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.

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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 March 31, 2011 and 2010, 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.

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 may result in revisions to costs and income, which are recognized in the period in which the revisions are determined.  Changes in estimated job profitability resulting from job performance, job conditions, contract penalty provisions, claims, change orders, and settlements, are accounted for as changes in estimates in the current period.  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.

Revenue recognition – Revenues from the  sales of robotic systems will be recognized at such time as  the title and risk of loss of the system passes to the customer, which Management expects will generally occur within one year of the start of production under the terms of the related sales agreement.

Revenue from a project that is rail based and generally completed over a period exceeding one year is recognized on the percentage of completion method, whereby revenue and the related gross profit is determined based upon the actual costs incurred to date for the project to the total estimated project costs at completion. Project costs generally include all material and shipping costs, our direct labor, subcontractor costs and an allocation of indirect costs related to the direct labor. Changes in the project scope, site conditions, staff performance and delays or problems with the equipment used on the project can result in increased costs that may not be billable or accepted by the customer and results in a loss or lower profit from what was originally anticipated at the time of the proposal.

Estimates for the costs to complete the project are periodically updated by management during the performance of the project. Provision for changes in estimated costs and losses, if any, on uncompleted projects are made in the period in which such losses are determined.

We may have service contracts in the future after the contract warranty period is expired, which are separate and distinct agreements from project agreements and will be billed according to the terms of the contract.

Research and development – Pursuant to ASC 730 , 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-based compensation – We adopted ASC 718-10-25, using the modified-prospective-transition method on February 7, 2008.  Under this method, we are required to recognize compensation cost for stock-based compensation arrangements with employees and directors based on their grant date fair value using the Black-Scholes option-pricing model, such cost to be expensed over the compensations’ respective vesting periods.  For awards with graded vesting, in which portions of the award vest in different periods, we recognize compensation costs over the vesting periods using the straight-line method.  For calculating the value for warrants, the Black-Scholes method is also used.

Inherent in determining the fair value of options are several judgments and estimates that must be made. These include determining the underlying valuation methodology for share compensation awards and the related inputs utilized in each valuation, such as our expected stock price volatility, expected term of the options granted to employees and consultants, expected dividend yield, the expected risk-free interest rate, the underlying stock price and the exercise price of the option. Changes to these assumptions could result in different valuations for individual share awards. The company uses the Black-Scholes option pricing model to determine the fair value of options granted to employees, non-employee directors and non-employee consultants.

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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.

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 March 31, 2011, 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.

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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 material weaknesses described below. Measures are being taken to include documentation of management oversight and review as part of the appropriate functional procedures.

Material Weaknesses

We have identified material weaknesses in our internal controls over financial reporting as of the quarter ended March 31, 2011 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 have 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 and the hiring of a Controller who commenced employment during the quarter, 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 March 31, 2011 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.  We believe that the addition of a Controller will help alleviate the weaknesses noted above.

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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.  You 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.

We have limited operating history which makes it difficult to predict future growth and operating results.

We were a developmental stage company through the first quarter of fiscal 2008.  Accordingly, we have a relatively short operating history, which makes it impossible to reliably predict future growth and operating results. We are subject to all the risks and uncertainties which are characteristic of a relatively new business enterprise, including the substantial problems, expenses and other difficulties typically encountered in the course of its business, in addition to normal business risks.  We face a high risk of business failure because we have commenced extremely limited business operations and have earned little revenues and have had only material losses since our inception. We expect to continue to incur losses well into the future. Our activities to date have been limited to organizational efforts, including fundraising, research and development, marketing and manufacturing a small number of automated storage and parking systems and limited sales of our systems. There is no relevant history upon which to base any assumption as to the likelihood that our business will be successful, and there can be no assurance that we will be able to raise sufficient capital to continue operations, that we will generate significant operating revenues in the future or that we will ever be able to achieve profitable operations in the future.  We face all of the risks commonly encountered by other businesses that lack an established operating history, including, but not limited to, the need for additional capital and personnel, and intense competition.

We have a limited amount of cash to grow our operations.  If we cannot obtain additional sources of cash, our growth prospects and future profitability may be materially adversely affected and we may not be able to implement our business plan. Such additional financing may not be available on satisfactory terms or it may not be available when needed, or at all.

As of March 31, 2011, we had cash and cash equivalents of approximately $1,037,791, and in December 2010, the Company obtained a commitment for a line of credit in the aggregate of $3,250,000 provided by nine accredited investors, including four related parties in the amount of $1,750,000, from which we can draw down.  As of March 31, 2011, the Company has drawn down $2,166,664 on this line of credit. To date our cash flows have been insufficient to fund our operations, which have included a substantial amount of research and development in connection with our RoboticValet System.  Because we have not generated sufficient cash from operations to date, we have funded our business primarily from the sale of equity securities and through the issuance of convertible notes. Historically, we have received funding from our directors, officers and related parties.  Although we believe that our existing cash, the notes and our anticipated cash receipts will be sufficient to sustain our operations, at our current expense levels, through the second quarter of fiscal 2012, we will require significant additional cash to expand our operations.  Our inability to finance our growth, either internally or externally, may limit our growth potential and our ability to execute our business strategy. If we issue securities to raise capital, our existing stockholders may experience dilution or the new securities may have rights senior to those of our common stock.

We have a history of losses and cash outflow from operations which may continue if we do not increase our sales or reduce our costs.

We have generated few sales since our inception, and have generated an operating loss in each financial period since inception. Our accumulated deficit as of March 31, 2011 is $46,131,010, losses are continuing to date and are expected to continue into the future until such time as we are able to generate meaningful sales of our systems.  In order to improve our profitability, we will need to continue to generate new sales while controlling our costs. As we plan to continue to invest to grow our business, we may not be able to successfully generate sufficient sales to achieve profitability. Our ability to achieve profitability also depends on our ability to expand our customer base and scale up our production capacity beyond our existing capacity, as well as our ability to provide products to meet the demands of our customers. If we fail to reduce the cash consumption from operations and to generate cash from other sources on a timely basis, or if the cash requirements of our business change as the result of changes in the cost of materials, a decline in the real estate market or other causes, we could no longer have the cash resources required to run our business. There is no assurance that we will achieve profitable operations at any point in time or at all.

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The loss of one or more of our raw materials suppliers, or increase in prices, could cause production delays, a reduction of revenues or an increase in costs.

The principal raw materials we use are steel and related products. We have no long-term supply agreements with any of our major suppliers. However, we have generally been able to obtain sufficient supplies of raw materials for our operations. Although we believe that such raw materials are readily available from alternate sources, an interruption in the supply of steel and related products or a substantial increase in the price of any of these raw materials could result in a delay in our ability to build and install systems and reductions in our profit margins.

We have neither commissioned nor performed any detailed market studies. Our assumptions regarding the potential market for our products may be incorrect.

Other than recent initial marketing efforts conducted by our employees, we have 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 our management as to the likely market for the automated systems we manufacture and market. Although we believe there is a substantial market for our automated parking and storage systems, there can be no assurance that the market for these systems will be significant.

We have only recently begun to commercialize our automated parking and storage systems, which have not been fully field tested and remain unproven.

We currently have contracts for the development and installation of five of our systems: one is a self-storage system, one is a parking system using our rail-based technology, and three are parking systems using our robotic parking technology.  These contracts provide for the installation of systems over the next three years and are subject to various uncertainties with respect to the underlying projects.  To date, we have not completed the commercial installation of any automated parking systems.  We expect that, as our systems are installed and used, they will be tested in ways that we cannot fully duplicate outside of the context of an actual, commercial operation of our systems, which has not yet occurred.  As a result, once our parking systems are used in commercial operations, we expect to discover various aspects of our systems that require improvement.  Based on our operation of test systems to date, we do not anticipate a need for any major redesign but such a need is possible.  Any major redesign requirement could delay existing projects and new sales, could result in increased cost or lowered performance for our systems and could negatively impact the market’s acceptance of our systems.

Because our parking systems are different from those currently available, we must actively seek market acceptance of our systems, which we expect may occur gradually, if at all.

Our systems are new and our current system RoboticValet automated parking system is substantially different from existing automated parking systems as well as traditional parking garages.  A number of enterprises, municipalities and other organizations that could be potential customers for our systems may be reluctant to commit themselves to our systems until one or more systems have been tested in commercial operations over a significant period of time.  As a result, we may experience difficulty in achieving market acceptance for our systems.  A number of automated parking systems exist in the United States and elsewhere.  Most of these systems are materially different in concept from our robotic system.  We believe that our RoboticValet system offers a number of advantages over existing automated systems and traditional parking structures. However, we expect challenges in demonstrating the advantages of our systems to potential customers and possibly others in the absence of significant historical data as to their performance.  A customer that purchases our systems will likely design the project around it and therefore would encounter significant difficulties if the system did not perform as claimed.  We expect that widespread market acceptance of our systems may occur only gradually over time, if at all.  A significant ramp-up in sales may be delayed until our systems achieve a meaningful history of commercial operations, which would delay our anticipated recognition of revenues.

We may incur significant costs in connection with the start-up of new contracts before receiving related revenues, which could result in cash shortfalls and fluctuations in quarterly results from period to period.

We may incur expenses before we receive any contract payments. These expenses include design and manufacturing expenses. For example, contracts may not fund start-up costs related to the project and may require that the purchaser obtain necessary regulatory and governmental approvals for development of an automated parking system prior to our receiving a deposit or commencing work on the project.  Accordingly, even if we are successful in negotiating deposit payments, we may be required to invest significant sums of money before receiving further related contract payments and the timing of installment payments may not match the timing of our cash outlays. Additionally, any resulting cash shortfall could be exacerbated if we fail to promptly receive payment upon completion of a portion of a project or to otherwise collect fees in a timely manner. A cash shortfall could result in significant consequences. For example, it:

• could increase our vulnerability to general adverse economic and industry conditions;

• would require us to dedicate a substantial portion of our cash flow from operations to service payments on our indebtedness; reducing the availability of our cash flow to fund future capital expenditures, working capital, execution of our growth strategy, research and development costs and other general corporate requirements;

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• could limit our availability to undertake additional projects;

• could limit our flexibility in planning for, or reacting to, changes in our business and industry, which may place us at a competitive disadvantage compared with competitors; and

• could limit our ability to borrow additional funds, even when necessary to maintain adequate liquidity.

As a result, there are no assurances that additional funds, if needed, to help fund start-up costs related to new contracts would be available or, if available, on terms advantageous to us.

We may not receive substantial payments under our contracts until the installation of all or a portion our systems, which in some cases could take over a year or longer, or may not occur at all.

We expect to receive a substantial portion of the contractual payment from system sales upon completion of the related installation in the case of installations taking less than one year or on a “percentage of completion” basis over the course of installation for longer-term installations.   While we have opportunities to install our systems in existing parking structures, we anticipate that the bulk of our opportunity will be in connection with new parking structures.  For our systems to work most effectively, the parking structure itself must be designed with the use of our system in mind.  Accordingly, we expect that the majority of our sales contracts will be entered into at the planning stage for the related construction project.  We expect that the sales cycle, itself, will often be long because of the need to coordinate the design and permitting process for the project as a whole.  Large construction projects requiring parking facilities for numerous vehicles typically take several years to plan, finance, permit and complete.  Our existing contracts provide that we will be paid upon completion of various stages of completion of the project.  We anticipate that, in most cases, our systems will be installed toward the end of the project construction process, which could occur several years after the sale is originally made.  Even where our contracts provide for deposit payments before we begin work and for payments on a percentage of completion basis for the work we do, there can be no assurance that our costs will not outpace the payments received.  In addition, if a project fails or is terminated prior to installation of our system, we will not receive the remaining installment payments, which could result in our incurring a significant loss on the termination of the project.

Some of our contracts contain fixed-price provisions that could result in losses or decreased profits if we fail to accurately estimate our costs.

Some of our contracts contain pricing provisions that require the payment of a set fee by the customer for our services regardless of the costs we incur in performing these services. In such situations, we are exposed to the risk that we will incur significant unforeseen costs in performing the contract. Therefore, the financial success of a fixed-price contract is dependent upon the accuracy of our cost estimates made during contract negotiations. Prior to bidding on a fixed-price contract, we attempt to factor in variables including equipment costs, labor, materials and related expenses over the term of the contract. However, it is difficult to predict future costs, especially for contract terms that range from 3 to 5 years. Any shortfalls resulting from the risks associated with fixed-price contracts will reduce our working capital and profitability. Our inability to accurately estimate the cost of providing services under these contracts could have an adverse effect on our profitability and cash flows.

The economic decline has caused, and may continue to cause, a decline in the type of real estate development projects that we intend to target.

Because our sales will depend on the development of projects in which our systems will be incorporated, our sales are likely to be heavily dependent on the construction climate in the markets that we address.  Since 2007, new real estate projects in the United States have experienced substantial declines and it is not clear whether, when or to what extent a recovery will occur.  A continued slump in new project construction would make it more difficult for us to achieve our growth objectives.

Our ability to perform under our contracts and thereby recognize revenues is dependent on the ability of the project owner to commence and complete construction of the project.

Major residential and commercial construction projects are subject to various uncertainties at several stages.  Design, permitting or financing issues can result in substantial delays and, ultimately, can render a project untenable.  Furthermore, even when the underlying project is fully funded and permitted, economic and other real estate market conditions, and possible interruptions in the project moving forward, continue to create uncertainty as to whether and when the project will be completed.  Changes in demographics and other macroeconomic changes can cause major construction projects to be delayed or abandoned because they are no longer viable or because they cannot be financed.  For example, the recent recession has resulted in a substantial decrease in construction on a global basis.  We intend that our contracts with our customers will provide for a percentage of the contract price to be paid to us if a project is substantially delayed or abandoned.  However, we may be unable to negotiate such arrangements and any such compensation is likely to be substantially less than the revenues and profit we would have earned if the project had been completed.  Our long-term planning will be based on various assumptions about project completion rates that may not prove to be accurate. A significant delay in construction schedules or a significant number of project abandonments would have a material adverse impact on our business.

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We have limited experience estimating our manufacturing and other costs and may underestimate these costs rendering our contracts less profitable or creating losses.

Through the date of these financial statements, we have manufactured and assembled one automated parking and one automated storage system intended for commercial use, and have a third system currently being assembled.  Accordingly, we have limited experience in acquiring and manufacturing the parts and components for the systems, assembling the systems, and in estimating the labor and overhead costs incurred with manufacturing the parts and components for the systems, assembling the systems, and in estimating the labor and overhead costs incurred with the manufacturing, assembling and installing the automated parking and storage systems.  This limited experience may result in us underestimating these costs which could lead to our expenses exceeding the revenues we receive from the contracts we have entered into and that we may enter into in the future.  Losses on our contracts will deplete our cash resources and adversely affect our revenues.  At March 31, 2011, the Company estimated that it would incur a loss on a rail based project.  The total loss was estimated to be approximately $700,000, all of which was recognized during the period ended March 31, 2011.

We expect to face intense competition in selling our systems and we may not be able to compete with our more established competitors.

While we believe that our systems offer a number of advantages over existing garage structures, and other automated parking systems, we expect to face intense competition not only from other systems, but from rack and rail systems and traditional parking garages.  Many of the companies with which we may compete have established products, existing relationships and financial capacity that may offer them a competitive advantage.  If we are correct in our assumption that the advantages of our systems are significant to customers, we can anticipate that other companies, some with stronger engineering and financial capabilities than we have, will seek to design comparable systems that offer similar or greater advantages.  We expect that we will have to continually innovate to reduce cost and increase effectiveness in order to remain competitive and there is no assurance that our systems will become competitive or remain so over time.

Our lack of sufficient patent protection may undermine our competitive position and subject us to intellectual property disputes with third parties, both of which may have a material adverse effect on our business, results of operations and financial condition.

We have filed patent applications with respect to certain aspects of our automated self-storage and automated parking systems but to date we have not been granted any patent protection for our automated parking or self-storage systems and there can be no assurance that, if one or more of our pending applications were allowed, any significant patent protection would be granted. Accordingly, we may have limited protection to prevent others from entering into competition with us.  

In addition, others may obtain knowledge of our know-how and technologies through independent development. Our failure to protect our production process, related know-how and technologies and/or our intellectual property and proprietary rights may undermine our competitive position. Third parties may infringe or misappropriate our proprietary technologies or other intellectual property and proprietary rights. Policing unauthorized use of proprietary technology can be difficult and expensive. Litigation, which can be costly and divert management attention and other resources away from our business, may be necessary to enforce our intellectual property rights, protect our trade secrets or determine the validity and scope of our proprietary rights. We cannot assure you that the outcome of such potential litigation will be in our favor. An adverse determination in any such litigation will impair our intellectual property and proprietary rights and may harm our business, prospects and reputation.

We may be exposed to infringement or misappropriation claims by third parties, which, if determined adversely to us, could cause us to pay significant damage awards.

Our success also depends largely on our ability to use and develop our technology and know-how without infringing the intellectual property rights of third parties. The validity and scope of claims relating to patents involve complex scientific, legal and factual questions and analysis and, therefore, may be highly uncertain. We may be subject to litigation involving claims of patent infringement or violation of intellectual property rights of third parties. The defense and prosecution of intellectual property suits and related legal and administrative proceedings can be both costly and time consuming and may significantly divert the efforts and resources of our technical and management personnel. An adverse determination in any such litigation or proceedings to which we may become a party could subject us to significant liability to third parties, require us to seek licenses from third parties, to pay ongoing royalties, or to redesign our anticipated products or subject us to injunctions prohibiting the manufacture and sale of our anticipated products or the use of our technologies. Protracted litigation could also result in our customers or potential customers deferring or limiting their purchase or use of our anticipated products until resolution of such litigation.

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Failures of our systems could expose us to liabilities that may not be fully covered by insurance.

Although we have designed a number of safeguards into our systems, they may fail, causing delays, injury or damage to persons, vehicles or other property.  We maintain insurance on our manufacturing facilities and intend to maintain insurance against the failure of our systems but the insurance may be inadequate to cover our exposure.  Our insurance does not cover any contractual liability that we may have as a result of a delay in delivery of systems to our customers. Any such events, whether covered by insurance or not, could have a material adverse effect on our business.

Our success is dependent upon our executive officers and other key personnel.

We rely for the conduct of our business on a small group of people whose expertise and knowledge of our business are critical to the prospects for its success.  Our Chief Executive Officer, President, and the Chief Executive Officer of our wholly owned subsidiary have accepted substantial equity interests and less cash for their services and it is unlikely that we could attract employees of comparable ability for the cash compensation that we are currently paying to these individuals.    The loss of any of our key management team would cause significant disruption in our operations and would require us to seek suitable replacements.  There is no assurance that we could attract qualified employees quickly or without incurring significant increased cost.

Because some of our officers have only agreed to provide their services on a part-time basis, they may not be able or willing to devote a sufficient amount of time to our business operations, which may cause our business to fail.

Although our Chief Executive Officer has agreed to devote the vast majority of his productive time, ability and attention to our business, he also is permitted to provide consulting services to third parties on a limited basis, and to serve on other boards of directors.  In addition, our Chief Financial Officer has no employment agreement with the company, and no obligation to provide a specific percentage of his time to the Company.  Currently, our Chief Financial Officer provides approximately 25% of his productive time to us pursuant to a shared services agreement.  In addition, Stan Checketts, CEO of our wholly owned operating subsidiary, Boomerang Sub, Inc., and a member of the Company’s Board of Directors, has commenced developing, manufacturing, and selling amusement rides through two companies: Stan Checketts Properties and Soaring Eagle, Inc.  As a result, he devotes less than 100% of his time to the company.  Accordingly, these officers may not be able to devote sufficient time to the management of our business, as and when needed. It is possible that the demands of these officers’, particularly our Chief Financial Officer’s, other business commitments will keep these officers from devoting sufficient time to the management of our business. Competing demands on these officers’ time may lead to a divergence between their interests and the interests of other shareholders.

Our foreign operations, could subject us to increased regulations and risks.  Failure to comply with these laws may affect our ability to conduct business in certain countries and may affect our financial performance.

We are currently actively seeking customers in the United Arab Emirates and the surrounding Gulf region and may seek customers in India and other countries.  Our foreign operations might or would subject us to a number of risks, including:

· currency fluctuations, which could affect our revenues for transactions denominated in non-U.S. currency or make our services relatively more expensive if denominated in United States currency;

· difficulties in staffing and managing multi-national operations;

· political and economic instability;

· limitations on our ability to enforce legal rights and remedies;

· restrictions on the repatriation of funds;

· changes in regulatory structures or trade policies; and

· tariff and tax regulations.

We are subject to a variety of laws regarding our international operations, including the Foreign Corrupt Practices Act and regulations issued by U.S. Customs and Border Protection, the Bureau of Industry and Security, and the regulations of various foreign governmental agencies. We cannot predict the nature, scope or effect of future regulatory requirements to which our international sales and manufacturing operations might be subject or the manner in which existing laws might be administered or interpreted. Future regulations could limit the countries in which some of our products may be manufactured or sold, or could restrict our access to, and increase the cost of obtaining, products from foreign sources. In addition, actual or alleged violations of these laws could result in enforcement actions and financial penalties that could result in substantial costs.

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Our systems and the projects in which they are installed are subject to complex and diverse regulation that may increase the cost of our systems or limit their efficiency.

Our systems and the real estate development projects in which they are installed are subject to a variety of regulations, including zoning and building codes, permitting, and fire and other safety regulations.  Most of these regulations are local and vary considerably from location to location.  We and our customers will be required to design systems and garages that conform to all applicable regulations, which may make it more difficult to standardize our offerings or to maximize the efficiency of our systems.  The enforcement of local regulations often involves the exercise of considerable judgment and there is likely to be a certain level of uncertainty as to what the regulations will be held to require in each project.  Local regulations may cause delays or cost increases that could have an adverse impact on our business.

Environmental regulation and liability may increase our costs and adversely affect us.

Our manufacturing operations are subject to federal and state environmental laws and regulations concerning, among other things, water discharges, air emissions, hazardous material and waste management. Environmental laws and regulations continue to evolve and we may become subject to increasingly stringent environmental standards in the future, particularly under air quality and water quality laws and standards related to climate change issues, such as reporting of greenhouse gas emissions. We are required to comply with environmental laws and the terms and conditions of environmental permits.  Failure to comply with these regulations, laws or permits could result in fines and penalties. We also may be required to make significant expenditures relating to environmental matters on an ongoing basis.

Based upon our marketing experience to date, we expect to undergo rapid growth of our operations as our sales, manufacturing and installation activity increase; we may be unable to manage this growth, to retain qualified employees and to implement infrastructure changes necessary to support this growth which would negatively adversely affect us.

We are currently managed and run by a small staff of employees who are engaged primarily in system design, manufacture and sales activity and general and administrative functions.  We expect that, if sales increase as we anticipate, and particularly as sales cycles advance, we will be subjected to rapid growth and a substantial increase in the activities that we are called upon to perform and the duties we must fulfill.  We may fail properly to anticipate the need for additional employees or be unable to attract and retain qualified employees as required to sustain our expected growth.  We will also be required to put in place in a timely manner effective accounting systems, reporting structures and other infrastructure required to sustain our growing and developing operations.  The failure to anticipate and effectively deal with these requirements could cause us to miss opportunities that would otherwise be available to us and could cause our performance to suffer across a broad range of activities.  Any such occurrences would have a material adverse effect on our business and prospects.

Our management has limited experience managing a public company and our current resources may not be sufficient to fulfill our public company obligations.

As a public company, we are subject to various requirements of the Securities and Exchange Commission, including record-keeping, financial reporting, and corporate governance rules.  Our management team has limited experience in managing a public company and, historically, has not had the resources typically found in a public company. Our internal infrastructure may not be adequate to support our reporting and other compliance obligations and we may be unable to hire, train or retain necessary staff and may be reliant on hiring outside consultants or professionals to overcome our lack of experience or trained and experienced employees.  Our business could be adversely affected if our internal infrastructure is inadequate, we are unable to engage outside consultants, or are otherwise unable to fulfill our public company obligations.

Our management discovered material weaknesses in our internal controls over financial reporting that, if not properly remediated, could result in material misstatements in our financial statements, which could cause inventors to lose confidence in our reported financial information and have a negative effect on the trading price of our stock.

Our management identified material weaknesses in connection with the preparation of our March 31, 2011 financial statements.  The conclusion that our disclosure controls and procedures were not effective was due to the lack of finance and accounting personnel with an appropriate level of knowledge, experience and training in the application of U.S. GAAP, inadequate number of personnel to properly implement control procedures, insufficient written policies and procedures for accounting and financial reporting, and inadequate financial statement closing process.  Our fiscal year 2010 financial reporting close process was ineffective in recording certain transactions according to the applicable accounting pronouncement and preparing certain critical financial statement disclosures. In order to correct the foregoing deficiencies, we plan to take the following remediation measures:  (1) continue to use third party specialists to address shortfalls in staffing and to assist the Company with accounting and finance responsibilities and (2) increase the frequency of independent reconciliations of significant accounts which will mitigate the lack of segregation of duties until there are sufficient personnel.  In addition, we hired a Controller who started during the quarter ended March 31, 2011.  

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We believe that the foregoing steps will remediate the deficiencies identified above, and we will continue to monitor the effectiveness of these steps and make any changes that our management deems appropriate.  Management anticipates that such disclosure controls and procedures will not be effective until the material weaknesses are remediated.  Material weaknesses in internal control over financial reporting may materially impact our reported financial results and the market price of our stock could significantly decline. Additionally, adverse publicity related to a material failure of internal control over financial reporting could have a negative impact on our reputation and business.

Our management and a limited number of stockholders, many of whom are related parties, collectively hold a controlling interest in us, they have significant influence over our management and their interests may not be aligned with our interests or the interests of our other stockholders.

The Company’s management and a limited number of stockholders, many of whom are related parties, retain majority 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 stockholders, many of whom are related parties, are able to control substantially all matters requiring stockholder approval, including nomination and election of directors and approval or rejection of significant corporate transactions.  There is also a risk that our existing management and a limited number of stockholders may have interests which are different from investors and that they will pursue an agenda which is beneficial to themselves at the expense of other stockholders.

There are limitations on the liabilities of our directors and executive officers. Under certain circumstances, we are obligated to indemnify our directors and executive officers against liability and expenses incurred by them in their service to us.

Pursuant to our amended and restated certificate of incorporation and under Delaware law, our directors are not liable to us or our stockholders for monetary damages for breach of fiduciary duty, except for liability for breach of a director’s duty of loyalty, acts or omissions by a director not in good faith or which involve intentional misconduct or a knowing violation of law, dividend payments or stock repurchases that are unlawful under Delaware law or any transaction in which a director has derived an improper personal benefit. In addition, we have entered into indemnification agreements with each of our directors and executive officers. These agreements, among other things, require us to indemnify each director and executive officer for certain expenses, including attorneys’ fees, judgments, fines and settlement amounts, incurred by any such person in any action or proceeding, including any action by us or in our right, arising out of the person’s services as one of our directors or executive officers. The costs associated with providing indemnification under these agreements could be harmful to our business.

There is no assurance of an active public market for our common stock and the price of our common stock may be volatile.

Given the relatively minimal public float and trading activity in our securities, there is little likelihood of any active and liquid public trading market developing for our shares. If such a market does develop, the price of the shares may be volatile. In the light of the Company’s operating history, continuing losses and financial condition, quotations published in the “pink sheets” 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.  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 "OTCQB".  It is possible that no active public market with significant liquidity will ever develop.

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

Rule 3a51-1 of the Securities Exchange Act of 1934 establishes the definition of a "penny stock," for purposes relevant to us, as any equity security that has a minimum bid price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to a limited number of exceptions which are not available to us. This classification would severely and adversely affect any market liquidity for our Common Stock.

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

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

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· The basis on which the broker or dealer made the suitability determination; and

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

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

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

Future sales of our common stock in the public market or the issuance of our common stock or securities senior to our common stock could adversely affect the trading price of our common stock.

Our Certificate of Incorporation currently authorizes our Board of Directors to issue up to 400,000,000 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 stockholders and may have the effect of further diluting the equity interest of stockholders.

We may issue common stock or equity securities senior to our common stock in the future for a number of reasons, including to attract and retain key personnel, to finance our operations and growth strategy, to adjust our ratio of debt to equity, to satisfy outstanding obligations or for other reasons. If we issue securities, our existing stockholders may experience dilution or the new securities may have rights senior to those of our common stock. In addition, the terms of these securities could impose restrictions on our operations. Future sales of our common stock, the perception that such sales could occur or the availability for future sale of shares of our common stock or securities convertible into or exercisable for our common stock could adversely affect the market prices of our common stock prevailing from time to time.

As of May 13, 2011, we had:

· 76,473,261 shares of common stock that were subject to outstanding warrants;

· 13,827,686 shares of common stock that were subject to options; and

· $546,000 of outstanding lines of credit and notes that were convertible into a maximum of 2,184,000 shares of common stock, subject to adjustment.

We have never paid dividends on our common stock and do not expect to pay dividends in the foreseeable future.

We intend to invest all available funds to finance our growth. Therefore our stockholders cannot expect to receive any dividends on our common stock in the foreseeable future. Even if we were to determine that a dividend could be declared, we could be precluded from paying dividends by restrictive provisions of loans, leases or other financing documents or by legal prohibitions under applicable corporate law.

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On February 11, 2011, the Company sold 2,857,143 shares of common stock at $0.35 per share in private placements for proceeds of $1,000,000.  

In February and March 2011, the Company drew down a total of $2,166,664 on its line of credit of $3,250,000.  In connection with the draw down, the Company issued five-year warrants to purchase 6,499,992 shares of common stock at an exercise price of $0.30 per share, including a total of 3,499,998 warrants issued to four related parties.

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The securities sold as described above were sold under an exemption from the registration requirements of the Securities Act of 1933, as amended, upon reliance on Section 4(2) thereof and/or regulation D promulgated thereunder. No underwriters were employed in any of these transactions.  Each of the certificates issued bears or will bear a legend stating that resale of the shares, including shares to be issued on exercise of options and warrants, is restricted without compliance with the registration requirements of the Securities Act or the availability of an exemption from such registration requirements and stop transfer instructions have been or will be placed with the transfer agent with respect to the transfer of the shares issued.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4.  [REMOVED AND RESERVED]

ITEM 5.  OTHER INFORMATION

None

ITEM 6.  EXHIBITS

 Exhibit

 Number     Description

31.1	Certification of Chief Executive Officer (Principal Executive Officer)  Pursuant to Rule 13a-14(a) (1)
31.2	Certification of Chief Financial Officer (Principal Financial Officer)  Pursuant to Rule 13a-14(a) (1)
32.1	Certification of Chief Executive Officer (Principal Executive Officer) Pursuant to Section 1350 (furnished, not filed) (1)
32.2	Certification of Chief Financial Officer (Principal Financial Officer) Pursuant to Section 1350 (furnished, not filed) (1)

(1) Filed herewith.

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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:  May 16, 2011
	By: /s/ Mark R. Patterson
	Mark Patterson
	Principal Executive Officer
Dated:  May 16, 2011
	By: /s/ Joseph R. Bellantoni
	Joseph R. Bellantoni
	Principal Financial Officer
	and Principal Accounting Officer

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EX-31.1

EXHIBIT 31.1

CERTIFICATION PURSUANT TO

RULE 13A-14 OR 15A-14 OF THE SECURITIES AND EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Mark R. Patterson, certify that:

1.   I have reviewed this quarterly report on Form 10-Q of Boomerang Systems, Inc.;

2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.   The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

(a.) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b.) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c.) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d.) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.   The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a.) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b.) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: May 16, 2011

By: /s/ Mark R. Patterson

Mark R. Patterson

Principal Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION PURSUANT TO

RULE 13A-14 OR 15A-14 OF THE SECURITIES AND EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Joseph R. Bellantoni, certify that:

1.   I have reviewed this quarterly report on Form 10-Q of Boomerang Systems, Inc.;

2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.   The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

(a.) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b.) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c.) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d.) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.   The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a.) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b.) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: May 16, 2011

By: /s/ Joseph R. Bellantoni

Joseph R. Bellantoni

Principal Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Boomerang Systems, Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2011, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Mark R. Patterson, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

1)   The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2)   The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Mark R. Patterson

Mark R. Patterson

Chief Executive Officer

May 16, 2011

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Boomerang Systems, Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2011, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Joseph R. Bellantoni, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

1)   The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2)   The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Joseph R. Bellantoni

Joseph R. Bellantoni

Principal Financial Officer

May 16, 2011