UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the quarterly period ended ~~March 31,~~June 30, 2015

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the transition period from ____________to______________

Commission File Number 0-10176

BOOMERANG SYSTEMS, INC.

(Exact name of registrant as specified in its charter)

Delaware	22-2306487
(State or other jurisdiction	(I.R.S Employer Identification No.)
of incorporation or organization)

30 A Vreeland Rd
Florham Park, New Jersey	07932
(Address of principal executive offices)	(zip code)

(973) 538-1194

(Registrant’s telephone number, including area code)

N/A

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 x 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 Act). Yes ¨ No x

APPLICABLE ONLY TO ~~CORPORATE~~ ISSUERS: INVOLVED IN BANKRUPTCY

~~Indicate~~PROCEEDINGS ~~the~~DURING ~~number~~THE ofPRECEDING ~~shares~~FIVE ~~outstanding of each of the registrant’s classes of common stock, as of the latest practicable date~~YEARS: ~~18,233,977 as of May 14, 2015~~

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

o Yes o No

~~PART~~APPLICABLE IONLY TO CORPORATE ISSUERS:

~~FINANCIAL~~Indicate ~~INFORMATION~~the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date: 18,237,308 as of August 24, 2015

ITEM 1.	FINANCIAL STATEMENTS
Consolidated Balance Sheets		4
Consolidated Statements of Operations		5
Consolidated Statements of Cash Flows		6
Notes to Consolidated Financial Statements		7-21
ITEM 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	22-30
ITEM 3.	Quantitative and Qualitative Disclosure About Market Risk	31
ITEM 4.	Controls and Procedures	31

PART II

OTHER INFORMATION

ITEM 1.	Legal Proceedings	32
ITEM 1A.	Risk Factors	32
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32
ITEM 3.	Defaults Upon Senior Securities	32
ITEM 4.	Mine Safety Disclosures	33
ITEM 5.	Other Information	33
ITEM 6.	Exhibits	33

PART I
FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Consolidated Balance Sheets	5

Consolidated Statements of Operations	6

Consolidated Statements of Cash Flows	7

Notes to Consolidated Financial Statements	8-23

ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	24-34

ITEM 3. Quantitative and Qualitative Disclosure About Market Risk	35

ITEM 4. Controls and Procedures	35

PART II
OTHER INFORMATION

ITEM 1. Legal Proceedings	36

ITEM 1A. Risk Factors	36

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds	38

ITEM 3. Defaults Upon Senior Securities	38

ITEM 4. Mine Safety Disclosures	38

ITEM 5. Other Information	39

ITEM 6. Exhibits	39

PART I FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

BOOMERANG SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	March 31,			September 30,
		June 30,			September 30,
	~~2015~~	2015		~~2014~~	2014
	~~(Unaudited)~~	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	12,~~895~~041,~~130~~644		$	958,877
Accounts receivable, net		~~237~~704,~~915~~701			862,794
Retainage receivable		~~589~~794,~~889~~354			367,706
Inventory		1870,~~047,813~~538			691,044
Prepaid expenses and other assets		~~126~~244,~~010~~683			20,800
Total current assets		34,~~896~~655,~~757~~920			2,901,221
Property, plant and equipment, net		2,~~068~~018,~~153~~737			2,179,521
Other assets:
Security deposit		4354,~~434~~184			20,825
Total other assets		4354,~~434~~184			20,825
Total assets	$	6,~~008~~728,~~344~~841		$	5,101,567
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable and accrued liabilities	$	5,~~554~~595,~~175~~059		$	3,751,600
Due to related party		-			529,830
Deposit payable		~~305~~140,000			155,000
Billings in excesss of costs and estimated earned profits on uncompleted contracts		3,829,843			3,688,059
Billings in excesss of costs and estimated earned profits on
Estimated loss on uncompleted contract		111,343			337,189
uncompleted contracts		5,170,762			3,688,059
Debt- current portion		80,538			89,562
Estimated loss on uncompleted contract		394,888			337,189
Total current liabilities		9,880,899			8,551,240
Debt- current		80,538			89,562
Debt- current, net of discount		7,607,103			-
Debt- current- related party, net of discount		2,963,710			-
Total current liabilities		21,952,060			8,551,240
Long term liabilities:
Debt- long term, net of discount		6,548,211			10,869,318
Debt- long term- related party		500,000			-
Debt- long term- related party, net of discount		2,960,246			7,525,184
Debt- long term, net of discount		315,915			10,869,318
Derivative liability		120,120			659,016
Debt- long term- related party, net of discount		-			7,525,184
Total long term liabilities		9,628,577			19,053,518
Derivative liability		6,270			659,016
Total liabilities		19,509,476			27,604,758
Total long term liabilities		822,185			19,053,518
Total liabilities		22,774,245			27,604,758
Stockholders' deficit:
Preferred stock, $0.01 par value; authorized shares 1,000,000; 0 shares issued and outstanding		-			-
Preferred stock, $0.01 par value; authorized shares 1,000,000;
Common stock, $0.001 par value; authorized shares 200,000,000 18,233,977 and 8,645,023 issued and outstanding		18,234			8,645
0 shares issued and outstanding		-			-
Additional paid in capital		85,782,745			61,617,019
Common stock, $0.001 par value; authorized shares 200,000,000
Accumulated deficit		(99,302,111	)		(84,128,855	)
18,237,308 and 8,645,023 issued and outstanding		18,237			8,645
Total stockholders' deficit		(13,501,132	)		(22,503,191	)
Additional paid in capital		88,168,568			61,617,019
Total liabilities and stockholders' deficit	$	6,008,344		$	5,101,567
Accumulated deficit		(104,232,209	)		(84,128,855	)
Total stockholders' deficit		(16,045,404	)		(22,503,191	)
Total liabilities and stockholders' deficit	$	6,728,841		$	5,101,567

See accompanying notes to the consolidated financial statements.

BOOMERANG SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	Six Months Ended March 31,						Three Months Ended March 31,
	Nine Months Ended June 30,						Three Months Ended June 30,
	2015			2014			2015			2014
Revenues:
System sales	$	23,~~350~~279,~~727~~450		$	34,~~336~~838,~~863~~820		$	~~662~~928,~~615~~723		$	21,~~296~~501,~~235~~957
Total revenues		23,~~350~~279,~~727~~450			34,~~336~~838,~~863~~820			~~662~~928,~~615~~723			21,~~296~~501,~~235~~957
Cost of goods sold		25,~~473~~294,~~353~~737			36,~~910~~653,~~907~~633			~~896~~2,~~719~~821,384			2,~~520~~742,~~354~~726
Gross (loss)		(~~122~~2,~~626~~015,287	)		(~~574~~1,~~044~~814,813	)		(~~234~~1,~~104~~892,661	)		(~~224~~1,~~119~~240,769	)
Expenses:
Sales and marketing		~~281~~393,~~501~~313			~~347~~531,~~147~~719			~~121~~111,~~410~~812			~~176~~184,~~841~~572
General and administrative expenses		24,~~768~~665,~~547~~090			12,~~696~~683,~~842~~412			1,~~490~~896,~~689~~543			~~875~~986,~~298~~569
Arbitration settlement charge		1,517,810			-			~~144,923~~-			-
Research and development		1419,~~505~~138			7484,~~125~~234			94,633			2610,~~328~~109
Depreciation and amortization		~~117~~169,~~185~~317			~~146~~219,~~666~~454			5352,~~628~~132			7372,~~417~~788
Total expenses		46,~~699~~764,~~548~~668			23,~~264~~518,~~780~~819			12,~~810~~065,~~659~~120			1,~~151~~254,~~884~~038
Loss from operations		(48,~~822~~779,~~174~~955	)		(25,~~838~~333,~~824~~632	)		(23,~~044~~957,~~763~~781	)		(12,~~376~~494,~~003~~807	)
Other income (expenses):
Interest income		-			~~492~~1,032			~~(126~~-	)		~~190~~539
Interest expense		(~~762~~1,~~055~~237,244	)		(~~968~~1,~~735~~505,619	)		(~~364~~475,~~757~~189	)		(~~493~~536,~~915~~884	)
Debt conversion expense		(9,350,726	)		-			-			-
Other income		3135,~~344~~920			-25			314,~~344~~576			-25
Loss on disposal of property, plant and equipment		(47,~~056~~080	)		-(7,789	)		(~~47,056~~24	)		-(7,789	)
Amortization of discount on debt		(~~759~~1,~~551~~375,081	)		(12,~~973~~969,~~009~~145	)		(~~283~~615,~~808~~530	)		(~~994~~996,~~843~~136	)
Gain/(loss) on fair value of derivative		~~538~~652,~~896~~746			11,~~069~~058,~~403~~653			~~(82~~113,~~685~~850	)		9(10,~~996,457~~750	)
Total other income (expenses)		(1011,~~349~~321,~~148~~465	)		86,~~128~~577,~~151~~157			(~~747~~972,~~088~~317	)		8(1,~~507~~550,~~889~~995	)
(Loss)/gain before provision for income taxes		(1520,~~171~~101,~~322~~420	)		51,~~289~~243,~~327~~525			(24,~~791~~930,~~851~~098	)		7(4,~~131~~045,~~886~~802	)
Provision for income taxes		1,934			57,~~696~~199			~~1,934~~-			51,~~696~~503
Net (loss)/income	$	(1520,~~173~~103,~~256~~354	)	$	51,~~283~~236,~~631~~326		$	(24,~~793~~930,~~785~~098	)	$	7(4,~~126~~047,~~190~~305	)
Net (loss)/income per common share - basic	$	(01.9117	)	$	0.6515		$	(0.1527	)	$	(0.8748	)
Weighted average number of shares - basic		1617,~~650~~178,~~151~~105			8,~~125~~205,~~029~~682			18,~~231~~234,~~253~~014			8,~~225~~366,~~816~~986
Net (loss)/income per common share - diluted	$	(01.9117	)	$	(0.1606	)	$	(0.1527	)	$	(0.2648	)
Weighted average number of shares - diluted		1617,~~650~~178,~~151~~105			1213,~~930~~034,~~199~~906			18,~~231~~234,~~253~~014			138,~~148~~366,~~569~~986

See accompanying notes to the consolidated financial statements.

BOOMERANG SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE ~~SIX~~NINE MONTHS ENDED ~~MARCH~~JUNE 3130, 2015 ~~AND~~ AND 2014

(UNAUDITED)

	2015			2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(1520,~~173~~103,~~256~~354	)	$	51,~~283~~236,~~631~~326
Adjustments to reconcile net loss operations to
Adjustments to reconcile net loss operations to net cash (used in) operating activities:
net cash (used in) operating activities:
Depreciation and amortization		169,317			219,454
Depreciation and amortization		117,185			146,666
Debt conversion expense		9,350,726			-
Grant of options for services		~~858~~1,~~968~~201,552			~~171~~188,~~479~~069
Issuance of common stock for interest expense		~~116~~122,~~431~~414			~~625~~937,~~267~~901
Rent concession		65,152			-
(Gain) on fair value of derivative		(~~538~~652,~~896~~746	)		(11,~~069~~058,~~403~~653	)
Loss on disposal of property, plant and equipment		47,~~056~~080			-7,789
Amortization of discount on debt		759,551			1,973,009
Allowance for doubtful accounts		13,539			-
Amortization of discount on debt		1,375,081			2,969,145
Changes in assets and liabilities:
Decrease/(increase) in accounts receivable		~~624~~144,~~879~~554			(~~744~~770,~~608~~097	)
(Increase) in retainage receivable		(~~222~~426,~~183~~648	)		-
Decrease in costs and estimated earned profits in excess of
Decrease in costs and estimated earned profits in excess of billings on uncompleted contracts		-			380,630
billings on uncompleted contracts		-			380,630
(Increase) in inventory		(179,494	)		(286,398	)
(Increase) in inventory		(356,769	)		(1,418,753	)
(Increase)/decrease in prepaid expenses and other assets		(257,242	)		72,786
(Increase)/decrease in prepaid expenses and other assets		(127,819	)		62,098
Increase in accounts payable and accrued liabilities		1,843,458			1,106,705
Increase in accounts payable and accrued liabilities		1,802,574			301,134
Increase in due to related party		44,153			132,457
Increase in due to related party		44,153			88,305
(Decrease)/increase in deposit payable		(15,000	)		95,000
Increase in deposit payable		150,000			5,000
Increase in billings in excess of costs and estimated earned profits on uncompleted contracts		1,482,703			2,265,455
Increase in billings in excess of costs and estimated earned
Increase in estimated loss on uncompleted contract		57,699			82,921
profits on uncompleted contracts		141,784			2,094,260
NET CASH (USED IN) OPERATING ACTIVITIES		(5,717,056	)		(2,420,510	)
(Decrease)/increase in estimated loss on uncompleted contract		(225,846	)		121,618
NET CASH (USED IN) OPERATING ACTIVITIES		(2,566,310	)		(1,979,667	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment		(5558,~~473~~213	)		(68,~~575~~421	)
Proceeds from sale of property, plant and equipment		2,600			-
NET CASH (USED IN) INVESTING ACTIVITIES		(5255,~~873~~613	)		(68,~~575~~421	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of notes payable		(9,024	)		(1422,~~911~~768	)
Proceeds from notes payable and line of credit		36,~~564~~864,460			23,452,207
NET CASH PROVIDED BY FINANCING ACTIVITIES		36,~~555~~855,436			23,~~437~~429,~~296~~439
INCREASE IN CASH AND CASH EQUIVALENTS		~~936~~1,~~253~~082,767			~~451~~1,~~054~~000,508
CASH AND CASH EQUIVALENTS - beginning of period		958,877			636,940
CASH AND CASH EQUIVALENTS - end of period	$	12,~~895~~041,~~130~~644		$	1,~~087~~637,~~994~~448
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for:
Income taxes	$	1,934		$	57,~~594~~199
Interest	$	-		$	5,594
Non-cash investing and financing activites:
Issuance of common stock for interest expense	$	~~116~~122,~~431~~414		$	~~625~~937,~~267~~901
Debt conversion expense	$	9,350,726		$	-
Capital Contribution:
Issuance of promissory note to related party	$	(500,000	)	$	-
Capital contribution		(73,982	)		-
Decrease in due to related party		573,982			-
	$	-		$	-
Rent concession	$	65,152		$	-
Capital contribution		(65,152	)		-
	$	-		$	-

See accompanying notes to the consolidated financial statements.

BOOMERANG SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE ~~SIX~~NINE AND THREE MONTHS ENDED ~~MARCH~~JUNE 3130, 2015

NOTE 1 – ORGANIZATION AND NATURE OF OPERATIONS

The Company

Our company, Boomerang Systems, Inc, is engaged in the business of marketing, designing, engineering, manufacturing, installing and servicing its RoboticValet^® automated parking systems (“APS”), with corporate and sales offices in Florham Park, New Jersey, offices in Logan, Utah, and a research, design, engineering, production and testing center in Fort Pierce, Florida.

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 30^th. We define fiscal year 2015 as the twelve month period ended September 30, 2015.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and footnotes included in the Company’s Annual Report on Form 10-K for the year ended September 30, 2014 and filed with the SEC on December 29, 2014. There have been no changes in significant accounting policies since September 30, 2014.

AtChapter ~~the~~11 ~~present~~Bankruptcy ~~time,~~Filing we believe our working capital together with the available borrowings under our Loan and Security Agreement (defined below) and the expected cash flow from ongoing projects will be sufficient to support our administrative requirements and existing projects until June, 2016. To implement our full business plan, we will require additional funds, and are now seeking to raise these funds through public or private debt or equity offerings, including offerings to our existing security holders. In December 2014, we obtained an additional $7,050,000 of commitments under the Loan and Security Agreement to increase the aggregate amount of commitments from $7,850,000 to $14,900,000. 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 and could default on our existing indebtedness. The unaudited, condensed financial statements included in this report do not include any adjustments that may result from this uncertainty.

On August 18, 2015 (the “Petition Date”), the Company and its wholly-owned subsidiaries Boomerang Sub, Inc., Boomerang USA Corp. and Boomerang MP Holdings, Inc. (collectively, the “Subsidiaries”), filed voluntary petitions (the “Bankruptcy Filing”) in the United States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court") seeking relief under the provisions of Chapter 11 ("Chapter 11") of Title 11 of the United States Code ("Bankruptcy Code"). The Chapter 11 case is being administered under the caption "In re Boomerang Systems, Inc., et al," Case No. 15-11729 (the "Chapter 11 Case"). The Company remains in possession of its assets and continues to operate its business as a debtor-in-possession under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and the orders of the Bankruptcy Court.

Operation and Implication of the Bankruptcy Filing

Under Section 362 of the Bankruptcy Code, the Bankruptcy Filing automatically stayed most actions against the Company, including all actions to collect indebtedness incurred prior to the Petition Date or to exercise control over the Company's property. Accordingly, although the Bankruptcy Filing triggered defaults for certain of the Company’s debt obligations, creditors are stayed from taking any actions as a result of such defaults. Absent an order of the Bankruptcy Court, substantially all of the Company’s pre-petition liabilities are subject to being restructured under a reorganization plan. As a result of the Bankruptcy Filing, the realization of assets and the satisfaction of liabilities are subject to uncertainty. The Company, operating as a debtor-in-possession under the Bankruptcy Code, may, subject to approval of the Bankruptcy Court, sell or otherwise dispose of assets and liquidate or settle liabilities for amounts other than those reflected in the condensed consolidated financial statements. Further, a confirmed reorganization plan or other arrangement may materially change the treatment, amounts and classifications in the Company’s condensed consolidated financial statements.

BOOMERANG SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE NINE AND THREE MONTHS ENDED JUNE 30, 2015

The Company has requested, subject to Bankruptcy Court approval to retain legal and financial professionals to advise the Company in connection with the Bankruptcy Filing and certain other professionals to provide services and advice in the ordinary course of business. From time to time, the Company may seek Bankruptcy Court approval to retain additional professionals.

Reorganization Plan

In order for the Company to emerge successfully from Chapter 11, the Company must obtain the Bankruptcy Court’s approval of a reorganization plan, which will enable the Company to transition from Chapter 11 into a successfully reorganized company. The reorganization plan would be subject to creditors' vote and class approval. In connection with a reorganization plan, the Company will require exit financing, to meet its near-term and longer term liquidity needs. The Company’s ability to obtain such approval and financing will depend on, among other things, the timing and outcome of various ongoing matters related to the Bankruptcy Filing. A reorganization plan determines the rights and satisfaction of claims of various creditors and security holders, and is subject to the ultimate outcome of negotiations and Bankruptcy Court decisions ongoing through the date on which the reorganization plan is confirmed.

The Company intends to propose a reorganization plan within the time that the Bankruptcy Code gives the Company the exclusive right to file a reorganization plan, as the same may be extended with approval of the Bankruptcy Court. The Company presently expects that any proposed reorganization plan will provide, among other things, mechanisms for settlement of claims against the Company’s assets and treatment of the Company’s existing equity and debt holders. Any proposed reorganization plan will be subject to revision prior to submission to the Bankruptcy Court based upon discussions with the Company’s creditors and other interested parties, and thereafter in response to creditor claims and objections and the requirements of the Bankruptcy Code or the Bankruptcy Court. There can be no assurance that the Company will be able to secure approval for the Company’s proposed reorganization plan from the Bankruptcy Court or that the Company’s proposed plan will be accepted by lenders.

Going Concern

The Company incurred net losses of approximately $20.1 million, $2.7 million and $11.2 million for the nine months ended June 30, 2015, and the fiscal years ended September 30, 2014 and 2013, respectively, and had a stockholders’ deficit of $16.05 million as of June 30, 2015. The Bankruptcy Filing is intended to bolster the Company’s liquidity and enable the Company to focus on enhancing its systems and strengthening its operational capabilities. The Company has obtained, subject to Bankruptcy Court approval, a debtor-in-possession credit facility (the “DIP Financing”) and, if the Company is successful in obtaining approval of the DIP Financing, such financing would be used to enhance liquidity and working capital. The Company is also developing a strategic plan for the ongoing operation of the Company’s business. Successful implementation of the Company’s strategic plan, however, is subject to numerous risks and uncertainties which raise substantial doubt about the Company’s ability to continue as a going concern.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern and contemplate the realization of assets and the satisfaction of liabilities in the normal course of business. The Company’s ability to continue as a going concern is contingent upon the Company’s ability to obtain required DIP Financing and comply with the financial and other covenants related to such financing, the Bankruptcy Court’s approval of the DIP Financing and the Company’s reorganization plan and the Company’s ability to successfully implement the Company’s strategic plan and obtain exit financing, among other factors. As a result of the Bankruptcy Filing, the realization of assets and the satisfaction of liabilities are subject to uncertainty. While operating as a debtor-in-possession under Chapter 11, the Company may sell or otherwise dispose of or liquidate assets or settle liabilities, subject to the approval of the Bankruptcy Court or as otherwise permitted in the ordinary course of business (and subject to the restrictions related to the DIP Financing), for amounts other than those reflected in the accompanying consolidated financial statements. Further, the reorganization plan could materially change the treatment, amounts and classifications of assets and liabilities reported in the consolidated financial statements. The accompanying condensed consolidated financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities or any other adjustments that might be necessary should the Company be unable to continue as a going concern or as a consequence of the Bankruptcy Filing.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Reorganization Accounting

Accounting Standards Codification 852, “Reorganizations” ("ASC 852") is applicable to entities operating under Chapter 11 of the Bankruptcy Code. ASC 852 generally does not affect the application of U.S. GAAP that the Company follows to prepare the condensed consolidated financial statements, but it does require specific disclosures for transactions and events that are directly related to the Chapter 11 proceedings and transactions and events that result from ongoing operations.

The Company will apply ASC 852 in preparing the condensed consolidated financial statements for periods subsequent to the Chapter 11 filing, and distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. Accordingly, certain revenues, expenses (including professional fees), realized gains and losses and provisions for losses that are realized or incurred in the Chapter 11 filing will be recorded in reorganization items, net in the condensed consolidated statement of operations and comprehensive loss. In addition, pre-petition obligations that may be impacted by the Chapter 11 reorganization process will be classified on the condensed consolidated balance sheet in liabilities subject to compromise. These liabilities are reported at the amounts expected to be allowed by the Bankruptcy Court, even if they may be settled for lesser amounts.

The condensed consolidated financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities or any other adjustments that might be necessary should the Company be unable to continue as a going concern or as a consequence of the Bankruptcy Filing.

Revenue Recognition

Revenues from the sales of RoboticValet and rack and rail systems are 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 changes to costs that may or may not be billable to the customer and can result in changes to the project profit.

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~~ 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 of the total estimated costs to complete the contract, including the contract costs incurred to date plus the estimated costs to complete. As of ~~March~~June 3130, 2015, one of our three ongoing projects was estimated to have a gross loss. On this project, we estimated that the total gross loss would be $35,~~558~~585,~~782~~320. This loss is comprised of $35,~~447~~190,~~439~~432 recognized through the percentage of completion method and $~~111~~394,~~343~~888 as a provision for the remaining loss on contract.

BOOMERANG SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE ~~SIX~~NINE AND THREE MONTHS ENDED ~~MARCH~~JUNE 3130, 2015

Revenues of $23,~~350~~279,~~727~~450 and $34,~~336~~838,~~863~~820 have been recognized for ~~the~~ ~~six~~the nine months ended ~~March~~June 3130, 2015 and 2014, respectively, and of $~~662~~928,~~615~~723 and $21,~~296~~501,~~235~~957 for the three months ended ~~March~~June 3130, ~~2015~~ 2015 and 2014, respectively.

The Company also engages in engineering and design contracts. Revenue is recognized on these contracts after the services are delivered to the customer.

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.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of Boomerang Systems, Inc. and the accounts of all majority-owned subsidiaries, including Boomerang Sub, Inc., Boomerang USA Corp. and Boomerang MP Holdings, Inc. All significant inter-company balances and transactions have been eliminated in consolidation.

Cash and Equivalents

For purposes of the statement of cash flows, we consider all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.

Earnings per Common Share

Basic earnings (loss) per share is based on the weighted average number of common shares outstanding. Diluted earnings (loss) per share is based on the weighted average number of common ~~shares~~ shares outstanding and all dilutive potential common shares outstanding. The weighted average number of common shares used to calculate basic income/(loss) per common share for the ~~six~~nine months ended ~~March~~June 3130, 2015 and 2014 were 1617,~~650~~178,~~151~~105 and 8,~~125~~205,~~029~~682, respectively, and for the three months ended ~~March~~June 3130, 2015 and 2014 were 18,~~231~~234,~~253~~014 and 8,~~225~~366,~~816~~986, respectively. As of ~~March~~June 3130, 2015 and 2014, there were fully vested options outstanding for the purchase of 2,~~256~~624,~~125~~292 and 902,010 common shares, warrants for the purchase of 910,~~225~~680,~~920~~833 and 10,~~640~~880,~~051~~654 common shares, and notes convertible into 127,090 and 4,~~875~~914,~~209~~039 common shares, respectively, all of which could potentially dilute future earnings per share.

	Six Months Ended						Three Months Ended
	Nine Months Ended						Three Months Ended
	March 31						March 31
	June 30						June 30
	2015			2014			2015			2014
Basic
Net Income (loss)	$	(1520,~~173~~103,~~256~~354	)	$	51,~~283~~236,~~631~~326		$	(24,~~793~~930,~~785~~098	)	$	7(4,~~126~~047,~~190~~305	)
Weighted average shares outstanding		1617,~~650~~178,~~151~~105			8,~~125~~205,~~029~~682			18,~~231~~234,~~253~~014			8,~~225~~366,~~816~~986
Earnings (loss) per share of common stock	$	(01.9117	)	$	0.6515		$	(0.1527	)	$	(0.8748	)
Assuming Dilution
Income (loss) from continuing operations	$	(1520,~~173~~103,~~256~~354	)	$	51,~~283~~236,~~631~~326		$	(24,~~793~~930,~~785~~098	)	$	7(4,~~126~~047,~~190~~305	)
Convertible note interest		-			~~625~~937,~~267~~901			-			~~316,069~~-
Convertible note discount amortization		-			12,~~647~~470,~~310~~964			-			~~823,655~~-
Change in fair value of convertible note BCF		-			(5,~~426~~421,~~404~~134	)		-			~~(4,900,428~~-	)
Net Income (loss)	$	(1520,~~173~~103,~~256~~354	)	$	2(775,~~129,804~~943	)	$	(24,~~793~~930,~~785~~098	)	$	3(4,~~365~~047,~~486~~305	)
Average Shares
Weighted average shares outstanding		1617,~~650~~178,~~151~~105			8,~~125~~205,~~029~~682			18,~~231~~234,~~253~~014			8,~~225~~366,~~816~~986
Dilutive securities issuable - stock plans		-			4266,~~924~~978			-			~~85,849~~-
Dilutive securities issuable - convertible notes		-			4,762,246			-			~~4,836,924~~-
Total weighted average shares outstanding		1617,~~650~~178,~~151~~105			1213,~~930~~034,~~199~~906			18,~~231~~234,~~253~~014			138,~~148~~366,~~589~~986
Earnings (loss) per share of common stock	$	(01.9117	)	$	(0.1606	)	$	(0.1527	)	$	(0.2648	)

The diluted earnings (loss) per share calculations exclude the effect of stock options and warrants when the options’ and warrants’ assumed proceeds exceed the average market price of the common shares during the period. For the ~~six~~nine and three months ended ~~March~~June 3130, 2014, the weighted average number of ~~stock~~ stock options excluded from the computations were ~~257~~598,385 and the weighted average number of warrants excluded from the computations were 10,~~640~~880,~~051~~654. For the ~~six~~nine and three months ended ~~March~~June 3130, 2015, the Company’s common stock equivalents, of ~~outstanding~~ outstanding options, warrants and convertible notes, have not been included as to include them would be anti-dilutive.

810

BOOMERANG SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE ~~SIX~~NINE AND THREE MONTHS ENDED ~~MARCH~~JUNE 3130, 2015

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~~nine months ~~ended~~ ~~March~~ended 31June 30, 2015 and 2014, we recognized $~~858~~1,~~968~~201,552 and $~~171~~188,~~479~~069, respectively, in share-based payments related to the issuance of of stock options and $~~136~~342,~~235~~584 and $~~171~~16,~~479~~590 for the three months ended ~~March~~June 3130, 2015 and 2014, respectively. We recognized no expense related to the issuance of warrants during the ~~six~~nine months or three months ended ~~March~~June 3130, 2015 and 2014.

Derivative liability

The Company accounts for reset provisions in connection with their issuance of debt, and reset provisions of equity instruments attached to their debt, in accordance with ASC 815. Under ASC 815 the Company is required to (1) evaluate an instrument’s contingent exercise provisions and (2) evaluate the instrument’s settlement provisions. The derivative liabilities are remeasured at fair value at the end of each reporting period as long as they are outstanding.

Fair Value Measurements

As defined in ASC Topic 820 – 10, “Fair Value Measurements and Disclosures,” fair value is the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 – 10 requires disclosure that establishes a framework for measuring fair value and expands disclosure about fair value measurements. The statement requires fair value measurements be classified and disclosed in one of the following categories:

Level 1:

Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. The Company considers active markets as those in which transactions for the assets or liabilities occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2:

Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability. This category includes those derivative instruments that the Company values using observable market data. Substantially all of these inputs are observable in the marketplace throughout the term of the derivative instruments, can be derived from observable data, or supported by observable levels at which transactions are executed in the marketplace.

Level 3:

Measured based on prices or valuation models that require inputs that are both significant to the fair value measurement and less observable from objective sources (i.e. supported by little or no market activity). The Company’s valuation models are primarily industry standard models. Level 3 instruments include derivative warrant instruments. The Company does not have sufficient corroborating evidence to support classifying these assets and liabilities as Level 1 or Level 2.

As required by ASC Topic 820 – 10, financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels.

The estimated fair value of the derivative liability was calculated using the Black-Scholes option pricing model. The Company uses Level 3 inputs to value its derivative liabilities. The ~~following~~ following table provides a reconciliation of the beginning and ending balances for the major classes of assets and liabilities measured at fair value using significant unobservable inputs (Level 3) and reflects gains and losses for the ~~six~~nine months and one year ended June ~~March 31~~30, 2015 and September 30, 2014, respectively, for all financial assets and liabilities categorized as Level 3.

911

BOOMERANG SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE ~~SIX~~NINE AND THREE MONTHS ENDED ~~MARCH~~JUNE 3130, 2015

	March 31, 2015			September 30, 2014
	June 30, 2015			September 30, 2014
	(Unaudited)
Liabilities:
Balance of derivative liabilities – beginning of period	$	659,016		$	11,767,504
Change in fair value of derivative liabilities		(~~538~~652,~~896~~746	)		(11,108,488	)
Balance of derivative liabilities – end of period	$	~~120~~6,~~120~~270		$	659,016

The Company incurred the derivative liability set forth on the ~~March 31~~June 30, 2015 balance sheet in connection with the 2011 Offering (see Note 7).

Research and Development

Pursuant to ASC 730, Research and Development, research ~~and~~ and development costs are expensed as incurred. Research and Development expense for the ~~six~~nine months ended ~~March~~June 3130, 2015 and 2014 were $1419,~~505~~138 and $7484,~~125~~234, respectively, and $94,633 and $2610,~~328~~109 for the three months ended ~~March~~June 3130, 2015 and 2014, respectively.

Advertising

Advertising costs are included in Sales and Marketing and expensed as incurred. Advertising costs amounted to $2042,~~499~~693 and $2330,~~446~~846 for the ~~six~~nine months ended ~~March~~June 3130, 2015 and 2014, respectively, and $~~162~~22,194 and $167,~~061~~400 for the three months ended ~~March~~June 3130, 2015 and 2014 respectively.

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. Estimates are used in accounting for, among other items, allowance for doubtful accounts, inventory obsolescence, warranty expense, income taxes and percentage of completion contracts. Actual results could differ from these estimates.

Accounts Receivable and Allowance for Doubtful Accounts

Trade receivables are recorded at the invoiced amount and do ~~not~~ not bear interest. The allowance for doubtful accounts reflects our best estimate of probable credit losses inherent in our existing accounts receivable balance. 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 determine this allowance based on known troubled accounts, history and other currently available evidence. The allowance for doubtful accounts as of ~~March~~ 31June 30, 2015 and September 30, 2014 was $31,039 and $17,500, respectively.

Retainage Receivable

The Company’s contracts for automated parking systems ~~sometimes~~ sometimes require a holdback of a percentage of the contract price as retainage. This holdback is recorded on the Company’s ~~balance~~ balance sheet as “Retainage receivable.” Retainage is a portion of the total price of a project that is held back by the customer until the project reaches certain milestones specified in the contract terms. Retainage percentages typically ~~range from 0% to~~approximate 10% and are usually collected anywhere from nine to eighteen months from the inception of the project. Retainage receivable at ~~March~~June 3130, 2015 and September 30, 2014 was $~~589~~794,~~889~~354 and $367,706, respectively.

Inventory

Inventory is stated at the lower of cost or market using the weighted average cost method. Inventory includes materials, parts, assemblies and work in process. The Company records an inventory reserve for the anticipated loss associated with slow moving, obsolete and/or damaged inventory.

~~Property, Plant and Equipment~~12

Property, plant 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 which range from three years to fifteen years. Depreciation and amortization for the six months ended March 31, 2015 and 2014 was $117,185 and $146,666, respectively, and $53,628 and $73,417 for the three months ended March 31, 2015 and 2014, respectively.

BOOMERANG SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE ~~SIX~~NINE AND THREE MONTHS ENDED ~~MARCH~~JUNE 3130, 2015

Property, Plant and Equipment

Property, plant 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 which range from three years to fifteen years. Depreciation and amortization for the nine months ended June 30, 2015 and 2014 was $169,317 and $219,454, respectively, and $52,132 and $72,788 for the three months ended June 30, 2015 and 2014, respectively.

Warranty Reserves

The Company provides warranty coverage on its products for a specified time as stipulated in its sales contracts. As revenues for contracts are recognized, the Company will record a warranty reserve for estimated costs in connection with future warranty claims associated with those contracts. The amount of of warranty reserve is based primarily on the estimated number of products under warranty and historical costs to service warranty claims. Management periodically assesses the adequacy of the reserves based on these factors and adjusts the reserve accordingly. The Company had no warranty reserve as of ~~March~~June 3130, 2015 and September 30, 2014.

Recent Accounting Pronouncements

A variety of proposed or otherwise potential accounting standards are currently under study by standard setting organizations and various regulatory agencies. Due to the tentative and preliminary nature of those proposed standards, management has not determined whether implementation of such proposed standards would be material to the consolidated financial statements of the Company.

NOTE 3 – INVENTORY

The components of inventory as of ~~March~~June 3130, 2015 and September 30, 2014 were as follows:

	March 31, 2015 (Unaudited)		September 30, 2014
	June 30, 2015 (Unaudited)		September 30, 2014
Parts, materials and assemblies	$	~~550~~463,~~531~~551	$	206,821
Work in-process		~~497~~406,~~282~~987		484,223
Total Inventory	$	1870,~~047,813~~538	$	691,044

NOTE 4 - PROPERTY AND EQUIPMENT

Property, plant and equipment consisted of the following at ~~March~~ 31June 30, 2015 and September 30, 2014:

	March 31, 2015			September 30, 2014
	June 30, 2015 (Unaudited)			September 30, 2014
	(Unaudited)
Computer equipment	$	31,832		$	47,999
Machinery and equipment		8790,~~961~~676			235,367
Furniture and fixtures		78,378			141,003
Leasehold improvements		-			62,470
Leased Equipment		-			70,133
Buildings		2,598,470			2,598,470
		2,796,641			3,155,442
		2,799,356			3,155,442
Less: Accumulated depreciation		(~~728~~780,~~488~~619	)		(975,921	)
	$	2,~~068~~018,~~153~~737		$	2,179,521

1113

BOOMERANG SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE ~~SIX~~NINE AND THREE MONTHS ENDED ~~MARCH~~JUNE 3130, 2015

NOTE 5 – BILLINGS IN EXCESS OF COSTS

Information with respect to uncompleted contracts at ~~March~~June 3130, ~~2015~~ 2015 and September 30, 2014 are as follows:

	March 31, 2015			September 30, 2014
Billings in excess of costs:	June 30, 2015 (Unaudited)			September 30, 2014
Billings in excess of costs:	(Unaudited)
Earnings on billings to date	$	10,376,095		$	7,583,997
Earnings on billings to date	$	9,652,371		$	7,583,997
Less: Billings		(15,546,857	)		(11,272,056	)
Less: Billings		(13,482,214	)		(11,272,056	)
Total (billings in excess of costs)	$	(5,170,762	)	$	(3,688,059	)
Total (billings in excess of costs)	$	(3,829,843	)	$	(3,688,059	)

NOTE 6 – ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable and accrued liabilities at ~~March~~June 3130, 2015 and ~~September~~ September 30, 2014 consisted of the following:

	March 31, 2015		September 30, 2014
	June 30, 2015 (Unaudited)		September 30, 2014
	(Unaudited)
Accounts payable – trade	$	2,546,705	$	1,958,696
Accounts payable – trade	$	2,015,537	$	1,958,696
Accrued interest		2,010,048		944,147
Accrued interest		1,544,013		944,147
Accrued payroll		465,999		676,942
Accrued payroll		390,957		676,942
Accrued arbitration settlement charge		481,358		-
Accrued arbitration settlement charge		1,517,810		-
Other accrued liabilities		90,949		171,815
Other accrued liabilities		85,858		171,815
Total	$	5,595,059	$	3,751,600
Total	$	5,554,175	$	3,751,600

NOTE 7- DEBT

Current Debt

Effective February 6, 2008, the Company became indebted for an unsecured loan to a third party. As of ~~March~~June 3130, 2015, the principal balance of this loan was $80,538. The loan is not collateralized, bears interest at an annual rate of 10% and is due on demand. As of ~~March~~June 3130, 2015, the balance of the loan including accrued interest was $~~126~~128,~~090~~260.

Long-Term Debt

Private Placement Offering – November/December 2011

In November and December 2011, the Company issued to subscribers 6% convertible promissory notes (“2011 Notes”) in the aggregate principal amount of approximately $11.6 million and warrants (“2011 Warrants”) to purchase an aggregate of approximately 2.7 million shares of Common Stock of the Company in three (3) closings of a private placement (the “2011 Offering”). The 2011 Notes are due five years after the respective date of issuance and were initially convertible into Common Stock at $4.25 per share, subject to weighted average adjustment for issuances of common stock or common stock equivalents below the conversion price, subject to certain exceptions.

The Company valued the 2011 Warrants and the beneficial conversion features (“BCF”) of the 2011 Notes, and the resulting derivative liability, at $5,309,941 each for the 2011 Warrants and the BCF, for a total of $10,619,882 recorded as a discount to the convertible debt during the first quarter of fiscal 2012. This discount is being amortized over the life of the note or until such time as the note is repaid or converted, or upon exercise of the 2011 Warrants. The valuation of the 2011 Warrants, BCF, and the resulting derivative liability, were determined using the Black-Scholes option pricing model with the following weighted assumptions for all debt issuances: i) expected dividend rate of 0%, ii) expected volatility of 52.7%, iii) risk free interest rate of 0.9%, and iv) expected term of 5 years. During the six months ended March 31, 2015, the Company amortized $174,907 of the of debt discount. Following the Exchange Offer on October 31, 2014 (described below), the remaining principal amount of 2011 Notes was $200,000 and the related discount to the convertible debt was $125,452. The Company amortized $12,545 of the remaining debt discount during the six months ended March 31, 2015.

BOOMERANG SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE SIX AND THREE MONTHS ENDED MARCH 31, 2015

As of September 30, 2014, the aggregate fair value of the derivative was $646,120. The revaluation of the derivative as of March 31, 2015 resulted in a derivative value of $55,612. The change in fair value of the derivative from September 30, 2014 to March 31, 2015 resulted in a gain on the fair value of the derivative liability of $590,508. Substantially all of the increase in the gain on the fair value of the derivative was due to the reduction of the principal amount of the convertible notes as a result of the Exchange Offer. The derivative liability was revalued on March 31, 2015 using the Black-Scholes option pricing model with the following weighted assumptions: i) expected dividend rate of 0% ii) expected volatility of 32.12% iii) risk free interest rate of 1.37%, iv) expected term of 1.60 years and v) market price of $3.13.

In connection with the 2011 Offering, the Company issued warrants to the placement agent (the “Placement Agent Warrants”) to purchase shares of Common Stock. The Company issued an aggregate of 109,176 Placement Agent Warrants in November and December 2011 valued at $212,040. The Placement Agent Warrants were valued based on the Black-Scholes Model with assumptions similar to those used to value the 2011 Warrants issued to the purchasers of 2011 Notes in the 2011 Offering. The Placement Agent Warrants have similar terms to those issued to the convertible debt holders, including a reset provision included with the warrants if the Company should obtain equity financing at a price per share lower than that of the exercise price of the warrants. The Placement Agent Warrants, similar to the 2011 Warrants issued to the purchasers of 2011 Notes in the 2011 Offering, do not meet the definition of being indexed to the Company’s own stock in accordance with ASC 815-40. Accordingly, the Company has recorded a derivative liability for the value of the Placement Agent Warrants. The derivative liability valued at $12,896 at September 30, 2014 was revalued at $64,508 at March 31, 2015. The difference in valuation for the six months ended March 31, 2014 was $51,612, accounted for as a loss on the fair value of derivative. Substantially all of the loss on the fair value of the derivative was due to a change in methodology in measuring the market price of the Company’s common stock during the quarter ended March 31, 2014. The valuation at March 31, 2015 was valued based on the Black-Scholes Model with assumptions similar to those used to value the 2011 Warrants granted to the debt holders as of March 31, 2015.

As a result of the issuance of shares of common stock in the Exchange Offer, the conversion price of the 2011 Notes was adjusted to $3.00.

Private Placement Offering – June/July 2012

In June and July 2012, the Company issued to subscribers 6% convertible promissory notes due on June 14, 2017 (“2012 Notes”) in the aggregate principal amount of $6.2 million and warrants to purchase an aggregate of approximately 1.2 million shares of Common Stock (“2012 Warrants”) in a private placement (the “2012 Offering”).

The 2012 Notes were initially convertible into Common Stock at $5.00 per share, subject to weighted average adjustment for issuances of common stock or common stock equivalents below the conversion price, subject to certain exceptions. Additionally, the conversion price may not be adjusted below $0.25.

The Company valued the 2012 Warrants and the BCF at $1,956,517 each for a total of $3,913,034 recorded as a discount to the convertible debt during the third quarter of fiscal 2012. This discount is being amortized over the life of the 2012 Notes or until such time as the 2012 Notes are repaid or converted, or upon exercise of the 2012 Warrants. The valuation of the 2012 Warrants and BCF were determined using the Black-Scholes option pricing model with the following weighted assumptions for all debt issuances: i) expected dividend rate of 0% ii) expected volatility of 53.43% iii) risk free interest rate of 0.9% and expected term of 5 years. During the six months ended March 31, 2015, the Company amortized $63,322 of the of debt discount. Following the Exchange Offer on October 31, 2014 (described below), the remaining principal amount of 2012 Notes was $200,000 and the related discount to the convertible debt was $126,424. The Company amortized $12,642 of the remaining debt discount during the six months ended March 31, 2015.

As a result of the issuance of shares of common stock in the Exchange Offer, the conversion price of the 2012 Notes was adjusted to $3.31.

Private Placement Offering – December 2012

In December 2012 and March 2013, the Company issued to subscribers 6% convertible notes due on December 28, 2017 (the “December 2012 Notes”) in the aggregate principal amount of approximately $3.1 million and warrants to purchase an aggregate of 615,000 shares of Common Stock (the “December 2012 Warrants”) in a private placement (the “December 2012 Offering”).

The December 2012 Notes were initially convertible into Common Stock at $5.00 per share, subject to full ratchet adjustment for issuances of Common Stock or Common Stock equivalents below the conversion price, subject to certain exceptions, and subject to weighted average anti-dilution adjustment for issuances of Common Stock as payment of interest on the Notes, the 2012 Notes and the December 2012 Notes. Additionally, the conversion price may not be adjusted below $0.25.

BOOMERANG SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE SIX AND THREE MONTHS ENDED MARCH 31, 2015

The Company valued the December 2012 Warrants and the BCF at $962,904 each for a total of $1,925,808 recorded as a discount to the convertible debt during the first quarter of fiscal 2013. This discount is being amortized over the life of the December 2012 Notes or until such time as the December 2012 Notes are repaid or converted, or upon exercise of the December 2012 Warrants. The valuation of the December 2012 Warrants and BCF were determined using the Black-Scholes option pricing model with the following weighted assumptions for all debt issuances: i) expected dividend rate of 0% ii) expected volatility of 52.92% iii) risk free interest rate of 0.72% and expected term of 5 years. During the six months ended March 31, 2015, the Company amortized $32,124 of the of debt discount. The entire principal amount of the December 2012 Notes, plus accrued and unpaid interest on October 31, 2014, was exchanged as part of the Exchange Offer on October 31, 2014 (described below).

Exchange Offer

On October 31, 2014, the Company completed an offer to exchange outstanding convertible notes and warrants, for the issuance of common stock at the rate of $2.15 per share in exchange for the entire balance (principal and interest) of the notes and warrants issued with the applicable note. The Company exchanged $20.5 million principal amount of the previously outstanding $20.9 million of convertible notes and 4,859,409 warrants for 9,583,384 shares of common stock in the exchange offer. Following the offer to exchange, $200,000 principal amount 2011 Notes and $200,000 principal amount 2012 Notes remain outstanding, at conversion ratios of $3.00 and $3.31 per share, respectively, and 66,667 2011 Warrants and 60,424 2012 Warrants remain outstanding with an exercise price of $3.00 and $3.31, respectively. Immediately prior to exchanging their notes in the Exchange Offer, holders of a majority of the principal amount of each of the series of notes consented to the Company (i) issuing debt from time to time on terms which may be approved by the Company’s Board of Directors, in an aggregate amount up to $100,000,000, which debt may be secured or unsecured and senior or subordinated to or pari passu with, the Notes, (ii) entering into transactions with its officers, directors, employees and affiliates on terms approved by a majority of the Company’s independent and disinterested directors from time to time, (iii) declaring and paying dividends and making distributions to its holders of common stock as may be approved by the Company’s Board of Directors from time to time and (iv) purchasing or acquiring shares of the Company’s common stock or other equity securities, including the notes and warrants, on terms as may be approved by the Company’s Board of Directors from time to time.

The Company accounted for the Exchange Offer as an induced conversion under the criteria established in ASC 470-20-40. In accordance with ASC 470-20-40, the Company recognized an expense equal to the fair value of the shares issued in the Exchange Offer in excess of the fair value of shares issuable at the stated conversion rates of the 2011 Notes, 2012 Notes and December 2012 Notes. This resulted in a debt conversion expense of $9,350,726 for the six months ended March 31, 2015.

June 2013 Loan and Security Agreement

On June 11, 2013, the Company and its wholly-owned subsidiaries Boomerang Sub, Inc., Boomerang USA Corp. and Boomerang MP Holdings Inc. (collectively with the Company, the “Borrowers” and individually, a “Borrower”), entered into a Loan and Security Agreement (the “Loan and Security Agreement”) dated as of June 6, 2013 with lenders who became a lender party thereto (together with any party which subsequently becomes a lender party, the “Lenders” and, individually, a “Lender”) and the Agent (as defined in the Loan and Security Agreement). Pursuant to the Loan and Security Agreement, Lenders committed to fund $4,750,000 principal amount of loans to the Borrowers. The Loan and Security Agreement contemplated that the aggregate principal amount of borrowings may be increased to $10,000,000 through commitments from additional Lenders who subsequently become a party to the Loan and Security Agreement.

On July 12, 2013 and August 6, 2013, the Borrowers entered into Amendments No. 1 (the “Amendment”) and No. 2 (the “2^nd Amendment”) to the Loan and Security Agreement (collectively “the Amendments”). Pursuant to the Amendments, the additional Lenders committed to fund an additional $3,100,000 principal amount of loans to the Borrowers, bringing aggregate commitments under the Loan and Security Agreement to $7,850,000.

On December 24, 2014, the Borrowers entered into Amendment No. 3 (the “3^rd Amendment”). Pursuant to the 3^rd Amendment, the maximum aggregate principal amount of borrowings under the Loan and Security Agreement was increased to $15,000,000. Additionally, Lenders and incremental lenders committed to fund an additional $7,050,000 principal amount of loans to the Borrowers, bringing aggregate commitments under the Loan and Security Agreement to $14,900,000.

BOOMERANG SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE ~~SIX~~NINE AND THREE MONTHS ENDED ~~MARCH~~JUNE 3130, 2015

AsOn ofApril ~~September 30~~1, ~~2014~~2015, the ~~Company~~Borrowers ~~drew~~entered ~~down~~into anAmendment ~~aggregate of~~No. ~~$6,485,540~~4 ~~under~~(the “4rd Amendment”). Pursuant to the ~~Loan~~4rd ~~and~~Amendment, ~~Security~~an ~~Agreement. The~~incremental ~~Company~~lender ~~drew~~committed ~~down~~to fund an additional $350,~~564,460~~000 ~~during~~principal ~~the~~amount ~~six~~of ~~months ended~~loans ~~March~~to ~~31,~~the ~~2015~~Borrowers, bringing ~~the~~aggregate ~~total~~commitments ~~amount of borrowings~~ under the Loan and Security Agreement to $1014,~~050~~950,000 ~~as of March 31, 2015~~.

~~The~~As ~~notes bear interest at the rate~~ of ~~15%~~September ~~per~~30, ~~annum~~2014, ~~payable~~the ~~upon maturity.~~Company ~~The~~drew ~~maturity~~down ~~date~~an aggregate of ~~the Notes is May 31~~$6, ~~2016~~485,540 ~~subject~~under ~~to earlier prepayment upon acceleration of~~ the ~~occurrence of an event of default (as defined in the~~ Loan and Security Agreement);. ~~provided~~The ~~further that the~~ Company ~~may~~drew ~~prepay~~down ~~the~~an ~~Notes~~additional ~~at any time without penalty. The Company accrued~~ $~~639~~6,~~516~~864,460 ~~of interest expense~~ during the ~~six~~nine months ended June ~~March 31~~30, 2015~~. Total accrued~~, ~~interest~~bringing ~~related~~the tototal amount of borrowings under the Loan and Security Agreement ~~was~~to $113,~~541~~350,~~657~~000 as of ~~March~~June 3130, 2015.

The notes bear interest at the rate of 15% per annum, payable upon maturity. The maturity date of the Notes is May 31, 2016, subject to earlier prepayment upon acceleration of the occurrence of an event of default (as defined in the Loan and Security Agreement); provided further that the Company may prepay the Notes at any time without penalty. The Company accrued $459,925 and $1,099,440 of interest expense during the three and nine months ended June 30, 2015. Total accrued interest related to the Loan and Security Agreement was $2,001,582 as of June 30, 2015.

Pursuant to the Loan and Security Agreement, the Borrowers assigned, pledged and granted to the Lenders a security interest in substantially all of their respective assets, including their respective intellectual property, accounts, receivables, general intangibles, equipment, inventory, all of the proceeds and products of the foregoing and the Company’s equity interests in the other Borrowers.

As partial consideration for providing advances under the Loan and Security Agreement, the Company agreed to issue to each Lender warrants to purchase 20,000 shares of its common stock for each $100,000 advanced. The warrants are exercisable at $5.00 per share, subject to full-ratchet adjustment for issuance below the exercise price, subject to certain exceptions. The warrants expire on June 6, 2018. As a result of the issuance of shares of common stock in the Exchange Offer, the exercise price of the Loan and Security Agreement warrants was adjusted to $2.15 and the number of warrants issuable was adjusted to 46,512 for each $100,000 advanced.

Pursuant to draws under the Loan and Security Agreement during ~~the~~ the year ended September 30, 2014, the Company issued warrants to purchase an aggregate of 3,016,674 shares of common stock. The Company valued these warrants at $1,944,688, recorded as a discount to long-term debt. During the ~~six~~nine months ended ~~March 31~~June 30, 2015, the Company amortized $~~348~~522,~~236~~354 of the debt discount.

Pursuant to draws under the Loan and Security Agreement during ~~the~~ ~~six~~the nine months ended ~~March~~June 3130, 2015, the Company issued warrants to purchase an aggregate of 13,~~657~~192,~~788~~701 shares of common stock. ~~The~~ The Company valued these warrants at $~~645~~2,~~461~~682,718, recorded as a discount to long-term debt. This discount is being amortized ~~over~~ over the life of the notes or until such time as the notes are repaid, or upon exercise of the warrants. The valuation of the warrants was determined using the Black-Scholes option pricing model with the following weighted assumptions: i) expected dividend rate of 0% ii) expected volatility of 3231.1240-35.05% iii) risk free interest rate of 1.29-1.63% and expected term of 3.3910-3.66 years. ~~During~~ During the ~~six~~nine months ended ~~March~~June 3130, 2015, the Company amortized $~~115~~544,~~775~~592 of the debt discount related to these warrants.

The following officers, directors and 5% shareholders of the Company participated as Lenders in the Loan and Security Agreement:

Name	Commitment		Amount Funded as of ~~March~~June 3130, 2015		Aggregate Number of Warrants Issuable		Warrants Issued as of ~~March~~June 3130, 2015
The Estate of Gene Mulvihill(1)	$	500,000	$	500,000		232,561		232,561
Sunset Marathon Partners LLC(2)	$	250,000	$	250,000		116,281		116,281
MRP Holdings LLC(3)	$	400,000	$	~~240~~400,000		186,~~047~~051		~~116~~186,~~628~~051
Burton I. Koffman and David Koffman(4)	$	750,000	$	750,000		348,~~838~~850		348,~~838~~850
Anthony P. Miele III(5)	$	25,000	$	25,000		11,631		11,631
Alexandria Equities, LLC(6)	$	700,000	$	~~420~~700,000		325,~~582~~585		~~195~~325,~~349~~585
Albert Behler(7)	$	400,000	$	~~240~~400,000		186,~~047~~051		~~116~~186,~~628~~051
Fox Hunt Wine Collectors, LLC(8)	$	1,000,000	$	~~600~~1,000,000		465,117		~~279~~465,~~070~~117
James Gelly(9)	$	400,000	$	~~240~~400,000		186,~~047~~051		~~116~~186,~~628~~051

BOOMERANG SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE ~~SIX~~NINE AND THREE MONTHS ENDED ~~MARCH~~JUNE 3130, 2015

(1)

Gail Mulvihill and Andrew Mulvihill, the co-administrators of the estate, exercise voting and investment power over the shares issuable upon exercise of the Warrants. Gail Mulvihill is a principal stockholder of the Company and mother of Christopher, the Company’s President and a principal stockholder of the Company. Andrew Mulvihill is a brother of Christopher Mulvihill.

(2)

James Mulvihill, was a principal stockholder of the Company at the time we entered into the Loan and Security Agreement, has voting and investment power over the shares issuable upon exercise of the Warrants and is a brother of Christopher Mulvihill.

(3)

MRP Holdings LLC is owned by Mark Patterson, the Chairman of the Board of Directors, a principal stockholder and the former Chief Executive Officer of the Company.

(4)

Directly and indirectly through entities they control and by members of their families and entities they control, Burton Koffman and David Koffman are principal stockholders of the Company. In addition, David Koffman is a director of the Company.

(5)

Anthony P. Miele, III is a director of the Company.

(6)

Alexandria Equities, LLC was a principal stockholder of the Company at the time we entered into the Loan and Security Agreement.

(7)

Albert Behler is a principal stockholder of the Company.

(8)

Fox Hunt Wine Collectors, LLC, is managed by Peter Mulvihill, brother of Christopher Mulvihill.

(9)

James Gelly is the Chief Executive Officer and a director of the Company.

A majority of the principal amount of each series of convertible notes (due 2016, June 2017 and December 2017) consented to the Company’s entering into the Loan Agreement and increasing the secured indebtedness under the Loan Agreement, and acknowledged that the secured indebtedness under the Notes is senior in right of payment and otherwise to the convertible notes.

~~Long-Term~~The Loan Agreement has terms which state that the Loan Agreement will be considered in default if, among other things, the Company or any other Borrower files a petition in bankruptcy or for reorganization or for the adoption of an arrangement under the Bankruptcy Code. The Company and the other Borrowers filed for a voluntary reorganization under the Bankruptcy Code, as discussed in Note –1 ~~Related~~above, ~~Party~~on August 18, 2015, and therefore the Company is considered in default on the Loan Agreement, although no demand letter or formal notification has been received from the lenders as of the date of this filing.

InOn ~~March~~May 18, 2015, ~~Boomerang~~the ~~and~~Company ~~SB&G~~commenced ~~Properties,~~an ~~LC,~~exchange ~~restructured~~offer for the ~~$573,982~~outstanding ~~due~~notes tounder ~~related~~the ~~party~~Loan ~~for~~and ~~deferred~~Security ~~rent~~Agreement. ~~through~~The Company offered to exchange the ~~issuance~~notes ofplus aaccrued ~~promissory~~interest ~~note~~thereon for incommon stock at the ~~amount~~rate of $~~500,000~~2.75 ~~The~~per ~~note accrues~~share. ~~interest~~On atJuly a28, ~~rate~~2015, ofthe ~~four~~Company ~~percent~~terminated ~~(4%)~~the ~~annually~~exchange onoffer. ~~the~~On ~~outstanding~~July ~~principal~~29, ~~with~~2015, the ~~all~~Company ~~accrued~~commenced ~~principal~~a ~~and~~tender ~~interest due~~offer onfor orsuch ~~before~~notes ~~February~~and ~~28,~~accrued ~~2020.~~interest ~~Accordingly,~~thereon ~~the~~for ~~Company~~common ~~reclassified~~stock at the ~~debt~~rate ~~from~~of a$2.15 ~~current~~per ~~liability~~share. Due to athe ~~non-current~~Bankruptcy ~~liability on~~Filing, ~~its~~the ~~balance~~Company ~~sheet~~does ~~for~~not ~~the~~expect ~~period~~to ~~ending~~proceed ~~March~~with ~~31,~~the ~~2015~~tender offer.

Long-Term Debt

Private Placement Offering – November/December 2011

The Company valued the 2011 Warrants and the beneficial conversion features (“BCF”) of the 2011 Notes, and the resulting derivative liability, at $5,309,941 each for the 2011 Warrants and the BCF, for a total of $10,619,882 recorded as a discount to the convertible debt during the first quarter of fiscal 2012. This discount is being amortized over the life of the note or until such time as the note is repaid or converted, or upon exercise of the 2011 Warrants. The valuation of the 2011 Warrants, BCF, and the resulting derivative liability, were determined using the Black-Scholes option pricing model with the following weighted assumptions for all debt issuances: i) expected dividend rate of 0%, ii) expected volatility of 52.7%, iii) risk free interest rate of 0.9%, and iv) expected term of 5 years. During the nine months ended June 30, 2015, the Company amortized $174,907 of the of debt discount. Following the Exchange Offer on October 31, 2014 (described below), the remaining principal amount of 2011 Notes was $200,000 and the related discount to the convertible debt was $125,452. The Company amortized $18,818 of the remaining debt discount during the nine months ended June 30, 2015.

BOOMERANG SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE ~~SIX~~NINE AND THREE MONTHS ENDED ~~MARCH~~JUNE 3130, 2015

	Principal
	As of
	3/31/2015			9/30/2014			Maturity Date	Interest Rate			Secured
	(unaudited)
Current Debt- Third Party:
Loan Payable- Third Party	$	80,538		$	80,538		Upon Demand		10	%	No
Equipment Note Payable (current portion)		-			9,024		1/15/2015		6	%	Yes
Total Current Debt- Third Party	$	80,538		$	89,562
Long-Term Debt – Third Party:
Long-Term Notes – June 2013 Loan Agreement	$	7,205,300		$	4,729,866		5/31/2016		15	%	Yes
Convertible Notes – 2011 Offering		-			3,665,763		11/1/2016		6	%	No
Convertible Notes – 2011 Offering		200,000			1,250,000		11/18/2016		6	%	No
Convertible Notes – 2011 Offering		-			925,000		12/9/2016		6	%	No
Convertible Notes – 2012 Offering		200,000			4,065,000		6/14/2017		6	%	No
Convertible Notes – Dec 2012 Offering		-			1,230,000		12/28/2017		6	%	No
Discount on Notes		(2,098,261	)		(10,073,448	)
Amortization of Discount		1,041,172			5,077,137
Total Long-Term Debt – Third Party	$	6,548,211		$	10,869,318
Long-Term Debt- Related Party:
Long-Term Notes – June 2013 Loan Agreement	$	2,844,700		$	1,755,674		5/31/2016		15	%	Yes
Convertible Notes – 2011 Offering		-			5,683,757		11/1/2016		6	%	No
Convertible Notes – 2011 Offering		-			100,000		11/18/2016		6	%	No
Convertible Notes – 2012 Offering		-			2,135,000		6/14/2017		6	%	No
Convertible Notes – Dec 2012 Offering		-			1,845,000		12/28/2017		6	%	No
Long-Term Note - Related Party		500,000			-		2/28/2020		4	%	No
Discount on Notes		(743,764	)		(8,329,964	)
Amortization of Discount		359,310			4,335,717
Total Long-Term Debt- Related Party	$	2,960,246		$	7,525,184

As of September 30, 2014, the aggregate fair value of the derivative was $646,120. The revaluation of the derivative as of June 30, 2015 resulted in a derivative value of $2,902. The change in fair value of the derivative from September 30, 2014 to June 30, 2015 resulted in a gain on the fair value of the derivative liability of $643,218. Substantially all of the increase in the gain on the fair value of the derivative was due to the reduction of the principal amount of the convertible notes as a result of the Exchange Offer. The derivative liability was revalued on June 30, 2015 using the Black-Scholes option pricing model with the following weighted assumptions: i) expected dividend rate of 0% ii) expected volatility of 31.40% iii) risk free interest rate of 1.63%, iv) expected term of 1.35 years and v) market price of $1.77.

In connection with the 2011 Offering, the Company issued warrants to the placement agent (the “Placement Agent Warrants”) to purchase shares of Common Stock. The Company issued an aggregate of 109,176 Placement Agent Warrants in November and December 2011 valued at $212,040. The Placement Agent Warrants were valued based on the Black-Scholes Model with assumptions similar to those used to value the 2011 Warrants issued to the purchasers of 2011 Notes in the 2011 Offering. The Placement Agent Warrants have similar terms to those issued to the convertible debt holders, including a reset provision included with the warrants if the Company should obtain equity financing at a price per share lower than that of the exercise price of the warrants. The Placement Agent Warrants, similar to the 2011 Warrants issued to the purchasers of 2011 Notes in the 2011 Offering, do not meet the definition of being indexed to the Company’s own stock in accordance with ASC 815-40. Accordingly, the Company has recorded a derivative liability for the value of the Placement Agent Warrants. The derivative liability valued at $12,896 at September 30, 2014 was revalued at $3,368 at June 30, 2015. The difference in valuation for the nine months ended June 30, 2015 was $9,528, accounted for as a gain on the fair value of derivative. The valuation at June 30, 2015 was valued based on the Black-Scholes Model with assumptions similar to those used to value the 2011 Warrants granted to the debt holders as of June 30, 2015.

As a result of the issuance of shares of common stock in the Exchange Offer, the conversion price of the 2011 Notes was adjusted to $3.00.

The 2011 Notes have terms which state that the 2011 Notes will be considered in default if, among other things, the Company files a petition in bankruptcy or for reorganization or for the adoption of an arrangement under the Bankruptcy Code. The Company filed for a voluntary reorganization under the Bankruptcy Code, as discussed in Note 1 above, on August 18, 2015, and therefore the Company is considered in default on the 2011 Notes, although no demand letter or formal notification has been received from the noteholders as of the date of this filing.

Private Placement Offering – June/July 2012

The Company valued the 2012 Warrants and the BCF at $1,956,517 each for a total of $3,913,034 recorded as a discount to the convertible debt during the third quarter of fiscal 2012. This discount is being amortized over the life of the 2012 Notes or until such time as the 2012 Notes are repaid or converted, or upon exercise of the 2012 Warrants. The valuation of the 2012 Warrants and BCF were determined using the Black-Scholes option pricing model with the following weighted assumptions for all debt issuances: i) expected dividend rate of 0% ii) expected volatility of 53.43% iii) risk free interest rate of 0.9% and expected term of 5 years. During the nine months ended June 30, 2015, the Company amortized $63,322 of the of debt discount. Following the Exchange Offer on October 31, 2014 (described below), the remaining principal amount of 2012 Notes was $200,000 and the related discount to the convertible debt was $126,424. The Company amortized $18,964 of the remaining debt discount during the nine months ended June 30, 2015.

As a result of the issuance of shares of common stock in the Exchange Offer, the conversion price of the 2012 Notes was adjusted to $3.31.

The 2012 Notes have terms which state that the 2012 Notes will be considered in default if, among other things, the Company files a petition in bankruptcy or for reorganization or for the adoption of an arrangement under the Bankruptcy Code. The Company filed for a voluntary reorganization under the Bankruptcy Code, as discussed in Note 1 above, on August 18, 2015, and therefore the Company is considered in default on the 2012 Notes, although no demand letter or formal notification has been received from the noteholders as of the date of this filing.

BOOMERANG SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE NINE AND THREE MONTHS ENDED JUNE 30, 2015

Private Placement Offering – December 2012

The Company valued the December 2012 Warrants and the BCF at $962,904 each for a total of $1,925,808 recorded as a discount to the convertible debt during the first quarter of fiscal 2013. This discount is being amortized over the life of the December 2012 Notes or until such time as the December 2012 Notes are repaid or converted, or upon exercise of the December 2012 Warrants. The valuation of the December 2012 Warrants and BCF were determined using the Black-Scholes option pricing model with the following weighted assumptions for all debt issuances: i) expected dividend rate of 0% ii) expected volatility of 52.92% iii) risk free interest rate of 0.72% and expected term of 5 years. During the nine months ended June 30, 2015, the Company amortized $32,124 of the of debt discount. The entire principal amount of the December 2012 Notes, plus accrued and unpaid interest on October 31, 2014, was exchanged as part of the Exchange Offer on October 31, 2014 (described below).

Exchange Offer

Long-Term Note – Related Party

In March 2015, Boomerang and SB&G Properties, LC, restructured the $573,982 due to related party for deferred rent through the issuance of a promissory note in the amount of $500,000. The note accrues interest at a rate of four percent (4%) annually on the outstanding principal with all accrued principal and interest due on or before February 28, 2020. Accordingly, the Company reclassified the debt from a current liability to a non-current liability on its balance sheet for the period ending June 30, 2015.

BOOMERANG SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE NINE AND THREE MONTHS ENDED JUNE 30, 2015

	Principal
	As of
	6/30/2015			9/30/2014			Maturity Date	Interest Rate			Secured
	(unaudited)
Current Debt- Third Party:
Loan Payable- Third Party	$	80,538		$	80,538		Upon Demand		10	%	No
Equipment Note Payable (current portion)		-			9,024		1/15/2015		6	%	Yes
Notes – June 2013 Loan Agreement		9,625,300			-		5/31/2016		15	%	Yes
Discount on Notes		(3,340,382	)		-
Amortization of Discount		1,322,185			-
Total Current Debt- Third Party	$	7,687,641		$	89,562

Current Debt- Related Party:
Notes – June 2013 Loan Agreement	$	3,724,700		$	-		5/31/2016		15	%	Yes
Discount on Notes		(1,287,024	)		-
Amortization of Discount		526,034			-
Total Current Debt- Related Party	$	2,963,710		$	-

Long-Term Debt – Third Party:
Notes – June 2013 Loan Agreement	$	-		$	4,729,866		5/31/2016		15	%	Yes
Convertible Notes – 2011 Offering		-			3,665,763		11/1/2016		6	%	No
Convertible Notes – 2011 Offering		200,000			1,250,000		11/18/2016		6	%	No
Convertible Notes – 2011 Offering		-			925,000		12/9/2016		6	%	No
Convertible Notes – 2012 Offering		200,000			4,065,000		6/14/2017		6	%	No
Convertible Notes – Dec 2012 Offering		-			1,230,000		12/28/2017		6	%	No
Discount on Notes		(251,876	)		(10,073,448	)
Amortization of Discount		167,791			5,077,137
Total Long-Term Debt – Third Party	$	315,915		$	10,869,318

Long-Term Debt- Related Party:
Notes – June 2013 Loan Agreement	$	-		$	1,755,674		5/31/2016		15	%	Yes
Convertible Notes – 2011 Offering		-			5,683,757		11/1/2016		6	%	No
Convertible Notes – 2011 Offering		-			100,000		11/18/2016		6	%	No
Convertible Notes – 2012 Offering		-			2,135,000		6/14/2017		6	%	No
Convertible Notes – Dec 2012 Offering		-			1,845,000		12/28/2017		6	%	No
Long-Term Note – Related Party		500,000			-		2/28/2020		4	%	No
Discount on Notes		-			(8,329,964	)
Amortization of Discount		-			4,335,717
Total Long-Term Debt- Related Party	$	500,000		$	7,525,184

The aggregate maturities of our long-term debt are as follows:

Twelve months ended
March 31, 2017	$	10,250,000
June 30, 2017	$	400,000
March 31, 2018		200,000
June 30, 2018		-
March 31, 2019		-
June 30, 2019		-
March 31, 2020		500,000
June 30, 2020		500,000
Total	$	10900,~~950,~~000

BOOMERANG SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE NINE AND THREE MONTHS ENDED JUNE 30, 2015

NOTE 8 – EQUITY

Common Stock:

On October 31, 2014, pursuant to the Exchange Offer described in Note 7, the Company issued an aggregate of 9,583,384 shares of common stock at $2.15 per share, in exchange for outstanding convertible notes and warrants. Included in the Exchange Offer was the issuance of 48,674 shares of common stock in lieu of cash payments of $104,463 for interest earned by noteholders for the quarter ended December 31, 2014. These shares of stock were issued at $2.15 per share, pursuant to the terms of the 2011 Notes, 2012 Notes and December 2012 Notes.

On December 31, 2014, the Company issued an aggregate of 2,815 shares of common stock in lieu of cash payments of $6,050 for interest earned by noteholders for the quarter ended December 31, 2014. These shares of stock were issued at $1.58 per share, pursuant to the terms of the 2011 Notes and 2012 Notes.

On March 31, 2015, the Company issued an aggregate of 2,755 shares of common stock in lieu of cash payments of $5,918 for interest earned by noteholders for the quarter ended March 31, 2015. These shares of stock were issued at $2.15 per share, pursuant to the terms of the 2011 Notes and 2012 Notes.

AtOn ~~March~~June 3130, 2015, the Company ~~required~~issued an aggregate of 3,331 shares of common stock in lieu of cash payments of $5,984 for interest earned by noteholders for the quarter ended June 30, 2015. ~~issuance~~These ~~upon~~shares ~~exercise~~of asstock ~~follows:~~were issued at $1.80 per share, pursuant to the terms of the 2011 Notes and 2012 Notes.

Options			3,421,292
Warrants			9,225,920
Convertible Notes			127,090
Total Shares			12,774,302

At June 30, 2015, the Company required shares of common stock for issuance upon exercise as follows:

Options			5,048,292
Warrants			10,680,833
Convertible Notes			127,090
Total Shares			15,856,215

BOOMERANG SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE SIX AND THREE MONTHS ENDED MARCH 31, 2015

Warrants:

As a result of the issuance of shares of common stock in the Exchange Offer, the exercise prices of the remaining outstanding 2011 Warrants and 2012 Warrants were adjusted to $3.00 and $3.31, respectively.

Pursuant to the Loan and Security Agreement described in Note 7, during the ~~six~~nine months ended ~~March~~June 3130, 2015, we issued warrants to Lenders to purchase an aggregate of 13,~~657~~192,~~788~~701 shares of Common Stock of the Company (after giving effect to the Exchange Offer). The warrants are exercisable at $2.15 per share (after giving effect to the Exchange Offer), subject to full ratchet adjustment for issuance below the exercise price, subject to certain exceptions. Additionally, the exercise price may not be adjusted below $1.00. Cashless exercise is permitted if the average trading volume of the Company’s Common Stock during at least five (5) of the ten (10) consecutive trading days immediately preceding the date of the notice of exercise is at least 10,000 shares, and will be based upon the average of the last sale price of the Common Stock during such five (5) consecutive trading day period. The warrants expire on June 6, 2018. When these warrants were issued, the fair value of each warrant granted was estimated on the date of grant using the Black-Scholes valuation model. The following weighted assumptions were used: (i) risk free interest rate of 1.29-1.63% and expected term of 3.3910-3.66 years, (iii) dividend rate of 0.00% and (iv) expected volatility of 3231.1240-35.05%. The Company valued these warrants at $~~645~~2,~~461~~682,718, recorded as a discount to long-term debt. This discount is being amortized over the life of the Loan and Security Agreement or until such time as the ~~notes~~ notes are repaid, or upon exercise of the warrants. During the ~~six~~nine months ended ~~March~~June 3130, 2015, the Company amortized $~~115~~544,~~774~~ 592 of the of debt discount.

Options:

On November 17, 2014, the Company issued options to purchase 471,719 shares of common stock of the Company to Mark Patterson, former Chief Executive Officer, and options to purchase 176,894 ~~shares~~ shares of common stock of the Company to Christopher Mulvihill, President. The options were issued in exchange for an aggregate of $459,643 of deferred compensation. The options are exercisable at $2.15 per share, have a term of five years and vest immediately. When these options were issued, the fair value of each option granted was estimated on the date of grant using the Black-Scholes valuation model. The following weighted assumptions were used: (i) risk free interest rate of 1.64%, (ii) expected life of 5 years, (iii) dividend rate of 0.00% and (iv) expected volatility of 35.34%. The Company valued these options at $459,643 and recorded the expense during the ~~six~~nine months ended ~~March~~June 3130, 2015.

On November 17, 2014, the Company issued options to purchase 275,169 shares of common stock of the Company to a consultant. The options were issued in exchange for approximately $195,000 of services provided to the Company. The options are exercisable at $2.15 per share, have a term of five years and vest immediately. When these options were issued, the fair value of each option granted was estimated on the date of grant using the Black-Scholes valuation model. The assumptions used were similar to those used for the option grants to Messrs. Patterson and Mulvihill on November 17, 2014. The Company valued these options at $195,000 and recorded the expense during the six months ended March 31, 2015.20

On November 17, 2014, the Company granted options to purchase 25,000 shares of common stock of the Company to each of Directors Joseph Bellantoni, Maureen Cowell, Kevin Cassidy, David Koffman and Anthony Miele. The options are exercisable at $2.15 per share and have a term of five years. The options are subject to a vesting schedule, under which one-third of the options will vest immediately, and one-third of the options will vest on each of November 17, 2015 and November 17, 2016. When these options were issued, the fair value of each option granted was estimated on the date of grant using the Black-Scholes valuation model. The assumptions used were similar to those used for the option grants to Messrs. Patterson and Mulvihill on November 17, 2014. The Company valued these options at $88,582 and is allocating this expense over the vesting period. The Company recorded an expense of $18,455 related to these options during the six months ended March 31, 2015.

On November 17, 2014, the Company granted options to purchase 20,000 shares of common stock of the Company to the former Chief Operating Officer of the Company. The options are exercisable at $2.15 per share, have a term of five years and vest immediately. When these options were issued, the fair value of each option granted was estimated on the date of grant using the Black-Scholes valuation model. The following weighted assumptions were used: (i) risk free interest rate of 1.49%, (ii) expected life of 5 years, (iii) dividend rate of 0.00% and (iv) expected volatility of 35.05%. The Company valued these options at $14,373 and recorded the expense during the six months ended March 31, 2015.

BOOMERANG SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE ~~SIX~~NINE AND THREE MONTHS ENDED ~~MARCH~~JUNE 3130, 2015

On ~~January~~November 1317, ~~2015~~2014, the Company ~~granted~~issued options to purchase ~~500,000~~ 275,169 shares of common stock of the Company to ~~James~~a ~~Gelly,~~consultant. ~~Chief~~The ~~Executive Officer of the Company,~~ options towere ~~purchase~~issued ~~450,000~~in ~~shares of~~exchange ~~common~~for ~~stock~~approximately ~~of the Company to George Gelly~~$195, ~~Chief Operating Officer of the Company, and options to purchase 300,~~000 ~~shares~~ of ~~common~~services ~~stock~~provided ~~of the Company~~ to ~~Mark Patterson, Chairman of~~ the Company. The options are exercisable at $2.15 per share, ~~and~~ have a term of five years~~. The~~ ~~options are subject to a vesting schedule, under which one-third of the options will vest immediately,~~ and ~~one-third of the options will~~ vest ~~on each of January 13, 2016 and January 13, 2017~~immediately. ~~When~~ When these options were issued, the fair value of each option granted was estimated on the date of grant using the Black-Scholes ~~valuation~~ valuation model. The ~~following weighted~~ assumptions ~~were~~ used: ~~(i)~~were ~~risk~~similar ~~free~~to ~~interest~~those ~~rate~~used offor ~~1.37%,~~the ~~(ii)~~option ~~expected~~grants ~~life~~to ~~of 5 years, (iii) dividend rate of 0~~Messrs.~~00%~~ Patterson and ~~(iv)~~Mulvihill ~~expected~~on ~~volatility~~November 17, ~~of 32~~2014.~~12%.~~ The Company valued these options at $~~820~~195,~~997~~000 and is ~~allocating~~recorded ~~this expense over~~ the ~~vesting period. The Company recorded an~~ expense ~~of $102,625 related to these options~~ during the ~~six~~nine months ended ~~March~~June 3130, 2015.

~~During~~On November 17, 2014, the ~~six~~Company ~~months~~granted ~~ended~~options ~~March~~to 31purchase 25,000 ~~2015,~~shares of common stock of the Company ~~recorded an~~to ~~expense~~each of ~~$68~~Directors Joseph Bellantoni,~~872~~ ~~related~~Maureen Cowell, Kevin Cassidy, David Koffman and Anthony Miele. The options are exercisable at $2.15 per share and have a term of five years. The options are subject to a vesting schedule, under which one-third of the options will vest immediately, and one-third of the options will vest on each of November 17, 2015 and November 17, 2016. When these options were issued, inthe ~~fiscal~~fair ~~year~~value of each option granted was estimated on the date of grant using the Black-Scholes valuation model. The assumptions used were similar to those used for the option grants to Messrs. Patterson and Mulvihill on November 17, 2014. ~~under~~The Company valued these options at $88,582 and is allocating this expense over the vesting period. The Company’s ~~2012~~recorded ~~Stock~~an ~~Incentive~~expense ~~Plan~~of $29,527 related to these options during the nine months ended June 30, 2015.

~~NOTE~~On 9November -17, ~~RELATED~~2014, ~~PARTY~~the ~~TRANSACTIONS~~Company granted options to purchase 20,000 shares of common stock of the Company to the former Chief Operating Officer of the Company. The options are exercisable at $2.15 per share, have a term of five years and vest immediately. When these options were issued, the fair value of each option granted was estimated on the date of grant using the

~~HSK~~Black-Scholes ~~Funding,~~valuation ~~Inc~~model. ~~and Lake~~The ~~Isle~~following ~~Corp.~~weighted ~~are beneficial holders~~assumptions ofwere ~~shares~~used: of(i) ~~our~~risk ~~company’s~~free ~~common~~interest ~~stock~~rate ~~and certain~~ of ~~their~~1.49%, ~~members~~(ii) ~~and~~expected ~~stockholders~~life ~~are also the members~~ of ~~SB&G~~5 ~~Properties~~years, ~~LC.~~ (~~“SB&G”~~iii), ~~which~~dividend ~~was~~rate ~~the~~of ~~landlord under a lease with us at 324 West 2450 North, Building B, Logan, Utah until March 31, 2015~~0.00% ~~Gail Mulvihill, the individual who exercises sole voting~~ and ~~investment~~(iv) ~~control over Lake Isle Corp., is the mother~~expected ofvolatility ~~Christopher Mulvihill, our President, and is a principal stockholder~~ of ~~our company~~35. ~~The approximately 29,750 square foot leased premises were used for Boomerang’s manufacturing activities~~05%. ~~This~~The ~~was~~Company avalued ~~month-to-month~~these ~~lease~~options at ~~a rate of~~ $~~21,717 per month, of which $~~14,~~717~~373 ~~was classified as deferred rent. Deferred rental payments totaling $573,982 have been accrued as of March 31, 2015. In March, 2015, Boomerang~~ and ~~SB&G~~recorded ~~Properties, LC, restructured~~ the ~~$573,982~~expense ~~due~~during ~~to related party for deferred rent through~~ the ~~issuance~~nine ofmonths aended ~~promissory~~June ~~note in the amount of $500~~30,~~000. The note accrues interest at a rate of four~~ percent (4%) annually on the outstanding principal with all accrued principal and interest due on or before February 28, 2020. Accordingly, the Company reclassified the debt from a current liability to a non-current liability on its balance sheet for the period ending March 31, 2015.

~~SB&G~~On isJanuary ~~obligated~~13, on2015, athe ~~twenty-year~~Company ~~promissory~~granted ~~note~~options ~~due~~to ~~August~~purchase 1500,000 ~~2027~~shares ~~owing~~of common stock of the Company to ~~Zions~~James ~~Bank.~~Gelly, ~~The~~Chief ~~principal~~Executive ~~amount due~~Officer ~~was~~of ~~$635~~the Company,~~245~~ asoptions to purchase 450,000 shares of ~~March~~common 31stock of the Company to George Gelly, ~~2015~~Chief Operating Officer of the Company, and options to purchase 300,000 shares of common stock of the ~~note~~Company ~~bears~~to ~~interest~~Mark Patterson, Chairman of the Company. The options are exercisable at 3$2.~~807%~~ 15 per ~~annum~~share and have a term of five years. The ~~promissory~~options ~~note~~are issubject ~~collateralized~~to bya ~~the~~vesting ~~real~~schedule, ~~property~~under ~~that~~which isone-third of the ~~subject~~options will vest immediately, and one-third of the ~~lease~~options ~~from~~will ~~SB&G~~vest toon ~~Boomerang Utah~~each of January 13, 2016 and January 13, 2017. ~~Boomerang~~When these options were issued, the ~~Estate~~fair value of ~~Gene~~each ~~Mulvihill~~option ~~and~~granted ~~Messrs.~~was ~~Stan~~estimated ~~Checketts~~on ~~and~~the ~~Burton~~date ~~Koffman~~of ~~are~~grant using the ~~joint~~Black-Scholes ~~and~~valuation ~~several~~model. ~~guarantors~~The following weighted ofassumptions ~~this~~were ~~promissory~~used: ~~note. Gene~~(i) ~~Mulvihill~~risk ~~was~~free ~~the~~interest ~~husband~~rate of ~~Gail~~1.37%, ~~Mulvihill~~(ii) ~~and~~expected ~~the father~~life of ~~Christopher~~5 ~~Mulvihill~~years, (iii) dividend rate of 0.00% and (iv) ~~the~~expected ~~President~~volatility of 32.12%. The Company valued these options at $820,997 and is allocating this expense over the vesting period. The Company recorded an expense of $205,249 related to these options during the nine months ended June 30, 2015.

InOn April ~~2010~~2, we2015, ~~entered~~the ~~into~~Company agranted ~~twenty-year~~options ~~ground lease with Route 94 Development Corporation (“Route 94”)~~ to ~~lease~~purchase a1,707,000 shares ~~portion~~ of ancommon ~~approximately~~stock ~~fifteen~~of ~~acre parcel in~~ the ~~town~~Company ofto ~~Hamburg~~employees, ~~located in Hardyston Township, New Jersey, on~~ which weincludes ~~constructed~~ a ~~RoboticValet™~~grant ~~parking facility. The~~of ~~leased~~options ~~property is adjacent~~ to ~~Grand~~purchase ~~Cascades Lodge (“Cascades”)~~100,000 ashares ~~hotel~~of ~~within~~common ~~the Crystal~~stock ~~Springs~~of ~~Golf~~the ~~and~~Company ~~Spa~~to ~~Resort~~Chris ~~(“the Resort”)~~Mulvihill. ~~The~~A ~~parking~~total ~~facility~~of ~~was~~207,500 ~~constructed~~options byare ~~Crystal~~exercisable ~~Springs~~at ~~Builders, LLC (“Builders”)~~$2. It12 isper ~~intended~~share ~~that~~and ~~this~~1,499,500 ~~facility~~options ~~will~~are ~~be used by us primarily for demonstration and~~exercisable ~~marketing~~at ~~purposes~~$3.22 inper ~~the eastern portion of the United States~~share. In ~~consideration~~All ofoptions ~~the~~have ~~benefits~~a toterm ~~us under the terms~~ of ~~the~~five ~~lease,~~years weand ~~agree~~are tosubject ~~provide~~ to ~~the~~a ~~lessor~~vesting ~~and~~schedule, ~~its~~under ~~affiliates~~which ~~parking~~one-third ~~and~~of ~~storage space within~~ the ~~facility at no cost~~options towill ~~the~~vest ~~lessor~~immediately, and ~~its~~one-third ~~affiliates~~of ~~subject to our right to use~~ the ~~facility~~options ~~for~~will ~~demonstration~~vest ~~purposes. In addition, we are required to pay the operating costs, premiums~~ on ~~the~~each ~~insurance required under the terms~~ of ~~the~~April ~~lease~~2, 2016 and ~~incremental property~~April ~~taxes~~2, ~~resulting~~2017. ~~from~~On ~~our construction of~~ the ~~facility. For~~date ~~a period~~ of ~~60 months~~issuance, ~~commencing five years after~~ ~~execution of~~ the ~~lease,~~fair ~~the~~value ~~lessor~~of ~~has~~each ~~the~~ option togranted ~~purchase~~was ~~the~~estimated ~~facility~~on ~~from us and we have a right to cause~~ the ~~lessor~~date ~~to buy~~of ~~from~~grant ususing the ~~facility~~Black-Scholes wevaluation ~~construct~~model. The ~~price~~following weighted toassumptions bewere ~~paid~~used: by(i) ~~the~~risk ~~lessor~~free ~~upon~~interest ~~exercise~~rate of ~~its~~1.35%, ~~option~~(ii) toexpected ~~purchase~~life ~~the facility~~of is5 ~~110%~~years, of(iii) ~~the~~dividend ~~greater~~rate of 0.00% and (iiv) ~~the~~expected ~~depreciated~~volatility ~~value~~ of ~~the~~31.40%. ~~facility,~~The orCompany ~~(ii)~~valued ~~the~~these ~~fair~~options ~~market~~at ~~value~~$1,777,459 ofand ~~the~~is ~~facility, and~~allocating ~~the~~this ~~price~~expense toover bethe vesting ~~paid~~period. byThe ~~the~~Company ~~lessor~~recorded ~~upon~~an ~~exercise~~expense of ~~our~~$212,003 ~~right~~related to ~~cause~~these ~~the~~options ~~lessor~~during tothe ~~buy~~nine ~~the~~months ~~facility~~ended isJune $130, 2015.~~00.~~

19During the nine months ended June 30, 2015, the Company recorded an expense of $85,757 related to options issued in fiscal year 2014 under the Company’s 2012 Stock Incentive Plan.

BOOMERANG SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE ~~SIX~~NINE AND THREE MONTHS ENDED ~~MARCH~~JUNE 3130, 2015

~~The~~NOTE ~~Resort~~9 ~~owns~~- ~~and~~RELATED ~~operates~~PARTY seven golf courses, two hotels and a fitness facility and develops real estate in Sussex County NJ, which is comprised of more than 40 additional entities, including the above named entities. Gail Mulvihill owns 50% of each of Builders, Cascades and Route 94 and, indirectly, through these and various other entities, Gail Mulvihill and her family own approximately 50% of the Resort. Except as set forth above, no other officer, director or 5% or greater stockholder of the Company has any equity interest in Builders, Cascades or Route 94. The Company incurred expenses of approximately $3,200 and $3,800 for Cascades for the six months ended March 31, 2015 and 2014, respectively. No expenses were incurred for Route 94 or Builders during the six months ended March 31, 2015 and 2014.TRANSACTIONS

HSK Funding, Inc. and Lake Isle Corp. 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 was the landlord under a lease with us at 324 West 2450 North, Building B, Logan, Utah until March 31, 2015. 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. The approximately 29,750 square foot leased premises were used for Boomerang’s manufacturing activities. This was a month-to-month lease at a rate of $21,717 per month, of which $14,717 was classified as deferred rent. In March 2015, Boomerang and SB&G Properties, LC, restructured $573,982 due to related party for deferred rent through the issuance of a promissory note in the amount of $500,000. The note accrues interest at a rate of four percent (4%) annually on the outstanding principal with all accrued principal and interest due on or before February 28, 2020. Accordingly, the Company reclassified the debt from a current liability to a non-current liability on its balance sheet for the period ending June 30, 2015. The promissory note has terms which state that the note will be considered in default if, among other things, the Company files a petition in bankruptcy or for reorganization or for the adoption of an arrangement under the Bankruptcy Code. The Company filed for a voluntary reorganization under the Bankruptcy Code, as discussed in Note 1 above, on August 18, 2015, and therefore the Company is considered in default on the promissory note, although no demand letter or formal notification has been received from the noteholder as of the date of this filing.

SB&G is obligated on a twenty-year promissory note due August 1, 2027 owing to Zions Bank. The principal amount due was $624,853 as of June 30, 2015, 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, the Estate of Gene Mulvihill and Messrs. Stan Checketts and Burton Koffman are the joint and several guarantors of this promissory note. Gene Mulvihill was the husband of Gail Mulvihill and the father of Christopher Mulvihill, the President of the Company.

In April 2010, we entered into a twenty-year ground lease with Route 94 Development Corporation (“Route 94”) to lease a portion of an approximately fifteen acre parcel in the town of Hamburg, located in Hardyston Township, New Jersey, on which we constructed a RoboticValet™ parking facility. The leased property is adjacent to Grand Cascades Lodge (“Cascades”), a hotel within the Crystal Springs Golf and Spa Resort (“the Resort”). The parking facility was constructed by Crystal Springs Builders, LLC (“Builders”). 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.

The Resort owns and operates seven golf courses, two hotels and a fitness facility and develops real estate in Sussex County NJ, which is comprised of more than 40 additional entities, including the above named entities. Gail Mulvihill owns 50% of each of Builders, Cascades and Route 94 and, indirectly, through these and various other entities, Gail Mulvihill and her family own

approximately 50% of the Resort. Except as set forth above, no other officer, director or 5% or greater stockholder of the Company has any equity interest in Builders, Cascades or Route 94. The Company incurred expenses of approximately $3,200 and $7,000 for Cascades for the nine months ended June 30, 2015 and 2014, respectively. No expenses were incurred for Route 94 or Builders during the nine months ended June 30, 2015 and 2014.

Certain officers, directors and 5% shareholders of the Company participated as Affiliate Lenders under the June 2013 Loan and Security Agreement. See Note 7.

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

Boomerang ~~Utah~~ is a joint and several guarantor on a twenty-year promissory note owing to Zions Bank in the principal amount of $~~635~~624,~~245~~853 as of ~~March~~June 3130, 2015, 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. The Estate of Gene Mulvihill and Messrs. Checketts and Burton Koffman, are the other joint and several guarantors of the promissory note.

In March 2013, we entered into a five year lease on our principal office in New Jersey, which expires in March 2018. In February 2015, we entered into a three year lease on our office in Utah which expires in February 2018. In January 2015, we entered into a three year lease on a research, design, production and testing facility in Fort Pierce, Florida, which expires in March 2018. The aggregate future minimum annual rental payments on these leases, exclusive of escalation payments for taxes and operating costs, are as follows:

Twelve months ended March 31, 2016	$	123,458
March 31, 2017		177,408
March 31, 2018		180,408
Total	$	481,274

On March 15, 2013, Crescent Heights R&D, LLC (“Crescent Heights”), filed a complaint against Boomerang in the State of Florida for fraud, breach of contract and specific performance, as well as equitable rescission which alleged an unspecified amount of damages in excess of the purchase price. Boomerang was subsequently granted a motion to remove this matter to federal court. On May 17, 2013, the court entered an order that our motion to compel arbitration and stay proceedings be granted. The parties agreed to arbitrate the matter in front of the American Arbitration Association in November 2014. The dispute arose from a contract to provide a rack and rail automated parking system. On April 21, 2015, the arbitrator issued a Final Arbitration Award. The arbitrator denied Crescent Heights’ claims of fraud in the inducement, equitable rescission based on fraud, and declaratory relief to strike the limitation of liability clause, but found Boomerang in Breach of Contract. Crescent Heights was awarded damages of $1,197,890, plus attorneys’ fees and costs of $319,920, which Boomerang is required to pay in fiscal year 2015. Boomerang established a reserve of $1,517,810 for the amount of the award, attorneys’ fees and costs.

On May 15, 2013, Boomerang entered into a Manufacturing and Licensing Agreement (the “Agreement”) with JBT Corporation (“JBT”), pursuant to which JBT would manufacture all Boomerang automated guided vehicles (“AGVs”) and license certain software to us for use in our robotic parking systems, including a non-exclusive, non-transferable, license to sub-license the software to customers for the duration of each customer contract with Boomerang. In each year from the effective date of May 15, 2013, Boomerang was required to purchase a minimum of 25 AGVs from JBT based on JBT’s cost plus an agreed upon profit. If we did not meet these minimum requirements, JBT’s sole remedy was to terminate the Agreement. In the event of expiration or termination of the Agreement, JBT is subject to a three-year non-competition provision, and obligated to license to Boomerang software for up to three years from the expiration or termination date. The Agreement was terminated by JBT effective May 23, 2014, due to Boomerang not meeting the minimum purchase requirements described above. With JBT’s knowledge, Boomerang manufactured, assembled, tested and delivered all AGVs for our first RoboticValet project, BrickellHouse, and expects to do so for subsequent projects in which our first-generation AGV design is included. As mentioned above, under the Agreement, Boomerang has the right to continue to license software through May 22, 2017, and expects to collaborate with JBT on a project-by-project basis going forward.

BOOMERANG SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE ~~SIX~~NINE AND THREE MONTHS ENDED ~~MARCH~~JUNE 3130, 2015

On June 6, 2013, Boomerang entered into a marketing agreement with BrickellHouse Holding, LLC, whereas BrickellHouse Holding, LLC will allow Boomerang to use its parking system for sales and marketing purposes. Boomerang will pay BrickellHouse Holding, LLC a royalty for each sale of a system equal to 2% of the purchase price of that system, not to exceed an aggregate of $2 million. The agreement shall be in effect until the amount of royalty payments reaches $2 million. As of March 31, 2015, the Company accrued $41,529 of royalty payments under this agreement.

Twelve months ended June 30, 2016	$	137,195
June 30, 2017		178,408
June 30, 2018		132,306
Total	$	447,909

On March 15, 2013, Crescent Heights R&D, LLC (“Crescent Heights”), filed a complaint against Boomerang in the State of Florida for fraud, breach of contract and specific performance, as well as equitable rescission which alleged an unspecified amount of damages in excess of the purchase price. Boomerang was subsequently granted a motion to remove this matter to federal court. On May 17, 2013, the court entered an order that our motion to compel arbitration and stay proceedings be granted. The parties agreed to arbitrate the matter in front of the American Arbitration Association in November 2014. The dispute arose from a contract to provide a rack and rail automated parking system. On April 21, 2015, the arbitrator issued a Final Arbitration Award. The arbitrator denied Crescent Heights’ claims of fraud in the inducement, equitable rescission based on fraud, and declaratory relief to strike the limitation of liability clause, but found Boomerang in Breach of Contract. Crescent Heights was awarded damages of $1,197,890, plus attorneys’ fees and costs of $319,920, which Boomerang is required to pay in fiscal year 2015. During the nine months ended June 30, 2015, Boomerang paid $1,036,452 of the award, attorneys’ fees and costs related to the arbitration and established a reserve of $481,358 for the remaining fees and costs.

On May 15, 2013, Boomerang entered into a Manufacturing and Licensing Agreement (the “Agreement”) with JBT Corporation (“JBT”), pursuant to which JBT would manufacture all Boomerang automated guided vehicles (“AGVs”) and license certain software to us for use in our robotic parking systems, including a non-exclusive, non-transferable, license to sub-license the software to customers for the duration of each customer contract with Boomerang. The Agreement was terminated by JBT effective May 23, 2014, due to Boomerang not meeting minimum purchase requirements. On June 8, 2015, Boomerang entered into a letter of agreement with JBT, in which JBT committed to complete the BrickellHouse project and three additional identified projects. As part of the letter of agreement, Boomerang agreed to a series of payments in aggregate of $728,518. As of June 30, 2015, $380,875 was paid to JBT with respect to these amounts. The letter of agreement was terminated by JBT effective August 20, 2015, due to Boomerang’s bankruptcy filing and failure to pay a JBT invoice.

On June 6, 2013, Boomerang entered into a marketing agreement with BrickellHouse Holding, LLC, whereas BrickellHouse Holding, LLC will allow Boomerang to use its parking system for sales and marketing purposes. Boomerang will pay BrickellHouse Holding, LLC a royalty for each sale of a system equal to 2% of the purchase price of that system, not to exceed an aggregate of $2 million. The agreement shall be in effect until the amount of royalty payments reaches $2 million. As of June 30, 2015, the Company accrued $41,529 of royalty payments under this agreement.

On August 18, 2015, the Company and the Subsidiaries filed voluntary petitions in the United States Bankruptcy Court for the District of Delaware seeking relief under the provisions of Chapter 11 of Title 11 of the United States Code. The Chapter 11 case is being administered under the caption "In re Boomerang Systems, Inc., et. al," Case No. 15-11729. The Company remains in possession of its assets and continues to operate its business as a debtor-in-possession under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and the orders of the Bankruptcy Court.

NOTE 11 – SUBSEQUENT EVENTS

In preparing the accompanying consolidated financial statements, the Company has reviewed events that have occurred after ~~March~~June 3130, 2015, through the date of issuance of the financial statements.

OnAs ~~April~~noted in Note 1 above, on August 18, 2015, the ~~Borrowers~~Company ~~entered~~and the ~~into~~Subsidiaries ~~Amendment~~filed Novoluntary petitions in the United States Bankruptcy Court for the District of Delaware seeking relief under the provisions of Chapter 11 of Title 11 of the United States Code. 4The (Chapter 11 case is being administered under the caption ~~“4rd~~"In ~~Amendment”)~~re Boomerang Systems, Inc. ~~Pursuant~~, et. al," Case No. 15-11729. The Company remains in possession of its assets and continues to operate its business as a debtor-in-possession under the ~~4rd~~jurisdiction ~~Amendment~~of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and the orders of the Bankruptcy Court. On August 20, an2015, ~~incremental~~the ~~lender~~Bankruptcy ~~committed~~Court entered an order toapproving ~~fund~~DIP Financing on an ~~additional~~interim basis in the amount of $501 million bearing interest at the rate of 20% per annum,~~000~~ ~~principal~~payable in-kind. Boomerang will be seeking approval of a final order on September 9, 2015, for DIP Financing on a final basis in the amount of $3 million, bearing interest at the rate of ~~loans~~20% toper annum, payable in-kind, with a maturity date of December 21, 2015. The DIP Lenders are Game Over Technology Investors, LLC and other parties comprised of existing equity holders in the ~~Borrowers~~Company, ~~bringing~~all ~~aggregate~~but one ~~commitments~~of ~~under~~which are also participants in the group of lenders comprising the Loan and Security ~~Agreement~~ ~~to $14,950,000~~Agreement.

21On August 18, 2015, Boomerang Systems, Inc. and its subsidiaries commenced an action against Parking Source LLC, and its principals (the “Defendants”) in the United States District Court for the Southern District of New York. The Company’s action seeks relief for Defendants’ purposeful breach of the Loan and Security Agreement, dated as of June 6, 2013, which directly led to a liquidity crunch and caused the Company to file for bankruptcy. The Company seeks damages of at least $25 million.

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.

Bankruptcy Related Matters

On August 18, 2015 (the “Petition Date”), we and our wholly-owned subsidiaries Boomerang Sub, Inc., Boomerang USA Corp. and Boomerang MP Holdings, Inc. (collectively, the “Subsidiaries”), filed voluntary petitions (the “Bankruptcy Filing”) in the United States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court") seeking relief under the provisions of Chapter 11 ("Chapter 11") of Title 11 of the United States Code ("Bankruptcy Code"). The Chapter 11 case is being administered under the caption "In re Boomerang Systems, Inc., et. al" Case No. 15-11729 (the "Chapter 11 Case"). We remain in possession of our assets and continue to operate our business as a debtor-in-possession under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and the orders of the Bankruptcy Court. As a result of the Bankruptcy Filing, the satisfaction of our liabilities and funding of our ongoing operations are subject to substantial uncertainty. In general, as a debtor-in-possession under the Bankruptcy Code, we are authorized to continue to operate as an ongoing business but may not engage in transactions outside the ordinary course of business without the prior approval of the Bankruptcy Court. We have not filed with the Bankruptcy Court schedules and statements of financial affairs setting forth, among other things, our assets and liabilities, subject to the assumptions filed in connection therewith. We anticipate filing the schedules and statements with the Bankruptcy Court shortly.

LIQUIDITY AND CAPITAL RESOURCES

~~Cash~~The ~~and~~Company ~~cash~~incurred ~~equivalents~~net ~~for the six months ended March 31,~~losses ~~2015~~of ~~increased~~approximately by $~~936,253 to $1,895,130~~20.1 ~~As of March 31~~million, ~~2015, our working capital together with borrowings of~~ $42.97 million ~~available under our Loan~~ and ~~Security~~$11.2 ~~Agreement~~million ~~expect~~for tothe ~~allow~~nine usmonths toended ~~carry~~June ~~out~~30, ~~our~~2015, ~~business~~and ~~plan~~the ~~until~~fiscal atyears ~~least June 2016 without securing~~ended ~~any~~September ~~additional~~30, ~~contracts.~~2014 Toand ~~implement~~2013, ~~our full business plan~~respectively, ~~we may require additional funds~~ and ~~anticipate~~had ~~raising~~a ~~these~~stockholders’ ~~funds through~~deficit ~~public~~of or$16.05 ~~private~~million ~~debt~~as orof ~~equity offerings~~June 30, ~~including offerings to our existing security holders~~2015. InThe Bankruptcy ~~addition,~~Filing weis ~~may~~intended ~~seek~~ to ~~restructure~~bolster our ~~existing~~liquidity ~~liabilities~~ and ~~debt.~~enable ~~There~~us ~~can~~to befocus noon ~~assurance~~enhancing ~~that~~our ~~the~~systems ~~capital~~and westrengthening ~~require to meet~~ our ~~operating needs~~operational ~~will~~capabilities. Cash beand ~~available~~cash toequivalents usfor onthe ~~favorable~~nine ~~terms,~~months orended atJune ~~all.~~30, If2015 weincreased by ~~are unsuccessful in raising sufficient capital~~$1,082,767 ~~we may be required~~ to ~~curtail our operations~~$2,041,644.

For the ~~six~~nine months ended ~~March~~June 3130, 2015, we had a net loss of $1520,~~173~~103,~~256~~354. Included in this net loss were several non-cash expenses that partially offset the use of cash. These non-cash expenses include depreciation of $~~117~~169,~~185~~317, amortization of discount on debt of $~~759~~1,~~551~~375,081, issuance of common stock for interest expense of of $~~116~~122,~~431~~414, rent concession of $65,152, expenses from the issuance of stock options of $~~858~~1,~~968~~201,552, loss from the disposal of property, plant and equipment of $47,~~056~~080, allowance for doubtful accounts of $13,539 and debt conversion expense of $9,350,726. These items were offset by non-cash gains on the fair value of derivative of $~~538~~652,~~896~~746. Cash decreased as we experienced ~~six~~nine month increases in prepaid expenses and other assets of $~~127~~257,~~819~~242, in retainage receivable of $~~222~~426,~~183~~648, and in inventories of $~~356~~179,~~769~~494. Cash also decreased as we experienced a decrease in ~~estimated loss~~deposits onpayable ~~uncompleted contract~~ of $~~225~~15,~~846~~000. Cash increased as we experienced ~~six~~nine month decreases in accounts receivable of $~~624~~144,~~879, and~~554. ~~increases~~Cash inalso ~~deposits~~increased ~~payable~~as ofwe ~~$150,000,~~experienced increases in accounts payable and accrued liabilities of $1,~~802~~843,~~574~~458, in due to related party of $44,153, in estimated loss on uncompleted contract of $57,699 and in billings in excess of costs of $~~141~~1,~~784~~482,703. After adjusting our net loss for these non-cash items and the net changes in assets and liabilities, net cash used in operations was $25,~~566~~717,~~310~~056 for the ~~six~~nine months ended ~~March~~June 3130, 2015.

Financing activities provided $36,~~555~~855,436 for the ~~six~~nine months ended ~~March~~June 3130, 2015. Net cash provided by financing activities consisted of $36,~~564~~864,460 of borrowings under the Loan Agreement, offset by $9,024 of note repayments.

During the ~~six~~nine months ended ~~March~~June 3130, 2015, net cash used in investing activities was $5255,~~873~~613, and consisted of additional purchases of property, plant and equipment of $5558,~~473~~213 offset by ~~proceeds~~ proceeds from the sale of property, plant and equipment of $2,600.

~~There~~Our ~~were~~cash norequirements ~~off-balance~~may ~~sheet~~vary ~~arrangements~~materially ~~during~~from those now planned because of the ~~six~~Bankruptcy ~~months~~Filing. We are seeking Bankruptcy Court approval of a debtor-in-possession credit facility (the “DIP ~~ended~~Financing”) ~~March~~and, 31if we are successful in securing Bankruptcy Court approval of the DIP Financing, ~~2015~~such ~~that~~financing ~~have~~would orbe used ~~are~~to ~~reasonably~~enhance ~~likely~~liquidity and working capital and will be subject to ~~have~~Bankruptcy aCourt ~~current~~approval orand ~~future~~other ~~effect~~conditions. On August 20, 2015, the Bankruptcy Court entered an order approving the DIP Financing on ~~our~~an ~~financial~~interim ~~condition,~~basis ~~changes~~in the amount of $1 million bearing interest at the rate of 20% per annum, payable in-kind. ~~financial~~Boomerang ~~condition~~will be seeking approval of a final order on September 9, ~~revenues~~2015, orfor ~~expenses~~DIP Financing on a final basis in the amount of $3 million, ~~results~~bearing interest at the rate of ~~operations~~20% per annum, ~~liquidity~~payable in-kind, ~~capital~~with ~~expenditures~~a ormaturity ~~capital~~date ~~resources~~of ~~that~~December 21, 2015. We must be able to secure the DIP Financing to meet our short-term liquidity isrequirements ~~material~~and exit financing to meet our ~~interests~~longer term liquidity needs.

We are also developing a strategic plan for the ongoing operation of our business. Successful implementation of such plan, however, is subject to numerous risks and uncertainties which raise substantial doubt about our ability to continue as a going concern.

The consolidated financial statements in this Form 10-Q and this Management’s Discussion and Analysis of Financial Condition and Results of Operations have been prepared assuming that we will continue as a going concern and contemplate the realization of assets and the satisfaction of liabilities in the normal course of business. Our ability to continue as a going concern is contingent upon our ability to obtain required DIP Financing and comply with the financial and other covenants related to such financing, the Bankruptcy Court’s approval of the DIP Financing and our reorganization plan and our ability to successfully implement our plan and obtain exit financing, among other factors. As a result of the Bankruptcy Filing, the realization of assets and the satisfaction of liabilities are subject to uncertainty. While operating as a debtor-in-possession under Chapter 11, we may sell or otherwise dispose of or liquidate assets or settle liabilities, subject to the approval of the Bankruptcy Court or as otherwise permitted in the ordinary course of business (and subject to the restrictions related to the DIP Financing), for amounts other than those reflected in the accompanying consolidated financial statements. Further, the reorganization plan could materially change the amounts and classifications of assets and liabilities reported in the consolidated financial statements. The accompanying condensed consolidated financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities or any other adjustments that might be necessary should we be unable to continue as a going concern or as a consequence of the Bankruptcy Filing.

Matters Related to the Bankruptcy Filing

Under Section 362 of the Bankruptcy Code, the Bankruptcy Filing automatically stayed most actions against us, including all actions to collect indebtedness incurred prior to the Petition Date or to exercise control over our property. Accordingly, although the Bankruptcy Filing triggered defaults for certain of our debt obligations, creditors are stayed from taking any actions as a result of such defaults. Absent an order of the Bankruptcy Court, substantially all of our pre-petition liabilities are subject to being restructured under a reorganization plan. As a result of the Bankruptcy Filing, the realization of assets and the satisfaction of liabilities are subject to uncertainty. We, operating as a debtor-in-possession under the Bankruptcy Code, may, subject to approval of the Bankruptcy Court, sell or otherwise dispose of assets and liquidate or settle liabilities for amounts other than those reflected in the condensed consolidated financial statements. Further, a confirmed reorganization plan or other arrangement may materially change the treatment, amounts and classifications in our condensed consolidated financial statements.

Subsequent to the Petition Date, we received approval from the Bankruptcy Court to pay or otherwise honor certain pre-petition obligations generally designed to stabilize our operations. These obligations related to certain employee wages, salaries and benefits. We have requested Bankruptcy Court approval to retain legal and financial professionals to advise us in connection with the Bankruptcy Filing and certain other professionals to provide services and advice in the ordinary course of business.

The U.S. Trustee for the District of Delaware may appoint an official committee of unsecured creditors (the “UCC”). The UCC and its legal representatives would have a right to be heard on all matters that come before the Bankruptcy Court on all matters affecting us. There can be no assurance that the UCC, if one is appointed, would support our positions on matters to be presented to the Bankruptcy Court in the future or on any reorganization plan, once the disclosure statement relating to the reorganization plan is submitted to and approved by the Bankruptcy Court.

Reorganization Plan

In order for us to emerge successfully from Chapter 11, we must obtain the Bankruptcy Court’s approval for the DIP Financing and the Bankruptcy Court’s approval of a disclosure statement and a reorganization plan to enable us to transition from Chapter 11 into a successfully reorganized company. On August 20, 2015, the Bankruptcy Court entered an order approving DIP Financing on an interim basis. The reorganization plan would be subject to creditors' vote and class approval. We have not yet submitted a disclosure statement and a reorganization plan. In connection with our reorganization plan, we will likely require “exit financing.” Our ability to obtain approval of DIP Financing on a final basis, approval of our reorganization plan and exit financing will depend on, among other things, the timing and outcome of various ongoing matters related to the Bankruptcy Filing. A reorganization plan determines the rights and satisfaction of claims of various creditors and security holders, and is subject to the ultimate outcome of negotiations and Bankruptcy Court decisions ongoing through the date on which the reorganization plan is confirmed. Although our goal is to obtain DIP Financing on a final basis and file a plan of reorganization, we may determine that it is in our best interests to seek Bankruptcy Court approval of a sale of all or a portion of our assets pursuant to Section 363 of the Bankruptcy Code or seek confirmation of a reorganization plan providing for such a sale or other arrangement.

We intend to propose a reorganization plan within the time that the Bankruptcy Code gives the Company the exclusive right to file a reorganization plan, as the same may be extended with approval of the Bankruptcy Court. We presently expect that any proposed reorganization plan will provide, among other things, mechanisms for settlement of claims by our creditors and treatment of our existing equity and debt holders. Any proposed reorganization plan will be subject to revision prior to submission to the Bankruptcy Court based upon discussions with our creditors and other interested parties, and thereafter in response to creditor claims and objections and the requirements of the Bankruptcy Code or the Bankruptcy Court. There can be no assurance that we will be able to secure approval for our proposed reorganization plan from the Bankruptcy Court or that our proposed plan will be accepted by the lenders which provide the DIP Financing.

There were no off-balance sheet arrangements during the nine months ended June 30, 2015, 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.

Convertible Notes

As of ~~March~~June 3130, 2015, and reflective of the Exchange Offer described below, the Company had $400,000 of indebtedness under convertible promissory notes associated with the November/December 2011 ~~Offering~~ Offering (“2011 Notes”) and June/July 2012 Offering (“2012 Notes” and collectively the “Notes”). ~~The~~ The Notes become due between November 2016 and December 2017. As of December 31, 2014, the 2011 Notes and 2012 Notes were ~~convertible~~ convertible into 66,667 shares of common stock at $3.00, and 60,423 shares of common stock at $3.31, respectively. The Notes are subject to a weighted average adjustment for issuances of common stock or common stock equivalents below the conversion price, subject to certain exceptions. The respective conversion price for the 2012 Notes may not be adjusted below $0.25. Interest accrues on the Notes at 6% per annum, payable quarterly at the Company’s option in: (i) cash or (ii) shares of Common Stock.

For so long as the above Notes are outstanding, without the prior written consent of the holders of at least a majority of the aggregate principal amount of each of the Notes, the Company may not:

create, incur, assume or suffer to exist, any indebtedness, contingent and otherwise, which should, in accordance with generally accepted accounting principles consistently applied, be classified upon the Company's balance sheet as liabilities and which would be senior or pari passu in right of payment to the notes, except for: (i) secured or unsecured debt issued to a bank or financial institution on commercially reasonable terms, or (ii) any other debt not to exceed $5 million, individually, or in the aggregate, provided herein that the Company may incur up to an aggregate of $100 million of debt under clause (ii) on terms approved by the Company’s board of directors;

and may not, unless approved by the Company’s board of directors, permit its subsidiaries to, engage in any transactions with any officer, director, employee or any affiliate of the Company, including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner, in each case in excess of $50,000, other than: (i) for payment of reasonable salary for services actually rendered, as approved by the Board of Directors of the Company as fair in all respects to the Company, (ii) reimbursement for expenses incurred on behalf of the Company (iii) transactions and written arrangements in existence on the date of the initial issuance of the notes, and any amendments, modifications, cancellations, terminations, limitations and waivers approved by a majority of the independent disinterested directors of the Company; and

and may not, unless approved by the Company’s board of directors, permit any subsidiary to: (i) declare or pay any dividends or make any distributions to any holder(s) of common stock or such subsidiaries (other than dividends and distributions from a subsidiary to the Company) or (ii) purchase or otherwise acquire for value, directly or indirectly, any shares or other equity security of the Company, other than the notes or warrants issued in connection with the notes

The Notes have terms which state that the Notes will be considered in default if, among other things, the Company files a petition in bankruptcy or for reorganization or for the adoption of an arrangement under the Bankruptcy Code. The Company filed for a voluntary reorganization under the Bankruptcy Code, as discussed in Note 1 above, on August 18, 2015, and therefore the Company is considered in default on the Notes, although no demand letter or formal notification has been received from the noteholders as of the date of this filing.

Exchange Offer

The Company accounted for the Exchange Offer as an induced ~~conversion~~ conversion under the criteria established in ASC 470-20-40. In accordance with ASC 470-20-40, the Company recognized an expense equal to the fair value of the shares issued in the Exchange Offer in excess of the fair value of shares issuable at the stated conversion rates of the 2011 Notes, 2012 Notes and December 2012 Notes. This resulted in a debt conversion expense of $9,350,726 for the ~~six~~nine months ended ~~March~~June 3130, 2015.

Derivative Liability

The Company has valued the warrants issued in connection with the November/December 2011 Offering, the 2011 Warrants, and the beneficial conversion features (“BCF”) of the 2011 Notes, to their maximum value in proportion to the 2011 Notes and had accounted for them as a discount to the debt. In certain circumstances the convertibility features and the attached Warrants contain reset provisions which adjust the conversion price of the 2011 Notes and the exercise price of the 2011 Warrants should the Company sell additional shares of common stock below the initial conversion price of the 2011 Notes or warrant exercise price as agreed to upon entry into the convertible notes payable. The Company has assessed that the reset provision for the convertibility feature and the warrant exercise price are such that they are not indexed to the Common Stock and is therefore a derivative in accordance with ASC 815-40. As such the derivative was valued on the date of its initiation, with each issuance of convertible debt, and will be re-valued at its fair value at each subsequent interim and annual reporting period.

As of September 30, 2014, the aggregate fair value of the derivative was $646,120. The revaluation of the derivative as of ~~March~~June 3130, 2015 resulted in a derivative value of $552,~~612~~902. The change in fair value of the derivative from September 30, 2014 to ~~March~~June 3130, 2015 resulted in a gain on the fair value of the derivative liability of $~~590~~643,~~508~~218. Substantially all of the increase in the gain on the fair value of the derivative was due to the reduction of the principal amount of the convertible notes as a result of the Exchange Offer. The derivative liability was revalued on ~~March~~June 3130, 2015 using the Black-Scholes option pricing model with the following weighted assumptions: i) expected dividend rate of 0% ii) expected volatility of 3231.1240% iii) risk free interest rate of 1.3763%, iv) expected term of 1.6035 years and v) market price of $31.1377.

In connection with the 2011 Offering, the Company issued warrants to the placement agent (the “Placement Agent Warrants”) to purchase shares of Common Stock. The Company issued an aggregate of 109,176 Placement Agent Warrants in November and December 2011 valued at $212,040. The Placement Agent Warrants were valued based on the Black-Scholes Model with assumptions similar to those used to value the 2011 Warrants issued to the purchasers of 2011 Notes in the 2011 Offering. The Placement Agent Warrants have similar terms to those issued to the convertible debt holders, including a reset provision included with the warrants if the Company should obtain equity financing at a price per share lower than that of the exercise price of the warrants. The Placement Agent Warrants, similar to the 2011 Warrants issued to the purchasers of 2011 Notes in the 2011 Offering, do not meet the definition of being indexed to the Company’s own stock in accordance with ASC 815-40. Accordingly, the Company has recorded a derivative liability for the value of the Placement Agent Warrants. The derivative liability valued at $12,896 at September 30, 2014 was revalued at $3,368 at June 30, 2015. The difference in valuation for the nine months ended June 30, 2015 was $9,528, accounted for as a gain on the fair value of derivative. The valuation at June 30, 2015 was valued based on the Black-Scholes Model with assumptions similar to those used to value the 2011 Warrants granted to the debt holders as of June 30, 2015.

December 2011 valued at $212,040. The Placement Agent Warrants were valued based on the Black-Scholes Model with assumptions similar to those used to value the 2011 Warrants issued to the purchasers of 2011 Notes in the 2011 Offering. The Placement Agent Warrants have similar terms to those issued to the convertible debt holders, including a reset provision included with the warrants if the Company should obtain equity financing at a price per share lower than that of the exercise price of the warrants. The Placement Agent Warrants, similar to the 2011 Warrants issued to the purchasers of 2011 Notes in the 2011 Offering, do not meet the definition of being indexed to the Company’s own stock in accordance with ASC 815-40. Accordingly, the Company has recorded a derivative liability for the value of the Placement Agent Warrants. The derivative liability valued at $12,896 at September 30, 2014 was revalued at $64,508 at March 31, 2015. The difference in valuation for the six months ended March 31, 2014 was $51,612, accounted for as a loss on the fair value of derivative. Substantially all of the loss on the fair value of the derivative was due to a change in methodology in measuring the market price of the Company’s common stock during the quarter ended March 31, 2014. The valuation at March 31, 2015 was valued based on the Black-Scholes Model with assumptions similar to those used to value the 2011 Warrants granted to the debt holders as of March 31, 2015.

June 2013 Loan and Security Agreement

On June 11, 2013, the Company and its wholly-owned subsidiaries Boomerang Sub, Inc., Boomerang USA Corp. and Boomerang MP Holdings Inc. (collectively with the Company, the “Borrowers” and individually, a “Borrower”), entered into a Loan and Security Agreement (the “Loan and Security Agreement”) ~~dated~~ dated as of June 6, 2013 with lenders who became a lender party thereto (together with any party which subsequently becomes a ~~lender~~ lender party, the “Lenders” and, individually, a “Lender”) and the Agent (as defined in the Loan and Security Agreement). Pursuant to the Loan and Security Agreement, Lenders committed to fund $4,750,000 principal amount of loans to the Borrowers. The Loan and Security Agreement contemplated that the aggregate principal amount of borrowings may be increased to $10,000,000 through commitments from additional Lenders who subsequently become a party to the Loan and Security Agreement.

On July 12, 2013 and August 6, 2013, the Borrowers entered ~~into~~ into Amendments No. 1 (the “Amendment”) and No. 2 (the “2nd Amendment”) to the Loan and Security Agreement (collectively “the Amendments”). Pursuant to the Amendments, the additional Lenders committed to fund an additional $3,100,000 principal amount of loans to the Borrowers, bringing aggregate commitments under the Loan ~~Agreement~~and Security Agreement to $7,850,000.

As of September 30, 2014, the Company drew down an aggregate of $6,485,540 under the Loan and Security Agreement. The Company drew down an additional $3,564,460 during the six months ended March 31, 2015, bringing the total amount of borrowings under the Loan and Security Agreement to $10,050,000 as of March 31, 2015.28

24On April 1, 2015, the Borrowers entered into Amendment No. 4 (the “4rd Amendment”). Pursuant to the 4rd Amendment, an incremental lender committed to fund an additional $50,000 principal amount of loans to the Borrowers, bringing aggregate commitments under the Loan and Security Agreement to $14,950,000.

The notes bear interest at the rate of 15% per annum, payable upon maturity. The maturity date of the Notes is May 31, 2016, subject to earlier prepayment upon acceleration of the occurrence of an event of default (as defined in the Loan and Security Agreement); provided further that the Company may prepay the Notes at any time without penalty. The Company accrued $1,099,440 of interest expense during the nine months ended June 30, 2015. Total accrued interest related to the Loan and Security Agreement was $2,001,582 as of June 30, 2015.

Pursuant to draws under the Loan and Security Agreement during ~~the~~ ~~six~~the nine months ended ~~March~~June 3130, 2015, the Company issued warrants to purchase an aggregate of 13,~~657~~192,~~788~~701 shares of common stock. ~~The~~ The Company valued these warrants at $~~645~~2,~~461~~682,718, recorded as a discount to long-term debt. This discount is being amortized ~~over~~ over the life of the notes or until such time as the notes are repaid, or upon exercise of the warrants. The valuation of the warrants was determined using the Black-Scholes option pricing model with the following weighted assumptions: i) expected dividend rate of 0% ii) expected volatility of 3231.1240-35.05% iii) risk free interest rate of 1.29-1.63% and expected term of 3.3910-3.66 years. ~~During~~ During the ~~six~~nine months ended ~~March~~June 3130, 2015, the Company amortized $~~115~~544,~~774~~592 of the debt discount related to these warrants.

The following officers, directors and 5% shareholders of the Company participated as Lenders in the Loan and Security Agreement:

Name	Commitment		Amount Funded as of ~~March~~June 3130, 2015		Aggregate Number of Warrants Issuable		Warrants Issued as of ~~March~~June 3130, 2015
The Estate of Gene Mulvihill(1)	$	500,000	$	500,000		232,561		232,561
Sunset Marathon Partners LLC(2)	$	250,000	$	250,000		116,281		116,281
MRP Holdings LLC(3)	$	400,000	$	~~240~~400,000		186,~~047~~051		~~116~~186,~~628~~051
Burton I. Koffman and David Koffman(4)	$	750,000	$	750,000		348,~~838~~850		348,~~838~~850
Anthony P. Miele III(5)	$	25,000	$	25,000		11,631		11,631
Alexandria Equities, LLC(6)	$	700,000	$	~~420~~700,000		325,~~582~~585		~~195~~325,~~349~~585
Albert Behler(7)	$	400,000	$	~~240~~400,000		186,~~047~~051		~~116~~186,~~628~~051
Fox Hunt Wine Collectors, LLC(8)	$	1,000,000	$	~~600~~1,000,000		465,117		~~279~~465,~~070~~117
James Gelly(9)	$	400,000	$	~~240~~400,000		186,~~047~~051		~~116~~186,~~628~~051

2529

(1)

(2)

(3)

MRP Holdings LLC is owned by Mark Patterson, the Chairman of the Board of Directors, a principal stockholder and the former Chief Executive Officer of the Company.

(4)

(5)

Anthony P. Miele, III is a director of the Company.

(6)

Alexandria Equities, LLC was a principal stockholder of the Company at the time we entered into the Loan and Security Agreement.

(7)

Albert Behler is a principal stockholder of the Company.

(8)

Fox Hunt Wine Collectors, LLC, is managed by Peter Mulvihill, brother of Christopher Mulvihill.

(9)

James Gelly is the Chief Executive Officer and a director of the Company.

The Loan Agreement has terms which state that the Loan Agreement will be considered in default if, among other things, the Company or any other Borrower files a petition in bankruptcy or for reorganization or for the adoption of an arrangement under the Bankruptcy Code. The Company and the other Borrowers filed for a voluntary reorganization under the Bankruptcy Code, as discussed in Note 1 above, on August 18, 2015, and therefore the Company is considered in default on the Loan Agreement, although no demand letter or formal notification has been received from the lenders as of the date of this filing.

On May 18, 2015, the Company commenced an exchange offer for the outstanding notes under the Loan and Security Agreement. The Company offered to exchange the notes plus accrued interest thereon for common stock at the rate of $2.75 per share. On July 28, 2015, the Company terminated the exchange offer. On July 29, 2015, the Company commenced a tender offer for such notes and accrued interest thereon for common stock at the rate of $2.15 per share. Due to the Bankruptcy Filing, the Company does not expect to proceed with the tender offer.

RESULTS OF OPERATIONS

FISCAL PERIOD FOR THE ~~SIX~~NINE MONTHS ENDED ~~MARCH~~JUNE 3130, 2015 COMPARED WITH ~~SIX~~NINE MONTHS ENDED ~~MARCH~~JUNE 3130, 2014.

Revenues were $23,~~350~~279,~~727~~450 for the ~~six~~nine months ended ~~March~~June 3130, 2015, compared with $34,~~336~~838,~~863~~820 for the ~~six~~nine months ended ~~March~~June 3130, 2014. The decrease was attributable to less work performed on a large-scale RoboticValet project in Miami, FL, which was substantially completed in fiscal year 2014, partially offset by revenues generated from two smaller-scale RoboticValet projects that commenced in fiscal year 2014.

Cost of goods sold were $25,~~473~~294,~~353~~737 for the ~~six~~nine months ended ~~March~~June 3130, 2015, compared with $36,~~910~~653,~~907~~633 for the ~~six~~nine months ended ~~March~~June 3130, 2014. The decrease for the ~~six~~nine months ended ~~March~~June 3130, 2015, was attributable to less work performed on a large-scale RoboticValet project in Miami, FL, which was substantially ~~completed~~ completed in fiscal year 2014, partially offset by revenues generated from two smaller-scale RoboticValet projects that commenced in fiscal year 2014.. The Company recognized a gross loss of ($~~122~~2,~~626~~015,287) and a gross loss of ($~~574~~1,~~044~~814,813) for the ~~quarters ended~~nine ~~March~~months 31ended June 30, 2015 and ~~March~~June 3130, 2014, respectively, for ana ~~increase~~decrease of $~~451~~580,~~418~~725.

Sales and marketing expenses were $~~281~~393,~~501~~313 during the ~~six~~nine months ended ~~March~~June 3130, 2015, compared with $~~347~~531,~~147~~719 during the ~~six~~nine months ended ~~March~~June 3130, 2014, for a decrease of $65138,~~646~~406. The decrease was due to reduced spending of approximately $63130,000 in salary related expense, ~~and~~$20,000 in atravel ~~decrease~~expense. This was offset by an increase in marketing and tradeshows of approximately $312,000. As of ~~March~~June 3130, 2015 and 2014, the Company employed two full-time sales persons. Salespersons’ salaries are recorded under sales and marketing expense.

General and administrative expenses were $2,768,547 during the six months ended March 31, 2015, compared with $1,696,842 during the six months ended March 31, 2014, for an increase of $1,071,705. The relocation of our inventory and production and assembly equipment from Utah to Florida increased freight by approximately $47,000, and facility set up expense by $53,000. Contract Labor increased by approximately $640,000 as the Company increased the use of consultants, travel increased by approximately $70,000 and stock-based compensation increased by approximately $200,000 during the six months ended March 31, 2015.30

26General and administrative expenses were $4,665,090 during the nine months ended June 30, 2015, compared with $2,683,412 during the nine months ended June 30, 2014, for an increase of $1,981,678. The relocation of our inventory and production and assembly equipment from Utah to Florida increased freight by approximately $47,000, and facility set up expense by $53,000. Contract Labor increased by approximately $876,000, salaries increased by $742,000, travel increased by approximately $70,000 and stock-based compensation increased by approximately $200,000 during the nine months ended June 30, 2015. We expect general and administrative expenses to increase due to the incurrence of bankruptcy expenses as our bankruptcy proceedings continue.

Arbitration settlement charges were $1,517,810 during the ~~six months~~nine months ended ~~March~~June 3130, 2015, compared with $0 during the ~~six~~nine months ended ~~March~~June 3130, 2014. This increase was due to an ~~interim~~ arbitration award related to the litigation with Crescent Heights.

Research and development expenses were $1419,~~505~~138 during the ~~six months~~nine months ended ~~March~~June 3130, 2015, compared with $7484,~~125~~234 during the ~~six~~nine months ended ~~March~~June 3130, 2014, for a decrease of $5965,~~620~~096. The ~~decrease~~ decrease was due to less research and development projects undertaken during the ~~six~~nine months ended ~~March~~June 3130, 2015.

Depreciation and amortization expenses were $~~117~~169,~~185~~317 during ~~the~~ ~~six~~the nine months ended ~~March~~June 3130, 2015, compared to $~~146~~219,~~666~~454 during the ~~six~~nine months ended ~~March~~June 3130, 2014, for a decrease of $2950,~~481~~137. ~~This~~ This decrease was the result of older assets becoming fully depreciated.

Interest expense was $~~762~~1,~~055~~237,244 during the ~~six~~nine months ended ~~March~~ 31June 30, 2015, compared with $~~968~~1,~~735~~505,619 during the ~~six~~nine months ended ~~March~~June 3130, 2014, for a decrease of $~~206~~268,~~680~~375. This decrease is due to the elimination of $20.5 million principal amount of convertible debt in the Exchange Offer in October 2014.

In connection with the 2011 Offering, the Company recorded a discount for the BCF and the 2011 Warrants. In addition, the Placement Agent Warrants were deemed not indexed to the Company’s common stock and accordingly the Company recorded a derivative liability. The derivative liability is required to be ~~revalued~~ revalued at each interim and annual reporting date until such time that it is settled. This revaluation resulted in a gain on fair ~~value~~ value of derivative of $~~538~~652,~~896~~746 during the ~~six~~nine months ended ~~March~~June 3130, 2015. Substantially all of the increase in the gain on the fair value of the derivative was due to the reduction of the principal amount of the convertible notes as a result of the Exchange Offer. With respect to the 2012 Offering and the December 2012 Offering, the Company recorded a discount for the BCF and the warrants issued in connection with each offering. In addition, the placement agent was granted warrants similar in their terms to those issued to the debt holders. The Company has determined that the 2012 Offering and the December 2012 Offering are indexed to the Company’s common stock and has not recorded a derivative liability. The Company also recorded a discount for the warrants issued in connection with each draw down of the June 2013 Loan Agreement. During the ~~six~~nine months ended ~~March~~June 3130, 2015 the Company amortized an aggregate of $~~759~~1,~~551~~375,081 of the debt discount for the 2011 Offering, the 2012 Offering, December 2012 Offering and June 2013 Loan Agreement.

FISCAL PERIOD FOR THE THREE MONTHS ENDED ~~MARCH~~JUNE 3130, 2015 COMPARED WITH THREE MONTHS ENDED ~~MARCH~~JUNE 3130, 2014.

Revenues were $~~662~~928,~~615~~723 for the three months ended ~~March~~June 3130, 2015, compared with $21,~~296~~501,~~235~~957 for the three months ended ~~March~~June 3130, 2014. The decrease was attributable to less work ~~performed~~ performed on a large-scale RoboticValet project in Miami, FL, which was substantially completed in fiscal year 2014, partially offset by revenues generated from two smaller-scale RoboticValet projects that commenced in fiscal year 2014..

Cost of goods sold were $~~896~~2,~~719~~821,384 for the three months ended ~~March~~June 3130, 2015, compared with $2,~~520~~742,~~354~~726 for the three months ended ~~March~~June 3130, 2014. The decrease was attributable to less ~~work~~ work performed on a large-scale RoboticValet project in Miami, FL, which was substantially completed in fiscal year 2014, partially offset by revenues generated from two smaller-scale RoboticValet projects that commenced in fiscal year 2014..

Sales and marketing expenses were $~~121~~111,~~410~~812 during the three ~~months~~ months ended ~~March~~June 3130, 2015, compared with $~~176~~184,~~841~~572 during the three months ended ~~March~~June 3130, 2014, for a decrease of $5572,~~431~~760. The ~~decrease~~ decrease was due to ~~reduced~~a ~~spending~~reduction of approximately $1576,000 onin ~~marketing~~salary ~~and~~related ~~tradeshows~~expense and a$12,000 ~~reduction~~in travel offset by increased spending of approximately $4015,000 inon ~~salary related~~marketing ~~expense~~and tradeshows and. As of ~~March~~June 3130, 2015, the Company employed two full-time sales persons.

~~General and administrative expenses were $1,490,689 during the three months ended March~~ 31, 2015, compared with $875,298 during the three months ended March 31, 2014, for an increase of $615,391. The relocation of our inventory and production and assembly equipment from Utah to Florida increased freight by approximately $47,000, and facility set up expense by $53,000. Also, travel increased by approximately $40,000, contract labor increased by approximately $330,000 as the Company increased use of consultants, and approximate increases were recognized in stock based compensation of $130,000. This was offset by a decrease in professional fees of $45,000.

~~Arbitration~~General ~~settlement~~and ~~charges~~administrative expenses were $~~144~~1,~~923~~896,543 during the ~~three~~ three months ended ~~March~~June 3130, 2015, compared with $0986,569 during the three months ended ~~March~~June 3130, 2014., ~~This~~for an increase ~~was~~of ~~due~~$909,974. Salaries toincreased anby ~~interim arbitration~~approximately ~~award~~$413,000, ~~related~~contract tolabor increased by approximately $280,000 as the ~~litigation~~Company ~~with~~increased ~~Crescent~~use ~~Heights~~of consultants, travel increased by 220,000 and approximate increases were recognized in stock based compensation of $130,000. This was offset by a decrease in professional fees of $130,000.

Research and development expenses were $94,633 during the three ~~months~~ months ended ~~March~~June 3130, 2015, compared with $2610,~~328~~109 during the three months ended ~~March~~June 3130, 2014, for a decrease of $265,~~319~~476. The decrease was due to less research and development projects undertaken during the three months ended ~~March~~June 3130, 2015.

27Depreciation and amortization expenses were $52,132 during the three months ended June 30, 2015, compared to $72,788 during the three months ended June 30, 2014, for a decrease of $20,656. This decrease was the result of result of older assets becoming fully depreciated.

~~Depreciation~~Interest ~~and~~expense ~~amortization~~was ~~expenses were~~ $53475,~~628~~189 during the three months ended June ~~March 31~~30, 2015, compared towith $73536,~~417~~884 during the three months ended ~~March~~June 3130, ~~2013~~2014, for a decrease of $1961,~~789~~695. This decrease ~~was~~is due to the ~~result~~elimination of ~~result~~$20.5 million of ~~older~~convertible ~~assets~~debt ~~becoming~~in ~~fully~~the ~~depreciated~~Exchange Offer.

~~Interest~~In ~~expense~~connection ~~was~~with ~~$364~~the 2011 Offering,~~757~~ ~~during~~the Company recorded a discount for the ~~three~~BCF ~~months~~and ~~ended~~the ~~March 31,~~2011 ~~2015~~Warrants. In addition, ~~compared~~the ~~with~~Placement Agent Warrants were deemed not indexed to the Company’s common stock and accordingly the Company recorded a derivative liability. The derivative liability is required to be revalued at each interim and annual reporting date until such time that it is settled. This revaluation resulted in a gain on fair value of derivative of $~~493~~113,~~915~~850 during the three months ended ~~March~~June 3130, ~~2014~~2015. With respect to the 2012 Offering and the December 2012 Offering, ~~for~~the Company recorded a ~~decrease~~discount offor ~~$129~~the BCF and the warrants issued in connection with each offerings. In addition,~~158~~ the placement agent was granted warrants similar in their terms to those issued to the debt holders. ~~This~~The ~~decrease~~Company ishas ~~due~~determined that the 2012 Offering and the December 2012 Offering are indexed to the ~~elimination~~Company’s common stock and has not recorded a derivative liability. The Company also recorded a discount for the warrants issued in connection with each draw down of ~~$20~~the June 2013 Loan Agreement.5 ~~million~~During the three months ended June 30, 2015, the Company amortized an aggregate of ~~convertible~~$615,530 of the debt indiscount for the ~~Exchange~~2011 ~~Offer~~Offering, the 2012 Offering, December 2012 Offering and June 2013 Loan Agreement.

In connection with the 2011 Offering, the Company recorded a discount for the BCF and the 2011 Warrants. In addition, the Placement Agent Warrants were deemed not indexed to the Company’s common stock and accordingly the Company recorded a derivative liability. The derivative liability is required to be revalued at each interim and annual reporting date until such time that it is settled. This revaluation resulted in a loss on fair value of derivative of $82,685 during the three months ended March 31, 2015. With respect to the 2012 Offering and the December 2012 Offering, the Company recorded a discount for the BCF and the warrants issued in connection with each offerings. In addition, the placement agent was granted warrants similar in their terms to those issued to the debt holders. The Company has determined that the 2012 Offering and the December 2012 Offering are indexed to the Company’s common stock and has not recorded a derivative liability. The Company also recorded a discount for the warrants issued in connection with each draw down of the June 2013 Loan Agreement. During the three months ended March 31, 2015, the Company amortized an aggregate of $283,808 of the debt discount for the 2011 Offering, the 2012 Offering, December 2012 Offering and June 2013 Loan Agreement.

OFF BALANCE SHEET ARRANGEMENTS

There were no off-balance sheet arrangements during the ~~six~~nine months ended ~~March~~June 3130, 2015, 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.

Reorganization Accounting - Accounting Standards Codification 852, “Reorganizations” ("ASC 852") is applicable to entities operating under Chapter 11 of the Bankruptcy Code. ASC 852 generally does not affect the application of U.S. GAAP that we follow to prepare the condensed consolidated financial statements, but it does require specific disclosures for transactions and events that are directly related to the Chapter 11 proceedings and transactions and events that result from our ongoing operations.

We will apply ASC 852 in preparing the condensed consolidated financial statements for periods subsequent to the Chapter 11 filing and distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. Accordingly, certain revenues, expenses (including professional fees), realized gains and losses and provisions for losses that are realized or incurred in the Chapter 11 filing are recorded in reorganization items, net in the condensed consolidated statement of operations and comprehensive loss. In addition, pre-petition obligations that may be impacted by the Chapter 11 reorganization process will be classified on the condensed consolidated balance sheet in liabilities subject to compromise. These liabilities are reported at the amounts expected to be allowed by the Bankruptcy Court, even if they may be settled for lesser amounts.

Our condensed consolidated financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities or any other adjustments that might be necessary should we be unable to continue as a going concern or as a consequence of the Bankruptcy Filing.

Principles of consolidation – The accompanying consolidated financial statements include the accounts of Boomerang Systems, Inc. and the accounts of all majority-owned subsidiaries. All significant inter-company accounts and transactions have been eliminated in consolidation.

Cash and Cash Equivalents- For purposes of the statement of cash flows, we consider all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.

Accounts receivable and allowance for doubtful accounts – Trade receivables are recorded at the invoiced amount and do not bear interest. The allowance for doubtful ~~accounts~~ accounts is our best estimate of the amount of probable credit losses in our existing accounts receivable. Account balances are ~~charged~~ charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. We determine this allowance based on known troubled accounts, history and other currently available evidence. The allowance for doubtful accounts as of ~~March~~June 3130, 2015 and September 30, 2014 was $31,039 and $17,500, respectively.

Property and equipment – Property, plant 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 which range from three years to fifteen years. Depreciation and amortization for the six months ended March 31, 2015 and 2014 was $117,185 and $146,666, respectively.32

28Property and equipment – Property, plant 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 which range from three years to fifteen years. Depreciation and amortization for the nine months ended June 30, 2015 and 2014 was $169,317 and $219,454, respectively.

Research and development – Pursuant to ASC 730, ~~Research~~ Research and Development, research and development costs are expensed as incurred. Research and Development expense for ~~the~~ ~~six~~the nine months ended ~~March~~June 3130, 2015 and 2014 were $1419,~~505~~138 and $7484,~~125~~234, respectively.

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.

Revenue recognition – Revenues from the sales of RoboticValet and rack and rail systems will be 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.

When the current estimate of total contract costs exceeds the ~~current~~ 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. As of ~~March~~June 3130, 2015, one of our three ongoing projects was estimated to have a gross loss. On this project, we estimated that ~~the~~ the total gross loss would be $35,~~558~~585,~~782~~320. This loss is comprised of $35,~~447~~190,~~439~~432 recognized through the percentage of completion ~~method~~ method and $~~111~~394,~~343~~888 as a provision for the remaining loss on contract for the ~~six~~nine months ended ~~March~~June 3130, 2015. Revenues of of $23,~~350~~279,~~727~~450 and $34,~~336~~838,~~863~~820 have been recognized for the ~~six~~nine months ended ~~March~~June 3130, 2015 and 2014, respectively.

The Company also engages in engineering and design contracts. Revenue is recognized on these contracts after the services are delivered to the customer.

Warranty Reserves - The Company provides warranty coverage on its products for a specified time as stipulated in its sales contracts. As revenues for contracts are recognized, the Company will record a warranty reserve for estimated costs in connection with future warranty claims associated with those contracts. The amount of warranty reserve is based primarily on the estimated number of products under warranty and historical costs to service warranty claims. Management periodically assesses the adequacy of the reserves based on these factors and adjusts the reserve accordingly. The Company incurred warranty expenses relating to its completed projects of $0 and $4,893 for the six months ended March, 2015 and 2014, respectively.33

Warranty Reserves - The Company provides warranty coverage on its products for a specified time as stipulated in its sales contracts. As revenues for contracts are recognized, the Company will record a warranty reserve for estimated costs in connection with future warranty claims associated with those contracts. The amount of warranty reserve is based primarily on the estimated number of products under warranty and historical costs to service warranty claims. Management periodically assesses the adequacy of the reserves based on these factors and adjusts the reserve accordingly. The Company incurred warranty expenses relating to its completed projects of $0 and $4,893 for the nine months ended June 30, 2015 and 2014, respectively.

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 earnings (loss) per share is based on the weighted average number of common shares outstanding. Diluted earnings (loss) per share is based on the weighted average number of common shares outstanding and all dilutive potential common shares outstanding.

Income Taxes - We account for income taxes under ASC 740-10. ASC 740-10 requires an asset and liability approach for financial reporting for income taxes. Under ASC 740-10, deferred taxes are provided for temporary differences between the carrying values of assets and liabilities for financial reporting and tax purposes at the enacted rates at which these differences are expected to reverse. The Company and its subsidiaries file a consolidated Federal income tax return.

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. Estimates are used in accounting for, among other items, allowance for doubtful accounts, inventory obsolescence, warranty expense, income taxes and percentage of completion contracts. Actual results could differ from these estimates.

Impairment of Long-Lived Assets - We review the long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. To determine if impairment exists, we compare the estimated future undiscounted cash flows from the related long-lived assets to the net carrying amount of such assets. Once it has been determined that an impairment exists, the carrying value of the asset is adjusted to the fair value. Factors considered in the determination of the fair value include current operating results, trends and the present value of estimated expected future cash flows.

Derivative liability - The Company accounts for reset provisions in connection with their issuance of debt, and reset provisions of equity instruments attached to their debt, in accordance with ASC 815 which defines determining whether an instrument (or embedded feature) is solely indexed to an entity’s own stock. Under ASC 815 the Company is required to (1) evaluate an instrument’s contingent exercise provisions and (2) evaluate the instrument’s settlement provisions. The derivative liabilities are remeasured at fair value at the end of each reporting period as long as they are outstanding.

Fair Value Measurements - As defined in ASC Topic 820 – 10, “Fair Value Measurements and Disclosures,” fair value is the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 – 10 requires disclosure that establishes a framework for measuring fair value and expands disclosure about fair value measurements.

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 on our Annual Report on Form 10-K for the fiscal year ended September 30, 2014, 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

The Company, under the supervision and with the participation of its management, including its principal executive officer and principal financial officer, evaluated the effectiveness of the design and operation of its disclosure controls and procedures as of the end of the period covered by this report. 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 as of ~~March~~June 3130, 2015 in reaching a reasonable level of assurance that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to the Company’s management, including its principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure due to our inability to record, process, summarize and report within the time periods specified in the SEC’s rules and forms.

The Company’s principal executive officer and principal financial officer also conducted an evaluation of internal control over financial reporting (“Internal Control”) to determine whether any changes in Internal Control occurred during the quarter (the Company’s fourth fiscal quarter in the case of an annual report) that have materially affected or which are reasonably likely to materially affect Internal Control. Based on that evaluation, there has been no such change during the quarter covered by this report.

A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. The Company conducts periodic evaluations to enhance, where necessary its procedures and controls.

3135

PART II

OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

~~On March 15, 2013,~~ Crescent Heights R&D, LLC (“Crescent Heights”), filed a complaint against Boomerang in the State of Florida for fraud, breach of contract and specific performance, as well as equitable rescission which alleged an unspecified amount of damages in excess of the purchase price. Boomerang was subsequently granted a motion to remove this matter to federal court. On May 17, 2013, the court entered an order that our motion to compel arbitration and stay proceedings be granted. The parties agreed to arbitrate the matter in front of the American Arbitration Association in November 2014. The dispute arose from a contract to provide a rack and rail automated parking system. Crescent Heights’ claims, Boomerang’s defenses and Boomerang’s affirmative claims all arose from the contract. On April 21, 2015, the arbitrator issued a Final Arbitration Award. The arbitrator denied Crescent Heights’ claims of fraud in the inducement, equitable rescission based on fraud, and declaratory relief to strike the limitation of liability clause, but found Boomerang in Breach of Contract. Crescent Heights was awarded damages of $1,197,890, plus attorneys’ fees and costs of $319,920, which Boomerang is required to pay in fiscal year 2015. Boomerang established a reserve of $1,517,810 for the amount of the award, attorneys’ fees and costs.

On March 15, 2013, Crescent Heights R&D, LLC (“Crescent Heights”), filed a complaint against Boomerang in the State of Florida for fraud, breach of contract and specific performance, as well as equitable rescission which alleged an unspecified amount of damages in excess of the purchase price. Boomerang was subsequently granted a motion to remove this matter to federal court. On May 17, 2013, the court entered an order that our motion to compel arbitration and stay proceedings be granted. The parties agreed to arbitrate the matter in front of the American Arbitration Association in November 2014. The dispute arose from a contract to provide a rack and rail automated parking system. Crescent Heights’ claims, Boomerang’s defenses and Boomerang’s affirmative claims all arose from the contract. On April 21, 2015, the arbitrator issued a Final Arbitration Award. The arbitrator denied Crescent Heights’ claims of fraud in the inducement, equitable rescission based on fraud, and declaratory relief to strike the limitation of liability clause, but found Boomerang in Breach of Contract. Crescent Heights was awarded damages of $1,197,890, plus attorneys’ fees and costs of $319,920, which Boomerang is required to pay in fiscal year 2015. During the nine months ended June 30, 2015, Boomerang paid $1,036,452 of the award, attorneys’ fees and costs related to the arbitration and established a reserve of $481,358 for the remaining fees and costs.

Bankruptcy Filing; In re Boomerang Systems, Inc., et al.

On August 18, 2015, we filed voluntary petitions in the United States Bankruptcy Court for the District of Delaware seeking relief under the provisions of Chapter 11 of Title 11 of the United States Code. The Chapter 11 case is being administered under the caption "In re Boomerang Systems, Inc., et. al," Case No. 15-11729. Our subsidiaries were not part of the Bankruptcy Filing and will continue to operate in the ordinary course of business. We remain in possession of our assets and continue to operate our business as a debtor-in-possession under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and the orders of the Bankruptcy Court.

In addition to the above, we may from time to time become involved in litigation relating to claims arising from the ordinary course of business. These claims, even if not meritous, could result in the expenditure of significant financial and managerial resources.

ITEM 1A. RISK FACTORS

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended September 30, 2014, which could materially affect our business, financial condition or future results. The risks described in our Annual Report on Form 10-K are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

Our Recently Filed Bankruptcy Proceedings Expose us to Significant Risks and Uncertainties and our Common Stock may have Very Little or No Value.

As a result of our Bankruptcy Filing, our operations, business and financial condition are subject to a number of risks and uncertainties which could materially and adversely impact our intent that the Bankruptcy Filing would bolster our liquidity in the U.S. and abroad and enable us to focus on enhancing our systems and strengthening the Company’s operational capabilities. We have obtained on an interim basis, subject to Bankruptcy Court approval on a final basis, a debtor-in-possession credit facility (the “DIP Financing”) and, if we are successful in obtaining approval of the DIP Financing on a final basis, such financing would be used to enhance liquidity and working capital. However, our ability to continue as a going concern is contingent upon our ability to obtain approval for the DIP Financing on a final basis and comply with the financial and other covenants related to such financing, the Bankruptcy Court’s approval of the DIP Financing on a final basis and our reorganization plan and our ability to successfully implement our plan and obtain exit financing, among other factors. As part of the bankruptcy process, the U.S. Trustee for the District of Delaware may appoint an official committee of unsecured creditors (the “UCC”). The UCC and its legal representatives would have a right to be heard on all matters that come before the Bankruptcy Court on all matters affecting us. There can be no assurance that the UCC, if one is appointed, would support our positions on matters to be presented to the Bankruptcy Court in the future or on any reorganization plan, once the disclosure statement relating to the reorganization plan is submitted to and approved by the Bankruptcy Court.

In order for us to emerge successfully from Chapter 11, we must obtain the Bankruptcy Court’s approval of the DIP Financing on a final basis and the Bankruptcy Court’s approval of a disclosure statement and a reorganization plan to enable us to transition from Chapter 11 into a successfully reorganized company. In connection with our reorganization plan, we will require “exit financing.” Our ability to obtain approval of DIP Financing on a final basis, approval of our reorganization plan and exit financing will depend on, among other things, the timing and outcome of various ongoing matters related to the Bankruptcy Filing. A reorganization plan determines the rights and satisfaction of claims of various creditors and security holders, and is subject to the ultimate outcome of negotiations and Bankruptcy Court decisions ongoing through the date on which the reorganization plan is confirmed. Although our goal is to obtain DIP Financing on a final basis and exit financing and to file a plan of reorganization, we may determine that it is in our best interests to seek Bankruptcy Court approval of a sale of all or a portion of our assets pursuant to Section 363 of the Bankruptcy Code or seek confirmation of a reorganization plan providing for such a sale or other arrangement.

In connection with the bankruptcy process, no assurance can be given as to the value, if any, that may be ascribed to our various pre-petition liabilities or our common stock. We cannot predict what the ultimate value of our common stock may be or whether the holders of our common stock will receive any distribution in our reorganization; however, it is likely that our common stock will have very little or no value given the amount of our liabilities compared to our assets.

Our Ability to Successfully Emerge from Bankruptcy is Subject to a Number of Significant Risks and Uncertainties Including our Ability to Maintain our Relationships with our Customers, Vendors and Employees.

Our business is subject to a number of risks and uncertainties associated with our bankruptcy filing which may have a material adverse effect on our liquidity, results of operations, brand or business prospects. We cannot assure you of the outcome of our bankruptcy process. Such risks and uncertainties include the following:

	·	our ability to secure required DIP Financing on a final basis and exit financing and to continue as a going concern;
	·	our ability to maintain our relationships with key suppliers, which relationships have likely been adversely impacted by our Bankruptcy Filing and lack of financial resources;
	·	our ability to maintain our relationships with key customers which may be less likely to continue to do business with us due to our Bankruptcy Filing and lack of financial resources;
	·	the outcome of pre-petition claims against us including claims by key suppliers and other trade creditors;
	·	our ability to obtain Bankruptcy Court approval with respect to motions in the Chapter 11 case and the outcomes of Bankruptcy Court rulings of the case in general;
	·	the length of time we operate under Chapter 11 and our ability to successfully emerge from bankruptcy;
	·	our ability to develop and consummate a plan of reorganization with respect to the Chapter 11 case;
	·	our ability to obtain Bankruptcy Court and creditor approval of our reorganization plan;
	·	our ability to maintain sufficient liquidity through the bankruptcy process;
	·	our ability to retain our key employees who may choose to seek other opportunities due to the uncertainties surrounding our bankruptcy and our lack of financial resources; and
	·	increased costs related to the Bankruptcy Filing.

As a result of the foregoing risks and uncertainties, our business, financial condition and operating results may be materially and adversely impacted and our equity may have very little or no value.

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

On ~~January~~April 132, 2015, the Company granted options to purchase ~~500~~1,707,000 shares of common stock of the Company to ~~James Gelly~~employees, ~~Chief~~which ~~Executive~~includes ~~Officer,~~a ~~options~~grant ~~to purchase 450,000 shares~~ of ~~common stock of the Company to George Gelly, Chief Operating Officer, and~~ options to purchase ~~300~~100,000 shares of common stock of the Company to ~~Mark~~Chris ~~Patterson~~Mulvihill, ~~Chairman~~President.

On ~~October~~April ~~January 16~~30, 2015, ~~January~~May 215, 2015 and ~~January~~May 2818, 2015, the Company issued warrants to purchase an aggregate of 1,~~023~~534,~~280~~913 shares of common stock in connection with a draw of $23,~~200~~300,000 under the Loan and Security Agreement.

On ~~March~~June 3130, 2015, the Company issued an aggregate of 23,~~755 shares~~331 shares of common stock in lieu of cash payments of $5,~~918~~984 for interest earned by noteholders for the quarter ended ~~March~~June 3130, 2015. ~~These~~ These shares of stock were issued at $21.1580 per share, pursuant to the terms of the 2011 Notes and 2012 Notes.

The securities sold described above were sold upon the 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~~The commencement of the Chapter 11 Case described in Item 4 below constitutes or may constitute an event of default or otherwise triggers or may trigger repayment obligations under the Company's debt obligations. As a result of such an event of default or triggering event, such debt obligations of the Company have become due and payable. Any efforts or actions to enforce those payment obligations are stayed as a result of the filing of the Chapter 11 Case. The material debt agreements, and the approximate aggregate principal balance of debt outstanding thereunder as of August 18, 2015 are as follows:

32Loan and Security Agreement entered into by the Company and the Subsidiaries, dated as of June 6, 2013, with the lenders who became a party thereto (the “Loan and Security Agreement”). The balance on this loan (including accrued interest) as of August 18, 2015 was approximately $15.62 million.

Convertible Note entered into by the Company and H. Robert Holmes, dated as of November 18, 2011. The balance on this loan as of August 18, 2015 was $200,000.

Convertible Note entered into by the Company and JMW Fund, LLC, dated as of June 14, 2012. The balance on this loan as of August 18, 2015 was $100,000.

Convertible Note entered into by the Company and San Gabriel Fund, LLC, dated as of June 14, 2012. The balance on this loan as of August 18, 2015 was $100,000.

Promissory Note entered into by the Company and SB&G Properties, L.C., dated as of March 11, 2015. The balance on this loan as of August 18, 2015 was $500,000.

Promissory Note entered into by the Company and Veloconet, dated February 6, 2008. The balance on this loan (including accrued interest) as of August 18, 2015 was approximately $130,000.

ITEM 4. MINE SAFETY DISCLOSURES

Not Applicable

ITEM 5. OTHER INFORMATION

~~None~~On August 18, 2015, the Company and the Subsidiaries filed voluntary petitions in the United States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court") seeking relief under the provisions of Chapter 11 ("Chapter 11") of Title 11 of the United States Bankruptcy Code ("Bankruptcy Code"). The Chapter 11 case is being administered under the caption "In re Boomerang Systems, Inc., et. al," Case No. 15-11729 (the "Chapter 11 Case"). The Company remains in possession of its assets and continues to operate its business as a debtor-in-possession under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and the orders of the Bankruptcy Court.

ITEM 6. EXHIBITS

Exhibit Number	Description
10.1	Promissory Note Agreement between Boomerang Systems, Inc. and SB&G Properties, L.C.
31.1	Certification of Chief Executive Officer (Principal Executive Officer) Pursuant to Rule 13a-14(a)
31.2	Certification of Chief Financial Officer (Principal Financial Officer) Pursuant to Rule 13a-14(a)
32.1	Certification of Chief Executive Officer (Principal Executive Officer) Pursuant to Section 1350 (furnished, not filed)
32.2	Certification of Chief Financial Officer (Principal Financial Officer) Pursuant to Section 1350 (furnished, not filed)

101 The following materials from Boomerang Systems, Inc.’s Quarterly Report on Form 10-Q for the quarter ended ~~March~~June 3130, 2015 formatted in eXtensible Business Reporting Language (XBRL): (i) Unaudited, Consolidated Statements of Operations for the ~~Six~~Nine and Three Months Ended ~~March~~June 3130, 2015 and 2014, (ii) Unaudited, ~~Consolidated~~ Consolidated Balance Sheets as of ~~March~~June 3130, 2015 and September 30, 2014, (iii) Unaudited, Consolidated Statements of Cash Flows for the ~~Six~~ Nine Months Ended ~~March~~June 3130, 2015 and 2014, and (iv) Notes to Unaudited, Consolidated Financial Statements.*

*Pursuant to Rule 406T of Regulation S-T, the interactive data files included in Exhibit 101 are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.39

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 15, 2015	By:	/s/ James V. Gelly
Dated: August 25, 2015	By:	/s/ James V. Gelly
	James V. Gelly
	Principal Executive Officer
Dated: May 15, 2015	By:	/s/ Scott Shepherd
Dated: August 25, 2015	By:	/s/ Scott Shepherd
	Scott Shepherd
	Principal Financial Officer
	and Principal Accounting Officer

3340

Filing Compare · Boomerang Systems, Inc.