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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended
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Jun. 30, 2015
Accounting Policies [Abstract] |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 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 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 June 30, 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 $5,585,320. This loss is comprised of $5,190,432 recognized through the percentage of completion method and $394,888 as a provision for the remaining loss on contract. Revenues of $3,279,450 and $4,838,820 have been recognized for the nine months ended June 30, 2015 and 2014, respectively, and of $928,723 and $1,501,957 for the three months ended June 30, 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 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 nine months ended June 30, 2015 and 2014 were 17,178,105 and 8,205,682, respectively, and for the three months ended June 30, 2015 and 2014 were 18,234,014 and 8,366,986, respectively. As of June 30, 2015 and 2014, there were fully vested options outstanding for the purchase of 2,624,292 and 902,010 common shares, warrants for the purchase of 10,680,833 and 10,880,654 common shares, and notes convertible into 127,090 and 4,914,039 common shares, respectively, all of which could potentially dilute future earnings per share.
|  | Nine Months Ended |  | Three Months Ended |
|  | June 30 |  | June 30 |
|  | 2015 |  | 2014 |  | 2015 |  | 2014 |
Basic |  |  |  |  |  |  |  |  |  |  |  |  |
Net Income (loss) |  | $ | (20,103,354) |  | $ | 1,236,326 |  | $ | (4,930,098) |  | $ | (4,047,305) |
Weighted average shares outstanding |  |  | 17,178,105 |  |  | 8,205,682 |  |  | 18,234,014 |  |  | 8,366,986 |
Earnings (loss) per share of common stock |  | $ | (1.17) |  | $ | 0.15 |  | $ | (0.27) |  | $ | (0.48) |
Assuming Dilution |  |  |  |  |  |  |  |  |  |  |  |  |
Income (loss) from continuing operations |  | $ | (20,103,354) |  | $ | 1,236,326 |  | $ | (4,930,098) |  | $ | (4,047,305) |
Convertible note interest |  |  | - |  |  | 937,901 |  |  | - |  |  | - |
Convertible note discount amortization |  |  | - |  |  | 2,470,964 |  |  | - |  |  | - |
Change in fair value of convertible note BCF |  |  | - |  |  | (5,421,134) |  |  | - |  |  | - |
Net Income (loss) |  | $ | (20,103,354) |  | $ | (775,943) |  | $ | (4,930,098) |  | $ | (4,047,305) |
Average Shares |  |  |  |  |  |  |  |  |  |  |  |  |
Weighted average shares outstanding |  |  | 17,178,105 |  |  | 8,205,682 |  |  | 18,234,014 |  |  | 8,366,986 |
Dilutive securities issuable - stock plans |  |  | - |  |  | 66,978 |  |  | - |  |  | - |
Dilutive securities issuable - convertible notes |  |  | - |  |  | 4,762,246 |  |  | - |  |  | - |
Total weighted average shares outstanding |  |  | 17,178,105 |  |  | 13,034,906 |  |  | 18,234,014 |  |  | 8,366,986 |
Earnings (loss) per share of common stock |  | $ | (1.17) |  | $ | (0.06) |  | $ | (0.27) |  | $ | (0.48) |
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 nine and three months ended June 30, 2014, the weighted average number of stock options excluded from the computations were 598,385 and the weighted average number of warrants excluded from the computations were 10,880,654. For the nine and three months ended June 30, 2015, the Company’s common stock equivalents, of outstanding options, warrants and convertible notes, have not been included as to include them would be anti-dilutive. 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 nine months ended June 30, 2015 and 2014, we recognized $1,201,552 and $188,069, respectively, in share-based payments related to the issuance of stock options and $342,584 and $16,590 for the three months ended June 30, 2015 and 2014, respectively. We recognized no expense related to the issuance of warrants during the nine months or three months ended June 30, 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 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 nine months and one year ended June 30, 2015 and September 30, 2014, respectively, for all financial assets and liabilities categorized as Level 3.
|  | 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 |  |  | (652,746) |  |  | (11,108,488) |
Balance of derivative liabilities – end of period |  | $ | 6,270 |  | $ | 659,016 |
The Company incurred the derivative liability set forth on the 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 development costs are expensed as incurred. Research and Development expense for the nine months ended June 30, 2015 and 2014 were $19,138 and $84,234, respectively, and $4,633 and $10,109 for the three months ended June 30, 2015 and 2014, respectively. Advertising Advertising costs are included in Sales and Marketing and expensed as incurred. Advertising costs amounted to $42,693 and $30,846 for the nine months ended June 30, 2015 and 2014, respectively, and $22,194 and $7,400 for the three months ended June 30, 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 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 June 30, 2015 and September 30, 2014 was $31,039 and $17,500, respectively. Retainage Receivable The Company’s contracts for automated parking systems sometimes require a holdback of a percentage of the contract price as retainage. This holdback is recorded on the Company’s 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 approximate 10% and are usually collected anywhere from nine to eighteen months from the inception of the project. Retainage receivable at June 30, 2015 and September 30, 2014 was $794,354 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 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 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 June 30, 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.

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