10-Q/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10 – Q/A

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2011

or

o 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: 333-130197

DELTRON, INC.
(Exact name of Registrant as specified in its charter)
Nevada	86-1147933
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)
11377 Markon Drive Garden Grove, CA 92841
(Address of principal executive offices)
(714) 891-1795
(Registrant’s telephone number, including area code)

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 o

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 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x  No o

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

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

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

 As of August 18, 2011, there were 1,640,898,796 shares of the issuer’s common stock, par value $0.001, outstanding.

EXPLANATORY NOTE

This Amendment No. 1 to the Quarterly Report on Form 10-Q/A (the “Amendment”) amends the Quarterly Report on Form 10-Q of DELTRON, INC. (the “Company”) for the quarter ended June 30, 2011 (the “Original Filing”), that was originally filed with the U.S. Securities and Exchange Commission on August 22, 2011. The Amendment is being filed to submit Exhibit 101. The Amendment revises the exhibit index included in Part II, Item 6 of the Original Filing and Exhibit 101 (XBRL interactive data) is included as an exhibit to the Amendment.

Except as described above, the Amendment does not modify or update the disclosures presented in, or exhibits to, the Original Filing in any way. Those sections of the Original Filing that are unaffected by the Amendment are not included herein. The Amendment continues to speak as of the date of the Original Filing. Furthermore, the Amendment does not reflect events occurring after the filing of the Original Filing. Accordingly, the Amendment should be read in conjunction with the Original Filing, as well as the Company’s other filings made with the SEC pursuant to Section 13(a) or 15(d) of the Exchange Act subsequent to the filing of the Original Filing.

ITEM 6.

EXHIBITS

Exhibit No.

Description

31.1 / 31.2

Rule 13(a)-14(a)/15(d)-14(a) Certification of Principal Executive and Financial Officer

32.1 / 32.2

Rule 1350 Certification of Principal Executive and Financial Officer

101

XBRL

2

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

DELTRON, INC.

Dated:  September 21, 2011

By:/s/ Henry Larrucea

Henry Larrucea
President, Principal Executive and Financial Officer

3

EX-31

EXHIBIT 32.1 / 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Deltron, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2011, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Henry Larrucea, Principal Executive and Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that;

(1)

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

(2)

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

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.  

/s/ Henry Larruca

Name:

Henry Larrucea

Title:

Principal Executive and Financial Officer

Date:

September 22, 2011

EX-32

EXHIBIT 31.1 / 31.2

CERTIFICATIONS

I, Henry Larrucea, certify that:

1.

I have reviewed this report on Form 10-Q of Deltron, Inc.

2.

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

3.

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

4.

I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15a-15(f)) for the registrant and have;

(a)

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

(b)

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

(c)

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

(d)

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

5.

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

(a)

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

(b)

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

Date:  September 22, 2011

/s/ Henry Larrucea

Henry Larrucea

Principal Executive and Financial Officer

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)	3 Months Ended		9 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Sales	$ 782,970	$ 854,999	$ 2,511,871	$ 1,970,058
Cost of sales	665,028	764,547	2,060,273	1,758,920
Gross profit	117,942	90,452	451,598	211,138
Selling, general and administrative expenses	293,417	151,451	745,088	462,939
Operating loss	(175,475)	(60,999)	(293,490)	(251,801)
Interest income	513		513
Change in fair value of derivative liability	33,349		26,807
Interest expense	(59,476)	(82,318)	(195,216)	(150,459)
Total other expense	(92,312)	(82,318)	(228,052)	(150,459)
Loss before provision for income taxes	(267,787)	(143,317)	(521,542)	(402,260)
Provision for income taxes			835
Net loss	$ (267,787)	$ (143,317)	$ (522,377)	$ (359,308)
Basic	$ 0.000	$ 0.000	$ (0.001)	$ (0.002)
Fully diluted	$ 0.000	$ 0.000	$ (0.001)	$ (0.002)
Weighted average number of common stock outstanding - basic	994,721,883	339,617,869	824,200,159	190,267,908
Weighted average number of common stock outstanding - diluted	994,721,883	339,617,869	824,200,159	190,267,908

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CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (USD $)

3 Months Ended

9 Months Ended

Jun. 30, 2011

Jun. 30, 2010

Jun. 30, 2011

Jun. 30, 2010

Cash Flows from Operating Activities:

Net loss

$ (267,787)

$ (143,317)

$ (522,377)

$ (359,308)

Depreciation

2,850

1,666

8,550

6,666

Change in fair value of derivative liability

33,349

26,807

Amortization of intangible asset

78,750

105,000

Amortization of debt discount

85,876

Stock issued for services

92,800

(Increase) Decrease in accounts receivable

127,730

(69,117)

334,611

(44,589)

(Increase) Decrease in inventory

(61,335)

(57,666)

(61,335)

(57,666)

(Increase) Decrease in prepaid expenses

46,314

(4,895)

2,398

18,091

Increase (decrease) in accounts payable

(121,755)

130,245

(279,884)

163,862

Increase (decrease) in accrued expenses

(21,925)

(7,913)

(21,925)

(7,913)

Increase (decrease) in accrued expenses - related parties

130,000

100,000

130,000

100,000

Increase (decrease) in accrued interest - others

45,104

73,429

Increase (decrease) in accrued interest - related parties

12,711

12,244

38,127

37,668

Net Cash Used by Operating Activities

34,364

(58,273)

12,077

(143,189)

Proceeds from sale of common stock

74,586

Decrease of bank overdraft

(10,506)

Borrowing of convertible debt

30,100

30,000

157,600

69,500

Payments on line of credit

(25,000)

Net Cash Provided by Financing Activities

30,100

30,000

122,094

144,086

Net Increase in Cash

64,464

(28,273)

134,171

897

Cash - Beginning of Period

136,023

27,065

136,023

27,065

Cash - End of Period

136,023

27,065

136,023

27,065

Cash paid for interest expense

1,680

1,856

5,363

8,782

Cash paid for income taxes

$ 800

$ 800

Nonmonetary Transactions [Abstract]

Nonmonetary Transactions Disclosure [Text Block]

SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES:

In November the Company issued 80,000,000 shares of its common stock valued at $60,000 to Elasco's president, $10,000 was recorded as a bonus and $50,000 is prepaid salary to be expensed over six months beginning mid November 2010.

Issuance of convertible note payable of $3,150,000 for unpatented rebreather system technology.

In April the Company issued 68,000,000 shares of its common stock valued at $32,800 to Elasco's president and one employee, which was recorded as prepaid salary to be expensed through July 2011

.

During the quarter $187,000 of notes and $6,646 of accrued interest was converted into 614,101,002 shares of the Company's common stock.

On June 30, 2011, the President of the Company converted $1,000 of accrued salary into 1 share of Series A Preferred Stock.

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Document and Entity Information	3 Months Ended
	Jun. 30, 2011
Document and Entity Information
Entity Registrant Name	DELTRON, INC.
Document Type	10-Q
Document Period End Date	Jun. 30, 2011
Amendment Flag	false
Entity Central Index Key	0001345913
Current Fiscal Year End Date	--09-30
Entity Common Stock, Shares Outstanding	1,440,579,982
Entity Filer Category	Smaller Reporting Company
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Document Fiscal Year Focus	2011
Document Fiscal Period Focus	Q3

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Commitment and Contingencies

3 Months Ended

Jun. 30, 2011

Commitment and Contingencies

Commitments Disclosure [Text Block]

NOTE 10 – COMMITMENTS

The Company leases a manufacturing and office facility from a related party as an operating lease which expires in 2015.  This lease currently requires monthly payments of $5,533 plus related insurance and maintenance.  Rental expense under this lease for the three and nine months ended June 30, 2011 was $16,599 and $49,797, respectively, all of which was paid to a related party.  Total future lease payments through September 30, 2015 are $282,193.

The Company has an employment agreement with Jeff Bozanic to develop its re-breather technology.  The agreement is for three years starting January 1, 2010 at a cost of $10,000 per month. As of June 30, 2011, the Company owed Mr. Bozanic $180,000.  This amount is classified as accrued expenses – related parties on the balance sheet.

Prior to the asset purchase agreement  between Blu Vu and Deltron, Blu Vu was in negotiations with Radikal, AS (“Radikal”), the owner of intellectual property involving rebreather technology, to purchase its intellectual property involving said technology.  At that time, Blu Vu did not own any rebreather technology.  No agreement was reached between Blu Vu and Radikal prior to the asset purchase agreement with Deltron.   On August 4, 2010, the Company entered into an agreement with Radikal to purchase its intellectual property involving said technology (the “Radikal Agreement”).  The Radikal Agreement requires the Company to pay a per unit fee of $35 for at least 500 units per year for 2 years, after which the obligation to Radikal will be fulfilled.

Pursuant to the terms of the Radikal Agreement, Radikal has transferred all U.S. and international patent rights to the Company. If the per unit fee payments are not made when due, Radikal has the right to the return of the intellectual property transferred. Payments for these rights are not required to begin until January 2012.

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Accounting Policies

3 Months Ended

Jun. 30, 2011

Accounting Policies

Business Description and Accounting Policies [Text Block]

NOTE 1- ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICES

Business Description

Deltron, Inc. (the “Company”) is a Nevada Corporation incorporated on September 14, 2005.  It is based in Garden Grove, California.  Through May 26, 2010 the Company was in the development stage. On May 26, 2010 the Company acquired all of the assets and liabilities of Blu Vu Deep Oil & Gas Exploration, Inc. (“Blu Vu”) including its ownership of 100% of the outstanding stock of Elasco, Inc. (“Elasco”) by issuance of 123,978,980 restricted common shares of its stock. 

Elasco was incorporated on October 25, 1979 in the state of California.  Its principal business is manufacturing and selling of open cast molded polyurethane elastomer products such as skateboard, roller skate, and industrial wheels.

After the acquisition of BluVu’s assets, the Company is engaged in potential manufacture and mass-market of proprietary breathing equipment developed specifically for the oil and gas, mining and safety industries, and military and recreational divers. The technology is still under development. Production and manufacture of the equipment (primarily Closed-Circuit Rebreathers “CCRs” and components used for all types of rebreathers) will be produced by the wholly-owned subsidiary, Elasco, while the Company provides financial, operational and technical expertise.

On August 4, 2010, Deltron entered into an agreement with Radikal, AS (“Radikal”), the owner of intellectual property involving rebreather technology, to purchase its intellectual property involving said technology (the “Radikal Agreement”).  The Radikal Agreement requires the Company to pay a per unit fee of $35 for at least 500 units per year for 2 years, after which the obligation to Radikal will be fulfilled. The Company is required to begin making payments in January 2012.

Pursuant to the terms of the Radikal Agreement, Radikalhas transferred all U.S. and international patent rights to the Company.  However, if the per unit fee payments are not made when due, Radikal has the right to the return of the intellectual property transferred.

The acquisition of BluVu’s assets and Elasco by the Company has been accounted for as a reverse capitalization.  The reverse recapitalization was the acquisition of a private operating company into a non-operating shell corporation with nominal net assets and is treated as a capital transaction, rather than a business combination.  As a result no goodwill is recorded.  In this situation Deltron is the legal acquirer because it acquired all of the assets and liabilities of Blu Vu and 100% of the stock of Elasco and Elasco is the legal acquiree because its equity interests were acquired.  However, Elasco is the acquirer and Deltron is the acquiree for accounting purposes.  The pre-acquisition financial statements of Elasco are treated as the historical financial statements of the consolidated companies except that the equity section and earnings per share have been retroactively restated to reflect the reverse recapitalization.

Principles of consolidations

The accompanying unaudited condensed consolidated financial statements are presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Elasco. All significant intercompany transactions have been eliminated in consolidation.

Unaudited Interim Financial Data

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X.  Accordingly, they do not include all of the information required by GAAP for annual financial statements.  In the opinion of the Company’s management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included.  Operating results for the three and nine months ended June 30, 2011 are not necessarily indicative of results for any future period.  These statements should be read in conjunction with the consolidated financial statements and notes for the year ended September 30, 2010 thereto included in the Company’s Form 10-K filed on January 13, 2011.

Use of Estimates

The Company’s unaudited condensed consolidated financial statements have been prepared in accordance with GAAP. The preparation of the Company’s consolidated financial statements requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and the related disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Accordingly, actual results may differ from these estimates under different assumptions or conditions.

Cash and Cash Equivalents

The Company considers all highly liquid investments with a maturity of three months or less to be cash equivalents.

Concentration of Credit Risk

The Company deposits its cash with major financial institutions and may at times exceed the federally insured limit.  At June 30, 2011 cash did not exceed the federally insured limit.  The Company believes that the risk of loss is minimal. To date, the Company has not experienced any losses related to cash deposits with financial institutions.

Accounts Receivable

The Company estimates the collectability of customer receivables on an ongoing basis by reviewing past-due invoices and assessing the current creditworthiness of each customer.  Allowances are provided for specific receivables deemed to be at risk for collection. As of June 30, 2011 and September 30, 2010, allowance of doubtful accounts was  $2,730 and $2,630, respectively.

Inventory

Inventory consists of raw material, work in progress, and finished goods.  It is stated at the lower of cost or market on a first in, first out (FIFO) basis.  The Company also evaluates and reserves allowance of obsolescence of its inventories. As of June 30, 2011 and September 30, 2010, the allowance for obsolescence was $9,795.

Property and Equipment and Depreciation Policy

Property and equipment are recorded at cost, less accumulated depreciation.  Cost of repairs and maintenance are expensed as they are incurred. Major repairs that extend the useful life of equipment are capitalized and depreciated over the remaining estimated useful life. When property and equipment are sold or otherwise disposed, the related cost and accumulated depreciation are removed from the respective accounts and the gains or losses realized on the disposition are reflected in operations. The Company uses the straight - line method in computing depreciation for financial reporting purposes.

Intangible assets

Costs paid by the Company related to the establishment, transfer and purchase of patented and unpatented technology and other intangibles are capitalized and amortized, depending on the estimated useful life of the technology. Useful lives range from three to ten years. Amortization is on the straight-line method.

Impairment of Long-Lived Assets

The Company evaluates the recoverability of long-lived assets with finite lives.  The Company assesses potential impairments to its long-lived assets when there is evidence that events or changes in circumstances indicate that the carrying amount of an asset may not be recovered. An impairment loss is recognized when the carrying amount of the long-lived asset is not recoverable and exceeds its fair value. The carrying amount of a long-lived asset is deemed not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. Any required impairment loss is measured as the amount by which the carrying amount of a long-lived asset exceeds its fair value and is recorded as a reduction in the carrying value of the related asset and a charge to operating results. Based upon the most recent assessment as of June 30, 2011, management has determined there was no impairment in the carrying value of long-lived assets.

Income Taxes

The Company accounts for income taxes in accordance with ASC 740, “Income Taxes”which requires an asset and liability approach for financial accounting and reporting of income taxes.   Deferred income taxes reflect the impact of temporary differences between the amount of assets and liabilities for financial reporting purposes and such amounts as measured by tax laws and regulations. Deferred tax assets include tax loss and credit carry forwards and are reduced by a valuation allowance if, based on available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

The Company adopted the FASB Interpretation on accounting for uncertainty in income taxes. The interpretation prescribes a measurement process for recording in the financial statements uncertain tax positions taken or expected to be taken in a tax return. Additionally, the interpretation provides guidance regarding uncertain tax positions relating to derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.  The Company will classify any interest and penalties associated with income taxes as interest expense. 

Revenue Recognition

The Company recognizes revenues through its consolidated fully owned subsidiary. Revenues are recognized from product sales upon delivery, at which time title passes to the customer provided that there are no uncertainties regarding customer acceptance, persuasive evidence of an arrangement exists, the sales price is fixed and determinable and collectability is deemed probable.

Advertising Costs

Advertising costs are charged to operations when incurred.

Share-Based Compensation

The Company has adopted ASC 718-20 (formerly SFAS No. 123R, Share-Based Payment -revised 2004) (“ASC 718-20”) and related interpretations which establish the accounting for equity instruments exchanged for employee services. Under ASC 718-20, share-based compensation cost is measured at the grant date based on the calculated fair value of the award. The expense is recognized over the employees’ requisite service period, generally the vesting period of the award.

Segment Information

Based on the criteria established by ASC Topic 280 “Segment report” (formerly SFAS No. 131, “Disclosures about Segments of an Enterprise and Related Information”), the Company uses the management approach for determining which, if any, of its products and services, locations, customers or management structures constitute a reportable business segment. The management approach designates the internal organization that is used by management for making operating decisions and assessing performance as the source of any reportable segments. As of June 30, 2011, the Company mainly operated in two principal segments – development of the rebreather system and sales of polyurethane elastomer products. The rebreather system is still under development and has not generated any revenue. The following tables present summarized information by segments:

		Nine Months Ended June 30,
			2011		2010
Revenues from external customers
	Rebreather	$	-	$	-
	Polyurethane		2,511,871		1,970,058
		$	2,511,871	$	1,970,058
Cost of sales
	Rebreather	$	-	$	-
	Polyurethane		2,060,273		1,758,920
		$	2,060,273	$	1,758,920
Gross Profit
	Rebreather	$	-	$	-
	Polyurethane		451,598		211,138
		$	451,598	$	211,138
Selling, general and administrative expenses
	Rebreather	$	470,646	$	60,441
	Polyurethane		274,442		402,498
		$	745,088	$	462,939
Income / (Loss) from operations
	Rebreather	$	(469,533)	$	(60,441)
	Polyurethane		176,043		(191,360)
		$	(293,490)	$	(251,801)
			June 30,		September 30,
			2011		2010
Total Assets
	Rebreather	$	3,097,499	$	42,852
	Polyurethane		895,441		1,045,136
		$	3,992,940	$	1,087,988

Basic and Diluted Earnings Per Common Share

The Company has adopted ASC 260-10, “Earnings per Share,” (EPS) which requires presentation of basic and diluted EPS on the face of the income statement for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation.  In the accompanying unaudited condensed consolidated financial statements, basic and diluted net loss per common share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. For the three and nine months ended June 30, 2011 and 2010, the Company has excluded all common equivalent shares from the calculation of diluted net loss per share as such securities are anti-dilutive.

Significant Recent Accounting Pronouncements

In January 2010, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.2010-06 regarding fair value measurements and disclosures and improvement in the disclosure about fair value measurements. This ASU requires additional disclosures regarding significant transfers in and out of Levels 1 and 2 of fair value measurements, including a description of the reasons for the transfers.  Further, this ASU requires additional disclosures for the activity in Level 3 fair value measurements, requiring presentation of information about purchases, sales, issuances, and settlements in the reconciliation for fair value measurements. This ASU is effective for fiscal years beginning after March 15, 2010, and for interim periods within those fiscal years. The adoption of this ASU did not have a material impact on our financial statements.

In February 2010, the FASB issued ASU No. 2010-09 (“ASU 2010-09”) as amendments to certain recognition and disclosure requirements. The amendments remove the requirement for an SEC filer to disclose a date in both issued and revised financial statements. Revised financial statements include financial statements revised as a result of either correction of an error or retrospective application of U.S. GAAP. Those amendments remove potential conflicts with the SEC’s literature. All of the amendments in ASU 2010-09 were effective upon issuance for interim and annual periods. The adoption of ASU 2010-09 did not have a material impact on the Company’s consolidated financial statements

In March 2010, the FASB issued ASU No. 2010-11, which is included in the Codification under ASC 815, “Derivatives and Hedging” (“ASC 815”).  This update clarifies the type of embedded credit derivative that is exempt from embedded derivative bifurcation requirements.  Only an embedded credit derivative that is related to the subordination of one financial instrument to another qualifies for the exemption.  This guidance is effective for interim and annual reporting periods beginning January 1, 2010.  The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.

In August 2010, the FASB issued ASU No. 2010-22, which amended various SEC paragraphs in the Codification based on external comments received and the issuance of Staff Accounting Bulletin (“SAB”) 112, which amended or rescinded portions of certain SAB topics.

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Equity

3 Months Ended

Jun. 30, 2011

Equity

Stockholders' Equity Note Disclosure [Text Block]

NOTE 11 – STOCK HOLDER EQUITY

Common Stock

At June 30, 2009 the Company had 5,545,000 shares of common stock, par value $0.001, outstanding.  On March 10, 2010, the Corporation’s Board of Directors approved a one hundred-for-one (100:1) forward split of the Corporation’s common stock, par value $0.001 per share. The forward split was for shareholders of record as of the close of business on Friday, April 30, 2010, and the market effective date for the forward stock split was May 3, 2010. As a result of the forward stock split, for every one share of the Corporation’s old common stock shareholders received ninety-nine additional shares of the Corporation’s new common stock.  Immediately following the forward split, the number of shares of the Corporation’s outstanding issued common stock was increased from 5,545,000 shares to approximately 554,500,000 shares, par value $0.001.

On May 26, 2010, the Company entered into an Asset Purchase Agreement (the “Agreement”) with Blu Vu Deep Oil & Gas Exploration, Inc., a Nevada corporation.  Under the terms of the Agreement, the Company purchased substantially all of the assets of Blue Vu, consisting of, but not limited to, all stock of BluVu’s subsidiary, Elasco, Inc., certain intellectual properties, computer programs and software, contracts, claims and accounts receivables associated with the operation of BluVu’s business of developing underwater deep breathing apparatus.  In consideration of the sale of the assets of Blu Vu, the shareholders of BluVu, received restricted common shares of the Company totaling 123,978,980.  No other consideration was exchanged in the transaction.

In November 2010, the Company issued 80,000,000 shares to Elasco’s president as a bonus of $10,000 and prepaid salary of $50,000 over the next six months under an Employee Stock Incentive Program (ESIP).  In April and May, the Company issued 40,000,000 shares to an employee of Elasco and 28,000,000 shares to Elasco’s president as prepaid salary of $16,000 and $16,800 through July 2011 under an Employee Stock Incentive Program (ESIP).  The unamortized amount of $6,154 is recorded under prepaid expenses on the June 30, 2011 balance sheet.

In total the Company has issued 80,000,000 shares in the quarter ending December 31, 2010, no shares in the quarter ending March 31, 2011 and 682,101,002 shares in the quarter ending June 30, 2011.

Preferred Stock

On June 30, 2011, the Company issued one share of Series A Preferred Stock to its president in exchange for $1,000 of accrued wages. The share is not convertible into common stock, does not accrue any dividends and is not transferable.  The only characteristic to the preferred share is that it has voting rights equal to 150% of all outstanding stock at all times.

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Income Taxes

3 Months Ended

Jun. 30, 2011

Income Taxes

Income Tax Disclosure [Text Block]

NOTE 12 – INCOME TAXES

The Company recognizes deferred income tax liabilities and assets for the expected future tax consequences of events that have been recognized in the financial statements or tax returns.  Under this method, deferred tax liabilities and assets are determined based on the differences between the financial statement carrying amounts and the tax basis of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse.

The Company incurred no income taxes for the periods ended June 30, 2011 and June 30, 2010 except for $800 each year for state franchise taxes.  For the three and six months ended June 30, 2011 the Company had incurred a loss and had a state income tax payable of $800 at June 30, 2011.  No income tax benefit was recognized as of June 30, 2011 and June 30, 2010 as a result of the valuation allowance applied to deferred tax assets, due to the uncertainty of recognizing any future tax benefits from the net operating loss (“NOL”).

The Company’s net loss of $522,377 for the nine months ended June 30, 2011 will be carried forward to offset future taxable income.  As of June 30, 2011, the Company’s federal NOL is approximately $636,000 expiring in 2025, and its California NOL is approximately $545,000 expiring 2015. The Company has book/tax differences of approximately $401,000 comprised of accrued officer’s compensation of $110,000, accrued consulting of $180,000 and accrued interest of $111,000. These differences result in a deferred tax asset of approximately $136,000.  The federal and California NOLs result in a deferred tax asset of approximately $178,000.  Due to the uncertainty of recognizing any future benefit, the Company has recorded a valuation allowance of $314,000 to offset the deferred tax asset.  The valuation allowance increased $168,000 from September 30, 2010, as a result of the uncertainty of utilizing the deferred tax assets. 

The deferred tax asset comprised the following at June 30, 2011:

Deferred tax asset:
	Federal benefit of NOL carryover	$              136,000
	California benefit of NOL carryover	42,000
	Accrued officer's compensation	37,000
	Accrued consulting	61,000
	Accrued interest	38,000
	Total	314,000
	Valuation allowance	(314,000)
	Net deferred tax asset	$                      -

The Company recognized approximately no increase in the liability for unrecognized tax benefits.  The Company has no tax position as of June 30, 2011 for which the ultimate deductibility is highly certain but for which there is uncertainty about such timing of such deductibility.  The Company recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses.  No such interest or penalties were recognized during the periods presented.  The Company had no accruals for interest and penalties at June 30, 2011.  The Company’s utilization of any net operating loss carry forward may be unlikely as a result of its continued losses.

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Debt (USD $)

3 Months Ended

9 Months Ended

Jun. 30, 2011

Jun. 30, 2011

Debt

Debt Disclosure [Text Block]

NOTE 8 – CONVERTIBLE NOTES PAYABLE

The Company has two notes payable to shareholders for $20,000 and $19,500, which it assumed under the May 26 Blu Vu asset purchase agreement.  These notes are due on May 28, 2011 and bear interest at 5.0%.  Both notes are convertible into shares of the Company’s common stock at a conversion discount of 70% of the stocks bid price but in no event shall the conversion price be less than par value of $0.001.  Both of these notes were converted during the current quarter into 70,904,100 and 69,452,067 shares, respectively.

The Company had ten notes payable to shareholders for a total of $136,000.  These notes are due ranging from September 17, 2010 to March 28, 2011 all bearing interest at 5.0%.  All ten notes are convertible into shares of the Company’s common stock at a conversion discount of 70% of the stocks bid price but in no event shall the conversion price be less than par value of $0.001.  None of these notes are considered derivatives. Six of these notes have been fully converted and one partially converted as of June 30, 2011, leaving a balance due of $58,500 as of June 30, 2011.  These notes are currently in default and the Company has extended or is in the process of extending these for six months.

In May and June 2011, the Company issued four notes to related parties for $5,100, $5,000, $15,000 and $5,000.  The notes are due in six months all bearing interest at 5.0%.  All four notes are convertible into shares of the Company’s common stock at a conversion discount of 70% of the stocks bid price but in no event shall the conversion price be less than par value of $0.001. 

In October, November and December 2010, the Company entered into securities purchase agreements with an investor and issued three 10% convertible promissory notes with face amounts of $35,000, $30,000 and $12,500 respectively and received cash proceeds of $77,500.  The Notes mature in eight months from the date of issuance, and provide for nominal interest at the rate of ten (10%) percent per annum. The Notes may be converted into unregistered shares of the Company’s common stock, par value $0.001 per share, at the Conversion Price, as defined below, in whole, or in part, at any time beginning 180 days after the date of the Notes, at the option of the holder. The Conversion Price shall be equal to 50% multiplied by the Variable Conversion Rate which is equal to the average of the three (3) lowest closing bid prices of the common stock during the ten (10) trading day period prior to the date of conversion.  During the current quarter, the October note for $35,000 was fully converted and $25,000 of the $30,000 November note was also converted into 92,857,143 and 75,757,575 shares, respectively, leaving a balance due on these three notes of $17,500 as of June 30, 2011.  The Company recorded a derivative liability of $19,251 as of June 30, 2011 related to reaming balance. In July 2011, the remaining balance of $17,500 was converted into 64,814,815 shares of the Company’s common stock.

In January 2011, the Company entered into securities purchase agreements with an investor and issued 8% convertible promissory notes with a face amount of $50,000 and received cash proceeds of $50,000.  The note matures in ten months from the date of issuance, and provide for nominal interest at the rate of eight (8.0%) percent per annum. The note may be converted into unregistered shares of the Company’s common stock, par value $0.001 per share, at the Conversion Price, as defined below, in whole, or in part, at the option of the holder. The Conversion Price shall be equal to 50% multiplied by the Variable Conversion Rate which is equal to the average of the three (3) lowest closing bid prices of the common stock during the ten (10) trading day period prior to the date of conversion.  At June 30, 2011, the Company recored a derivative liability of $75,055.   

In February 2011, the Company purchased technology from an unrelated party for $3,150,000 by issuing a 5% convertible promissory note.  The note is due on demand, but not sooner than six months from the date of issuance, and provides for nominal interest at the rate of five (5.0%) percent per annum. The note may be converted into unregistered shares of the Company’s common stock, par value $0.001 per share at the Conversion Price, as defined below, in whole, or in part, at any time beginning 180 days after the date of the notes, at the option of the holder. The Conversion Price shall be equal to 30% multiplied by the Variable Conversion Rate which is equal to the average of the three (3) lowest closing bid prices of the Common Stock during the ten (10) trading day period prior to the date of conversion.  This note is payable to the note holder regardless of the company’s ability to successfully file a patent for such technology or to generate revenues from the sale or implementation of such technology. 

The Company issued financial instruments in the form of convertible notes payable.  These instruments have variable conversion rates.  The conversion features were analyzed for derivative liabilities under GAAP and the Company has determined that they meet the definition of a derivative liability due to the contracts obligations.  Derivative instruments shall also be measured at fair value at each reporting period with gains and losses recognized in current earnings.  The Company calculated the fair value of these instruments using the Black-Scholes Model due to the short duration of the conversion option (less than one year). The significant assumptions used in the calculation of the instrument’s fair value are detailed in the table below.  

Derivative Liability - Embedded Conversion Features

During the nine months ended June 30, 2011, the Company recorded a derivative liability of $95,639 for the issuance of convertible notes payable.  During the nine months ended June 30, 2011, none of these instruments were converted into common stock of the Company.  The Company performed a final mark-to-market adjustment for the derivative liability related to the convertible notes and the carrying amount of the derivative liability related to the conversion feature was $94,306.  During the nine months ended June 30, 2011, the Company recognized other expense of $33,349 based on the change in fair value (mark-to market adjustment) of the derivative liability associated with the embedded conversion features in the accompanying statement of operations.  The value of the derivative liability associated with the embedded conversion features was $94,306 at June 30, 2011.

These instruments were not issued with the intent of effectively hedging any future cash flow, fair value of any asset, liability or any net investment in a foreign operation.  The instruments do not qualify for hedge accounting, and as such, all future changes in the fair value will be recognized currently in earnings until such time as the instruments are exercised, converted or expire.   The following assumptions were used to determine the fair value of the derivative liabilities for the period ended of June 30, 2011:

Weighted- average volatility		69.9%
Expected dividends		0.0%
Expected term	0.5 year
Risk-free rate	0.07% to 0.57%

As of June 30, 2011, the Company had authorized unissued common stock of 8,559,420,018 shares, which is sufficient to cover shares to be issued upon conversion of all convertible notes.

Increase (decrease) in accrued interest - others

$ 45,104

$ 73,429

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Organization, Consolidation and Presentation of Financial Statements

3 Months Ended

Jun. 30, 2011

Organization, Consolidation and Presentation of Financial Statements

Liquidity Disclosure [Policy Text Block]

NOTE 13 – SUBSEQUENT EVENT

In July, the holder of the remaining $17,500 of convertible notes (footnote 9) converted this amount into 64,818,815 common shares.

In August the holder of the $3,150,000 note converted $8,820 of the note into 98,000,000 shares of common stock.

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Inventory

3 Months Ended

Jun. 30, 2011

Inventory {1}

Inventory Disclosure [Text Block]

NOTE 3 – INVENTORY

Inventory consisted of the following:

	June 30, 2011	September 30, 2010
Raw material	$296,190	$232,962
Work in process	25,474	41,513
Finished goods	82,142	67,996
	403,806	342,471
Less allowance for obsolete inventory	(9,795)	(9,795)
	$394,011	$332,676

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Property, Plant, and Equipment

3 Months Ended

Jun. 30, 2011

Property, Plant, and Equipment

Property, Plant and Equipment Disclosure [Text Block]

NOTE 4 - PROPERTY AND EQUIPMENT

Property and equipment consisted of the following:

	June 30, 2011	September 30, 2010
Machinery and equipment	$237,377	$237,377
Tooling	139,138	139,138
Computer equipment	94,383	94,383
Leasehold improvements	38,720	38,720
Furniture, fixtures and office equipment	17,033	17,033
	526,651	526,651
Less accumulated depreciation	(502,962)	(494,412)
	$23,689	$  32,239

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Intangible Assets, Goodwill and Other

3 Months Ended

Jun. 30, 2011

Intangible Assets, Goodwill and Other

Intangible Assets Disclosure [Text Block]

NOTE 5 – INTANGIBLE ASSET

In February 2011 the Company issued a convertible note payable (see Note 9) to acquire an unpatented rebreather technology from an unrelated party.  The Company intends to manufacture and sell these systems for use in non-pressurized sport and military subs. Amortization expense was $78,750 and $105,000 for the three and nine months ended June 30, 2011, respectively.

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CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDER'S (DEFICIT) (USD $)	Total	Preferred shares	Accumulated Deficit	Common Shares	Additional paid-in Capital	Totals
Balance at Dec. 31, 2008			$ (2,218,137)		$ 1,911,235	$ (292,499)
Balance (in shares) at Dec. 31, 2008				14,403,074
Recapitalization in reverse acquisition			(624,200)		(624,200)
Issuance of stock for cash			109,576		560,646	670,222
Issuance of stock for cash (in shares)				109,575,906
Balance at Dec. 31, 2009			(2,718,001)		1,847,681	(746,341)
Balance (in shares) at Dec. 31, 2009				123,978,980
Balance at Dec. 31, 2008			(2,218,137)		1,911,235	(292,499)
Balance (in shares) at Dec. 31, 2008				14,403,074
Recapitalization in reverse acquisition			554,500		(604,414)	(49,914)
Beneficial conversion feature - convertible notes payable - related parties					175,500	175,500
Recapitalization in reverse acquisition (in shares)				554,500,000
Balance at Sep. 30, 2010	(981,345)		(3,078,591)		1,418,767	(981,345)
Balance (in shares) at Sep. 30, 2010				678,478,980
Issuance of common stock for services			148,000		(55,200)	92,800
Issuance of common stock for services (in shares)				148,000,000
Conversion of notes payable at Jun. 30, 2011			614,100		(420,453)	193,647
Balance at Jun. 30, 2011	$ (1,216,275)	$ 1	$ (3,600,968)	$ 1,440,579,982	$ 943,114	$ (1,217,275)
Issuance of preferred share at Jun. 30, 2011		1	1,000
Conversion of notes payable (in shares) at Jun. 30, 2011				614,101,002

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Risks and Uncertainties

3 Months Ended

Jun. 30, 2011

Risks and Uncertainties

Concentration Risk Disclosure [Text Block]

NOTE 9 – CONCENTRATION OF CREDIT RISK

A material part of the Company’s account receivables is outstanding with five customers.  The amount owed by these customers at June 30, 2011 was $291,270, approximately 89% of the Company’s receivables.  Sales to the top five customers represented 77% of total sales.  The amount owed by these customers at September 30, 2010 was $518,092, approximately 78% of the Company’s receivables.  Sales to the top five customers represented 84% of total sales for the quarter ended June 30, 2010.  Sales are concentrated in the western United States.

For the three months ended June 30, 2011 and 2010, the Company purchased approximately $264,000 and $238,000, respectively, of raw material from five suppliers, representing 73% and 69%, respectively, of the Company’s total purchases. As of June 30, 2011 and September 30, 2010, amounts owed to these five suppliers were approximately $82,412 and $186,000 representing 81% and 41%, respectively, of the total accounts payable.  

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Subsequent Events

3 Months Ended

Jun. 30, 2011

Subsequent Events

Subsequent Events [Text Block]

NOTE 13 – SUBSEQUENT EVENT

In July, the holder of the remaining $17,500 of convertible notes (footnote 9) converted this amount into 64,818,815 common shares.

In August the holder of the $3,150,000 note converted $8,820 of the note into 98,000,000 shares of common stock.

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CONDENSED CONSOLIDATED BALANCE SHEETS (USD $)	Jun. 30, 2011		Sep. 30, 2010
Cash	$ 64,464		$ 1,852
Accounts receivable, net	325,784		660,395
Inventory	394,011		332,676
Loan receivable	41,000		41,000
Prepaid expenses	27,433		19,826
Total Current Assets	924,251		1,055,749
Property and equipment, net	23,689		32,239
Intangible asset, net of amortization of $105,000	3,045,000
Total Assets	3,992,940		1,087,988
Line of credit	100,000		125,000
Bank overdraft	(10,506)		10,506
Accounts payable	172,434		452,318
Accrued expenses	53,164		75,091
Income taxes payable	1,600		1,600
Accrued expenses - related parties	279,000		150,000
Accrued interest - related parties	12,711		63,541
Accrued interest - others	69,360
Convertible notes payable - related parties	3,245,143	[1]	96,167
Derivative liability	94,306
Current portion of notes payable - related party	415,109		334,587
Total Current Liabilities	4,529,214		1,308,810
Notes payable - related party, net of current portion	680,001		760,523
Common stock, $0.001 par value;	$ 1,440,579	[2]	$ 678,479
Series A Preferred Stock, no par value,	$ 1,000	[3]
Additional paid-in capital	943,114		1,418,767
Accumulated deficit	(3,600,968)		(3,078,591)
Total Stockholders' Deficit	(1,216,275)		(981,345)
Total liabilities and stockholders' deficit	$ 3,992,940		$ 1,087,988

[1] , net of note discount of $60,957 and $79,333 at June 30, 2011 and September 30, 2010, respectively

[2] 10,000,000,000 shares authorized, 1,440,579,982 and 678,478,980 shares issued and at June 30, 2011 and September 30, 2010, respectively outstanding

[3] 1 share issued and outstanding at June 30, 2011 and 0 outstanding at September 30, 2010