Trimedyne (TMED) 10-Q 23 Feb 15 2015 Q1 Quarterly report Financial data

Document_and_Entity_Informatio

Document and Entity Information	3 Months Ended
	Dec. 31, 2014	Feb. 20, 2015
Document And Entity Information
Entity Registrant Name	TRIMEDYNE INC
Entity Central Index Key	357001
Document Type	10-Q
Document Period End Date	31-Dec-14
Amendment Flag	FALSE
Current Fiscal Year End Date	-21
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		18,395,960
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2015

CONDENSED_CONSOLIDATED_BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS (USD $)	Dec. 31, 2014	Sep. 30, 2014
Current assets:
Cash and cash equivalents	$751,000	$1,292,000
Trade accounts receivable, net of allowance for doubtful accounts of $11,000 at December 31, 2014 and September 30, 2014, respectively	522,000	463,000
Inventories	1,806,000	1,581,000
Other current assets	116,000	123,000
Total current assets	3,195,000	3,459,000
Property and equipment, net	608,000	635,000
Other	74,000	73,000
Goodwill	544,000	544,000
Total Assets	4,421,000	4,711,000
Current liabilities:
Accounts payable	201,000	278,000
Accrued expenses	550,000	628,000
Deferred revenue	88,000	50,000
Accrued warranty	30,000	27,000
Current portion of note payable and capital leases	71,000	70,000
Total current liabilities	940,000	1,053,000
Deferred rent	4,000	6,000
Long-term debt	36,000	43,000
Total liabilities	980,000	1,102,000
Commitments and contingencies
Stockholders' equity:
Preferred stock - $0.01 par value, 1,000,000 shares authorized, none issued and outstanding	0	0
Common stock - $0.01 par value, 30,000,000 shares authorized, 18,497,569 shares issued, 18,395,960 shares outstanding at December 31, 2014 and September 30, 2014, respectively	186,000	186,000
Additional paid-in capital	51,312,000	51,311,000
Accumulated deficit	-47,344,000	-47,175,000
Stockholders' Equity before Treasury Stock	4,154,000	4,322,000
Treasury stock, at cost (101,609 shares)	-713,000	-713,000
Total stockholders' equity	3,441,000	3,609,000
Total liabilities and stockholder's equity	$4,421,000	$4,711,000

CONDENSED_CONSOLIDATED_BALANCE1

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)	Dec. 31, 2014	Sep. 30, 2014
Statement of Financial Position [Abstract]
Allowance for doubtful accounts	$11,000	$11,000
Preferred stock par value	$0.01	$0.01
Preferred stock, shares authorized	1,000,000	1,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock par value	$0.01	$0.01
Common stock shares authorized	30,000,000	30,000,000
Common stock shares issued	18,497,569	18,497,569
Common stock shares outstanding	18,395,960	18,395,960
Treasury stock shares	101,609	101,609

CONSOLIDATED_STATEMENTS_OF_OPE

CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)	3 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Income Statement [Abstract]
Net revenues	$1,352,000	$1,399,000
Cost of revenues	912,000	1,023,000
Gross profit	440,000	376,000
Operating expenses:
Selling, general and administrative	478,000	549,000
Research and development	128,000	124,000
Total operating expenses	606,000	673,000
(Loss) from operations	-166,000	-297,000
Other expense, net	-1,000	38,000
(Loss) before income taxes	-167,000	-259,000
Provision for income taxes	2,000	0
Net (loss)	($169,000)	($259,000)
Net loss per share - Basic	($0.01)	($0.01)
Net loss per share - Diluted	($0.01)	($0.01)
Weighted average number of shares outstanding - Basic	18,395,960	18,395,960
Weighted average number of shares outstanding - Diluted	18,395,960	18,395,960

CONSOLIDATED_STATEMENTS_OF_CAS

CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)	3 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Cash flows from operating activities:
Net loss	($169,000)	($259,000)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Stock-based compensation	1,000	1,000
Depreciation and amortization	53,000	57,000
Changes in operating assets and liabilities:
Trade accounts receivable	-59,000	-43,000
Inventories	-225,000	161,000
Other assets	27,000	13,000
Accounts payable	-77,000	55,000
Accrued expenses	-78,000	38,000
Deferred revenue	38,000	37,000
Accrued warranty	3,000	9,000
Deferred rent	-2,000	-1,000
Net cash (used in) provided by operating activities	-488,000	68,000
Cash flows from investing activities:
Purchase of property and equipment	-26,000	-4,000
Net cash used in investing activities	-26,000	-4,000
Cash flows from financing activities:
Principal payments on note payable and capital leases	-27,000	-37,000
Net cash used in financing activities	-27,000	-37,000
Net (decrease) increase in cash and cash equivalents	-541,000	27,000
Cash and cash equivalents at beginning of period	1,292,000	1,572,000
Cash and cash equivalents at end of period	751,000	1,599,000
Supplemental disclosure of cash flow information:
Cash paid for income taxes	0	0
Cash paid for interest	1,000	3,000
Supplemental disclosure of non-cash investing activity:
Company financing of insurance policies	21,607	0
Company financing of IT infrastructure	$0	$119,000

1_Summary_Of_Significant_Accou

1. Summary Of Significant Accounting Policies	3 Months Ended
	Dec. 31, 2014
Accounting Policies [Abstract]
Summary Of Significant Accounting Policies	Principles of Consolidation
	The accompanying condensed consolidated financial statements include the accounts of Trimedyne, Inc., a Nevada corporation, its wholly owned subsidiary, Mobile Surgical Technologies, Inc. ("MST"), a Texas corporation, and its 90% owned inactive subsidiary, Cardiodyne, Inc. ("Cardiodyne"), a Nevada corporation, (collectively, the "Company"). All intercompany accounts and transactions have been eliminated in consolidation.
	Going Concern
	At December 31, 2014, the Company had working capital of $2,255,000 compared to $2,406,000 at the end of the fiscal year ended September 30, 2014. Cash decreased by $541,000 to $751,000 from $1,292,000 at September 30, 2014. We intend to fund operations with cash on hand and from operations, however, additional working capital in the next 12 months will be required based upon our current expenditure rate. These factors raise substantial doubt about the Company’s ability to continue as a going concern.
	We plan to supply our Holmium Lasers and patented Side Firing Fibers to one or more separate companies being organized in which we will own a 30% equity interest at nominal cost. Since we cannot afford to fund large, randomized, controlled clinical trials to prove the safety and efficacy of our new Lasers and Side Firing Fibers in the treatment of multiple medical conditions in various fields of medicine, helping these separate companies may become an outlet for our Lasers and Side Firing Fibers. However, the success of their efforts to raise capital cannot be assured and, if they were able to raise capital, there is no assurance that the clinical trials of any of these separate companies will be successful.
	The first of these companies, Gastromedix, Inc., has been incorporated and is attempting to raise at least $10 million of capital to finance three or more, 25 patient “pilot” clinical trials and, if the “pilot” clinical trials are successful, which cannot be assured, one to three, 300 patient, randomized, controlled clinical trials of our Lasers and patented Side Firing Fibers in the treatment of Type II Diabetes, Obesity and GERD, often called “heartburn”, on which two U.S. Patent Applications are pending, in the gastroenterology field of medicine. These conditions affect millions of people in the U.S. and elsewhere and, if these larger clinical trials are successful, and this company receives FDA approval or clearance to market these products in the U.S., the CE Mark to market these products in the European Union and Medicare, other third-party payers in the U.S. and foreign governmental healthcare reimbursement, none of which can be assured, it could generate substantial sales of our Lasers and Side Firing Fibers.
	If necessary, we will also attempt to raise additional debt and/or equity capital, sell some of our assets, reduce our costs by eliminating certain personnel positions and continue to reduce certain overhead costs in order to reduce our consumption levels.
	The Company is currently pursuing market development efforts in Asia, Latin America and Eastern Europe. We believe that by expanding healthcare infrastructure in these markets, we may be able to create a sustained demand for Holmium Lasers and Fibers in the fields of Laser Spinal Endoscopy, Laser Lithotripsy in the laser treatment of other conditions. Additionally, we expect the global trend toward single-use, disposable laser delivery devices will improve sales and profit margins as more hospitals convert from multi-use devices, due to concerns for sterility and handling costs incurred in product sterilization, and we hope to develop more single-use medical devices.
	Unaudited Interim Financial Information
	The accompanying unaudited condensed consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America for interim financial information, and pursuant to the instructions to Form 10-Q promulgated by the Securities and Exchange Commission ("SEC"). Accordingly, they do not include all information and disclosures required by generally accepted accounting principles for complete financial statement presentation. In the opinion of management, the accompanying condensed consolidated financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the Company's consolidated financial position as of December 31, 2014 and the results of its operations and its cash flows for the three months ended December 31, 2014 and 2013. Results for the three months ended December 31, 2014 are not necessarily indicative of the results to be expected for the year ending September 30, 2015.
	Use of Estimates
	The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates and assumptions include inventory valuation, allowances for doubtful accounts and deferred income tax assets, recoverability of goodwill and long-lived assets and certain accrued liabilities.
	While management believes that the disclosures presented are adequate to make the information not misleading, it is suggested that these condensed consolidated financial statements be read in conjunction with the condensed consolidated financial statements and the notes included in the Company's 2014 annual report on Form 10-K for the year ended September 30, 2014.
	Stock-Based Compensation
	Stock-based compensation was $1,000 during the quarters ended December 31, 2014 and 2013. As of December 31, 2014, there was approximately $1,970 of total unrecognized compensation cost, net of estimated expected forfeitures, related to employee and director stock option compensation arrangements. This unrecognized cost is expected to be recognized on a straight-line basis over the next nine reporting periods.
	Per Share Information
	Basic per share information is computed based upon the weighted average number of common shares outstanding during the period. Diluted per share information consists of the weighted average number of common shares outstanding, plus the dilutive effects of options and warrants calculated using the treasury stock method. In loss periods, dilutive common equivalent shares are excluded as the effect would be anti-dilutive. During the three months ended December 31, 2014 and 2013, outstanding options of 801,900 and 818,900, respectively, were excluded from the diluted net loss per share as the effects would have been anti-dilutive. In addition, the exercise prices of these options were in excess of the average closing price of the Company’s common stock for the quarter ended December 31, 2014 and 2013.

2_Composition_Of_Certain_Balan

2. Composition Of Certain Balance Sheet Captions	3 Months Ended
	Dec. 31, 2014
Disclosure Text Block Supplement [Abstract]
Composition Of Certain Balance Sheet Captions	Inventories, net of reserves, consist of the following:
		December 31,			September 30,
		2014			2014
	Raw materials	$	698,000		$	549,000
	Work-in-process		276,000			298,000
	Finished goods		832,000			734,000
		$	1,806,000		$	1,581,000
	For the three months ended December 31, 2014 and 2013, the aggregate net realizable value of demonstration and evaluation lasers did not comprise a material amount in inventories.
	Other current assets consist of the following:
		December 31,			September 30,
		2014			2014
	Prepaid insurance		54,000			55,000
	Prepaid income tax		10,000			11,000
	Prepaid rent		13,000			13,000
	Short-term deposits		8,000			8,000
	Other		31,000			36,000
	Total other current assets	$	116,000		$	123,000
	Property and equipment consist of the following:
		December 31,			September 30,
		2014			2014
	Furniture and equipment	$	3,474,000		$	3,474,000
	Leasehold improvements		57,000			57,000
	Other		342,000			316,000
			3,873,000			3,847,000
	Less accumulated depreciation and amortization		(3,265,000	)		(3,212,000	)
	Total property and equipment	$	608,000		$	635,000
	Accrued expenses consist of the following:
		December 31,			September 30,
		2014			2014
	Accrued vacation	$	190,000		$	181,000
	Accrued salaries and wages		127,000			60,000
	Accrued bonus		4,000			17,000
	Medical device tax		89,000			83,000
	Sales and use tax		52,000			58,000
	Customer deposits		5,000			190,000
	Property tax		17,000			–
	Commissions		27,000			19,000
	Other		39,000			20,000
	Total accrued expenses	$	550,000		$	628,000

3_Notes_Payable_and_Leases

3. Notes Payable and Leases	3 Months Ended
	Dec. 31, 2014
Debt Disclosure [Abstract]
Notes Payable and Leases	Note payable and capital leases consist of the following:
		31-Dec-14			30-Sep-14
	Capital lease agreement in connection with the update of our IT infrastructure bearing an effective interest rate of 8.41% per annum. The lease requires monthly payments of $3,766 through October 2016	$	77,000		$	83,000
	Finance agreement issued in connection with the purchasing of an insurance policy. The note bears interest at 4.75% per annum and requires monthly payments principal and interest payments of $2,011 through November 2015.		19,000			–
	Finance agreement issued in connection with the purchasing of insurance policies. The note bears interest at 3.35% per annum and require monthly principal and interest payments of $5,693 through March 2015.		11,000			30,000
		$	107,000		$	113,000
	Less:  current portion		(71,000	)		(70,000	)
		$	36,000		$	43,000

4_Commitments_And_Contingencie

4. Commitments And Contingencies	3 Months Ended
	Dec. 31, 2014
Commitments and Contingencies Disclosure [Abstract]
Commitments And Contingencies	Litigation
	We are subject to various claims and actions that arise in the ordinary course of business. The litigation process is inherently uncertain, and it is possible that the resolution of any future litigation may adversely affect us.
	Guarantees and Indemnities
	The Company has made certain indemnities and guarantees, under which it may be required to make payments to a guaranteed or indemnified party. The Company indemnifies its directors, officers, employees and agents to the maximum extent permitted under the laws of the State of California. In connection with its facility leases, the Company has indemnified its users of lasers for certain claims arising from the use of the lasers. The duration of the guarantees and indemnities varies, and in many cases is indefinite. These guarantees and indemnities do not provide for any limitation of the maximum potential future payments the Company could be obligated to make. Historically, the Company has not been obligated to make any payments for these obligations and no liabilities have been recorded for these indemnities and guarantees in the accompanying condensed consolidated balance sheet.
	Risks and Uncertainties
	The Centers for Medicare and Medicaid Services (CMS), the agency of the U.S. Government that administers the Medicare Program, does not reimburse for thermal intradiscal procedures to treat spinal discs including the use of the Company's pulsed Holmium Lasers. Since most people suffering from a herniated or ruptured spinal disc are below Medicare age, we do not believe CMS's decision will have an adverse impact on our business.

5_Segment_Information

5. Segment Information	3 Months Ended
	Dec. 31, 2014
Segment Reporting [Abstract]
Segment Information	The Company's segments consist of individual companies managed separately with each manager reporting to the Principal Executive Officer. Revenues, and operating or segment profit, are reflected net of inter-segment sales and profits. Segment profit is comprised of net sales less operating expenses. Other income and expense and income taxes are not allocated and reported by segment since they are excluded from the measure of segment performance reviewed by management.
	Data with respect to these operating activities for the three months ended December 31, 2014 and 2013 are as follows:
		For the Three Months Ended								For the Three Months Ended
		31-Dec-14								31-Dec-13
		Products			Service and Rental		Total			Products			Service and Rental			Total
	Revenue	$	669,000		$	683,000	$	1,352,000		$	760,000		$	639,000		$	1,399,000
	Cost of sales		414,000			498,000		912,000			527,000			496,000			1,023,000
	Gross profit		255,000			185,000		440,000			233,000			143,000			376,000
	Expenses:
	Selling, general and administrative		320,000			158,000		478,000			391,000			158,000			549,000
	Research and development		128,000			–		128,000			124,000			–			124,000
	Income (loss) from operations	$	(193,000	)	$	27,000		(166,000	)	$	(282,000	)	$	(15,000	)		(297,000	)
	Other:
	Interest expense							(1,000	)								(3,000	)
	Royalty income							–									30,000
	Other income							–									11,000
	Provision for income tax							2,000									–
	Net loss						$	(169,000	)							$	(259,000	)
	Sales and gross profit to customers by similar products and services for the three months ended December 31, 2014 and 2013 were as follows:
		For the Three Months Ended
		December 31,
		2014			2013
	By similar products and services:
	Revenues:
	Laser equipment and accessories	$	247,000		$	283,000
	Delivery and disposable devices		422,000			477,000
	Service and rental		683,000			639,000
	Total	$	1,352,000		$	1,399,000
	Gross profit
	Laser equipment and accessories	$	27,000		$	56,000
	Delivery and disposable devices		228,000			177,000
	Service and rental		185,000			143,000
	Total	$	440,000		$	376,000
	Sales in foreign countries for the three months ended December 31, 2014 and 2013 accounted for approximately 26.1% and 13.7%, respectively, of the Company's total sales. The breakdown by geographic region is as follows:
		Three Months Ended
		December 31,
		2014			2013
	Asia	$	254,000		$	167,000
	Europe		11,000			5,000
	Latin America		88,000			10,000
	Australia		–			9,000
		$	353,000		$	191,000
	Total segment assets at December 31, 2014 and 2013 for the Products segment were $2,846,000 and $2,992,000, respectively, and for the Service and Rental segment were $1,553,000 and $1,665,000, respectively. Total segment assets differ from total assets on a consolidated basis as a result of unallocated corporate assets primarily comprised of immaterial amounts of property and equipment, etc.

6_Subsequent_Events

6. Subsequent Events	3 Months Ended
	Dec. 31, 2014
Subsequent Events [Abstract]
6. Subsequent Events	On January 30, 2015, Marvin P. Loeb, Sc.D., per his request, was relieved from the offices of Chairman of the Board and CEO of the Company, due to his age and a recent injury temporarily limiting his mobility. This resignation was not a result of any disagreement with the Company, its management, the Company’s Board or any matter relating to the Company’s operations, policies or practices. In addition, Dr. Loeb was elected to the office of Chief Scientific Officer of the Company at his current cash compensation, and remains a member of the Board of Directors of the Company.
	Further, Glenn D. Yeik, current President, COO and Director of the Company, was elected to the additional office of Chairman of the Board, effective immediately and is the acting Principal Executive Officer of the Company.
	Additionally, Alan E. Loeb, age 50, was appointed to the Company’s Board of Directors effective immediately. He is the sole Trustee of the four Trusts established by Dr. Loeb, which together constitute the Company’s principal stockholder.

Recovered_Sheet1

1. Summary of Significant Accounting Policies (Policies)	3 Months Ended
	Dec. 31, 2014
Accounting Policies [Abstract]
Principles of Consolidation	Principles of Consolidation
	The accompanying condensed consolidated financial statements include the accounts of Trimedyne, Inc., a Nevada corporation, its wholly owned subsidiary, Mobile Surgical Technologies, Inc. ("MST"), a Texas corporation, and its 90% owned inactive subsidiary, Cardiodyne, Inc. ("Cardiodyne"), a Nevada corporation, (collectively, the "Company"). All intercompany accounts and transactions have been eliminated in consolidation.
Going Concern	Going Concern
	At December 31, 2014, the Company had working capital of $2,255,000 compared to $2,406,000 at the end of the fiscal year ended September 30, 2014. Cash decreased by $541,000 to $751,000 from $1,292,000 at September 30, 2014. We intend to fund operations with cash on hand and from operations, however, additional working capital in the next 12 months will be required based upon our current expenditure rate. These factors raise substantial doubt about the Company’s ability to continue as a going concern.
	We plan to supply our Holmium Lasers and patented Side Firing Fibers to one or more separate companies being organized in which we will own a 30% equity interest at nominal cost. Since we cannot afford to fund large, randomized, controlled clinical trials to prove the safety and efficacy of our new Lasers and Side Firing Fibers in the treatment of multiple medical conditions in various fields of medicine, helping these separate companies may become an outlet for our Lasers and Side Firing Fibers. However, the success of their efforts to raise capital cannot be assured and, if they were able to raise capital, there is no assurance that the clinical trials of any of these separate companies will be successful.
	The first of these companies, Gastromedix, Inc., has been incorporated and is attempting to raise at least $10 million of capital to finance three or more, 25 patient “pilot” clinical trials and, if the “pilot” clinical trials are successful, which cannot be assured, one to three, 300 patient, randomized, controlled clinical trials of our Lasers and patented Side Firing Fibers in the treatment of Type II Diabetes, Obesity and GERD, often called “heartburn”, on which two U.S. Patent Applications are pending, in the gastroenterology field of medicine. These conditions affect millions of people in the U.S. and elsewhere and, if these larger clinical trials are successful, and this company receives FDA approval or clearance to market these products in the U.S., the CE Mark to market these products in the European Union and Medicare, other third-party payers in the U.S. and foreign governmental healthcare reimbursement, none of which can be assured, it could generate substantial sales of our Lasers and Side Firing Fibers.
	If necessary, we will also attempt to raise additional debt and/or equity capital, sell some of our assets, reduce our costs by eliminating certain personnel positions and continue to reduce certain overhead costs in order to reduce our consumption levels.
	The Company is currently pursuing market development efforts in Asia, Latin America and Eastern Europe. We believe that by expanding healthcare infrastructure in these markets, we may be able to create a sustained demand for Holmium Lasers and Fibers in the fields of Laser Spinal Endoscopy, Laser Lithotripsy in the laser treatment of other conditions. Additionally, we expect the global trend toward single-use, disposable laser delivery devices will improve sales and profit margins as more hospitals convert from multi-use devices, due to concerns for sterility and handling costs incurred in product sterilization, and we hope to develop more single-use medical devices.
Unaudited Interim Financial Information	Unaudited Interim Financial Information
	The accompanying unaudited condensed consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America for interim financial information, and pursuant to the instructions to Form 10-Q promulgated by the Securities and Exchange Commission ("SEC"). Accordingly, they do not include all information and disclosures required by generally accepted accounting principles for complete financial statement presentation. In the opinion of management, the accompanying condensed consolidated financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the Company's consolidated financial position as of December 31, 2014 and the results of its operations and its cash flows for the three months ended December 31, 2014 and 2013. Results for the three months ended December 31, 2014 are not necessarily indicative of the results to be expected for the year ending September 30, 2015.
Use of Estimates	Use of Estimates
	The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates and assumptions include inventory valuation, allowances for doubtful accounts and deferred income tax assets, recoverability of goodwill and long-lived assets and certain accrued liabilities.
	While management believes that the disclosures presented are adequate to make the information not misleading, it is suggested that these condensed consolidated financial statements be read in conjunction with the condensed consolidated financial statements and the notes included in the Company's 2014 annual report on Form 10-K for the year ended September 30, 2014.
Stock-Based Compensation	Stock-Based Compensation
	Stock-based compensation was $1,000 during the quarters ended December 31, 2014 and 2013. As of December 31, 2014, there was approximately $1,970 of total unrecognized compensation cost, net of estimated expected forfeitures, related to employee and director stock option compensation arrangements. This unrecognized cost is expected to be recognized on a straight-line basis over the next nine reporting periods.
Per Share Information	Per Share Information
	Basic per share information is computed based upon the weighted average number of common shares outstanding during the period. Diluted per share information consists of the weighted average number of common shares outstanding, plus the dilutive effects of options and warrants calculated using the treasury stock method. In loss periods, dilutive common equivalent shares are excluded as the effect would be anti-dilutive. During the three months ended December 31, 2014 and 2013, outstanding options of 801,900 and 818,900, respectively, were excluded from the diluted net loss per share as the effects would have been anti-dilutive. In addition, the exercise prices of these options were in excess of the average closing price of the Company’s common stock for the quarter ended December 31, 2014 and 2013.

Recovered_Sheet2

2. Composition of Certain Balance Sheet Captions (Tables)	3 Months Ended
	Dec. 31, 2014
Disclosure Text Block Supplement [Abstract]
Inventories		December 31,			September 30,
		2014			2014
	Raw materials	$	698,000		$	549,000
	Work-in-process		276,000			298,000
	Finished goods		832,000			734,000
		$	1,806,000		$	1,581,000
Other current assets		December 31,			September 30,
		2014			2014
	Prepaid insurance		54,000			55,000
	Prepaid income tax		10,000			11,000
	Prepaid rent		13,000			13,000
	Short-term deposits		8,000			8,000
	Other		31,000			36,000
	Total other current assets	$	116,000		$	123,000
Property and equipment		December 31,			September 30,
		2014			2014
	Furniture and equipment	$	3,474,000		$	3,474,000
	Leasehold improvements		57,000			57,000
	Other		342,000			316,000
			3,873,000			3,847,000
	Less accumulated depreciation and amortization		(3,265,000	)		(3,212,000	)
	Total property and equipment	$	608,000		$	635,000
Accrued expenses		December 31,			September 30,
		2014			2014
	Accrued vacation	$	190,000		$	181,000
	Accrued salaries and wages		127,000			60,000
	Accrued bonus		4,000			17,000
	Medical device tax		89,000			83,000
	Sales and use tax		52,000			58,000
	Customer deposits		5,000			190,000
	Property tax		17,000			–
	Commissions		27,000			19,000
	Other		39,000			20,000
	Total accrued expenses	$	550,000		$	628,000

3_Notes_Payable_and_Leases_Tab

3. Notes Payable and Leases (Tables)	3 Months Ended
	Dec. 31, 2014
Debt Disclosure [Abstract]
Schedule of notes payable		31-Dec-14			30-Sep-14
	Capital lease agreement in connection with the update of our IT infrastructure bearing an effective interest rate of 8.41% per annum. The lease requires monthly payments of $3,766 through October 2016	$	77,000		$	83,000
	Finance agreement issued in connection with the purchasing of an insurance policy. The note bears interest at 4.75% per annum and requires monthly payments principal and interest payments of $2,011 through November 2015.		19,000			–
	Finance agreement issued in connection with the purchasing of insurance policies. The note bears interest at 3.35% per annum and require monthly principal and interest payments of $5,693 through March 2015.		11,000			30,000
		$	107,000		$	113,000
	Less:  current portion		(71,000	)		(70,000	)
		$	36,000		$	43,000

5_Segment_Information_Tables

5. Segment Information (Tables)	3 Months Ended
	Dec. 31, 2014
Segment Reporting [Abstract]
Segment Reporting by Operating activities		For the Three Months Ended								For the Three Months Ended
		31-Dec-14								31-Dec-13
		Products			Service and Rental		Total			Products			Service and Rental			Total
	Revenue	$	669,000		$	683,000	$	1,352,000		$	760,000		$	639,000		$	1,399,000
	Cost of sales		414,000			498,000		912,000			527,000			496,000			1,023,000
	Gross profit		255,000			185,000		440,000			233,000			143,000			376,000
	Expenses:
	Selling, general and administrative		320,000			158,000		478,000			391,000			158,000			549,000
	Research and development		128,000			–		128,000			124,000			–			124,000
	Income (loss) from operations	$	(193,000	)	$	27,000		(166,000	)	$	(282,000	)	$	(15,000	)		(297,000	)
	Other:
	Interest expense							(1,000	)								(3,000	)
	Royalty income							–									30,000
	Other income							–									11,000
	Provision for income tax							2,000									–
	Net loss						$	(169,000	)							$	(259,000	)
Sales and gross profit to customers by similar products and services		For the Three Months Ended
		December 31,
		2014			2013
	By similar products and services:
	Revenues:
	Laser equipment and accessories	$	247,000		$	283,000
	Delivery and disposable devices		422,000			477,000
	Service and rental		683,000			639,000
	Total	$	1,352,000		$	1,399,000
	Gross profit
	Laser equipment and accessories	$	27,000		$	56,000
	Delivery and disposable devices		228,000			177,000
	Service and rental		185,000			143,000
	Total	$	440,000		$	376,000
Sales breakdown by geographic region		Three Months Ended
		December 31,
		2014			2013
	Asia	$	254,000		$	167,000
	Europe		11,000			5,000
	Latin America		88,000			10,000
	Australia		–			9,000
		$	353,000		$	191,000

1_Summary_of_Significant_Accou1

1. Summary of Significant Accounting Policies (Details Narrative) (USD $)	3 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Sep. 30, 2014
Accounting Policies [Abstract]
Working capital	$2,255,000		$2,406,000
Stock-based compensation	1,000	1,000
Unrecognized compensation cost	$1,970
Unrecognized compensation cost, period for recognition	3 years
Outstanding options excluded from the diluted net loss per share	801,900	818,900

2_Composition_Of_Certain_Balan1

2. Composition Of Certain Balance Sheet Captions (Details-Inventories) (USD $)	Dec. 31, 2014	Sep. 30, 2014
Inventories, net of reserves, consist of the following
Raw materials	$698,000	$549,000
Work-in-process	276,000	298,000
Finished goods	832,000	734,000
Total Inventory	$1,806,000	$1,581,000

2_Composition_Of_Certain_Balan2

2. Composition Of Certain Balance Sheet Captions (Details-Other Current Assets) (USD $)	Dec. 31, 2014	Sep. 30, 2014
Other current assets consist of the following
Prepaid insurance	$54,000	$55,000
Prepaid income tax	10,000	11,000
Prepaid rent	13,000	13,000
Short-term deposits	8,000	8,000
Other	31,000	36,000
Total other current assets	$116,000	$123,000

2_Composition_Of_Certain_Balan3

2. Composition Of Certain Balance Sheet Captions (Details-Property and Equipment) (USD $)	Dec. 31, 2014	Sep. 30, 2014
Property, Plant and Equipment [Abstract]
Furniture and equipment	$3,474,000	$3,474,000
Leasehold improvements	57,000	57,000
Other	342,000	316,000
Property plant and equipment, gross	3,873,000	3,847,000
Less accumulated depreciation and amortization	-3,265,000	-3,212,000
Total property and equipment, net	$608,000	$635,000

2_Composition_Of_Certain_Balan4

2. Composition Of Certain Balance Sheet Captions (Details-Accrued Expenses) (USD $)	Dec. 31, 2014	Sep. 30, 2014
Accrued expenses consist of the following
Accrued vacation	$190,000	$181,000
Accrued salaries and wages	127,000	60,000
Accrued bonus	4,000	17,000
Medical device tax	89,000	83,000
Sales and use tax	52,000	58,000
Customer deposits	5,000	190,000
Property tax	17,000	0
Commissions	27,000	19,000
Other	39,000	20,000
Total accrued expenses	$550,000	$628,000

3_Notes_Payable_and_Leases_Det

3. Notes Payable and Leases (Details) (USD $)	3 Months Ended
	Dec. 31, 2014	Sep. 30, 2014
Gross Capital Lease and Finance Agreements Issued	$107,000	$113,000
Less:B B current portion	-71,000	-70,000
Total notes payable and capital lease	36,000	43,000
Capital Lease 1
Gross Capital Lease and Finance Agreements Issued	77,000	83,000
Effective interest rate	8.41%
Maturity date	31-Oct-16
Finance Agreement 1
Gross Capital Lease and Finance Agreements Issued	19,000	0
Effective interest rate	4.75%
Maturity date	30-Nov-15
Finance Agreement 2
Gross Capital Lease and Finance Agreements Issued	$11,000	$30,000
Effective interest rate	3.35%
Maturity date	31-Mar-15

5_Segment_Information_DetailsI

5. Segment Information (Details-Income Statement) (USD $)	3 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Revenue	$1,352,000	$1,399,000
Cost of sales	912,000	1,023,000
Gross profit	440,000	376,000
Expenses:
Selling, general and administrative	478,000	549,000
Research and development	128,000	124,000
Income (loss) from operations	-166,000	-297,000
Other:
Interest expense	-1,000	-3,000
Royalty income	0	30,000
Other income	0	11,000
Provision for income taxes	2,000	0
Net loss	-169,000	-259,000
Products
Revenue	669,000	760,000
Cost of sales	414,000	527,000
Gross profit	255,000	233,000
Expenses:
Selling, general and administrative	320,000	391,000
Research and development	128,000	124,000
Income (loss) from operations	-193,000	-282,000
Service and rental
Revenue	683,000	639,000
Cost of sales	498,000	496,000
Gross profit	185,000	143,000
Expenses:
Selling, general and administrative	158,000	158,000
Research and development	0	0
Income (loss) from operations	$27,000	($15,000)

5_Segment_Information_DetailsS

5. Segment Information (Details-Similar Products) (USD $)	3 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Products:
Total Sales	$1,352,000	$1,399,000
Gross profit
Total gross profit	440,000	376,000
Service and rental
Products:
Total Sales	683,000	639,000
Gross profit
Total gross profit	185,000	143,000
Lasers and accessories
Products:
Total Sales	247,000	283,000
Gross profit
Total gross profit	27,000	56,000
Delivery and disposable devices
Products:
Total Sales	422,000	477,000
Gross profit
Total gross profit	$228,000	$177,000

5_Segment_Information_DetailsS1

5. Segment Information (Details-Sales in Foreign Countries) (USD $)	3 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Total Sales	$353,000	$191,000
AsiaMember
Total Sales	254,000	167,000
EuropeMember
Total Sales	11,000	5,000
LatinAmericaMember
Total Sales	88,000	10,000
AustraliaMember
Total Sales	$0	$9,000

5_Segment_Information_Details_

5. Segment Information (Details Narrative) (USD $)	3 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Sales Revenue | Foreign Countries
Sales in foreign countries	26.10%	13.70%
Products
Total segment assets	2,846,000
Products
Total segment assets		2,992,000
Service and rental
Total segment assets	1,553,000	1,665,000