Trimedyne (TMED) 10-Q 22 Aug 16 2016 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Jun. 30, 2016	Aug. 19, 2016
Document And Entity Information
Entity Registrant Name	TRIMEDYNE INC
Entity Central Index Key	357,001
Document Type	10-Q
Document Period End Date	Jun. 30, 2016
Amendment Flag	false
Current Fiscal Year End Date	--09-30
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	Q3
Document Fiscal Year Focus	2,016

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($)	Jun. 30, 2016	Sep. 30, 2015
Current assets:
Cash and cash equivalents	$ 239,000	$ 365,000
Trade accounts receivable, net of allowance for doubtful accounts of $11,000 at June 30, 2016 and September 30, 2015, respectively	369,000	416,000
Inventories	1,575,000	1,808,000
Other current assets	131,000	96,000
Total current assets	2,314,000	2,685,000
Property and equipment, net	382,000	480,000
Other	58,000	75,000
Goodwill	544,000	544,000
Total Assets	3,298,000	3,784,000
Current liabilities:
Accounts payable	162,000	138,000
Accrued expenses	382,000	426,000
Deferred revenue	34,000	26,000
Accrued warranty	40,000	50,000
Taxes Payable	8,000	8,000
Current portion of note payable and capital leases	74,000	68,000
Total current liabilities	700,000	716,000
Deferred rent	1,000	5,000
Long-term debt	0	4,000
Total liabilities	701,000	725,000
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 June 30, 2016 and September 30, 2015, respectively	186,000	186,000
Additional paid-in capital	51,363,000	51,356,000
Accumulated deficit	(48,239,000)	(47,770,000)
Stockholders' Equity before Treasury Stock	3,310,000	3,772,000
Treasury stock, at cost (101,609 shares)	(713,000)	(713,000)
Total stockholders' equity	2,597,000	3,059,000
Total liabilities and stockholder's equity	$ 3,298,000	$ 3,784,000

CONDENSED CONSOLIDATED BALANCE3

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)	Jun. 30, 2016	Sep. 30, 2015
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

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Income Statement [Abstract]
Net revenues	$ 1,106,000	$ 1,482,000	$ 3,776,000	$ 4,027,000
Cost of sales	653,000	995,000	2,617,000	2,717,000
Gross profit	453,000	487,000	1,159,000	1,310,000
Operating expenses:
Selling, general and administrative	469,000	480,000	1,390,000	1,417,000
Research and development	100,000	86,000	293,000	336,000
Total operating expenses	569,000	566,000	1,683,000	1,753,000
Loss from operations	(116,000)	(79,000)	(524,000)	(443,000)
Other (expense) income, net	(2,000)	(17,000)	65,000	(15,000)
Loss before provision for income taxes	(118,000)	(96,000)	(459,000)	(458,000)
Provision for income taxes	5,000	1,000	10,000	8,000
Net loss	$ (123,000)	$ (97,000)	$ (469,000)	$ (466,000)
Net loss per share - Basic	$ (.01)	$ (.01)	$ (.03)	$ (.03)
Net loss per share - Diluted	$ (0.01)	$ (0.01)	$ (0.03)	$ (0.03)
Weighted average number of shares outstanding - Basic	18,395,960	18,395,960	18,395,960	18,395,960
Weighted average number of shares outstanding - Diluted	18,395,960	18,395,960	18,395,960	18,395,960

CONDENSED CONSOLIDATED STATEME5

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)	9 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Cash flows from operating activities:
Net loss	$ (469,000)	$ (466,000)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Stock-based compensation	7,000	43,000
Depreciation and amortization	96,000	146,000
Net loss on disposal of assets	(2,000)	0
Changes in operating assets and liabilities:
Trade accounts receivable	47,000	(24,000)
Inventories	233,000	(200,000)
Other assets	74,000	33,000
Accounts payable	24,000	29,000
Accrued expenses	(44,000)	(224,000)
Income tax payable	0	6,000
Deferred revenue	14,000	0
Accrued warranty	(16,000)	23,000
Deferred rent	(4,000)	2,000
Net cash used in operating activities	(36,000)	(632,000)
Cash flows from investing activities:
Purchase of property and equipment	0	(35,000)
Net cash used in investing activities	0	(35,000)
Cash flows from financing activities:
Principal payments on notes payable and capital leases	(90,000)	(87,000)
Net cash used in financing activities	(90,000)	(87,000)
Net decrease in cash and cash equivalents	(126,000)	(754,000)
Cash and cash equivalents at beginning of period	365,000	1,292,000
Cash and cash equivalents at end of period	239,000	538,000
Supplemental disclosure of cash flow information:
Cash paid for income taxes	10,000	8,000
Cash paid for interest	5,000	5,000
Supplemental disclosure of non-cash investing activity:
Company financing of insurance policies	$ 90,000	$ 80,000

1. Summary Of Significant Accou

1. Summary Of Significant Accounting Policies	9 Months Ended
	Jun. 30, 2016
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 June 30, 2016, we had working capital of $1,614,000 compared to $1,969,000 at the end of the previous fiscal year ended September 30, 2015. Cash decreased by $126,000 to $239,000 at June 30, 2016 from $365,000 at the fiscal year ended September 30, 2015. As of June 30, 2016 we had cash on hand of $239,000. We intend to fund operations with cash on hand and from operations; however, additional working capital in the next 12 months may be required based upon our current expenditure rate. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The Company will attempt to lower our overhead costs on less profitable segments, raise additional debt and/or equity capital, sell some of our assets including utilization of current inventory, outsource some of our manufacturing processes and/or reduce our costs by eliminating certain personnel in order to reduce our cash consumption levels to a supportable level. There can be no assurances that we will be successful in those efforts. If we are unsuccessful in our efforts, we may be forced to reduce or curtail certain operational segments. The Company's continuation as a going concern is dependent on its ability to meet its obligations, to obtain additional financing as may be required and ultimately to attain profitability. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. The Company is currently pursuing market development efforts in Asia and Latin America. 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 June 30, 2016 and the results of its operations and its cash flows for the nine months ended June 30, 2016 and 2015. Results for the nine months ended June 30, 2016 are not necessarily indicative of the results to be expected for the year ending September 30, 2016. 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 2015 annual report on Form 10-K for the year ended September 30, 2015. Stock-Based Compensation Stock-based compensation was $7,000 and $43,000 during the nine months ended June 30, 2016 and 2015, respectively. As of June 30, 2016, there was approximately $13,000 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 eight 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 and nine months ended June 30, 2016 and 2015, outstanding options of 1,572,000 and 1,697,000, 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 June 30, 2016 and 2015. Cash and Cash Equivalents The Company considers all highly liquid investments with insignificant interest rate risk and original maturities of three months or less from the date of purchase to be cash equivalents. The carrying amounts of cash and cash equivalents approximate their fair values. The Company maintains its cash with a major financial institution located in the United States of America which it believes to be credit worthy. Balances are insured by the Federal Deposit Insurance Corporation up to $250,000. At times, the Company maintains balances in excess of the federally insured limits.

2. Composition Of Certain Balan

2. Composition Of Certain Balance Sheet Captions	9 Months Ended
	Jun. 30, 2016
Composition Of Certain Balance Sheet Captions Details-accrued Expenses
Composition Of Certain Balance Sheet Captions	Inventories, net of reserves, consist of the following: June 30, September 30, Raw materials $ 557,000 $ 616,000 Work-in-process 177,000 288,000 Finished goods 841,000 904,000 $ 1,575,000 $ 1,808,000 For the three months ended June 30, 2016 and 2015, 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: June 30, September 30, Prepaid insurance $ 80,000 $ 49,000 Prepaid income tax 3,000 3,000 Prepaid rent 15,000 13,000 Short-term deposits 7,000 7,000 Other 26,000 24,000 Total other current assets $ 131,000 $ 96,000 Property and equipment consist of the following: June 30, September 30, Furniture and equipment $ 3,478,000 $ 3,478,000 Leasehold improvements 62,000 62,000 Other 305,000 325,000 3,845,000 3,865,000 Less accumulated depreciation and amortization (3,463,000 ) (3,385,000 ) Total property and equipment $ 382,000 $ 480,000 Accrued expenses consist of the following: June 30, September 30, Accrued vacation $ 205,000 $ 203,000 Accrued salaries and wages 32,000 60,000 Accrued compensation 43,000 20,000 Accrued bonus 15,000 23,000 Sales and use tax 49,000 51,000 Customer deposits – 30,000 Commissions 20,000 16,000 Other 18,000 23,000 Total accrued expenses $ 382,000 $ 426,000

3. Note Payable and Capital Lea

3. Note Payable and Capital Leases	9 Months Ended
	Jun. 30, 2016
Debt Disclosure [Abstract]
Note Payable and Capital Leases	Note payable and capital leases consist of the following: June 30, 2016 September 30, 2015 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 $ 15,000 $ 47,000 Finance agreement issued in connection with the purchasing of an insurance policy. The note bears interest at 4.9% per annum and requires monthly payments principal and interest payments of $2,191 through January 2017. 15,000 – Finance agreement issued in connection with the purchasing of insurance policies. The note bears interest at 3.35% per annum and requires monthly principal and interest payments of $5,890 through March 2016. – 25,000 Finance agreement issued in connection with the purchasing of insurance policies. The note bears interest at 3.35% per annum and requires monthly principal and interest payments of $5,647 through March 2017. 44,000 – $ 74,000 $ 72,000 Less: current portion (74,000 ) (68,000 ) $ – $ 4,000 On November 12, 2015, the Company signed an amendment to its existing lease at its facility in Irvine, California extending the term until April 30, 2019. The amendment contains an increase in the base monthly rent beginning May 1, 2016 to $8,754 with two annual base rent increases on May 1, 2017 and May 1, 2018 of $9,017 and $9,287, respectively.

4. Commitments And Contingencie

4. Commitments And Contingencies	9 Months Ended
	Jun. 30, 2016
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	9 Months Ended
	Jun. 30, 2016
Segment Reporting [Abstract]
Segment Information	The Company's segments consist of individual companies managed separately with each manager reporting to the Chief 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 and nine months ended June 30, 2016 and 2015 are as follows: For the Three Months Ended June 30, 2016 For the Three Months Ended June 30, 2015 Products Service and Rental Total Products Service and Rental Total Revenue $ 468,000 $ 638,000 $ 1,106,000 $ 807,000 $ 675,000 $ 1,482,000 Cost of sales 265,000 388,000 653,000 538,000 457,000 995,000 Gross profit 203,000 250,000 453,000 269,000 218,000 487,000 Expenses: Selling, general and administrative 294,000 175,000 469,000 327,000 153,000 480,000 Research and development 100,000 – 100,000 86,000 – 86,000 Income (loss) from operations $ (191,000 ) $ 75,000 (116,000 ) $ (144,000 ) $ 65,000 (79,000 ) Other: Interest expense (3,000 ) (2,000 ) Other (expense) income 3,000 (15,000 ) Gain (loss) Disposal of assets (2,000 ) – Income taxes (5,000 ) (1,000 ) Net loss $ (123,000 ) $ (97,000 ) For the Nine Months Ended June 30, 2016 For the Nine Months Ended June 30, 2015 Products Service and Rental Total Products Service and Rental Total Revenue $ 1,914,000 $ 1,862,000 $ 3,776,000 $ 2,060,000 $ 1,967,000 $ 4,027,000 Cost of sales 1,318,000 1,299,000 2,617,000 1,320,000 1,397,000 2,717,000 Gross profit 596,000 563,000 1,159,000 740,000 570,000 1,310,000 Expenses: Selling, general and administrative 881,000 509,000 1,390,000 956,000 461,000 1,417,000 Research and development 293,000 – 293,000 336,000 – 336,000 Income (loss) from operations $ (578,000 ) $ 54,000 (524,000 ) $ (552,000 ) $ 109,000 (443,000 ) Other: Interest expense (5,000 ) (5,000 ) Other (expense) income 72,000 (10,000 ) Gain (loss) disposal of assets (2,000 ) – Income taxes (10,000 ) (8,000 ) Net loss $ (469,000 ) $ (466,000 ) Sales and gross profit to customers by similar products and services for the three and nine months ended June 30, 2016 and 2015 were as follows: For the Three Months Ended June 30, For the Nine Months Ended June 30, 2016 2015 2016 2015 By similar products and services: Revenues: Products: Laser equipment and accessories $ 76,000 $ 413,000 $ 634,000 $ 819,000 Delivery and disposable devices 392,000 394,000 1,280,000 1,241,000 Service and rental 638,000 675,000 1,862,000 1,967,000 Total $ 1,106,000 $ 1,482,000 $ 3,776,000 $ 4,027,000 Gross profit Products: Laser equipment and accessories $ (6,000 ) $ 105,000 $ 28,000 $ 140,000 Delivery and disposable devices 209,000 164,000 568,000 600,000 Service and rental 250,000 218,000 563,000 570,000 Total $ 453,000 $ 487,000 $ 1,159,000 $ 1,310,000 Sales in foreign countries for the three months ended June 30, 2016 and 2015, accounted for approximately 19% and 35%, respectively, of the Company's total sales. Sales in foreign countries for the nine months ended June 30, 2016 and 2015 accounted for approximately 28% and 29%, respectively, of the Company's total sales. The breakdown by geographic region is as follows: Three Months Three Months Nine Months Nine Months Ended Ended Ended Ended Asia $ 174,000 $ 448,000 $ 902,000 $ 929,000 Europe 6,000 14,000 23,000 66,000 Latin America 2,000 44,000 49,000 132,000 Middle East – – – 2,000 Australia 24,000 11,000 65,000 24,000 $ 206,000 $ 517,000 $ 1,039,000 $ 1,153,000 During the three and nine months ended June 30, 2016 and 2015, one Laser was located in Canada, respectively. Total segment assets at June 30, 2016 and 2015 for the Products segment were $1,833,000 and $2,478,000, respectively, and for the Service and Rental segment were $1,443,000 and $1,617,000, 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. The decrease of $645,000 in the Products segment as compared to the prior year was primarily due to reductions of $299,000 cash and $206,000 in inventories as compared to the prior year period. 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.

6. Related Party Transactions

6. Related Party Transactions	9 Months Ended
	Jun. 30, 2016
Related Party Transactions [Abstract]
Related Party Transactions	During the quarter ended June, 2016, the Company incurred approximately $11,000 in expenses primarily resulting from the sharing of a member of the Company’s staff, for two companies, Cardiomax, LLC. and Gastromedix, Inc, (“Gastromedix”) owned by our Chief Scientific Officer and Director, Marvin P. Loeb, based on an agreement with the Company’s Board of Directors. One of the two companies, Gastromedix, could potentially benefit the Company in the future. For details regarding Gastromedix, please refer to the Company's 2015 annual report on Form 10-K for the year ended September 30, 2015.

1. Summary of Significant Acc12

1. Summary of Significant Accounting Policies (Policies)	9 Months Ended
	Jun. 30, 2016
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 June 30, 2016, we had working capital of $1,614,000 compared to $1,969,000 at the end of the previous fiscal year ended September 30, 2015. Cash decreased by $126,000 to $239,000 at June 30, 2016 from $365,000 at the fiscal year ended September 30, 2015. As of June 30, 2016 we had cash on hand of $239,000. We intend to fund operations with cash on hand and from operations; however, additional working capital in the next 12 months may be required based upon our current expenditure rate. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The Company will attempt to lower our overhead costs on less profitable segments, raise additional debt and/or equity capital, sell some of our assets including utilization of current inventory, outsource some of our manufacturing processes and/or reduce our costs by eliminating certain personnel in order to reduce our cash consumption levels to a supportable level. There can be no assurances that we will be successful in those efforts. If we are unsuccessful in our efforts, we may be forced to reduce or curtail certain operational segments. The Company's continuation as a going concern is dependent on its ability to meet its obligations, to obtain additional financing as may be required and ultimately to attain profitability. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. The Company is currently pursuing market development efforts in Asia and Latin America. 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 June 30, 2016 and the results of its operations and its cash flows for the nine months ended June 30, 2016 and 2015. Results for the nine months ended June 30, 2016 are not necessarily indicative of the results to be expected for the year ending September 30, 2016.
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 2015 annual report on Form 10-K for the year ended September 30, 2015.
Stock-Based Compensation	Stock-Based Compensation Stock-based compensation was $7,000 and $43,000 during the nine months ended June 30, 2016 and 2015, respectively. As of June 30, 2016, there was approximately $13,000 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 eight 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 and nine months ended June 30, 2016 and 2015, outstanding options of 1,572,000 and 1,697,000, 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 June 30, 2016 and 2015.
Cash and Cash Equivalents	Cash and Cash Equivalents The Company considers all highly liquid investments with insignificant interest rate risk and original maturities of three months or less from the date of purchase to be cash equivalents. The carrying amounts of cash and cash equivalents approximate their fair values. The Company maintains its cash with a major financial institution located in the United States of America which it believes to be credit worthy. Balances are insured by the Federal Deposit Insurance Corporation up to $250,000. At times, the Company maintains balances in excess of the federally insured limits.

2. Composition of Certain Bal13

2. Composition of Certain Balance Sheet Captions (Tables)	9 Months Ended
	Jun. 30, 2016
Composition Of Certain Balance Sheet Captions Details-accrued Expenses
Inventories	June 30, September 30, Raw materials $ 557,000 $ 616,000 Work-in-process 177,000 288,000 Finished goods 841,000 904,000 $ 1,575,000 $ 1,808,000
Other current assets	June 30, September 30, Prepaid insurance $ 80,000 $ 49,000 Prepaid income tax 3,000 3,000 Prepaid rent 15,000 13,000 Short-term deposits 7,000 7,000 Other 26,000 24,000 Total other current assets $ 131,000 $ 96,000
Property and equipment	June 30, September 30, Furniture and equipment $ 3,478,000 $ 3,478,000 Leasehold improvements 62,000 62,000 Other 305,000 325,000 3,845,000 3,865,000 Less accumulated depreciation and amortization (3,463,000 ) (3,385,000 ) Total property and equipment $ 382,000 $ 480,000
Accrued expenses	June 30, September 30, Accrued vacation $ 205,000 $ 203,000 Accrued salaries and wages 32,000 60,000 Accrued compensation 43,000 20,000 Accrued bonus 15,000 23,000 Sales and use tax 49,000 51,000 Customer deposits – 30,000 Commissions 20,000 16,000 Other 18,000 23,000 Total accrued expenses $ 382,000 $ 426,000

3. Note Payable and Capital L14

3. Note Payable and Capital Leases (Tables)	9 Months Ended
	Jun. 30, 2016
Debt Disclosure [Abstract]
Schedule of notes payable and capital lease obligations	June 30, 2016 September 30, 2015 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 $ 15,000 $ 47,000 Finance agreement issued in connection with the purchasing of an insurance policy. The note bears interest at 4.9% per annum and requires monthly payments principal and interest payments of $2,191 through January 2017. 15,000 – Finance agreement issued in connection with the purchasing of insurance policies. The note bears interest at 3.35% per annum and requires monthly principal and interest payments of $5,890 through March 2016. – 25,000 Finance agreement issued in connection with the purchasing of insurance policies. The note bears interest at 3.35% per annum and requires monthly principal and interest payments of $5,647 through March 2017. 44,000 – $ 74,000 $ 72,000 Less: current portion (74,000 ) (68,000 ) $ – $ 4,000

5. Segment Information (Tables)

5. Segment Information (Tables)	9 Months Ended
	Jun. 30, 2016
Segment Reporting [Abstract]
Segment Reporting by operating activities	For the Three Months Ended June 30, 2016 For the Three Months Ended June 30, 2015 Products Service and Rental Total Products Service and Rental Total Revenue $ 468,000 $ 638,000 $ 1,106,000 $ 807,000 $ 675,000 $ 1,482,000 Cost of sales 265,000 388,000 653,000 538,000 457,000 995,000 Gross profit 203,000 250,000 453,000 269,000 218,000 487,000 Expenses: Selling, general and administrative 294,000 175,000 469,000 327,000 153,000 480,000 Research and development 100,000 – 100,000 86,000 – 86,000 Income (loss) from operations $ (191,000 ) $ 75,000 (116,000 ) $ (144,000 ) $ 65,000 (79,000 ) Other: Interest expense (3,000 ) (2,000 ) Other (expense) income 3,000 (15,000 ) Gain (loss) Disposal of assets (2,000 ) – Income taxes (5,000 ) (1,000 ) Net loss $ (123,000 ) $ (97,000 ) For the Nine Months Ended June 30, 2016 For the Nine Months Ended June 30, 2015 Products Service and Rental Total Products Service and Rental Total Revenue $ 1,914,000 $ 1,862,000 $ 3,776,000 $ 2,060,000 $ 1,967,000 $ 4,027,000 Cost of sales 1,318,000 1,299,000 2,617,000 1,320,000 1,397,000 2,717,000 Gross profit 596,000 563,000 1,159,000 740,000 570,000 1,310,000 Expenses: Selling, general and administrative 881,000 509,000 1,390,000 956,000 461,000 1,417,000 Research and development 293,000 – 293,000 336,000 – 336,000 Income (loss) from operations $ (578,000 ) $ 54,000 (524,000 ) $ (552,000 ) $ 109,000 (443,000 ) Other: Interest expense (5,000 ) (5,000 ) Other (expense) income 72,000 (10,000 ) Gain (loss) disposal of assets (2,000 ) – Income taxes (10,000 ) (8,000 ) Net loss $ (469,000 ) $ (466,000 )
Segment reporting by similar products and services	For the Three Months Ended June 30, For the Nine Months Ended June 30, 2016 2015 2016 2015 By similar products and services: Revenues: Products: Laser equipment and accessories $ 76,000 $ 413,000 $ 634,000 $ 819,000 Delivery and disposable devices 392,000 394,000 1,280,000 1,241,000 Service and rental 638,000 675,000 1,862,000 1,967,000 Total $ 1,106,000 $ 1,482,000 $ 3,776,000 $ 4,027,000 Gross profit Products: Laser equipment and accessories $ (6,000 ) $ 105,000 $ 28,000 $ 140,000 Delivery and disposable devices 209,000 164,000 568,000 600,000 Service and rental 250,000 218,000 563,000 570,000 Total $ 453,000 $ 487,000 $ 1,159,000 $ 1,310,000
Segment reporting by geographic region	Three Months Three Months Nine Months Nine Months Ended Ended Ended Ended Asia $ 174,000 $ 448,000 $ 902,000 $ 929,000 Europe 6,000 14,000 23,000 66,000 Latin America 2,000 44,000 49,000 132,000 Middle East – – – 2,000 Australia 24,000 11,000 65,000 24,000 $ 206,000 $ 517,000 $ 1,039,000 $ 1,153,000

1. Summary of Significant Acc16

1. Summary of Significant Accounting Policies (Details Narrative) - USD ($)	3 Months Ended	9 Months Ended
	Jun. 30, 2016	Jun. 30, 2016	Jun. 30, 2015	Sep. 30, 2015	Sep. 30, 2014
Accounting Policies [Abstract]
Working capital	$ 1,614,000	$ 1,614,000		$ 1,969,000
Cash	239,000	239,000	$ 538,000	$ 365,000	$ 1,292,000
Stock-based compensation		7,000	$ 43,000
Unrecognized compensation cost	$ 13,000	$ 13,000
Unrecognized compensation cost, period for recognition	24 months
Outstanding options excluded from the diluted net loss per share	1,572,000	1,697,000

2. Composition Of Certain Bal17

2. Composition Of Certain Balance Sheet Captions (Details-Inventories) - USD ($)	Jun. 30, 2016	Sep. 30, 2015
Inventories, net of reserves, consist of the following
Raw materials	$ 557,000	$ 616,000
Work-in-process	177,000	288,000
Finished goods	841,000	904,000
Total Inventory	$ 1,575,000	$ 1,808,000

2. Composition Of Certain Bal18

2. Composition Of Certain Balance Sheet Captions (Details-Other Current Assets) - USD ($)	Jun. 30, 2016	Sep. 30, 2015
Other current assets consist of the following
Prepaid insurance	$ 80,000	$ 49,000
Prepaid income tax	3,000	3,000
Prepaid rent	15,000	13,000
Short-term deposits	7,000	7,000
Other	26,000	24,000
Total other current assets	$ 131,000	$ 96,000

2. Composition Of Certain Bal19

2. Composition Of Certain Balance Sheet Captions (Details-Property and Equipment) - USD ($)	Jun. 30, 2016	Sep. 30, 2015
Property and equipment consist of the following
Furniture and equipment	$ 3,478,000	$ 3,478,000
Leasehold improvements	62,000	62,000
Other	305,000	325,000
Property plant and equipment, gross	3,845,000	3,865,000
Less accumulated depreciation and amortization	(3,463,000)	(3,385,000)
Total property and equipment, net	$ 382,000	$ 480,000

2. Composition Of Certain Bal20

2. Composition Of Certain Balance Sheet Captions (Details-Accrued Expenses) - USD ($)	Jun. 30, 2016	Sep. 30, 2015
Accrued expenses consist of the following
Accrued vacation	$ 205,000	$ 203,000
Accrued salaries and wages	32,000	60,000
Accrued compensation	43,000	20,000
Accrued bonus	15,000	23,000
Sales and use tax	49,000	51,000
Customer deposits	0	30,000
Commissions	20,000	16,000
Other	18,000	23,000
Total accrued expenses	$ 382,000	$ 426,000

3. Note Payable and Capital L21

3. Note Payable and Capital Leases (Details) - USD ($)	9 Months Ended
	Sep. 30, 2016	Jun. 30, 2016	Sep. 30, 2015
Gross Capital Lease and Finance Agreements Issued		$ 74,000	$ 72,000
Less: current portion		(74,000)	(68,000)
Total portion long-term		0	4,000
Capital Lease 1 [Member]
Gross Capital Lease and Finance Agreements Issued		$ 15,000	47,000
Effective interest rate		8.41%
Maturity date		Oct. 31, 2016
Finance Agreement 1 [Member]
Gross Capital Lease and Finance Agreements Issued		$ 15,000	0
Effective interest rate		4.90%
Maturity date		Jan. 31, 2017
Finance Agreement 2 [Member]
Gross Capital Lease and Finance Agreements Issued		$ 0	25,000
Effective interest rate		3.35%
Maturity date		Mar. 31, 2016
Finance Agreement 3 [Member]
Gross Capital Lease and Finance Agreements Issued		$ 44,000	$ 0
Effective interest rate		3.35%
Maturity date	Mar. 31, 2017

3. Note Payable and Capital L22

3. Note Payable and Capital Leases (Details Narrative)	9 Months Ended
	Jun. 30, 2016USD ($)
Debt Disclosure [Abstract]
Lease expiration date	Apr. 30, 2019
Monthly rental payments year one	$ 8,754
Monthly rental payments year two	9,017
Monthly rental payments year three	$ 9,287

5. Segment Information (Details

5. Segment Information (Details-Income Statement) - USD ($)	3 Months Ended		9 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Revenue	$ 1,106,000	$ 1,482,000	$ 3,776,000	$ 4,027,000
Cost of sales	653,000	995,000	2,617,000	2,717,000
Gross profit	453,000	487,000	1,159,000	1,310,000
Expenses:
Selling, general and administrative	469,000	480,000	1,390,000	1,417,000
Research and development	100,000	86,000	293,000	336,000
Income (loss) from operations	(116,000)	(79,000)	(524,000)	(443,000)
Other:
Interest expense	(3,000)	(2,000)	(5,000)	(5,000)
Other (expense) income	3,000	(15,000)	72,000	(10,000)
Gain (loss) disposal of assets	(2,000)	0	(2,000)	0
Income taxes	(5,000)	(1,000)	(10,000)	(8,000)
Net loss	(123,000)	(97,000)	(469,000)	(466,000)
Products [Member]
Revenue	468,000	807,000	1,914,000	2,060,000
Cost of sales	265,000	538,000	1,318,000	1,320,000
Gross profit	203,000	269,000	596,000	740,000
Expenses:
Selling, general and administrative	294,000	327,000	881,000	956,000
Research and development	100,000	86,000	293,000	336,000
Income (loss) from operations	(191,000)	(144,000)	(578,000)	(552,000)
Service and rental [Member]
Revenue	638,000	675,000	1,862,000	1,967,000
Cost of sales	388,000	457,000	1,299,000	1,397,000
Gross profit	250,000	218,000	563,000	570,000
Expenses:
Selling, general and administrative	175,000	153,000	509,000	461,000
Research and development	0	0	0	0
Income (loss) from operations	$ 75,000	$ 65,000	$ 54,000	$ 109,000

5. Segment Information (Detai24

5. Segment Information (Details-Similar Products) - USD ($)	3 Months Ended		9 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Products:
Total Sales	$ 1,106,000	$ 1,482,000	$ 3,776,000	$ 4,027,000
Gross profit
Total gross profit	453,000	487,000	1,159,000	1,310,000
Laser equipment and accessories [Member]
Products:
Total Sales	76,000	413,000	634,000	819,000
Gross profit
Total gross profit	(6,000)	105,000	28,000	140,000
Delivery and disposable devices [Member]
Products:
Total Sales	392,000	394,000	1,280,000	1,241,000
Gross profit
Total gross profit	209,000	164,000	568,000	600,000
Service and rental [Member]
Products:
Total Sales	638,000	675,000	1,862,000	1,967,000
Gross profit
Total gross profit	$ 250,000	$ 218,000	$ 563,000	$ 570,000

5. Segment Information (Detai25

5. Segment Information (Details-Sales in Foreign Countries) - USD ($)	3 Months Ended		9 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Total Sales	$ 206,000	$ 517,000	$ 1,039,000	$ 1,153,000
Asia [Member]
Total Sales	174,000	448,000	902,000	929,000
Europe [Member]
Total Sales	6,000	14,000	23,000	66,000
Latin America [Member]
Total Sales	2,000	44,000	49,000	132,000
Middle East [Member]
Total Sales	0	0	0	2,000
Australia [Member]
Total Sales	$ 24,000	$ 11,000	$ 65,000	$ 24,000

5. Segment Information (Detai26

5. Segment Information (Details Narrative) - USD ($)	9 Months Ended
	Jun. 30, 2016	Sep. 30, 2015
Total segment assets	$ 3,298,000	$ 3,784,000
Decrease in assets	(645,000)
Decrease in cash	(299,000)
Decrease in inventory	(206,000)
Products [Member]
Total segment assets	1,833,000	2,478,000
Service and rental [Member]
Total segment assets	$ 1,443,000	$ 1,617,000

6. Related Party Transactions (

6. Related Party Transactions (Details Narrative)	3 Months Ended
	Jun. 30, 2016USD ($)
Related Party Transactions [Abstract]
Employee related expenses	$ 11,000