Inotiv (NOTV) 10-Q 14 Feb 17 2017 Q1 Quarterly report Financial data

Document And Entity Information

Document And Entity Information - shares	3 Months Ended
	Dec. 31, 2016	Feb. 09, 2017
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Dec. 31, 2016
Document Fiscal Year Focus	2,017
Document Fiscal Period Focus	Q1
Entity Registrant Name	BIOANALYTICAL SYSTEMS INC
Entity Central Index Key	720,154
Current Fiscal Year End Date	--09-30
Entity Filer Category	Smaller Reporting Company
Trading Symbol	BASI
Entity Common Stock, Shares Outstanding		8,107,677

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Dec. 31, 2016	Sep. 30, 2016
Current assets:
Cash and cash equivalents	$ 287	$ 386
Accounts receivable
Trade, net of allowance of $565 at December 31, 2016 and $565 at September 30, 2016	2,450	1,649
Unbilled revenues and other	404	591
Inventories, net	1,367	1,453
Prepaid expenses	621	798
Total current assets	5,129	4,877
Property and equipment, net	15,867	16,136
Lease rent receivable	60	51
Goodwill	38	38
Other assets	26	27
Total assets	21,120	21,129
Current liabilities:
Accounts payable	3,046	2,965
Restructuring liability	1,117	1,117
Accrued expenses	1,306	1,089
Customer advances	3,765	3,114
Income taxes payable	14	13
Revolving line of credit	597	1,358
Fair value of interest rate swap	13	35
Current portion of capital lease obligation	124	126
Term loan, net of debt issuance costs	3,465	3,656
Total current liabilities	13,447	13,473
Capital lease obligation, less current portion	166	198
Total liabilities	13,613	13,671
Shareholders’ equity:
Preferred shares, authorized 1,000,000 shares, no par value: 1,185 Series A shares at $1,000 stated value issued and outstanding at December 31, 2016 and September 30, 2016	1,185	1,185
Common shares, no par value: Authorized 19,000,000 shares; 8,107,558 issued and outstanding at December 31, 2016 and September 30, 2016, respectively	1,989	1,989
Additional paid-in capital	21,250	21,240
Accumulated deficit	(16,904)	(16,921)
Accumulated other comprehensive (loss) income	(13)	(35)
Total shareholders’ equity	7,507	7,458
Total liabilities and shareholders’ equity	$ 21,120	$ 21,129

CONDENSED CONSOLIDATED BALANCE3

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2016	Sep. 30, 2016
Allowance for Doubtful Accounts Receivable, Current	$ 565	$ 565
Common Stock, No Par Value	$ 0	$ 0
Common Stock, Shares Authorized	19,000,000	19,000,000
Common Stock, Shares, Issued	8,107,558	8,107,558
Common Stock, Shares, Outstanding	8,107,558	8,107,558
Series A Preferred Stock [Member]
Preferred Stock, Shares Authorized	1,000,000	1,000,000
Preferred Stock, No Par Value	$ 0	$ 0
Preferred Stock, Shares Issued	1,185	1,185
Preferred Stock, Shares Outstanding	1,185	1,185
Preferred Stock, Par or Stated Value Per Share	$ 1,000	$ 1,000

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Service revenue	$ 5,264	$ 4,055
Product revenue	910	840
Total revenue	6,174	4,895
Cost of service revenue	3,750	3,339
Cost of product revenue	565	572
Total cost of revenue	4,315	3,911
Gross profit	1,859	984
Operating expenses:
Selling	336	307
Research and development	104	157
General and administrative	1,325	1,049
Total operating expenses	1,765	1,513
Operating income (loss)	94	(529)
Interest expense	(76)	(66)
Decrease in fair value of warrant liability	0	89
Other income	1	1
Income (loss) before income taxes	19	(505)
Income taxes	2	1
Net income (loss)	17	(506)
Other comprehensive income (loss)	21	(80)
Comprehensive income (loss)	$ 38	$ (586)
Other comprehensive (loss) income :
Basic net income (loss) per share	$ 0	$ (0.06)
Diluted net income (loss) per share	$ 0	$ (0.06)
Weighted common shares outstanding:
Basic	8,107	8,107
Diluted	8,699	8,107

CONDENSED CONSOLIDATED STATEME5

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Operating activities:
Net income (loss)	$ 17	$ (506)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	396	342
Decrease in fair value of warrant liability	0	(89)
Stock based compensation expense	10	15
(Gain) Loss on sale of property and equipment	(5)	11
Provision for doubtful accounts	0	(39)
Changes in operating assets and liabilities:
Accounts receivable	(623)	1,474
Inventories	86	32
Income tax accruals	1	(22)
Prepaid expenses and other assets	178	351
Accounts payable	81	(499)
Accrued expenses	217	(728)
Customer advances	651	(690)
Net cash provided (used) by operating activities	1,009	(348)
Investing activities:
Capital expenditures	(105)	(166)
Proceeds from sale of equipment	5	0
Net cash used by investing activities	(100)	(166)
Financing activities:
Proceeds from exercise of stock options	0	4
Payments of long-term debt	(196)	(196)
Payments of debt-issuance costs	(17)	0
Payments on revolving line of credit	(3,721)	(2,473)
Borrowings on revolving line of credit	2,960	3,211
Payments on capital lease obligations	(34)	(67)
Net cash (used) provided by financing activities	(1,008)	479
Net decrease in cash and cash equivalents	(99)	(35)
Cash and cash equivalents at beginning of period	386	438
Cash and cash equivalents at end of period	287	403
Supplemental disclosure of non-cash financing activities:
Cash paid for interest	$ 57	$ 58

DESCRIPTION OF THE BUSINESS AND

DESCRIPTION OF THE BUSINESS AND BASIS OF PRESENTATION	3 Months Ended
	Dec. 31, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]
DESCRIPTION OF THE BUSINESS AND BASIS OF PRESENTATION	DESCRIPTION OF THE BUSINESS AND BASIS OF PRESENTATION Bioanalytical Systems, Inc. and its subsidiaries (“We,” the “Company”, “Our” or “BASi”) engage in contract laboratory research services and other services related to pharmaceutical development. We also manufacture scientific instruments for life sciences research, which we sell with related software for use in industrial, governmental and academic laboratories. Our customers are located throughout the world. We have prepared the accompanying unaudited interim condensed consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles (“GAAP”), and therefore should be read in conjunction with our audited consolidated financial statements, and the notes thereto, included in the Company’s annual report on Form 10-K for the year ended September 30, 2016. Certain amounts in the fiscal 2016 consolidated financial statements have been reclassified to conform to the fiscal 2017 presentation without affecting previously reported net income or stockholders’ equity. In the opinion of management, the condensed consolidated financial statements for the three months ended December 31, 2016 and 2015 include all adjustments which are necessary for a fair presentation of the results of the interim periods and of our financial position at December 31, 2016. The results of operations for the three months ended December 31, 2016 may not be indicative of the results for the year ending September 30, 2017. During fiscal 2016 and throughout the first quarter of fiscal 2017 we have operated either in default of, or under forbearance arrangements with respect to, our credit agreements with Huntington National Bank (“Huntington Bank”). Effective January 31, 2017, we entered into a Fifth Forbearance Agreement and Sixth Amendment to Credit Agreement (the “Fifth Forbearance Agreement”) with Huntington Bank. Pursuant to the Fifth Forbearance Agreement, Huntington Bank agreed to forbear from exercising its rights and remedies under the Company’s credit facility and from terminating the Company’s related swap agreement with respect to the Company’s non-compliance with applicable financial covenants under the credit agreement and any further non-compliance with such covenants until July 31, 2017. If we are unable to refinance our indebtedness before the end of the forbearance period, and were Huntington Bank to demand payment on the outstanding debt under our credit arrangements, we would have insufficient funds to satisfy that obligation. In such case, in addition to the ability to immediately demand payment of the outstanding debt under our term loan and revolving loan, Huntington Bank would have the right to exercise its security interest, to take possession of or sell the underlying collateral, to increase interest accruing on the debt, to refrain from making additional advances under the revolving loan, and to terminate our interest rate swap. We have classified the entire term loan payable to Huntington Bank and the interest rate swap agreement with Huntington Bank as current liabilities of the Company.

MANAGEMENT'S PLAN

MANAGEMENT'S PLAN	3 Months Ended
	Dec. 31, 2016
Managements Plan [Abstract]
MANAGEMENT'S PLAN	MANAGEMENT’S PLAN The Company’s condensed consolidated financial statements were prepared on a going concern basis, which assumes continuity of operations and realization of assets and satisfaction of liabilities in the ordinary course of business. The financial statements do not include any adjustments to reflect possible future effects on the recoverability and classification of assets and liabilities that may result in the event the Company’s plans, including plans to rectify our liquidity issues, are not successful. As noted above, during fiscal 2016 and the first quarter of fiscal 2017, we have operated either in default of, or under forbearance arrangements with respect to, our credit agreements with Huntington National Bank. During recent periods, we have experienced depressed revenues as compared to historical levels. A significant portion of our costs are fixed. Thus, decreases in revenues lead to decreased margins, which in turn negatively impacts cash provided from operating activities. To supplement cash from operating activities, we have recently relied, and may in the future rely, on our cash balance and supplemental funds from our credit arrangements. The Company’s liquidity circumstances, including the potential inability to find replacement financing, raise substantial doubt about the Company’s ability to continue as a going concern, and management has and will continue to take measures to mitigate that possibility. We cannot provide assurance that we will be able to satisfy our cash requirements from cash provided by operating activities on a go-forward basis. If our working capital needs and capital expenditure requirements exceed cash provided by operating activities, then we may again look to our cash balance and committed credit lines, if any, to satisfy those needs. The term of our Fifth Forbearance Agreement ends on July 31, 2017, after which, or sooner should we default on the Fifth Forbearance Agreement, Huntington Bank may refrain from making additional advances under our revolving loan. In addition, alternative financing sources may hesitate to enter into credit arrangements with us due in part to real and/or perceived difficulties in achieving revenue growth. The Company’s Board of Directors has directed management to seek alternatives that will enable the Company to repay its indebtedness to Huntington Bank in full upon the expiration of the forbearance period. The Company continues to pursue liquidity alternatives, including but not limited to, replacement financing, the potential disposition of certain of its assets and the possible sale of its West Lafayette facilities. Management has been reviewing details of all current account management and marketing programs as well as all invoicing and top-line growth initiatives. Management also has been, and continues to be, actively engaged in more effectively controlling operating costs in the short-term as we strive for long term stabilization. We cannot provide assurance that we will be able to resolve our liquidity issues on satisfactory terms, or at all. As the Company manages the near term challenges to rectify the liquidity position, the entire team at BASi, including its current Management, remains focused on the Company’s core priorities including opportunities to refine the operations, capture more cost savings where appropriate and expanding our business with existing customers and adding new ones. We have taken steps to strengthen our leadership team. Similarly, the Board of Directors continues to weigh options for replacing the Chief Executive Officer. The performance in the first fiscal quarter of 2017 reflects a significant improvement in our reported revenue and profitability versus recent trends. We will continue to take steps to position the Company to deliver profitable growth as we address our liquidity position.

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION	3 Months Ended
	Dec. 31, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
STOCK-BASED COMPENSATION	STOCK-BASED COMPENSATION The Company’s 2008 Stock Option Plan (“the Plan”) is used to promote our long-term interests by providing a means of attracting and retaining officers, directors and key employees and aligning their interests with those of our shareholders. The Plan is described more fully in Note 10 in the Notes to the Consolidated Financial Statements in our Form 10-K for the year ended September 30, 2016. All options granted under the Plan had an exercise price equal to the market value of the underlying common shares on the date of grant. We expense the estimated fair value of stock options over the vesting periods of the grants. We recognize expense for awards subject to graded vesting using the straight-line attribution method, reduced for estimated forfeitures. Forfeitures are revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates and an adjustment is recognized at that time. The Compensation Committee may also issue non-qualified stock option grants with vesting periods different from the 2008 Plan. As of December 31, 2016, there are 15 10 15 Weighted- Weighted- Average Average Options Exercise Grant Date (shares) Price Fair Value Outstanding - October 1, 2016 262 $ 1.76 $ 1.39 Exercised — Granted — Terminated — Outstanding - December 31, 2016 262 $ 1.76 $ 1.39

INCOME (LOSS) PER SHARE

INCOME (LOSS) PER SHARE	3 Months Ended
	Dec. 31, 2016
Earnings Per Share [Abstract]
INCOME (LOSS) PER SHARE	4. INCOME (LOSS) PER SHARE We compute basic income (loss) per share using the weighted average number of common shares outstanding. The Company has two categories of dilutive potential common shares: the Series A preferred shares issued in May 2011 in connection with the registered direct offering and shares issuable upon exercise of options. We compute diluted earnings per share using the if-converted method for preferred stock and the treasury stock method for stock options, respectively. Shares issuable upon exercise of 209 Shares issuable upon exercise of 229 799 592 Three Months Ended December 31, 2016 2015 Basic net income (loss) per share: Net income (loss) applicable to common shareholders $ 17 $ (506) Weighted average common shares outstanding 8,107 8,107 Basic net income (loss) per share $ 0.00 $ (0.06) Diluted net income (loss) per share: Diluted net income (loss) applicable to common shareholders $ 17 $ (506) Weighted average common shares outstanding 8,107 8,107 Plus: Incremental shares from assumed conversions Series A preferred shares 592 — Diluted weighted average common shares outstanding 8,699 8,107 Diluted net income (loss) per share $ 0.00 $ (0.06)

INVENTORIES

INVENTORIES	3 Months Ended
	Dec. 31, 2016
Inventory Disclosure [Abstract]
INVENTORIES	5. INVENTORIES December 31, September 30, 2016 2016 Raw materials $ 1,123 $ 1,190 Work in progress 336 267 Finished goods 222 284 $ 1,681 $ 1,741 Obsolescence reserve (314) (288) $ 1,367 $ 1,453

SEGMENT INFORMATION

SEGMENT INFORMATION	3 Months Ended
	Dec. 31, 2016
Segment Reporting [Abstract]
SEGMENT INFORMATION	6. SEGMENT INFORMATION We operate in two principal segments - research services and research products. Our Services segment provides research and development support on a contract basis directly to pharmaceutical companies. Our Products segment provides liquid chromatography, electrochemical and physiological monitoring products to pharmaceutical companies, universities, government research centers and medical research institutions. Our accounting policies in these segments are the same as those described in the summary of significant accounting policies found in Note 2 to Consolidated Financial Statements in our annual report on Form 10-K for the year ended September 30, 2016. Three Months Ended December 31, 2016 2015 Revenue: Service $ 5,264 $ 4,055 Product 910 840 $ 6,174 $ 4,895 Operating income (loss): Service $ 273 $ (322) Product (179) (207) $ 94 $ (529) Interest Expense (76) (66) Decrease in fair value of warrant liability — 89 Other income 1 1 Income (loss) before income taxes $ 19 $ (505)

INCOME TAXES

INCOME TAXES	3 Months Ended
	Dec. 31, 2016
Income Tax Disclosure [Abstract]
INCOME TAXES	INCOME TAXES We use the asset and liability method of accounting for income taxes. We recognize deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. We measure deferred tax assets and liabilities using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. We recognize the effect on deferred tax assets and liabilities of a change in tax rates in income in the period that includes the enactment date. We record valuation allowances based on a determination of the expected realization of tax assets. We recognize the tax benefit from an uncertain tax position only if it is more likely than not to be sustained upon examination based on the technical merits of the position. We measure the amount of the accrual for which an exposure exists as the largest amount of benefit determined on a cumulative probability basis that we believe is more likely than not to be realized upon ultimate settlement of the position. At December 31, 2016 and September 30, 2016, we had a $ 16 34 6.5 We record interest and penalties accrued in relation to uncertain income tax positions as a component of income tax expense. Any changes in the liability for uncertain tax positions would impact our effective tax rate. We do not expect the total amount of unrecognized tax benefits to significantly change in the next twelve months. We file income tax returns in the U.S. and several U.S. States. We remain subject to examination by taxing authorities in the jurisdictions in which we have filed returns for years after 2011.

DEBT

DEBT	3 Months Ended
	Dec. 31, 2016
Debt Disclosure [Abstract]
DEBT	8. DEBT Credit Facility On May 14, 2014, we entered into a Credit Agreement with Huntington Bank, which was subsequently amended on May 14, 2015 (“Agreement”). The Agreement includes both a term loan and a revolving loan and is secured by mortgages on our facilities in West Lafayette and Evansville, Indiana and liens on our personal property. As of December 31, 2015, we were not in compliance with certain financial covenants of the Agreement, and during fiscal 2016 and the first quarter of fiscal 2017 we operated either in default of, or under forbearance arrangements with respect to, the Agreement. On April 27, 2016, the Company entered into a Forbearance Agreement and Second Amendment to Credit Agreement (“Forbearance Agreement”) with Huntington Bank and on July 1, 2016, the Company entered into a Second Forbearance Agreement and Third Amendment to Credit Agreement (“Second Forbearance Agreement”) with Huntington Bank. As of June 30, 2016, the Company was not in compliance with an additional financial covenant under the Second Forbearance Agreement, resulting in termination of the forbearance period thereunder. On September 30, 2016, the Company entered into a Third Forbearance Agreement and Fourth Amendment to Credit Agreement with Huntington Bank (“Third Forbearance Agreement”), on October 31, 2016, the Company entered into a Fourth Forbearance Agreement and Fifth Amendment to Credit Agreement (“Fourth Forbearance Agreement”) and on January 31, 2017 the Company entered into a Fifth Forbearance Agreement and Sixth Amendment to Credit Agreement (“Fifth Forbearance Agreement”) with Huntington Bank. Subject to the conditions set forth in the Fifth Forbearance Agreement, Huntington Bank has agreed to continue to forbear from exercising its rights and remedies under the Agreement and from terminating the Company’s related swap agreement with respect to the Company’s non-compliance with applicable financial covenants under the Agreement and any further non-compliance with such covenants during a forbearance period ending July 31, 2017 and to continue to make advances under the Agreement. In exchange for Huntington Bank’s agreement to continue to forbear from exercising its rights and remedies under the Agreement, the Company has agreed to, among other things: (i) amend the maturity dates for the term and revolving loans under the Agreement to July 31, 2017, (ii) take commercially reasonable efforts to obtain funds sufficient to repay the indebtedness in full upon the expiration of the forbearance period, (iii) provide to Huntington Bank certain cash flow forecasts and other financial information, (iv) comply with a minimum cash flow covenant, (v) continue to engage the services of the Company’s financial consultant and cause the financial consultant to provide Huntington Bank such information regarding its efforts as Huntington Bank reasonably requests, and (vi) pay to Huntington Bank a forbearance fee in the amount of $ 227,000 27,000 100,000 The Fifth Forbearance Agreement provides for immediate termination of the forbearance period upon the occurrence of, among other events, the failure of the Company to perform, observe or comply with the terms of the Fifth Forbearance Agreement. The available remedies in the event of a default by the Company include among others, the ability to accelerate and immediately demand payment of the outstanding debt under our term loan and revolving loan, to exercise on the security interest, to take possession of or sell the underlying collateral, to refrain from making additional advances under the revolving loan, to increase interest accruing on the debt by five percent ( 5 The term loan bears interest at LIBOR plus 325 basis points 65 3,470 3,666 2,000 LIBOR plus 300 basis points .25 The revolving loan includes an annual clean-up provision that requires the Company to maintain a balance of not more than 20% of the maximum loan of $2,000 for a period of 30 days in any 12 month period while the revolving loan is outstanding. 2016 597 1,358 Were Huntington Bank to demand payment of the outstanding debt (whether at or, in the case of a default of the Fifth Forbearance Agreement, prior to the scheduled maturity of the loans on July 31, 2017 We incurred $ 134 94 41 10 17 For the three months ended December 31, 2016 and 2015, we amortized $ 21 7 5 10 Interest Rate Swap We entered into an interest rate swap agreement with respect to the above loans to fix the interest rate with respect to 60 5.0

RESTRUCTURING

RESTRUCTURING	3 Months Ended
	Dec. 31, 2016
Restructuring and Related Activities [Abstract]
RESTRUCTURING	9. RESTRUCTURING In March 2012, we announced a plan to restructure our bioanalytical laboratory operations. We consolidated our laboratory in McMinnville, Oregon into our 120,000 We reserved for lease payments at the cease use date for our UK facility and have considered free rent, sublease rentals and the number of days it would take to restore the space to its original condition prior to our improvements. In the first quarter of fiscal 2013, we began amortizing into general and administrative expense, equally through the cease use date, the estimated rent income of $ 200 1,000 Other costs of $ 117

FAIR VALUE OF FINANCIAL INSTRUM

FAIR VALUE OF FINANCIAL INSTRUMENTS	3 Months Ended
	Dec. 31, 2016
Fair Value Disclosures [Abstract]
FAIR VALUE OF FINANCIAL INSTRUMENTS	10. FAIR VALUE OF FINANCIAL INSTRUMENTS The provisions of the Fair Value Measurements and Disclosure Topic defines fair value, establishes a consistent framework for measuring fair value and provides the disclosure requirements about fair value measurements. This Topic also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s judgment about the assumptions market participants would use in pricing the asset or liability based on the best information available in the circumstances. The hierarchy is broken down into three levels based on the inputs as follows: • Level 1 – Valuations based on quoted prices for identical assets or liabilities in active markets that the Company has the ability to access. • Level 2 – Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly. • Level 3 – Valuations based on inputs that are unobservable and significant to the overall fair value measurement. In May 2011, we issued Class A and B Warrants that were measured at fair value on a recurring basis. We recorded these warrants as a liability determining the fair value at inception on May 11, 2011. Subsequent quarterly fair value measurements, using the Black Scholes model which is considered a level 2 measurement, were calculated with fair value changes charged to the statement of operations and comprehensive income (loss). The Class B Warrants expired in May 2012 and the liability was reduced to zero and the Class A Warrants expired in May 2016 and the liability was reduced to zero. In the first three months of fiscal 2016, the fair value of the Warrant liability decreased $ 89 The carrying amounts for cash and cash equivalents, accounts receivable, inventories, prepaid expenses and other assets, accounts payable and other accruals approximate their fair values because of their nature and respective duration. The carrying value of the note payable approximates fair value due to the variable nature of the interest rates. We use an interest rate swap, designated as a hedge, to fix 60 Level 1 Level 2 Level 3 Interest rate swap agreement $ - $ 13 $ - Level 1 Level 2 Level 3 Interest rate swap agreement $ - $ 35 $ -

NEW ACCOUNTING PRONOUNCEMENTS

NEW ACCOUNTING PRONOUNCEMENTS	3 Months Ended
	Dec. 31, 2016
Accounting Changes and Error Corrections [Abstract]
NEW ACCOUNTING PRONOUNCEMENTS	11. NEW ACCOUNTING PRONOUNCEMENTS Effective October 1, 2018, the Company will be required to adopt the new guidance of ASC Topic 606, Revenue from Contracts with Customers Revenue Recognition In August 2014, the FASB issued new guidance in Accounting Standards Update (ASU) No. 2014-15, “Presentation of Financial Statements – Going Concern (Subtopic 205-40).” The update provides guidance regarding management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. The Company adopted the guidance in the first quarter of fiscal 2017 and added the required disclosures to the footnotes. In November 2014, the FASB issued new guidance in ASU No. 2014-16, “Derivatives and Hedging (Topic 815) – Determining whether the host contract in a hybrid financial instrument issued in the form of a share is more akin to debt or to equity.” The guidance clarifies how current GAAP should be interpreted in subjectively evaluating the economic characteristics and risks of a host contract in a hybrid financial instrument that is issued in the form of a share. The Company adopted this guidance in the first quarter of fiscal 2017 with no material impact on our condensed consolidated financial statements. In February 2015, the FASB amended guidance in ASU No. 2015-02, “Consolidation Topic 810.” The guidance made certain targeted revisions to various area of the consolidation guidance, including the determination of the primary beneficiary of an entity, among others. The Company adopted the guidance in the first quarter of fiscal 2017 with no material impact on our condensed consolidated financial statements. In April 2015, the FASB amended the existing accounting standards for imputation of interest. The amendments require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by these amendments. The Company adopted the guidance in the first quarter of fiscal 2017, presenting the remaining debt issuance costs at December 31, 2016 and September 30, 2016 of $ 5 10 In July 2015, the FASB issued an amendment to the accounting guidance related to the measurement of inventory. The amendment revises inventory to be measured at lower of cost and net realizable value from lower of cost or market. Subsequent measurement is unchanged for inventory measured using last-in, first-out (LIFO) or the retail inventory method. This guidance will be effective prospectively for the first quarter of fiscal 2018, with early application permitted. We are currently evaluating the impact that this guidance will have on our consolidated financial statements. In February 2016, the FASB issued updated guidance on leases which, for operating leases, requires a lessee to recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, in its balance sheet. The standard also requires a lessee to recognize a single lease cost, calculated so that the cost of the lease is allocated over the lease term, on a generally straight-line basis. The guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with earlier application permitted. We are currently evaluating the effects of the adoption and have not yet determined the impact the revised guidance will have on our consolidated financial statements and related disclosures.

ARCHIVE REVENUES

ARCHIVE REVENUES	3 Months Ended
	Dec. 31, 2016
Archive Revenues [Abstract]
ARCHIVE REVENUES	12. ARCHIVE REVENUES In fiscal 2017, after a thorough review of its service contracts with customers, the Company instituted the practice of uniformly charging archive fees to clients where contracts allow. Historically, the Company’s practice of charging such fees was inconsistent. Archive revenues include fees for: (1) the handling of records (pickup and delivery of records, addition of new records, and retrieval and refiling of records); (2) secure destruction of records; (3) secure shredding of sensitive documents; (4) other services, including the scanning, imaging and document conversion of active and inactive physical and digital records; and (5) the secure storage of records in a designated environmentally monitored, limited-access location. In the first quarter of fiscal 2017, the Company began recognizing archive revenue when the following criteria are met: (1) persuasive evidence of a contractual arrangement; (2) the invoice price is fixed or determinable; (3) services have been rendered; and (4) collectability of the resulting receivable is reasonably assured. Archiving revenues for services rendered prior to calendar year 2017 are currently recognized when payments are received because collectability cannot be reasonably assured. Archive revenue recognized for the first quarter ended December 31, 2016 amounted to $ 8

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS	3 Months Ended
	Dec. 31, 2016
Subsequent Events [Abstract]
SUBSEQUENT EVENTS	13. SUBSEQUENT EVENTS On January 11, 2017, the Company entered into a Settlement Agreement and Release of All Claims (the “ Agreement Severance Period 200 Effective January 31, 2017, the Company entered into a Fifth Forbearance Agreement and Sixth Amendment to Credit Agreement (the “Fifth Forbearance Agreement”) with Huntington Bank. Pursuant to the Fifth Forbearance Agreement, Huntington Bank agreed to forbear from exercising its rights and remedies under the Company’s credit facility and from terminating the Company’s related swap agreement with respect to the Company’s non-compliance with applicable financial covenants under the Credit Agreement and any further non-compliance with such covenants during the Forbearance Period until July 31, 2017. Further details of the Fifth forbearance Agreement are included in Note 8.

STOCK-BASED COMPENSATION (Table

STOCK-BASED COMPENSATION (Tables)	3 Months Ended
	Dec. 31, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Schedule of Share-based Compensation, Stock Options, Activity	A summary of our stock option activity for the three months ended December 31, 2016 is as follows (in thousands except for share prices): Weighted- Weighted- Average Average Options Exercise Grant Date (shares) Price Fair Value Outstanding - October 1, 2016 262 $ 1.76 $ 1.39 Exercised — Granted — Terminated — Outstanding - December 31, 2016 262 $ 1.76 $ 1.39

INCOME (LOSS) PER SHARE (Tables

INCOME (LOSS) PER SHARE (Tables)	3 Months Ended
	Dec. 31, 2016
Earnings Per Share [Abstract]
Schedule of Earnings Per Share, Basic and Diluted	The following table reconciles our computation of basic income (loss) per share to diluted income (loss) per share: Three Months Ended December 31, 2016 2015 Basic net income (loss) per share: Net income (loss) applicable to common shareholders $ 17 $ (506) Weighted average common shares outstanding 8,107 8,107 Basic net income (loss) per share $ 0.00 $ (0.06) Diluted net income (loss) per share: Diluted net income (loss) applicable to common shareholders $ 17 $ (506) Weighted average common shares outstanding 8,107 8,107 Plus: Incremental shares from assumed conversions Series A preferred shares 592 — Diluted weighted average common shares outstanding 8,699 8,107 Diluted net income (loss) per share $ 0.00 $ (0.06)

INVENTORIES (Tables)

INVENTORIES (Tables)	3 Months Ended
	Dec. 31, 2016
Inventory Disclosure [Abstract]
Schedule of Inventory, Current	Inventories consisted of the following: December 31, September 30, 2016 2016 Raw materials $ 1,123 $ 1,190 Work in progress 336 267 Finished goods 222 284 $ 1,681 $ 1,741 Obsolescence reserve (314) (288) $ 1,367 $ 1,453

SEGMENT INFORMATION (Tables)

SEGMENT INFORMATION (Tables)	3 Months Ended
	Dec. 31, 2016
Segment Reporting [Abstract]
Schedule of Operating Segments	Three Months Ended December 31, 2016 2015 Revenue: Service $ 5,264 $ 4,055 Product 910 840 $ 6,174 $ 4,895 Operating income (loss): Service $ 273 $ (322) Product (179) (207) $ 94 $ (529) Interest Expense (76) (66) Decrease in fair value of warrant liability — 89 Other income 1 1 Income (loss) before income taxes $ 19 $ (505)

FAIR VALUE OF FINANCIAL INSTR23

FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)	3 Months Ended
	Dec. 31, 2016
Fair Value Disclosures [Abstract]
Schedule of Financial Liabilities Measured at Fair Value	Level 1 Level 2 Level 3 Interest rate swap agreement $ - $ 13 $ - Level 1 Level 2 Level 3 Interest rate swap agreement $ - $ 35 $ -

STOCK-BASED COMPENSATION (Detai

STOCK-BASED COMPENSATION (Details) - Employee Stock Option [Member] shares in Thousands	3 Months Ended
	Dec. 31, 2016$ / sharesshares
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Options (shares) Outstanding	262
Options (shares) Exercised	0
Options (shares) Granted	0
Options (shares) Terminated	0
Options (shares) Outstanding	262
Weighted-Average Exercise Price Outstanding | $ / shares	$ 1.76
Weighted-Average Exercise Price Outstanding | $ / shares	1.76
Weighted-Average Grant Date Fair Value Outstanding | $ / shares	1.39
Weighted-Average Grant Date Fair Value Outstanding | $ / shares	$ 1.39

STOCK-BASED COMPENSATION (Det25

STOCK-BASED COMPENSATION (Details Textual) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share Based Compensation Options Outstanding Issued Outside Of Stock Option Plan	15
Employee Stock Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Allocated Share-based Compensation Expense	$ 10	$ 15

INCOME (LOSS) PER SHARE (Detail

INCOME (LOSS) PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Basic net income (loss) per share:
Net income (loss) applicable to common shareholders	$ 17	$ (506)
Weighted average common shares outstanding	8,107	8,107
Basic net income (loss) per share	$ 0	$ (0.06)
Diluted net income (loss) per share:
Diluted net income (loss) applicable to common shareholders	$ 17	$ (506)
Weighted average common shares outstanding	8,107	8,107
Plus: Incremental shares from assumed conversions Series A preferred shares	592	0
Diluted weighted average common shares outstanding	8,699	8,107
Diluted net income (loss) per share	$ 0	$ (0.06)

INCOME (LOSS) PER SHARE (Deta27

INCOME (LOSS) PER SHARE (Details Textual) - shares shares in Thousands	3 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Series A Preferred Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount		592
Warrant [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount		799
Employee Stock Option [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	209	229

INVENTORIES (Details)

INVENTORIES (Details) - USD ($) $ in Thousands	Dec. 31, 2016	Sep. 30, 2016
Inventory [Line Items]
Raw materials	$ 1,123	$ 1,190
Work in progress	336	267
Finished goods	222	284
Gross inventories	1,681	1,741
Obsolescence reserve	(314)	(288)
Inventories	$ 1,367	$ 1,453

SEGMENT INFORMATION (Details)

SEGMENT INFORMATION (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Segment Reporting Information [Line Items]
Revenue:	$ 6,174	$ 4,895
Operating income (loss):	94	(529)
Interest Expense	(76)	(66)
Decrease in fair value of warrant liability	0	89
Other income	1	1
Income (loss) before income taxes	19	(505)
Service Segment [Member]
Segment Reporting Information [Line Items]
Revenue:	5,264	4,055
Operating income (loss):	273	(322)
Product Segment [Member]
Segment Reporting Information [Line Items]
Revenue:	910	840
Operating income (loss):	$ (179)	$ (207)

INCOME TAXES (Details Textual)

INCOME TAXES (Details Textual) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2016	Sep. 30, 2016
Income Taxes [Line Items]
Unrecognized Tax Benefits, Beginning Balance	$ 16	$ 16
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent	34.00%
Effective Income Tax Rate Reconciliation, Percent, Total	6.50%

DEBT (Details Textual)

DEBT (Details Textual) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended			12 Months Ended
	Nov. 01, 2016	Dec. 31, 2016	Jun. 30, 2016	Dec. 31, 2015	Sep. 30, 2016
Debt Instrument [Line Items]
Payments of Forbearance Fee		$ 27,000
Reduced Forbearance Fee, Indebtness Paid		100,000
Debt Instrument, Fee Amount		$ 227,000
Interest Rate Swap [Member]
Debt Instrument [Line Items]
Debt Instrument, Interest Rate, Stated Percentage		60.00%
Huntington Bank [Member]
Debt Instrument [Line Items]
Debt Instrument Maturity Date		Jul. 31, 2017
Debt Issuance Costs		$ 134
Deferred Finance Costs, Net		5			$ 10
Debt Instrument, Interest Rate, Increase (Decrease)					5.00%
Amortization Of Financing Costs	$ 17	$ 21	$ 41	$ 7	$ 10
Term Loan Payable To Bank [Member] | Interest Rate Swap [Member]
Debt Instrument [Line Items]
Debt Instrument, Interest Rate, Stated Percentage		5.00%
Credit Facility Term Loan [Member]
Debt Instrument [Line Items]
Debt Instrument, Description of Variable Rate Basis		LIBOR plus 325 basis points
Interest Expense, Debt		$ 94
Credit Facility Term Loan [Member] | Huntington Bank [Member]
Debt Instrument [Line Items]
Debt Instrument, Periodic Payment, Total		65
Long-term Debt, Gross		$ 3,470			3,666
Credit Facility Revolving Loan [Member]
Debt Instrument [Line Items]
Debt Instrument, Description of Variable Rate Basis		LIBOR plus 300 basis points
Line of Credit Facility, Commitment Fee Percentage		0.25%
Line of Credit Facility, Covenant Terms		The revolving loan includes an annual clean-up provision that requires the Company to maintain a balance of not more than 20% of the maximum loan of $2,000 for a period of 30 days in any 12 month period while the revolving loan is outstanding.
Credit Facility Revolving Loan [Member] | Huntington Bank [Member]
Debt Instrument [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity		$ 2,000
Long-term Line of Credit		$ 597			$ 1,358

RESTRUCTURING (Details Textual)

RESTRUCTURING (Details Textual) $ in Thousands	3 Months Ended
	Dec. 31, 2016USD ($)ft²	Dec. 31, 2013USD ($)	Sep. 30, 2016USD ($)
Restructuring Cost and Reserve [Line Items]
Area of property | ft² | ft²	120,000
Estimated rent income		$ 200
Other Restructuring Costs	$ 117
Lease Related Costs
Restructuring Cost and Reserve [Line Items]
Restructuring reserves	$ 1,000		$ 1,000

FAIR VALUE OF FINANCIAL INSTR33

FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) - Fair Value, Measurements, Recurring [Member] - Interest Rate Swap [Member] - USD ($) $ in Thousands	Dec. 31, 2016	Sep. 30, 2016
Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative Liability	$ 0	$ 0
Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative Liability	13	35
Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative Liability	$ 0	$ 0

FAIR VALUE OF FINANCIAL INSTR34

FAIR VALUE OF FINANCIAL INSTRUMENTS (Details Textual) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Percentage of Debt Hedged by Interest Rate Derivatives	60.00%
Fair Value Adjustment of Warrants	$ 0	$ (89)

NEW ACCOUNTING PRONOUNCEMENTS (

NEW ACCOUNTING PRONOUNCEMENTS (Details Textual) - USD ($) $ in Thousands	Dec. 31, 2016	Sep. 30, 2016
Regulated Entity, Other Assets, Noncurrent [Abstract]
Unamortized Debt Issuance Expense	$ 5	$ 10

ARCHIVE REVENUES (Details Textu

ARCHIVE REVENUES (Details Textual) $ in Thousands	3 Months Ended
	Dec. 31, 2016USD ($)
Deferred Revenue, Revenue Recognized	$ 8

SUBSEQUENT EVENTS (Details Text

SUBSEQUENT EVENTS (Details Textual) $ in Thousands	Dec. 31, 2016USD ($)
Subsequent Event [Line Items]
Accrued Employee Benefits	$ 200