SHAREHOLDERS' EQUITY

9 Months Ended

Jun. 30, 2015

Stockholders' Equity Note [Abstract]

SHAREHOLDERS' EQUITY

NOTE 4 SHAREHOLDERS’ EQUITY

6% Senior Convertible Preferred Stock

In the event of a liquidation (or deemed liquidation, as described below) of the Company, the holders of the Company’s 6% Senior Convertible Preferred Stock, par value $0.001 per share (“Convertible Preferred Stock”), shall receive in preference to the holders of common stock and any junior securities of the Company an amount (the “Liquidation Preference”) equal to (i) $1.965 (the “Original Issue Price”) per each outstanding share of Convertible Preferred Stock (subject to adjustment upon the occurrence of certain customary events), plus (ii) any accrued but unpaid dividends. A Change of Control of the Company (as defined in the Certificate of Amendment) will be treated as a liquidation at the option of the holders of a majority of the Convertible Preferred Stock, provided that the amount paid to holders of Convertible Preferred Stock in such event will be equal to 101% of the Original Issue Price, plus accrued but unpaid dividends.

Dividends on the Convertible Preferred Stock were payable, on a cumulative basis, in cash, at the rate per annum of 6% of the Liquidation Preference (as defined below) and were payable quarterly, in arrears, on each March 31, June 30, September 30 and December 31, commencing on September 30, 2013. The Company was prohibited from paying any dividend with respect to shares of common stock or other junior securities in any quarter unless full dividends were paid on the Convertible Preferred Stock in such quarter.

At the December 30, 2014 Annual Meeting, the shareholder vote resulted in the turnover of a majority of the Board members, which represented a Change of Control pursuant to the terms of the Convertible Preferred Stock. On December 31, 2014, the Company determined to recognize the balance of the accretion and bring the Convertible Preferred Stock carrying value up to its redemption value due to the likelihood of the holders requesting redemption. On January 9, 2015, the Company received a notice of deemed liquidation from a majority of the outstanding Convertible Preferred Stockholders in which they requested redemption of their Convertible Preferred Stock. On February 23, 2015 the Company paid an aggregate $1,287,737 to the Convertible Preferred Stockholders, in order to redeem all of the outstanding shares of Convertible Preferred Stock.

Dividends on the Convertible Preferred Stock totaled approximately $0 and $ 19,000 for each of the three months ended June 30, 2015 and 2014, respectively, and totaled approximately $21,000 and $ 57,000 for the nine months ended June 30, 2015 and 2014, respectively. These dividends, in addition to the accretion, totaled approximately $0 and $48,000 for the three months ended June 30, 2015 and 2014, respectively, and $476,000 and $145,000 for the nine months ended June 30, 2015 and 2014, respectively. As of June 30, 2015 and September 30, 2014, the carrying value of the Convertible Preferred Stock was $0 and approximately $833,000, respectively, and is included on the Company’s condensed consolidated balance sheets as temporary equity.

Stock Repurchase

In September 2002 and January 2004, the Board authorized the repurchase of up to an aggregate of 486,200 shares of outstanding common stock. Under those authorizations, through June 30, 2015, the Company repurchased an aggregate of 223,614 shares at a cost of approximately $485,000. In November 2014, the Company repurchased and retired an aggregate of 10,340 shares of its outstanding restricted common stock at a cost of approximately $12,000, in connection with the vesting of employee restricted stock awards, wherein certain employees surrendered a portion of their award in order to fund certain tax withholding obligations.

Retirement of Treasury Stock

On December 5, 2014, the Board of Directors approved the retirement of 706,410 shares of existing treasury stock.

Changes in Shareholders’ Equity

Changes in shareholders’ equity for the nine months ended June 30, 2015 are summarized below:

																			Accumulated
							Additional												Other
	Common Stock						Paid-In			Treasury Stock						Accumulated			Comprehensive
	Shares			Amount			Capital			Shares			Amount			Deficit			Loss			Total
Balance - September 30, 2014		9,159,796		$	91,598		$	18,747,371			706,410		$	(1,260,057	)	$	(8,371,806	)	$	(20,411	)	$	9,186,695
Restricted stock award issuances		290,000			2,900			(2,900	)		-			-			-			-			-
Restricted stock award forfeitures		(126,291	)		(1,263	)		1,263			-			-			-			-			-
Restricted stock repurchased and retired		(10,340	)		(103	)		(12,096	)		-			-			-			-			(12,199	)
Treasury stock retired		(706,410	)		(7,064	)		(1,252,993	)		(706,410	)		1,260,057			-			-			-
Share-based compensation		-			-			3,065			-			-			-			-			3,065
Preferred stock dividends		-			-			-			-			-			(21,208	)		-			(21,208	)
Preferred stock accretion		-			-			-			-			-			(454,372	)		-			(454,372	)
Foreign currency translation		-			-			-			-			-			-			(615	)		(615	)
Net loss		-			-			-			-			-			(1,694,379	)		-			(1,694,379	)
Balance - June 30, 2015		8,606,755		$	86,068		$	17,483,710			-		$	-		$	(10,541,765	)	$	(21,026	)	$	7,006,987