Going Concern and Liquidity (Notes)

6 Months Ended

Mar. 31, 2018

Risks and Uncertainties [Abstract]

Substantial Doubt about Going Concern [Text Block]

Going Concern and Liquidity

The accompanying financial statements have been prepared on a going concern basis which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future and, thus, do not include any adjustments relating to the recoverability and classification of assets and liabilities that may be necessary if the Company is unable to continue as a going concern. However, the Company's ability to continue as a going concern is dependent upon generating profitable operations in the future and obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due.

The Company continues to incur operating losses due to depressed revenue levels and ongoing strategic investments. Since 2012, the Company has made a significant investment in the development of a completely new, and strategically critical, video management system (VMS). The initial release of this product offering was launched in January 2017 and was followed up by system enhancements released in July 2017 and March 2018. The funding of this major development effort has contributed to the ongoing operating losses and depletion of cash reserves. Although the Company phased in material operating expense reductions over the course of the past several years, it intends to continue funding further development of its new VMS platform and will incur increasing sales and marketing costs to rebuild lost market channels and promote its new core product offering.

At March 31, 2018, the Company had $1.5 million of cash reserves and $700,000 of maximum borrowings available under its Credit Agreement, which is subject in part to a borrowing-base formula. Cash losses over the past several years have been financed by credit facility borrowings, the sale of the Company’s two principal operating facilities, ongoing management of working capital levels and, more recently, the Company's rights offering and related backstop funding discussed in Note 13 below. The Company expects to continue to draw on its credit facility to the extent available to finance its near term working capital needs.

Notwithstanding the recent cash infusion, the Company will likely require additional financing over the next twelve months to implement its planned business objectives and strategies. Accordingly, and in light of the Company's historic and continuing losses, there is substantial doubt about the Company's ability to continue as a going concern.