Note 11 - Going Concern and Management Plan	9 Months Ended
Jun. 30, 2011
Going Concern Note	11. Going Concern and Management Plan The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has suffered recurring losses from operations during the past several years due primarily to decreasing sales of existing product lines and a general economic downturn in all markets the Company serves. The resulting lower sales levels have reduced the Company's accounts receivable and cash balances, if this situation continues it may prevent the Company from generating sufficient cash flow to sustain its operations. The ability of the Company to continue as a going concern is dependent on improving the Company's profitability and cash flow and securing financing if needed. Management continues to review and revise its strategic plan and believes in the viability of its strategy to increase revenues and profitability through increased sales of existing products and the introduction of new products to the market place. Management believes that the actions presently being taken by the Company will provide the stimulus for it to continue as a going concern, however, because of the inherent uncertainties there can be no assurances to that effect. These consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. In December of 2008 management took steps to reduce non-direct product related expenses throughout the Company in response to the economic downturn and the uncertainty in the markets the Company serves. The steps included a substantial reduction in personnel, wage reductions for all personnel and expenditure restrictions in most aspects of the Company’s operations. Management took additional steps in April 2009 and made additional reductions in personnel throughout the Company due to the continued decline in sales to the markets the Company serves. For the three and the nine month periods ended June 30, 2011 and 2010 the Company achieved the savings that were anticipated from the cost cutting measures. The Company anticipates the cost cutting measures will continue for the fiscal year ended September 30, 2011. Management implemented additional expense reductions that were effective March 1, 2011 in the form of a substantial reduction in personnel and a wage reduction for the CEO. In addition, the Board of Directors reduced and then eliminated all Board of Directors fees until Company financial conditions improve. A senior sales executive resigned in March and management has determined not to replace that individual. These additional expense reductions are expected to save approximately $46,000 per month beginning in April 2011. The Company achieved the savings that were anticipated from this additional cost cutting measure during the three months ended June 30, 2011. Management also believes its strategy to improve revenue and profitability will aid results during the remainder of the fiscal year. In addition, the Company obtained a $250,000 unsecured line of credit from one of the Company's major shareholders. Management had recorded a valuation allowance on the entire balance of deferred tax assets at September 30, 2010 due to the continued losses during the past several years, the current economic uncertainties, the negative effects of the current economic crisis on all the Company's markets and concern that a more likely than not expiration of the Company's net operating loss and research and development credit carryforwards could occur before they can be used. In addition, management recorded a valuation allowance in the amount of $47,000 on the current quarter deferred taxes and $243,000 for the nine month period ended June 30, 2011.

Note 11 - Going Concern and Management Plan

9 Months Ended

Jun. 30, 2011

11. Going Concern and Management Plan

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has suffered recurring losses from operations during the past several years due primarily to decreasing sales of existing product lines and a general economic downturn in all markets the Company serves. The resulting lower sales levels have reduced the Company's accounts receivable and cash balances, if this situation continues it may prevent the Company from generating sufficient cash flow to sustain its operations.

The ability of the Company to continue as a going concern is dependent on improving the Company's profitability and cash flow and securing financing if needed. Management continues to review and revise its strategic plan and believes in the viability of its strategy to increase revenues and profitability through increased sales of existing products and the introduction of new products to the market place. Management believes that the actions presently being taken by the Company will provide the stimulus for it to continue as a going concern, however, because of the inherent uncertainties there can be no assurances to that effect. These consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

In December of 2008 management took steps to reduce non-direct product related expenses throughout the Company in response to the economic downturn and the uncertainty in the markets the Company serves. The steps included a substantial reduction in personnel, wage reductions for all personnel and expenditure restrictions in most aspects of the Company’s operations. Management took additional steps in April 2009 and made additional reductions in personnel throughout the Company due to the continued decline in sales to the markets the Company serves. For the three and the nine month periods ended June 30, 2011 and 2010 the Company achieved the savings that were anticipated from the cost cutting measures. The Company anticipates the cost cutting measures will continue for the fiscal year ended September 30, 2011.

Management implemented additional expense reductions that were effective March 1, 2011 in the form of a substantial reduction in personnel and a wage reduction for the CEO. In addition, the Board of Directors reduced and then eliminated all Board of Directors fees until Company financial conditions improve. A senior sales executive resigned in March and management has determined not to replace that individual. These additional expense reductions are expected to save approximately $46,000 per month beginning in April 2011. The Company achieved the savings that were anticipated from this additional cost cutting measure during the three months ended June 30, 2011. Management also believes its strategy to improve revenue and profitability will aid results during the remainder of the fiscal year. In addition, the Company obtained a $250,000 unsecured line of credit from one of the Company's major shareholders.

Management had recorded a valuation allowance on the entire balance of deferred tax assets at September 30, 2010 due to the continued losses during the past several years, the current economic uncertainties, the negative effects of the current economic crisis on all the Company's markets and concern that a more likely than not expiration of the Company's net operating loss and research and development credit carryforwards could occur before they can be used.

In addition, management recorded a valuation allowance in the amount of $47,000 on the current quarter deferred taxes and $243,000 for the nine month period ended June 30, 2011.