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Detail of Certain Balance Sheet Accounts

9 Months Ended

Jun. 30, 2011

Detail of Certain Balance Sheet Accounts

Detail of Certain Balance Sheet Accounts

2. Detail of Certain Balance Sheet Accounts

Inventories

Inventories are stated at the lower of cost (first-in, first-out) or market, net of reserve for excess and obsolete inventory, and consist of the following:

	June 30,		September 30,
	2011		2010
Raw materials	$	2,708,236	$	2,725,268
Work-in-process	330,871		236,060
Finished goods	1,337,871		1,695,064
	$	4,376,978	$	4,656,392

Prepaid expenses and other current assets

Prepaid expenses and other current assets consist of the following:

	June 30,		September 30,
	2011		2010

Revenue recognized not yet invoiced	$	254,085	$	420,429
Prepaid insurance	149,483		298,308
Deferred engineering costs	14,014		48,237
Income tax asset	—		29,066
Other	231,082		186,728
	$	648,664	$	982,768

Property and equipment

Property and equipment, net consists of the following balances:

	June 30,			September 30,
	2011			2010

Computer equipment	$	2,016,023		$	1,968,365
Corporate airplane	$	3,082,186		3,082,186
Furniture and office equipment	$	1,074,279		1,077,698
Manufacturing facility	$	5,599,931		5,576,466
Equipment	$	4,198,511		4,070,171
Land	$	1,021,245		1,021,245
	16,992,175			16,796,131
Less: Accumulated depreciation and amortization	(9,434,796		)	(9,034,593		)
	$	7,557,379		$	7,761,538

Depreciation and amortization related to property and equipment was approximately $128,000 and $179,000 for the three months ended June 30, 2011 and 2010, respectively.

Depreciation and amortization related to property and equipment was approximately $400,000 and $589,000 for the nine months ended June 30, 2011 and 2010, respectively.

Other assets

Other assets consist of the following:

	June 30,		September 30,
	2011		2010
Intangible assets, net of accumulated amortization
of $356,720 and $257,850 at June 30, 2011 and September 30, 2010	$	243,517	$	221,150
	$	243,517	$	221,150

Intangible assets consist of licensing and certification rights which are amortized over a defined number of units. No impairment charge was recorded in the nine months ended June 30, 2011.

Total intangible amortization expense was approximately $36,472 and $23,190 for the three months ended June 30, 2011 and 2010, respectively. Total amortization expense for the nine months ended June 30, 2011 and 2010 was $98,870 and $43,140, respectively. Because the intangible assets are being amortized over a defined number of units, the future amortization expense over the next five years cannot be determined at this time.

Accrued expenses

Accrued expenses consist of the following:

	June 30,		September 30,
	2011		2010

Warranty	$	949,931	$	933,270
Salary, benefits and payroll taxes	410,893		552,646
Professional fees	390,704		303,139
Income taxes payable	18,235		—
Materials on order	26,770		18,772
Other	492,442		777,233

	$	2,288,975	$	2,585,060

The Company provides for the estimated cost of product warranties at the time revenue is recognized. Warranty cost is recorded as cost of sales and the reserve balance is recorded as an accrued expense in the financial statements. While the Company engages in extensive product quality programs and processes, the Company’s warranty obligation is affected by product failure rates and the related material, labor and delivery costs incurred in correcting a product failure. If actual product failure rates, material or labor costs differ from the Company’s estimates, further revisions to the estimated warranty liability would be required.

Warranty cost and accrual information for the three months ended June 30, 2011 is highlighted below:

Warranty Accrual at March 31, 2011	$	946,493
Accrued expense for the three months ended June 30, 2011	56,257
Warranty cost for the three months ended June 30, 2011	(52,819		)
Warranty Accrual at June 30, 2011	$	949,931

Warranty cost and accrual information for the nine months ended June 30, 2011 is highlighted below:

Warranty Accrual at September 30, 2010	$	933,270
Accrued expense for the nine months ended June 30, 2011	195,581
Warranty cost for the nine months ended June 30, 2011	(178,920		)
Warranty Accrual at June 30, 2011	$	949,931