WARRANTY RESERVE

3 Months Ended

Nov. 30, 2011

Notes to Financial Statements

WARRANTY RESERVE

The Company accrues for estimated future warranty costs associated with products sold. The Company provides a ten year limited warranty for defects in materials and workmanship. In order to maintain some existing dealer/distributor relationships, the Company elected to set up an initial reserve to estimate its future costs of honoring warranties on previous installations. In Fiscal year 2011, an initial reserve was created based on 100 installed units with estimated warranty costs of $1,000 per unit, creating an initial reserve of $100,000. The reserve is increased by the addition of two percent of all system and tower sales.

Warranty reserve activity for the nine months ended November 30, 2011 was as follows:

	Nine Months Ended November 30, 2011
Reserve balance, February 28, 2011	$	16,601
Added to reserve		38,485
Charges against reserve		(39,138	)
Reserve balance, November 30, 2011	$	15,948