Note 3 - Inventories

12 Months Ended

Jun. 30, 2012

Note 3 – Inventories

Inventories consist of the following:

	June 30,
	2012			2011
	(In thousands)
Raw materials	$	3,961		$	4,312
Finished goods		2,235			1,804
Subtotal		6,196			6,116
Less: Inventory reserve		(1,721	)		(443	)
	$	4,475		$	5,673

The Company has evaluated its manufacturing operations, inventory, and facility utilization and implemented a restructuring plan to reduce costs in an effort to return to consistent profitability. The Company streamlined its product offerings by recognizing inventory reserves on the ten to fifteen year TLS and RLS product lines that were experiencing declining revenue, competitive pricing pressures, and high manufacturing costs with older generation technology, preventing it from competing effectively. By removing these product lines, the Company shifted its focus on the new technologically competitive rack mount and enterprise level product lines. A full inventory reserve of approximately $900,000 was taken in fiscal 2012 on the older generation TLS and RLS product lines including finished goods, raw materials, drives and work in process.

- Definition

The entire disclosure for inventory. This may include, but is not limited to, the basis of stating inventory, the method of determining inventory cost, the major classes of inventory, and the nature of the cost elements included in inventory. If inventory is stated above cost, accrued net losses on firm purchase commitments for inventory and losses resulting from valuing inventory at the lower-of-cost-or-market may also be included. For LIFO inventory, may disclose the amount and basis for determining the excess of replacement or current cost over stated LIFO value and the effects of a LIFO quantities liquidation that impacts net income.

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