2.Supplemental Balance Sheet Disclosures

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,
	2013		2012
Raw materials	$	2,730,869	$	2,752,833
Work-in-process	1,153,838		555,495
Finished goods	154,171		493,219
	$	4,038,878	$	3,801,547

Prepaid expenses and other current assets

Prepaid expenses and other current assets consist of the following:

	June 30,		September 30,
	2013		2012

Revenue recognized not yet invoiced	$	5,188,095	$	1,595,436
Prepaid insurance	157,704		176,340
Other	214,921		259,868
	$	5,560,720	$	2,031,644

Revenue recognized not yet invoiced represents principally sales recorded under the percentage-of-completion method of accounting that have not been billed to customers in accordance with applicable contract terms.

Property and equipment

Property and equipment, net consists of the following balances:

	June 30,			September 30,
	2013			2012

Computer equipment	$	2,153,406		$	2,090,556
Corporate airplane	3,128,504			3,082,186
Furniture and office equipment	1,062,296			1,076,849
Manufacturing facility	5,631,001			5,605,616
Equipment	4,681,006			4,378,714
Land	1,021,245			1,021,245
	17,677,458			17,255,166
Less: Accumulated depreciation and amortization	(10,242,432		)	(10,040,788		)
	$	7,435,026		$	7,214,378

Depreciation and amortization related to property and equipment was approximately $113,000 and $111,000 for the three months ended June 30, 2013 and 2012, respectively. The corporate airplane is utilized primarily in support of product development and has been depreciated to its estimated salvage value.

Depreciation and amortization related to property and equipment was approximately $330,000 and $362,000 for the nine months ended June 30, 2013 and 2012, respectively.

Other assets

Other assets consist of the following:

	June 30,		September 30,
	2013		2012
Intangible assets, net of accumulated amortization of $477,637 and $441,637 at June 30, 2013 and September 30, 2012, respectively	$	122,600	$	158,600

Intangible assets consist of licensing and certification rights which are amortized over a defined number of units. No impairment charges were recorded in the nine months ended June 30, 2013 and 2012.

Total amortization expense was approximately $7,000 and $1,000 for the three months ended June 30, 2013 and 2012, respectively. Total amortization expense for the nine months ended June 30, 2013 and 2012 was $36,000 and $48,000, respectively. Because the intangible assets are being amortized over a defined number of units, the timing of future amortization expense is not determinable.

Accrued expenses

Accrued expenses consist of the following:

	June 30,		September 30,
	2013		2012

Warranty	$	689,173	$	850,499
Salary, benefits and payroll taxes	491,787		531,862
Professional fees	413,711		330,858
Income taxes payable	399,870		132,980
Materials on order	26,583		43,374
Other	1,660,358		834,239

	$	3,681,482	$	2,723,812

Other includes an accrual of $640,000 recorded for the estimated liability related to a legal matter described in Note 6 — Contingencies below.

	Three Months Ending			Nine Months Ending
	June 30, 2013			June 30, 2013

Warranty accrual, beginning of period	$	744,722		$	850,499
Accrued expense for the three and nine months ended June 30, 2013	(17,485		)	(42,302		)
Warranty cost for the three and nine months ended June 30, 2013	(38,064		)	(119,024		)
Warranty accrual, end of period	$	689,173		$	689,173