Note 9. Segment Information

3 Months Ended

Jun. 30, 2011

Segment Reporting Disclosure [Text Block]

Note 9.  Segment Information

We have two reportable segments, medical and industrial. Each of these operating segments has unique characteristics.

Our medical segment designs, manufactures and sells our advanced line of endoscopy-based products, including our state-of-the-art flexible endoscopes, and our Slide-On EndoSheath technology referred to as a sheath or EndoSheath disposable, for a variety of specialties and markets.

Our industrial segment, through our wholly-owned subsidiary Machida, designs, manufactures, and sells borescopes to a variety of users, primarily in the aircraft engine manufacturing and aircraft engine maintenance industries. A borescope is an instrument that uses optical fibers for the visual inspection of narrow cavities.  Our borescopes are used to inspect aircraft engines, casting parts and ground turbines, among other items.

Management evaluates the revenue and profitability performance of each of our product lines to make operating and strategic decisions. We have no intersegment revenue.

The following table presents key financial highlights, by reportable segments:

Three months ended June 30,	Medical			Industrial			Adjustments *			Consolidated
2011
Net sales	$	3,105		$	651		$	-		$	3,756
Gross profit		900			228			-			1,128
Operating loss		(2,362	)		(129	)		-			(2,491	)
Interest expense, net		(94	)		-			-			(94	)
Depreciation and amortization		178			11			-			189
Stock-based compensation expense		433			41			-			474
Total assets		16,684			1,344			(1,822	)		16,206
Expenditures for fixed assets		76			-			-			76
2010
Net sales	$	2,119		$	513		$	-		$	2,632
Gross profit		522			167			-			689
Operating loss		(2,300	)		(87	)		-			(2,387	)
Interest expense, net		(53	)		-			-			(53	)
Depreciation and amortization		185			4			-			189
Stock-based compensation expense		352			40			-			392
Total assets		10,927			2,297			(2,011	)		11,213
Expenditures for fixed assets		10			-			-			10
	June 30,
* Adjustments		2011			2010
Intercompany eliminations	$	(1,136	)	$	(1,239	)
Investment in subsidiaries		(686	)		(772	)
Total adjustments	$	(1,822	)	$	(2,011	)

The following table presents the reconciliation to loss before provision for income taxes for the three months ended June 30, 2011 and 2010:

	Three Months Ended
	June 30,
Reconciliation to loss before provision for income taxes:	2011			2010
Operating loss	$	(2,491	)	$	(2,387	)
Interest expense, net		(94	)		(53	)
Debt cost expense		(41	)		(27	)
Other, net		(1	)		1
Loss before provision for income taxes	$	(2,627	)	$	(2,466	)