3.	Inventories

Inventories are valued at the lower of cost or market using the first in, first out (FIFO) method and consist of the following:

	November 25, 2011 (unaudited)		February 25, 2011

Raw materials	$	-	$	-
Work in process		5,145		3,919
Finished goods		444		96
	$	5,589	$	4,015

Inventory is presented net of an allowance for obsolescence of $1,299 (raw material $81 and work in process $1,218), and $1,283 (raw material $133 and work in process $1,150) at November 25, 2011 and February 25, 2011, respectively.

In accordance with United States generally accepted accounting principles, the Company may capitalize into property, plant, and equipment certain costs of simulation equipment. This equipment may be used to provide training or as a demonstration device to market the technology, and may be sold as a product if appropriate. Upon receipt of a contract or contracts for products which are based on this technology, such costs will be transferred initially into inventory and subsequently charged to the cost of sales for that particular contract as manufacturing costs.