NOTE 3 - Inventories

Inventories, net of reserves are valued at lower of cost (first-in, first-out method) or market. The Company regularly reviews parts and finished goods inventories on hand and, when necessary, records a provision for excess or obsolete inventories. The balance in these reserves was $3,517,000 and $3,392,000 as of December 31, 2013 and June 30, 2013, respectively. The Company also regularly reviews the period over which its inventories will be converted to sales. Any inventories expected to convert to sales beyond 12 months from the balance sheet date are classified as non-current.

Inventories, net of reserves consist of the following (in thousands):

	December 31, 2013		June 30, 2013

Component parts	$	13,775	$	13,112
Work-in-process		3,282		3,125
Finished product		5,957		5,670
	$	23,014	$	21,907
Classification of inventories, net of reserves:
Current	$	19,788	$	18,471
Non-current		3,226		3,436
	$	23,014	$	21,907