10.

MANAGEMENT'S PLAN

Our long-term strategic objective is to maximize the Company's intrinsic value per share. However, in response to our financial performance through the second quarter of fiscal 2012, we began to operate the business in a manner designed to place more emphasis on cash flow generation. Thus, our short-term tactical objective is to maximize free cash flow from operating activities.

During the first fiscal quarter of 2014, revenues improved 7.2% as did gross margin by 15.6% and operating income by 53.0% from the first fiscal quarter of 2013. We also generated $976 in cash from operations, maintained strict controls on expenditures and paid down our line of credit $1.2 million while meeting all of our other obligations.

We negotiated an amendment to our loans with Regions Bank, extending the maturity date to October 2014. We intend to refinance the amounts in lieu of making balloon payments for the remaining principal balances or sell the building in West Lafayette, Indiana. We listed for sale our headquarters facility in West Lafayette, Indiana with the intent to leaseback 80% of that square footage in which to continue our laboratory and manufacturing operations.

For the remainder of fiscal 2014, we will focus on growing our revenues and continue initiatives to control costs and improve productivity to further reduce our break-even point and achieve our financial objectives. We expect to see improvement in the volume of new bookings in fiscal 2014 along with the continued improvements in gross profit margins. We have debt service and lease obligations of approximately $1.7 million in fiscal 2014. Based on our expected revenue, the impact of the cost reductions implemented and restructuring activities during fiscal 2012, we project that we will have the liquidity required to meet our fiscal 2014 operations and debt obligations. Though our current line of credit expired on January 31, 2014, we were able to pay off the remaining balance while continuing to meet all other debt obligations and working capital requirements. Although management believes our cash flow from operations will generate sufficient cash flow for our debt obligations, working capital requirements and capital expenditures, we are pursuing alternatives to replace this line of credit.