Note 12 - Commitments And Contingencies

9 Months Ended

Mar. 31, 2013

Commitments and Contingencies Disclosure [Text Block]

NOTE 12 – COMMITMENTS AND CONTINGENCIES

As part of the acquisition of Virticus Corporation on March 19, 2012, a contingent earn-out liability of $877,000 was recorded based on the fair value of estimated earn-out payments. This liability is to be paid over a five year period, contingent upon reaching certain sales in each year over the five year period (fiscal year 2013 through fiscal year 2017). In December 2012, as a result of modified sales forecasts for LSI Virticus, the fair value of the earn-out liability was adjusted to $218,000. In addition to the $659,000 adjustment to the earn-out liability, which was recorded within selling and administrative expenses in Corporate and Eliminations, $46,000 of accrued interest expense was also reversed. The earn-out liability, including related accrued interest expense, is $241,000 as of March 31, 2013.

The Company is party to various negotiations, customer bankruptcies, and legal proceedings arising in the normal course of business.  The Company provides reserves for these matters when a loss is probable and reasonably estimable.  The Company does not disclose a range of potential loss because the likelihood of such a loss is remote.  In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company’s financial position, results of operations, cash flows or liquidity.

The Company may occasionally issue a standby letter of credit in favor of third parties.  As of March 31, 2013, standby letter of credit agreements totaled $0.3 million.