13.Restructuring

On January 3, 2014, the Company implemented a restructuring plan, reorganizing the Company’s operations and sales departments. The restructuring expenses totaled approximately $41,000, of which $24,000 are included in cost of goods sold and $17,000 are included in operating expense for the third quarter of fiscal year 2014. A summary of the third quarter restructuring activity is as follows:




	Employee Termination Costs

Balance as of December 31, 2013	$	-
Restructuring charges		41
Payments		(40)
Balance as of March 31, 2014	$	1

On April 10, 2014, the Company implemented a second restructuring plan, making additional changes to the Company’s operations and sales departments. The restructuring included another reduction in work force and severance payments of approximately $44,000 which will be included in cost of goods sold and operating expense for the fourth quarter of fiscal year 2014.

These restructurings were part of a strategic decision to refocus the allocation of company resources and improve the Company’s ability to achieve profitability and generate positive cash flow from operations. The Company estimates that as a result of these restructurings, it will be able to reduce cost of goods sold and pre-tax operating expenses in total by more than $4.0 million annually, beginning in the fourth quarter of fiscal year 2014.