Net inventories for the periods presented were zero.  With the sale of our legacy Etch and PVD assets to OEM Group and the sale of our DRIE assets to SPTS, the company no longer maintains inventory.  The Company did not sell or scrap previously reserved inventory during the twelve months ended March 31, 2012 and 2011.  The inventory provision balance for the periods ended March 31, 2012 and 2011 was $0.  In the fiscal year ended March 31, 2012, the Company's inventory consisted of the NLD hardware, which was held for sale, and had a book value of zero.  The NLD hardware was included in the sale of the first lot of patents completed in the third quarter of the current fiscal year.  The Company no longer engages in the sale or shipment of manufactured products.

Previously, the Company's policy was that inventories were stated at the lower of cost or market. Cost was computed using standard cost, which approximates actual cost on a first-in, first-out basis and included material, labor and manufacturing overhead costs. Any excess and obsolete provision was only released if and when the related inventory is sold or scrapped.

Prior to the sale of the Company's inventory assets, the Company periodically analyzed any systems that were in finished goods inventory to determine if they were suitable for current customer requirements.  At that time, the Company's policy was that, if after approximately 18 months, it determines that a sale will not take place within the next twelve months and the system would be useable for customer demonstrations or training, it is transferred to fixed assets.  Otherwise, it was expensed.

 

Property and equipment, net, consisted of:

 

Depreciation expense for years ended March 31, 2012 and 2011 was $9 and $442, respectively.

A summary of accrued expenses and other current liabilities follows, including accrued liabilities related to discontinued operations:

 

Product warranty and guarantees:

Prior to our exit from our historical core operations, the Company provided warranty on all system sales based on the estimated cost of product warranties at the time revenue is recognized.  The warranty obligation was affected by product failure rates, material usage rates, and the efficiency by which the product failure was corrected.  The Company's warranty obligation was assumed by SPTS as part of the sale of the DRIE assets.  Warranty activity for the years ended March 31, 2012 and 2011, is as follows:

 

Certain of the Company's sales contracts included provisions under which customers would be indemnified by the Company in the event of, among other things, a third-party claim against the customer for intellectual property rights infringement related to the Company's products. There are no limitations on the maximum potential future payments under these guarantees. The Company has accrued no amounts in relation to these provisions as no such claims have been made and the Company believes it has valid, enforceable rights to the intellectual property embedded in its products.