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UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
      Form 10-K
      (Mark One)þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended April
    7, 2007o

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to          .   Commission file number 0-23418
    MTI TECHNOLOGY
    CORPORATION
 (Exact name of registrant as
    specified in its charter)
   Delaware

95-3601802(State or other jurisdiction of
    
    incorporation or organization)

(I.R.S. employer
    identification no.)    17595 Cartwright Road
 Irvine, California 92614
 (Address of principal executive
    offices, zip code)
  Registrants telephone number, including area code(949) 251-1101
  Securities registered pursuant to Section 12(b) of the
    Act:
    None
  Securities registered pursuant to Section 12(g) of the
    Act:
  Common stock, $0.001 par value
 (Title of class)
  o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. o
  Rule 12b-2
 o o þ
  Rule 12b-2 o þ
      DOCUMENTS INCORPORATED BY REFERENCE:




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##### 



MTI
    TECHNOLOGY CORPORATION
  FORM 10-K
    For the fiscal year ended April 7, 2007
  INDEX
  PagePART IItem 1.


Business


3Item 1A.


Risk
    Factors


8Item 1B.


Unresolved Staff
    Comments


20Item 2.


Properties


20Item 3.


Legal
    Proceedings


20Item 4.


Submission of
    Matters to a Vote of Security Holders


20PART IIItem 5.


Market for the
    Registrants Common Equity, Related Stockholder Matters and
    Issuer Purchases of Equity Securities


20Item 6.


Selected Financial
    Data


23Item 7.


Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations


24Item 7A.


Quantitative and
    Qualitative Disclosures About Market Risks


37Item 8.


Financial
    Statements and Supplementary Data


37Item 9.


Changes in and
    Disagreements with Accountants on Accounting and Financial
    Disclosure


37Item 9A.


Controls and
    Procedures


37Item 9B.


Other
    Information


39PART IIIItem 10.


Directors,
    Executive Officers and Corporate Governance


39Item 11.


Executive
    Compensation


39Item 12.


Security Ownership
    of Certain Beneficial Owners and Management and Related
    Stockholder Matters


39Item 13.


Certain
    Relationships and Related Transactions, and Director
    Independence


39Item 14.


Principal
    Accountant Fees and Services


39PART IVItem 15.


Exhibits and
    Financial Statement Schedules


40EXHIBIT 23.1EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2   2




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PART I  ITEM 1.
    BUSINESS  INTRODUCTION
  (949) 885-7300. Form 10-K
    OVERVIEW
  e-mail 
  tm on-site 90-day
    
    Business Continuity (Disaster Recovery and
    Back-up and
    Recovery)
    Virtualization Technology 3




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
    Infrastructure Consolidation and Migration
    Mail and Messaging
    High Density Computing
    Data Storage Solutions and Assessments
    Systems Management
    Data Management, Migration and Consulting        Our
    Strategy
        SIGNIFICANT
    BUSINESS DEVELOPMENTS
  Collective
    Technologies Acquisition
    
    $6.0 million in cash; 4




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
    a note in the amount of $2.0 million bearing interest at 5%
    and due in twelve quarterly payments beginning
    September 30, 2006;
    2,272,727 shares of our common stock  valued at
    $1.3520 per common share;
    a warrant to purchase 1,000,000 shares of our common stock
    at an exercise price of $1.32 per share  the fair
    value of the warrant was calculated to be $974;
    assumption of certain liabilities.  lock-up
  OUR
    MARKET
        OUR
    STORAGE SOLUTION
   5




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
    Storage infrastructure solutions that center on
    state-of-the-art, high-performance, high-availability networked
    storage systems from EMC (DAS, SAN, NAS and CAS). These
    solutions are designed to deliver fast, reliable and resilient
    on-line storage systems. Our solutions are integrated with easy
    to use storage resource management software that allows our
    customers to improve system administration productivity.
    Information backup, recovery and archiving solutions that
    incorporate leading edge solutions from vendors such as EMC and
    Arkivio in combination with state-of-the-art tape libraries from
    Quantum, and Sun Microsystems.
    Replication and availability services on both a local level and
    wide area basis to create operational copies of current data or
    for enhanced data protection and business continuity utilizing
    software and hardware services from EMC and other leading
    storage application software vendors.
    Server virtualization solutions from VMware that enable server
    consolidation and increased application mobility across server
    platforms to deliver operational cost savings and increased
    availability and business continuity.
    Information Lifecycle Management solutions that enable customers
    to reduce cost and control, track and manage information across
    storage platforms and applications in support of regulatory
    compliance and corporate governance initiatives.  GLOBAL
    CUSTOMER SOLUTIONS
      on-site 24 hours-a-day, seven-days-a-week, 365 days-a-year.
  SALES AND
    MARKETING
   6




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ORDER
    BACKLOG
    MANUFACTURING
    AND INTEGRATION SERVICES
    COMPETITION
    Form 10-K.
 7




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PROPRIETARY
    RIGHTS
    SEASONALITY
    EMPLOYEES
    AVAILABILITY
    OF SEC FILINGS
  1-800-SEC-0330. Forms 8-K, 10-K 10-Q,
  ITEM 1A.
    RISK
    FACTORS  FORWARD-LOOKING
    STATEMENTS
  Form 10-K Form 10-K
  
    our belief that we receive favorable pricing, rebates and access
    to training from EMC;
    our belief that complexity is the key weakness in the IT storage
    environment;
    our beliefs regarding trends toward fully integrated storage
    solutions in the mid-enterprise market;
    our belief that the expertise of our professional services staff
    and the delivery of high quality customer service will be of
    greater importance to our customer base;
    our market strategy to become the preferred provider for sales,
    professional services and maintenance to the mid-enterprise
    market for information infrastructure solutions;
    our belief that order backlog as of any particular date is not
    meaningful as it is not necessarily indicative of future sales
    levels;
    our beliefs regarding the principal elements of competition; 8




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
    the factors upon which our future depends, which, in addition to
    our cost-reduction initiatives, include improving revenues and
    margins, continuing our relationship with EMC, expanding our
    service offerings, successfully integrating our recent
    acquisition of Collective, receiving market acceptance of new
    products and services, recruiting, hiring, training and
    retaining significant numbers of qualified personnel,
    forecasting revenues and expenses, controlling expenses and
    managing assets;
    our belief that our current cash and receivable balances, as
    supplemented by our financing arrangements, will be sufficient
    to meet our operating and capital expenditure requirements for
    at least the next 12 months;
    our belief regarding the timing and risk of undetected software
    or hardware errors;
    our expectation to retain any earnings and not to declare or pay
    any cash dividends in the near future;
    our belief that by providing a combination of systems, software,
    services and solutions to meet customers needs, we will be
    able to further grow revenues and achieve profitability;
    our expectation that the loss of hardware maintenance revenue
    will be mitigated by an increase in professional service revenue
    as well as software maintenance revenue on new technology
    installations;
    our belief that, through increased capabilities of our service
    engineers, we are better positioned to sell more complex
    professional service projects such as design and architecture,
    which generally drive more revenue than implementation and
    installation projects; and
    our business outlook, including all statements in the section
    titled Outlook in Item 7.
    Managements Discussion and Analysis of Financial
    Condition and Results of Operations.    RISK
    FACTORS
  We are
    dependent upon EMC as the main supplier for our storage
    solutions, and disruptions in supply or increases in costs could
    harm our business materially.
       9




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We may
    need additional financing to continue to carry on our existing
    operations and such additional financing may not be
    available.
      
    grow the business;
    maintain or enhance our product or service offerings;
    respond to competitive pressures; and
    continue operations.    
    dilution in percentage of ownership in MTI;
    economic dilution if the pricing terms offered to investors are
    more favorable to them than the current market price; and
    subordination of the rights, preferences or privileges of common
    stockholders to the rights, preferences or privileges of new
    security holders.  Our
    stock ownership is concentrated in a few stockholders who may be
    able to influence corporate decisions.
   10




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
    any amendment of the Companys charter or bylaws that
    adversely affects the holders of Series A, or
    Series B, as applicable;
    any authorization of a class of capital stock ranking senior to,
    or on parity with, the Series A, or Series B, as
    applicable;
    any increase in the size of our Board of Directors to greater
    than eight members or any change in the classification of the
    Board of Directors;
    certain redemptions or repurchases of capital stock;
    acquisitions of capital stock or assets from other entities;
    effecting, or entering into any agreement to effect, any merger,
    consolidation, recapitalization, reorganization, liquidation,
    dissolution, winding up or similar transaction (a
    Liquidation Event) involving the Company or any of
    its subsidiaries;
    any sale of assets of the Company or a subsidiary which is
    outside the ordinary course of business;
    any purchase of assets of or an equity interest in another
    entity for more than $5.0 million; and
    any incurrence of additional debt for borrowed money in excess
    of $1.0 million.     11




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We
    have experienced challenges associated with integrating our
    company and Collective.
    
    successfully integrating our operations, technologies, products
    and services with those of Collective;
    retaining and expanding customer and supplier relationships;
    coordinating and integrating the service capabilities of
    Collective into our company and particularly our sales
    organization;
    preserving service and other important relationships that we and
    Collective have, and resolving potential conflicts that may
    arise;
    assimilating the personnel of Collective and integrating the
    business cultures of both companies;
    maintaining employee morale and motivation; and
    reducing administrative costs associated with the operations of
    Collective.    A
    significant portion of our revenues occurs in the last month of
    a given quarter. Consequently, our results of operations for any
    particular quarter are difficult to predict.
      We
    have a history of operating losses, and our future operating
    results may depend on the success of our cost reduction
    initiatives and on other factors.
     12




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We are
    subject to financial and operating risks associated with
    international sales and services.
    
    fluctuating exchange rates, tariffs and other barriers;
    difficulties in staffing and managing foreign subsidiary
    operations;
    changes in a countrys economic or political conditions;
    greater difficulties in accounts receivable collection and
    longer payment cycles;
    unexpected changes in, or impositions of, legislative or
    regulatory requirements;
    import or export restrictions;
    potentially adverse tax consequences;
    potential hostilities and changes in diplomatic and trade
    relationships; and
    differing customer
    and/or
    technology standards requirements.    The
    storage market is characterized by rapid technological change,
    and our success will depend on EMCs ability to develop new
    products.
    The
    markets for the products and services that we sell are intensely
    competitive, which may lead to reduced sales of our products,
    reduced profits and reduced market share for our
    business.
   13




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
    quality of professional services consulting and support;
    responsiveness to customer and market needs;
    product price, quality, reliability and performance; and
    ability to sell, service and deploy new technology.      Our
    quarterly results may fluctuate from period to period.
    Therefore, historical results may not be indicative of future
    results or be helpful in evaluating the results of our
    business.
    
    the size, timing and terms of customer orders;
    the introduction of new products by our competitors and
    competitive pricing pressures;
    the timing of the introduction of new products and new versions
    of best-of-breed products;
    shifts in our product or services mix;
    changes in our operating expenditures;
    decreases in our gross profit as a percentage of revenues for
    mature products; and
    changes in foreign currency exchange rates. 14




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Net LossAttributable toTotal


Gross


Operating


CommonRevenue


Profit


Loss


Shareholders2007Fourth quarter

$
37,754


$
7,251


$
(5,426
)

$
(7,130
)Third quarter


45,221



9,270



(1,396
)


(3,107
)Second quarter


40,291



8,510



(3,122
)


(4,832
)First quarter


42,692



7,950



(1,194
)


(2,354
)Total

$
165,958


$
32,981


$
(11,138
)

$
(17,423
)2006Fourth quarter

$
44,299


$
8,589


$
(117
)

$
(1,253
)Third quarter


40,162



7,887



(1,557
)


(2,988
)Second quarter


31,635



6,401



(3,463
)


(4,148
)First quarter


39,331



8,078



(2,090
)


(3,622
)Total

$
155,427


$
30,955


$
(7,227
)

$
(12,011
)   Our
    solutions are complex and may contain undetected software or
    hardware errors that could be difficult, costly, and
    time-consuming to repair.
    
    adversely affect our sales;
    cause us to incur significant warranty and repair costs;
    cause significant customer relations problems;
    harm our competitive position;
    hurt our reputation; and
    cause purchase delays.    Domestic
    employment at MTI, including employment of our domestic key
    personnel, is generally at will.
   15




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We may
    have difficulty managing any future growth
    effectively.
      We may
    face inherent costly damages or litigation costs if third
    parties claim that we infringe upon their intellectual property
    rights.
    If we
    and our partners are unable to comply with evolving industry
    standards and government regulations, we may be unable either to
    sell our solutions or to be competitive in the
    marketplace.
    Our
    common stock is not traded on a national securities exchange and
    is subject to the penny stock rules.
   16




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Our
    stock price may be volatile, which could lead to losses by
    investors and to securities litigation.
    
    failure of our results from operations to meet the expectations
    of public market analysts and investors;
    the timing and announcement of new or enhanced products or
    services by us, our partners or by our competitors;
    speculation in the press or investment community about our
    business or our competitive position;
    the volume of trading in our common stock; and
    market conditions and the trading price of shares of technology
    companies generally.    We may
    not have registered, or we may not have had an exemption from
    registering, certain options under the California securities
    laws and may incur liability to repurchase the options or face
    potential claims under the California securities
    laws.
   17




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Form S-8.
  We
    have identified a material weakness in our internal control over
    financial reporting that could cause investors to lose
    confidence in the reliability of our financial statements and
    result in a decrease in the value of our
    securities.
  Form 10-K.
    Failure
    to achieve and maintain effective internal controls in
    accordance with Section 404 of the Sarbanes-Oxley Act could
    have a material adverse effect on our business and stock
    price.
    Our
    stockholders may be diluted by the conversion of outstanding
    Series A and Series B and the exercise of warrants to
    purchase common stock.
   18




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We
    have adopted anti-takeover defenses that could affect the price
    of our common stock.
   19




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ITEM 1B.
    UNRESOLVED
    STAFF COMMENTS    ITEM 2.
    PROPERTIES    ITEM 3.
    LEGAL
    PROCEEDINGS    ITEM 4.
    SUBMISSION
    OF MATTERS TO A VOTE OF SECURITY HOLDERS   PART II  ITEM 5.
    MARKET
    FOR THE REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER
    MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES  PRINCIPAL
    MARKET AND PRICES
   20




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Bid PricesHigh


LowFISCAL YEAR 2006First Quarter


2.48



1.40Second Quarter


2.38



1.68Third Quarter


1.99



1.18Fourth Quarter


1.64



1.22FISCAL YEAR 2007First Quarter


1.09



.70Second Quarter


.94



.65Third Quarter


1.23



.80Fourth Quarter


1.09



.72   NUMBER OF
    COMMON STOCKHOLDERS
    DIVIDENDS
      UNREGISTERED
    SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  Form 8-K Form 8-K
  ISSUER
    PURCHASES OF EQUITY SECURITIES
  Rule 10b-18(a)(3)
  SECURITIES
    AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION
    PLANS
   21




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COMPANY
    STOCK PRICE PERFORMANCE
    The following performance graph shall not be deemed to be
    incorporated by reference in any previous or future documents
    filed by us with the SEC under the Securities Act or the
    Exchange Act, except to the extent that the company specifically
    incorporates the following company Stock Price Performance graph
    by reference in any such document.
  COMPARISON
    OF 60 MONTHS CUMULATIVE TOTAL RETURN AMONG MTI TECHNOLOGY
    CORPORATION, THE NASDAQ STOCK MARKET-U.S. AND THE NASDAQ
    COMPUTER MANUFACTURER INDEX PERFORMANCE GRAPH
  
 22




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ITEM 6.
    SELECTED
    FINANCIAL DATA  Form 10-K.
  Fiscal YearApril 7,


April 1,


April 2,


April 3,


April 5,2007


2006


2005


2004


2003(Amounts in thousands, except per share data)SELECTED STATEMENT OF
    OPERATIONS DATA:Net product revenue

$
113,570


$
116,529


$
93,947


$
46,538


$
40,204Service revenue


52,388



38,898



38,927



36,723



42,285Total revenue(1)


165,958



155,427



132,874



83,261



82,489Product gross profit


21,415



21,858



19,805



11,473



7,153Service gross profit


11,566



9,097



5,714



10,333



14,645Gross profit(1)(2)


32,981



30,955



25,519



21,806



21,798Operating expense:Selling, general and administrative


42,704



37,091



39,078



28,935



27,754Research and development














776



5,238Amortization of intangibles


743















Restructuring charges


672



1,091



2,024



(211
)


1,467Total operating expenses


44,119



38,182



41,102



29,500



34,459Operating loss


(11,138
)


(7,227
)


(15,583
)


(7,694
)


(12,661
)Interest and other income
    (expense), net(3)


(624
)


(104
)


(500
)


631



1,008Gain (loss) on foreign currency
    transactions


631



(720
)


318



29



639Loss before income taxes


(11,131
)


(8,051
)


(15,765
)


(7,034
)


(11,014
)Income tax expense (benefit)


32



51



22



(3,168
)


205Net loss


(11,163
)


(8,102
)


(15,787
)


(3,866
)


(11,219
)Amortization of preferred stock
    discount


(3,230
)


(1,970
)


(880
)






Dividend on preferred stock


(3,030
)


(1,939
)


(953
)






Net loss applicable to common
    shareholders

$
(17,423
)

$
(12,011
)

$
(17,620
)

$
(3,866
)

$
(11,219
)Net loss per share:Basic and diluted

$
(0.46
)

$
(0.34
)

$
(0.51
)

$
(0.12
)

$
(0.34
)Weighted average shares used in
    per share computations:Basic and diluted


37,943



35,541



34,476



33,482



32,852SELECTED BALANCE SHEET
    DATA:Cash and cash equivalents

$
11,447


$
21,660


$
12,191


$
3,017


$
9,833Working capital


273



15,792



2,256



2,743



2,071Total assets


70,553



84,622



62,866



46,612



44,556Short-term debt


5,825



5,167



3,745



4,109



1,901Long-term debt, less current
    maturities


869











95



286Total stockholders equity
    (deficit)


(14,400
)


(3,630
)


(2,369
)


7,141



8,974     (1)
    
    On March 31, 2003, we became an exclusive reseller of EMC
    products and services. See further discussion of this transition
    and its impact on result of operations in the Results of
    Operations section of Managements Discussion and
    Analysis.(2)
    
    Includes charges related to production and service inventory
    write-offs of $512, $589, $2,681, $1,469, and $1,950 for fiscal
    years 2007, 2006, 2005, 2004, and 2003, respectively.(3)
    
    Includes $1,200 in fiscal year 2003 related to the gain on sale
    of The SCO Group, Inc. common stock. 23




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ITEM 7.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS      OVERVIEW
    AND EXECUTIVE SUMMARY
    
    We have increased product revenue significantly during the years
    immediately after the reseller agreement was signed. We recorded
    product revenue of $116.5 million in fiscal year 2006, a
    24% increase from fiscal year 2005. Furthermore we recorded
    product revenue of $113.6 million in fiscal year 2007, a
    slight decrease of 2.3% from fiscal year 2006. In order to
    achieve this revenue growth, we invested heavily in sales and
    service resources which led to increased losses in fiscal year
    2005. In fiscal year 2006, we moderated headcount additions and
    reduced spending which led to decreased operating losses as
    compared to fiscal year 2005. In fiscal year 2007, our strategy
    was modified to place more emphasis on services in an effort to
    improve margins. We acquired Collective at the beginning of the
    second quarter of fiscal year 2007 and refocused our sales force
    on more complex, service-rich transactions. As a result, fiscal
    year 2007 net product revenues were flat.
    Maintenance revenue has been negatively impacted due to the
    comprehensive warranty provided on EMC products. We resell EMC
    hardware products with up to a three-year warranty and a
    seven-day,
    twenty-four hour service level. In contrast, MTI proprietary
    products were generally sold with a one year warranty and a five
    day, nine hour service level. Therefore, the sale of proprietary
    products provided an opportunity to generate maintenance revenue
    earlier due to the shorter warranty period and allowed the
    Company to generate maintenance revenue during the warranty
    period by selling maintenance contracts increasing the service
    level to seven days a week, twenty-four hours a day. We expect
    the loss of hardware maintenance revenue to be mitigated by an
    increase in professional service revenue as well as software
    maintenance revenue on new technology installations.    OUTLOOK
    
    We expect net product revenue to continue to be flat to lower in
    fiscal year 2008 as we become more balanced between product and
    services revenue. We expect product revenue to follow, to some
    extent, the seasonal patterns experienced in fiscal 2007. 24




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
    We believe product margins will benefit from our focus on
    selling more complex, service-rich solutions, however, our
    product margins can be volatile and are subject to many factors
    including competitive market forces.
    We expect that service revenue will increase year-over-year due
    to planned growth in our professional service business by taking
    advantage of the synergies created by the Collective acquisition
    , as well as continued sales of software maintenance contracts.
    We also expect service revenue to be driven by sales of hardware
    maintenance contracts as the warranty period on EMC products
    sold in previous years begin to expire. If we are able to
    achieve growth in service revenue, we expect service margins to
    improve as we are able to further leverage our existing service
    resources.
    We expect operating expenses to be lower in fiscal year 2008
    compared to fiscal year 2007 as we completely integrate
    Collectives operations and realize the full effects of our
    restructuring activities, including headcount, facility and
    other operating cost reductions.  CRITICAL
    ACCOUNTING POLICIES
    Revenue recognition.
  Hardware
    revenue
  No. 00-21, Revenue Arrangements with Multiple Deliverables (EITF 00-21)
  
    persuasive evidence of an arrangement exists;
    delivery has occurred;
    fee is fixed or determinable; and
    collectability is reasonably assured.  and/or
 25




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Revenue
    Recognition When Right of Return Exists.
  Software
    revenue
  EITF 00-21,
  back-up, Position 97-2 Software Revenue Recognition, (SOP 97-2) SOP 97-2, SOP 98-9, SOP 97-2
  EITF 03-05 ,
    Applicability of AICPA Statement of Position
    97-2,
    Software Revenue Recognition, to Non-Software Deliverables in an
    Arrangement Containing More-Than-Incidental Software (EITF 03-05). EITF 03-05, SOP 97-2. SOP 97-2 EITF 00-21
  Service
    revenue
   26




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EITF 01-14, Income Statement Characterization of Reimbursements
    Received for Out-of-Pocket Expenses Incurred,
  Multiple
    element arrangements
  EITF 00-21 SOP 97-2. EITF 00-21,
  Other
  EITF 99-19, Reporting Revenue Gross as a Principal versus Net as an
    Agent, EITF 00-21.
    EITF 00-21.
  Shipping
  EITF 00-10, Accounting for Shipping and Handling Fees and
    Costs.
 27




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##### Table of Contents



Product warranty.
  Allowance for doubtful accounts and product
    returns.
  Income taxes. Accounting for
    Income Taxes
  Valuation of goodwill and intangible
    assets. Goodwill and Other
    Intangible Assets
  Inventories. (first-in,
 28




---



##### Table of Contents



RESULTS
    OF OPERATIONS
    Fiscal Year EndedApril 7,


April 1,


April 2,2007


2006


2005Net product revenue


68.4
%


75.0
%


70.7
%Service revenue


31.6



25.0



29.3Total revenue


100.0



100.0



100.0Product gross profit


18.9



18.8



21.1Service gross profit


22.1



23.4



14.7Gross profit


19.9



19.9



19.2Selling, general and administrative


25.8



23.9



29.4Amortization of intangibles


0.4







Restructuring charges


0.4



0.7



1.5Operating loss


(6.7
)


(4.6
)


(11.7
)Other expense, net


(0.4
)


(0.1
)


(0.4
)Gain (loss) on foreign currency
    transactions


0.4



(0.5
)


0.2Income tax benefit










Net loss


(6.7
)%


(5.2
)%


(11.9
)%   Fiscal
    year 2007 compared to Fiscal year 2006
  Net product revenue:
  Fiscal Year 2007


Fiscal Year 2006US


Europe


Total


US


Europe


TotalServer revenue

$
52.6


$
29.6


$
82.2


$
47.3


$
31.5


$
78.8Software revenue


17.4



4.8



22.2



17.6



3.5



21.1Tape library revenue


3.1



6.1



9.2



10.3



6.3



16.6Total product revenue

$
73.1


$
40.5


$
113.6


$
75.2


$
41.3


$
116.5    29




---



##### Table of Contents



Service Revenue:
  Fiscal Year 2007


Fiscal Year 2006US


Europe


Total


US


Europe


TotalProfessional services revenue

$
20.3


$
5.6


$
25.9


$
8.0


$
4.4


$
12.4Maintenance revenue


9.2



17.3



26.5



10.2



16.3



26.5Total service revenue

$
29.5


$
22.9


$
52.4


$
18.2


$
20.7


$
38.9   3-year,
  Product Gross Profit:
  Service Gross Profit:
  Selling, General and Administrative:
  Restructuring:
 30




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##### Table of Contents



Amortization of Intangible Assets:
  Interest and Other Expense, Net:
  Gain on Foreign Currency Transactions:
  Income Tax Expense (Benefit):
  Fiscal
    year 2006 compared to Fiscal year 2005
  Net product revenue:
  Fiscal Year 2006


Fiscal Year 2005US


Europe


Total


US


Europe


TotalServer revenue

$
47.3


$
31.5


$
78.8


$
43.4


$
25.7


$
69.1Software revenue


17.6



3.5



21.1



12.5



2.8



15.3Tape library revenue


10.3



6.3



16.6



2.5



7.0



9.5Total product revenue

$
75.2


$
41.3


$
116.5


$
58.4


$
35.5


$
93.9    31




---



##### Table of Contents



Service Revenue:
  Fiscal Year 2006


Fiscal Year 2005U.S.


Europe


Total


U.S.


Europe


TotalProfessional Services Revenue

$
8.0


$
4.4


$
12.4


$
5.6


$
2.9


$
8.5Maintenance Revenue


10.2



16.3



26.5



12.9



17.5



30.4Total Service Revenue

$
18.2


$
20.7


$
38.9


$
18.5


$
20.4


$
38.9     3-year
    Product Gross Profit: transaction-by-transaction
  Service Gross Profit:
 32




---



##### Table of Contents



Selling, General and Administrative: Form 10-K.
  Restructuring:
  Interest and Other Expense, Net:
  Gain on Foreign Currency Transactions:
  Income Tax Expense (Benefit):
  Staff
    Accounting Bulletin No. 108
  Considering the Effects of Prior Year Misstatements
    when Quantifying Misstatements in Current Year Financial
    Statements.
   33




---



##### Table of Contents



LIQUIDITY
    AND CAPITAL RESOURCES
         34




---



##### Table of Contents




    $6.0 million in cash;
    a note in the amount of $2.0 million bearing interest at 5%
    and due in twelve quarterly payments beginning
    September 30, 2006;
    2,272,727 shares of our common stock;
    a warrant to purchase 1,000,000 shares of our common stock
    at an exercise price of $1.32 per share; and
    assumption of certain liabilities.  lock-up
  Accounting for Transfers and Servicing
    of Financial Assets and Extinguishment of Liabilities
 35




---



##### Table of Contents



Form S-8.
      Payments Due by Fiscal YearTotal


2008


2009


2010


2011(In millions)Line of Credit

$
5.2


$
5.2


$



$



$
Operating Leases(1)


5.6



2.5



1.3



1.1



0.7Notes Payable


1.6



0.7



0.7



0.2



$
12.4


$
8.4


$
2.0


$
1.3


$
0.7  36




---



##### Table of Contents



(1)
    
    Represents lease obligations, net of anticipated sublease cash
    receipts.    INFLATION
    AND FOREIGN CURRENCY EXCHANGE
      ITEM 7A.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK  and/or and/or
    ITEM 8.
    FINANCIAL
    STATEMENTS AND SUPPLEMENTARY DATA  Form 10-K.
  ITEM 9.
    CHANGES
    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
    FINANCIAL DISCLOSURE    ITEM 9A.
    CONTROLS
    AND PROCEDURES  Evaluation
    of Disclosure Controls and Procedures
   37




---



##### Table of Contents



Rules 13a-15(e) 15d-15(e)
    1.
    Having inadequate segregation of duties within our accounting
    function and over-relying on our corporate controller with
    respect to analyzing and recording unusual or complex
    transactions, consolidating schedules and performing certain
    other functions;2.
    Our corporate controller having responsibility for monitoring
    and approving transactions as well as journal entry access to
    record transactions, and the lack of review and approval by our
    corporate controller of entries prepared and posted by our
    accounting manager; and3.
    Insufficient accounting and reporting resources to monitor
    financial accounting standards and to maintain controls to
    appropriately interpret, implement and review the application of
    existing and new financial accounting standards, reporting
    requirements, and the completeness and accuracy of accounting
    information.    Changes
    in Internal Control over Financial Reporting
    
    Our Chief Financial Officer
    and/or
    experienced financial consultants retained by us will review and
    approve the work performed by our corporate controller,
    including work on unusual or complex transactions and the
    consolidation of financial information.
    Our access controls for our general ledger software have been
    updated to permit only the accounting manager and one other
    staff person to post journal entries
    and/or make
    other adjustments to the general ledger. All of their work will
    be reviewed and approved by our corporate controller. Our Chief
    Financial Officer
    and/or
    experienced financial consultants retained by us will seek to
    ensure these procedures are performed and will document their
    review on a quarterly basis.
    Experienced financial consultants have been retained to augment
    our accounting and financial resources and assist us in
    appropriately identifying, interpreting and resolving the
    application of existing or new financial accounting standards
    and reporting requirements as well as the completeness and
    accuracy of our accounting information.   38




---



##### Table of Contents



ITEM 9B.
    OTHER
    INFORMATION   PART III  ITEM 10.
    DIRECTORS,
    EXECUTIVE OFFICERS AND CORPORATE GOVERANCE    Regulation S-K
  ITEM 11.
    EXECUTIVE
    COMPENSATION    ITEM 12.
    SECURITY
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
    RELATED STOCKHOLDER MATTERS    ITEM 13.
    CERTAIN
    RELATIONSHIPS, RELATED TRANSACTIONS AND DIRECTOR
    INDEPENDENCE    ITEM 14.
    PRINCIPAL
    ACCOUNTANT FEES AND SERVICES   39




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##### Table of Contents



PART IV  ITEM 15.
    EXHIBITS AND
    FINANCIAL STATEMENT SCHEDULES    Consolidated Financial Statements:
              The following financial statement schedule for
    fiscal years 2007, 2006, and 2005 is submitted herewith:
      Exhibits
   40




---



##### Table of Contents



SIGNATURES
  Form 10-K
    By:
    /s/  THOMAS
    P. RAIMONDI, JR.     POWER OF
    ATTORNEY
  Form 10-K,
    Signature

Title

Date/s/  THOMAS
    P. RAIMONDI, JR.(Thomas
    P. Raimondi, Jr.)

Chairman, President and 
    Chief Executive Officer 
    (Principal Executive Officer)

July 23, 2007/s/  SCOTT
    POTERACKI(Scott
    Poteracki)

Chief Financial Officer and
    Secretary 
    (Principal Financial Officer)

July 23, 2007/s/  EDWARD
    KIRNBAUER(Edward
    Kirnbauer)

Vice President and Corporate
    Controller (Principal Accounting Officer)

July 23, 2007/s/  WILLIAM
    ATKINS(William
    Atkins)

Director

July 23, 2007/s/  LAWRENCE
    P. BEGLEY(Lawrence
    P. Begley)

Director

July 23, 2007/s/  FRANZ
    L. CRISTIANI(Franz
    L. Cristiani)

Director

July 23, 2007/s/  RONALD
    E. HEINZ(Ronald
    E. Heinz)

Director

July 23, 2007/s/  MICHAEL
    PEHL(Michael
    Pehl)

Director

July 23, 2007/s/  KENT
    D. SMITH(Kent
    D. Smith)

Director

July 23, 2007  41




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##### Table of Contents



EXHIBIT INDEX
  Exhibit



Incorporated by ReferenceNumber

Exhibit Description

Form

Exhibit(s)

Filing Date2
.1

Asset Purchase Agreement, dated
    June 6, 2006, between MTI Technology Corporation and
    Collective Technologies, LLC

10-K

2.1

June 30, 20062
.2

Amendment No. 1 to Asset
    Purchase Agreement, dated June 28, 2006, by and among MTI
    Technology Corporation, Collective Technologies LLC and Pencom
    Incorporated

8-K

2.1

July 11, 20062
.3

Amendment No. 2 to Asset
    Purchase Agreement, dated July 5, 2006, by and among MTI
    Technology Corporation, Collective Technologies LLC and Pencom
    Incorporated

8-K

2.2

July 11, 20063
.1

Restated Certificate of
    Incorporation of the Company

S-1

3.1

February 11, 19943
.2

Certificate of Amendment of
    Restated Certificate of Incorporation of the Company

14-C

A

April 3, 20003
.3

Second Amended and Restated Bylaws
    of the Company

10-Q

10.101

November 16, 20043
.4

Certificate of Designation of
    Series B Convertible Preferred Stock

8-K

3.1

November 3, 20053
.5

Certificate of Designation of
    Series A Convertible Preferred Stock

8-K

3(i).1

June 22, 20043
.6

Certificate of Amendment of
    Certificate of Designation of Series A Convertible
    Preferred Stock, filed with the Secretary of State of the State
    of Delaware on November 1, 2005

8-K

3.2

November 3, 20054
.1

Specimen of Amended Stock
    Certificate

10-K

4.2

July 11, 20034
.2

Form of Common Stock Purchase
    Warrant

8-K

4.1

November 3, 20054
.3

Amended and Restated Investor
    Rights Agreement, dated November 2, 2005, by and among the
    Company and the Investors set forth therein

8-K

10.1

November 3, 20054
.4

Amended and Restated Registration
    Rights Agreement, dated January 11, 2002, between the
    Company and Silicon Valley Bank

10-Q

4.8

February 19, 20024
.5

Form of Common Stock Purchase
    Warrant

8-K

4.1

July 11, 20064
.6

Registration Rights Agreement,
    dated July 5, 2006, by and between MTI Technology
    Corporation and Collective Technologies LLC

8-K

4.2

July 11, 200610
.1

Letter Agreement, dated
    October 11, 2005, by and among the Company, EMC Corporation
    and certain affiliates of Advent International Corporation

8-K

10.1

October 12, 200510
.2*

Severance and Release Agreement
    dated November 21, 2005 by and between the Company and Jon
    Caputo

8-K

10.1

November 22, 200510
.3*

Form of Nonqualified Stock Option
    Agreement under the Stock Incentive Plan

S-1

10.14

March 21, 199410
.4*

Form of Indemnification Agreement
    for Officers of the Company

10-K

10.2

July 11, 200310
.5*

Form of Indemnification Agreement
    for Directors of the Company

10-K

10.3

July 11, 200310
.6*

Form of Change of Control Agreement

8-K

10.1

February 13, 200610
.7*

1987 Incentive Stock Option and
    Nonqualified Stock Option Plan of the Company

S-1

10.21

February 11, 199410
.8*

Form of Incentive Stock Option
    Agreement under the Stock Incentive Plan

S-1

10.30

March 21, 1994 42




---



##### Table of Contents



Exhibit



Incorporated by ReferenceNumber

Exhibit Description

Form

Exhibit(s)

Filing Date10
.9*

Form of Nonqualified Common Stock
    Option Agreement under the 1987 Stock Option Plan

S-1

10.23

February 11, 199410
.10*

Directors Non-Qualified
    Stock Option Plan

S-1

10.32

March 21, 199410
.11

Loan and Security Agreement, dated
    November 13, 2002, by and between Comerica Bank California
    and the Company

10-Q

10.70

November 19, 200210
.12*

1996 Stock Incentive Plan, as
    amended

10-Q

10.29

November 16, 199910
.13*

Severance Agreement, dated as of
    July 15, 1998, between the Company and Tom Raimondi

10-K

10.30

August 2, 199910
.14*

Severance Agreement, dated as of
    February 7, 2001, between the Company and Keith Clark

10-K

10.24

June 12, 200110
.15*

MTI Technology Corporation 2001
    Stock Incentive Plan

8-K

99.1

November 3, 200610
.16*

MTI Technology Corporation 2001
    Non-Employee Director Option Program

10-K

10.31

June 12, 200110
.17*

MTI Technology Corporation 2001
    Employee Stock Purchase Plan

10-K

10.32

June 12, 200110
.18

Reseller Agreement effective as of
    March 31, 2003, between EMC Corporation and the Company.
    (Portions of this exhibit are omitted and were filed separately
    with the Secretary of the SEC pursuant to the Companys
    application requesting confidential treatment under
    Rule 406 of the Securities Act.).

10-K

10.61

July 11, 200310
.19

Amendment 1 to Reseller Agreement,
    dated February 1, 2004, between EMC Corporation and the
    Company.

10-K

10.87

July 1, 200410
.20

Third Amendment to Loan and
    Security Agreement, dated as of June 15, 2005, by and
    between Comerica Bank and the Company

10-K

10.95

July 18, 200510
.21*

Summary of Executive Compensation
    and Bonus Arrangements

10-K

10.21

June 30, 200610
.22*

Summary of Director Compensation
    Arrangements

10-K

10.22

June 30, 200610
.23*

Contract of Employment between the
    Company and Keith Clark

10-K

10.1

August 1, 200510
.24

Lease Agreement, dated
    August 2, 2005, by and between CalWest Industrial Holdings,
    LLC and the Company

8-K

10.1

August 8, 200510
.25

Securities Purchase Agreement,
    dated August 19, 2005, by and among the Company, EMC
    Corporation, and certain affiliates of Advent International
    Corporation

8-K

10.1

August 22, 200510
.26*

Form of Restricted Stock Award
    Agreement under the 2001 Stock Incentive Plan

10-K

10.24

June 30, 200610
.27*

Form of Stock Option Award
    Agreement (Officers) under the 2001 Stock Incentive Plan

10-K

10.25

June 30, 200610
.28*

Form of Stock Option Award
    Agreement (Employees) under the 2001 Stock Incentive Plan

10-K

10.26

June 30, 200610
.29

EMC Security Agreement, dated
    December 30, 2004

10-K

10.28

June 30, 200610
.30

Termination of EMC Letter
    Agreement and Security Agreement, dated June 7, 200610
.31

Amendment to Second Waiver and
    Consent, dated June 20, 2006, between the Company and The
    Canopy Group

8-K

10.2

June 26, 200610
.32

Second Waiver and Consent, dated
    December 28, 2004, between the Company and The Canopy Group

10-K

10.30

June 30, 2006 43




---



##### Table of Contents



Exhibit



Incorporated by ReferenceNumber

Exhibit Description

Form

Exhibit(s)

Filing Date10
.33

Fourth Amendment to Loan and
    Security Agreement, dated June 20, 2006, between Comerica
    Bank and the Company

8-K

10.1

June 26, 200610
.34

Warrant, dated June 20, 2006,
    issued by the Company to The Canopy Group

8-K

10.3

June 26, 200610
.35*

MTI Technology Corporation 2006
    Stock Incentive Plan (CT)

8-K

99.2

November 3, 200610
.36*

Form of Restricted Stock Award
    Agreement under the 2006 Stock Incentive Plan (CT)

10-K

10.34

June 30, 200610
.37*

Form of Stock Option Award
    Agreement (Officers) under the 2006 Stock Incentive Plan (CT)

10-K

10.35

June 30, 200610
.38*

Form of Stock Option Award
    Agreement (Employees) under the 2006 Stock Incentive Plan (CT)

10-K

10.36

June 30, 200610
.39

Form of Promissory Note

8-K

10.1

July 11, 200610
.40*

Employment Agreement, dated
    July 5, 2006, by and between MTI Technology Corporation and
    Edward C. Ateyeh, Jr.

8-K

10.2

July 11, 200610
.41*

Employment Agreement, dated
    July 5, 2006, by and between MTI Technology Corporation and
    William Kerley

10-Q

10.3

November 14, 200610
.42

Amendment No. 2 to Second
    Waiver and Consent, entered into as of November 21, 2006,
    by and between The Canopy Group, Inc. and MTI Technology
    Corporation

8-K

10.1

November 28, 200610
.43

Warrant to Purchase Common Stock
    of MTI Technology Corporation, dated November 21, 2006,
    issued to The Canopy Group, Inc.

8-K

10.2

November 28, 200610
.44*

Severance and Release Agreement,
    dated December 1, 2006, by and between MTI Technology
    Corporation and Richard L. Ruskin

8-K

10.1

December 4, 200610
.45

Fifth Amendment to Loan and
    Security Agreement, entered into as of December 21, 2006,
    by and between Comerica Bank, successor by merger to Comerica
    Bank-California, and MTI Technology Corporation

8-K

10.1

December 28, 200610
.46

Account Purchase Agreement, dated
    November 27, 2006, by and between MTI Technology
    Corporation and Wells Fargo Bank, National Association, acting
    through its Wells Fargo Business Credit operating division

10-Q

10.7

February 16, 200710
.47

Sixth Amendment to Loan and
    Security Agreement, entered into as of May 31, 2007, by and
    between Comerica Bank, successor by merger to Comerica
    Bank  California, and MTI Technology Corporation

8-K

10.1

June 6, 200710
.48

Amendment No. 3 to Second
    Waiver and Consent, dated as of June 22, 2007, by and
    between The Canopy Group, Inc. and MTI Technology Corporation.

8-K

10.1

June 28, 200710
.49

Warrant to Purchase Common Stock
    of MTI Technology Corporation, dated June 22, 2007, issued
    to The Canopy Group, Inc.

8-K

10.2

June 28, 200721
.1

List of Subsidiaries

10-K

21.1

June 30, 200623
.1

Consent of Independent Registered
    Public Accounting Firm  Grant Thornton LLP24
.1

Powers of Attorney31
.1

Certification by CEO pursuant to
    Rule 13a-14(a)
    or 15d-14(a), as adopted pursuant to Section 302 of the
    Sarbanes-Oxley Act of 2002 44




---



##### Table of Contents



Exhibit



Incorporated by ReferenceNumber

Exhibit Description

Form

Exhibit(s)

Filing Date31
.2

Certification by CEO pursuant to
    Rule 13a-14(a)
    or 15d-14(a), as adopted pursuant to Section 302 of the
    Sarbanes-Oxley Act of 200232
.2

Certification by CFO pursuant to
    18 U.S.C. Section 1350, as adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002     *
    
    Management or compensatory plan or arrangement. 45




---



##### Table of Contents



INDEX TO
    FINANCIAL STATEMENTS
  PageReport of
    Independent Registered Public Accounting Firm  Grant
    Thornton LLP


47Consolidated
    Balance Sheets as of April 7, 2007 and April 1, 2006


48Consolidated
    Statements of Operations for the fiscal years ended April 7,
    2007, April 1, 2006 and April 2, 2005


49Consolidated
    Statements of Stockholders Equity (Deficit) for the fiscal
    years ended April 7, 2007, April 1, 2006 and April 2,
    2005


50Consolidated
    Statements of Cash Flows for the fiscal years ended April 7,
    2007, April 1, 2006 and April 2, 2005


51Notes to
    Consolidated Financial Statements


52FINANCIAL STATEMENT
    SCHEDULESchedule II 
    Valuation and Qualifying Accounts


82  46




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM           Share-Based
    Payment Considering the Effects of Prior Year
    Misstatements when Quantifying Misstatements in Current Year
    Financial Statements.
     
    47




---



##### Table of Contents



MTI
    TECHNOLOGY CORPORATION



CONSOLIDATED
    BALANCE SHEETS  April 7,


April 1,2007


2006(In thousands exceptper share amounts)ASSETSCurrent assets:Cash and cash equivalents

$
11,447


$
21,660Accounts receivable, less
    allowance for doubtful accounts and sales returns of $615 and
    $514 in 2007 and 2006, respectively


30,327



37,803Inventories, net


2,718



10,466Prepaid expenses and other
    receivables


8,798



8,072Total current assets


53,290



78,001Property, plant and equipment, net


710



555Intangible assets, net


2,758



Goodwill, net


13,365



5,184Other assets


430



882Total assets

$
70,553


$
84,622LIABILITIES AND
    STOCKHOLDERS DEFICITCurrent liabilities:Line of credit

$
5,167


$
5,167Current portion of notes payable


658



Accounts payable


22,375



36,952Accrued liabilities


9,546



7,423Accrued restructuring charges


593



847Deferred revenue, current


14,678



11,820Total current liabilities


53,017



62,209Notes payable, noncurrent


869



Accrued preferred stock dividend


5,922



2,892Deferred revenue, noncurrent


3,069



4,305Total liabilities


62,877



69,406Commitments and contingencies






Series A redeemable
    convertible preferred stock, 567 shares issued and
    outstanding at April 7, 2007 and April 1,
    2006 net of discount of $4,946 and $6,584 at April 7,
    2007 and April 1, 2006, respectively


10,054



8,416Series B redeemable
    convertible preferred stock, 1,582 shares issued and
    outstanding at April 7, 2007 and April 1,
    2006 net of discount of $7,978 and $9,570 at April 7,
    2007 and April 1, 2006, respectively


12,022



10,430Stockholders deficit:Preferred stock, $.001 par
    value; 5,000 shares authorized; 2,149 shares issued
    and outstanding at April 7, 2007 and April 1, 2006,
    respectively, included in redeemable convertible preferred stock






Common stock, $.001 par
    value; 80,000 shares authorized; 38,915 and
    36,024 shares issued and outstanding at April 7, 2007
    and April 1, 2006, respectively


39



36Additional paid-in capital


162,004



155,039Accumulated deficit


(173,425
)


(155,779
)Accumulated other comprehensive
    loss


(3,018
)


(2,926
)Total stockholders deficit


(14,400
)


(3,630
)Total liabilities and
    stockholders deficit

$
70,553


$
84,622    48




---



##### Table of Contents



MTI
    TECHNOLOGY CORPORATION



CONSOLIDATED
    STATEMENTS OF OPERATIONS

Fiscal
    Years Ended April 7, 2007, April 1, 2006 and April 2,
    2005  2007


2006


2005(In thousands, except per share data)Net product revenue

$
113,570


$
116,529


$
93,947Service revenue


52,388



38,898



38,927Total revenue


165,958



155,427



132,874Product cost of revenue


92,155



94,671



74,142Service cost of revenue


40,822



29,801



33,213Total cost of revenue


132,977



124,472



107,355Gross profit


32,981



30,955



25,519Operating expenses:Selling, general and administrative


42,704



37,091



39,078Amortization of intangibles


743







Restructuring charges


672



1,091



2,024Total operating expenses


44,119



38,182



41,102Operating loss


(11,138
)


(7,227
)


(15,583
)Interest and other expense, net


(624
)


(104
)


(500
)Gain (loss) on foreign currency
    transactions


631



(720
)


318Loss before income tax expense


(11,131
)


(8,051
)


(15,765
)Income tax expense


32



51



22Net loss


(11,163
)


(8,102
)


(15,787
)Amortization of preferred stock
    discount


(3,230
)


(1,970
)


(880
)Dividend on preferred stock


(3,030
)


(1,939
)


(953
)Net loss applicable to common
    shareholders

$
(17,423
)

$
(12,011
)

$
(17,620
)Net loss per share:Basic and diluted

$
(0.46
)

$
(0.34
)

$
(0.51
)Weighted average shares used in
    per share computations:Basic and diluted


37,943



35,541



34,746    49




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##### Table of Contents



MTI
    TECHNOLOGY CORPORATION



CONSOLIDATED
    STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT)

Fiscal
    Years Ended April 7, 2007 April 1, 2006 and April 2,
    2005  Accumulated


Total


TotalAdditional





Other


Stockholders


ComprehensiveCommon Stock


Paid-In


Accumulated


Comprehensive


Equity


IncomeShares


Amount


Capital


Deficit


Loss


(Deficit)


(Loss)Balance at April 3, 2004


34,473


$
34


$
136,316


$
(126,148
)

$
(3,060
)

$
7,142Net loss














(15,787
)






(15,787
)

$
(15,787
)Foreign currency translation
    adjustments


















(316
)


(316
)


(316
)Comprehensive loss for the year
    ended April 2, 2005


























(16,103
)Shares issued under Employee Stock
    Purchase Plan


104







161











161Exercise of stock options


582



1



698











699Issuance of restricted stock






















Deferred compensation










166











166Discount related to Series A
    preferred stock










8,835











8,835Issuance fees related to preferred
    stock










(1,436
)










(1,436
)Dividend on preferred stock














(953
)






(953
)Amortization of preferred stock
    discount














(880
)






(880
)Balance at April 2, 2005


35,159



35



144,740



(143,768
)


(3,376
)


(2,369
)Net loss














(8,102
)






(8,102
)


(8,102
)Foreign currency translation
    adjustments


















450



450



450Comprehensive loss for the year
    ended April 1, 2006


























(7,652
)Shares issued under Employee Stock
    Purchase Plan


140







193











193Exercise of stock options


610



1



560











561Deferred compensation


115







237











237Discount related to Series B
    preferred stock










10,169











10,169Issuance fees related to preferred
    stock










(860
)










(860
)Dividend on preferred stock














(1,939
)






(1,939
)Amortization of preferred stock
    discount














(1,970
)






(1,970
)Balance at April 1, 2006


36,024



36



155,039



(155,779
)


(2,926
)


(3,630
)Net loss














(11,163
)






(11,163
)


(11,163
)Foreign currency translation
    adjustments


















(92
)


(92
)


(92
)Comprehensive loss for the year
    ended April 7, 2007

























$
(11,255
)Shares issued under Employee Stock
    Purchase Plan


121







103











103Exercise of stock options


194



1



95











96Issuance of restricted stock


303







2











2Stock-based compensation










2,565











2,565Issuance of shares for acquisition


2,273



2



3,070











3,072Issuance of warrants for acquisition










974











974Issuance of warrants for line of
    credit guarantee (Canopy)










158











158Issuance fees related to preferred
    stock










(2
)










(2
)Cumulative effect of adjustments
    resulting from the adoption of SAB 108














(223
)






(223
)Dividend on preferred stock














(3,030
)






(3,030
)Amortization of preferred stock
    discount














(3,230
)






(3,230
)Balance at April 7, 2007


38,915


$
39


$
162,004


$
(173,425
)

$
(3,018
)

$
(14,400
)    50




---



##### Table of Contents



MTI
    TECHNOLOGY CORPORATION



CONSOLIDATED
    STATEMENTS OF CASH FLOWS

Fiscal
    Years Ended April 7, 2007, April 1, 2006 and April 2,
    2005  2007


2006


2005(In thousands)Cash flows from operating
    activities:Net loss

$
(11,163
)

$
(8,102
)

$
(15,787
)Adjustments to reconcile net loss
    to net cash used in operating activities:Depreciation and amortization


1,120



487



1,282Provision for losses on accounts
    receivable, net


376



197



14Provision for inventory
    obsolescence


512



589



2,681Loss on disposal of fixed assets


24







96Restructuring charges


673



1,091



2,024Proceeds from sales of accounts
    receivable


11,059







Stock-based compensation expense


2,565



237



166Changes in assets and liabilities:Accounts receivable


377



(3,886
)


(11,323
)Inventories


7,223



(7,301
)


(233
)Prepaid expenses, other
    receivables and other assets


(277
)


(1,654
)


1,213Accounts payable


(17,896
)


12,648



10,706Deferred revenue


1,412



(1,592
)


1,387Accrued and other liabilities


214



(3,887
)


3,422Net cash used in operating
    activities


(3,781
)


(11,173
)


(4,352
)Cash flows from investing
    activities:Cash paid for acquisition


(6,635
)






Capital expenditures for property,
    plant and equipment


(441
)


(360
)


(661
)Net cash used in investing
    activities


(7,076
)


(360
)


(661
)Cash flows from financing
    activities:Net borrowings (payments) on line
    of credit






1,500



(266
)Payment on notes payable


(473
)






Proceeds from exercise of stock
    options and warrants


358



753



860Payment of stock issuance costs


(2
)






Proceeds from issuance of
    preferred stock, net of costs






19,140



13,564Payment of capital lease
    obligations






(78
)


(193
)Net cash provided by (used in)
    financing activities


(117
)


21,315



13,965Effect of exchange rate changes on
    cash


761



(313
)


222Net increase (decrease) in cash
    and cash equivalents


(10,213
)


9,469



9,174Cash and cash equivalents at
    beginning of year


21,660



12,191



3,017Cash and cash equivalents at end
    of year

$
11,447


$
21,660


$
12,191Supplemental disclosures of cash
    flow information:Cash paid during the year for:Interest

$
682


$
285


$
432Income taxes


133



64



7Non-cash investing and financing
    activities:Accrued dividends on preferred
    stock

$
3,030


$
1,939


$
953Fair value of assets acquired


16,715







Fair value of liabilities assumed


4,034







    51




---



##### Table of Contents



MTI
    TECHNOLOGY CORPORATION



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) (1)
    SUMMARY
    OF SIGNIFICANT ACCOUNTING POLICIES  Company
  tm ® on-site
    
    Business Continuity (Disaster Recovery and
    Back-up and
    Recovery)
    Virtualization Technology
    Infrastructure Consolidation and Migration
    Mail and Messaging
    High Density Computing
    Data Storage Solutions and Assessments
    Systems Management
    Data Management, Migration and Consulting  Basis
    of Financial Statement Presentation
  No. 00-10, Accounting for Shipping and Handling Fees and
    Costs, (EITF 00-10)
   52




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##### Table of Contents



MTI
    TECHNOLOGY CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Fiscal
    Year
    Use of
    Estimates
    Revenue
    Recognition
    Hardware
    revenue
  EITF 00-21, Revenue Arrangements with Multiple Deliverables (EITF 00-21) Revenue Recognition in Financial Statements
  
    persuasive evidence of an arrangement exists;
    delivery has occurred;
    fee is fixed or determinable; and
    collectability is reasonably assured.  and/or
  Revenue
    Recognition When Right of Return Exists.
 53




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##### Table of Contents



MTI
    TECHNOLOGY CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Software
    revenue
  EITF 00-21,
  back-up, 97-2 Software Revenue Recognition, (SOP 97-2) SOP 97-2, SOP 98-9, SOP 97-2
  EITF 03-05, Applicability of AICPA Statement of Position
    97-2,
    Software Revenue Recognition, to Non-Software Deliverables in an
    Arrangement Containing More-Than-Incidental Software (EITF 03-05). EITF 03-05, SOP 97-2. SOP 97-2 EITF 00-21
  Service
    revenue
   54




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##### Table of Contents



MTI
    TECHNOLOGY CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  EITF 01-14, Income Statement Characterization of Reimbursements
    Received for Out-of-Pocket Expenses Incurred,
  Multiple
    element arrangements
  EITF 00-21 SOP 97-2. EITF 00-21,
  Other
  EITF 99-19, Reporting Revenue Gross as a Principal versus Net as an
    Agent, EITF 00-21.
  EITF 00-21.
  Shipping
  EITF 00-10, Accounting for Shipping and Handling Fees and
    Costs.
  Cash
    and Cash Equivalents
   55




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##### Table of Contents



MTI
    TECHNOLOGY CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Inventories
  (first-in,
  Property,
    Plant and Equipment
    Allowance
    for Doubtful Accounts and Sales Returns
    Accounting
    for Stock-Based Compensation
  Share-Based
    Payment, Accounting for Stock Based Compensation, Accounting for
    Stock Issued to Employees.
  Sales
    of Accounts Receivable
  Accounting for Transfers and Servicing
    of Financial Assets and Extinguishment of Liabilities, Accounting for
    Servicing of Financial Assets  An Amendment of FASB
    Statement No. 140.
  Liquidity
   56




---



##### Table of Contents



MTI
    TECHNOLOGY CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Income
    Taxes
  Accounting for Income Taxes,
  Intangible
    Assets and Goodwill
  Goodwill and
    Other Intangible Assets.
  Foreign
    Currency
  Foreign Currency Translation,
 57




---



##### Table of Contents



MTI
    TECHNOLOGY CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Concentration
    of Credit Risk and Dependence Upon Suppliers
      Advertising
    costs
    Loss
    Per Share
    Fair
    Value of Financial Instruments
  Disclosure about Fair Value of Financial
    Instruments,
  Staff
    Accounting Bulletin No. 108
  Considering the Effects of Prior Year Misstatements
    when Quantifying Misstatements in Current Year Financial
    Statements.
   58




---



##### Table of Contents



MTI
    TECHNOLOGY CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Recently
    Issued Accounting Standards
  Accounting for Uncertainty in Income Taxes, an
    interpretation of FASB Statement No. 109
  No. 06-3, How Taxes Collected from Customers and Remitted to the
    Governmental Authorities Should Be Presented in the Income
    Statement (That is Gross versus Net Presentation). EITF 06-3 EITF 06-3
    Fair Value Measurements
  (2)
    BUSINESS
    ACQUISITIONS  Business
    Combinations.
 59




---



##### Table of Contents



MTI
    TECHNOLOGY CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    
    $6,000 in cash;
    a note in the amount of $2,000 bearing interest at 5% and due in
    twelve quarterly payments beginning September 30, 2006;
    2,272,727 shares of the Companys common
    stock  valued at $1.3520 per common share;
    a warrant to purchase 1,000,000 shares of the
    Companys common stock at an exercise price of $1.32 per
    share  the fair value of the warrant was calculated
    to be $974;
    direct acquisition costs of $634;
    assumption of certain liabilities.      Current assets

$
4,927Property, plant and equipment


107Intangible assets


3,500Goodwill


8,181Total assets acquired


16,715Current liabilities


(4,034
)Total purchase price

$
12,681     Gross Carrying


AccumulatedAmount


AmortizationCustomer relationships

$
2,900


$
217Backlog


300



300Trademarks/tradenames


250



187Non-compete agreement


50



38$
3,500


$
742     2008

$
3652009

$
2902010

$
2902011

$
2902012

$
290    60




---



##### Table of Contents



MTI
    TECHNOLOGY CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      lock-up
  (3)
    RESTRUCTURING    2007
    Restructuring Program
      Beginning


2007


2007


EndingCategory

Balance


Charges


Utilization


BalanceFacilities actions

$



$
10


$
(10
)

$
Workforce reduction






491



(483
)


8Total

$



$
501


$
(493
)

$
8   2005
    Restructuring Program
   61




---



##### Table of Contents



MTI
    TECHNOLOGY CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Fiscal
    2007
  AdditionalBeginning


Charges


Utilization


EndingCategory

Balance


During 2007


During 2007


BalanceFacilities actions

$
603


$



$
(58
)

$
545Workforce reduction


29







(29
)


Total

$
632


$



$
(87
)

$
545   Fiscal
    2006
  AdditionalBeginning


Charges


Utilization


EndingCategory

Balance


During 2006


During 2006


BalanceFacilities actions

$
930


$



$
(327
)

$
603Workforce reduction


941



941



(1,853
)


29Total

$
1,871


$
941


$
(2,180
)

$
632   Fiscal
    2005
  AdditionalInitial


Charges


Utilization


EndingCategory

Provision


During 2005


During 2005


BalanceFacilities actions

$
1,011


$



$
(81
)

$
930Workforce reduction


1,161







(220
)


941Total

$
2,172


$



$
(301
)

$
1,871       2002
    Restructuring Program
   62




---



##### Table of Contents



MTI
    TECHNOLOGY CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Fiscal
    2007
  AdditionalBeginning


Charges


Utilization


EndingCategory

Balance


During 2007


During 2007


BalanceFacilities actions

$
215


$
172


$
(347
)

$
40   Fiscal
    2006
  AdditionalBeginning


Charges


Utilization


EndingCategory

Balance


During 2006


During 2006


BalanceFacilities actions

$
896


$
150


$
(831
)

$
215   Fiscal
    2005
  AdditionalChargesBeginning


During


Utilization


EndingCategory

Balance


2005


During 2005


BalanceFacilities actions

$
1,830


$



$
(934
)

$
896       (4)
    INVENTORIES    April 7,


April 1,2007


2006Finished goods

$
1,454


$
9,611Service spares and components


1,264



855$
2,718


$
10,466     (5)
    COMPOSITION
    OF CERTAIN FINANCIAL STATEMENT CAPTIONS    April 7,


April 1,2007


2006Prepaid maintenance contracts

$
6,678


$
5,672Other


2,120



2,400$
8,798


$
8,072  63




---



##### Table of Contents



MTI
    TECHNOLOGY CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    April 7,


April 1,2007


2006Office furniture and fixtures

$
10,594


$
10,978Machinery and equipment


8,566



8,580Leasehold improvements


1,084



2,09820,244



21,656Less accumulated depreciation and
    amortization


(19,534
)


(21,101
)$
710


$
555     April 7,


April 1,2007


2006Salaries and benefits

$
3,844


$
2,661Sales tax


1,765



2,236Customer deposits


1,180



519Commissions


1,272



684Warranty costs


700



662Other


785



661$
9,546


$
7,423   (6)
    PRODUCT
    WARRANTIES      April 7,


April 1,2007


2006Balance at the beginning of the
    period

$
662


$
598Current year warranty charges


534



833Utilization


(496
)


(769
)Balance at the end of the period

$
700


$
662   (7)
    DEBT  Credit
    Agreement, Lines of Credit and Notes Payable
   64




---



##### Table of Contents



MTI
    TECHNOLOGY CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
             65




---



##### Table of Contents



MTI
    TECHNOLOGY CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      (8)
    SALES OF
    ACCOUNTS RECEIVABLE  Accounting for Transfers and Servicing of Financial
    Assets and Extinguishment of Liabilities.
 66




---



##### Table of Contents



MTI
    TECHNOLOGY CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  (9)
    INCOME
    TAXES    Fiscal Year EndedApril 7,


April 1,


April 2,2007


2006


2005U.S.

$
(13,800
)

$
(5,737
)

$
(8,948
)Foreign


2,318



(2,314
)


(6,817
)$
(11,482
)

$
(8,051
)

$
(15,765
)     Current


Deferred


Total2007:Federal

$



$



$
State


32







32Foreign










$
32


$



$
322006:Federal

$



$



$
State


39







39Foreign


12







12$
51


$



$
512005:Federal

$



$



$
State


3







3Foreign


19







19$
22


$



$
22     Fiscal Year EndedApril 7,


April 1,


April 2,2007


2006


2005Federal statutory rate


(34.0
)%


(34.0
)%


(34.0
)%Effect of foreign operations


0.2



2.6



0.1State taxes, net of federal benefit


(5.9
)


(3.4
)


(3.3
)Change in valuation allowance


13.9



(10.6
)


30.4Non-deductible expenses


1.8



2.2



0.7Change to beginning deferred tax
    assets


12.7



33.4



3.5Expiration of NOL


11.9



24.4



Change in effective state tax rate
    in valuing deferred tax assets


(0.3
)


(11.9
)


Other






(2.1
)


2.70.3
%


0.6
%


0.1
%  67




---



##### Table of Contents



MTI
    TECHNOLOGY CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2007


2006


2005Deferred tax assets:Tax operating loss carryforwards

$
52,160


$
51,523


$
49,951Capital loss carryforwards


2,475



2,829



2,617Intangible assets


1,485



1,912



2,304Accrued expenses


509



415



2,389Inventory reserves


523



161



378Depreciation


428



268



643Deferred income


356



612



559Other deferred tax assets


3,392



1,308



1,060Total deferred tax assets


61,328



59,028



59,901Deferred tax liabilities


(730
)


(28
)


(62
)Net deferred tax assets


60,598



59,000



59,839Less valuation allowance


60,598



59,000



59,839$



$



$
            68




---



##### Table of Contents



MTI
    TECHNOLOGY CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (10)
    NET LOSS
    PER SHARE    2007


2006


2005Numerator:Net loss

$
(11,163
)

$
(8,102
)

$
(15,787
)Amortization of preferred stock
    discount


(3,230
)


(1,970
)


(880
)Dividend on preferred stock


(3,030
)


(1,939
)


(953
)Net loss applicable to common
    shareholders

$
(17,423
)

$
(12,011
)

$
(17,620
)Denominator:Denominator for net loss per
    share, basic and diluted weighted-average shares outstanding


37,943



35,541



34,476Net loss per share, basic and
    diluted

$
(0.46
)

$
(0.34
)

$
(0.51
)       (11)
    STOCK-BASED
    COMPENSATION  Adoption
    of SFAS 123(R)
  Share-Based Payment, Accounting for Stock Based
    Compensation, Accounting for Stock Issued to Employees.
 69




---



##### Table of Contents



MTI
    TECHNOLOGY CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          2007


2006


2005Service cost of revenue

$
254


$



$
Selling, general and administrative


2,311



237



166Total stock-based compensation
    expense

$
2,565


$
237


$
166     2006


2005Net loss applicable to common
    shareholders, as reported

$
(12,011
)

$
(17,620
)Add: Stock-based compensation
    expense included in reported net loss, net of related tax effects


237



166Deduct: Stock-based compensation
    expense determined under the fair value method for all awards,
    net of related tax effects


(2,512
)


(2,945
)Pro forma net loss applicable to
    common shareholders

$
(14,286
)

$
(20,399
)Net loss per share:Basic and diluted, as reported

$
(0.34
)

$
(0.51
)Basic and diluted, pro forma

$
(0.40
)

$
(0.59
)     2007


2006


2005Risk free interest rate


4.64
%


4.22
%


3.86
%Expected volatility


75.0
%


80.0
%


70.0
%Expected life in years


5.8



5.0



5.0Dividend yield


None



None



NoneWeighted-average fair value at
    grant date

$
0.97


$
1.04


$
0.63  70




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##### Table of Contents



MTI
    TECHNOLOGY CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Stock
    Option Plan
           71




---



##### Table of Contents



MTI
    TECHNOLOGY CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    WeightedAverageShares


Exercise PriceOptions outstanding at
    April 3, 2004


10,832


$
4.97Granted


2,331



2.46Exercised


(501
)


1.33Forfeited/Cancelled


(1,255
)


6.34Options outstanding at
    April 2, 2005


11,407



4.12Granted


1,051



1.58Exercised


(610
)


.92Forfeited/Cancelled


(2,239
)


5.74Options outstanding at
    April 1, 2006


9,609



3.70Granted


2,866



.92Exercised


(194
)


.51Forfeited/Cancelled


(2,858
)


3.44Options outstanding at
    April 7, 2007


9,423


$
3.00       Weighted





Exercisable(1)Average


Weighted





WeightedNumber of


Remaining


Average





AverageOptions


Contractual


Exercise


Number of


ExerciseRange of Exercise Price

Outstanding


Life


Price


Options


Price(In 000s)


(In years)





(In 000s)$0.27 - $0.38


143



5.61


$
0.34



143


$
0.340.55 - 0.55


1,028



5.24



0.55



1,028



0.550.57 - 0.82


313



9.77



.81



9



.670.85 - 0.85


1,928



9.56



.85



437



.850.90 - 1.35


1,053



6.55



1.21



708



1.221.44 - 1.80


1,025



7.74



1.63



671



1.661.82 - 2.13


516



4.93



2.05



493



2.052.20 - 2.20


1,044



6.62



2.20



1,044



2.202.45 - 3.63


983



6.85



2.98



807



3.034.13 - 36.9


1,390



2.59



11.89



1,390



11.899,423



6.61


$
3.00



6,730


$
3.75   Note:
  (1)
    
    Options vested and exercisable at April 7, 2007,
    April 1, 2006 and April 2, 2005, were 6,730,153,
    7,463,679 and 7,904,875 respectively. At April 7, 2007, options
    expected to vest were 9,050,136 had a weighted average exercise
    price of $3.08, an aggregate intrinsic value of $277 and a
    weighted average remaining contractual term of 0.27 years. 72




---



##### Table of Contents



MTI
    TECHNOLOGY CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Form S-8.
  Non-Employee
    Directors Option Program
    Employee
    Stock Purchase Plan
   73




---



##### Table of Contents



MTI
    TECHNOLOGY CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Restricted
    Stock
          Wtd. Avg. RemainingRestricted Stock


Contractual TermOutstanding


(Years)Non-vested restricted shares at
    April 1, 2006


127,778Awarded


4,238,597Vested


(304,318
)Cancelled/Forfeited


(399,999
)Non-vested restricted shares at
    April 7, 2007


3,662,058



1.14     (12)
    PREFERRED
    STOCK  Series A
    Redeemable Convertible Preferred Stock
   74




---



##### Table of Contents



MTI
    TECHNOLOGY CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          Form 10-K).
  Series B
    Redeemable Convertible Preferred Stock
     75




---



##### Table of Contents



MTI
    TECHNOLOGY CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
           76




---



##### Table of Contents



MTI
    TECHNOLOGY CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (13)
    COMMITMENTS
    AND CONTINGENCIES  Leases
      2008

$
2,4942009


1,3102010


1,0762011


691$
5,571     Litigation
    Employment
    Agreements/Indemnification
          (14)
    BUSINESS
    SEGMENT AND INTERNATIONAL INFORMATION   77




---



##### Table of Contents



MTI
    TECHNOLOGY CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  mark-up
    2007


2006


2005Revenue:United States

$
102,653


$
93,357


$
76,907Germany


22,281



23,833



23,383France


23,846



22,416



21,803United Kingdom


17,178



15,821



9,706Ireland










1,075Total revenue

$
165,958


$
155,427


$
132,874   April 7,


April 1,


April 2,2007


2006


2005Identifiable assets:United States

$
22,995


$
51,297


$
29,431Germany


10,698



7,722



11,133France


13,674



13,460



12,985United Kingdom


6,753



6,765



3,587Ireland


310



194



546Tangible assets


54,430



79,438



57,682Goodwill and intangible
    assets  United States


13,998



3,059



3,059Goodwill  Europe


2,125



2,125



2,125Total assets

$
70,553


$
84,622


$
62,866     2007


2006


2005Server

$
82,213


$
78,358


$
69,093Tape libraries


9,184



16,555



9,445Software


22,173



21,616



15,409Service


52,388



38,898



38,927$
165,958


$
155,427


$
132,874    78




---



##### Table of Contents



MTI
    TECHNOLOGY CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  (15)
    RELATED-PARTY
    TRANSACTIONS          (16)
    EMPLOYEE
    BENEFITS   79




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##### Table of Contents



MTI
    TECHNOLOGY CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  (17)
    QUARTERLY
    FINANCIAL DATA (UNAUDITED)    Net Loss


Net LossNet


Attributable to


per Share,Total


Gross


Operating


Income


Common


Basic andRevenue


Profit


Loss


(Loss)


Shareholders


Diluted2007Fourth quarter

$
37,754


$
7,251


$
(5,426
)

$
(5,492
)

$
(7,130
)

$
(0.18
)Third quarter


45,221



9,270



(1,396
)


(1,512
)


(3,107
)


(0.08
)Second quarter


40,291



8,510



(3,122
)


(3,290
)


(4,832
)


(0.13
)First quarter


42,692



7,950



(1,194
)


(869
)


(2,354
)


(0.07
)Total

$
165,958


$
32,981


$
(11,138
)

$
(11,163
)

$
(17,423
)2006Fourth quarter

$
44,299


$
8,589


$
(117
)

$
201


$
(1,253
)

$
(0.03
)Third quarter


40,162



7,887



(1,557
)


(1,787
)


(2,988
)


(0.08
)Second quarter


31,635



6,401



(3,463
)


(3,513
)


(4,148
)


(0.12
)First quarter


39,331



8,078



(2,090
)


(3,003
)


(3,622
)


(0.10
)Total

$
155,427


$
30,955


$
(7,227
)

$
(8,102
)

$
(12,011
)        80




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##### Table of Contents



MTI
    TECHNOLOGY CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  (18)
    SUBSEQUENT
    EVENTS   81




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##### Table of Contents



SCHEDULE II
    MTI TECHNOLOGY CORPORATION
    VALUATION AND QUALIFYING ACCOUNTS
    Fiscal Years Ended April 7, 2007, April 1, 2006 and April 2,
    2005 Balance at


Allowance for





Balance atBeginning


Bad Debts and


Write-offs and


End ofof Period


Sales Returns


Adjustments


Period(In thousands)Year ended April 7, 2007Allowance for doubtful accounts

$
361


$
376


$
(293
)

$
444Allowance for sales returns


153



18







171$
514


$
394


$
(293
)

$
615Year ended April 1, 2006Allowance for doubtful accounts

$
251


$
197


$
(87
)

$
361Allowance for sales returns


200



402



(449
)


153$
451


$
599


$
(536
)

$
514Year ended April 2, 2005Allowance for doubtful accounts

$
237


$
14


$



$
251Allowance for sales returns


200



170



(170
)


200$
437


$
184


$
(170
)

$
451  82