Note 4 – Inventories

Inventories net of reserves are summarized as follows:

	(unaudited)
	June 30, 2011			Dec. 31, 2010
Raw Materials	$	6,414		$	6,151
Work in process		1,718			1,971
Finished Goods		7,775			7,711
		15,907			15,833
Less current inventory		(7,991	)		(7,672	)
		7,916			8,161
Less Reserve primarily for excess inventory		(1,985	)		(2,068	)
	$	5,931		$	6,093

Inventories are stated at the lower of cost, determined by the first-in, first-out (“FIFO”) method, or market.

The Company periodically analyzes anticipated product sales based on historical results, current backlog and marketing plans. Based on these analyses, the Company anticipates that certain products will not be sold during the next twelve months. Inventories that are not anticipated to be sold in the next twelve months, have been classified as non-current.

Approximately 46% and 50% of the non-current inventories were comprised of finished goods at June 30, 2011 and December 31, 2010, respectively. The Company has established a program to use interchangeable parts in its various product offerings and to modify certain of its finished goods to better match customer demands. In addition, the Company has instituted additional marketing programs to dispose of the slower moving inventories.

The Company continually analyzes its slow-moving, excess and obsolete inventories. Based on historical and projected sales volumes and anticipated selling prices, the Company establishes reserves. Products that are determined to be obsolete are written down to net realizable value. If the Company does not meet its sales expectations, these reserves are increased. The Company believes reserves are adequate and inventories are reflected at net realizable value.