NOTE 4. INVENTORIES

Inventories consist of finished goods, raw materials and work in process and are stated at the lower of cost or market and consist of the following (in thousands):

	December 31, 2013			December 31, 2012

Raw materials	$	1,951		$	1,927
Work-in-process		181			1,569
Finished goods		9,056			6,787
Less: allowance for obsolescence		(1,043	)		(696	)


Total	$	10,145		$	9,587

Inventories relate to the manufacturing costs of the Company's Gralise, Zipsor, Lazanda and CAMBIA products at December 31, 2013.

The fair value of inventories acquired included a step-up in the value of CAMBIA inventories of $3.7 million which is being amortized to cost of sales as the acquired inventories are sold. The cost of sales related to the step-up value of CAMBIA was $0.2 million in 2013. The fair value of inventories acquired included a step-up in the value of Lazanda inventories of $0.6 million which will be amortized to cost of sales as the acquired inventories are sold. The cost of sales related to the step-up value of Lazanda was $0.1 million in 2013. At December 31, 2012, the fair value of inventories acquired related to the Zipsor acquisition in June 2012 included a step-up in the value of Zipsor inventories of $1.2 million, which was amortized to cost of sales through April 2013 as the acquired inventories were sold.