3.	INVENTORY

Inventories are stated at the lower of cost or market, using the first-in first-out method. Cost includes materials, labor and manufacturing overhead related to the purchase and production of inventories. We regularly review inventory quantities on hand, future purchase commitments with our supplies, and the estimated utility of our inventory. If the review indicates a reduction in utility below carrying value, we reduce our inventory to a new cost basis through a charge to cost of goods sold. Allowance for slow moving items increased $6,366 due to a type of aerostat material which was custom ordered. Inventory consists of the following at September 30, 2017 and December 31, 2016:

	September 30, 2017			December 31, 2016
Raw Materials	$	110,765		$	48,014
Work in Progress		287,175			254,258
Finished Goods		346,793			160,819
Less valuation allowance		(9,572	)		(3,206	)
Total	$	735,161		$	459,885