Note 2 – Inventories:

The composition of inventories at December 31, 2015 and 2014 are as follows:

	2015			2014
Raw materials	$	3,749,702		$	3,365,093
Finished goods		4,445,130			5,021,536
Inventories, gross		8,194,832			8,386,629

Inventory reserves		(279,882	)		(277,296	)

Inventories, net	$	7,914,950		$	8,109,333

The inventory reserves shown in the table above reflect slow moving and obsolete inventory.

The Company operates a vendor managed inventory program with one of its customers to improve the promotion of the Company's products. The Company manages the inventory levels at this customer’s warehouses and recognizes revenue as the products are sold by the customer. The inventories managed at the customer’s warehouses amounted to approximately $543,000 and $493,000 at December 31, 2015 and 2014, respectively.