Inventory - Note 4

9 Months Ended

Sep. 30, 2011

Inventory Disclosure

Inventory

4. INVENTORY

Inventory consists of the following:

		September 30,		December 31,
		2011		2010
Raw materials	$	3,151,000	$	3,924,000
Finished goods		1,292,000		2,151,000
	$	4,443,000	$	6,075,000

The inventory at September 30, 2011 and December 31, 2010 consisted of raw materials primarily for our accessory pico projectors and PicoP display engine, and finished goods primarily composed of our accessory pico projectors. Historically our cost has been higher than our selling price for our accessory pico projectors and we have recognized write downs for lower of cost or market adjustments primarily comprised of adjustments to reflect our current estimated selling prices for our inventory. During the three and nine months ended September 30, 2011, we recognized zero and $944,000 in write downs for lower of cost or market adjustments.

Inventory is stated at the lower of cost or market, with cost determined on a net realizable value basis. Management periodically assesses the need to provide for obsolescence of inventory and adjusts the carrying value of inventory to its net realizable value when required. In addition, we reduce the value of our inventory to our estimated scrap value when management determines that it is not probable that the inventory will be consumed through normal production during the next twelve months.