Inventory - Note 4

3 Months Ended

Mar. 31, 2012

Inventory Disclosure

Inventory

4. INVENTORY

Inventory consists of the following:

		March 31,		December 31,
		2012		2011
Raw materials	$	128,000	$	2,741,000
Finished goods		991,000		1,513,000
	$	1,119,000	$	4,254,000

The inventory at March 31, 2012 and December 31, 2011 consisted of raw materials primarily for our accessory pico projectors and PicoP display engine, and finished goods primarily composed of our accessory pico projectors. Inventory for the three months ended March 31, 2012 also included net write downs of $1.1 million to adjust our inventory value to reflect our lowered sales forecast of pico projectors resulting from our decision to reduce marketing activities for our first-generation PicoP technology products as availability of our next-generation PicoP technology approaches. Inventory is stated at the lower of cost or market, with cost determined on 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.