Inventory - Note 4

12 Months Ended

Dec. 31, 2012

Inventory Disclosure

Inventory - Note 4

4. Inventory

Inventory consists of the following, net of allowances:

		December 31,
		2012		2011
Raw materials	$	361,000	$	2,741,000
Finished goods		136,000		1,513,000
	$	497,000	$	4,254,000

The inventory at December 31, 2012 consisted of key components supplied under our "Image by PicoP" ingredient brand business model, and finished goods primarily composed of our accessory pico projectors. The inventory at 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 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 its estimated scrap value when management determines that it is not probable that the inventory will be consumed through the normal course of business during the next twelve months. In 2012 and 2011, we recorded inventory write-downs of $1,094,000, and $1,563,000, respectively. At December 31, 2012 and 2011, we have aggregate allowances recorded of $9,916,000 and $11,138,000, respectively, offsetting inventory on hand deemed to be obsolete or scrap inventory.