INVENTORY - Note 4

6 Months Ended

Jun. 30, 2014

Inventory Disclosure

Inventory - Note 4

4. INVENTORY

Inventory consists of the following:

		June 30,		December 31,
		2014		2013
Raw materials	$	5,000	$	23,000
Finished goods		26,000		26,000
	$	31,000	$	49,000

The inventory at June 30, 2014 and December 31, 2013 consisted of components and finished goods primarily composed of our accessory pico projectors. Inventory is stated at the lower of cost or market. 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. During the six months ended June 30, 2014, we recorded inventory write-downs of $25,000. In 2013, we recorded inventory write-downs of $303,000. At June 30, 2014 and December 31, 2013, we have recorded aggregate write-downs of $7,605,000 and $7,964,000, respectively, offsetting inventory deemed to be obsolete or scrap inventory. From time to time, we may enter into arrangements to sell the obsolete or scrap inventory, or enter into consignment agreements with third-parties to sell the units, resulting in a gain in the period such transactions are realized.