Note 3. Inventory

Inventory consists of the following:

	September 30,		December 31,
	2011		2010
	(unaudited)

Purchased parts	$	269	$	269
Finished goods		624		624
Total inventory		893		893
Less: inventory non-current.		785		785
Total inventory current	$	108	$	108

Inventory is valued at the lower of cost or market, using the first in, first out method. Due to the uncertainty as to the timing of sales, the Company has classified $785,000 of inventory as non-current. Additionally, as required by FASB ACS 330-10-30-7 relating to inventory costs, items such as idle facility expense, excessive spoilage, freight, handling costs and re-handling costs are recognized as current period charges. The allocation of fixed production overheads to the costs of conversion are based upon the normal capacity of the production facility. Fixed overhead costs associated with idle capacity are expensed as incurred.