Note 3.

Fixed Assets

Fixed assets consist of the following at December 31:

	2011			2010
	(in thousands)
Furniture and fixtures	$	47		$	47
Laboratory equipment		508			508
Computer and communications equipment		261			261
Design and tooling		1,204			1,204
Machinery and equipment		167			777
		2,187			2,797
Less accumulated depreciation and amortization		(1,825	)		(1,742	)
Total	$	362		$	1,055

For the years ended December 31, 2011 and 2010, depreciation expense was $368,000 and $392,000, respectively. The Company did not allocate any of the depreciation expense of the machinery and equipment or the design and tooling into inventory as there was no manufacturing. This depreciation was included as a selling, general and administrative expense as excess idle time.

During 2011, the Company determined that the value associated with certain its machinery and equipment was impaired and recorded an adjustment of $27,000 to write down the excess value. In 2010, the Company determined that its construction in progress was diminished and recorded an impairment of $399,000 to adjust the value to zero.

During the fourth quarter of 2011, the Company settled a suit filed by a supplier. The supplier alleged that the Company owes it approximately $377,000. As part of this settlement, the Company transferred the title to three presses to the supplier. The supplier released the lien it had previously placed on the Company’s machinery and equipment. See Note 12 “Legal Proceedings” for additional information regarding this settlement.