Note 2 - Inventories

3 Months Ended

Jun. 30, 2016

2.	INVENTORIES

Inventories are stated at the lower of cost or market. Cost is determined by the first-in, first-out method. Inventories consist of the following:

	June 30, 201 6		March 31, 201 6
	(in thousands)
Raw materials	$	474	$	375
Work in process		3,627		3,782
Finished goods (1)		4,118		3,543
Supplies		169		156
Inventories, net	$	8,388	$	7,856

(1)

Net of reserve for obsolescence of $8,000 at June 30, 2016 and March 31, 2016, respectively.

The Company recognizes abnormal production costs, including fixed cost variances from normal production capacity, as an expense in the period incurred. Non-inventoriable fixed costs related to astaxanthin production of $28,000 were charged to cost of sales for the quarter ended June 30, 2016. Start-up costs for our extraction facility of $170,000 and non-inventoriable fixed costs related to astaxanthin production of $44,000 were charged to cost of sales for the quarter ended June 30, 2015.