NOTE 8 – INVENTORIES

Inventories consist of raw materials and finished goods on our Nexafed product at June 30, 2016. Inventories are stated at the lower of cost (first-in, first-out method) or market (net realizable value). We write down inventories to net realizable value based on forecasted demand and market conditions, which may differ from actual results. Our purchases of ingredients and other materials required in our development and clinical trial activities are expensed as incurred.

Inventories are summarized as follows:

	June 30,		December 31,
	2016		2015
	(in thousands)
Raw and packaging materials	$	98	$	-
Finished goods		116		346
Total		214		346
Less: reserve for finished goods		(32)		(70)
Net inventory	$	182	$	276

Inventory reserve activity during the six months ended June 30, 2016 and 2015 was as follows:

	2016		2015
	(in thousands)
Reserve balance at January 1,	$	70	$	-
Reserve expense – raw and packaging materials		-		260
Reserve expense – finished goods		26		47
		96		307
Inventory destruction – raw and packaging materials		-		(260)
Inventory destruction - finished goods		(64)		-
Reserve balance at June 30,	$	32	$	47