NOTE 5 – INVENTORIES

At December 31, 2017 and 2016, inventories consisted of the following:

	December 31, 2017			December 31, 2016
Raw materials	$	998,751		$	1,003,359
Work-in-process		2,629,570			639,345
Finished goods		1,239,168			772,652
		4,867,489			2,415,356
Less: reserve for obsolete inventories		(313,930	)		(21,177	)
	$	4,553,559		$	2,394,179

The Company establishes a reserve to mark down its inventories for estimated unmarketable inventories equal to the difference between the cost of inventories and the estimated net realizable value based on assumptions about the usability of the inventories, future demand and market conditions. For the year ended December 31, 2017 and 2016, the Company increased its reserve for obsolete inventory by approximately $285,334 and $0, respectively, which has been included in cost of revenues on the accompanying consolidated statements of operations and comprehensive loss.