NOTE 10 – INVENTORIES

Inventories are stated at the lower of cost or net realizable value using the first-in first-out method. Shipping and handling costs are classified as a component of cost of sales in the consolidated statements of operations. Sales demonstration inventory is comprised of measuring, imaging and realization devices utilized by sales representatives to present our products to customers. Management expects these products to remain in sales demonstration inventory for approximately 12 months and are subsequently sold at prices that produce reduced gross margins. Service inventory is comprised of inventory that is not expected to be sold within 12 months, such as training and loaned equipment.

Inventories consist of the following:


	As of March 28, 2015		As of December 31, 2014
Raw materials	$	27,428	$	27,058
Finished goods		18,615		13,075
Sales demonstration inventory		20,609		19,201

Inventory, net	$	66,652	$	59,334


Service inventory	$	21,494	$	20,646