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Inventory

6 Months Ended

Jun. 30, 2013

Notes to Financial Statements

Inventory, consisting of materials, labor and manufacturing overhead, is stated at the lower of cost (first-in, first-out) or market and consisted of the following at:

		June 30, 2013				December 31, 2012
Raw materials		$	3,224,000			$	3,988,000
Work in progress			267,000				2,000
Finished goods			511,000				587,000
Reserve for obsolescence			(1,969,000	)			(2,374,000	)
Total		$	2,033,000			$	2,203,000

In the three months ended June 30, 2013, the Company exchanged excess inventory with an original book value totaling $670,000 as settlement for vendor payables. Inventory reserve charged to operations amounted to $200,000 and $893,000 for the six months ended June 30, 2013 and 2012, respectively. Inventory valuation adjustments and other inventory write-offs amounted to $606,000 and $76,000 for the six months ended June 30, 2013 and 2012, respectively.

The entire disclosure for inventory. This may include, but is not limited to, the basis of stating inventory, the method of determining inventory cost, the major classes of inventory, and the nature of the cost elements included in inventory. If inventory is stated above cost, accrued net losses on firm purchase commitments for inventory and losses resulting from valuing inventory at the lower-of-cost-or-market may also be included. For LIFO inventory, may disclose the amount and basis for determining the excess of replacement or current cost over stated LIFO value and the effects of a LIFO quantities liquidation that impacts net income.

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