NOTE 6. INVENTORIES

Inventories consist of finished goods, raw materials and work in process and are stated at the lower of cost or market and consist of the following (in thousands):

	September 30,			December 31,
	2013			2012

Raw materials	$	2,055		$	1,927
Work-in-process	218			1,569
Finished goods	6,488			6,787
Less: allowance for obsolescence	(939		)	(696		)
Total	$	7,822		$	9,587

Inventories relate to the manufacturing costs of the Company’s Gralise, Lazanda and Zipsor products.

The fair value of inventories acquired included a step-up in the value of Lazanda inventories of $0.6 million which will be amortized to cost of sales as the acquired inventories are sold. At December 31, 2012, the fair value of inventories acquired related to the Zipsor acquisition in June 2012 included a step-up in the value of Zipsor inventories of $1.2 million, which was amortized to cost of sales through April 2013 as the acquired inventories were sold.