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INVENTORIES

12 Months Ended

Dec. 31, 2013

NOTE 8 - INVENTORY

Inventory is comprised of the following:

	As of December 31,
	2013			2012
Raw materials	$	94,681		$	167,413
Finished goods		1,028,037			218,406
Inventory in transit		221,728			-
Less inventory reserve		(90,725	)		(27,843	)
Net inventory	$	1,253,721		$	357,976

Raw materials relate to inventory at the Company’s Phototron subsidiary, which purchases components from its vendors and then assembles finished units that are shipped to its customers. At December 31, 2013 the Company reviewed Phototron’s inventory and determined that impaired inventory totaled $40,725, an increase of $12,882 from the $27,843 of impaired inventory as of December 31, 2012. As a result, the Company recorded a $12,882 non-cash inventory impairment expense as of December 31, 2013 while also increasing the inventory reserve from $27,843 to $40,725 as of December 31, 2013. In addition, the Company also expensed $6,640 to cost of goods sold as of December 31, 2013 in relation to low-priced items such as nuts and bolts that had previously been capitalized as inventory.

Finished goods inventory relates to product at the Company’s retail stores, with the gross finished goods inventory totaling $1,078,037 as of December 31, 2013. This is product purchased from distributors, and in some cases directly from the manufacturer, and resold at our retail stores. During the twelve months ended December 31, 2013, the Company identified $50,000 of inventory impairment related to inventory held at its retail stores and recorded this as a $50,000 non-cash inventory impairment expense while also recording a $50,000 inventory reserve.

Inventory in transit relates to six containers of product that the Company is purchasing from an overseas vendor. As of December 31, 2013 the containers of product had not arrived in the United States and therefore were recorded as inventory in transit. The products purchased are typical items sold at the Company’s retail stores, such as lights, tents, reflectors, and ballasts. The containers of product/inventory are scheduled to arrive in the first quarter of fiscal year 2014.

- Definition

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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