NOTE 3-BALANCE SHEET DETAIL

Accounts Receivable

Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the Company's best estimate of the amount of probable credit losses existing in accounts receivable and is based on historical write-off experience and any specific customer issues that have been identified. Account balances are charged off against the allowance when it is probable the receivable will not be recovered. The Company had one customer who accounted for 8% at December 31, 2011 and 10% at December 31, 2010 of the Company's total accounts receivable balance.

Inventories

Inventories consist of the following (in thousands):

	December 31,
	2011		2010
Raw materials	$	6,587	$	4,204
Finished goods		4,142		2,244
Total	$	10,729	$	6,448

Property and Equipment, net

Property and equipment, net consists of the following (in thousands):

	December 31,
	2011			2010
Leasehold improvements	$	590		$	361
Office equipment and furniture		2,761			2,702
Machinery and equipment		2,893			2,688
		6,244			5,751
Less: Accumulated depreciation		(5,391	)		(5,154	)
Property and equipment, net	$	853		$	597

Depreciation expense related to property and equipment was $446,000 in 2011, $525,000 in 2010, and $664,000 in 2009.

Intangible Assets

Intangible assets were comprised of a patent sublicense acquired from Palomar in 2006 and a technology sublicense acquired in 2002. The components of intangible assets at December 31, 2011 and 2010 were as follows (in thousands):

	Gross Carrying Amount		Accumulated Amortization Amount		Net Amount
December 31, 2011
Patent sublicense	$	1,218	$	793	$	425
Technology sublicense		538		517		21
Total	$	1,756	$	1,310	$	446
December 31, 2010
Patent sublicense	$	1,218	$	656	$	562
Technology sublicense		538		463		75

Total	$	1,756	$	1,119	$	637

Amortization expense for intangible assets was $191,000 in 2011, $192,000 in 2010, and $196,000 in 2009.

Based on intangible assets recorded at December 31, 2011, and assuming no subsequent additions to, or impairment of the underlying assets, the remaining estimated annual amortization expense is expected to be as follows (in thousands):

Year ending December 31,	Amount
2012	$	158
2013		138
2014		138
2015		12

Total	$	446

Accrued Liabilities

Accrued liabilities consist of the following (in thousands):

	December 31,
	2011		2010
Payroll and related expenses	$	4,172	$	3,035
Warranty		1,121		796
Customer deposits		1,054		131
Sales tax		839		809
Professional fees		483		335
Royalty		434		475
Income tax		276		-
Sales and marketing accruals		191		131
Other		692		482
Total	$	9,262	$	6,194