4.	INVENTORY

Inventories are stated at the net realizable value, using the first-in first-out method. Cost includes materials, labor and manufacturing overhead related to the purchase and production of inventories. We regularly review inventory quantities on hand, future purchase commitments with our supplies, and the estimated utility of our inventory. If the review indicates a reduction in utility below carrying value, we reduce our inventory to a new cost basis through a charge to cost of goods sold. At September 30, 2018, $1,050,740 of the $1,238,331 Work in Process Inventory was related to the WASP multi-mission capable tactical aerostat valued in excess of $1.7 million dollars which was delivered to the Department of Defense on October 9, 2018. Inventory consists of the following at September 30, 2018 and December 31, 2017:

	September 30, 2018			December 31, 2017
Raw Materials	$	115,926		$	114,119
Work in Progress		1,238,331			482,770
Finished Goods		416,978			398,912
In Transit		-			5,468
Less valuation allowance		(9,572	)		(9,572	)
Total	$	1,761,663		$	991,697