NOTE 6. Inventory

Inventory is stated at the lower of cost (first-in, first-out) or market and consists primarily of cellular phones and cellular phone accessories. The Company records a reserve against inventories to account for obsolescence and possible price concessions required to liquidate inventories below cost. During the nine months ended September 30, 2018, the inventory reserve balance was increased by $272,000. As of September 30, 2018 and December 31, 2017, the inventory reserve was $272,000 and $36,000, respectively. Inventory consists of the following (in thousands):

	September 30, 2018 (unaudited)			December 31, 2017 (audited)
Finished goods	$	3,956		$	1,667
Inventory reserve		(272	)		(36	)
Net inventory	$	3,684		$	1,631