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INVENTORIES

12 Months Ended

Dec. 31, 2012

Inventories at December 31, 2012 and December 31, 2011, consisted of work in process at various stages of production and finished goods. This inventory, which consists primarily of mobile communication devices, is valued at the lower of cost (as calculated using the weighted average method) or market. The cost of the work in process consists of materials put into production, the cost of labor and an allocation of overhead costs. At December 31, 2012, we reserved $963,000 for certain inventory items where the market has not developed as expected. A reserve of $471,000 was recorded at December 31, 2011.



Inventory Reserve	Activity
Balance - January 1, 2011	$	—
Additions	471,000
Balance - December 31, 2011	$	471,000
Additions	750,000
Write-offs	(258,000		)
Balance - December 31, 2012	$	963,000

- 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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