Inventory - Note 4

6 Months Ended

Jun. 30, 2011

Inventory Disclosure

Inventory

4. INVENTORY

Inventory consists of the following:

		June 30,		December 31,
		2011		2010
Raw materials	$	3,905,000	$	3,924,000
Finished goods		1,137,000		2,151,000
	$	5,042,000	$	6,075,000

The inventory at June 30, 2011 and December 31, 2010 consisted of raw materials primarily for our accessory pico projector SHOWWX+ and PicoP display engine, and finished goods primarily composed of our SHOWWX and SHOWWX+. Because our cost is currently higher than our selling price for our accessory pico projector products, we recognized write downs of $483,000 and $944,000 during the three and six months ended June 30, 2011 for lower of cost or market adjustments primarily comprised of adjustments to reflect our current estimated selling prices for our inventory.

Inventory is stated at the lower of cost or market, with cost determined on a net realizable value basis. Management periodically assesses the need to provide for obsolescence of inventory and adjusts the carrying value of inventory to its net realizable value when required. In addition, we reduce the value of our inventory to our estimated scrap value when management determines that it is not probable that the inventory will be consumed through normal production during the next twelve months.