INVENTORY - Note 4

9 Months Ended

Sep. 30, 2013

Inventory Disclosure

Inventory - Note 4

4. INVENTORY

Inventory consists of the following:

		September 30,		December 31,
		2013		2012
Raw materials	$	3,000	$	361,000
Finished goods		25,000		136,000
	$	28,000	$	497,000

The inventory at September 30, 2013 and December 31, 2012 consisted of components supplied under our "Image by PicoP^®" ingredient brand business model, and finished goods primarily composed of our accessory pico projectors. Inventory is stated at the lower of cost or market. 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. During the nine months ended September 30, 2013, we recorded inventory write-downs of $303,000. In 2012, we recorded inventory write-downs of $1,094,000. At September 30, 2013 and December 31, 2012, we have aggregate write-downs recorded of $8,378,000 and $9,916,000, respectively, offsetting inventory on hand deemed to be obsolete or scrap inventory.