INVENTORY - Note 5

3 Months Ended

Mar. 31, 2015

Inventory Disclosure

Inventory - Note 5

5. INVENTORY

Inventory consisted of the following:

		March 31,		December 31,
		2015		2014
Raw materials	$	261,000	$	42,000
Finished goods		171,000		74,000
	$	432,000	$	116,000

The inventory at March 31, 2015 and December 31, 2014 consisted of raw materials and finished goods assemblies. Inventory is stated at the lower of cost or market. Management periodically assesses the need to account 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 its estimated scrap value when management determines that it is not probable that the inventory will be consumed through the normal course of business during the next twelve months. At March 31, 2015 and December 31, 2014, we have recorded aggregate write-downs of $7.1 million and $6.9 million, respectively, offsetting inventory deemed to be obsolete or scrap inventory. From time to time, we may enter into arrangements to sell the obsolete or scrap inventory, or enter into consignment agreements with third-parties to sell the units, resulting in a gain in the period such transactions are realized.