INVENTORIES

9 Months Ended

Sep. 30, 2020

Inventories are stated at the lower of cost or net realizable values. Cost is determined on a first in, first out basis. Finished goods and work-in-process inventories include material, labor and overhead costs. Factory overhead costs are primarily allocated to inventory manufactured in-house based upon direct labor hours.

Inventories consisted of the following:


(In thousands)	September 30, 2020		December 31, 2019
Raw materials	$	2,487	$	2,935
Work in process	1,522		1,209
Finished goods	1,944		1,316
Gross inventories	5,953		5,460
Less: provision for obsolescence	(537)		(392)
Inventories, net	$	5,416	$	5,068

During the second quarter of 2020, we reassessed our forecasted product mix due to COVID-19, increased availability of our newer handpiece designs, and earlier than expected completion of product registrations in some of our foreign markets. As a result, certain products were reduced to a lower carrying value, and some components were also written down as we determined to cease further production on these older models. The total impairment was approximately $400,000 and is included in cost of sales in the accompanying consolidated statement of operations for the nine months ended September 30, 2020.