INVENTORIES

6 Months Ended

Jun. 30, 2016

Notes to Financial Statements

NOTE 2. INVENTORIES

Inventories are stated at the lower of cost or market. Finished goods and work-in-process inventories include material, labor, and overhead costs. Factory overhead costs are allocated to inventory manufactured in-house based upon labor hours.

Inventories at June 30, 2016 and December 31, 2015 were as follows (in thousands):

	June 30,			December 31,
	2016			2015
Raw materials	$	5,563		$	4,627
Work in process		481			483
Finished goods		1,938			2,080
Gross inventories		7,982			7,190
Less: reserve for obsolescence		(1,567	)		(1,233	)
Net inventories	$	6,415		$	5,957