INVENTORIES - NET

9 Months Ended

Sep. 30, 2013

4. INVENTORIES – NET

The components of inventories are as follows at:


	September 30, 2013			December 31, 2012
Raw materials	$	528,754		$	659,149
Finished goods		211,561			334,026
Offsite demo equipment		96,566			96,566
Less inventory reserve		(204,160	)		(163,505	)
Total inventories - net	$	632,721		$	926,236

Offsite demo equipment represents the cost of products physically located at customer locations, during an orientation period for which the Company retains title. As such, no depreciation expense has been recorded on these units. The inventory reserve at September 30, 2013 includes amounts necessary to adjust the Company’s inventory and offsite demo equipment to net realizable value following the Company’s release of newly redesigned products in 2012.

- Definition

The entire disclosure for inventory. This may include, but is not limited to, the basis of stating inventory, the method of determining inventory cost, the major classes of inventory, and the nature of the cost elements included in inventory. If inventory is stated above cost, accrued net losses on firm purchase commitments for inventory and losses resulting from valuing inventory at the lower-of-cost-or-market may also be included. For LIFO inventory, may disclose the amount and basis for determining the excess of replacement or current cost over stated LIFO value and the effects of a LIFO quantities liquidation that impacts net income.

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