NOTE 4: INVENTORIES

6 Months Ended

Jun. 30, 2014

NOTE 4: INVENTORIES

Inventories are stated at the lower of cost or market value. Cost is determined using the average cost method or the FIFO method. The Company periodically evaluates the quantities on hand relative to current and historical selling prices and historical and projected sales volume. Based on these evaluations, provisions are made in each period to write down inventory to its net realizable value. Inventory write-offs are provided to cover risks arising from slow-moving items, technological obsolescence, excess inventories, and for market prices lower than cost. Inventories in continuing business segments decreased, from December 31, 2013, $169,000 in the Training and Simulation Division and $345,000 in the Battery and Power Systems Division for the product required to fulfill the current backlog. Inventories are composed of the following:

	June 30, 2014		December 31, 2013
Raw and packaging materials	$	7,177,613	$	6,761,876
Work in progress		1,015,881		666,386
Finished products		1,366,974		2,646,504
Total:	$	9,560,468	$	10,074,766

- 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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