Inventories

The Company uses the lower of first-in, first-out (“FIFO”) cost or market method of accounting for inventory.



Inventories consist of the following:	(in thousands)
	March 31,		December 31,
	2013		2012
Inventory work-in-process, January 1	$	453	$	897
Production	—		579
Spoilage	—		(1,023		)
Inventory work-in-process, end of period	$	453	$	453

As of March 31, 2013 and December 31, 2012, all of our lots of Alferon® Work-In-Process Inventory have completed the fill, finish and packaging process. With the completion of the fill, finish and packaging protocol, Process Validation of Alferon® Work-In-Process lots need to be completed. With our redirection of resources to the Ampligen® NDA submission, this process had been delayed but is now underway. We are unable to provide any assurances that the FDA will approve the existing inventory finish product lots produced by Althea.

While at March 31, 2013 and December 31, 2012, the Work-In-Process Inventory had no manufacturing steps to be undertaken at the Company's New Brunswick, NJ facility, it will not be classified as Finished Goods until all stability and release testing are concluded and it is confirmed by the FDA that the product can be commercially sold as is.