Quarterly report pursuant to Section 13 or 15(d)

Inventory

v2.4.0.8
Inventory
 9 Months Ended
Sep. 30, 2013
Inventory Disclosure [Abstract]  
Inventory
Inventory

All components of inventory are valued at the lower of cost (first-in, first-out) or market. We adjust inventory to market value when the net realizable value is lower than the carrying cost of the inventory. Market value is determined based on estimated sales activity and margins.

The components of inventory as of September 30, 2013 and December 31, 2012, net of reserves of $0 and $308,000, respectively, are as follows:
 
September 30, 2013
 
December 31,
2012
 
(unaudited)
 
 
Materials
$
652,818

 
$
297,500

Work-in-process
811,053

 
—

Finished goods
578,913

 
—

Total
$
2,042,784

 
$
297,500



During the three-month periods ended September 30, 2013 and 2012, we wrote off $298,000 and $278,000, respectively, of previously capitalized Lymphoseek inventory due to the consumption of the Lymphoseek material for product testing purposes. During the nine-month periods ended September 30, 2013 and 2012, we wrote off $298,000 and $378,000, respectively, for the same reason.

We estimate a reserve for obsolete inventory based on management’s judgment of probable future commercial use, which is based on an analysis of current inventory levels, estimated future sales and production rates, and estimated shelf lives. During the nine-month period ended September 30, 2012, we recorded an obsolescence reserve for $339,000 of Lymphoseek inventory due to changes in our projections of the probability of future commercial use for the specific lots previously capitalized.