Annual report pursuant to Section 13 and 15(d)

Inventory

Inventory

12 Months Ended

Dec. 31, 2014

The components of net inventory at December 31, 2014 and 2013, net of reserves of $539,000 and $0, respectively, are as follows:



	2014		2013
Materials	$	—	$	652,818
Work in process	495,449		1,073,568
Finished goods	436,936		$	506,050
	$	932,385	$	2,232,436

During 2014 and 2013, we capitalized $110,000 and $2.4 million, respectively, of inventory costs associated with our Lymphoseek product. During 2014 and 2013, we wrote off $198,000 and $298,000, respectively, of previously capitalized Lymphoseek inventory due to the consumption of the Lymphoseek material in product development activities.

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, historical and estimated future sales and production rates, and estimated shelf lives. During 2014, we recorded an obsolescence reserve for $539,000 of Lymphoseek inventory related to a specific lot that was originally produced for commercial validation purposes and that is nearing its product expiry and therefore is no longer expected to be sold.

- 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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