Annual report pursuant to section 13 and 15(d)

INVENTORIES

INVENTORIES

12 Months Ended

Dec. 31, 2012

4.	INVENTORIES:

Inventories which are purchased from third parties consist of the following:


	December 31,
	2012			2011
Raw materials	$	1,552,267		$	1,708,642
Finished goods		2,693,439			2,163,820

		4,245,706			3,872,462
Less provision for obsolescence		(1,669,253	)		(895,415	)

Net inventories	$	2,576,453		$	2,977,047

At December 31, 2012, inventories include $1,215,268 of finished products located at Seesmart’s logistics supplier. On March 7, 2013, the Company notified the logistics supplier of the Company’s intent to terminate its relationship.

As a result of deteriorating market conditions and aggressive pricing by competitors, the Company experienced a decrease in market price for certain Array products in its LED replacement lamps and fixtures segment. For the year ended December 31, 2012, the Company recorded a write down of inventory of $387,196 due to this decrease in market price.

- 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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