(4) INVENTORIES

We work closely with third parties to manufacture and package finished goods for sale. We take title to the finished goods at the time of shipment from the manufacturer and warehouse such goods until distribution and sale. Inventories are stated at the lower of cost or market with cost determined using the first-in, first-out method. As of September 30, 2011, some portion of our inventory may be in excess of our current inventory requirements based on the recent level of sales and projections. As of September 30, 2011 and December 31, 2010, we have recognized a reserve for potential obsolescence for our marketed products of approximately $1.0 million and $0.1 million, respectively.

We purchased certain packaging materials related to the manufacture of Caldolor. As these materials are consumed as part of the manufacturing process, the costs associated with these materials will be used to offset the finished goods price from the manufacturer. As of September 30, 2011 and December 31, 2010, inventory was comprised of the following:


	September 30,		December 31,
	2011		2010
Raw materials	$	588,637	$	356,676
Finished goods		6,285,962		7,327,166

Total	$	6,874,599	$	7,683,842