@Anonymous_ Thank you for the feedback! After further research I found this in IRS Pub. 946 (2021) section titled "Property Used in Business or Income Producing Activity": "Inventory. You cannot depreciate inventory because it is not held for use in your business. Inventory is any property you hold primarily for sale to customers in the ordinary course of your business."
After reading that, I felt assured that what I have for my demonstrator business is NOT inventory. However, I was just filling out my Schedule C, in Part 3 I got confused again... basically since this is my first year of business, I had $0 for all items other than line 38 "Materials & Supplies" which is where I categorized all of my business expenses (described in first post) that were not applicable to Section 2. For line 41, I am correct in saying $0 and in line 42 it only have the cost of Materials & Supplies... right?
