Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Mar. 10, 2016 | Jun. 30, 2015 | |
Document And Entity Information | |||
Entity Registrant Name | Lifeloc Technologies, Inc | ||
Entity Central Index Key | 1,493,137 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2015 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Is Entity a Well-known Seasoned Issuer? | No | ||
Is Entity a Voluntary Filer? | No | ||
Is Entity's Reporting Status Current? | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 4,175,287 | ||
Entity Common Stock, Shares Outstanding | 2,454,116 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,015 |
Balance Sheets
Balance Sheets - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
CURRENT ASSETS: | ||
Cash | $ 3,227,190 | $ 2,749,254 |
Accounts receivable, net | 603,817 | 855,452 |
Inventories, net | 801,661 | 945,425 |
Income taxes receivable | 81,031 | 83,275 |
Deferred taxes | 114,058 | 120,392 |
Prepaid expenses and other | 23,821 | 48,101 |
Total current assets | 4,851,578 | 4,801,899 |
PROPERTY AND EQUIPMENT, at cost: | ||
Land | 317,932 | 317,932 |
Building | 1,911,695 | 1,631,207 |
Training courses | 432,375 | 432,375 |
Production equipment | 434,148 | 401,030 |
Office equipment and software | 193,332 | 237,724 |
Sales and marketing equipment | 232,468 | $ 236,722 |
Research and development equipment and software | 78,157 | |
Less accumulated depreciation | (876,582) | $ (650,576) |
Total property and equipment, net | 2,723,525 | 2,606,414 |
OTHER ASSETS: | ||
Patents, net | 102,252 | 80,356 |
Deposits and other | 18,987 | 69,687 |
Deferred taxes, long term | 7,282 | 7,504 |
Total other assets | 128,521 | 157,547 |
Total assets | 7,703,624 | 7,565,860 |
CURRENT LIABILITIES: | ||
Accounts payable | 222,976 | 469,570 |
Term loan payable, current portion | 36,689 | 35,262 |
Customer deposits and deferred grant revenue | 92,870 | 16,018 |
Accrued expenses | 274,996 | 232,130 |
Deferred revenue, current portion | 89,179 | 86,493 |
Reserve for warranty expense | 33,100 | 33,100 |
Total current liabilities | 749,810 | 872,573 |
TERM LOAN PAYABLE, net of current portion | 1,503,466 | 1,540,154 |
DEFERRED REVENUE, net of current portion | $ 19,163 | $ 19,746 |
COMMITMENTS AND CONTINGENCIES (Note 5) | ||
STOCKHOLDERS' EQUITY: | ||
Common stock, no par value; 50,000,000 shares authorized, 2,454,116 shares outstanding (2,447,416 at December 31, 2014) | $ 4,533,012 | $ 4,517,468 |
Retained earnings | 898,173 | 615,919 |
Total stockholders' equity | 5,431,185 | 5,133,387 |
Total liabilities and stockholders' equity | $ 7,703,624 | $ 7,565,860 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2015 | Dec. 31, 2014 |
STOCKHOLDERS' EQUITY: | ||
Common stock, par value | $ 0 | $ 0 |
Common stock, authorized shares | 50,000,000 | 50,000,000 |
Common stock, outstanding shares | 2,454,116 | 2,447,416 |
Statements of Income
Statements of Income - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
REVENUES: | ||
Product sales | $ 8,323,913 | $ 9,023,804 |
Royalties | 394,895 | 300,533 |
Rental income | 107,665 | 17,647 |
Total | 8,826,473 | 9,341,984 |
COST OF SALES | 4,425,106 | 4,874,127 |
GROSS PROFIT | 4,401,367 | 4,467,857 |
OPERATING EXPENSES: | ||
Research and development | 1,224,045 | 1,000,266 |
Sales and marketing | 1,467,344 | 1,433,839 |
General and administrative | 1,267,772 | 1,239,238 |
Total | 3,959,161 | 3,673,343 |
OPERATING INCOME | 442,206 | 794,514 |
OTHER INCOME (EXPENSE): | ||
Interest income | 14,737 | 24,132 |
Bad debt recovery | 12,000 | 12,000 |
Interest expense | (70,986) | (11,913) |
Total | (44,249) | 24,219 |
NET INCOME BEFORE PROVISION FOR TAXES | 397,957 | 818,733 |
PROVISION FOR FEDERAL AND STATE INCOME TAXES | (115,703) | (213,737) |
NET INCOME | $ 282,254 | $ 604,996 |
NET INCOME PER SHARE, BASIC | $ 0.12 | $ 0.25 |
NET INCOME PER SHARE, DILUTED | $ 0.11 | $ 0.24 |
WEIGHTED AVERAGE SHARES, BASIC | 2,453,293 | 2,433,690 |
WEIGHTED AVERAGE SHARES, DILUTED | 2,523,676 | 2,497,502 |
Statement of Stockholders' Equi
Statement of Stockholders' Equity - USD ($) | Common Stock | Accumulated Deficit | Total |
Begning Balance, Amount at Dec. 31, 2013 | $ 4,385,093 | $ 10,923 | $ 4,396,016 |
Begning Balance, Shares at Dec. 31, 2013 | 2,432,416 | ||
Common stock issued in connection with business combination, Amount | $ 132,375 | 132,375 | |
Common stock issued in connection with business combination, Shares | 15,000 | ||
Net income | $ 604,996 | 604,996 | |
Ending Balance, Amount at Dec. 31, 2014 | $ 4,517,468 | $ 615,919 | 5,133,387 |
Ending Balance, Shares at Dec. 31, 2014 | 2,447,416 | ||
Common stock options exercised, Amount | $ 15,544 | 15,544 | |
Common stock options exercised, Shares | 6,700 | ||
Net income | $ 282,254 | 282,254 | |
Ending Balance, Amount at Dec. 31, 2015 | $ 4,533,012 | $ 898,173 | $ 5,431,185 |
Ending Balance, Shares at Dec. 31, 2015 | 2,454,116 |
Statements of Cash Flows
Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income | $ 282,254 | $ 604,996 |
Adjustments to reconcile net income to net cash provided by operating activities- | ||
Depreciation and amortization | 292,593 | 205,094 |
Provision for bad debt | 17,000 | 49,796 |
Provision for inventory obsolescence | 5,000 | |
Deferred taxes | $ 6,555 | (35,194) |
Reserve for warranty expense | 10,000 | |
Changes in operating assets and liabilities- | ||
Accounts receivable | $ 234,635 | (479,000) |
Inventories | 138,764 | (208,728) |
Income taxes receivable | 2,244 | 48,302 |
Prepaid expenses and other | 24,280 | 19,599 |
Deposits and other | 50,067 | (57,173) |
Accounts payable | (246,594) | 319,621 |
Customer deposits and deferred grant revenue | 76,852 | (170,664) |
Accrued expenses | 42,866 | (89,562) |
Deferred revenue | 2,104 | 24,104 |
Net cash provided from operating activities | $ 928,620 | 241,191 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Cash paid for property acquired in business combination | (368,033) | |
Cash paid for training courses acquired in business combination | (300,000) | |
Purchases of property and equipment | $ (402,799) | (132,461) |
Patent filing expense | (28,168) | (43,205) |
Net cash (used in) investing activities | (430,967) | (843,699) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Principal payments made on term loan | (35,261) | $ (5,498) |
Sale of common stock | 15,544 | |
Net cash (used in) financing activities | (19,717) | $ (5,498) |
NET INCREASE (DECREASE) IN CASH | 477,936 | (608,006) |
CASH, BEGINNING OF PERIOD | 2,749,254 | 3,357,260 |
CASH, END OF PERIOD | 3,227,190 | 2,749,254 |
SUPPLEMENTAL INFORMATION: | ||
Cash paid for interest | 70,353 | 11,913 |
Cash paid for income tax | $ 106,904 | 248,930 |
Non cash investing and financing activities: | ||
Mortgage issued for property and equipment acquired in business combination | 1,581,106 | |
Stock issued for property and equipment acquired in business combinations | 132,275 | |
Total non cash investing and financing Activities | $ 1,713,381 |
1. ORGANIZATION AND NATURE OF B
1. ORGANIZATION AND NATURE OF BUSINESS | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
ORGANIZATION AND NATURE OF BUSINESS | Lifeloc Technologies, Inc. ("Lifeloc" or the "Company") is a Colorado based developer, manufacturer and marketer of portable hand-held and fixed station breathalyzers and related accessories, supplies and education. We design, produce and sell fuel-cell based breath alcohol testing equipment. We compete in all major segments of the breath alcohol testing instrument market, including law enforcement, workplace, corrections, original equipment manufacturing ("OEM") and consumer markets. In addition, we offer a line of supplies, accessories, services, and training to support customers' alcohol testing programs. We sell globally through distributors as well as directly to users. |
2. SUMMARY OF SIGNIFICANT ACCOU
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Use of Estimates in the Preparation of Financial Statements. Fair Value Measurement. ASC Topic 820, Fair Value Measurements and Disclosures Level 1 - Quoted prices are available in active markets for identical assets or liabilities as of the reported date. The types of assets and liabilities included in Level 1 are highly liquid and actively traded instruments with quoted prices, such as equity securities listed on the New York Stock Exchange. Level 2 - Pricing inputs are other than quoted prices in active markets, but are either directly or indirectly observable as of the reported date. The types of assets and liabilities in Level 2 are typically either comparable to actively traded securities or contracts or priced with models using highly observable inputs. Level 3 - Significant inputs to pricing that are unobservable as of the reporting date. The types of assets and liabilities included in Level 3 are those with inputs requiring significant management judgment or estimation, such as complex and subjective models and forecasts used to determine the fair value of financial transmission rights. Cash and Cash Equivalents. Fair Value of Financial Instruments. Concentration of Credit Risk. We have no significant off-balance sheet concentrations of credit risk such as foreign exchange contracts, options contracts or other foreign hedging arrangements. Note Receivable Accounts Receivable Years Ended December 31 2015 2014 Balance, beginning of year $ 40,000 $ 26,267 Provision for estimated losses 6,530 49,796 Write-off of uncollectible accounts (11,530 ) (36,063 ) Balance, end of year $ 35,000 $ 40,000 The net accounts receivable balance at December 31, 2015 of $603,817 included an account from one customer of $138,909 (23%) and no more than 6% from any one other single customer. The net accounts receivable balance at December 31, 2014 of $855,452 included an account from one customer of $156,701 (18%) and no more than 12% from any one other customer. Inventories. 2015 2014 Raw materials & deposits $ 404,104 $ 476,941 Work-in process 76,903 132,029 Finished goods 408,154 428,955 Total gross inventories 889,161 1,037,925 Less reserve for obsolescence (87,500 ) (92,500 ) Total net inventories $ 801,661 $ 945,425 A summary of the activity in our inventory reserve for obsolescence is as follows: Years Ended December 31 2015 2014 Balance, beginning of year $ 92,500 $ 75,000 Provision for estimated obsolescence 2,640 43,894 Write-off of obsolete inventory (7,640 ) (26,394 ) Balance, end of year $ 87,500 $ 92,500 Property and Equipment. Long-Lived Assets. Technology Licenses. Patents. 2015 2014 Patents issued $ 22,775 $ 22,775 Patent applications 102,802 74,634 Accumulated amortization (23,325 ) (17,053 ) Total net patents $ 102,252 $ 80,356 Deposits and Other Assets Accrued Expenses 2015 2014 Compensation $ 176,219 $ 157,888 Rebates 47,706 21,280 Property and other taxes 51,071 44,810 401(k) plan and health insurance - 8,152 Total accrued expenses $ 274,996 $ 232,130 Product Warranty Reserve Years Ended December 31 2015 2014 Balance, beginning of year $ 33,100 $ 23,100 Provision for estimated warranty claims 21,277 14,425 Claims made (21,277 ) (4,425 ) Balance, end of year $ 33,100 $ 33,100 Income Taxes. ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements, uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts. For the years ended December 31, 2015 and 2014, we did not have any interest or penalties or any significant uncertain tax positions. Revenue Recognition. Deferred revenues arising from service and extended warranty contracts are booked as sales over their life on a straight-line basis. Supplies are recognized as sales when they are shipped. Training revenues are recognized at the time the training occurs. We have discontinued arranging for customer financing and leasing through unrelated third parties and instead are providing for customer financing and leasing ourselves which we recognize as revenue over the applicable lease term. Occasionally, we rent used equipment to customers, and in those cases, we recognize the revenues as they are earned over the life of the contract. Royalty income is recognized in accordance with agreed upon terms, when performance obligations are satisfied, the amount is fixed or determinable and collectability is reasonably assured. The sales of licenses to our training courses are recognized as revenue at the time of sale. Rental income from space leased to our tenants is recognized in the month in which it is due. On occasion we receive customer deposits for future product orders. Customer deposits are initially recorded as a liability and recognized as revenue when the product is shipped and title has passed to the customer. Deferred Revenue. Grants Rebates. Rent Expense Research and Development Expenses Stock-Based Compensation ASC 718 requires companies to estimate the fair value of share-based payment awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in the accompanying statement of income. Stock-based compensation expense recognized during the period is based on the value of the portion of share-based payment awards that is ultimately expected to vest during the period. We used the Black-Scholes option-pricing model ("Black-Scholes model") to determine fair value. Our determination of fair value of share-based payment awards on the date of grant using an option-pricing model is affected by our stock price as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to our expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors. Although the fair value of employee stock options is determined in accordance with ASC 718 using an option-pricing model, that value may not be indicative of the fair value observed in a willing buyer/willing seller market transaction. Stock-based compensation expense recognized under ASC 718 for fiscal years 2015 and 2014 was $0. Stock-based compensation expense related to employee stock options under ASC 718 for 2013 is allocated to General and Administrative Expense when incurred. Segment Reporting. Basic and Diluted Income and Loss per Common Share. Recent Accounting Pronouncements The Financial Accounting Standards Board issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers In April 2015, the FASB issued Accounting Standards Update No. 2015-03, Simplifying the Presentation of Debt Issuance Costs In November 2015, the FASB issued Accounting Standards Update No. 2015-17, Balance Sheet Classification of Deferred Taxes In January 2016, the FASB issued Accounting Standards Update No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) |
3. BUSINESS COMBINATIONS
3. BUSINESS COMBINATIONS | 12 Months Ended |
Dec. 31, 2015 | |
Business Combinations [Abstract] | |
BUSINESS COMBINATIONS | Building and Land Approximately 48% of the building is leased to third party tenants pursuant to lease agreements expiring on various dates ranging to December 31, 2017. Rental revenue and operating income included in our statement of income for the year ended December 31, 2015 were $107,665 and $19,641 respectively. Actual earnings from rental units for the year ended December 31, 2015 and estimated earnings as though the combination took place at the beginning of the year ended December 31, 2014 are as follows. 2015 2014 Unaudited) Rental income $ 107,665 $ 105,880 Expenses: Depreciation 59,419 59,150 Maintenance 6,562 20,000 Property taxes 18,460 18,000 Insurance 3,583 4,800 Total expenses 88,024 101,950 Net profit $ 19,641 $ 3,930 Future rental income and related expenses will depend on whether existing leases are renewed. Minimum base rents for leases in place at December 31, 2015 are scheduled to be $99,746 in 2016 and $75,627 in 2017. The purpose of this acquisition was to provide for potential growth and the need for additional space. Training Courses Data that would enable us to present the amounts of revenue and earnings of STS as though the combination took place at the beginning of the year ended December 31, 2014 are unavailable to us. Actual earnings for the years ended December 31, 2015 and 2014 are as follows: 2015 2014 (Unaudited) Sales, STS courses $ 141,605 $ 5,010 Expenses: Outside services 48,337 4,167 Amortization 28,825 2,402 Manuals, CDs, supplies 23,579 1,446 Internet expense 2,014 - Telephone and other 1,982 - Commissions and other selling expenses 26,193 712 Total expenses 130,930 8,727 Net profit (loss) $ 10,675 $ (3,717 ) The purpose of this acquisition was to expand our offering of online substance abuse training courses and of online reasonable suspicion training courses. Estimated annual amortization relating to the training courses is $28,825 for 180 months commencing December 1, 2014. |
4. STOCKHOLDERS' EQUITY
4. STOCKHOLDERS' EQUITY | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
STOCKHOLDERS' EQUITY | Stock Option Plan. Under ASC 718, the value of each employee stock option was estimated on the date of grant using the Black-Scholes model for the purpose of financial information in accordance with ASC 718. The use of a Black-Scholes model requires the use of actual employee exercise behavior data and the use of a number of assumptions including expected volatility, risk-free interest rate and expected dividends. No employee stock options were granted during fiscal years 2015 or 2014. Cumulative compensation cost recognized in net income or loss with respect to options that are forfeited prior to vesting is adjusted as a reduction of compensation expense in the period of forfeiture. The volatility of the stock is based on a comparable public company's historical volatility since our stock is rarely traded. Fair value computations are highly sensitive to the volatility factor; the greater the volatility, the higher the computed fair value of options granted. The Black-Scholes model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. In addition, option valuation models require the use of assumptions, including the expected stock price volatility. Because our employee stock options have characteristics significantly different than those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management's opinion, the existing models do not necessarily provide a reliable single measure of the fair value of our employee stock options. A summary of our stock option activity and related information for equity compensation plans approved by security holders for each of the fiscal years ended December 31, 2015 and 2014 is as follows: STOCK OPTIONS OUTSTANDING Number Outstanding Weighted Average Exercise Price Per Share BALANCE AT DECEMBER 31, 2013 92,000 $ 2.66 Granted - - Exercised - - Forfeited/expired - - BALANCE AT DECEMBER 31, 2014 92,000 $ 2.66 Granted - - Exercised (6,700 ) - Forfeited/expired (6,300 ) - BALANCE AT DECEMBER 31, 2015 79,000 $ 2.67 The following table summarizes information about employee stock options outstanding and exercisable at December 31, 2015: STOCK OPTIONS OUTSTANDING STOCK OPTIONS EXERCISABLE Range of Exercise Prices Number Outstanding Weighted-Average Remaining Contractual Life (in Years) Weighted-Average Exercise Price per Share Number Exercisable Weighted-Average Exercise Price per Share $3.69 20,000 .9 $3.69 20,000 $3.69 $2.32 59,000 2.75 $2.32 59,000 $2.32 79,000 79,000 Of the 79,000 options exercisable as of December 31, 2015, all are incentive stock options. The exercise price of all options granted through December 31, 2015 has been equal to or greater than the fair market value, as determined by the Board. As of December 31, 2015, 81,000 options exercisable for our common stock remain available for grant under the 2013 Plan. |
5. COMMITMENTS AND CONTINGENCIE
5. COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | Mortgage Expense Year Amount 2016 36,689 2017 35,576 2018 40,353 2019 42,211 2020 43,979 2020 - 2024 1,341,347 Total 1,540,155 Less current portion (36,689 ) Long term portion $ 1,503,466 Rent Expense Employee Severance Benefits Purchase Orders Other Material Contractual Commitments Regulatory Commitments |
6. LINE OF CREDIT
6. LINE OF CREDIT | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
LINE OF CREDIT | As part of the long-term financing of our property purchased on October 31, 2014, we obtained a one-year $250,000 revolving line of credit facility with Bank of America, which matured on October 31, 2015 and was extended to October 31, 2016, and which bears interest at a rate equal to the LIBOR daily floating rate of .3661 and .1146 on December 31, 2015 and 2014 respectively, plus 2.5%. The revolving line of credit facility is secured by all personal property and assets, whether now owned or hereafter acquired, wherever located. There was no balance due on the line of credit as of December 31, 2015 and 2014. |
7. INCOME TAXES
7. INCOME TAXES | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
INCOME TAXES | We account for income taxes under ASC 740, which requires the use of the liability method. ASC 740 provides that deferred tax assets and liabilities are recorded based on the differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes, referred to as temporary differences. Deferred tax assets and liabilities at the end of each period are determined using the currently enacted tax rates applied to taxable income in the periods in which the deferred tax assets and liabilities are expected to be settled or realized. We have a Federal General Business Credit carryover available for 2016 of $36,154. Our income tax provision is summarized below: Years Ended December 31, 2015 December 31, 2014 Current: Federal $ 88,671 $ 208,081 State 20,477 40,849 Total current 109,148 248,930 Deferred: Federal 5,756 (30,905 ) State 799 (4,288 ) Total deferred 6,555 (35,193 ) Total $ 115,703 $ 213,737 The items accounting for the difference between income taxes computed at the federal statutory rate and the provision for income taxes consists of the following: Years Ended December 31, 2015 December 31, 2014 Federal statutory rate $ 143,412 $ 286,086 Effect of: State taxes, net of federal tax benefit 21,276 36,561 Research & development credit (54,741 ) (78,005 ) Other 5,756 (30,905 ) Total $ 115,703 $ 213,737 The components of the deferred tax asset are as follows: Years Ended December 31, Current Deferred Tax Assets: 2015 2014 Deferred income $ 33,888 $ 32,867 Bad debt reserve 15,010 21,470 Accrued vacation 19,332 18,327 Inventory reserve 33,250 35,150 Warranty reserve 12,578 12,578 Total current deferred tax assets 114,058 120,392 Long Term Deferred Tax Assets: Deferred income 7,282 7,504 Total Deferred Tax Assets $ 121,340 $ 127,896 Our income tax returns are no longer subject to Federal tax examinations by tax authorities for years before 2012 or state examinations for years before 2011. |
9. LEGAL PROCEEDINGS
9. LEGAL PROCEEDINGS | 12 Months Ended |
Dec. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
LEGAL PROCEEDINGS | We were not involved or party to any legal proceedings at December 31, 2015 or December 31, 2014, and therefore made no accruals for legal proceedings in either 2015 or 2014. |
10. MAJOR CUSTOMERS_SUPPLIERS
10. MAJOR CUSTOMERS/SUPPLIERS | 12 Months Ended |
Dec. 31, 2015 | |
Risks and Uncertainties [Abstract] | |
MAJOR CUSTOMERS/SUPPLIERS | We depend on sales that are generated from our customers' ongoing usage of alcohol testing instruments. One customer contributed 8% ($737,834) to our total sales in 2015, a second customer contributed 8% ($734,352), a third customer contributed 3% ($307,259), and no other customer contributed more than 3%. One customer contributed 8% ($736,458) to our total sales in 2014, a second customer contributed 6% ($549,867), a third customer contributed 5% ($471,432), and no other customer contributed more than 5%. In making this determination, we considered the federal government, state governments, local governments, and foreign governments each as a single customer. In 2015, we depended upon three vendors for approximately 19% of our purchases (three vendors and 24% respectively in 2014). |
11. DEFINED CONTRIBUTION EMPLOY
11. DEFINED CONTRIBUTION EMPLOYEE BENEFIT PLAN | 12 Months Ended |
Dec. 31, 2015 | |
Compensation and Retirement Disclosure [Abstract] | |
DEFINED CONTRIBUTION EMPLOYEE BENEFIT PLAN | We have adopted a 401(k) Profit Sharing Plan ("401(k) Plan") which covers all full-time employees who have completed 3 months of full-time continuous service and are age eighteen or older. Participants may defer up to 100% of their gross pay up to 401(k) Plan limits. Participants are immediately vested in their contributions. We make monthly discretionary matching contributions of 3% of the total payroll of the participating employees. In 2015 and 2014 we contributed $50,223 and $46,766 respectively. The participants vest in Company contributions based on years of service, with a participant fully vested after six years of credited service. |
12. LICENSE OF SOFTWARE
12. LICENSE OF SOFTWARE | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
LICENSE OF SOFTWARE | In 2012 we granted a non-exclusive license to two customers for the use of our patented breath alcohol testing algorithms. The agreement provides for termination pursuant to notice requirements, and further provides for royalties based on the number of units sold which incorporate our software. The transaction is being accounted for under the guidance of ASC 605-10, Revenue Recognition, which states, in part, revenue can be recognized when collection of the fee agreement can be reasonably assured. |
13. BUSINESS SEGMENTS
13. BUSINESS SEGMENTS | 12 Months Ended |
Dec. 31, 2015 | |
Segment Reporting [Abstract] | |
BUSINESS SEGMENTS | We currently have two business segments: (i) the sale of physical products, including portable hand-held breathalyzers and related accessories, supplies, education, training ("Product Sales”), and royalties from development contracts with OEM manufacturers (“Royalties” and, together with Product Sales, the “Products” segment), and (ii) rental of a portion of our building (the "Rentals" segment). The accounting policies of the segments are the same as those described in the summary of significant accounting policies. Operating profits for these segments excludes unallocated corporate items. Administrative and staff costs were commonly used by all business segments and were indistinguishable. The following sets forth information about the operations of the business segments: Year Ended December 31, Revenue: 2015 2014 Product Sales $ 8,323,913 $ 9,023,804 Royalties 394,895 300,533 Products Subtotal 8,718,808 9,324,337 Rentals 107,665 17,647 Total $ 8,826,473 $ 9,341,984 Gross profit: Product Sales $ 3,986,830 $ 4,157,451 Royalties 394,895 300,533 Products Subtotal 4,381,725 4,457,984 Rentals 19,642 9,873 Total $ 4,401,367 $ 4,467,857 Interest expense: Product Sales $ 36,584 $ 6,195 Royalties - - Products Subtotal 36,584 Rentals 34,402 5,718 Total $ 70,986 $ 11,913 Net income (loss) before taxes: Product Sales $ (11,065 ) $ 514,045 Royalties 394,895 300,533 Products Subtotal 383,830 814,578 Rentals 14,127 4,155 Total $ 397,957 $ 818,733 There were no intersegment revenues. As of December 31, 2015, $905,379 of our assets were used in the Rentals segment, with the remainder, $6,798,245, used in the Products and unallocated segments. |
14. SUBSEQUENT EVENTS
14. SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
SUBSEQUENT EVENTS | We evaluated subsequent events through the date the financial statements were issued and determined that none have occurred that would require recognition in the financial statements or disclosure in the notes to the financial statements. In the first quarter of 2016, we granted 50,000 stock options. These options become vested in 2018 and are exercisable at $8.83 apiece for 2.5 years thereafter if specified financial objectives are met in 2018. The assumptions for valuing these stock options are summarized as follows: Risk-free interest rate 1.46% Expected life (in years) 5.0 Expected volatility 28.67% Expected dividend 0% Applying these assumptions resulted in a fair market value of $123,269, which will result in stock option expense of $2,054 per month commencing in February 2016 being charged against operations, with an accompanying credit to capital for the same amount. |
2. SUMMARY OF SIGNIFICANT ACC20
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2015 | |
Summary Of Significant Accounting Policies Policies | |
Use of Estimates | The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions. Such estimates and assumptions affect the reported amounts of assets and liabilities as well as disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of sales and expense during the reporting period. Actual results could differ from those estimates. |
Fair Value Measurement | ASC Topic 820, Fair Value Measurements and Disclosures Level 1 - Quoted prices are available in active markets for identical assets or liabilities as of the reported date. The types of assets and liabilities included in Level 1 are highly liquid and actively traded instruments with quoted prices, such as equity securities listed on the New York Stock Exchange. Level 2 - Pricing inputs are other than quoted prices in active markets, but are either directly or indirectly observable as of the reported date. The types of assets and liabilities in Level 2 are typically either comparable to actively traded securities or contracts or priced with models using highly observable inputs. Level 3 - Significant inputs to pricing that are unobservable as of the reporting date. The types of assets and liabilities included in Level 3 are those with inputs requiring significant management judgment or estimation, such as complex and subjective models and forecasts used to determine the fair value of financial transmission rights. |
Cash and Cash Equivalents | For purposes of reporting cash flows, we consider all cash and highly liquid investments with an original maturity of three months or less to be cash equivalents. There were no cash equivalents as of December 31, 2015 and 2014. |
Fair Value of Financial Instruments | Our financial instruments consist of cash, short-term trade receivables, payables and a term loan secured by a first mortgage. The carrying values of cash, short-term receivables, and payables approximate their fair value due to their short term maturities. The carrying value of the term loan approximates its fair value based on interest rates currently obtainable. |
Concentration of Credit Risk | Financial instruments with significant credit risk include cash and accounts receivable. The amount of cash on deposit with two financial institutions exceeded the $250,000 federally insured limit at December 31, 2015 by $2,650,781. However, we believe that the financial institutions are financially sound and the risk of loss is minimal. We have no significant off-balance sheet concentrations of credit risk such as foreign exchange contracts, options contracts or other foreign hedging arrangements. |
Note Receivable | We made a loan of $62,500 to Tipping Point, Inc. ("TPI"), an early stage company, during the second quarter of 2011. Although the loan has been paid down by $58,000, including a repayment of $3,000 in the fourth quarter of 2015, we do not expect to realize any significant sales to TPI in the near term. We have provided a reserve against the loan for the full amount, leaving a net amount of $0, which is not included in our balance sheets at December 31, 2015 and 2014. TPI was considered a related party at the time the loan was made, as certain of our board members were also TPI board members during a portion of 2011. |
Accounts Receivable | Accounts receivable are typically unsecured and are derived from transactions with and from entities primarily located in the United States or from international distributors with a proven payment history; we require pre-payment for most international orders. Accordingly, we may be exposed to credit risks generally associated with the alcohol monitoring industry. Our credit policy calls for payment in accordance with prevailing industry standards, generally 30 days with occasional exceptions of up to 60 days for large established international customers. We maintain allowances for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. A summary of the activity in our allowance for doubtful accounts is as follows: Years Ended December 31 2015 2014 Balance, beginning of year $ 40,000 $ 26,267 Provision for estimated losses 6,530 49,796 Write-off of uncollectible accounts (11,530 ) (36,063 ) Balance, end of year $ 35,000 $ 40,000 The net accounts receivable balance at December 31, 2015 of $603,817 included an account from one customer of $138,909 (23%) and no more than 6% from any one other single customer. The net accounts receivable balance at December 31, 2014 of $855,452 included an account from one customer of $156,701 (18%) and no more than 12% from any one other customer. |
Inventories | Inventories are stated at the lower of cost (first-in, first-out basis) or market. We reduce inventory for estimated obsolete or unmarketable inventory equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand and market conditions. If actual market conditions are less favorable than those projected by management, additional inventory write-downs may be required. At December 31, 2015 and 2014, inventory consisted of the following: 2015 2014 Raw materials & deposits $ 404,104 $ 476,941 Work-in process 76,903 132,029 Finished goods 408,154 428,955 Total gross inventories 889,161 1,037,925 Less reserve for obsolescence (87,500 ) (92,500 ) Total net inventories $ 801,661 $ 945,425 A summary of the activity in our inventory reserve for obsolescence is as follows: Years Ended December 31 2015 2014 Balance, beginning of year $ 92,500 $ 75,000 Provision for estimated obsolescence 2,640 43,894 Write-off of obsolete inventory (7,640 ) (26,394 ) Balance, end of year $ 87,500 $ 92,500 |
Property and Equipment | Property and equipment are stated at cost, with depreciation computed over the estimated useful lives of the assets, generally five years; three years for software and technology licenses; 15 years for training courses; 39 years for the cost of the building we purchased in October 2014. We utilize the double-declining method of depreciation for property and equipment, and the straight-line method of depreciation for software, training courses, and the building, due to the expected usage of these assets over time. These methods are expected to continue throughout the life of the assets. Maintenance and repairs are expensed as incurred and major additions, replacements and improvements are capitalized. Depreciation expense for the years ended December 31, 2015 and 2014 was $285,688 and $201,433 respectively. |
Long-Lived Assets | Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. A long-lived asset is considered impaired when estimated future cash flows related to the asset, undiscounted and without interest, are insufficient to recover the carrying amount of the asset. If deemed impaired, the long-lived asset is reduced to its estimated fair value. Long-lived assets to be disposed of are reported at the lower of their carrying amount or estimated fair value less cost to sell. Impairments of $0 and $1,796 were recorded for the years ended December 31, 2015 and 2014 respectively. |
Technology Licenses | In 2010 we entered into a technology transfer agreement with an unrelated third-party manufacturer of fuel cells, pursuant to which we acquired a perpetual-term license to technology for the manufacture of fuel cells. We made three equal lump-sum payments of $40,000 each, based on achievement of milestones related to our establishment of successful production facilities. The total, $120,000, is being amortized over three years commencing in 2011, using the straight line method, with amortization expense of $0 for the year 2015 and $3,333 for the year 2014. |
Patents | The costs of applying for patents are capitalized and amortized on a straight-line basis over the lesser of the patent's economic or legal life (20 years for utility patents in the United States, and 14 years for design patents). Amortization expense for the year ended December 31, 2015 and 2014 was $6,272 and $3,661 respectively. Capitalized costs are expensed if patents are not granted. We review the carrying value of our patents periodically to determine whether the patents have continuing value and such reviews could result in the conclusion that the recorded amounts have been impaired. A summary of our patents at December 31, 2015 and 2014 is as follows: 2015 2014 Patents issued $ 22,775 $ 22,775 Patent applications 102,802 74,634 Accumulated amortization (23,325 ) (17,053 ) Total net patents $ 102,252 $ 80,356 |
Deposits and Other Assets | We include the long-term portion of installment receivables, as well as the long-term portion of deferred financing loan costs with deposits. Deferred loan costs are amortized over the 20-year life of the term loan on a straight line basis, which approximates the effective interest method. Total amortization during the years ended December 31, 2015 and 2014 was $633 and $0, respectively, and are included within interest expense on the statements of income. |
Accrued Expenses | We have accrued various expenses in our December 31 balance sheets, as follows: 2015 2014 Compensation $ 176,219 $ 157,888 Rebates 47,706 21,280 Property and other taxes 51,071 44,810 401(k) plan and health insurance - 8,152 Total accrued expenses $ 274,996 $ 232,130 |
Product Warranty Reserve | We provide for the estimated cost of product warranties at the time sales are recognized. Our warranty obligation is based upon historical experience and will be affected by product failure rates and material usage incurred in correcting a product failure. Should actual product failure rates or material usage costs differ from our estimates, revisions to the estimated warranty liability would be required. A summary of the activity in our product warranty reserve is as follows: Years Ended December 31 2015 2014 Balance, beginning of year $ 33,100 $ 23,100 Provision for estimated warranty claims 21,277 14,425 Claims made (21,277 ) (4,425 ) Balance, end of year $ 33,100 $ 33,100 |
Income Taxes | We account for income taxes under the provisions of Accounting Standards Codification Topic 740, "Accounting for Income Taxes" ("ASC 740"). ASC 740 requires recognition of deferred income tax assets and liabilities for the expected future income tax consequences, based on enacted tax laws, of temporary differences between the financial reporting and tax bases of assets and liabilities. ASC 740 also requires recognition of deferred tax assets for the expected future tax effects of all deductible temporary differences, loss carryforwards and tax credit carryforwards. Deferred tax assets are then reduced, if deemed necessary, by a valuation allowance for the amount of any tax benefits which, more likely than not based on current circumstances, are not expected to be realized. ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements, uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts. For the years ended December 31, 2015 and 2014, we did not have any interest or penalties or any significant uncertain tax positions. |
Revenue Recognition | Revenue from product sales is generally recorded when we ship the product and title has passed to the customer, provided that we have evidence of a customer arrangement and can conclude that collection is probable. The prices at which we sell our products are fixed and determinable at the time we accept a customer's order. We recognize revenue from sales to stocking distributors when there is no right of return, other than for normal warranty claims, and generally have no ongoing obligations related to product sales, except for normal warranty. Deferred revenues arising from service and extended warranty contracts are booked as sales over their life on a straight-line basis. Supplies are recognized as sales when they are shipped. Training revenues are recognized at the time the training occurs. We have discontinued arranging for customer financing and leasing through unrelated third parties and instead are providing for customer financing and leasing ourselves which we recognize as revenue over the applicable lease term. Occasionally, we rent used equipment to customers, and in those cases, we recognize the revenues as they are earned over the life of the contract. Royalty income is recognized in accordance with agreed upon terms, when performance obligations are satisfied, the amount is fixed or determinable and collectability is reasonably assured. The sales of licenses to our training courses are recognized as revenue at the time of sale. Rental income from space leased to our tenants is recognized in the month in which it is due. On occasion we receive customer deposits for future product orders. Customer deposits are initially recorded as a liability and recognized as revenue when the product is shipped and title has passed to the customer. |
Deferred Revenue | Deferred revenues arise from service contracts and from development contracts. Revenues from service contracts are recognized on a straight-line basis over the life of the contract, generally one year. However, there are occasions when they are written for longer terms up to four years. The revenues from that portion of the contract that extend beyond one year are shown in our balance sheet as long term. Deferred revenues also result from progress payments received on development contracts; those revenues are recognized when the contract is complete. All development contracts are for less than one year and all deferred revenues from this source are shown in our balance sheet as short term. |
Grants | We apply for and receive job training and other grants. In September 2014 we were notified that we had been awarded a $250,000 grant from the Colorado Office of Economic Development to accelerate development of a marijuana breathalyzer that is currently under development. Grants are recognized as reductions of expense when received. In 2015 and 2014, we received expense reimbursement grants of $42,396 and $45,868 respectively. |
Rebates | Our rebate program is available to certain of our North American workplace distributors in good standing who are responsible for sales equaling at least $30,000 in one calendar year. Distributors who meet the required sales threshold automatically earn a rebate |
Rent Expense | We recognize rent expense on a straight-line basis over the reasonably assured lease term as defined in ASC Topic 840, Leases ("ASC 840"). As a result of purchasing our building, we did not incur rent expense after October 31, 2014. |
Research and Development Expenses | We expense research and development costs for products and processes as incurred. |
Stock-Based Compensation | Stock-based compensation is presented in accordance with the guidance of ASC Topic 718, Compensation – Stock Compensation ("ASC 718"). Under the provisions of ASC 718, companies are required to estimate the fair value of share-based payment awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in our statement of income. ASC 718 requires companies to estimate the fair value of share-based payment awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in the accompanying statement of income. Stock-based compensation expense recognized during the period is based on the value of the portion of share-based payment awards that is ultimately expected to vest during the period. We used the Black-Scholes option-pricing model ("Black-Scholes model") to determine fair value. Our determination of fair value of share-based payment awards on the date of grant using an option-pricing model is affected by our stock price as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to our expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors. Although the fair value of employee stock options is determined in accordance with ASC 718 using an option-pricing model, that value may not be indicative of the fair value observed in a willing buyer/willing seller market transaction. Stock-based compensation expense recognized under ASC 718 for fiscal years 2015 and 2014 was $0. Stock-based compensation expense related to employee stock options under ASC 718 for 2013 is allocated to General and Administrative Expense when incurred. |
Segment Reporting | We have concluded that we have two operating segments, including our primary business which is as a developer, manufacturer and marketer of portable hand-held breathalyzers and related accessories, supplies and education. As a result of purchasing our building on October 31, 2014, we have a second segment consisting of renting portions of our building to existing tenants, whose leases expire at various times until December 31, 2017. |
Basic and Diluted Income and Loss per Common Share | Net income or loss per share is calculated in accordance with ASC Topic 260, Earnings Per Share ("ASC 260"). Under the provisions of ASC 260, basic net income or loss per common share is computed by dividing net income or loss for the period by the weighted average number of common shares outstanding for the period. Diluted net income or loss per share is computed by dividing the net income or loss for the period by the weighted average number of common and potential common shares outstanding during the period if the effect of the potential common shares is dilutive. Dilution from potential common shares outstanding at December 31, 2015 and 2014 was $0.01. |
Recent Accounting Pronouncements | We have reviewed all recently issued, but not yet effective, accounting pronouncements. The Financial Accounting Standards Board issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers In April 2015, the FASB issued Accounting Standards Update No. 2015-03, Simplifying the Presentation of Debt Issuance Costs In November 2015, the FASB issued Accounting Standards Update No. 2015-17, Balance Sheet Classification of Deferred Taxes In January 2016, the FASB issued Accounting Standards Update No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) |
2. SUMMARY OF SIGNIFICANT ACC21
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Summary Of Significant Accounting Policies Tables | |
Schedule of allowance for doubtful accounts | Years Ended December 31 2015 2014 Balance, beginning of year $ 40,000 $ 26,267 Provision for estimated losses 6,530 49,796 Write-off of uncollectible accounts (11,530 ) (36,063 ) Balance, end of year $ 35,000 $ 40,000 |
Inventories | 2015 2014 Raw materials & deposits $ 404,104 $ 476,941 Work-in process 76,903 132,029 Finished goods 408,154 428,955 Total gross inventories 889,161 1,037,925 Less reserve for obsolescence (87,500 ) (92,500 ) Total net inventories $ 801,661 $ 945,425 |
Inventory reserve | Years Ended December 31 2015 2014 Balance, beginning of year $ 92,500 $ 75,000 Provision for estimated obsolescence 2,640 43,894 Write-off of obsolete inventory (7,640 ) (26,394 ) Balance, end of year $ 87,500 $ 92,500 |
Patents | 2015 2014 Patents issued $ 22,775 $ 22,775 Patent applications 102,802 74,634 Accumulated amortization (23,325 ) (17,053 ) Total net patents $ 102,252 $ 80,356 |
Accrued Expenses | 2015 2014 Compensation $ 176,219 $ 157,888 Rebates 47,706 21,280 Property and other taxes 51,071 44,810 401(k) plan and health insurance - 8,152 Total accrued expenses $ 274,996 $ 232,130 |
Product warranty reserve | Years Ended December 31 2015 2014 Balance, beginning of year $ 33,100 $ 23,100 Provision for estimated warranty claims 21,277 14,425 Claims made (21,277 ) (4,425 ) Balance, end of year $ 33,100 $ 33,100 |
3. BUSINESS COMBINATIONS (Table
3. BUSINESS COMBINATIONS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Business Combinations [Abstract] | |
Estimate from net earnings from rental units | 2015 2014 Unaudited) Rental income $ 107,665 $ 105,880 Expenses: Depreciation 59,419 59,150 Maintenance 6,562 20,000 Property taxes 18,460 18,000 Insurance 3,583 4,800 Total expenses 88,024 101,950 Net profit $ 19,641 $ 3,930 |
Schedule Of Actual earnings | 2015 2014 (Unaudited) Sales, STS courses $ 141,605 $ 5,010 Expenses: Outside services 48,337 4,167 Amortization 28,825 2,402 Manuals, CDs, supplies 23,579 1,446 Internet expense 2,014 - Telephone and other 1,982 - Commissions and other selling expenses 26,193 712 Total expenses 130,930 8,727 Net profit (loss) $ 10,675 $ (3,717 ) |
4. STOCKHOLDERS' EQUITY (Tables
4. STOCKHOLDERS' EQUITY (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Stockholders Equity Tables | |
Summary of our stock option activity | STOCK OPTIONS OUTSTANDING Number Outstanding Weighted Average Exercise Price Per Share BALANCE AT DECEMBER 31, 2013 92,000 $ 2.66 Granted - - Exercised - - Forfeited/expired - - BALANCE AT DECEMBER 31, 2014 92,000 $ 2.66 Granted - - Exercised (6,700 ) - Forfeited/expired (6,300 ) - BALANCE AT DECEMBER 31, 2015 79,000 $ 2.67 |
Stock options outstanding and exercisable | STOCK OPTIONS OUTSTANDING STOCK OPTIONS EXERCISABLE Range of Exercise Prices Number Outstanding Weighted-Average Remaining Contractual Life (in Years) Weighted-Average Exercise Price per Share Number Exercisable Weighted-Average Exercise Price per Share $3.69 20,000 .9 $3.69 20,000 $3.69 $2.32 59,000 2.75 $2.32 59,000 $2.32 79,000 79,000 |
5. COMMITMENTS AND CONTINGENC24
5. COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Minimum future lease payments | Year Amount 2016 36,689 2017 35,576 2018 40,353 2019 42,211 2020 43,979 2020 - 2024 1,341,347 Total 1,540,155 Less current portion (36,689 ) Long term portion $ 1,503,466 |
7. INCOME TAXES (Tables)
7. INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Income Taxes Tables | |
Schedule of income tax provision | Years Ended December 31, 2015 December 31, 2014 Current: Federal $ 88,671 $ 208,081 State 20,477 40,849 Total current 109,148 248,930 Deferred: Federal 5,756 (30,905 ) State 799 (4,288 ) Total deferred 6,555 (35,193 ) Total $ 115,703 $ 213,737 |
Schedule of income tax reconciliation | Years Ended December 31, 2015 December 31, 2014 Federal statutory rate $ 143,412 $ 286,086 Effect of: State taxes, net of federal tax benefit 21,276 36,561 Research & development credit (54,741 ) (78,005 ) Other 5,756 (30,905 ) Total $ 115,703 $ 213,737 |
Schedule of components of the deferred tax asset | Years Ended December 31, Current Deferred Tax Assets: 2015 2014 Deferred income $ 33,888 $ 32,867 Bad debt reserve 15,010 21,470 Accrued vacation 19,332 18,327 Inventory reserve 33,250 35,150 Warranty reserve 12,578 12,578 Total current deferred tax assets 114,058 120,392 Long Term Deferred Tax Assets: Deferred income 7,282 7,504 Total Deferred Tax Assets $ 121,340 $ 127,896 |
13. BUSINESS SEGMENTS (Tables)
13. BUSINESS SEGMENTS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Segment Reporting [Abstract] | |
Operations of business segments | Year Ended December 31, Revenue: 2015 2014 Product Sales $ 8,323,913 $ 9,023,804 Royalties 394,895 300,533 Products Subtotal 8,718,808 9,324,337 Rentals 107,665 17,647 Total $ 8,826,473 $ 9,341,984 Gross profit: Product Sales $ 3,986,830 $ 4,157,451 Royalties 394,895 300,533 Products Subtotal 4,381,725 4,457,984 Rentals 19,642 9,873 Total $ 4,401,367 $ 4,467,857 Interest expense: Product Sales $ 36,584 $ 6,195 Royalties - - Products Subtotal 36,584 Rentals 34,402 5,718 Total $ 70,986 $ 11,913 Net income (loss) before taxes: Product Sales $ (11,065 ) $ 514,045 Royalties 394,895 300,533 Products Subtotal 383,830 814,578 Rentals 14,127 4,155 Total $ 397,957 $ 818,733 |
14. SUBSEQUENT EVENTS (Tables)
14. SUBSEQUENT EVENTS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Schedule of assumptions for valuing stock options | Risk-free interest rate 1.46% Expected life (in years) 5.0 Expected volatility 28.67% Expected dividend 0% |
2. SUMMARY OF SIGNIFICANT ACC28
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Notes to Financial Statements | ||
Balance, beginning of year | $ 40,000 | $ 26,267 |
Provision for estimated losses | 6,530 | 49,796 |
Write-off of uncollectible accounts | (11,530) | (36,063) |
Balance, end of year | $ 35,000 | $ 40,000 |
2. SUMMARY OF SIGNIFICANT ACC29
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Inventories | |||
Raw materials & deposits | $ 404,104 | $ 476,941 | |
Work-in-process | 76,903 | 132,029 | |
Finished goods | 408,154 | 428,955 | |
Total gross inventories | 889,161 | 1,037,925 | |
Less reserve for obsolescence | (87,500) | (92,500) | $ (75,000) |
Total net inventories | $ 801,661 | $ 945,425 |
2. SUMMARY OF SIGNIFICANT ACC30
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Notes to Financial Statements | ||
Inventory reserve for obsolescence, beginning of year | $ 92,500 | $ 75,000 |
Provision for estimated obsolescence | 2,640 | 43,894 |
Write-off of obsolete inventory | (7,640) | (26,394) |
Inventory reserve for obsolescence, end of year | $ 87,500 | $ 92,500 |
2. SUMMARY OF SIGNIFICANT ACC31
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 3) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Notes to Financial Statements | ||
Patents issued | $ 22,775 | $ 22,775 |
Patent applications | 102,802 | 74,634 |
Accumulated amortization | (23,325) | (17,053) |
Total net patents | $ 102,252 | $ 80,356 |
2. SUMMARY OF SIGNIFICANT ACC32
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 4) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Notes to Financial Statements | ||
Compensation | $ 176,219 | $ 157,888 |
Rebates | 47,706 | 21,280 |
Property and other taxes | $ 51,071 | 44,810 |
401(k) plan and health insurance | 8,152 | |
Total accrued expenses | $ 274,996 | $ 232,130 |
2. SUMMARY OF SIGNIFICANT ACC33
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 5) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Notes to Financial Statements | ||
Product warranty reserve, beginning of year | $ 33,100 | $ 23,100 |
Provision for estimated warranty claims | 21,277 | 14,425 |
Claims made | (21,277) | (4,425) |
Product warranty reserve, end of year | $ 33,100 | $ 33,100 |
2. SUMMARY OF SIGNIFICANT ACC34
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Line of Credit Facility, Maximum Borrowing Capacity | $ 250,000 | |
Line of Credit Facility, Borrowing Capacity, Description | The amount of cash on deposit with two financial institutions exceeded the $250,000 federally insured limit at December 31, 2015 by $2,650,781 | |
Accounts receivable, net | $ 603,817 | $ 855,452 |
Depreciation, Depletion and Amortization, Nonproduction | $ 292,593 | $ 205,094 |
Dilution from potential common shares outstanding | $ 0.01 | $ 0.01 |
Technology Licenses [Member] | ||
Depreciation, Depletion and Amortization, Nonproduction | $ 0 | $ 3,333 |
Patents [Member] | ||
Depreciation, Depletion and Amortization, Nonproduction | 6,227 | 3,661 |
Deposits and Other Assets [Member] | ||
Depreciation, Depletion and Amortization, Nonproduction | 0 | 633 |
Long Lived Assets [Member] | ||
Depreciation, Depletion and Amortization, Nonproduction | 0 | 1,796 |
Property, Plant and Equipment [Member] | ||
Depreciation, Depletion and Amortization, Nonproduction | 285,688 | 201,433 |
Customer One [Member] | ||
Accounts receivable, net | $ 138,909 | $ 156,701 |
3. BUSINESS COMBINATIONS (Detai
3. BUSINESS COMBINATIONS (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Business Combinations [Abstract] | ||
Rental income | $ 107,665 | $ 105,880 |
Expenses: | ||
Depreciation | 59,419 | 59,150 |
Maintenance | 6,562 | 20,000 |
Property taxes | 18,460 | 18,000 |
Insurance | 3,583 | 4,800 |
Total expenses | 88,024 | 101,950 |
Net profit | $ 19,641 | $ 3,930 |
3. BUSINESS COMBINATIONS (Det36
3. BUSINESS COMBINATIONS (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Sales, STS courses | $ 107,665 | $ 105,880 |
Expenses: | ||
Amortization | 292,593 | 205,094 |
Internet expense | 70,986 | 11,913 |
Total expenses | 88,024 | 101,950 |
Net profit (loss) | 19,641 | 3,930 |
STS [Member] | ||
Sales, STS courses | 141,605 | 5,010 |
Expenses: | ||
Outside services | 48,337 | 4,167 |
Amortization | 28,825 | 2,402 |
Manuals, CDs, supplies | 23,579 | $ 1,446 |
Internet expense | 2,014 | |
Telephone and other | 1,982 | |
Commissions and other selling expenses | 26,193 | $ 712 |
Total expenses | 130,930 | 8,727 |
Net profit (loss) | $ 10,675 | $ (3,717) |
3. BUSINESS COMBINATIONS (Det37
3. BUSINESS COMBINATIONS (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Business Combinations [Abstract] | ||
Major improvements | $ 280,488 | |
Rental income | 107,665 | $ 105,880 |
Operating income | $ 19,641 | $ 3,930 |
Operating Leases, Indemnification Agreements, Description | Minimum base rents for leases in place at December 31, 2015 are scheduled to be $99,746 in 2016 and $75,627 in 2017. |
4. STOCKHOLDERS' EQUITY (Detail
4. STOCKHOLDERS' EQUITY (Details 1) - $ / shares | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Notes to Financial Statements | ||
Option Outstanding, beginning | 92,000 | 92,000 |
Option Granted | 0 | 0 |
Option Exercised | (6,700) | 0 |
Option Forfeited/expired | (6,300) | 0 |
Option Outstanding, ending | 79,000 | 92,000 |
Option Outstanding, Weighted-Average Exercise Price per Share, beginning | $ 2.66 | $ 2.66 |
Option Granted, Weighted-Average Exercise Price per Share | 0 | 0 |
Option Exercised, Weighted-Average Exercise Price per Share | 0 | 0 |
Option Forfeited/expired, Weighted-Average Exercise Price per Share | 0 | 0 |
Option Outstanding, Weighted-Average Exercise Price per Share, ending | $ 2.67 | $ 2.66 |
4. STOCKHOLDERS' EQUITY (Deta39
4. STOCKHOLDERS' EQUITY (Details 2) - $ / shares | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Option Outstanding | 79,000 | 92,000 | 92,000 |
Weighted Average Exercise Price per Share | $ 2.67 | $ 2.66 | $ 2.66 |
Number Exercisable | 79,000 | ||
Price range $3.69 | |||
Range of Exercise Prices | $ 3.69 | ||
Option Outstanding | 20,000 | ||
Weighted Average Remaining Contractual Life (in Years) | 10 months 24 days | ||
Weighted Average Exercise Price per Share | $ 3.69 | ||
Number Exercisable | 20,000 | ||
Weighted Average Exercise Price per Share | $ 3.69 | ||
Price range $2.32 | |||
Range of Exercise Prices | $ 2.32 | ||
Option Outstanding | 59,000 | ||
Weighted Average Remaining Contractual Life (in Years) | 2 years 9 months | ||
Weighted Average Exercise Price per Share | $ 2.32 | ||
Number Exercisable | 59,000 | ||
Weighted Average Exercise Price per Share | $ 2.32 |
4. STOCKHOLDERS' EQUITY (Deta40
4. STOCKHOLDERS' EQUITY (Details Narrative) | Dec. 31, 2015shares |
Stockholders Equity Details Narrative | |
Common stock available for grant under the new Plan adopted in 2013 | 81,000 |
6. COMMITMENTS AND CONTINGENCIE
6. COMMITMENTS AND CONTINGENCIES (Details) | Dec. 31, 2015USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2,016 | $ 36,689 |
2,017 | 35,576 |
2,018 | 40,353 |
2,019 | 42,211 |
2,020 | 43,979 |
2020 - 2024 | 1,341,347 |
Total | 1,540,155 |
Less current portion | (36,689) |
Long term portion | $ 1,503,466 |
6. COMMITMENTS AND CONTINGENC42
6. COMMITMENTS AND CONTINGENCIES (Details Narrative) | Dec. 31, 2015USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Outstanding purchase orders issued to vendors | $ 993,053 |
7. LINE OF CREDIT (Details Narr
7. LINE OF CREDIT (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Line Of Credit Details Narrative | ||
Line of Credit Facility | $ 0 | $ 0 |
LIBOR daily floating rate | LIBOR daily floating rate of .3661 and .1146 on December 31, 2015 and 2014 respectively, plus 2.5%. |
8. INCOME TAXES (Details)
8. INCOME TAXES (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Current: | ||
Federal | $ 88,671 | $ 208,081 |
State | 20,477 | 40,849 |
Total current | 109,148 | 248,930 |
Deferred: | ||
Federal | 5,756 | (30,905) |
State | 799 | (4,288) |
Total deferred | 6,555 | (35,194) |
Total | $ 115,703 | $ 213,737 |
8. INCOME TAXES (Details 1)
8. INCOME TAXES (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Income Tax Disclosure [Abstract] | ||
Federal statutory rate | $ 143,412 | $ 286,086 |
State taxes, net of federal tax benefit | 21,276 | 36,561 |
Research & development credit | (54,741) | (78,005) |
Other | 5,756 | (30,905) |
Total | $ 115,703 | $ 213,737 |
8. INCOME TAXES (Details 2)
8. INCOME TAXES (Details 2) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Current Deferred Tax Assets: | ||
Deferred income | $ 33,888 | $ 32,867 |
Bad debt reserve | 15,010 | 21,470 |
Accrued vacation | 19,332 | 18,327 |
Inventory reserve | 33,250 | 35,150 |
Warranty reserve | 12,578 | 12,578 |
Total current deferred tax assets | 114,058 | 120,392 |
Long Term Deferred Tax Assets: | ||
Deferred income | 7,282 | 7,504 |
Deferred Tax Assets | $ 121,340 | $ 127,896 |
10. MAJOR CUSTOMERS_SUPPLIERS (
10. MAJOR CUSTOMERS/SUPPLIERS (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Sales Revenue, Goods, Net | $ 8,323,913 | $ 9,023,804 |
Customer One [Member] | ||
Concentration Risk, Percentage | 8.00% | 8.00% |
Sales Revenue, Goods, Net | $ 737,834 | $ 736,458 |
Customer Two [Member] | ||
Concentration Risk, Percentage | 8.00% | 6.00% |
Sales Revenue, Goods, Net | $ 734,352 | $ 549,867 |
Customer Three [Member] | ||
Concentration Risk, Percentage | 3.00% | 5.00% |
Sales Revenue, Goods, Net | $ 307,259 | $ 471,432 |
Vendor [Member] | ||
Concentration Risk, Percentage | 19.00% | 24.00% |
11. DEFINED CONTRIBUTION EMPL48
11. DEFINED CONTRIBUTION EMPLOYEE BENEFIT PLAN (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Accounting Policies [Abstract] | ||
Percentage of payroll to discretionary contribution | 3.00% | 3.00% |
Discretionary contributions amount | $ 50,223 | $ 46,766 |
13. BUSINESS SEGMENTS (Details)
13. BUSINESS SEGMENTS (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Revenue | $ 8,826,473 | $ 9,341,984 |
Gross profit | 4,401,367 | 4,467,857 |
Interest expense | 70,986 | 11,913 |
Net income (loss) before taxes | 397,957 | 818,733 |
Product Sales | ||
Revenue | 8,323,913 | 9,023,804 |
Gross profit | 3,986,830 | 4,157,451 |
Interest expense | 36,584 | 6,195 |
Net income (loss) before taxes | (11,065) | 514,045 |
Royalties | ||
Revenue | 394,895 | 300,533 |
Gross profit | $ 394,895 | $ 300,533 |
Interest expense | ||
Net income (loss) before taxes | $ 394,895 | $ 300,533 |
Products Subtotal | ||
Revenue | 8,718,808 | 9,324,337 |
Gross profit | 4,381,725 | 4,457,984 |
Interest expense | 36,584 | |
Net income (loss) before taxes | 383,830 | 814,578 |
Rentals | ||
Revenue | 107,665 | 17,647 |
Gross profit | 19,642 | 9,873 |
Interest expense | 34,402 | 5,718 |
Net income (loss) before taxes | $ 14,127 | $ 4,155 |
13. BUSINESS SEGMENTS (Details
13. BUSINESS SEGMENTS (Details Narrative) | Dec. 31, 2015USD ($) |
Segment Reporting [Abstract] | |
Rentals segment | $ 905,379 |
Rentals segment remainder | $ 6,798,245 |
14. SUBSEQUENT EVENTS (Details)
14. SUBSEQUENT EVENTS (Details) - Subsequent Event [Member] | 3 Months Ended |
Mar. 31, 2016 | |
Risk-free interest rate | 1.46% |
Expected life (in years) | 5 years |
Expected volatility | 28.67% |
Expected dividend | 0.00% |