| 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
| Dec. 31, 2017 |
| Summary Of Significant Accounting Policies Policies | |
| Use of Estimates in the Preparation of Financial Statements | 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. |
| Debt Issuance Costs | In 2016, the Company adopted Financial
Accounting Standards Board ("FASB") Accounting Standards Update ("ASU") No. 2015-03, Simplifying the Presentation
of Debt Issuance Costs |
| Deferred Taxes | In November
2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update No. 2015-17, Balance
Sheet Classification of Deferred Taxes ( |
| Fair Value Measurement | Accounting Standards Codification
("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, 2017 and 2016. |
| 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, 2017 by $1,919,223. 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. |
| 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
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 2017 2016
Balance, beginning of year $ 35,000 $ 35,000
Provision for estimated losses 10,669 5,301
Write-off of uncollectible accounts (10,669 ) (5,301 )
Balance, end of year $ 35,000 $ 35,000 The net accounts receivable balance
at December 31, 2017 of $593,326 included an account from one customer of $156,960 (26%), and no more than 10% from any other single
customer. The net accounts receivable balance at December 31, 2016 of $495,397 included an account from one customer of $113,948
(23%) and no more than 6% from any other single 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, 2017 and December 31, 2016, inventory consisted of the following:
2017 2016
Raw materials & deposits $ 809,867 $ 592,771
Work-in-process 181,976 42,366
Finished goods 243,260 287,972
Total gross inventories 1,235,103 923,109
Less reserve for obsolescence (60,000 ) (87,500 )
Total net inventories $ 1,175,103 $ 835,609 A summary of the activity in our
inventory reserve for obsolescence is as follows:
Years Ended December 31 2017 2016
Balance, beginning of year $ 87,500 $ 87,500
Provision for estimated obsolescence 21,965 30,134
Write-off of obsolete inventory (49,465 ) (30,134 )
Balance, end of year $ 60,000 $ 87,500 |
| 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, 2017 and 2016 was $275,592 and $243,326
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. No impairments were recorded for the years ended December 31, 2017 and 2016 respectively. |
| 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, including impairments, for the years
ended December 31, 2017 and 2016 was $11,882 and $39,297 respectively. Amortization expense for each of the next 5 years
is estimated to be $13,227 per year. 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. Impairments of $0 and $29,386 were included in amortization expense for the
years ended December 31, 2017 and 2016 respectively. A summary of our patents at December 31, 2017 and 2016 is as follows:
2017 2016
Patents issued $ 190,508 $ 22,775
Patent applications 24,321 74,837
Accumulated amortization (37,585 ) (25,703 )
Total net patents $ 177,244 $ 71,909 |
| Deposits and Other Assets | We include the long-term portion
of installment receivables and the long-term portion of prepaid consulting with deposits. |
| Accrued Expenses | We have accrued various expenses
in our December 31 balance sheets, as follows.
2017 2016
Compensation $ 139,841 $ 135,585
Property and other taxes 96,097 49,092
Rebates 28,352 37,562
State income tax - 12,408
Interest - 5,186
$ 264,290 $ 239,833 |
| 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 2017 2016
Balance, beginning of year $ 40,000 $ 33,100
Provision for estimated warranty claims 38,153 46,980
Claims made (38,153 ) (40,080 )
Balance, end of year $ 40,000 $ 40,000 |
| Income Taxes | We account for income taxes under
the provisions of ASC Topic 740, Accounting for 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, 2017 and 2016, 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. 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. Revenues from
these activities are included in product revenue in our statements of income. 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 and the sale of 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, which approximates if it were recognized on a straight-line basis over
the term of the related lease. 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, and are included in product revenue in our statements of income. 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 sheets as long term. Deferred revenues also result from progress
payments received on development contracts; those revenues are recognized when the contract is complete, and are included in product
revenue in our statements of income. All development contracts are for less than one year and all deferred revenues
from this source are shown in our balance sheets 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 2017 and 2016, we received expense reimbursement grants of $11,288
and $44,523 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 $25,000 in
one calendar year. Distributors who meet the required sales threshold automatically earn a rebate equal to between 1
and 10 percent of that distributor's total sales of the Company's products. We accrue for these rebates monthly; they
are shown in our balance sheets as accrued expenses and are included in sales and marketing expense in our statements of income. |
| 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 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 years 2017 and 2016 was $22,857 and $24,308 respectively. Stock-based compensation expense
related to employee stock options under ASC 718 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 July 31,
2020. |
| 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 |
| Recent Accounting Pronouncements | We have reviewed all recently issued,
but not yet effective, accounting pronouncements. The FASB issued ASU No. 2014-09, Revenue from Contracts
with Customers In January 2016, the FASB issued
ASU 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) |
