| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES Basis of Presentation Use of Estimates
in the Preparation of Financial Statements Fair Value Measurement 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. Inventories
Schedule of Inventories
2021 2020
Raw materials & deposits $ 2,227,166 $ 2,116,389
Work-in-process 31,777 16,862
Finished goods 481,205 524,875
Total gross inventories 2,740,148 2,658,126
Less reserve for obsolescence (160,000 ) (160,000 )
Total net inventories $ 2,580,148 $ 2,498,126 Income Taxes Accounting for Income Taxes The estimated annual
effective tax rate is applied to the year-to-date ordinary income (loss) at the end of the interim period. ASC 740 prescribes
a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or
expected to be taken in a tax return. This pronouncement also provides guidance on derecognition, classification, interest
and penalties, accounting in interim periods, disclosure, and transition. Revenue Recognition Revenue from Contracts with Customers (Topic 606). Revenue from product
sales and supplies 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. The sales of licenses
to our training courses are recognized as revenue at the time of sale. Training and certification revenues are recognized at the time
the training and certification occurs. Data recording revenue is recognized based on each day’s usage of enrolled devices. Revenues arising from
extended warranty contracts are booked as sales over their life on a straight-line basis. 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. 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 and product developments. Customer deposits are initially recorded as a liability
and recognized as revenue when the product is shipped and title has passed to the customer, or when agreed milestones are met in the
case of product developments. Topic 606 requires
the disaggregation of revenue into broad categories, which we have defined as shown below for the three months ended March 31, 2021 and
March 31, 2020.
Schedule of Disaggregation of revenue
Product sales: 2021 2020
Product sales and supplies $ 1,626,160 $ 1,767,140
Training, certification and data recording 135,922 148,182
Service plans
and equipment rental 13,365 22,544
Products subtotal 1,775,447 1,937,866
Royalties 12,564 59,281
Building rentals 21,532 21,189
Total revenues $ 1,809,543 $ 2,018,336 Deferred Revenue Recent Accounting
Pronouncements Stock-Based Compensation 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 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 the three months ended March 31, 2021 and 2020 was $ 17,157 32,111 Segment Reporting |
