| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES Use of Estimates
in the Preparation of Financial Statements Debt Issuance Costs Simplifying the Presentation of Debt Issuance Costs Deferred
Taxes Balance Sheet Classification of Deferred Taxes ( 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. Cash and Cash Equivalents Fair Value of Financial
Instruments Concentration of
Credit Risk 250,000 993,331 214,830 360,478 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
Schedule of allowance for doubtful accounts
Years Ended December
31 2021 2020
Balance, beginning of year $ 54,000 $ 30,000
Provision for estimated losses (48,712 ) 25,042
Recovery (write-off) of uncollectible accounts (288 ) (1,042 )
Balance, end of year $ 5,000 $ 54,000 The net accounts receivable
balance at December 31, 2021 of $ 562,092 71,522 57,500 523,603 182,510 67,183 Inventories
Inventories
2021 2020
Raw materials & deposits $ 2,179,332 $ 2,116,389
Work-in-process 84,963 16,862
Finished goods 559,494 524,875
Total gross inventories 2,823,789 2,658,126
Less reserve for obsolescence (155,000 ) (160,000 )
Total net inventories $ 2,668,789 $ 2,498,126 A summary of the activity
in our inventory reserve for obsolescence is as follows:
Inventory reserve
Years Ended December
31 2021 2020
Balance, beginning
of year $ 160,000 $ 140,000
Provision for estimated obsolescence 23,585 64,753
Write-off
of obsolete inventory (28,585 ) (44,753 )
Balance,
end of year $ 155,000 $ 160,000 Property and Equipment 254,010 343,834 Long-Lived Assets No Patents 12,883 19,417 12,932 0 5,990
Patents
2021 2020
Patents issued $ 190,508 $ 190,508
Patent applications 30,905 28,296
Accumulated amortization (86,985 ) (74,102 )
Total net patents $ 134,428 $ 144,702
Deposits and Other
Assets Accrued Expenses
Accrued expenses
2021 2020
Compensation $ 187,729 $ 165,686
Property and other taxes 68,514 69,109
Rebates 42,287 31,471
Total accrued expenses $ 298,530 $ 266,266 Product Warranty
Reserve
Product warranty reserve
Years Ended December
31 2021 2020
Balance, beginning
of year $ 46,500 $ 45,000
Provision for estimated
warranty claims 25,818 27,279
Claims
made (25,818 ) (25,779 )
Balance,
end of year $ 46,500 $ 46,500 Income Taxes 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, 2021 and 2020, we did not have any interest or penalties or any significant uncertain tax positions. 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, or when agreed milestones are
met in the case of product developments, 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.
Disaggregation of revenue
Year
Ended December 31,
Product sales: 2021 2020
Product sales and supplies $ 5,992,880 $ 5,509,424
Training, certification and data recording 624,167 541,580
Service plans and equipment rental 281,908 71,344
Product sales subtotal 6,898,955 6,122,348
Royalties 67,526 148,398
Rental income 87,949 85,956
Total revenues $ 7,054,430 $ 6,356,702
Deferred Revenue Paycheck Protection Loans 465,097 471,347 Rebates Recent Accounting
Pronouncements Research and Development
Expenses. 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 ("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 2021 and 2020 was $ 17,157 30,351 Segment Reporting Basic and Diluted
Income and Loss per Common Share Earnings
Per Share 0.01 0 |
