| 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 250,000 832,158 756,530 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 2022 2021
Balance, beginning of year $ 5,000 $ 54,000
Provision for estimated losses 297 (48,712 )
Recovery (write-off) of uncollectible accounts (297 ) (288 )
Balance, end of year $ 5,000 $ 5,000 The net accounts receivable balance at December 31,
2022 of $ 627,919 103,739 98,412 42,954 562,092 71,522 57,500 Inventories
Schedule of Inventories
2022 2021
Raw materials & deposits $ 2,509,661 $ 2,179,332
Work-in-process 52,642 84,963
Finished goods 539,316 559,494
Total gross inventories 3,101,619 2,823,789
Less reserve for obsolescence (369,156 ) (155,000 )
Total net inventories $ 2,732,463 $ 2,668,789 A summary of the activity in our inventory reserve
for obsolescence is as follows:
Schedule of inventory reserve
Years Ended December 31 2022 2021
Balance, beginning of year $ 155,000 $ 160,000
Provision for estimated obsolescence 269,837 23,585
Write-off of obsolete inventory (55,681 ) (28,585 )
Balance, end of year $ 369,156 $ 155,000 Property and Equipment 553,995 254,010 Long-Lived Assets No Patents 74,120 12,883 12,932 0 0
Schedule of patents
2022 2021
Patents issued $ 191,871 $ 190,508
Patent applications filed and in process 25,154 30,905
Accumulated amortization (147,346 ) (86,985 )
Total net patents $ 69,679 $ 134,428 Deposits and Other Assets Accrued Expenses
Schedule of accrued expenses
2022 2021
Compensation $ 205,422 $ 187,729
Property and other taxes 73,892 68,514
Rebates 65,630 42,287
Total accrued expenses $ 344,944 $ 298,530 Product Warranty Reserve
Schedule of product warranty reserve
Years Ended December 31 2022 2021
Balance, beginning of year $ 46,500 $ 46,500
Provision for estimated warranty claims 37,092 25,818
Claims made (37,092 ) (25,818 )
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, 2022 and 2021, 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.
Schedule of disaggregation of revenue
Year Ended December 31,
Product sales: 2022 2021
Product sales and supplies $ 7,632,716 $ 6,211,320
Training, certification and data recording 651,128 624,167
Service plans and equipment rental 66,619 63,468
Product sales subtotal 8,350,463 6,898,955
Royalties 40,674 67,526
Rental income 90,856 87,949
Total revenues $ 8,481,993 $ 7,054,430
Deferred Revenue Paycheck Protection Loans 465,097 471,347 Rebates Recently Issued 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 2022 and 2021 was $ 17,202 17,157 Segment Reporting Basic and Diluted Income and Loss per Common Share Earnings Per Share 0.00 0.01 Wholly Owned Subsidiary On June 1, 2022, we formed a wholly-owned
subsidiary, Probation Tracker, Inc., a Colorado corporation (“PTI”) and capitalized it with $ 61,353 613,530 613,530 61,353 |
