| Note 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at dates of the financial statements and the reported amounts of revenue and expenses during the periods. Actual results could differ from these estimates. Our significant estimates and assumptions include the useful lives of fixed assets and intangible assets, the fair value of our stock, and the valuation allowance relating to the Company’s deferred tax assets. Cash and Cash Equivalents Cash and cash equivalents consist of highly liquid investments with an original maturity of three months or less at the date of purchase. Cash and cash equivalents are carried at cost, which approximates fair value. As of September 30, 2021, and December 31, 2020, the Company had $595,390 and $326,713, respectively of cash and had no cash equivalents. Accounts Receivable Trade accounts receivable are recorded net of allowance for expected uncollectible accounts. The Company extends credit to its customers in the normal course of business and performs on-going credit evaluations of its customers. All accounts, or portions thereof, that are deemed uncollectible are written off to bad debt expense, as incurred. In addition, most sales orders are not accepted without a substantial deposit. Inventory Inventories are stated at the lower of cost or net realizable value using the first-in first-out (FIFO) method. We have four principal categories of inventory: Sales demonstration inventory Equipment parts inventory Work in process inventory - Finished goods inventory At September 30, 2021 (unaudited) and December 31, 2020, respectively, our inventory consisted of the following: September 30, 2021 December 31, 2020 Inventory Equipment Parts Inventory 706,230 690,069 Finished Goods Inventory 95,603 181,453 Sales Demo Inventory 1,074,240 1,281,564 Work in process Inventory 66,630 19,241 Total Inventory 1,942,433 2,172,327 Fixed Assets - Plant Machinery and Equipment Property and equipment are recorded at cost. Expenditures for major additions and improvements are capitalized and minor replacements, maintenance, and repairs are charged to expense as incurred. When property and equipment are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the results of operations for the respective period. Depreciation is provided over the estimated useful lives of the related assets using the straight-line method for financial statement purposes. The estimated useful lives for significant property and equipment categories are as follows: Category Economic Useful Life Office furniture and fixtures 3-5 years Machinery and equipment 5-7 years September 30, 2021 December 31, 2020 Fixed Assets: Machinery & Equipment 797,695 794,945 ) Office and Computer Equipment 8,420 8,420 Office Furniture 31,029 31,029 R&D Equipment 31,053 31,053 Vehicles 9,989 9,989 Accumulated Depreciation (146,199 ) (26,409 Total 738,908 849,027 For the three and nine months ended September 30, 2021, we recorded $39,930 and $119,789, respectively, of depreciation expense. For the three and nine months ended September 30, 2020, we recorded $6,602 and $13,205, respectively, of depreciation expense. Intangible Assets Intangible assets consist primarily of capitalized equipment design documentation, acquired customer relationships, and software costs including MRP/ERP, inventory management, and engineering design applications. The equipment design documentation development costs are recorded in accordance with Accounting Standards Codification (“ASC”) No. 985-20, “Costs of Software to Be Sold, Leased, or Marketed,” with costs to be amortized on a product-by-product basis based on the greater of the amounts computed using the following (a) the ratio that current gross revenues for the product bear to the total of current and anticipated future gross revenues for that product and (b) the straight-line method over the remaining estimated economic life of the product. Software costs are amortized using the straight-line method in accordance with ASC 350-40. “Internal-Use Software.” The acquired customer relationship intangible asset will be amortized using the straight-line method over the estimated useful life based on the pattern in which the expected benefits will be consumed. The Company’s intangible assets were placed in service on January 1, 2021. The carrying values have been revised to reflect current period amortization, resulting in an increase in expenses and decrease in net income of $58,709 and $176,130, respectively, for the three and nine months ended September 30, 2021, and a decrease in earnings per share of $0.01 for the nine months ended September30, 2021. On an ongoing basis, management reviews the valuation of intangible assets to determine if there has been impairment by comparing the related assets’ carrying value to the undiscounted estimated future cash flows and/or operating income from related operations. Intangible Assets: Useful Life September 30, 2021 December 31, 2020 Customer Relationships 8 years 191,219 211,000 Equipment Design Documentation 15 years 2,541,520 2,675,000 Operational Software & Website 10 years 276,678 298,280 Total Intangible Assets, net 3,011,145 3,184,280 Long-Lived Assets Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Impairment is measured by comparing the carrying value of the long-lived assets to the estimated undiscounted future cash flows expected to result from use of the assets and their ultimate disposition. In instances where impairment is determined to exist, the Company will write down the asset to its fair value based on the present value of estimated future cash flows. Sales Tax Liability Sales tax liability is created when Company sells equipment and services to another entity located in the State of Florida. Currently the sales tax rate in the Company’s County place of business is 6.5%. As of September 30, 2021, our sales tax liability was $9,087 compared to $12,665 at December 31, 2020. Deferred Revenue The Company requires deposits on most sales orders. These deposits are recorded as deferred revenue until such time as the revenue recognition criteria for that project are order is completed. As of September 30, 2021, our deferred revenue was $650,344 in comparison to $779,128 at December 31, 2020. Net Income Loss per Share Basic income (loss) per share is calculated by dividing the income or loss attributable to stockholders by the weighted-average number of shares outstanding for the period. Diluted income or loss per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that shared in the earnings (loss) of the Company. Diluted income or loss per share is computed by dividing the income or loss available to stockholders by the weighted average number of shares outstanding for the period and dilutive potential shares outstanding unless such dilutive potential shares would result in anti-dilution. At September 30, 2021 and December 31, 2020, there were no potentially dilutive shares. Revenue Recognition We generate revenue from the production and sale of laser equipment, OEM Laser Products and Service and Repair. We recognize revenue according to ASC 606. When the customer obtains control over the promised equipment or services, we record revenue in the amount of consideration that we receive or can expect to receive in exchange for those goods and services. The Company applies the following five-step model to determine revenue recognition: · Identification of a contract with a customer · Identification of the performance obligations in the contact · Determination of the transaction price · Allocation of the transaction price to the separate performance obligations · Recognition of revenue when performance obligations are satisfied The Company only applies the five-step model when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception and once the contract is determined to be within the scope of ASC 606, we assess the goods or services promised within each contract and determines those that are performance obligations and assesses whether each promised good or service is distinct. Our contracts contain a single performance obligation, and the entire transaction price is allocated to the single performance obligation. We recognize as revenues the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied or as it is satisfied. Accordingly, we recognize revenues (net) when the customer obtains control of the Company’s product, which typically occurs upon shipment of the product. Product sales: Refunds and returns, which are minimal, are recorded as a reduction of revenue. Unshipped product on received purchase orders by customers prior to our satisfying the above criteria are recorded as deferred revenue in the balance sheets. All revenues were reported net of any sales discounts or taxes. Service revenue: Other: Revenue by Category: For the three months ended September 30, For the nine months ended September 30, For the three months ended September 30, For the nine months ended September 30, Product Sales $ 1,075,494 $ 2,936,306 $ 588,902 $ 1,259,162 Service revenue/other 23,097 52,802 18,785 86,301 Net revenue $ 1,098,591 $ 2,989,108 $ 607,687 $ 1,345,463 Fair Value of Financial Instruments The Company applies the accounting guidance under Financial Accounting Standards Board (“FASB”) ASC 820-10, “Fair Value Measurements”, as well as certain related FASB staff positions. This guidance defines fair value as the price that would be received from m selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact business and considers assumptions that marketplace participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance. The guidance also establishes a fair value hierarchy for measurements of fair value as follows: ☐ Level 1 - quoted market prices in active markets for identical assets or liabilities. ☐ Level 2 - inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. ☐ Level 3 - unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The carrying amount of the Company’s financial instruments approximates their fair value as of September 30, 2021, due to the short-term nature of these instruments. Tax Loss Carryforwards The Company recognizes deferred tax assets and liabilities for the tax effects of differences between the financial statement and tax basis of assets and liabilities. A valuation allowance is established to reduce the deferred tax assets if it is more likely than not that a deferred tax asset will not be realized. Reclassifications Certain figures in the prior year financial statements have been reclassified to conform to the current year presentation. Recently Adopted Accounting Guidance In December 2019, the FASB issued authoritative guidance intended to simplify the accounting for income taxes (ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes”). This guidance eliminates certain exceptions to the general approach to the income tax accounting model and adds new guidance to reduce the complexity in accounting for income taxes. This guidance is effective for annual periods after December 15, 2020, including interim periods within those annual periods. The updated guidance, which became effective for fiscal years beginning after December 15, 2020, did not have a material impact on the Company’s condensed financial statements. Recent Accounting Guidance Not Yet Adopted In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments (“ASU-2016-13”). ASU 2016-13 affects loans, debt securities, trade receivables, and any other financial assets that have the contractual right to receive cash. The ASU requires an entity to recognize expected credit losses rather than incurred losses for financial assets. ASU 2016-13 is effective for the fiscal year beginning after December 15, 2022, including interim periods within that fiscal year. The Company is currently evaluating the impact of the new guidance on its condensed financial statements. Management does not believe that any recently issued, but not yet effective accounting pronouncements, when adopted, will have a material effect on the accompanying condensed financial statements. |
