| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Revenue Recognition Revenue from product sales is recognized
as promulgated by the Financial Accounting Standards Board (“FASB”) in Accounting Standards Update (“ASU”) 2014-09,
Revenue from Contracts with Customers Revenue
from services, typically non-recurring engineering services related to the design or customization of a medical device, is typically recognized
over time. The customer funding for costs incurred for non-recurring engineering services is deferred and subsequently recognized as revenue
as under-lying products or services are delivered to the customers. Additionally, expenses incurred, up to the customer agreed funding
amount, are deferred as an asset and recognized as cost of sales when the under-lying products or services are delivered to the customer.
The deferred customer funding and costs result in recognition of deferred costs (asset) and deferred revenue (liability) on our consolidated
balance sheets. One of our customer contracts can
give rise to variable consideration due to volume rebates. We estimate variable consideration at the most likely amount we will receive
from our customer. Our estimates of variable consideration are based on an assessment of our anticipated performance and all information
(historical, current, and forecasted) that is reasonably available to us. Returns of our product for credit
are minimal; accordingly, we do not establish a reserve for product returns at the time of sale. Estimated Losses on Product Development Services Cost
and revenue estimates related to the product development service portions of development and supply contracts are reviewed and updated
quarterly. An expected loss on development service contracts is recognized immediately in cost of sales. Losses recorded in fiscal 2022
and 2021 related to these services totaled $ 0 71,000 Owing
to the complexity of many of the contracts we have undertaken, the cost estimation process requires significant judgment. It is based
upon the knowledge and experience of our project managers, engineers, and finance professionals. Factors that are considered in estimating
the cost of work to be completed and ultimate profitability of the fixed price product development portion of development and supply contracts
include the nature and complexity of the work to be performed, availability and productivity of labor, the effect of change orders, the
availability of materials, performance of subcontractors, and expected costs for specific regulatory approvals. Warranties Certain of our products are sold
with a warranty that provides for repairs or replacement of any defective parts for a period, generally one to two years, after the sale.
At the time of the sale, we accrue an estimate of the cost of providing the warranty based on prior experience with such factors as return
rates and repair costs, which factors are reviewed quarterly. The warranty accrual is based on
historical costs of warranty repairs and expected future identifiable warranty expenses and is included in accrued expenses in the accompanying
balance sheets. Warranty expenses are included in cost of sales in the accompanying statements of operations. Changes in estimates to
previously established warranty accruals result from current period updates to assumptions regarding repair costs and warranty return
rates and are included in current period warranty expense. Cash and Cash Equivalents We consider all highly liquid investments
with an original maturity of ninety days or less to be cash equivalents. At June 30, 2022 and 2021, cash equivalents consisted of investments
in money market funds. Accounts Receivable Trade receivables are stated at
their original invoice amounts, less an allowance for doubtful portions of such accounts. Management determines the allowance for doubtful
accounts based on facts and circumstances related to specific accounts and the age of accounts. Trade receivables are written off when
deemed uncollectible. Recoveries of trade receivables previously reserved are offset against the allowance when received. Deferred Costs Deferred costs reflect costs incurred
related to non-recurring engineering services under the terms of the related development and/or supply contracts. These costs get recorded
to cost of sales in the period that the revenue is recognized. Inventories Inventories are stated at the lower
of cost (first-in, first-out method) or net realizable value. Cost includes materials, labor, and manufacturing overhead related to the
purchase and production of inventories. Reductions to estimated market value are recorded and charged to cost of sales, when indicated
based on a formula that compares on-hand quantities to both historical usage and estimated demand over the ensuing 12 months from the
measurement date. On an ongoing basis, we evaluate inventory for obsolescence and slow-moving items. This evaluation includes analysis
of historical sales and usage, existing demand, as well as specific factors known to management. As of June 30, 2022 and 2021, there was
approximately $ 177,000 128,000 Investments Investments at June 30, 2022 and
2021, consist of marketable equity securities of publicly held companies. The investments were made to realize a reasonable return, although
there is no assurance that positive returns will be realized. Investments are marked to market at each measurement date, with unrealized
gains and losses presented separately within other income and expense on the consolidated income statement. Certain investments consist
of common stocks of public companies that are thinly traded. These investments were subject to a valuation analysis as of June 30, 2022
and 2021. Long-lived Assets We review the recoverability of
long-lived assets, consisting of the land and building that we own, equipment, and improvements, including leasehold improvements, when
events or changes in circumstances occur that indicate carrying values may not be recoverable. Our building, equipment and improvements
are recorded at historical cost and depreciation is provided using the straight-line method over the following periods:
Schedule of building, equipment and improvements
Building Thirty years
Equipment Three to ten years
Improvements Shorter of the remaining life of the underlying building, lease term, or the asset’s estimated useful life Intangibles Intangibles
consist legal fees incurred connection
with patent applications. Our patent costs are being amortized over a period of four 4 7 Income Taxes We recognize deferred tax assets
and liabilities for temporary differences between the financial reporting basis and the tax basis of our assets and liabilities along
with net operating losses and tax credit carryovers. Deferred tax assets at both June 30, 2022 and 2021 consisted primarily of basis
differences related to unrealized gain/loss related to investments, stock-based compensation, fixed assets, accrued expenses, and inventories. Significant management judgment
is required in determining the provision for income taxes and the recoverability of deferred tax assets. Such determination is based on
historical taxable income, with consideration given to estimates of future taxable income and the periods over which deferred tax assets
will be recoverable. We record a valuation allowance against deferred tax assets to reduce the net carrying value to an amount that we
believe is more likely than not to be realized. When we establish or reduce the valuation allowance against deferred tax assets, the provision
for income taxes will increase or decrease, respectively, in the period such determination is made. Uncertain Tax Positions We record uncertain tax positions
in accordance with Accounting Standards Codification (“ASC”) 740 on the basis of a two-step process whereby (1) we determine
whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position, and
(2) for those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that
is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. Shipping and Handling Payments from customers for shipping
and handling are included in net sales . Concentration of Credit Risk Financial instruments that potentially
subject us to credit risk consist principally of cash, cash equivalents, and trade receivables. We place our cash and cash equivalents
with major financial institutions. At June 30, 2022 and 2021, and throughout the fiscal years then ended, we had deposits in excess
of federally insured limits. Credit sales are made to medical device distributors, original equipment manufacturers, and resellers throughout
the world, and sales to such customers account for a substantial portion of our trade receivables. While such receivables are not collateralized,
we evaluate their collectability based on several factors including customers’ payment histories. Compensation Plans We recognize compensation expense
for the share-based awards that vest subject to market conditions under ASC 718, Compensation-Stock Compensation Use of Estimates The preparation of financial statements
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates. Our operations are affected by numerous
factors including market acceptance of our products, supply chain disruptions, changes in technologies, and new laws, effects from the
COVID-19 pandemic, government regulations, and policies. We cannot predict what impact, if any, the occurrence of these or other events
might have on our operations. Significant estimates and assumptions made by management include, but are not limited to, revenue recognition,
share-based compensation, the allowance for doubtful accounts, accrued warranty expense, investments, inventory valuation, the carrying
value of long-lived assets, and the recoverability of deferred income tax assets. Basic and Diluted Per Share Information Basic per share amounts are computed
on the basis of the weighted-average number of common shares outstanding during each period presented. Diluted per share amounts assume
the issuance of all potential common stock equivalents, consisting of outstanding stock options and performance awards as discussed in
Note 11, unless the effect of such exercise is to increase income, or decrease loss, per common share. Fair Value Measurements Fair value is measured based on
the prices that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants
at the measurement date. Fair value measurements are based on a three-tier hierarchy that prioritizes the inputs used to measure fair
value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs
other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs
for which little or no market data exists, therefore requiring an entity to develop its own assumptions. Cash and cash equivalents: Investments: Although the methods above may produce
a fair value calculation that may not be indicative of the net realizable value or reflective of future fair values, we believe our valuation
methods are appropriate. Advertising Advertising costs are charged to
selling or general and administrative expense as incurred and amounted to $ 1,000 4,000 Reclassifications Certain
prior year amounts have been reclassified to conform to the current year presentation. Recently Issued and Adopted Accounting Standards In
June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13,
Financial Instruments—Credit Losses (Topic 326). ASU 2016-13 revises the impairment model to utilize an expected loss methodology
in place of the currently used incurred loss methodology, which will result in more timely recognition of losses on financial instruments,
including, but not limited to, available for sale debt securities and accounts receivable. The guidance is effective for the Company’s
annual reporting period beginning after December 15, 2022 and interim reporting periods within that annual reporting period. The Company
does not expect the adoption of this ASU to have a material impact on the consolidated financial statements. In
December 2019, the FASB issued ASU 2019-12 Income Taxes (Topic 740) Simplifying the
Accounting for Income Taxes, to remove certain exceptions related to the approach for intraperiod tax allocation, recognition of deferred
tax liabilities for outside basis differences and requiring that an entity reflect the effect of an enacted change in tax laws or rates
in the annual effective tax rate computation in the interim period that includes the enactment date. The amendments in this update are
effective for us beginning with fiscal year 2022. The adoption of the amendments has not had a material impact on our consolidated financial
statements. In
October 2020, the FASB issued ASU No. 2020-10, Codification Improvements, which updates various codification topics by clarifying disclosure
requirements to align with the SEC's regulations. The guidance is effective for the Company’s annual reporting period beginning
after December 15, 2020 and interim reporting periods within the annual period beginning after December 15, 2020. The adoption of the
amendments has not had a material impact on the consolidated financial statements or related footnote disclosures. |
