SCI Engineered Materials (SCIA) 10-Q 4 May 22 2022 Q1 Quarterly report Financial data

Document And Entity Information

Document And Entity Information - shares	3 Months Ended
	Mar. 31, 2022	May 01, 2022
Document And Entity Information
Document Type	10-Q
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Mar. 31, 2022
Entity File Number	0-31641
Entity Registrant Name	SCI ENGINEERED MATERIALS, INC.
Entity Incorporation, State or Country Code	OH
Entity Tax Identification Number	31-1210318
Entity Address, Address Line One	2839 Charter Street
Entity Address, City or Town	Columbus
Entity Address, State or Province	OH
Entity Address, Postal Zip Code	43228
City Area Code	614
Local Phone Number	486-0261
Title of 12(b) Security	Common stock, without par value
Trading Symbol	SCIA
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		4,513,074
Entity Central Index Key	0000830616
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q1
Amendment Flag	false

BALANCE SHEETS

BALANCE SHEETS - USD ($)	Mar. 31, 2022	Dec. 31, 2021
Current Assets
Cash	$ 4,646,475	$ 4,140,942
Accounts receivable Trade, less allowance for doubtful accounts of $15,000	658,669	425,327
Accounts receivable Tax - Employee Retention Credit	105,000	105,000
Other receivable		1,250
Inventories	1,263,720	1,073,218
Prepaid expenses	202,155	678,357
Total current assets	6,876,019	6,424,094
Property and Equipment, at cost
Machinery and equipment	8,052,806	7,949,746
Furniture and fixtures	132,365	132,365
Leasehold improvements	596,867	596,867
Construction in progress	252,962	287,510
Property, Plant and Equipment, Gross	9,035,000	8,966,488
Less accumulated depreciation	(6,898,040)	(6,809,850)
Property, Plant and Equipment, Net	2,136,960	2,156,638
Right of use asset, net	252,571	274,298
Deferred tax asset	607,820	663,820
Other assets	88,449	89,552
Total other assets	948,840	1,027,670
TOTAL ASSETS	9,961,819	9,608,402
Current Liabilities
Finance lease obligations, current portion	97,759	96,702
Operating lease obligations, current portion	99,404	97,292
Accounts payable	345,299	250,383
Customer deposits	1,743,121	1,724,556
Accrued compensation	117,141	225,190
Accrued expenses and other	110,580	122,836
Total current liabilities	2,513,304	2,516,959
Finance lease obligations, net of current portion	121,676	146,516
Operating lease obligations, net of current portion	179,835	205,623
Total liabilities	2,814,815	2,869,098
Shareholders' Equity
Common stock, no par value, authorized 15,000,000 shares; 4,513,074 and 4,506,629 shares issued and outstanding, respectively	10,595,959	10,573,843
Additional paid-in capital	2,228,261	2,227,078
Accumulated deficit	(5,677,216)	(6,061,617)
Total shareholders' equity	7,147,004	6,739,304
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$ 9,961,819	$ 9,608,402

BALANCE SHEETS (Parenthetical)

BALANCE SHEETS (Parenthetical) - USD ($)	Mar. 31, 2022	Dec. 31, 2021
BALANCE SHEETS
Allowance for doubtful accounts (in dollars)	$ 15,000	$ 15,000
Common stock, par value (in dollars per share)	$ 0	$ 0
Common stock, shares authorized	15,000,000	15,000,000
Common stock, shares issued	4,513,074	4,506,629
Common stock, shares outstanding	4,513,074	4,506,629

STATEMENTS OF INCOME

STATEMENTS OF INCOME - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
STATEMENTS OF INCOME
Revenue	$ 5,326,432	$ 3,022,310
Cost of revenue	4,332,331	2,219,274
Gross profit	994,101	803,036
General and administrative expense	373,188	287,881
Research and development expense	87,031	38,219
Marketing and sales expense	82,188	51,393
Income from operations	451,694	425,543
Gain on extinguishment of debt		(325,300)
Interest expense	6,493	7,638
Income before provision for income taxes	445,201	743,205
Provision for income taxes	60,800	90,620
Net income	384,401	652,585
Dividends on preferred stock		6,038
INCOME APPLICABLE TO COMMON STOCK	$ 384,401	$ 646,547
Income per common share
Basic (In dollars per share)	$ 0.09	$ 0.14
Diluted (In dollars per share)	$ 0.08	$ 0.14
Weighted average shares outstanding
Basic (In shares)	4,510,276	4,479,823
Diluted (In shares)	4,538,165	4,506,531

STATEMENTS OF SHAREHOLDERS' EQU

STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($)	Convertible Preferred Stock, Series BPreferred stock	Common Stock	Additional Paid-In Capital	Accumulated Deficit	Total
Balance at Dec. 31, 2020	$ 514,438	$ 10,530,669	$ 2,246,501	$ (7,740,441)	$ 5,551,167
Accretion of cumulative dividends	6,038		(6,038)
Stock based compensation expense (Note 4)			1,183		1,183
Common stock issued (Note 4)		20,705			20,705
Net income				652,585	652,585
Balance at Mar. 31, 2021	$ 520,476	10,551,374	2,241,646	(7,087,856)	6,225,640
Balance at Dec. 31, 2021		10,573,843	2,227,078	(6,061,617)	6,739,304
Stock based compensation expense (Note 4)			1,183		1,183
Common stock issued (Note 4)		22,116			22,116
Net income				384,401	384,401
Balance at Mar. 31, 2022		$ 10,595,959	$ 2,228,261	$ (5,677,216)	$ 7,147,004

STATEMENTS OF CASH FLOWS

STATEMENTS OF CASH FLOWS - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$ 384,401	$ 652,585
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and accretion	101,246	114,002
Amortization of right of use asset	21,727	20,207
Amortization of patents	1,104	1,104
Stock based compensation	23,299	21,888
(Gain) loss on sale of equipment	(5,166)	2,367
Deferred tax asset	56,000	87,842
Gain on extinguishment of debt		(325,300)
Inventory reserve	1,500	300
Changes in operating assets and liabilities:
Accounts receivable	(232,092)	(278,476)
Inventories	(192,002)	(2,250,824)
Prepaid expenses	476,202	46,397
Other assets	(1)	(73)
Accounts payable	94,916	151,304
Operating lease obligations	(23,675)	(21,593)
Accrued expenses and customer deposits	(103,467)	2,230,664
Net cash provided by operating activities	603,992	452,394
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds on sale of equipment	5,166	20
Purchases of property and equipment	(79,842)	(319,578)
Net cash used in investing activities	(74,676)	(319,558)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on finance lease obligations and notes payable	(23,783)	(43,454)
Net cash used in financing activities	(23,783)	(43,454)
NET INCREASE IN CASH	505,533	89,382
CASH - Beginning of period	4,140,942	2,917,551
CASH - End of period	4,646,475	3,006,933
Cash paid during the year for:
Interest	2,543	2,024
SUPPLEMENTAL DISCLOSURES OF NONCASH FINANCING ACTIVITIES
Increase in asset retirement obligation	$ 1,725	$ 900

Business Organization and Purpo

Business Organization and Purpose	3 Months Ended
	Mar. 31, 2022
Business Organization and Purpose
Business Organization and Purpose	Note 1. Business Organization and Purpose SCI Engineered Materials, Inc. (“SCI,” or the “Company”), an Ohio corporation, was incorporated in 1987. The Company operates in one segment as a global supplier and manufacturer of advanced materials for Physical Vapor Deposition (“PVD”) Thin Film Applications. The Company is focused on markets within the Photonics industry which include Aerospace, Defense, Glass and Solar. Substantially all revenues are generated from customers with multi-national operations. The Company develops innovative customized solutions enabling commercial success through collaboration with end users and Original Equipment Manufacturers.

Summary of Significant Accounti

Summary of Significant Accounting Policies	3 Months Ended
	Mar. 31, 2022
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies	Note 2. Summary of Significant Accounting Policies Basis of Presentation - The accompanying unaudited financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and with instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for fair presentation of the results of operations for the periods presented have been included. The financial statements should be read in conjunction with the audited financial statements and the notes thereto for the year ended December 31, 2021. Interim results are not necessarily indicative of results for the full year. Use of Estimates - The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of 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. Revenue Recognition - The Company enters into contracts with its customers that generally represent purchase orders specifying general terms and conditions, order quantities and per unit product prices. The Company has determined that each unit of product purchased represents a separate performance obligation. The Company satisfies its performance obligations and recognizes revenue at a point in time when control of a unit of product is transferred to the customer. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products. For the majority of product sales, transfer of control occurs when the products are shipped from the Company’s manufacturing facility to the customer. The cost of delivering products to the Company’s customers is recorded as a component of cost of products sold. Those costs may include the amounts paid to a third party to deliver the products. Any freight costs billed to and paid by a customer are included in revenue. Note 2. Summary of Significant Accounting Policies (continued) The Company considers collectability of amounts due under a contract to be probable upon inception of a sale based on an evaluation of the credit worthiness of each customer. The Company sells its products typically under agreements with payment terms less than 45 days. The Company does not typically include extended payment terms or significant financing components in contracts with customers. The majority of the Company’s contracts have an obligation to transfer products within one year. Thus, the Company elects to use the practical expedient where incremental cost of obtaining a contract, such as commissions, is expensed when incurred because the amortization period for those costs is one year or less. The Company treats shipping and handling activities that occur after control of the product transfers as fulfillment activities, and therefore, does not account for shipping and handling costs as a separate performance obligation. Customer deposits are funds received in advance from customers and are recognized as revenue when the Company has transferred control of product to the customer. Product revenues are recognized upon shipment of goods as the customer has assumed the significant risks and rewards of ownership and the Company is entitled to payment at this point. Service revenues are recognized upon completion as the customer cannot realize the benefit of the service until fully completed. All revenue was from the photonics industry during the three months ended March 31, 2022 and 2021. The top two customers represented approximately 89% and 83% of total revenue for the three months ended March 31, 2022 and 2021, respectively. International shipments resulted in 1% and 2% of total revenue for the first three months of 2022 and 2021, respectively. Employee Retention Credit (ERC) - The Company qualified for federal government assistance during the first quarter of 2021 in the amount of approximately $255,500 through ERC provisions of the Consolidated Appropriations Act of 2021. The purpose of the ERC was to encourage employers to keep employees on the payroll, even if they are not working during the covered period due to the effects of the coronavirus outbreak. These funds were recorded in the Statement of Income during the first quarter of 2021 as an offset to payroll costs in their respective expense lines and as a tax receivable on the balance sheets. The Company also qualified for the ERC in the second and third quarters of 2021. A balance of $105,000 appears as a tax receivable on the balance sheet at March 31, 2022.

Recent Accounting Pronouncement

Recent Accounting Pronouncements	3 Months Ended
	Mar. 31, 2022
Recent Accounting Pronouncements
Recent Accounting Pronouncements	Note 3. Recent Accounting Pronouncements In June 2016, the FASB issued ASU No. 2016-13 “Credit Losses - Measurement of Credit Losses on Financial Instruments.” ASU No. 2016-13 significantly changes how entities will measure credit losses for most financial assets, including accounts and notes receivables, by replacing today’s “incurred loss” approach with an “expected loss” model under which allowances will be recognized based on expected rather than incurred losses. ASU No. 2016-13 will become effective for us in the first quarter of 2023. We are evaluating the impact that the adoption of this update will have on our financial statements.

Common Stock and Stock Options

Common Stock and Stock Options	3 Months Ended
	Mar. 31, 2022
Common Stock and Stock Options
Common Stock and Stock Options	Note 4. Common Stock and Stock Options Stock Based Compensation cost for all stock awards is based on the grant date fair value and recognized over the required service (vesting) period. Non cash stock-based compensation expense was $23,299 and $21,888 for the three months ended March 31, 2022 and 2021, respectively. Unrecognized compensation expense was $5,123 as of March 31, 2022 and will be recognized through 2023. There was no tax benefit recorded for this compensation cost as the expense relates to incentive stock options that do not qualify for a tax deduction until, and only if, a qualifying disposition occurs. The non-employee Board members received compensation of 2,305 and 2,725 aggregate shares of common stock of the Company during the three months ended March 31, 2022 and 2021, respectively. The stock had an aggregate value of $7,491 and $7,494 for the three months ended March 31, 2022 and 2021, respectively, and was recorded as non-cash stock compensation expense in the financial statements. Employees received compensation of 4,500 and 4,804 aggregate shares of common stock of the Company during the three months ended March 31, 2022 and 2021, respectfully. These shares had an aggregate value of $14,625 and $13,211, and was recorded as non-cash stock compensation expense in the financial statements for the three months ended March 31, 2022 and 2021, respectively. In addition, during the three months ended March 31, 2021, a total of 30,181 stock options were exercised by management. The cumulative status of options granted and outstanding at March 31, 2022, and December 31, 2021, as well as options which became exercisable in connection with the Company’s stock option plans is summarized as follows: ​ Employee Stock Options ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ Average ​ Stock Options Exercise Price Outstanding at January 1, 2021 76,037 ​ $ 1.03 Exercised (34,733) ​ ​ 1.00 Outstanding at December 31, 2021 41,304 ​ $ 1.05 Outstanding at March 31, 2022 41,304 ​ $ 1.05 Options exercisable at December 31, 2021 27,418 ​ $ 0.95 Options exercisable at March 31, 2022 27,418 ​ $ 0.95 ​ Exercise prices for options ranged from $0.84 to $1.25 at March 31, 2022. The weighted average option price for all options outstanding at March 31, 2022, was $0.95 with a weighted average remaining contractual life of 4.6 years. There were no non-employee director stock options outstanding during 2022 and 2021.

Preferred Stock

Preferred Stock	3 Months Ended
	Mar. 31, 2022
Preferred Stock
Preferred Stock	Note 5. Preferred Stock The Board of Directors voted in November 2021 to authorize full redemption of the 24,152 shares of the Company’s Convertible Preferred Stock, Series B (“Series B”) outstanding effective December 31, 2021. This involved cash payments of $248,766 ($10.30 per Series B share, which includes a 3% premium to the stated value of $10 per share), plus unpaid annual dividends of $265,672 ($11.00 per Series B share). Dividends on the Convertible Preferred Stock, Series B accrued at 10% annually on the outstanding shares prior to the redemption in 2021, and were $6,038 for the three months ended March 31, 2021.

Inventories

Inventories	3 Months Ended
	Mar. 31, 2022
Inventories
Inventories	Note 6. Inventories Inventories consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, ​ December 31, ​ 2022 2021 ​ ​ (unaudited) ​ ​ ​ Raw materials ​ $ 205,930 ​ $ 440,759 Work-in-process ​ 955,826 ​ 549,369 Finished goods ​ 128,882 ​ 108,508 Inventory reserve ​ (26,918) ​ (25,418) ​ ​ $ 1,263,720 ​ $ 1,073,218 ​

Earnings Per Share

Earnings Per Share	3 Months Ended
	Mar. 31, 2022
Earnings Per Share
Earnings Per Share	Note 7. Earnings Per Share Basic income per share is calculated as income applicable to common shareholders divided by the weighted average of common shares outstanding. Diluted earnings per share is calculated as diluted income applicable to common shareholders divided by the diluted weighted average number of common shares. Diluted weighted average number of common shares gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. Diluted earnings per share exclude all diluted potential shares if their effect is anti-dilutive. All common stock options listed in Note 4 that were out-of-the-money or anti-dilutive were excluded from diluted earnings per share. The following is provided to reconcile the earnings per share calculations: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three months ended March 31, ​ 2022 2021 Income applicable to common shares ​ $ 384,401 ​ $ 646,547 ​ ​ ​ ​ ​ ​ ​ Weighted average common shares outstanding - basic ​ 4,510,276 ​ 4,479,823 ​ ​ ​ ​ ​ ​ ​ Effect of dilution ​ 27,889 ​ 26,708 Weighted average shares outstanding - diluted ​ 4,538,165 ​ 4,506,531 ​

Notes Payable

Notes Payable	3 Months Ended
	Mar. 31, 2022
Notes Payable
Notes Payable	Note 8. Notes Payable On April 17, 2020, the Company entered into an unsecured promissory note under the Paycheck Protection Program (the “PPP”), with a principal amount of $325,300. Under the terms of the CARES Act, PPP loan recipients were eligible to apply for, and be granted, forgiveness for all or a portion of loans granted. Such forgiveness was subject to limitations and ongoing rulemaking by the SBA, based on the use of loan proceeds for payroll costs and mortgage interest, rent or utility costs and the maintenance of employee and compensation levels. The Company applied for forgiveness of the entire amount of the loan during the fourth quarter of 2020, and the SBA approved the Forgiveness Application in full during the first quarter of 2021. This amount is included in the Statement of Income as gain on extinguishment of debt in the first quarter of 2021. The Company commenced a line of credit with Fifth Third Bank for $1 million during 2021. The line of credit bears interest equal to the rate of interest per annum established by Fifth Third Bank as its Prime Rate. This line of credit has a maturity date of August 29, 2022. No amounts were drawn on this line of credit as of March 31, 2022.

Income Taxes

Income Taxes	3 Months Ended
	Mar. 31, 2022
Income Taxes
Income Taxes	Note 9. Income Taxes The provision for income taxes for the three months ended March 31, 2022 is based on our projected annual effective tax rate for fiscal year 2022, adjusted for permanent differences and specific items that are required to be recognized in the period in which they are incurred. The provision for income taxes was $60,800 for the three months ended March 31, 2022 compared to $90,620 for the three months ended March 31, 2021. Following is the income tax expense for the three months ended March 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 Federal ​ $ 56,000 ​ $ 87,842 State and local ​ 4,800 ​ 2,778 ​ ​ $ 60,800 ​ $ 90,620 ​ Deferred tax assets and liabilities result from temporary differences in the recognition of income and expense for tax and financial reporting purposes. The Company had net operating loss carryforwards available for federal and state tax purposes of approximately $2,100,000 at December 31, 2021, which expire in varying amounts through 2041. As of December 31, 2021, management determined that there was sufficient positive evidence to conclude that it is more likely than not that deferred taxes of $663,820 were realizable principally because we achieved five consecutive years of pretax income, expect profits to continue for the foreseeable future and implemented new efficiencies in the Company’s manufacturing process. As of each reporting date, management considers new evidence, both positive and negative, that could affect its view of the future realization of deferred tax assets. Accordingly, management determined that no valuation allowance was necessary, and the deferred tax asset was $607,820 at March 31, 2022.

Operating Lease

Operating Lease	3 Months Ended
	Mar. 31, 2022
Operating Lease
Operating Lease	Note 10. Operating Lease The Company entered into an operating lease with a third party on March 18, 2014 for its headquarters in Columbus, Ohio. The terms of the lease include monthly payments ranging from $9,200 to $9,700 with a maturity date of November 30, 2024. The Company has the option to extend the lease period for an additional five years beyond the original expiration date. There are no restrictions or covenants associated with the lease. The lease costs were approximately $28,100 and $27,500 during the three months ended March 31, 2022 and 2021, respectively. The following is a maturity analysis, by year, of the annual undiscounted cash outflows of the operating lease liabilities as of March 31, 2022: ​ ​ ​ ​ ​ 2022 $ 84,527 2023 ​ 114,857 2024 ​ 102,550 Total minimum lease payments ​ 301,934 Less debt discount ​ ​ 22,695 Total operating lease obligations ​ $ 279,239 ​ ​ ​ ​ ​ ​ Operating cash outflows from operating leases $ 23,675 ​ Weighted average remaining lease term ​ 2.7 years Weighted average discount rate ​ 5.5 % ​

Finance Leases

Finance Leases	3 Months Ended
	Mar. 31, 2022
Finance Leases
Finance Leases	Note 11. Finance Leases The Company leases certain equipment under finance leases. Future minimum lease payments, by year, with the present value of such payments, as of March 31, 2022, are shown in the following table. ​ ​ ​ ​ ​ 2022 $ 78,976 2023 ​ 101,675 2024 ​ ​ 49,859 Total minimum lease payments ​ ​ 230,510 Less amount representing interest ​ 11,075 Present value of minimum lease payments ​ 219,435 Less current portion ​ 97,759 Finance lease obligations, net of current portion ​ $ 121,676 ​ The equipment under finance lease at March 31, 2022, and December 31, 2021, is included in the accompanying balance sheets as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, 2022 Dec. 31, 2021 Machinery and equipment ​ $ 385,923 ​ $ 385,923 Less accumulated depreciation and amortization ​ 75,431 ​ 65,783 Net book value ​ $ 310,492 ​ $ 320,140 ​ These assets are amortized over a period of ten years using the straight-line method and amortization is included in depreciation expense. The finance leases are structured such that ownership of the leased asset reverts to the Company at the end of the lease term. Accordingly, leased assets are depreciated using the Company’s normal depreciation methods and lives. Ownership of certain assets were transferred to the Company in accordance with the terms of the leases and these assets have been excluded from the leased asset disclosure above. During 2021, the Company was approved by Fifth Third Equipment Finance Company for an equipment line of credit not to exceed $800,000 with an implicit rate of 2.71% at time of approval. Delivery and acceptance of new production equipment was to be no later than December 31, 2021. Due to the improved cash position of the Company, management determined it was preferable to reinvest these funds directly into the purchase of the production equipment received rather than initiate a new lease. The cost of this equipment was $341,655. In addition, a deposit of $220,075 was made towards a purchase order of $440,150 for new equipment now expected to arrive during the second quarter of 2022.

Summary of Significant Accoun_2

Summary of Significant Accounting Policies (Policies)	3 Months Ended
	Mar. 31, 2022
Summary of Significant Accounting Policies
Basis of Presentation	Basis of Presentation - The accompanying unaudited financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and with instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for fair presentation of the results of operations for the periods presented have been included. The financial statements should be read in conjunction with the audited financial statements and the notes thereto for the year ended December 31, 2021. Interim results are not necessarily indicative of results for the full year.
Use of Estimates	Use of Estimates - The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of 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.
Revenue Recognition	Revenue Recognition - The Company enters into contracts with its customers that generally represent purchase orders specifying general terms and conditions, order quantities and per unit product prices. The Company has determined that each unit of product purchased represents a separate performance obligation. The Company satisfies its performance obligations and recognizes revenue at a point in time when control of a unit of product is transferred to the customer. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products. For the majority of product sales, transfer of control occurs when the products are shipped from the Company’s manufacturing facility to the customer. The cost of delivering products to the Company’s customers is recorded as a component of cost of products sold. Those costs may include the amounts paid to a third party to deliver the products. Any freight costs billed to and paid by a customer are included in revenue. Note 2. Summary of Significant Accounting Policies (continued) The Company considers collectability of amounts due under a contract to be probable upon inception of a sale based on an evaluation of the credit worthiness of each customer. The Company sells its products typically under agreements with payment terms less than 45 days. The Company does not typically include extended payment terms or significant financing components in contracts with customers. The majority of the Company’s contracts have an obligation to transfer products within one year. Thus, the Company elects to use the practical expedient where incremental cost of obtaining a contract, such as commissions, is expensed when incurred because the amortization period for those costs is one year or less. The Company treats shipping and handling activities that occur after control of the product transfers as fulfillment activities, and therefore, does not account for shipping and handling costs as a separate performance obligation. Customer deposits are funds received in advance from customers and are recognized as revenue when the Company has transferred control of product to the customer. Product revenues are recognized upon shipment of goods as the customer has assumed the significant risks and rewards of ownership and the Company is entitled to payment at this point. Service revenues are recognized upon completion as the customer cannot realize the benefit of the service until fully completed. All revenue was from the photonics industry during the three months ended March 31, 2022 and 2021. The top two customers represented approximately 89% and 83% of total revenue for the three months ended March 31, 2022 and 2021, respectively. International shipments resulted in 1% and 2% of total revenue for the first three months of 2022 and 2021, respectively.
Employee Retention Credit (ERC)	Employee Retention Credit (ERC) - The Company qualified for federal government assistance during the first quarter of 2021 in the amount of approximately $255,500 through ERC provisions of the Consolidated Appropriations Act of 2021. The purpose of the ERC was to encourage employers to keep employees on the payroll, even if they are not working during the covered period due to the effects of the coronavirus outbreak. These funds were recorded in the Statement of Income during the first quarter of 2021 as an offset to payroll costs in their respective expense lines and as a tax receivable on the balance sheets. The Company also qualified for the ERC in the second and third quarters of 2021. A balance of $105,000 appears as a tax receivable on the balance sheet at March 31, 2022.

Common Stock and Stock Options

Common Stock and Stock Options (Tables)	3 Months Ended
	Mar. 31, 2022
Common Stock and Stock Options
Schedule of share-based compensation, employee stock options, activity	The cumulative status of options granted and outstanding at March 31, 2022, and December 31, 2021, as well as options which became exercisable in connection with the Company’s stock option plans is summarized as follows: ​ Employee Stock Options ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ Average ​ Stock Options Exercise Price Outstanding at January 1, 2021 76,037 ​ $ 1.03 Exercised (34,733) ​ ​ 1.00 Outstanding at December 31, 2021 41,304 ​ $ 1.05 Outstanding at March 31, 2022 41,304 ​ $ 1.05 Options exercisable at December 31, 2021 27,418 ​ $ 0.95 Options exercisable at March 31, 2022 27,418 ​ $ 0.95

Inventories (Tables)

Inventories (Tables)	3 Months Ended
	Mar. 31, 2022
Inventories
Schedule of Inventories	​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, ​ December 31, ​ 2022 2021 ​ ​ (unaudited) ​ ​ ​ Raw materials ​ $ 205,930 ​ $ 440,759 Work-in-process ​ 955,826 ​ 549,369 Finished goods ​ 128,882 ​ 108,508 Inventory reserve ​ (26,918) ​ (25,418) ​ ​ $ 1,263,720 ​ $ 1,073,218

Earnings Per Share (Tables)

Earnings Per Share (Tables)	3 Months Ended
	Mar. 31, 2022
Earnings Per Share
Summary of reconciliation of earnings per share calculations	​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three months ended March 31, ​ 2022 2021 Income applicable to common shares ​ $ 384,401 ​ $ 646,547 ​ ​ ​ ​ ​ ​ ​ Weighted average common shares outstanding - basic ​ 4,510,276 ​ 4,479,823 ​ ​ ​ ​ ​ ​ ​ Effect of dilution ​ 27,889 ​ 26,708 Weighted average shares outstanding - diluted ​ 4,538,165 ​ 4,506,531

Income Taxes (Tables)

Income Taxes (Tables)	3 Months Ended
	Mar. 31, 2022
Income Taxes
Schedule of components of the income tax expense	Following is the income tax expense for the three months ended March 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 Federal ​ $ 56,000 ​ $ 87,842 State and local ​ 4,800 ​ 2,778 ​ ​ $ 60,800 ​ $ 90,620

Operating Lease (Tables)

Operating Lease (Tables)	3 Months Ended
	Mar. 31, 2022
Operating Lease
Schedule of annual undiscounted cash flows of the operating lease liabilities	The following is a maturity analysis, by year, of the annual undiscounted cash outflows of the operating lease liabilities as of March 31, 2022: ​ ​ ​ ​ ​ 2022 $ 84,527 2023 ​ 114,857 2024 ​ 102,550 Total minimum lease payments ​ 301,934 Less debt discount ​ ​ 22,695 Total operating lease obligations ​ $ 279,239
Schedule of operating lease other information	​ ​ ​ ​ ​ ​ Operating cash outflows from operating leases $ 23,675 ​ Weighted average remaining lease term ​ 2.7 years Weighted average discount rate ​ 5.5 %

Finance Leases (Tables)

Finance Leases (Tables)	3 Months Ended
	Mar. 31, 2022
Finance Leases
Schedule of future minimum lease payments	The Company leases certain equipment under finance leases. Future minimum lease payments, by year, with the present value of such payments, as of March 31, 2022, are shown in the following table. ​ ​ ​ ​ ​ 2022 $ 78,976 2023 ​ 101,675 2024 ​ ​ 49,859 Total minimum lease payments ​ ​ 230,510 Less amount representing interest ​ 11,075 Present value of minimum lease payments ​ 219,435 Less current portion ​ 97,759 Finance lease obligations, net of current portion ​ $ 121,676
Schedule of equipment under finance leases	The equipment under finance lease at March 31, 2022, and December 31, 2021, is included in the accompanying balance sheets as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, 2022 Dec. 31, 2021 Machinery and equipment ​ $ 385,923 ​ $ 385,923 Less accumulated depreciation and amortization ​ 75,431 ​ 65,783 Net book value ​ $ 310,492 ​ $ 320,140

Business Organization and Pur_2

Business Organization and Purpose (Details)	3 Months Ended
	Mar. 31, 2022segment
Business Organization and Purpose
Number of operating segments	1

Summary of Significant Accoun_3

Summary of Significant Accounting Policies (Details) - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021
Accounting Policies [Line Items]
Employee retention credit provisions		$ 255,500
Accounts receivable Tax - Employee Retention Credit	$ 105,000		$ 105,000
Geographic Concentration Risk | Sales Revenue, Net | International
Accounting Policies [Line Items]
Concentration risk, percentage	1.00%	2.00%
Two Customers | Photonics industry | Sales Revenue, Net
Accounting Policies [Line Items]
Concentration risk, percentage	89.00%	83.00%

Common Stock and Stock Option_2

Common Stock and Stock Options (Details) - Employee Stock Option - $ / shares	3 Months Ended		12 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021
Common Stock and Stock Options
Stock Options, Outstanding, Beginning Balance	41,304	76,037	76,037
Stock Options, Exercised	0	(30,181)	(34,733)
Stock Options, Outstanding, Ending Balance	41,304		41,304
Stock Options, Options exercisable	27,418		27,418
Weighted Average Exercise Price, Outstanding, Beginning Balance	$ 1.05	$ 1.03	$ 1.03
Weighted Average Exercise Price, Exercised	0		1
Weighted Average Exercise Price, Outstanding, Ending Balance	1.05		1.05
Weighted Average Exercise Price, Options exercisable	$ 0.95		$ 0.95

Common Stock and Stock Option_3

Common Stock and Stock Options - Additional Information (Details) - USD ($)	3 Months Ended		12 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021
Common Stock and Stock Options
Stock based compensation	$ 23,299	$ 21,888
Unrecognized compensation expense	5,123
Stock Issued During Period, Value, New Issues	$ 22,116	20,705
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Lower Range Limit	$ 0.84
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Upper Range Limit	1.25
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Outstanding Options, Weighted Average Exercise Price, Ending Balance	$ 0.95
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term	4 years 7 months 6 days
Common Stock
Common Stock and Stock Options
Stock Issued During Period, Value, New Issues	$ 22,116	$ 20,705
Employee Stock Option
Common Stock and Stock Options
Stock options exercised	0	30,181	34,733
Non-employee director | Common Stock
Common Stock and Stock Options
Stock Issued During Period, Shares, New Issues	2,305	2,725
Stock Issued During Period, Value, New Issues	$ 7,491	$ 7,494
Employee Stock Grants | Common Stock
Common Stock and Stock Options
Stock Issued During Period, Shares, New Issues	4,500	4,804
Stock Issued During Period, Value, New Issues	$ 14,625	$ 13,211

Preferred Stock - Additional In

Preferred Stock - Additional Information (Details) - USD ($)	3 Months Ended	12 Months Ended
	Mar. 31, 2021	Dec. 31, 2021
Preferred Stock Dividends, Income Statement Impact	$ 6,038
Convertible Preferred Stock, Series B
Preferred Stock, Dividend Rate, Percentage	10.00%
Preferred Stock Redemption Percentage		3.00%
Preferred Stock, Shares Outstanding		24,152
Dividend Payment, Preferred Stock		$ 248,766
Preferred redemption price per share		$ 10.30
Preferred stock stated value		$ 10
Unpaid dividends		$ 265,672
Dividend rate		$ 11
Preferred Stock Dividends, Income Statement Impact	$ 6,038

Inventories (Details)

Inventories (Details) - USD ($)	Mar. 31, 2022	Dec. 31, 2021
Inventories
Raw materials	$ 205,930	$ 440,759
Work-in-process	955,826	549,369
Finished goods	128,882	108,508
Reserve for obsolete inventory	(26,918)	(25,418)
Inventory, Net	$ 1,263,720	$ 1,073,218

Earnings Per Share - Reconcilia

Earnings Per Share - Reconciliation of Earnings Per Share Calculations (Details) - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Earnings Per Share
Income applicable to common stock	$ 384,401	$ 646,547
Weighted average common shares outstanding - basic	4,510,276	4,479,823
Effect of dilution	27,889	26,708
Weighted average shares outstanding - diluted	4,538,165	4,506,531

Notes Payable (Details)

Notes Payable (Details) - USD ($)	Mar. 31, 2022	Aug. 31, 2021	Apr. 17, 2020
SBA PPP Loan
Debt Instrument [Line Items]
Unsecured promissory note			$ 325,300
Fifth Third Bank
Debt Instrument [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity		$ 1,000,000
Borrowings on line of credit	$ 0

Income Taxes - Income tax expen

Income Taxes - Income tax expense (Details) - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Income Taxes
Federal	$ 56,000	$ 87,842
State and local	4,800	2,778
Total	$ 60,800	$ 90,620

Income Taxes - Additional infor

Income Taxes - Additional information (Details) - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021
Income Taxes
Deferred Tax Assets, Operating Loss Carryforwards, State and Local			$ 2,100,000
Operating Loss Carry forward Expiration Year	2041
Net deferred tax asset	$ 607,820		$ 663,820
Deferred Tax Assets, Valuation Allowance	0
Provision for income taxes	$ 60,800	$ 90,620

Operating Lease - Future Minimu

Operating Lease - Future Minimum Lease Payments (Details)	Mar. 31, 2022USD ($)
Operating Lease
2022	$ 84,527
2023	114,857
2024	102,550
Total minimum lease payments	301,934
Less debt discount	22,695
Total operating lease obligations	$ 279,239

Operating Lease - Additional In

Operating Lease - Additional Information (Details) - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Operating cash outflows from operating leases	$ 23,675
Weighted average remaining lease term	2 years 8 months 12 days
Weighted average discount rate	5.50%
Operating lease, renewal term	5 years
Operating Lease, Cost	$ 28,100	$ 27,500
Minimum
Operating Lease Monthly Rent Payable	9,200
Maximum
Operating Lease Monthly Rent Payable	$ 9,700

Finance Leases - Future minimum

Finance Leases - Future minimum lease payments (Details) - USD ($)	Mar. 31, 2022	Dec. 31, 2021
Finance Leases
2022	$ 78,976
2023	101,675
2024	49,859
Total minimum lease payments	230,510
Less amount representing interest	11,075
Present value of minimum lease payments	219,435
Less current portion	97,759	$ 96,702
Finance lease obligations, net of current portion	$ 121,676	$ 146,516

Finance Leases - Equipment unde

Finance Leases - Equipment under finance lease and additional information (Details) - USD ($)	3 Months Ended
	Mar. 31, 2022	Dec. 31, 2021
Line of Credit Facility [Line Items]
Machinery and equipment	$ 385,923	$ 385,923
Less accumulated depreciation and amortization	75,431	65,783
Net book value	$ 310,492	320,140
Amortization period, Finance lease (in years)	10 years
Fifth Third Equipment Finance Company
Line of Credit Facility [Line Items]
Equipment line of credit		$ 800,000
Implicit rate		2.71%
Cost of equipment	$ 341,655
Deposits towards purchase orders for new equipment	220,075
Amount of purchase orders for new equipment	$ 440,150