SCI Engineered Materials (SCIA) 10-Q29 Jul 222022 Q2 Quarterly reportFinancial data

Company Profile

Document And Entity Information

Document And Entity Information - shares	6 Months Ended
Document And Entity Information - shares	Jun. 30, 2022	Jul. 28, 2022
Document And Entity Information
Document Type	10-Q
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Jun. 30, 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
Security Exchange Name	NONE
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		4,515,379
Entity Central Index Key	0000830616
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q2
Amendment Flag	false

BALANCE SHEETS

BALANCE SHEETS - USD ($)	Jun. 30, 2022	Dec. 31, 2021
Current Assets
Cash	$ 5,409,210	$ 4,140,942
Accounts receivable Trade, less allowance for doubtful accounts of $15,000	714,269	425,327
Accounts receivable Tax - Employee Retention Credit	105,000	105,000
Other		1,250
Inventories, net	3,617,648	1,073,218
Prepaid expenses	46,052	678,357
Total current assets	9,892,179	6,424,094
Property and Equipment, at cost
Machinery and equipment	8,066,539	7,949,746
Furniture and fixtures	135,665	132,365
Leasehold improvements	596,867	596,867
Construction in progress	330,972	287,510
Property, Plant and Equipment, Gross	9,130,043	8,966,488
Less accumulated depreciation	(6,994,759)	(6,809,850)
Property, Plant and Equipment, Net	2,135,284	2,156,638
Right of use asset, net	230,457	274,298
Deferred tax asset	531,720	663,820
Other assets	87,346	89,552
Total other assets	849,523	1,027,670
TOTAL ASSETS	12,876,986	9,608,402
Current Liabilities
Finance lease obligations, current portion	98,828	96,702
Operating lease obligations, current portion	101,525	97,292
Accounts payable	430,808	250,383
Customer deposits	3,862,439	1,724,556
Accrued compensation	198,471	225,190
Accrued expenses and other	114,147	122,836
Total current liabilities	4,806,218	2,516,959
Finance lease obligations, net of current portion	96,564	146,516
Operating lease obligations, net of current portion	153,654	205,623
Total liabilities	5,056,436	2,869,098
Shareholders' Equity
Common stock, no par value, authorized 15,000,000 shares; 4,515,379 and 4,506,269 shares issued and outstanding, respectively	10,603,450	10,573,843
Additional paid-in capital	2,229,443	2,227,078
Accumulated deficit	(5,012,343)	(6,061,617)
Total shareholders' equity	7,820,550	6,739,304
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$ 12,876,986	$ 9,608,402

BALANCE SHEETS (Parenthetical)

BALANCE SHEETS (Parenthetical) - USD ($)	Jun. 30, 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	4,515,379	4,506,269
Common stock, shares outstanding	4,515,379	4,506,269

STATEMENTS OF INCOME

STATEMENTS OF INCOME - USD ($)	3 Months Ended		6 Months Ended
STATEMENTS OF INCOME - USD ($)	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
STATEMENTS OF INCOME
Revenue	$ 6,505,005	$ 1,972,049	$ 11,831,437	$ 4,994,359
Cost of revenue	5,127,337	1,409,495	9,459,668	3,628,769
Gross profit	1,377,668	562,554	2,371,769	1,365,590
General and administrative expense	423,401	283,708	796,589	571,589
Research and development expense	92,085	54,377	179,116	92,596
Marketing and sales expense	108,140	46,434	190,328	97,827
Income from operations	754,042	178,035	1,205,736	603,578
Gain on extinguishment of debt				(325,300)
Interest expense	5,769	9,014	12,262	16,652
Income before provision for income taxes	748,273	169,021	1,193,474	912,226
Provision for income taxes	83,400	47,473	144,200	138,093
Net income	664,873	121,548	1,049,274	774,133
Dividends on preferred stock		6,038		12,076
INCOME APPLICABLE TO COMMON STOCK	$ 664,873	$ 115,510	$ 1,049,274	$ 762,057
Income per common share
Basic (In dollars per share)	$ 0.15	$ 0.03	$ 0.23	$ 0.17
Diluted (In dollars per share)	$ 0.15	$ 0.03	$ 0.23	$ 0.17
Weighted average shares outstanding
Basic (In shares)	4,514,492	4,497,903	4,512,396	4,488,913
Diluted (In shares)	4,541,819	4,526,062	4,539,988	4,516,478

STATEMENTS OF SHAREHOLDERS' EQU

STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($)	Convertible Preferred Stock, Series B Preferred 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, 2020	514,438	10,530,669	2,246,501	(7,740,441)	5,551,167
Net income					774,133
Balance at Jun. 30, 2021	502,362	10,558,867	2,236,790	(6,966,308)	6,331,711
Balance at Mar. 31, 2021	520,476	10,551,374	2,241,646	(7,087,856)	6,225,640
Accretion of cumulative dividends	6,038		(6,038)
Stock based compensation expense (Note 4)			1,182		1,182
Payment of cumulative dividends (Note 7)	(24,152)				(24,152)
Common stock issued (Note 4)		7,493			7,493
Net income				121,548	121,548
Balance at Jun. 30, 2021	$ 502,362	10,558,867	2,236,790	(6,966,308)	6,331,711
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
Balance at Dec. 31, 2021		10,573,843	2,227,078	(6,061,617)	6,739,304
Net income					1,049,274
Balance at Jun. 30, 2022		10,603,450	2,229,443	(5,012,343)	7,820,550
Balance at Mar. 31, 2022		10,595,959	2,228,261	(5,677,216)	7,147,004
Stock based compensation expense (Note 4)			1,182		1,182
Common stock issued (Note 4)		7,491			7,491
Net income				664,873	664,873
Balance at Jun. 30, 2022		$ 10,603,450	$ 2,229,443	$ (5,012,343)	$ 7,820,550

STATEMENTS OF CASH FLOWS

STATEMENTS OF CASH FLOWS - USD ($)	6 Months Ended
STATEMENTS OF CASH FLOWS - USD ($)	Jun. 30, 2022	Jun. 30, 2021
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$ 1,049,274	$ 774,133
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and accretion	203,944	230,689
Amortization of right of use asset	43,841	40,792
Amortization of patents	2,207	2,207
Stock based compensation	31,972	30,563
(Gain) loss on disposal of equipment	(5,166)	3,224
Deferred tax asset	132,100	131,002
Gain on extinguishment of debt		(325,300)
Inventory reserve	(16,855)	600
Changes in operating assets and liabilities:
Accounts receivable	(287,692)	(144,555)
Inventories	(2,527,575)	(3,066,009)
Prepaid expenses	632,305	(151,276)
Other assets	(2)	2,656
Accounts payable	180,425	286,866
Operating lease obligations	(47,736)	(43,565)
Accrued expenses and customer deposits	2,099,024	3,477,435
Net cash provided by operating activities	1,490,066	1,249,462
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds on sale of equipment	5,166	591
Purchases of property and equipment	(179,140)	(558,828)
Net cash used in investing activities	(173,974)	(558,237)
CASH FLOWS FROM FINANCING ACTIVITIES
Payment of cumulative dividends on preferred stock		(24,152)
Principal payments on finance lease obligations and notes payable	(47,824)	(87,422)
Net cash used in financing activities	(47,824)	(111,574)
NET INCREASE IN CASH	1,268,268	579,651
CASH - Beginning of period	4,140,942	2,917,551
CASH - End of period	5,409,210	3,497,202
Cash paid during the period for:
Interest	4,826	5,895
Income taxes	10,863	2,778
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES
Increase in asset retirement obligation	$ 3,450	$ 3,450

Business Organization and Purpo

Business Organization and Purpose	6 Months Ended
Business Organization and Purpose	Jun. 30, 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 including Aerospace, Automotive, Defense, Glass, Optical Coatings 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	6 Months Ended
Summary of Significant Accounting Policies	Jun. 30, 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. 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 30 day payment terms. 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 six months ended June 30, 2022 and 2021. The top two customers represented approximately 87% and 79% of total revenue for the six months ended June 30, 2022 and 2021, respectively. International shipments resulted in 1% and 3% of total revenue for the first six months of 2022 and 2021, respectively. Note 2. Summary of Significant Accounting Policies (continued) Employee Retention Credit (ERC) - The Company qualified for federal government assistance through Employee Retention Credit provisions of the Consolidated Appropriations Act of 2021 during the first six months of 2021 in the amount of $255,507 during the first quarter of 2021 and $151,701 during the second quarter of 2021. The purpose of the Employee Retention Credit was to encourage employers to keep employees on the payroll, even if they were not working during the covered period because of the coronavirus outbreak. These funds were recorded in the Statements of Income 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 third quarter of 2021. A balance of $105,000 appears as a tax receivable on the balance sheets at June 30, 2022.

Recent Accounting Pronouncement

Recent Accounting Pronouncements	6 Months Ended
Recent Accounting Pronouncements	Jun. 30, 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	6 Months Ended
Common Stock and Stock Options	Jun. 30, 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. Noncash stock-based compensation expense was $8,673 and $8,675 for the three months ended June 30, 2022, and 2021, respectively. Noncash stock-based compensation expense was $31,972 and $30,563 for the six months ended June 30, 2022, and 2021, respectively. Unrecognized compensation expense was $3,941 as of June 30, 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 4,610 and 5,265 aggregate shares of common stock of the Company during the six months ended June 30, 2022 and 2021, respectively. The stock had an aggregate value of $14,982 and $14,987 for the six months ended June 30, 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 six months ended June 30, 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 six months ended June 30, 2022 and 2021, respectively. In addition, during the six months ended June 30, 2021, a total of 30,181 stock options were exercised by management. The cumulative status of options granted and outstanding at June 30, 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 June 30, 2022 41,304 $ 1.05 Options exercisable at December 31, 2021 27,418 $ 0.95 Options exercisable at June 30, 2022 34,361 $ 1.01 Note 4. Common Stock and Stock Options (continued) Exercise prices for options ranged from $0.84 to $1.25 at June 30, 2022. The weighted average option price for all options outstanding at June 30, 2022, was $1.05 with a weighted average remaining contractual life of 4.1 years. There were no non-employee director stock options outstanding during 2022 and 2021.

Preferred Stock

Preferred Stock	6 Months Ended
Preferred Stock	Jun. 30, 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 and $12,076 for the three and six months ended June 30, 2021, respectively. During June 2021, a cash dividend payment of $24,152 was made to preferred shareholders.

Inventories

Inventories	6 Months Ended
Inventories	Jun. 30, 2022
Inventories
Inventories	Note 6. Inventories Inventories consisted of the following: June 30, December 31, 2022 2021 (unaudited) Raw materials $ 1,759,561 $ 440,759 Work-in-process 1,700,549 549,369 Finished goods 166,101 108,508 Inventory reserve (8,563) (25,418) $ 3,617,648 $ 1,073,218

Earnings Per Share

Earnings Per Share	6 Months Ended
Earnings Per Share	Jun. 30, 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 June 30, Six months ended June 30, 2022 2021 2022 2021 Income applicable to common shares $ 664,873 $ 115,510 $ 1,049,274 $ 762,057 Weighted average common shares outstanding - basic 4,514,492 4,497,903 4,512,396 4,488,913 Effect of dilution 27,327 28,159 27,592 27,565 Weighted average shares outstanding - diluted 4,541,819 4,526,062 4,539,988 4,516,478

Notes Payable

Notes Payable	6 Months Ended
Notes Payable	Jun. 30, 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 Statements of Income as gain on extinguishment of debt for the six months ended June 30, 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 June 30, 2022.

Income Taxes

Income Taxes	6 Months Ended
Income Taxes	Jun. 30, 2022
Income Taxes
Income Taxes	Note 9. Income Taxes The provision for income taxes for the six months ended June 30, 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. Following is the income tax expense for the three and six months ended June 30: Three months ended June 30, Six months ended June 30, 2022 2021 2022 2021 Federal - deferred $ 76,100 $ 43,160 $ 132,100 $ 131,002 State and local 7,300 4,313 12,100 7,091 $ 83,400 $ 47,473 $ 144,200 $ 138,093 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 $531,720 at June 30, 2022.

Operating Lease

Operating Lease	6 Months Ended
Operating Lease	Jun. 30, 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 $56,200 and $55,000 during the six months ended June 30, 2022 and 2021, respectively. Note 10. Operating Lease (continued) The following is a maturity analysis, by year, of the annual undiscounted cash outflows of the operating lease liabilities as of June 30, 2022: 2022 $ 56,443 2023 114,857 2024 102,550 Total minimum lease payments 273,850 Less debt discount 18,671 Total operating lease obligations $ 255,179 Operating cash outflows from operating leases $ 47,736 Weighted average remaining lease term 2.4 years Weighted average discount rate 5.5 %

Finance Leases

Finance Leases	6 Months Ended
Finance Leases	Jun. 30, 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 June 30, 2022, are shown in the following table. 2022 $ 52,650 2023 101,675 2024 49,859 Total minimum lease payments 204,184 Less amount representing interest 8,792 Present value of minimum lease payments 195,392 Less current portion 98,828 Finance lease obligations, net of current portion $ 96,564 The equipment under finance lease at June 30, 2022, and December 31, 2021, is included in the accompanying balance sheets as follows: June 30, 2022 Dec. 31, 2021 Machinery and equipment $ 385,923 $ 385,923 Less accumulated depreciation and amortization 85,080 65,783 Net book value $ 300,843 $ 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.

Subsequent Event

Subsequent Event	6 Months Ended
Subsequent Event	Jun. 30, 2022
Subsequent Event
Subsequent Event	Note 12. Subsequent Event The Company expects to receive shipment of additional manufacturing equipment during the third quarter of 2022. This includes a hot press that will enable production of higher temperature materials with increased capacity. A final cash payment of $220,075 was made for the hot press during late July of this year.

Summary of Significant Accoun_2

Summary of Significant Accounting Policies (Policies)	6 Months Ended
Summary of Significant Accounting Policies (Policies)	Jun. 30, 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. 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 30 day payment terms. 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 six months ended June 30, 2022 and 2021. The top two customers represented approximately 87% and 79% of total revenue for the six months ended June 30, 2022 and 2021, respectively. International shipments resulted in 1% and 3% of total revenue for the first six months of 2022 and 2021, respectively.
Employee Retention Credit (ERC)	Employee Retention Credit (ERC) - The Company qualified for federal government assistance through Employee Retention Credit provisions of the Consolidated Appropriations Act of 2021 during the first six months of 2021 in the amount of $255,507 during the first quarter of 2021 and $151,701 during the second quarter of 2021. The purpose of the Employee Retention Credit was to encourage employers to keep employees on the payroll, even if they were not working during the covered period because of the coronavirus outbreak. These funds were recorded in the Statements of Income 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 third quarter of 2021. A balance of $105,000 appears as a tax receivable on the balance sheets at June 30, 2022.

Common Stock and Stock Options

Common Stock and Stock Options (Tables)	6 Months Ended
Common Stock and Stock Options (Tables)	Jun. 30, 2022
Common Stock and Stock Options
Schedule of share-based compensation, employee stock options, activity	The cumulative status of options granted and outstanding at June 30, 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 June 30, 2022 41,304 $ 1.05 Options exercisable at December 31, 2021 27,418 $ 0.95 Options exercisable at June 30, 2022 34,361 $ 1.01

Inventories (Tables)

Inventories (Tables)	6 Months Ended
Inventories (Tables)	Jun. 30, 2022
Inventories
Schedule of Inventories	June 30, December 31, 2022 2021 (unaudited) Raw materials $ 1,759,561 $ 440,759 Work-in-process 1,700,549 549,369 Finished goods 166,101 108,508 Inventory reserve (8,563) (25,418) $ 3,617,648 $ 1,073,218

Earnings Per Share (Tables)

Earnings Per Share (Tables)	6 Months Ended
Earnings Per Share (Tables)	Jun. 30, 2022
Earnings Per Share
Summary of reconciliation of earnings per share calculations	Three months ended June 30, Six months ended June 30, 2022 2021 2022 2021 Income applicable to common shares $ 664,873 $ 115,510 $ 1,049,274 $ 762,057 Weighted average common shares outstanding - basic 4,514,492 4,497,903 4,512,396 4,488,913 Effect of dilution 27,327 28,159 27,592 27,565 Weighted average shares outstanding - diluted 4,541,819 4,526,062 4,539,988 4,516,478

Income Taxes (Tables)

Income Taxes (Tables)	6 Months Ended
Income Taxes (Tables)	Jun. 30, 2022
Income Taxes
Schedule of components of the income tax expense	Following is the income tax expense for the three and six months ended June 30: Three months ended June 30, Six months ended June 30, 2022 2021 2022 2021 Federal - deferred $ 76,100 $ 43,160 $ 132,100 $ 131,002 State and local 7,300 4,313 12,100 7,091 $ 83,400 $ 47,473 $ 144,200 $ 138,093

Operating Lease (Tables)

Operating Lease (Tables)	6 Months Ended
Operating Lease (Tables)	Jun. 30, 2022
Operating Lease
Schedule of annual undiscounted cash flows of the operating lease liabilities	Note 10. Operating Lease (continued) The following is a maturity analysis, by year, of the annual undiscounted cash outflows of the operating lease liabilities as of June 30, 2022: 2022 $ 56,443 2023 114,857 2024 102,550 Total minimum lease payments 273,850 Less debt discount 18,671 Total operating lease obligations $ 255,179
Schedule of operating lease other information	Operating cash outflows from operating leases $ 47,736 Weighted average remaining lease term 2.4 years Weighted average discount rate 5.5 %

Finance Leases (Tables)

Finance Leases (Tables)	6 Months Ended
Finance Leases (Tables)	Jun. 30, 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 June 30, 2022, are shown in the following table. 2022 $ 52,650 2023 101,675 2024 49,859 Total minimum lease payments 204,184 Less amount representing interest 8,792 Present value of minimum lease payments 195,392 Less current portion 98,828 Finance lease obligations, net of current portion $ 96,564
Schedule of equipment under finance leases	The equipment under finance lease at June 30, 2022, and December 31, 2021, is included in the accompanying balance sheets as follows: June 30, 2022 Dec. 31, 2021 Machinery and equipment $ 385,923 $ 385,923 Less accumulated depreciation and amortization 85,080 65,783 Net book value $ 300,843 $ 320,140

Business Organization and Pur_2

Business Organization and Purpose (Details)	6 Months Ended
Business Organization and Purpose (Details)	Jun. 30, 2022 segment
Business Organization and Purpose
Number of operating segments	1

Summary of Significant Accoun_3

Summary of Significant Accounting Policies (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Mar. 31, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021
Accounting Policies [Line Items]
Employee retention credit provisions	$ 151,701	$ 255,507
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%	3%
Two Customers \| Photonics industry \| Sales Revenue, Net
Accounting Policies [Line Items]
Concentration risk, percentage			87%	79%

Common Stock and Stock Option_2

Common Stock and Stock Options (Details) - Employee Stock Option - $ / shares	6 Months Ended		12 Months Ended
	Jun. 30, 2022	Jun. 30, 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	34,361		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	$ 1.01		$ 0.95

Common Stock and Stock Option_3

Common Stock and Stock Options - Additional Information (Details) - USD ($)	3 Months Ended				6 Months Ended		12 Months Ended
	Jun. 30, 2022	Mar. 31, 2022	Jun. 30, 2021	Mar. 31, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021
Common Stock and Stock Options
Stock based compensation	$ 8,673		$ 8,675		$ 31,972	$ 30,563
Unrecognized compensation expense	3,941				$ 3,941
Stock Issued During Period, Value, New Issues	$ 7,491	$ 22,116	7,493	$ 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	$ 1.05				$ 1.05
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term					4 years 1 month 6 days
Common Stock
Common Stock and Stock Options
Stock Issued During Period, Value, New Issues	$ 7,491	$ 22,116	$ 7,493	$ 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					4,610	5,265
Stock Issued During Period, Value, New Issues					$ 14,982	$ 14,987
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 ($)	1 Months Ended	3 Months Ended	6 Months Ended	12 Months Ended
	Jun. 30, 2021	Jun. 30, 2021	Jun. 30, 2021	Dec. 31, 2021
Preferred Stock Dividends, Income Statement Impact		$ 6,038	$ 12,076
Convertible Preferred Stock, Series B
Preferred Stock, Dividend Rate, Percentage			10%
Preferred Stock Redemption Percentage				3%
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	$ 12,076
Cash dividend payment	$ 24,152

Inventories (Details)

Inventories (Details) - USD ($)	Jun. 30, 2022	Dec. 31, 2021
Inventories
Raw materials	$ 1,759,561	$ 440,759
Work-in-process	1,700,549	549,369
Finished goods	166,101	108,508
Inventory reserve	(8,563)	(25,418)
Inventory, Net	$ 3,617,648	$ 1,073,218

Earnings Per Share - Reconcilia

Earnings Per Share - Reconciliation of Earnings Per Share Calculations (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Earnings Per Share
Income applicable to common stock	$ 664,873	$ 115,510	$ 1,049,274	$ 762,057
Weighted average common shares outstanding - basic	4,514,492	4,497,903	4,512,396	4,488,913
Effect of dilution	27,327	28,159	27,592	27,565
Weighted average shares outstanding - diluted	4,541,819	4,526,062	4,539,988	4,516,478

Notes Payable (Details)

Notes Payable (Details) - USD ($)	Jun. 30, 2022	Jun. 30, 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 ($)	3 Months Ended		6 Months Ended
Income Taxes - Income tax expense (Details) - USD ($)	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Income Taxes
Federal	$ 76,100	$ 43,160	$ 132,100	$ 131,002
State and local	7,300	4,313	12,100	7,091
Total	$ 83,400	$ 47,473	$ 144,200	$ 138,093

Income Taxes - Additional infor

Income Taxes - Additional information (Details) - USD ($)	3 Months Ended		6 Months Ended
Income Taxes - Additional information (Details) - USD ($)	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 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	$ 531,720		$ 531,720		$ 663,820
Deferred Tax Assets, Valuation Allowance	0		0
Provision for income taxes	$ 83,400	$ 47,473	$ 144,200	$ 138,093

Operating Lease - Future Minimu

Operating Lease - Future Minimum Lease Payments (Details)	Jun. 30, 2022 USD ($)
Operating Lease
2022	$ 56,443
2023	114,857
2024	102,550
Total minimum lease payments	273,850
Less debt discount	18,671
Total operating lease obligations	$ 255,179

Operating Lease - Additional In

Operating Lease - Additional Information (Details) - USD ($)	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Operating cash outflows from operating leases	$ 47,736
Weighted average remaining lease term	2 years 4 months 24 days
Weighted average discount rate	5.50%
Operating lease, renewal term	5 years
Operating Lease, Cost	$ 56,200	$ 55,000
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 ($)	Jun. 30, 2022	Dec. 31, 2021
Finance Leases
2022	$ 52,650
2023	101,675
2024	49,859
Total minimum lease payments	204,184
Less amount representing interest	8,792
Present value of minimum lease payments	195,392
Less current portion	98,828	$ 96,702
Finance lease obligations, net of current portion	$ 96,564	$ 146,516

Finance Leases - Equipment unde

Finance Leases - Equipment under finance lease and additional information (Details) - USD ($)	6 Months Ended
	Jun. 30, 2022	Dec. 31, 2021
Finance Leases
Machinery and equipment	$ 385,923	$ 385,923
Less accumulated depreciation and amortization	85,080	65,783
Net book value	$ 300,843	$ 320,140
Amortization period, Finance lease (in years)	10 years

Subsequent Event (Details)

Subsequent Event (Details)	Jul. 31, 2022 USD ($)
Subsequent Event [Member]
Subsequent Event [Line Items]
Cash Payment	$ 220,075