15. MATERIAL WEAKNESS IN CONTROLS OVER FINANCIAL REPORTING	6 Months Ended
Jun. 30, 2011
Notes to Financial Statements
15. MATERIAL WEAKNESS IN CONTROLS OVER FINANCIAL REPORTING	We have identified material weakness in our internal controls over financial reporting, that, if not corrected, could result in material misstatements in our financial statements. We are not currently required to comply with Section 404 of the Sarbanes Oxley Act of 2002 and are therefore not required to make an assessment of the effectiveness of our internal controls over financial reporting for that purpose. However, in connection with the audit of our financial statements for the year ended December 31, 2011, our auditors and we have identified certain matters involving our internal controls over financial reporting that constitute material weaknesses under standards established by the Public Accounting Oversight Board. The material weakness identified resulted from inadequate oversight by management and accounting personnel into the process of recognizing revenue in accordance with generally accepted accounting principles. As a result revenue from sales of extended warranties were recognized as revenue when contracted for rather than allocated over the life of the warranty. In addition, some sales of products were recognized as revenue even though all of the elements of a completed sale were not evident. See Note 14 above. We have instituted a remediation plan which involves reeducating Company management, the accounting staff and the administrative staff as to the elements of a completed sale. We increased the oversight of the process by increasing the frequency of involvement of outside accounting consultants. Internal systems are being put into place to track and document significant dates, such as delivery, installation and customer acceptance. In addition, the bookkeeping system has been modified so that all sales of extended warranties are automatically recorded as deferred revenue and that the amount of revenue that is ultimately recognized as warranty revenue is as the result of an analysis of the significant aspects of the warranty such as coverage and period.

15. MATERIAL WEAKNESS IN CONTROLS OVER FINANCIAL REPORTING

6 Months Ended

Jun. 30, 2011

15. MATERIAL WEAKNESS IN CONTROLS OVER FINANCIAL REPORTING

We have identified material weakness in our internal controls over financial reporting, that, if not corrected, could result in material misstatements in our financial statements. We are not currently required to comply with Section 404 of the Sarbanes Oxley Act of 2002 and are therefore not required to make an assessment of the effectiveness of our internal controls over financial reporting for that purpose. However, in connection with the audit of our financial statements for the year ended December 31, 2011, our auditors and we have identified certain matters involving our internal controls over financial reporting that constitute material weaknesses under standards established by the Public Accounting Oversight Board.

The material weakness identified resulted from inadequate oversight by management and accounting personnel into the process of recognizing revenue in accordance with generally accepted accounting principles. As a result revenue from sales of extended warranties were recognized as revenue when contracted for rather than allocated over the life of the warranty. In addition, some sales of products were recognized as revenue even though all of the elements of a completed sale were not evident. See Note 14 above.

We have instituted a remediation plan which involves reeducating Company management, the accounting staff and the administrative staff as to the elements of a completed sale. We increased the oversight of the process by increasing the frequency of involvement of outside accounting consultants. Internal systems are being put into place to track and document significant dates, such as delivery, installation and customer acceptance. In addition, the bookkeeping system has been modified so that all sales of extended warranties are automatically recorded as deferred revenue and that the amount of revenue that is ultimately recognized as warranty revenue is as the result of an analysis of the significant aspects of the warranty such as coverage and period.