COMMITMENTS AND CONTINGENCIES

12 Months Ended

Dec. 31, 2011

COMMITMENTS AND CONTINGENCIES [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 15 - COMMITMENTS AND CONTINGENCIES:

Employment Contracts:

The Company has contracts with two key employees.  The contracts call for salaries presently aggregating $510,000 per year.  One contract expires in May 2013 and one contract expires in March 2013.  The following table is a schedule of future minimum salary commitments:

2012	$	545,000
2013		172,500
	$	717,500

Pension Plan:

The Company has a 401(k) plan established for its employees.  Effective January 1, 2011 the Company elected to match 40% of the first 5% (or 2% of salary) that an employee contributes to their 401(k) plan.  Expenses related to this matching contribution aggregated $74,464 and none for the years ended December 31, 2011 and 2010, respectively.

Obligations Under Operating Leases:

The Company leases industrial space used for office, R&D and manufacturing facilities, currently with a monthly rent of $18,223.  The current lease expires on April 30, 2014.  We entered into two additional leases in 2011, one effective November 1, 2011 and the second, signed in December, effective January 1, 2012, the principal terms of these leases are the same as the one entered into in 2009 which was as follows: (a) a lease term ending April 30, 2014; (b) an initial rent of $11,350 per month ; (c) the monthly rent for year two of the lease will increase by the lower of (i) the change in the consumer price index, or (ii) five percent; and (d) the monthly rent for years three through five of the lease will increase each year by the lower of (i) the change in the consumer price index, or (ii) two and one half percent.

The following is a schedule of future minimum rental commitments (assuming no increases):

Years ending December 31,

2012	$	217,899
2013		217,899
2014		70,355
	$	506,153

Rent expense was $177,200 and $174,200 for the years ended December 31, 2011 and 2010, respectively.

Economic Dependency:

The following table delineates sales the Company had to customers in excess of 10% of total sales for the periods indicated:

	For the years ended						Accounts Receivable
	December 31, 2011			December 31, 2010			As of
	Sales		% of Sales	Sales		% of Sales	December 31, 2011
Customer 1	$	7,208,712	41	$	5,281,111	39	$	782,300
Customer 2		4,662,607	27		*	*		685,692
Customer 3		1,713,390	10		-	-		450,000
Customer 4		*	*		3,689,865	27		-

In the table above the asterisk (*) indicates that sales to the customer did not exceed 10% for the period indicated.

The Company had no vendor in excess of 10% of total purchases for the period ended December 31, 2011.

The Company currently buys materials which are purchased under intellectual property rights agreements and are important components in its products.  Management believes that other suppliers could provide similar materials on comparable terms.  A change in suppliers, however, could cause a delay in manufacturing and a possible loss of sales, which would affect operating results adversely.