COMMITMENTS, CONTINGENCIES, AND CONCENTRATIONS

3 Months Ended

Mar. 31, 2012

COMMITMENTS, CONTINGENCIES, AND CONCENTRATIONS [Abstract]

COMMITMENTS, CONTINGENCIES, AND CONCENTRATIONS

NOTE7 - COMMITMENTS, CONTINGENCIES, AND CONCENTRATIONS:

a)   Economic Dependency:

The following table discloses product sales the Company had to customers in excess of 10% of net product sales for the periods indicated:

	For the three months ended						Accounts Receivable
	March 31, 2012			March 31, 2011			As of
	Sales		% of Sales	Sales		% of Sales	March 31, 2012
Customer 1	$	2,503,739	39	$	2,055,210	68	$	850,482
Customer 2		2,516,000	40		*	*		1,319,247
Customer 3		601,402	9		*	*		676,596
Customer 4		*	*		459,697	15		*

In the table above, the asterisk (*) indicates that sales to the customer did not exceed 10% for the period indicated.  Note that sales include product sales only while accounts receivable reflects the total due from the customer which includes freight.

The following table discloses purchases the Company made from a vendor in excess of 10% of total purchases for the periods indicated:

	For the three months ended						Accounts Payable
	March 31, 2012			March 31, 2011			As of
	Purchases		% of Purc.	Purchases		% of Purc.	March 31, 2012
Vendor 1	$	177,637	13	$	108,456	13	$	12,700
Vendor 2		140,654	10		*	*		115,294

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 could adversely affect operating results.

b)   Governmental Regulation:

All of the Company's existing and proposed diagnostic products are regulated by the United States Food and Drug Administration, United States Department of Agriculture, certain U.S., state and local agencies, and/or comparable regulatory bodies in other countries.  Most aspects of development, production, and marketing, including product testing, authorizations to market, labeling, promotion, manufacturing, and record keeping are subject to review.  After marketing approval has been granted, Chembio must continue to comply with governmental regulations.  Failure to comply with these regulations can result in significant penalties.

c)   Employment Agreement:

The Company has employment contracts with two key employees.  The contracts call for salaries presently aggregating $545,000 per year.  One contract expires in May 2013 and one contract expires in March 2013.  In connection with the contract that expires in March 2013, the Company issued, in March 2010, 300,000 options to purchase common stock with one-third vesting immediately and one-third vesting on each of the second and third anniversaries of the grant.