COMMITMENTS AND CONTINGENCIES

12 Months Ended

Dec. 31, 2017

COMMITMENTS AND CONTINGENCIES [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 13 — COMMITMENTS AND CONTINGENCIES:

Employment Contracts:

The Company has multi-year contracts with two key employees.  The contracts call for salaries presently aggregating $770,000 per year, and they expire in March 2019 and March 2020. The following table is a schedule of future minimum salary commitments:

2018	$	770,000
2019		485,500
2020		85,000

Pension Plan:

The Company has a 401(k) plan established for its employees whereby it matches 40% of the first 5% (or 2% of salary) that an employee contributes to the plan.  Matching contribution expenses totaled $91,150, $96,051 and $90,915 for the years ended December 31, 2017, 2016, and 2015, respectively.

Obligations Under Operating Leases:

The Company leases industrial space used for office, R&D and manufacturing facilities, currently with a monthly rent of $29,773.  The current lease expires on April 30, 2019.  The lease provides for annual increases of 2.5% percent each year starting May 1, 2016.  In February of 2014, the Company entered into a lease for office and warehouse space, effective March 1, 2014, a short distance from its current facility currently with a monthly rent of $16,017.  The space is used primarily for warehousing and provides for additional office space.  The lease expires on April 30, 2020.  The lease provides for annual increases of 3.0% percent each year starting March 1, 2016. The Company also leases office, warehouse, and manufacturing space in a single building in Kuala Lumpur, Malaysia persuant to two separate leases that each expire on April 30, 2020 and have an additional three year renewal option with combined monthly rent of approximately $3,600.

The following is a schedule of future minimum rental commitments for the years ending December 31,

2018	$	603,335
2019		371,036
2020		84,152
	$	1,058,523

Rent expense was $586,730, $516,708 and $511,900 for the years ended December 31, 2017, 2016, and 2015, respectively.

Economic Dependency:

Customers are considered major customers when net sales exceed 10% of the Company's total net sales for period or outstanding trade receivables exceed 10% of current assets. The Company had the following major customers for the respective periods:

	For the years ended															Accounts Receivable
	December 31, 2017					December 31, 2016					December 31, 2015					December 31, 2017		December 31, 2016
	Sales		% of Sales			Sales		% of Sales			Sales		% of Sales
Customer 1	$	8,065,217		42	%	$	4,801,577		35	%	$	10,132,512		46	%	$	-	$	828,848
Customer 2		-		-			1,796,477		13	%		4,526,908		21	%		-		-

The following table delineates purchases the Company had with vendors in excess of 10% of total purchases for the periods indicated:

For the years ended

Accounts Payable

December 31, 2017

December 31, 2016

December 31, 2015

December 31, 2017

December 31, 2016

Purchases

% of Purc.

Purchases

% of Purc.

Purchases

% of Purc.

Vendor 1

$

*

*

$

652,273

11

%

$

*

*

$

*

$

*

Vendor 2

746,868

12

%

*

*

*

*

*

*

Vendor 3

849,966

14

%

*

*

*

*

*

*

Vendor 4

884,698

14

%

*

*

794,536

11

%

*

*

In the table above, an asterisk (*) indicates that purchases from the vendor did not exceed 10% for the period indicated.

The Company purchases materials pursuant to intellectual property rights agreements that 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 adversly affect operating results.