What changed in this filing

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Item 1. Financial Statements

2021-11-12 compared with 2021-08-12 · 297 added, 191 removed, 470 unchanged (51% of the section changed)

1 unchanged sentence

Condensed Balance Sheets

September 30,

Current assets

13 unchanged sentences

Total current liabilities

Deferred revenue, noncurrent

Operating lease liabilities, noncurrent

2 unchanged sentences

Stockholders' equity

Preferred stock, $ 0.001 par value, 10,000,000 authorized, none outstanding as of June 30, 2021 and December 31, 2020, respectively.

Common stock, $ 0.001 par value, 9,800,000 shares authorized, 8,897,955 and 8,482,387 shares issued or issuable and outstanding as of June 30, 2021 and December 31, 2020, respectively.

Preferred stock, $ 0.001 par value, 10,000,000 authorized, none outstanding as of September 30, 2021 and December 31, 2020, respectively.

Common stock, $ 0.001 par value, 350,000,000 shares authorized, 8,948,248 and 8,482,387 shares issued or issuable and outstanding as of September 30, 2021 and December 31, 2020, respectively.

Additional paid-in-capital

8 unchanged sentences

For the Three Months Ended

For the Six Months Ended

For the Nine Months Ended

September 30,

Cost of revenues

Gross income (loss)

$ ( 631,020 )

Operating expenses

3 unchanged sentences

$ ( 4,584,011 )

( 2,870,455 )

Other income (expense)

6 unchanged sentences

$ ( 4,580,403 )

( 2,871,532 )

Income tax expense

8 unchanged sentences

Condensed Statements of Changes in Stockholders'

Additional Paid-in-

Total Stockholders'

Paid-in-Capital

Balance at December 31, 2019

1 unchanged sentence

Stock issued for director services

Stock issued to escrow account - unvested

Stock issued to escrow account -

Stock option expense

Warrants exercised

Net loss for the three months ended March 31, 2020

Net loss for the three months ended

March 31, 2020

Balance at March 31, 2020

1 unchanged sentence

Stock issued for director services

Stock issued to escrow account - unvested

Stock issued to escrow account -

Stock option expense

Warrants exercised

Net loss for the three months ended June 30, 2020

Net loss for the three months ended

June 30, 2020

Balance at June 30, 2020

$ ( 47,586,059 )

Additional Paid-in-

Stock issued for director services

Stock issued to escrow account -

Stock option expense

Proceeds from issuance of common

stock, pursuant to public offering

Warrants exercised

Stock option exercise (cashless)

Stock issued for services

Cash fees related to stock offering

Net loss for the three months ended

September 30, 2020

( 1,100,023 )

Balance at September 30, 2020

$ ( 48,686,082 )

Stockholders'

Paid-in-Capital

Balance at December 31, 2020

$ ( 51,022,606 )

Stock issued for director services - vested

Stock issued to escrow account - unvested

Stock issued for director services

Stock issued to escrow account -

Stock option expense

1 unchanged sentence

Stock option exercise (cashless)

Net loss for the three months ended March 31, 2021

Net loss for the three months ended

March 31, 2021

( 1,250,809 )

2 unchanged sentences

$ ( 52,273,415 )

Stock issued for director services - vested

Stock issued to escrow account - unvested

Stock issued for director services

Stock issued to escrow account -

Stock option expense

1 unchanged sentence

Stock option exercise (cashless)

Net loss for the three months ended June 30, 2021

Net loss for the three months ended

June 30, 2021

( 1,641,788 )

2 unchanged sentences

$ ( 53,915,203 )

Stock issued for director services

Stock issued to escrow account - unvested

Stock option expense

Warrants exercised for cash

Stock option exercise (cashless)

Stock option exercise (for cash)

Net loss for the three months ended

September 30, 2021

( 1,688,631 )

Balance at September 30, 2021

$ ( 55,603,834 )

The accompanying unaudited notes are an integral

1 unchanged sentence

Condensed Statements of Cash Flows

For the Six Months Ended

For the Nine Months Ended

September 30,

Operating Activities:

10 unchanged sentences

Accounts receivable

( 1,021,591 )

Prepaid expenses and other current assets

( 1,011,971 )

Increase (decrease) in:

17 unchanged sentences

Payments of equity offering costs

Proceeds from issuance of common stock and warrants, pursuant to public offering

Net cash provided by financing activities

Net decrease in cash

( 1,394,198 )

Net (decrease) increase in cash

( 3,624,352 )

5 unchanged sentences

Supplemental Disclosure of Non-Cash Investing and Financing Activities:

Transfer of prepaid asset to inventory

Depreciation cost capitalized into inventory

Recording of right of use asset and corresponding liability

Reclassification of deferred equity offering costs into APIC

Transfer of fixed asset to inventory

The accompanying unaudited notes are an integral

1 unchanged sentence

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

JUNE 30, 2021

SEPTEMBER 30, 2021

NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

17 unchanged sentences

In management’s opinion, all adjustments (consisting of normal recurring adjustments

and reclassifications) necessary to present fairly our results of operations and cash flows for the six months ended June 30, 2021 and

2020, and our financial position as of June 30, 2021, have been made.

The results of operations for such interim periods are not necessarily

indicative of the operating results to be expected for the full year.

and reclassifications) necessary to present fairly our results of operations and cash flows for the nine months ended September 30, 2021

and 2020, and our financial position as of September 30, 2021, have been made.

The results of operations for such interim periods are

not necessarily indicative of the operating results to be expected for the full year.

Certain information and disclosures

4 unchanged sentences

Risks and Uncertainties

On March 11, 2020, the World Health Organization declared the outbreak

of a novel coronavirus (COVID-19) as a pandemic.

The outbreak of COVID-19 resulted in travel restrictions, quarantines, “stay-at-home”

and “shelter-in-place” orders as well as the shutdown of many businesses around the world.

To date, while we have seen some

delays and cancellations of opportunities in our pipeline as a result of funding issues, priority issues or temporary business closures,

the pandemic has not had a material adverse effect on the Company’s financial position or results of operations for the quarter

ended June 30, 2021.

With the rollout of a COVID-19 vaccine, businesses and governments are beginning to return to pre-pandemic status.

However, it is difficult to predict what impact variants of the virus may have in the future or what impact these governmental actions

and the widespread economic disruption arising from the pandemic will have on our business in the future.

The ongoing novel coronavirus

(COVID-19) pandemic has resulted in travel restrictions, quarantines, “stay-at-home” and “shelter-in-place” orders as

well as the shutdown of many businesses around the world.

These shutdowns have resulted in product shortages and longer delivery lead-times,

global shipping disruptions and higher costs due to increasing demands for these goods and services.

While we have been impacted by supplier

cost increases and other supply chain issues, the COVID-19 pandemic did not have a material adverse effect on our financial position or

results of operations for the nine months ended September 30, 2021.

With the rollout of a COVID-19 vaccine and booster shots, businesses

and governments are beginning to return to pre-pandemic status.

However, it is difficult to predict what governmental actions may be enacted in

the future or what impact the widespread economic disruption arising from the pandemic could have on our business.

The extent and duration

of the pandemic is unknown, and the future effects on our business are uncertain.

The Company is continuing to monitor the events and

circumstances surrounding the COVID-19 pandemic, which may require adjustments to the Company’s estimates and assumptions in the

Use of Estimates

51 unchanged sentences

potentially subject us to concentrations of credit risk consist of cash and accounts receivable.

The Company maintains its cash in banks and financial institution deposits that at times may exceed federally insured limits.

The Company has not experienced any losses in such accounts from inception through June 30, 2021.

As of June 30, 2021, $ 25,173,457 of the Company’s cash deposits were greater than the federally insured limits.

The Company maintains its

cash in banks and financial institution deposits that at times may exceed federally insured limits.

The Company has not experienced any

losses in such accounts from inception through September 30, 2021.

As of September 30, 2021, $ 23,184,771 of the Company’s cash deposits

were greater than the federally insured limits.

Major Customers

For the three months ended

June 30, 2021, revenues from four customers accounted for 22 %, 18 %, 16 % and 10 % of total revenues, and for the six months ended June 30,

2021, revenues from three customers accounted for 13 %, 13 % and 11 % of total revenues, with no other single customer accounting for more

than 10% of revenues.

At June 30, 2021, accounts receivable from four customers accounted for 18 %, 14 %, 14 % and 11 % of total accounts

receivable, with no other single customer accounting for more than 10% of the accounts receivable balance.

September 30, 2021, revenues from one customer accounted for 74 % of total revenues, and for the nine months ended September 30, 2021,

revenues from one customer accounted for 36 % of total revenues, with no other single customer accounting for more than 10% of revenues.

At September 30, 2021, accounts receivable from two customers accounted for 52 % and 16 % of total accounts receivable, with no other single

customer accounting for more than 10% of the accounts receivable balance.

For the three months ended

June 30, 2020, revenues from four customers accounted for 39 %, 18 %, 12 % and 11 % of total revenues, and for the six months ended June 30,

2020, revenues from two customers accounted for 20 % and 12 % of total revenues, with no other single customer accounting for more than

10% of revenues.

At June 30, 2020, accounts receivable from six customers accounted for 28 %, 11 %, 10 %, 10 %, 10 % and 10 % of total accounts

receivable, with no other single customer accounting for more than 10% of the accounts receivable balance.

For the six months ended June

30, 2021 and 2020, we had a heavy concentration of sales to federal, state and local governments which represented 78 % and 75 % of revenues,

respectively.

September 30, 2020, revenues from four customers accounted for 41 %, 27 %, 14 % and 11 % of total revenues, and for the nine months ended

September 30, 2020, revenues from two customers accounted for 14 % and 13 % of total revenues, with no other single customer accounting

for more than 10% of revenues.

At September 30, 2020, accounts receivable from four customers accounted for 42 %, 29 %, 14 % and 10 % of total

accounts receivable, with no other single customer accounting for more than 10% of the accounts receivable balance.

For the nine months ended

September 30, 2021 and 2020, we had a heavy concentration of sales to federal, state and local governments which represented 71 % and 60 %

of revenues, respectively.

Cash and Cash Equivalents

2 unchanged sentences

purchased to be cash equivalents.

There were no cash equivalents at June 30, 2021 and December 31, 2020, respectively.

There were no cash equivalents at September 30, 2021 and December 31, 2020, respectively.

Fair Value of Financial Instruments

1 unchanged sentence

instruments, including accounts receivable, accounts payable, accrued expenses, and short-term loans, are carried at historical cost basis.

At June 30, 2021, the carrying amounts of these instruments approximated their fair values because of the short-term nature of these instruments.

At September 30, 2021, the carrying amounts of these instruments approximated their fair values because of the short-term nature of these

Accounts Receivable

19 unchanged sentences

is established if this review process determines the net realizable value of such inventory may be below the carrying value.

The Company believes it will achieve future economic value benefits for its patents.

All administrative costs for obtaining patents are accumulated on the balance sheet as a patent asset until such time as a patent is issued.

The costs of these intangible assets are classified as a long-term asset and amortized on a straight-line basis over the legal life of such asset, which is typically 20 years.

In the event a patent is denied or abandoned, all accumulated administrative costs will be expensed in the period in which the patent was denied or abandoned.

Patent amortization expense was $ 9,977 and $ 2,182 in the six months ended June 30, 2021 and 2020, respectively.

The Company believes it will

achieve future economic value benefits for its patents.

All administrative costs for obtaining patents are accumulated on the balance

sheet as a patent asset until such time as a patent is issued.

The costs of these intangible assets are classified as a long-term asset

and amortized on a straight-line basis over the legal life of such asset, which is typically 20 years.

In the event a patent is denied

or abandoned, all accumulated administrative costs will be expensed in the period in which the patent was denied or abandoned.

amortization expense was $ 13,156 and $ 3,273 in the nine months ended September 30, 2021 and 2020, respectively.

In February 2016, the Financial

76 unchanged sentences

the Company accrues for product warranties when the loss is probable and can be reasonably estimated.

At June 30, 2021, the Company

has no product warranty accrual given the Company’s historical financial warranty expense.

At September 30, 2021, the

Company has no product warranty accrual given the Company’s historical financial warranty expense.

Cost of Revenues

The Company records direct material and component costs, direct labor

and associated benefits, and manufacturing overhead costs such as supervision, manufacturing equipment depreciation, rent, and utility

costs, all of which are included in inventory prior to a sale, as costs of revenues.

The Company further includes shipping and handling

costs as cost of revenues.

The Company records direct

material and component costs, direct labor and associated benefits, and manufacturing overhead costs such as supervision, manufacturing

equipment depreciation, rent, and utility costs, all of which are included in inventory prior to a sale, as costs of revenues.

further includes shipping and handling costs as cost of revenues.

Stock-Based Compensation

11 unchanged sentences

Net Loss Per Share

Basic net loss per share is computed by dividing the net loss by the weighted average number of shares of common stock outstanding during the periods presented.

Diluted net loss per common share is computed using the weighted average number of common stock outstanding for the period, and, if dilutive, potential common stock outstanding during the period.

Potential common stock consist of the incremental shares of common stock issuable upon the exercise of stock options, stock warrants, convertible debt instruments or other common stock equivalents.

Potentially dilutive securities are excluded from the computation if their effect is anti-dilutive.

Basic net loss per share is

computed by dividing the net loss by the weighted average number of shares of common stock outstanding during the periods presented.

net loss per common share is computed using the weighted average number of common stock outstanding for the period, and, if dilutive,

potential common stock outstanding during the period.

Potential common stock consists of the incremental shares of common stock issuable

upon the exercise of stock options, stock warrants, convertible debt instruments or other common stock equivalents.

Potentially dilutive

securities are excluded from the computation if their effect is anti-dilutive.

Options to purchase 222,383

shares of common stock and warrants to purchase 549,335 shares of common stock were outstanding at June 30, 2021.

These shares were not included in the computation of diluted loss per share for the three or six months ended June 30, 2021 because the effects would have been anti-dilutive.

shares of common stock and warrants to purchase 542,823 shares of common stock were outstanding at September 30, 2021.

These shares were

not included in the computation of diluted loss per share for the three or nine months ended September 30, 2021 because the effects would

have been anti-dilutive.

These options and warrants may dilute future earnings per share.

Reclassifications

Where necessary, the prior

year’s information has been reclassified to conform to the current period’s statement presentation.

On the Condensed Statements

of Cash Flows, the amortization of operating lease right of use asset of $24,578 at June 30, 2020 was reclassified from accrued expenses

to conform to the June 30, 2021 presentation.

Where necessary, the

prior year’s information has been reclassified to conform to the current period’s statement presentation.

Condensed Statements of Cash Flows, the prepaid inventory of $126,100 that was converted to inventory at September 30, 2020 was

reclassified from inventory to conform to the September 30, 2021 presentation and $69,711

of deferred revenue was reclassed to deferred revenue, noncurrent on the Condensed Balance Sheets.

The Company follows ASC 280-10

"Disclosures about Segments of an Enterprise and Related Information." During the six months ended June 30, 2021 and 2020, the

Company only operated in one segment;

"Disclosures about Segments of an Enterprise and Related Information." During the nine months ended September 30, 2021 and 2020,

the Company only operated in one segment;

therefore, segment information has not been presented.

As reflected in the accompanying

unaudited condensed financial statements for the six months ended June 30, 2021, the Company had a net loss and net cash used in operating

activities of $ 2,892,597 (which includes $ 495,368 of non-cash compensation expense) and $ 3,750,649 , respectively.

Additionally, at June

30, 2021, the Company had an accumulated deficit of $ 53,915,203 .

The Company has incurred significant losses from operations since inception,

and such losses are expected to continue.

In April 2019, the Company issued shares of its common stock in a public offering that generated gross proceeds of $13,201,000, which was used to pay off the Company’s debt and to fund business operations.

The Company issued shares in two additional public offerings generating gross proceeds of $ 11,499,675 in July 2020 and $ 7,500,000 in November 2020.

In addition, the company issued warrants as part of the April 2019 public offering which has generated an additional $ 11,053,338 during fiscal 2020 through June 30, 2021.

At June 30, 2021, there are warrants outstanding to

purchase up to 549,335 shares of common stock, which if fully exercised would generate an additional $ 3,465,410 .

At June 30, 2021, our cash

balance was $ 25,308,606 and our working capital was $ 28,177,437 .

Management believes it has sufficient cash to fund its liabilities and

operations for at least the next twelve months from the issue date of this report.

unaudited condensed financial statements for the nine months ended September 30, 2021, the Company had a net loss and net cash used in

operating activities of $ 4,581,228 (which includes $ 814,588 of non-cash compensation expense) and $ 5,160,604 , respectively.

Additionally,

at September 30, 2021, the Company had an accumulated deficit of $ 55,603,834 .

The Company has incurred significant losses from operations

since inception, and such losses are expected to continue.

In April 2019, the

Company issued shares of its common stock in a public offering that generated gross proceeds of $ 13,201,000 ,

which was used to pay off the Company’s debt and to fund business operations.

The Company issued shares in two additional

public offerings generating gross proceeds of $ 11,499,675

in July 2020 and $ 7,500,000

in November 2020.

In addition, the warrants issued in the April 2019 public offering and from earlier private offerings generated an

additional $ 12,611,377

during fiscal 2020 through September 30, 2021 from the exercise of such warrants.

At September 30, 2021, there are warrants outstanding to

purchase up to 542,823

shares of common stock, which if fully exercised would generate an additional $ 3,424,385 .

At September 30, 2021, our

cash balance was $ 23,078,452 and our working capital was $ 26,125,088 .

Management believes it has sufficient cash to fund its liabilities

and operations for at least the next twelve months from the issue date of this report.

Inventory consists of the following:

Schedule of Inventory

September 30,

Finished goods

Work in process

Raw materials

net inventory

Total net inventory

PROPERTY AND EQUIPMENT

Schedule Of Property and equipment

September 30,

Office furniture and equipment

Computer equipment

Leasehold improvements

Machinery and equipment

Total property and equipment

Less accumulated depreciation

Property and Equipment, net

ACCRUED EXPENSES

1 unchanged sentence

Accrued expense schedule

September 30,

Accrued vacation

Accrued salaries

accrued expense

accrued expenses

Accrued salaries and bonus

Other accrued expense

Total accrued expenses

CONVERTIBLE NOTE PAYABLE - RELATED PARTY AND NOTE PAYABLE

22 unchanged sentences

Subsequent to June 30,

2018 through December 31, 2018, and based on the average daily closing price of our common stock, the Company recorded $ 8,672 of debt

discount for the beneficial conversion feature value which is being amortized to interest expense over the term of the note.

For the three

months ended March 31, 2019 and based on the average daily closing price of our common stock, the Company recorded $ 3,967 of debt discount

for the beneficial conversion feature value which is also being amortized to interest expense over the term of the note.

beneficial conversion value and therefore, no debt discount was recorded for any other periods subsequent to March 31, 2019.

Additionally,

on March 29, 2017, the Board of Directors granted Mr.

2018 through December 31, 2018 and based on the average daily closing price of our common stock, the Company recorded $ 8,672 of debt discount

for the beneficial conversion feature value which is being amortized to interest expense over the term of the note.

For the three months

ended March 31, 2019 and based on the average daily closing price of our common stock, the Company recorded $ 3,967 of debt discount for

the beneficial conversion feature value which is also being amortized to interest expense over the term of the note.

There was no beneficial

conversion value and therefore, no debt discount was recorded for any other periods subsequent to March 31, 2019.

Additionally, on March

29, 2017, the Board of Directors granted Mr.

Wheatley a $35,000 bonus for which Mr.

Wheatley agreed to defer such bonus under

the same terms of his salary deferral.

Wheatley agreed to defer such bonus under the same

terms of his salary deferral.

On September 17, 2019, the

25 unchanged sentences

be involved in litigation relating to claims arising out of our operations in the normal course of business.

As of June 30, 2021, there

were no pending or threatened lawsuits that could reasonably be expected to have a material effect on the results of our operations.

As of September 30, 2021,

there were no pending or threatened lawsuits that could reasonably be expected to have a material effect on the results of our operations.

In August 2016, the Company

34 unchanged sentences

The tables below show the

operating ROU assets and liabilities as of December 31, 2020 and the balance as of June 30, 2021, including the changes during the periods.

Schedule of Operating right-of use asset

operating ROU assets and liabilities as of December 31, 2020 and the balance as of September 30, 2021, including the changes during the

Schedule of Operating right-of use

Operating lease ROU asset as of December 31, 2020

Less amortization of operating lease ROU assets

Operating lease ROU asset as of June 30, 2021

As of June 30, 2021 and December

31, 2020, the current and non-current portions of the lease liability were recorded to the Balance Sheet as follows:

Operating lease ROU asset as of September 30, 2021

As of September 30, 2021

and December 31, 2020, the current and non-current portions of the lease liability were recorded to the Balance Sheet as follows:

Schedule of lease liability

Operating lease

liabilities, current

lease liabilities, noncurrent

lease liability

September 30,

Operating lease liabilities, current

Operating lease liabilities, noncurrent

Total lease liability

The future minimum rental

commitments for our operating leases reconciled to the lease liability as of June 30, 2021 is as follows:

commitments for our operating leases reconciled to the lease liability as of September 30, 2021 is as follows:

Schedule of future minimum rental commitments

June 30, 2021

September 30, 2021

Total undiscounted future minimum payments

2 unchanged sentences

There was no Federal income

tax expense for the six months ended June 30, 2021 or 2020 due to the Company’s net losses.

Income tax expense represents minimum

state taxes due.

As a result of the Company’s history of incurring operating losses, a full valuation allowance has been established

to offset all deferred tax assets as of June 30, 2021 and no benefit has been provided for the year to date loss.

On a quarterly basis,

the company evaluates the positive and negative evidence to assess whether the more likely than not criteria has been satisfied in determining

whether there will be further adjustments to the valuation allowance.

Director Annual Restricted Stock Grants

tax expense for the nine months ended September 30, 2021 or 2020 due to the Company’s net losses.

Income tax expense represents

minimum state taxes due.

As a result of the Company’s history of incurring operating losses, a full valuation allowance has been

established to offset all deferred tax assets as of September 30, 2021 and no benefit has been provided for the year to date loss.

a quarterly basis, the company evaluates the positive and negative evidence to assess whether the more likely than not criteria have been

satisfied in determining whether there will be further adjustments to the valuation allowance.

RESTRICTED STOCK GRANTS TO DIRECTORS

On September 30, 2021 the

company granted each of our two non-employee directors annual restricted stock grants of 2,900 shares of our common stock and our lead

independent director an annual restricted stock grant of 4,000 shares of common stock, which vest quarterly in four (4) equal installments

beginning on December 31, 2021.

On the grant date, these shares had a per share fair value of $27.37 based on the closing trading price

of our common stock, or $268,234.

There was no expense recognized in the quarter ended September 30, 2021.

On April 1, 2021, the Board

6 unchanged sentences

which will vest quarterly over 11 equal installments.

During the quarter ended June 30, 2021, 596 of these shares vested generating

During the six months ended September 30, 2021, 1,192 of these shares vested generating

an expense of $ 47,728 .

At June 30, 2021, 2,210 shares are unvested representing $ 88,636 of unrecognized restricted stock grant expense

At September 30, 2021, 1,614 shares are unvested representing $ 64,772 of unrecognized restricted stock grant expense

which will be recognized through the quarter ending December 31, 2023.

5 unchanged sentences

of grant and will vest quarterly through September 30, 2021.

During the quarter ended June 30, 2021, 2,542 of these shares vested generating

During the nine months ended September 30, 2021, all 5,592 shares vested generating

an expense of $ 186,426 .

At June 30, 2021, 3,050 shares are unvested representing $ 101,687 of unrecognized restricted stock grant expense

which will be recognized in the quarter ending September 30, 2021.

On April 16, 2021, the Board appointed Mr.

At September 30, 2021, all of these shares were vested, and no unrecognized restricted stock grant expense remained.

On April 16, 2021, the Board

appointed Mr.

Posawatz as the Lead Independent Director.

With this appointment, the Company, upon recommendation of the Compensation Committee, granted Mr.

Posawatz 2,246 shares of restricted stock for this role which had a per share fair value of $ 33.34 on the date of grant and will vest quarterly through September 30, 2021.

During the quarter ended June 30, 2021, 1,021 of these shares vested generating an expense of $34,035.

At June 30, 2021, 1,225 shares are unvested representing $ 40,841 of unrecognized restricted stock grant expense which will be recognized in the quarter ending September 30, 2021.

On October 20, 2020, the Company granted each of our two non-employee directors annual restricted stock grants of 12,200 shares of our common stock and our then lead independent director an annual restricted stock grant of 17,100 shares of common stock, which vest quarterly in four (4) equal installments.

On the grant date, these shares had a per share fair value of $ 14.95 based on the closing trading price of our common stock, or $620,425.

During the three months ended March 31, 2021, upon the death of our lead independent director, 12,825 unvested shares of restricted stock were forfeited and returned to the Company, and 6,100 shares of restricted stock relating to the other two directors vested, generating an expense of $91,196.

During the three months ended June 30, 2021, 6,100 of these shares vested generating an expense of $91,196.

At June 30, 2021, there were 6,100 unvested shares of restricted stock representing $ 91,192 of unrecognized restricted stock grant expense which will be recognized through the quarter ending September 30, 2021.

On June 17, 2020, the

Board approved two restricted stock grants to Mr.

With this appointment, the Company, upon recommendation of the Compensation Committee,

Posawatz 2,246 shares of restricted stock for this role which had a per share fair value of $ 33.34 on the date of grant and

will vest quarterly through September 30, 2021.

During the nine months ended September 30, 2021, all 2,246 shares vested generating an

expense of $ 74,876 .

At September 30, 2021, all of these shares were vested, and no unrecognized restricted stock grant expense remained.

On October 20, 2020, the Company

granted each of our two non-employee directors annual restricted stock grants of 12,200 shares of our common stock and our then lead independent

director an annual restricted stock grant of 17,100 shares of common stock, which vest quarterly in four (4) equal installments.

grant date, these shares had a per share fair value of $ 14.95 based on the closing trading price of our common stock, or $ 620,425 .

the three months ended March 31, 2021, upon the death of our lead independent director, 12,825 unvested shares of restricted stock were

forfeited and returned to the Company.

During the nine months ended September 30, 2021, 18,300 shares of restricted stock relating to

the other two directors vested, generating an expense of $ 273,584 .

At September 30, 2021, all of these shares were vested, and no unrecognized

restricted stock grant expense remained.

On June 17, 2020, the Board

approved two restricted stock grants to Mr.

Wheatley under the 2011 Stock Incentive Plan.

The total number of shares granted

was determined based on an award of $150,000 divided by the per share quoted trading price on June 17, 2020.

On the grant date, the

shares had a per share fair value of $ 7.35 and 20,408 shares

were granted, half of which vest quarterly over four equal installments and half vest quarterly over 12 equal installments.

the six months ended June 30, 2021, 4,251 of

shares from this grant vested and 2,094 shares

from an October 1, 2019 grant vested generating a total expense of $ 43,750 .

At June 30, 2021, 9,093 shares for these 2 grants are unvested representing $ 62,500 of

unrecognized restricted stock grant expense which will be recognized through the quarter ending March 31, 2023.

The total number of shares granted was determined

based on an award of $150,000 divided by the per share quoted trading price on June 17, 2020.

On the grant date, the shares had a per

share fair value of $ 7.35 and 20,408 shares were granted, half of which vest quarterly over four equal installments and half vest quarterly

over 12 equal installments.

During the nine months ended September 30, 2021, 5,101 shares from this grant vested and 3,141 shares from

an October 1, 2019 grant vested generating a total expense of $ 56,250 .

At September 30, 2021, 7,196 shares for these 2 grants are unvested

representing $ 50,000 of unrecognized restricted stock grant expense which will be recognized through the quarter ending March 31, 2023.

STOCK OPTIONS AND WARRANTS

Stock Options

During the six months ended

June 30, 2021, there were no stock options granted.

During the six months ended

June 30, 2021 and 2020, the Company recorded non-cash stock option based compensation expense of $ 126,588 and $ 54,136 , respectively.

of June 30, 2021, there was $ 646,242 of unrecognized stock option-based compensation expense that will be recognized over the next 3.25

During the six months ended June 30, 2021, 5,953 stock options were exercised on a cashless basis for 2,380 shares of common stock at a weighted average exercise price of $ 14.38 .

The Company withheld shares to cover income and payroll taxes totaling $81,039, which was charged to additional paid in capital.

There were stock options outstanding

to purchase 333,980 shares of common stock at a weighted average exercise price of $ 11.09 at June 30, 2021.

During the six months ended

June 30, 2021, 1,875 stock options terminated.

During the six months ended

June 30, 2021, warrants to purchase 416,249

shares of the Company’s common stock were exercised generating $ 2,643,493 .

At June 30, 2021, there were warrants outstanding to purchase up to 549,335

shares of the Company’s common stock at a weighted average exercise price of $ 6.31 .

During the three months ended September 30, 2021 and 2020, the Company

recorded non-cash stock option based compensation expense of $ 49,136 and $ 27,068 , respectively.

During the nine months ended

September 30, 2021 and 2020, the Company recorded non-cash stock option based compensation expense of $ 175,724 and $ 81,204 , respectively.

As of September 30, 2021, there was $ 435,461 of unrecognized stock option-based compensation expense that will be recognized over the

next 3 years.

During the three months

ended September 30, 2021, there were no

stock options granted.

There were 89,800

stock options exercised on a cashless basis for 33,142

shares of common stock at a weighted average exercise price of $ 13.27 .

The Company withheld shares to cover income and payroll taxes totaling $ 543,937 ,

which was charged to additional paid in capital.

There were 839

stock options exercised on a cash basis at an exercise price of $12.76 for a total purchase price of $ 10,706 .

During the nine months

ended September 30, 2021, there were no

stock options granted.

There were 95,753

stock options exercised on a cashless basis for 35,522

shares of common stock at a weighted average exercise price of $ 13.34 .

The Company withheld shares to cover income and payroll taxes totaling $ 624,976 ,

which was charged to additional paid in capital.

There were 839

stock options exercised on a cash basis at an exercise price of $12.76 for a total purchase price of $ 10,706 .

There were stock options

outstanding to purchase 222,383

shares of common stock at a weighted average exercise price of $ 9.30

at September 30, 2021.

During the nine months ended September 30, 2021, 22,833

stock options were forfeited.

During the nine months ended

September 30, 2021, warrants to purchase 422,761 shares of the Company’s common stock were exercised generating $ 2,684,520 .

30, 2021, there were warrants outstanding to purchase up to 542,823 shares of the Company’s common stock at a weighted average exercise

price of $ 6.34 .

For each of the identified

1 unchanged sentence

Schedule of revenues

For the Nine Months Ended

September 30,

Product sales

2 unchanged sentences

Shipping and handling

and allowances

At June 30, 2021 and December

31, 2020, deferred revenue was $ 155,747 and $ 107,489 , respectively.

The June 30, 2021 balance consists of deferred maintenance fees of

$ 152,447 pertaining to services to be provided through the second quarter of 2027 and a $ 3,300 prepayment from a customer.

Discounts and allowances

Total revenues

At September 30, 2021 and

December 31, 2020, deferred revenue was $ 159,596 and $ 107,489 , respectively.

The September 30, 2021 balance consists of deferred maintenance

fees of $ 156,296 pertaining to services to be provided through the second quarter of 2027 and a $ 3,300 prepayment from a customer.

SUBSEQUENT EVENTS

Subsequent to June 30, 2021,

warrants to purchase 504 shares of common stock were exercised generating proceeds of $3,175.

In August 2021, stock options

to purchase 89,800 shares of common stock were exercised on a cashless basis at a weighted average exercise price of $13.27 resulting

in the issuance of 33,142 shares of common stock, after reducing the shares to cover the cost of the shares and taxes.

The Company withheld

shares to cover income and payroll taxes totaling $543,937, which was charged to additional paid in capital.

On July 19, 2021, we filed

a Certificate of Amendment to the Articles of Incorporation to increase our number of authorized common stock from 9,800,000 to 350,000,000.

The stockholders of the Company approved the amendment at the Company’s annual stockholders meeting on July 14, 2021.

In October 2021, an option

was granted to an employee to purchase up to 20,000 shares of the Company’s common stock.

This option will vest over 4 years and

has an exercise price of $26.80 per share.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements