Note 8 - Commitments and Contingencies

3 Months Ended

Mar. 31, 2021

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

8. COMMITMENTS AND CONTINGENCIES

Contingencies

In the normal course of operations, the Company

may

have disagreements or disputes with customers, employees or vendors. Such potential disputes are seen by management as a normal part of business. As of

March 31, 2021,

except as disclosed, management believes any liability that

may

ultimately result from the resolution of these matters will

not

have a material adverse effect on the Company's condensed consolidated financial position, operating results or cash flows.

Financial Covenants

On

July 13, 2020,

the Company, entered into a Manufacturing and Supply Amending Agreement

#2

with CBR Systems, Inc. (“CBR”) with an effective date of

July 13, 2020 (

the “Amendment”). The Amendment amends the Manufacturing and Supply Agreement entered into on

May 15, 2017

and Amendment

#1

dated

March 16, 2020

by the Company and CBR. The Amendment, among other things, revised the amount of certain products to be purchased, pricing of those products and removal of the safety stock requirement. In addition, the Amendment updated the financial requirement to exclude convertible debt from the definition of short-term debt under events or conditions that constitute a default. The Amendment states that the Company's cash balance and short-term investments net of non-convertible debt and borrowed funds that are payable within

one

year must be greater than

$1,000,000

at any month end. The Company was in compliance with this agreement as of

March 31, 2021.

Warranty

The Company offers a warranty on all of its non-disposable products of

one

to

two

years. The Company warrants disposable products through their expiration date. The Company periodically assesses the adequacy of its recorded warranty liabilities and adjusts the amounts as necessary.

The warranty liability is included in other current liabilities in the unaudited condensed consolidated balance sheets. The change in the warranty liability for the

three

months ended

March 31, 2021

is summarized in the following table:

Balance at December 31, 2020	$	154,000
Warranties issued during the period		6,000
Settlements made during the period		(66,000	)
Changes in liability for pre-existing warranties during the period		12,000
Balance at March 31, 2021	$	106,000