NOTE 9 – COMMITMENT AND CONTINGENCIES

Legal Proceedings

From time to time, the Company may be involved in general commercial disputes arising in the ordinary course of its business. The Company is not currently involved in legal proceedings that could reasonably be expected to have material adverse effect on its business, prospects, financial condition or results of operations.

Sales Backlog

As of September 30, 2017, the Company had a backlog of $1,546,777. The amount of backlog represents revenue that the Company anticipates recognizing in the future, as evidenced by purchase orders and other purchase commitments received from customers, but on which work has not yet been initiated or with respect to which work is currently in progress. Product delivery to fulfill a customer’s purchase order depends on the customer’s requested ship date, which may require the Company to hold on to finished goods for weeks or months. A customer could have delays in preparing the site where its product will be installed, causing the Company to delay product delivery. Finished product tied to a purchase order, but which has not been delivered to the customer is counted as part of the Company’s backlog.

The Company’s backlog consists of 62% in purchases of its DC power systems by telecommunications customers, of which 45% is from the Company’s single largest telecommunications customer and 17% from one of two Tier 1 telecommunications companies that granted the Company approved supplier status during the first quarter of 2017. In addition, the Company’s backlog includes 28% in purchases from military contractors, and 10% from other markets. The Company believes the majority of its backlog will be shipped within the next nine months. However, there can be no assurance that the Company will be successful in fulfilling such orders and commitments in a timely manner or that the Company will ultimately recognize as revenue the amounts reflected in its backlog.