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ACCOUNTS RECEIVABLE
6 Months Ended12 Months Ended
Jun. 30, 2011
Dec. 31, 2010
ACCOUNTS RECEIVABLE
5.  ACCOUNTS RECEIVABLE

In July 2010, the Company entered into a $1.0 million accounts receivable factoring facility with a purchaser to sell its qualified accounts receivable in exchange for advance of funds equivalent to 80% of the value of receivables.  The facility may be terminated by either party at any time and there are no obligations to sell or purchase any quantities of the Company’s accounts receivable by any party.  While the facility calls for the sale, assignment, transfer and conveyance of all rights, title and interests in the selected accounts receivable, the purchaser may put and charge-back any receivable not paid to the purchaser within 60 days of purchase or for which there is a dispute.  As collateral for the repayment of advances for receivables sold, the purchaser has a priority security interest in substantially all present and future assets and rights of the Company including accounts receivable, inventory, property, equipment and intangible assets.  The purchaser has required that the Company notify all customers that all payments must be made to a lock-box controlled by the purchaser.  The purchaser provides a rebate ranging from 14.60% to 19.10% of the value of the gross receivables sold based upon the timing of collection of the receivable.  The purchaser is also entitled to charge various fees, expenses and interest.

For the six months ended June 30, 2011, the Company had sold $50,492 of its accounts receivable and received advances of $40,393.  For the six months ended June 30, 2011, the Company had received rebates of $22,451 for prompt payment of receivables sold and had been charged fees, expenses and interest aggregating $2,998 by the purchaser.  As of June 30, 2011 and December 31, 2010, $0 and $45,939, respectively, of accounts receivable had not been paid and were subject to charge-back by the purchaser.  A summary of accounts receivable as of June 30, 2011 and December 31, 2010, is as follows:
 
   
June 30,
    
December 31,
  
   
2011
    
2010
  
             
Accounts receivable, gross
   $ 56,725     $ 128,715  
Accounts sold with recourse
     -       (45,939 )
Accounts not sold
     56,725       82,776  
Allowance for doubtful accounts
     (5,000 )     (1,276 )
    $ 51,725     $ 81,500  
 
The provision for bad debts was $3,724 for the six months ended June 30, 2011.  During the six months ended June 30, 2010, the Company adjusted its  allowance for doubtful accounts by $26,724 as such reserves were no longer deemed necessary.
4.  ACCOUNTS RECEIVABLE

In July 2010, the Company entered into a $1.0 million accounts receivable factoring facility with a purchaser to sell its qualified accounts receivable in exchange for advance of funds equivalent to 80% of the value of receivables.  The facility may be terminated by either party at any time, and there are no obligations to sell or purchase any quantities of the Company’s accounts receivable by any party.  While the facility calls for the sale, assignment, transfer and conveyance of all rights, title and interests in the selected accounts receivable, the purchaser may put and charge-back any receivable not paid to the purchaser within 60 days of purchase or for which there is a dispute.  As collateral for the repayment of advances for receivables sold, the purchaser has a priority security interest in substantially all present and future assets and rights of the Company including accounts receivable, inventory, property, equipment and intangible assets.  The purchaser has required that the Company notify all customers that all payments must be made to a lock-box controlled by the purchaser.  The purchaser provides a rebate ranging from 14.60% to 19.10% of the value of the gross receivables sold based upon the timing of collection of the receivable.  The purchaser is also entitled to charge various fees, expenses and interest.

For the period ended December 31, 2010, the Company had sold $71,200 of its accounts receivable and received advances of $56,960.  For the period ended December 31, 2010, the Company had received rebates of $2,480 for prompt payment of receivables sold and been charged fees, expenses and interest aggregating $669 by the purchaser. As of December 31, 2010, $45,939 of accounts receivables had not been paid and was subject to charge-back by the purchaser.  A summary of accounts receivable as of December 31, 2010 and 2009 is as follows:

   
2010
    
2009
  
             
Accounts receivable, gross
   $ 128,715     $ 90,187  
Accounts sold with recourse
     (45,939 )     -  
Accounts not sold
     82,776       90,187  
Allowance for doubtful accounts
     (1,276 )     (28,224 )
    $ 81,500     $ 61,963  

The allowance for doubtful accounts was $1,276 and $28,224 as of December 31, 2010 and 2009, respectively.  A summary of changes in this reserve account are as follows:

   
Balance,
    
Additions
          
Balance,
  
   
Beginning of
    
Charged to
    
Charged to
          
End of
  
   
Year
    
Cost or Expense
    
Other Accounts
    
Deductions
    
Year
  
Accounts Receivable -
                              
Allowance for doubtful accounts
                              
2009
   $ 28,224     $ -     $ -     $ -     $ 28,224  
2010
     28,224       -       (224 )     (26,724 )     1,276