Document and Entity Information
Document and Entity Information - USD ($) | 9 Months Ended | ||
Dec. 31, 2017 | Sep. 30, 2017 | Jan. 31, 2017 | |
Document and Entity Information: | |||
Entity Registrant Name | Advansource Biomaterials Corp | ||
Document Type | 10-Q | ||
Document Period End Date | Dec. 31, 2017 | ||
Amendment Flag | false | ||
Entity Central Index Key | 1,011,060 | ||
Current Fiscal Year End Date | --03-31 | ||
Entity Common Stock, Shares Outstanding | 21,490,621 | ||
Entity Public Float | $ 1,711,466 | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Well-known Seasoned Issuer | No | ||
Document Fiscal Year Focus | 2,018 | ||
Document Fiscal Period Focus | Q3 | ||
Trading Symbol | asnb |
Condensed Balance Sheets
Condensed Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2017 | Mar. 31, 2017 | ||
Current assets | ||||
Cash | $ 57 | $ 27 | ||
Accounts receivable-trade, net | 115 | [1] | 94 | [2] |
Accounts receivable-other | 229 | 139 | ||
Inventories, net | 304 | 189 | ||
Prepaid expenses and other current assets | 4 | 5 | ||
Total current assets | 709 | 454 | ||
Property, plant and equipment, net | 1,837 | 1,865 | ||
Deferred financing costs, net | 61 | 66 | ||
Other assets | 47 | 47 | ||
Total assets | 2,654 | 2,432 | ||
Current liabilities | ||||
Accounts payable | 474 | 450 | ||
Accrued expenses | 276 | 255 | ||
Customer advance | 333 | 7 | ||
Notes payable | 145 | 150 | ||
Deferred revenue | 25 | 13 | ||
Total current liabilities | 1,253 | 875 | ||
Long-term liabilities | ||||
Long-term financing obligation | 1,986 | 1,986 | ||
Accrued interest on financing obligation | 176 | 172 | ||
Total long-term liabilities | 2,162 | 2,158 | ||
Total liabilities | 3,415 | 3,033 | ||
Commitments and contingencies | ||||
Stockholders' equity | ||||
Preferred stock | [3] | [4] | ||
Common stock | 21 | [5] | 21 | [6] |
Additional paid-in capital | 38,404 | 38,104 | ||
Accumulated deficit | (39,156) | (38,696) | ||
Treasury stock | (30) | [7] | (30) | [8] |
Total stockholders' equity | (761) | (601) | ||
Total liabilities and stockholders' equity | $ 2,654 | $ 2,432 | ||
[1] | Net of allowance of $5 as of 12/31/2017. | |||
[2] | Net of allowance of $5 as 3/31/2017. | |||
[3] | $.001 par value, 5,000,000 shares authorized; no shares issued and outstanding as of 12/31/2017. | |||
[4] | $.001 par value, 5,000,000 shares authorized; no shares issued and outstanding as of 3/31/2017. | |||
[5] | $.001 par value, 50,000,000 shares authorized; 21,567,313 shares issued and 21,490,621 shares outstanding as of 12/31/2017. | |||
[6] | $.001 par value, 50,000,000 shares authorized; 21,567,313 shares issued and 21,490,621 shares outstanding as of 3/31/2017. | |||
[7] | 76,692 shares at cost at 12/31/2017. | |||
[8] | 76,692 shares at cost at 3/31/2017. |
Condensed Statements of Operati
Condensed Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | |
Revenues | ||||
Product sales | $ 397 | $ 261 | $ 1,343 | $ 1,191 |
License, royalty and development fees | 213 | 206 | 645 | 601 |
Total revenues | 610 | 467 | 1,988 | 1,792 |
Cost of sales | 178 | 174 | 603 | 601 |
Gross profit | 432 | 293 | 1,385 | 1,191 |
Operating expenses | ||||
Research, development and regulatory | 87 | 88 | 284 | 246 |
Selling, general and administrative | 295 | 286 | 1,272 | 912 |
Total operating expenses | 382 | 374 | 1,556 | 1,158 |
Income (loss) from operations | 50 | (81) | (171) | 33 |
Interest expense | 94 | 91 | 289 | 271 |
Net income (loss) | $ (44) | $ (172) | $ (460) | $ (238) |
Net income (loss) per common share, basic | $ 0 | $ (0.01) | $ (0.02) | $ (0.01) |
Net income (loss) per common share, diluted | $ 0 | $ (0.01) | $ (0.02) | $ (0.01) |
Shares used in computing net income (loss) per common share, basic | 21,491 | 21,491 | 21,491 | 21,491 |
Shares used in computing net income (loss) per common share, diluted | 21,491 | 21,491 | 21,491 | 22,631 |
Condensed Statement of Cash Flo
Condensed Statement of Cash Flows - USD ($) | 9 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Cash flows from operating activities | ||
Net income (loss) | $ (460,000) | $ (238,000) |
Adjustments to reconcile net income (loss) to net cash flows used in operating activities: | ||
Depreciation | 38,000 | 43,000 |
Amoritization of deferred financing costs | 5,000 | 6,000 |
Stock-based compensation | 300,000 | 4,000 |
Changes in assets and liabilities: | ||
(Increase) decrease in accounts receivable-trade | (21,000) | (80,000) |
(Increase) decrease in accounts receivable-other | (90,000) | 27,000 |
(Increase) decrease in inventories | (115,000) | 40,000 |
(Increase) decrease in prepaid expenses and other current assets | 1,000 | 1,000 |
Increase (decrease) in accounts payable | 24,000 | 60,000 |
Increase (decrease) in accrued expenses | 25,000 | 9,000 |
Increase (decrease) in customer advance | 326,000 | (29,000) |
Increase (decrease) in deferred revenue | 12,000 | 12,000 |
Net cash flows provided by (used in) operating activities | 45,000 | (145,000) |
Cash flows from investing activities | ||
Purchase of equipment | (10,000) | |
Net cash flows provided by (used in) investing activities | (10,000) | |
Cash flows from financing activities | ||
Proceeds from issuance of promissory note | 150,000 | |
Repayment of promissory note | (5,000) | |
Repayment of capital lease obligation | (1,000) | |
Net cash flows provided by (used in) financing activities | (5,000) | 149,000 |
Net change in cash | 30,000 | 4,000 |
Cash at beginning of period | 27,000 | 80,000 |
Cash at end of period | 57,000 | 84,000 |
Supplemental disclosures of cash flow information | ||
Interest paid | $ 279,000 | $ 243,000 |
Description of Business
Description of Business | 9 Months Ended |
Dec. 31, 2017 | |
Notes | |
Description of Business | 1. Description of Business AdvanSource Biomaterials Corporation develops advanced polymer materials which provide critical characteristics in the design and development of medical devices. Our biomaterials are used in devices that are designed for treating a broad range of anatomical sites and disease states. Our business model leverages our proprietary materials science technology and manufacturing expertise in order to expand product sales and royalty and license fee income. Our technology, notably products such as ChronoFlex®, HydroMed , and HydroThane , which have been developed to overcome a wide range of design and functional challenges, such as the need for dimensional stability, ease of manufacture and demanding physical properties to overcoming environmental stress cracking and providing heightened lubricity for ease of insertion. Our new product extensions customize proprietary polymers for specific customer applications in a wide range of device categories. Our corporate, development and manufacturing operations are located in our leased facility in Wilmington, Massachusetts. |
Interim Financial Statements an
Interim Financial Statements and Basis of Presentation | 9 Months Ended |
Dec. 31, 2017 | |
Notes | |
Interim Financial Statements and Basis of Presentation | 2. Interim Financial Statements and Basis of Presentation The accompanying unaudited condensed financial statements have been prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP) for interim financial information with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, these unaudited condensed financial statements do not include all of the information and disclosures required by U.S. GAAP for complete financial statements. In the opinion of management, the accompanying unaudited condensed financial statements include all adjustments (consisting only of normal recurring adjustments), which we consider necessary, for a fair presentation of those financial statements. The results of operations and cash flows for the nine months ended December 31, 2017 may not necessarily be indicative of results that may be expected for any succeeding quarter or for the entire fiscal year. The information contained in this quarterly report on Form 10-Q should be read in conjunction with our audited financial statements included in our annual report on Form 10-K, as amended, as of and for the year ended March 31, 2017 as filed with the Securities and Exchange Commission (the SEC). Additionally, he accompanying unaudited financial statements have been prepared on a going concern basis which implies we will continue to meet our obligations for the next twelve months as of the date these financial statements are issued. The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. For the nine months ended December 31, 2017, we incurred a net loss of approximately $460,000, had positive cash flows from operations of $45,000 and had a working capital deficit of $544,000. Management believes that certain arrangements entered into during the nine months ended December 31, 2017 with three of our significant customers which provide for long-term commitments for continued product purchase; and an advance from one customer for future product purchases should alleviate any substantial doubt as to our ability to meet our obligations for the next twelve months as of the date these financial statements are issued. However, management cannot provide any assurances that we will be successful in accomplishing any of our plans. Management also cannot provide any assurance that unforeseen circumstances that could occur at any time within the next twelve months or thereafter will not increase the need for us to raise additional capital on an immediate basis. However, based upon an evaluation, management believes that we are a going concern. Our significant accounting policies are described in Note 2 to the financial statements included in Item 8 of our annual report on Form 10-K as of March 31, 2017. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and judgments, which are evaluated on an ongoing basis, and that affect the amounts reported in our unaudited condensed financial statements and accompanying notes. Management bases its estimates on historical experience and on various other assumptions that it believes are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the amounts of revenues and expenses that are not readily apparent from other sources. Actual results could differ from those estimates and judgments. In particular, significant estimates and judgments include those related to revenue recognition, allowance for doubtful accounts, inventory reserves, useful lives and valuation of property and equipment. |
New Accounting Pronouncement
New Accounting Pronouncement | 9 Months Ended |
Dec. 31, 2017 | |
Notes | |
New Accounting Pronouncement | 3. New Accounting Pronouncement We have evaluated all issued but not yet effective accounting pronouncements and determined that, other than the following, they are either immaterial or not relevant to us. In February 2016, the Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU) ASU 2016 - 02 Leases intended to improve financial reporting about leasing transactions. The ASU affects all companies and other organizations that lease assets such as real estate, office equipment and manufacturing equipment. The ASU will require organizations that lease assets - referred to as lessees - to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. Under the new guidance, a lessee will be required to recognize assets and liabilities for leases with lease terms of more than 12 months. Consistent with current Generally Accepted Accounting Principles (GAAP), the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease. However, unlike current GAAP - which requires only capital leases to be recognized on the balance sheet - the new ASU will require both types of leases to be recognized on the balance sheet. The ASU also will require disclosures to help investors and other financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. These disclosures include qualitative and quantitative requirements, providing additional information about the amounts recorded in the financial statements. The accounting by organizations that own the assets leased by the lessee - also known as lessor accounting - will remain largely unchanged from current GAAP. However, the ASU contains some targeted improvements that are intended to align, where necessary, lessor accounting with the lessee accounting model and with the updated revenue recognition guidance issued in 2014. The ASU on leases will take effect for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. For all other organizations, the ASU on leases will take effect for fiscal years beginning after December 15, 2019, and for interim periods within fiscal years beginning after December 15, 2020. It is not anticipated that this updated guidance will have a material impact on our results of operations, cash flows or financial condition. In March 2016, the FASB issued ASU 2016 - 09 Improvements to Employee Share-Based Payment Accounting which is intended to improve the accounting for employee share-based payments. The ASU affects all organizations that issue share-based payment awards to their employees. The ASU, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, simplifies several aspects of the accounting for share-based payment award transactions, including; the income tax consequences, classification of awards as either equity or liabilities, and the classification on the statement of cash flows. The ASU simplifies two areas specific to private companies, with regards to the expected term and intrinsic value measurements. The ASU simplifies the following areas to private and public companies; (a) tax benefits and tax deficiencies with regards to the differences between book and tax deductions, (b) changes in the excess tax benefits classification in the statement of cash flows, (c) make an entity wide accounting policy election for accrual of vested awards verses individual awards, (d) changes in the amount qualifying as an equity award classification subject to statutory tax withholdings, (e) clarification in the classification of shares withheld for statutory tax withholdings on the statement of cash flows. For public companies, the amendments in this ASU are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. For private companies, the amendments are effective for annual periods beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2018. Early adoption is permitted for any organization in any interim or annual period. It is not anticipated that this guidance will have a material impact on our results of operations, cash flows or financial condition. In January 2016, the FASB issued ASU 2016 - 01 Recognition and Measurement of Financial Assets and Financial Liabilities, intended to improve the recognition and measurement of financial instruments. The ASU affects public and private companies, not-for-profit organizations, and employee benefit plans that hold financial assets or owe financial liabilities. The new guidance makes targeted improvements to existing GAAP by: Requiring equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income; Requiring public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; Requiring separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (that is, securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements; Eliminating the requirement to disclose the fair value of financial instruments measured at amortized cost for organizations that are not public business entities; Eliminating the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet; and Requiring a reporting organization to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk (also referred to as own credit) when the organization has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. The ASU on recognition and measurement will take effect for public companies for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. For private companies, not-for-profit organizations, and employee benefit plans, the standard becomes effective for fiscal years beginning after December 15, 2018, and for interim periods within fiscal years beginning after December 15, 2019. The ASU permits early adoption of the own credit provision (referenced above). Additionally, it permits early adoption of the provision that exempts private companies and not-for-profit organizations from having to disclose fair value information about financial instruments measured at amortized cost. It is not anticipated that this guidance will have a material impact on our results of operations, cash flows or financial condition. In April 2016, the FASB issued ASU 2016 10, Revenue from Contract with Customers (Topic 606): identifying Performance Obligations and Licensing. The amendments in this Update do not change the core principle of the guidance in Topic 606. Rather, the amendments in this Update clarify the following two aspects of Topic 606: identifying performance obligations and the licensing implementation guidance, while retaining the related principles for those areas. Topic 606 includes implementation guidance on (a) contracts with customers to transfer goods and services in exchange for consideration and (b) determining whether an entitys promise to grant a license provides a customer with either a right to use the entitys intellectual property (which is satisfied at a point in time) or a right to access the entitys intellectual property (which is satisfied over time). The amendments in this Update are intended to render more detailed implementation guidance with the expectation to reduce the degree of judgement necessary to comply with Topic 606. The amendments in this Update affect the guidance in ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which is not yet effective. The effective date and transition requirements for the amendments in this Update are the same as the effective date and transition requirements in Topic 606 (and any other Topic amended by Update 2014-09). ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, defers the effective date of Update 2014-09 by one year. It is not anticipated that this updated guidance will have a material impact on our results of operations, cash flows or financial condition. In November 2016, the FASB issued ASU 2016-20, an amendment to ASU 2014-09, Revenue from Contracts with Customers (Topic 606). This ASU addressed several areas related to contracts with customers. This topic is not yet effective and will become effective with Topic 606. We are currently evaluating the impact this topic will have on our financial statements. In January 2017, the FASB issued ASU 2017-04, an amendment to Topic 350, Intangibles Goodwill and Other. An entity no longer will determine goodwill impairment by calculating the implied fair value of goodwill by assigning the fair value of a reporting unit to all of its assets and liabilities as if that reporting unit had been acquired in a business combination. Because these amendments eliminate Step 3 2 from the goodwill impairment test, they should reduce the cost and complexity of evaluating goodwill for impairment. An entity should apply the amendments in this Update on a prospective basis. The amendments in this Update are effective for Goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company is currently evaluating the impact this guidance will have on its financial statements. |
Customer Advances
Customer Advances | 9 Months Ended |
Dec. 31, 2017 | |
Notes | |
Customer Advances | 4. Customer Advances In April 2017, we received approximately $338,000 from one customer as an advance against future product sales. During the three months and nine months ended December 31, 2017, we shipped and recognized revenue on the sale of product to this customer in the approximate amount of $97,000 and $248,000, respectively. As of December 31, 2017, the outstanding balance available for future product purchases by this customer is $90,000 and included in Customer Advances in our balance sheet. During the three months ended December 31, 2017, we received $330,000 from one customer which cash was retained by us in order to purchase certain raw material inventory on their behalf. This customer previously remitted $330,000 to us during the three month period ended June 30, 2017. During the nine months ended December 31, 2017, we received approximately $$660,000 and $145,000 from two customers which cash was retained by us in order to purchase certain raw material inventory on their behalf. During the three months ended December 31, 2017, we purchased raw materials on behalf of these two customers resulting in an available balance of approximately $243,000 as of December 31, 2017, and is included in Customer Advances in our balance sheet. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Dec. 31, 2017 | |
Notes | |
Related Party Transactions | 5. Related Party Transactions On April 26, 2016, we entered into Promissory Notes in the aggregate principal amount of $50,000 (the Notes) with Khristine Carroll, our Executive VP of Commercial Operations and an affiliate of Michael Adams, our Chief Executive Officer (the Affiliate) (collectively, the Investors). The Notes were initially due on May 25, 2016 and are currently being extended for consecutive monthly periods as mutually agreed upon by the parties and provided for by the terms of the Notes. The Notes bear interest at the rate of 10% per annum and all principal and accrued interest, if any, is due on demand. During the three months ended September 30, 2017, we repaid $5,000 of principal to Ms. Carroll. As of December 31, 2017 and March 31, 2017, the principal balance outstanding was $45,000 and $50,000, respectively. During the three months ended December 31, 2017 and 2016, we recorded interest expense of approximately $1,000 and $1,000, respectively, on the Notes. During the nine months ended December 31, 2017 and 2016, we recorded interest expense of approximately $3,000 and $3,000, respectively, on the Notes. As of December 31, 2017 and March 31, 2017 our accrued interest outstanding was $0 and $0, respectively. On December 5, 2016, we entered into an additional Promissory Note in the principal amount of $100,000 (the Second Note) with the Affiliate. The Second Note bears interest at the rate of 12% per annum, provides for a $3,000 commitment fee, which fee was paid in February 2017, and all principal and accrued interest, if any, is due on demand, but not later than June 5, 2017. As of December 31, 2017 and March 31, 2017, the principal balance outstanding was $100,000 and $100,000, respectively. During the three months ended December 31, 2017 and 2016 we recorded interest expense of $3,000 and $0, respectively, on the Second Note. During the nine months ended December 31, 2017 and 2016 we recorded interest expense of $9,000 and $0, respectively, on the Second Note. As of December 31, 2017 and March 31, 2017 our accrued interest outstanding was $0 and $0, respectively. On April 3, 2017, Michael Adams, our CEO and President, advanced and committed to us $20,000 pursuant to a promissory note, as amended (the Advance Note). The Advance Note provides the availability of up to $20,000 at the sole discretion of Mr. Adams through April 2, 2018, bears interest at the rate of 10% per annum, and provides for a $2,000 commitment fee and guaranteed interest of $2,000 payable upon execution of the Advance Note. On April 19, 2017 we paid the commitment fee and guaranteed interest of $2,000 and $2,000, respectively. Additionally, on April 19, 2017 we paid down the $20,000 advance. As of December 31, 2017 the principal balance outstanding on the Advance Note was $0. |
Equity-Based Compensation
Equity-Based Compensation | 9 Months Ended |
Dec. 31, 2017 | |
Notes | |
Equity-Based Compensation | 6. Equity-Based Compensation In October 2003, our shareholders approved the 2003 Stock Option Plan (the 2003 Plan), which authorized the issuance of 3,000,000 shares of common stock. Under the terms of the 2003 Plan, the exercise price of incentive stock options issued under the 2003 Plan must be equal to the fair market value of the common stock at the date of grant. In the event that non-qualified options are granted under the 2003 Plan, the exercise price may be less than the fair market value of the common stock at the time of the grant (but not less than par value). Options granted expire ten years from the grant date. As of September 4, 2013, all shares pursuant to the 2003 Plan had been granted. Activity under the 2003 Plan for the nine months ended December 31, 2017 is as follows: Options Outstanding Weighted-Average Exercise Price per Share Weighted-Average Remaining Contractual Term in Years Aggregate Intrinsic Value (in thousands) Options outstanding as of April 1, 2017 2,170,750 $ 0.36 $ - Granted - Exercised - Cancelled or forfeited (351,000) $ 1.15 - $ - Options outstanding as of December 31, 2017 (unaudited) 1,819,750 $ 0.21 3.24 $ - Options exercisable as of December 31, 2017 (unaudited) 1,819,750 $ 0.21 3.24 $ - Options vested or expected to vest as of December 31, 2017 (unaudited) 1,819,750 $ 0.21 3.24 $ - Our unaudited condensed statements of operations include equity-based compensation expense related to our 2003 Plan for employee and non-employee director awards in the amount of $0 and $0 for the three months ended December 31, 2017 and 2016, respectively, and $0 and $4,000 for the nine months ended December 31, 2017 and 2016, respectively. There was no income tax benefit related to these costs. As of December 31, 2017, the total amount of unrecognized equity-based compensation expense was $0. On August 14, 2017, our board of directors approved and adopted the 2017 Non-Qualified Equity Incentive Plan (the 2017 Plan), which authorized the grant of non-qualified stock options exercisable into a maximum of 7,000,000 shares of our common stock. Under the terms of the 2017 Plan, the exercise price of stock options issued under the 2017 Plan must be equal to the fair market value of the common stock at the date of grant. Options granted expire ten years from the grant date. On August 17, 2017, the board of directors approved the grant of stock options to certain directors, employees and a consultant exercisable into 5,600,000 shares of our common stock (the 2017 Plan Options). The 2017 Plan Options were immediately vested on the date of grant and exercisable at $0.06 per share, the fair market value on the date of grant. In determining the fair value of the 2017 Stock Options, we utilized the Black-Scholes pricing model utilizing the following assumptions: i) stock option exercise price of $0.06; ii) grant date price of our common stock of $0.06; iii) expected term of option of 10 years; iv) expected volatility of our common stock of 100%; v) expected dividend rate of 0.0%; and vi) risk-free interest rate of 0.0%. Accordingly, we recorded stock-based compensation in selling, general and administrative expenses of approximately $300,000 during the three ended September 30, 2017 and nine months ended December 31, 2017. |
Inventories
Inventories | 9 Months Ended |
Dec. 31, 2017 | |
Notes | |
Inventories | 7. Inventories Inventories, net, are stated at the lower of cost (first in, first out) or market and consist of the following: (in thousands) December 31, 2017 (unaudited) March 31, 2017 Raw materials $ 246 $ 92 Work in progress 39 59 Finished goods 161 180 446 331 Less: allowance for obsolete and excess inventory (142) (142) Total inventories, net $ 304 $ 189 |
Property, Plant and Equipment
Property, Plant and Equipment | 9 Months Ended |
Dec. 31, 2017 | |
Notes | |
Property, Plant and Equipment | 8. Property, Plant and Equipment Property, plant and equipment consists of the following: (in thousands) December 31, 2017 (unaudited) March 31, 2017 Land $ 500 $ 500 Building 2,705 2,705 Machinery, equipment and tooling 1,237 1,214 Furniture, fixtures and office equipment 285 285 Office equipment under capital lease - 13 4,727 4,717 Less: accumulated depreciation (2,890) (2,852) $ 1,837 $ 1,865 For the three months ended December 31, 2017 and 2016, depreciation expense was $13,000 and $13,000, respectively. For the nine months ended December 31, 2017 and 2016, depreciation expense was $38,000 and $43,000, respectively. |
Loss Per Share
Loss Per Share | 9 Months Ended |
Dec. 31, 2017 | |
Notes | |
Loss Per Share | 9. Income Per Share Basic income per common share is computed by dividing net income by the weighted-average number of common shares outstanding during the period. Diluted income per common share are based upon the weighted-average common shares outstanding during the period plus additional weighted-average common equivalent shares outstanding during the period. Common equivalent shares result from the assumed exercise of outstanding stock options and warrants, the proceeds of which are then assumed to have been used to repurchase outstanding common stock using the treasury stock method. In addition, the numerator is adjusted for any changes in income that would result from the assumed conversion of potential shares. Potentially dilutive shares, which were excluded from the diluted income per share calculations because the effect would be antidilutive or the options exercise prices were greater than the average market price of the common shares, were 8,600,250 shares and 3,001,250 shares for the three and nine months ended December 31, 2017 and 2016, respectively. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Dec. 31, 2017 | |
Notes | |
Stockholders' Equity | 10. Stockholders Deficit Common Stock Options and Warrants On July 22, 2015, we engaged the services of a financial and strategic advisor whose services include, but are not limited to, financial advice, strategic advice and investment banking services. In connection with this engagement, we agreed to compensate the investment bankers approximately $4,000 per quarter for a one year period and we issued them a warrant to purchase 830,500 shares of our common stock at an exercise price of $0.0301 per share, the approximate fair value of our common stock on the date of the engagement. The warrant is exercisable at any time until July 21, 2025. The warrant was valued at approximately $28,000 using the Black-Scholes model. There were no exercises of options or warrants by employees or consultants during the three and nine months ended December 31, 2017 and 2016, respectively. |
Income Taxes
Income Taxes | 9 Months Ended |
Dec. 31, 2017 | |
Notes | |
Income Taxes | 11. Income Taxes The provision for income taxes includes federal, state, local and foreign taxes. Income taxes are accounted for under the liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences of temporary differences between the financial statement carrying amounts and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which the temporary differences are expected to be recovered or settled. We evaluate the realizability of our deferred tax assets and establishes a valuation allowance when it is more likely than not that all or a portion of deferred tax assets will not be realized. A valuation allowance has been recorded to offset all deferred tax assets due to uncertainty of realizing the tax benefits of the underlying operating loss and tax credit carry forwards over their carry forward periods. We have no significant deferred tax liabilities as of December 31, 2017 and March 31, 2017. We account for uncertain tax positions using a more-likely-than-not threshold for recognizing and resolving uncertain tax positions. The evaluation of uncertain tax positions is based on factors including, but not limited to, changes in tax law, the measurement of tax positions taken or expected to be taken in tax returns, the effective settlement of matters subject to audit, new audit activity and changes in facts or circumstances related to a tax position. We evaluate this tax position on a quarterly basis. We also accrue for potential interest and penalties, if applicable, related to unrecognized tax benefits in income tax expense. As of December 31, 2017 and March 31, 2017, we had no material unrecognized tax benefits and no adjustments to liabilities or operations were required. |
Notes Payable
Notes Payable | 9 Months Ended |
Dec. 31, 2017 | |
Notes | |
Notes Payable | 12. Notes Payable On April 26, 2016, we entered into Promissory Notes in the aggregate principal amount of $50,000 (the Notes) with Khristine Carroll, our Executive VP of Commercial Operations and an affiliate of Michael Adams, our Chief Executive Officer (the Affiliate) (collectively, the Investors). The Notes were initially due on May 25, 2016 and are currently being extended for consecutive monthly periods as mutually agreed upon by the parties and provided for by the terms of the Notes. The Notes bear interest at the rate of 10% per annum and all principal and accrued interest, if any, is due on demand. During the three months ended September 30, 2017, we repaid $5,000 of principal to Ms. Carroll. As of December 31, 2017 and March 31, 2017, the principal balance outstanding was $45,000 and $50,000, respectively. During the three months ended December 31, 2017 and 2016, we recorded interest expense of approximately $1,000 and $1,000, respectively, on the Notes. During the nine months ended December 31, 2017 and 2016, we recorded interest expense of approximately $3,000 and $3,000, respectively, on the Notes. As of December 31, 2017 and March 31, 2017 our accrued interest outstanding was $0 and $0, respectively. On December 5, 2016, we entered into an additional Promissory Note in the principal amount of $100,000 (the Second Note) with the Affiliate. The Second Note bears interest at the rate of 12% per annum, provides for a $3,000 commitment fee, which fee was paid in February 2017, and all principal and accrued interest, if any, is due on demand, but not later than June 5, 2017. As of December 31, 2017 and March 31, 2017, the principal balance outstanding was $100,000 and $100,000, respectively. During the three months ended December 31, 2017 and 2016 we recorded interest expense of $3,000 and $0, respectively, on the Second Note. During the nine months ended December 31, 2017 and 2016 we recorded interest expense of $9,000 and $0, respectively, on the Second Note. As of December 31, 2017 and March 31, 2017 our accrued interest outstanding was $0 and $0, respectively. On April 3, 2017, Michael Adams, our CEO and President, advanced and committed to us $20,000 pursuant to a promissory note, as amended (the Advance Note). The Advance Note provides the availability of up to $20,000 at the sole discretion of Mr. Adams through April 2, 2018, bears interest at the rate of 10% per annum, and provides for a $2,000 commitment fee and guaranteed interest of $2,000 payable upon execution of the Advance Note. On April 19, 2017 we paid the commitment fee and guaranteed interest of $2,000 and $2,000, respectively. Additionally, on April 19, 2017 we paid down the $20,000 advance. As of December 31, 2017 the principal balance outstanding on the Advance Note was $0. |
Long-Term Financing Obligation
Long-Term Financing Obligation | 9 Months Ended |
Dec. 31, 2017 | |
Notes | |
Long-Term Financing Obligation | 13. Long-Term Financing Obligation On December 22, 2011, we entered into an agreement with an independent third-party under which we sold and leased back our land and building generating gross proceeds of $2,000,000. Pursuant to a lease agreement, the initial minimum lease term is 15 years. At the end of the initial minimum lease term, we have the option to renew the lease for three periods of five years each. In addition, we provided, as collateral, a security interest in all furnishings, fixtures and equipment owned and used by us, having a net book value of approximately $0 as of December 31, 2017. For accounting purposes, the provision of such collateral constitutes continuing involvement with the associated property. Due to this continuing involvement, this sale-leaseback transaction is accounted for under the financing method, rather than as a completed sale. Under the financing method, we include the sales proceeds received as a financing obligation. As of December 31, 2017 and March 31, 2017, the total financing obligation was $1,986,000, respectively, and accrued interest on financing obligation was $176,000 and $172,000, respectively. Through December 2018, interest on the financing obligation exceeds the minimum lease payments, accordingly the principal remains constant through that date. After December 2018, the minimum lease payment will exceed interest and principal will be reduced by the excess of minimum lease payment over interest. The building, building improvements and land remain on the condensed balance sheet and the building and building improvements will continue to be depreciated over their remaining useful lives. Payments made under the lease are applied as payments of imputed interest and deemed principal on the underlying financing obligation. |
Contingencies
Contingencies | 9 Months Ended |
Dec. 31, 2017 | |
Notes | |
Contingencies | 14. Contingencies We are not a party to any legal proceedings, other than ordinary routine litigation incidental to our business, which we believe will not have a material affect on our financial position or results of operations. |
Concentrations of Credit Risk a
Concentrations of Credit Risk and Major Customers | 9 Months Ended |
Dec. 31, 2017 | |
Notes | |
Concentrations of Credit Risk and Major Customers | 15. Concentrations of Credit Risk and Major Customers For the three months ended December 31, 2017 and 2016, four customers represented 61% of our total revenues and three customer represented 70% of our total revenues, respectively. For the nine months ended December 31, 2017 and 2016, four customers represented 65% of our total revenues and three customer represented 68% of our total revenues, respectively. As of December 31, 2017, we had accounts receivable-trade, net, of $61,000, or 53%, due from five customers. As of March 31, 2017, we had accounts receivable-trade, net, of $36,000, or 38%, due from three customers. As of December 31, 2017, we had $229,000 due from two customer related to receivables on royalties, license and annual usage fees. As of March 31, 2017, we had $139,000 due from two customers related to receivables on royalties, license and annual usage fees. These amounts are classified as accounts receivable-other in the accompanying condensed balance sheets. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Dec. 31, 2017 | |
Notes | |
Subsequent Events | 16. Subsequent Events We evaluated all events or transactions that occurred after the balance sheet date through the date when we issued these unaudited condensed financial statements. During this period, we did not have any material recognizable subsequent events. |
Equity-Based Compensation_ Sche
Equity-Based Compensation: Schedule of Share-Based Compensation Activity (Tables) | 9 Months Ended |
Dec. 31, 2017 | |
Tables/Schedules | |
Schedule of Share-Based Compensation Activity | Options Outstanding Weighted-Average Exercise Price per Share Weighted-Average Remaining Contractual Term in Years Aggregate Intrinsic Value (in thousands) Options outstanding as of April 1, 2017 2,170,750 $ 0.36 $ - Granted - Exercised - Cancelled or forfeited (351,000) $ 1.15 - $ - Options outstanding as of December 31, 2017 (unaudited) 1,819,750 $ 0.21 3.24 $ - Options exercisable as of December 31, 2017 (unaudited) 1,819,750 $ 0.21 3.24 $ - Options vested or expected to vest as of December 31, 2017 (unaudited) 1,819,750 $ 0.21 3.24 $ - |
Inventories_ Schedule of Invent
Inventories: Schedule of Inventory, Current (Tables) | 9 Months Ended |
Dec. 31, 2017 | |
Tables/Schedules | |
Schedule of Inventory, Current | (in thousands) December 31, 2017 (unaudited) March 31, 2017 Raw materials $ 246 $ 92 Work in progress 39 59 Finished goods 161 180 446 331 Less: allowance for obsolete and excess inventory (142) (142) Total inventories, net $ 304 $ 189 |
Property, Plant and Equipment_
Property, Plant and Equipment: Schedule of Property, Plant and Equipment (Tables) | 9 Months Ended |
Dec. 31, 2017 | |
Tables/Schedules | |
Schedule of Property, Plant and Equipment | (in thousands) December 31, 2017 (unaudited) March 31, 2017 Land $ 500 $ 500 Building 2,705 2,705 Machinery, equipment and tooling 1,237 1,214 Furniture, fixtures and office equipment 285 285 Office equipment under capital lease - 13 4,727 4,717 Less: accumulated depreciation (2,890) (2,852) $ 1,837 $ 1,865 |
Equity-Based Compensation_ Sc24
Equity-Based Compensation: Schedule of Share-Based Compensation Activity (Details) - Employee Stock Option | 9 Months Ended |
Dec. 31, 2017$ / sharesshares | |
Disclosure of Share-based Compensation Arrangements by Share-based Payment Award | 3.24 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number, Beginning Balance | 2,170,750 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price, Beginning Balance | $ / shares | $ 0.36 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Expirations in Period | (351,000) |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number, Ending Balance | 1,819,750 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Number | 1,819,750 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Number | 1,819,750 |
Equity-Based Compensation (Deta
Equity-Based Compensation (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | |
Details | ||||
Share-based Compensation | $ 0 | $ 0 | $ 0 | $ 4,000 |
Inventories_ Schedule of Inve26
Inventories: Schedule of Inventory, Current (Details) - USD ($) | Dec. 31, 2017 | Mar. 31, 2017 |
Details | ||
Inventory, Raw Materials, Net of Reserves | $ 246 | $ 92 |
Inventory, Work in Process, Net of Reserves | 39 | 59 |
Inventory, Finished Goods, Net of Reserves | 161 | 180 |
Inventory Valuation Reserves | $ (142) | $ (142) |
Property, Plant and Equipment27
Property, Plant and Equipment: Schedule of Property, Plant and Equipment (Details) - USD ($) | Dec. 31, 2017 | Mar. 31, 2017 |
Details | ||
Land | $ 500 | $ 500 |
Buildings and Improvements, Gross | 2,705 | 2,705 |
Machinery and Equipment, Gross | 1,237 | 1,214 |
Furniture and Fixtures, Gross | 285 | 285 |
Debt and Capital Lease Obligations | 13 | |
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment | (2,890) | (2,852) |
Property, plant and equipment, net | $ 1,837,000 | $ 1,865,000 |
Property, Plant and Equipment (
Property, Plant and Equipment (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | |
Details | ||||
Depreciation | $ 13,000 | $ 13,000 | $ 38,000 | $ 43,000 |
Loss Per Share (Details)
Loss Per Share (Details) - shares | 3 Months Ended | 9 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Details | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 3,001,250 | 8,600,250 | 3,001,250 |
Long-Term Financing Obligation
Long-Term Financing Obligation (Details) - USD ($) | Dec. 22, 2011 | Dec. 31, 2017 | Mar. 31, 2017 |
Details | |||
Sale Leaseback Transaction, Date | December 22, 2011 | ||
Sale Leaseback Transaction, Historical Cost | $ 2,000,000 | ||
Interest Portion of Minimum Lease Payments, Sale Leaseback Transactions | $ 176,000 | $ 172,000 |
Concentrations of Credit Risk31
Concentrations of Credit Risk and Major Customers (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Mar. 31, 2017 | |
Details | |||||
Concentration Risk, Percentage | 61.00% | 70.00% | 65.00% | 68.00% | |
Fair Value, Concentration of Risk, Accounts Receivable | $ 61,000 | $ 61,000 | $ 36,000 | ||
Accrued Fees and Other Revenue Receivable | $ 229,000 | $ 229,000 | $ 139,000 |