Accounting Policies, by Policy (Policies) | 12 Months Ended |
Mar. 31, 2014 |
Accounting Policies [Abstract] | ' |
Use of Estimates, Policy [Policy Text Block] | ' |
Use of Estimates |
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The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. It is reasonably possible that a change in the Company’s estimates will occur in the near term and such change could be material. |
Earnings Per Share, Policy [Policy Text Block] | ' |
Net Income (Loss) per Share of Common Stock |
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The Company computes net income (loss) per share of common stock in accordance with Accounting Standards Codification (“ASC”) 260. ASC 260 requires companies with complex capital structures to present basic and diluted Earnings per Share (“EPS”). Basic EPS is measured as the income or loss available to common shareholders divided by the weighted average shares of common stock outstanding for the period. Diluted EPS is similar to basic EPS but presents the dilutive effect on a per share basis of potential common stock (e.g., convertible securities, options, and warrants) as if they had been converted at the beginning of the periods presented. Potential shares of common stock that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. For the years ended March 31, 2014 and 2013, the Company had 3.6 million (including preferred stock), and 3.5 million, respectively, of securities that could potentially dilute basic EPS in the future that were not included in the computation of diluted EPS because to do so would have been anti-dilutive for the periods presented. |
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The following table presents the computation of basic and diluted net income per share for the year ended March 31, 2014 (in thousands, except per share amounts): |
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| Fiscal Year Ended March 31, | | | | | | | | | |
| 2014 | | | 2013 | | | | | | | | | |
Net loss available to common shareholders | | $ | (4,130 | ) | | | (8,259 | ) | | | | | | | | |
Basic and diluted: | | | | | | | | | | | | | | | | |
Weighted-average shares outstanding | | | 5,408 | | | | 5,344 | | | | | | | | | |
Basic and diluted net loss per share | | $ | (0.76 | ) | | | (1.55 | ) | | | | | | | | |
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As of March 31, 2014, employee stock options to purchase approximately 397,000 shares of common stock and warrants to purchase approximately 575,000 shares of common stock were outstanding but were not included in the computation of diluted net income per share because the effect of including such shares would have been anti-dilutive in the periods presented. |
Reclassification, Policy [Policy Text Block] | ' |
Reclassifications |
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Certain prior year amounts have been reclassified to conform to current year presentation. |
Cash and Cash Equivalents, Policy [Policy Text Block] | ' |
Cash and Cash Equivalents |
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The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. There were no cash equivalents at March 31, 2014 and 2013. |
Cash and Cash Equivalents, Restricted Cash and Cash Equivalents, Policy [Policy Text Block] | ' |
Restricted Cash |
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The Company has secured activity related to its corporate credit card purchase account with a restricted money market account. In addition, as discussed in Note 2– Notes Payable and Long Term Debt, 20% of the Company’s daily credit card receipts were held in a restricted escrow account in accordance with the 2011 Credit Card Receipts-Backed Notes which were paid in full during the year ended March 31, 2014. The balance in this account as of March 31, 2014 and March 31, 2013 was $15,000 and $42,000, respectively. |
Concentration Risk, Credit Risk, Policy [Policy Text Block] | ' |
Concentrations of Risk |
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ASC 825-10-50-20 requires disclosure of significant concentrations of credit risk regardless of the degree of such risk. Financial instruments with significant credit risk include cash deposits. The amount on deposit with one financial institution exceeded the $250,000 federally insured limit as of March 31, 2014. However, management believes that the financial institution is financially sound and the risk of loss is minimal. |
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Customers: |
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For the years ended March 31, 2014 and 2013, the Company had one customer, Amazon.com, who represented 30.7%, and 10.9%, respectively, of the Company’s net revenue. |
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Suppliers: |
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For the year ended March 31, 2014, the Company purchased inventories and other inventory related items from four suppliers totaling $1.5 million, $1.4 million, $315,000, and $300,000 representing 26.0%, 24.3%, 5.6% and 5.4% of cost of revenue, respectively. For the year ended March 31, 2013, the Company purchased inventories and other inventory related items from four suppliers totaling $587,000, $543,000, $469,000, and $360,000 representing 14.6%, 13.5%, 11.7% and 9.0% of cost of revenue, respectively. |
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The Company’s primary contract manufacturers are located in China. As a result, the Company may be subject to political, currency, regulatory, shipping, labor and weather/natural disaster risks. Although the Company believes alternate sources of manufacturing could be obtained, these risks and any potential loss of supply could have an adverse impact on operations. |
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Account Receivables: |
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As of March 31, 2014, the Company had three customers, Amazon.com, Costco.com and The Home Depot, that represented 44.1%, 24.5% and 11.1%, respectively, of outstanding accounts receivable. As of March 31, 2013, the Company had one customer, Amazon.com, that represented 61.2% of outstanding accounts receivable. Management believes that all receivables from these customers are collectible. |
Fair Value of Financial Instruments, Policy [Policy Text Block] | ' |
Fair Value of Financial Instruments |
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The Company follows the guidance in ASC 820, Fair Value Measurements and Disclosures (“ASC 820”), as it relates to the fair value of its financial assets and liabilities. This guidance requires disclosure of fair value information about certain financial instruments (insurance contracts, real estate, goodwill and taxes are excluded) for which it is practicable to estimate such values, whether or not these instruments are included in the balance sheet at fair value. The fair values presented for certain financial instruments are estimates which, in many cases, may differ significantly from the amounts that could be realized upon immediate liquidation. |
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Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability, i.e., exit price, in an orderly transaction between market participants. ASC 820 also provides a hierarchy for determining fair value, which emphasizes the use of observable market data whenever available. The three broad levels defined by the hierarchy are as follows, with the highest priority given to Level 1 as these are the most reliable, and the lowest priority given to Level 3. The three levels of the fair value hierarchy are described below: |
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| Level 1: | Quoted prices (unadjusted) in active markets for identical assets or liabilities. | | | | | | | | | | | | | | |
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| Level 2: | Observable market-based inputs, other than quoted prices in active markets for identical assets or liabilities. | | | | | | | | | | | | | | |
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| Level 3: | Unobservable inputs. | | | | | | | | | | | | | | |
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The carrying value of financial instruments, including cash, receivables, accounts payable and accrued expenses, approximates their fair value at March 31, 2014 and March 31, 2013 due to the relatively short-term nature of these instruments. As of March 31, 2014 and March 31, 2013, the fair value of the Company's debt, notes payable, and sale of intellectual property liability, using Level 3 inputs was estimated using the discounted cash flow method, which is based on the future expected cash flows, discounted to their present values, using a discount rate of 15%. |
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In conjunction with a Securities Purchase Agreement and strategic alliance with Scotts Miracle-Gro on April 22, 2013, the Company issued a warrant that entitles, but does not obligate, Scotts Miracle-Gro to purchase a number of shares of common stock that, on a fully diluted basis, constitute 80% of the Company’s outstanding capital stock together with existing stock owned. This warrant was accounted for as a liability at its estimated fair value and is classified as a Level 3 fair value measurement. The Company calculated the fair value of the warrant during the fiscal year ended March 31, 2014 using Level 3 inputs in a Monte Carlo simulation model. As of March 31, 2014, the Company measured the warrant at fair value and will continue to do so on a quarterly basis. As of March 31, 2013, the Company did not have any financial assets or liabilities that were measured at fair value on a recurring basis subsequent to initial recognition. |
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| | 31-Mar-14 | | | 31-Mar-13 | |
(in thousands) | | Fair Value | | | Carry Value | | | Fair Value | | | Carry Value | |
Liabilities | | | | | | | | | | | | |
Notes payable | | $ | - | | | $ | - | | | $ | 610 | | | $ | 641 | |
Sale of intellectual property liability | | | 171 | | | | 258 | | | | - | | | | - | |
Derivative warrant liability | | | 2,530 | | | | 2,530 | | | | - | | | | - | |
Long-term debt | | | - | | | | - | | | | 1,726 | | | | 2,068 | |
Total | | $ | 2,701 | | | $ | 2,788 | | | $ | 2,336 | | | $ | 2,709 | |
Property, Plant and Equipment, Policy [Policy Text Block] | ' |
Property and Equipment |
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Property and equipment are stated at cost. Depreciation for financial accounting purposes is computed using the straight-line method over the estimated lives of the respective assets. Office equipment and computer hardware are depreciated over five years. Tooling is depreciated over three years. Leasehold improvements are being amortized over the life of the lease. |
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Property and equipment consist of the following: |
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| | March 31, | | | March 31, | | | | | | | | | |
(in thousands) | | 2014 | | | 2013 | | | | | | | | | |
Manufacturing equipment and tooling | | $ | 2,423 | | | $ | 2,269 | | | | | | | | | |
Computer equipment and software | | | 435 | | | | 406 | | | | | | | | | |
Leasehold improvements | | | 116 | | | | 112 | | | | | | | | | |
Other equipment | | | 348 | | | | 348 | | | | | | | | | |
| | | 3,322 | | | | 3,135 | | | | | | | | | |
Less: accumulated depreciation | | | (3,024 | ) | | | (2,869 | ) | | | | | | | | |
Property and equipment, net | | $ | 298 | | | $ | 266 | | | | | | | | | |
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Depreciation expense for the years ended March 31, 2014 and 2013, was $156,000, and $161,000, respectively. |
Intangible Assets, Finite-Lived, Policy [Policy Text Block] | ' |
Intangible Assets |
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Intangible assets consist of the direct costs incurred for application fees and legal expenses associated with patents and trademarks on the Company's products. The Company periodically reviews the value of the intangible assets. To the extent carrying values exceed estimated fair values, the Company records a reduction in the carrying value to the determined fair value. The Company amortizes its patent and trademark costs on a straight line basis over their estimated useful life of 17 years. |
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Intangible assets consist of the following: |
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| | March 31, | | | March 31, | | | | | | | | | |
(in thousands) | | 2014 | | | 2013 | | | | | | | | | |
Patents | | $ | - | | | $ | 286 | | | | | | | | | |
Trademarks | | | 2 | | | | 44 | | | | | | | | | |
| | | 2 | | | | 330 | | | | | | | | | |
Less: accumulated amortization | | | - | | | | (135 | ) | | | | | | | | |
Intangible assets, net | | $ | 2 | | | $ | 195 | | | | | | | | | |
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Amortization expense for the years ended March 31, 2014 and 2013, was less than $1,000 and $14,000, respectively. |
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As of April 22, 2013, the Company agreed to sell to Scotts Miracle-Gro all intellectual property associated with the Company’s hydroponic products, other than the AeroGrow and AeroGarden trademarks, free and clear of all encumbrances, for $500,000. Scotts Miracle-Gro has the right to use the AeroGrow and AeroGarden trademarks in connection with the sale of products incorporating the Hydroponic IP. |
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In return, Scotts Miracle-Gro granted the Company an exclusive right to use the Hydroponic intellectual property (“IP”) in North America and certain European countries in return for a royalty of 2% of annual net sales, as determined at the end of each fiscal year. The royalty is payable in the Company's common stock at the conversion price of the Series B Preferred Stock (see Note 3). The initial term of the Technology License is five years, and the Company may renew the Technology License for an additional five-year term by providing notice to Scotts Miracle-Gro at least six months in advance of the expiration of each five-year term. Please see Note 3 “Scotts Miracle-Gro Transactions – Convertible Preferred Stock, Warrants and Other Transactions” to our financial statements for further discussion. |
Inventory, Policy [Policy Text Block] | ' |
Inventory |
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Inventories are valued at the lower of cost, as determined by the first-in, first-out method, or market. Included in inventory where the Company is the manufacturer are raw materials, labor, and manufacturing overhead. The Company records the raw materials at delivered cost. Standard labor and manufacturing overhead costs are applied to the finished goods based on normal production capacity. A majority of the Company’s products are manufactured overseas and are recorded at standard cost. |
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| | March 31, | | | March 31, | | | | | | | | | |
(in thousands) | | 2014 | | | 2013 | | | | | | | | | |
Finished goods | | $ | 784 | | | $ | 606 | | | | | | | | | |
Raw materials | | | 527 | | | | 623 | | | | | | | | | |
| | $ | 1,311 | | | $ | 1,229 | | | | | | | | | |
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The Company determines an inventory obsolescence reserve based on management’s historical experience and establishes reserves against inventory according to the age of the product. As of March 31, 2014 and 2013, the Company had reserved $332,000 and $94,000, respectively, for inventory obsolescence. |
Receivables, Policy [Policy Text Block] | ' |
Accounts Receivable and Allowance for Doubtful Accounts |
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The Company sells its products to retailers and consumers. Consumer transactions are paid primarily by credit card. Retailer sales terms vary by customer, but are generally net 30 days to net 60 days. Accounts receivable are reported at net realizable value and net of the allowance for doubtful accounts. The Company uses the allowance method to account for uncollectible accounts receivable. The Company's allowance estimate is based on a review of the current status of trade accounts receivable. |
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Other Receivables |
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In conjunction with the Company’s processing of credit card transactions for its direct-to-consumer sales activities and as security with respect to the Company’s performance for required credit card refunds and charge backs, the Company is required to maintain a cash reserve with Litle and Company, the Company’s credit card processor. This reserve is equal to 5% of the credit card sales processed during the previous six months. As of March 31, 2014 and March 31, 2013, the balance in this reserve account was $187,000 and $169,000, respectively. |
Advertising Costs, Policy [Policy Text Block] | ' |
Advertising and Production Costs |
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The Company expenses all production costs related to advertising, including, print, television, and radio advertisements when the advertisement has been broadcast or otherwise distributed. The Company records media costs related to its direct-to-consumer advertisements, inclusive of postage and printing costs incurred in conjunction with mailings of direct response catalogues, and related direct response advertising costs, in accordance ASC 340-20-Reporting on Advertising Costs. As prescribed by ASC 340-20-25, direct-to-consumer advertising costs incurred should be reported as assets and should be amortized over the estimated period of the benefits, based on the proportion of current period revenue from the advertisement to probable future revenue. |
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As the Company has re-entered the retail distribution channel, the Company has expanded its advertising to online gateway and portal advertising, as well as placement in third party catalogues. |
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Advertising expenses for the years ended March 31, 2014 and March 31, 2013, were as follows: |
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| | Fiscal Year Ended March 31, | | | | | | | | | |
| | 2014 | | | 2013 | | | | | | | | | |
(in thousands) | | | | | | | | | | | | | | | | |
Direct-to-consumer | | $ | 786 | | | $ | 1,055 | | | | | | | | | |
Retail | | | 404 | | | | 1 | | | | | | | | | |
Total advertising expense | | $ | 1,190 | | | $ | 1,056 | | | | | | | | | |
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As of March 31, 2014 and March 31, 2013, the Company had deferred $16,000 and $4,000, respectively, related to such media costs. The costs are included in the prepaid and other expenses line of the balance sheet. |
Research and Development Expense, Policy [Policy Text Block] | ' |
Research and Development |
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Research, development, and engineering costs are expensed as incurred. Research, development, and engineering expenses primarily include payroll and headcount related costs, contractor fees, infrastructure costs, and administrative expenses directly related to research and development support. |
Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block] | ' |
Stock-Based Compensation |
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The Company uses the Black-Scholes option valuation model to estimate the fair value of stock option awards. For the years ended March 31, 2014 and March 31, 2013, equity compensation in the form of stock options and grants of restricted stock that vested totaled $257,000 and $177,000, respectively, and is included in the accompanying Statements of Operations in the following categories: |
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| | Years ended | | | | | | | | | |
(in thousands) | | 31-Mar-14 | | | 31-Mar-13 | | | | | | | | | |
General and administrative | | $ | 200 | | | $ | 136 | | | | | | | | | |
Sales and marketing | | | 57 | | | | 41 | | | | | | | | | |
Total | | $ | 257 | | | $ | 177 | | | | | | | | | |
Income Tax, Policy [Policy Text Block] | ' |
Income Taxes |
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Deferred income taxes are recognized for the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts at the end of each period, based on enacted laws and statutory rates applicable to the periods in which the differences are expected to affect taxable income. Any liability for actual taxes to taxing authorities is recorded as income tax liability. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is established against such assets where management is unable to conclude that it is “more likely than not” that the value of such asset will be realized. As of March 31, 2014 and March 31, 2013, the Company recognized a valuation allowance equal to 100% of the net deferred tax asset balance. |
Revenue Recognition, Policy [Policy Text Block] | ' |
Revenue Recognition |
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The Company recognizes revenue from product sales, net of estimated returns, when persuasive evidence of a sale exists: that is, a product is shipped under an agreement with a customer; risk of loss and title has passed to the customer; the fee is fixed or determinable; and collection of the resulting receivable is reasonably assured. |
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The Company records estimated reductions to revenue for customer and distributor programs and incentive offerings, including promotions and other volume-based incentives. Certain incentive programs require the Company to estimate based on industry experience the number of customers who will actually redeem the incentive. At March 31, 2014 and March 31, 2013, the Company had accrued $42,000 and $43,000 respectively, as its estimate for the foregoing deductions and allowances. These expenses are included in the accrued expenses line of the balance sheet. |
Standard Product Warranty, Policy [Policy Text Block] | ' |
Warranty and Return Reserves |
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The Company records warranty liabilities at the time of sale for the estimated costs that may be incurred under its basic warranty program. The specific warranty terms and conditions vary depending upon the product sold but generally include technical support, repair parts and labor for periods up to one year. Factors that affect the Company’s warranty liability include the number of installed units currently under warranty, historical and anticipated rates of warranty claims on those units, and cost per claim to satisfy the Company’s warranty obligation. Based upon the foregoing, the Company has recorded as of March 31, 2014 and March 31, 2013 a provision for potential future warranty costs of $11,000 and $10,000, respectively. These warranty expenses are included in the accrued expenses line of the balance sheet. |
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The Company reserves for known and potential returns and associated refunds or credits related to such returns based upon historical experience. In certain cases, customers are provided a fixed allowance, usually in the 1% to 2% range, to cover returned goods and this allowance is deducted from payments to us by such customers. As of March 31, 2014 and March 31, 2013, the Company has recorded a reserve for customer returns of $61,000 and $27,000, respectively. These expenses are included in the accrued expenses line of the balance sheet. |
Shipping and Handling Cost, Policy [Policy Text Block] | ' |
Shipping and Handling Costs |
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Shipping and handling costs associated with inbound freight are recorded in cost of revenue. Shipping and handling costs associated with freight out to customers are also included in cost of revenue. Shipping and handling charges paid by customers are included in product sales. |
Lease, Policy [Policy Text Block] | ' |
Deferred Rent |
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In July 2006, the Company entered into a facility lease with a term through January 2012, for its corporate offices in Boulder, Colorado. As of September 30, 2011 this lease was extended through September 30, 2014. As of April 14, 2014 the lease term was extended to September 30, 2016. As of March 31, 2014 and March 31, 2013, the Company had recorded deferred rent related to this agreement in the amount of $3,000 and $6,000, respectively, based on the difference between straight-line rent expense recorded and the rent payment obligation. |
Deferred Charges, Policy [Policy Text Block] | ' |
Deferred Debt Issuance Costs |
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The Company capitalizes debt issuance costs that are directly attributable to realizing the proceeds of the debt issued and it is amortized over the contractual life of the debt using the effective interest rate method. |
Segment Reporting, Policy [Policy Text Block] | ' |
Segments of an Enterprise and Related Information |
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GAAP utilizes a management approach based on allocating resources and assessing performance as the source of the Company's reportable segments. GAAP also requires disclosures about products and services, geographic areas and major customers. At present, the Company operates in one segment. |
New Accounting Pronouncements, Policy [Policy Text Block] | ' |
New Accounting Pronouncements |
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In July 2013, the FASB issued ASU 2013-11, “Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists,” which among other things, requires an unrecognized tax benefit, or a portion of an unrecognized tax benefit, to be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except as denoted within the ASU. The amendments in this ASU are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. This new guidance will not have a material impact on our financial statements. |
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In May 2014, the FASB issued ASU 2014-09, "Revenue from Contracts with Customers," which amended revenue recognition guidance to clarify the principles for recognizing revenue from contracts with customers. The guidance requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. The guidance also requires expanded disclosures relating to the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. Additionally, qualitative and quantitative disclosures are required about customer contracts, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. This accounting guidance is effective for the Company beginning in the first quarter of fiscal year 2018 using one of two prescribed retrospective methods. Early adoption is not permitted. We have not yet selected a transition method nor have we determined the effect of the standard on our ongoing financial reporting. |