Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Mar. 31, 2016 | May 31, 2016 | Sep. 30, 2015 | |
Document and Entity Information | |||
Entity Registrant Name | ENCISION INC | ||
Entity Central Index Key | 930,775 | ||
Document Type | 10-K | ||
Document Period End Date | Mar. 31, 2016 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --03-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 2,130,467 | ||
Entity Common Stock, Shares Outstanding | 10,673,225 | ||
Document Fiscal Year Focus | 2,016 | ||
Document Fiscal Period Focus | FY |
Balance Sheets
Balance Sheets - USD ($) | Mar. 31, 2016 | Mar. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 292,840 | $ 258,656 |
Restricted cash | 25,000 | 0 |
Accounts receivable, net of allowance for doubtful accounts of $9,000 at March 31, 2016 and $11,500 at March 31, 2015 | 839,850 | 965,355 |
Inventories, net of reserve for obsolescence of $410,000 at March 31, 2016 and $240,000 at March 31, 2015 | 1,730,747 | 2,337,654 |
Prepaid expenses | 91,989 | 109,678 |
Total current assets | 2,980,426 | 3,671,343 |
Equipment, at cost: | ||
Furniture, fixtures and equipment | 3,950,710 | 3,917,386 |
Accumulated depreciation | (3,389,533) | (3,140,453) |
Equipment, net | 561,177 | 776,933 |
Patents, net of accumulated amortization of $179,317 at March 31, 2016 and $153,494 at March 31, 2015 | 252,889 | 257,356 |
Other assets | 15,926 | 20,135 |
TOTAL ASSETS | 3,810,418 | 4,725,767 |
Current liabilities: | ||
Accounts payable | 355,890 | 675,411 |
Accrued compensation | 246,203 | 262,195 |
Other accrued liabilities | 257,506 | 324,926 |
Line of credit | 387,491 | 0 |
Deferred rent | 30,384 | 30,384 |
Total current liabilities | 1,277,474 | 1,292,916 |
Long-term liabilities | ||
Line of credit | 0 | 64,000 |
Deferred rent | 70,896 | 101,280 |
Total liabilities | 1,348,370 | 1,458,196 |
Shareholders' equity: | ||
Preferred stock, no par value: 10,000,000 shares authorized; none issued and outstanding | 0 | 0 |
Common stock and additional paid-in capital, no par value: 100,000,000 shares authorized; 10,673,225 issued and outstanding at March 31, 2016 and 2015 | 23,682,365 | 23,607,688 |
Accumulated (deficit) | (21,220,317) | (20,340,117) |
Total shareholders' equity | 2,462,048 | 3,267,571 |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ 3,810,418 | $ 4,725,767 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - USD ($) | Mar. 31, 2016 | Mar. 31, 2015 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for doubtful accounts (in dollars) | $ 9,000 | $ 11,500 |
Inventories, reserve for obsolescence (in dollars) | 410,000 | 240,000 |
Accumulated amortization | $ 179,317 | $ 153,494 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock and additional paid-in capital, shares authorized | 100,000,000 | 100,000,000 |
Common stock and additional paid-in capital, shares issued | 10,673,225 | 10,673,225 |
Common stock and additional paid-in capital, shares outstanding | 10,673,225 | 10,673,225 |
Statements of Operations
Statements of Operations - USD ($) | 12 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Income Statement [Abstract] | ||
NET REVENUE | $ 9,336,078 | $ 9,671,481 |
COST OF REVENUE | 4,759,067 | 4,977,258 |
GROSS PROFIT | 4,577,011 | 4,694,223 |
OPERATING EXPENSES: | ||
Sales and marketing | 2,558,785 | 2,921,295 |
General and administrative | 1,476,803 | 1,615,006 |
Research and development | 1,249,787 | 1,342,411 |
Total operating expenses | 5,285,375 | 5,878,712 |
OPERATING INCOME (LOSS) | (708,364) | (1,184,489) |
Interest expense, net | (46,903) | (7,381) |
Other expense, net | (124,933) | (190,876) |
Interest and other expense, net | (171,836) | (198,257) |
LOSS BEFORE PROVISION FOR INCOME TAXES | (880,200) | (1,382,746) |
Provision for income taxes | 0 | 0 |
NET LOSS | $ (880,200) | $ (1,382,746) |
Net loss per share—basic and diluted | $ (0.08) | $ (0.13) |
Weighted average shares—basic and diluted | 10,673,225 | 10,673,225 |
Statements of Shareholders_ Equ
Statements of Shareholders’ Equity - USD ($) | Common Stock and Additional Paid-in Capital | Accumulated Deficit | Total |
Beginning Balance, Shares at Mar. 31, 2014 | 10,673,225 | ||
Beginning Balance, Amount at Mar. 31, 2014 | $ 23,545,080 | $ (18,957,371) | $ 4,587,709 |
Net loss | (1,382,746) | ||
Compensation expense related to equities | $ 62,608 | $ 62,608 | |
Ending Balance, Shares at Mar. 31, 2015 | 10,673,225 | 3,267,571 | |
Ending Balance, Amount at Mar. 31, 2015 | $ 23,607,688 | (20,430,117) | $ 3,267,571 |
Net loss | (880,200) | (880,200) | |
Compensation expense related to equities | $ 74,677 | 74,677 | |
Ending Balance, Shares at Mar. 31, 2016 | 10,673,225 | ||
Ending Balance, Amount at Mar. 31, 2016 | $ 23,682,365 | $ (21,220,317) | $ 2,462,048 |
Statements of Cash Flows
Statements of Cash Flows - USD ($) | 12 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Cash flows from operating activities: | ||
Net loss | $ (880,200) | $ (1,382,746) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 318,692 | 382,058 |
Stock-based compensation expense related to stock options | 74,677 | 62,608 |
Provision for doubtful accounts, net change | (2,500) | 3,500 |
Provision for inventory obsolescence, net change | 170,000 | 136,501 |
Change in operating assets and liabilities: | ||
Accounts receivable | 128,005 | (105,635) |
Inventories | 436,907 | (249,927) |
Prepaid expenses and other assets | 21,898 | (50,299) |
Accounts payable | (319,521) | 9,252 |
Accrued compensation and other accrued liabilities | (113,796) | (238,083) |
Net cash used in operating activities | (165,838) | (1,432,771) |
Cash flows from investing activities: | ||
Acquisition of property and equipment | (77,113) | (29,695) |
Patent costs | (21,356) | (32,458) |
Net cash used in investing activities | (98,469) | (62,153) |
Cash flows from financing activities: | ||
Borrowings from credit facility | 323,491 | 64,000 |
Change in restricted cash | (25,000) | 0 |
Net cash provided by financing activities | 298,491 | 64,000 |
Net increase (decrease) in cash and cash equivalents | 34,184 | (1,430,924) |
Cash and cash equivalents, beginning of period | 258,656 | 1,689,580 |
Cash and cash equivalents, end of period | 292,840 | 258,656 |
Supplemental disclosures of cash flow information: | ||
Cash paid during the year for interest | $ 14,835 | $ 1,250 |
Description of Business
Description of Business | 12 Months Ended |
Mar. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business | Encision Inc. is a medical device company that designs, develops, manufactures and markets patented surgical instruments that provide greater safety to patients undergoing minimally-invasive surgery. We believe that our patented AEM ® We have an accumulated deficit of $21,220,317 at March 31, 2016. Operating funds have been provided primarily by issuances of our common stock and warrants, the exercise of stock options to purchase our common stock, and, in recent years, by operating profits. Our liquidity has diminished because of prior years operating losses, and we may be required to seek additional capital in the future. Our strategic marketing and sales plan is designed to expand the use of our products in surgically active hospitals in the United States. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Mar. 31, 2016 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Use of Estimates in the Preparation of Financial Statements. Cash and Cash Equivalents. Fair Value of Financial Instruments. Concentration of Credit Risk. We have no significant off-balance sheet concentrations of credit risk such as foreign exchange contracts, options contracts or other foreign hedging arrangements. We maintain the majority of our cash balances with one financial institution in the form of demand deposits. Accounts receivable are typically unsecured and are derived from transactions with and from entities in the healthcare industry primarily located in the United States. Accordingly, we may be exposed to credit risk generally associated with the healthcare industry. We maintain allowances for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. We charge interest on past due accounts on a case-by-case basis. A summary of the activity in our allowance for doubtful accounts is as follows: Years Ended March 31, 2016 March 31, 2015 Balance, beginning of year $11,500 $ 8,000 Provision for estimated (recoveries) losses (1,338) 9,582 Write-off of uncollectible accounts (1,162) (6,082) Balance, end of year $9,000 $11,500 The net accounts receivable balance at March 31, 2016 of $839,850 included no more than 5% from any one customer. The net accounts receivable balance at March 31, 2015 of $965,355 included no more than 5% from any one customer. Warranty Accrual. We provide for the estimated cost of product warranties at the time sales are recognized. While we engage in extensive product quality programs and processes, including actively monitoring and evaluating the quality of our component suppliers, our warranty obligation is based upon historical experience and is also affected by product failure rates and material usage in correcting a product failure. Should actual product failure rates or material usage costs differ from our estimates, revisions to the estimated warranty liability would be required. A summary of our warranty claims activity, included in other accrued liabilities, is as follows: Years Ended March 31, 2016 March 31, 2015 Balance, beginning of year $ 20,000 $ 35,000 Provision for estimated warranty claims 1,194 (15,000) Claims made (1,194) Balance, end of year $ 20,000 $ 20,000 Inventories. We reduce inventory for estimated obsolete or unmarketable inventory equal to the difference between the cost of inventory and the market value based upon assumptions about future demand and market conditions. If actual market conditions are less favorable than those projected by management, additional inventory write-downs may be required. March 31, 2016 March 31, 2015 Raw materials $1,469,630 $1,547,733 Finished goods 671,117 1,029,921 Total gross inventories 2,140,747 2,577,654 Less reserve for obsolescence (410,000) (240,000) Total net inventories $1,730,747 $2,337,654 A summary of the activity in our inventory reserve for obsolescence is as follows: Years Ended March 31, 2016 March 31, 2015 Balance, beginning of year $ 240,000 $ 560,000 Provision for estimated obsolescence 221,427 135,902 Write-off of obsolete inventory (51,427) (455,902) Balance, end of year $ 410,000 $ 240,000 Property and Equipment. Long-Lived Assets. Patents. March 31, 2016 March 31, 2015 Patents issued $280,669 $280,669 Accumulated amortization (165,167) (153,494) Patents issued, net of accumulated amortization 115,502 127,175 Patent applications 151,537 130,181 Accumulated amortization (14,150) Patent applications, net of accumulated amortization 137,387 130,181 Total net patents and patent applications $252,889 $257,356 The expected annual amortization expense related to patents and patent applications as of March 31, 2016, for the next five fiscal years, is as follows: Fiscal Year Amount 2017 $ 25,823 2018 25,823 2019 25,823 2020 25,823 2021 and following 149,597 Total $252,889 Other Accrued Liabilities. March 31, 2016 March 31, 2015 Warranty $ 20,000 $ 20,000 Sales commissions 83,445 82,132 Lease normalization 31,365 22,655 Sales and use tax 17,453 21,124 Marketing fees 10,363 8,133 Legal and audit fees 40,454 38,493 Payroll taxes 21,823 24,120 Medical device tax 7,651 Employment agreement 87,282 Insurance 20,240 Miscellaneous 12,363 13,336 Total other accrued liabilities $257,506 $324,926 Income Taxes. ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts. The cumulative effect of adopting ASC 740 on April 1, 2007 has been recorded net in deferred tax assets, which resulted in no ASC 740 liability on the balance sheet. The total amount of unrecognized tax benefits as of the date of adoption was zero. There are open statutes of limitations for taxing authorities in federal and state jurisdictions to audit the Companys tax returns from fiscal year ended March 31, 1999 through the current period. Our policy is to account for income tax related interest and penalties in income tax expense in the statements of operations. There have been no income tax related interest or penalties assessed or recorded. Because the Company has provided a full valuation allowance on all of its deferred tax assets, the adoption of ASC 740 had no impact on our effective tax rate. Revenue Recognition. Sales Taxes. Research and Development Expenses Advertising Costs. Medical Device Tax Effective January 1, 2016, the excise tax was suspended for two years. Stock-Based Compensation. ASC 718 requires companies to estimate the fair value of share-based payment awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in the accompanying statements of operations. Stock-based compensation expense recognized during the period is based on the value of the portion of share-based payment awards that is ultimately expected to vest during the period. Stock-based compensation expense recognized in our statements of operations for fiscal years 2016 and 2015 included compensation expense for share-based payment awards granted prior to, but not yet vested as of March 31, 2016, based on the grant date fair value. Compensation expense for all share-based payment is recognized using the straight-line, single-option method. As stock-based compensation expense recognized in the accompanying statements of operations for fiscal years 2016 and 2015 is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures. ASC 718 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. We used the Black-Scholes option-pricing model (Black-Scholes model) to determine fair value. Our determination of fair value of share-based payment awards on the date of grant using an option-pricing model is affected by our stock price as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to our expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors. Although the fair value of employee stock options is determined in accordance with ASC 718 using an option-pricing model, that value may not be indicative of the fair value observed in a willing buyer/willing seller market transaction. Stock-based compensation expense recognized under ASC 718 for fiscal years 2016 and 2015 was $74,677 and $62,608, respectively, which consisted of stock-based compensation expense related to director and employee stock options. Stock-based compensation expense related to director and employee stock options under ASC 718 for fiscal years 2016 and 2015 was allocated as follows: Years Ended March 31, 2016 March 31, 2015 Cost of sales $ 2,287 $ 1,965 Sales and marketing 11,822 11,076 General and administrative 56,381 46,522 Research and development 4,187 3,045 Stock-based compensation expense $ 74,677 $ 62,608 Segment Reporting. Basic and Diluted Income per Common Share. The following table presents the calculation of basic and diluted net income (loss) per share: Years Ended March 31, 2016 March 31, 2015 Net loss $ (880,200) $(1,382,746) Weighted-average shares basic 10,673,225 10,673,225 Effect of dilutive potential common shares Weighted-average shares diluted 10,673,225 10,673,225 Net loss per share basic and diluted $ (0.08) $ (0.13) Antidilutive equity units 700,924 599,924 Recent Accounting Pronouncements. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (ASU 2016-02), which modified lease accounting for both lessees and lessors to increase transparency and comparability by recognizing lease assets and lease liabilities by lessees for those leases classified as operating leases under previous accounting standards and disclosing key information about leasing arrangements. ASU 2016-02 will be effective for the Company beginning in its third quarter of 2020 and early adoption is permitted. The Company is currently evaluating the timing of its adoption and the impact of adopting the new lease standard on its consolidated financial statements. |
Shareholders' Equity
Shareholders' Equity | 12 Months Ended |
Mar. 31, 2016 | |
Stockholders' Equity Note [Abstract] | |
Shareholders' Equity | Stock Option Plans. Under ASC 718, the value of each employee stock option was estimated on the date of grant using the Black-Scholes model for the purpose of financial information in accordance with ASC 718. The use of a Black-Scholes model requires the use of actual employee exercise behavior data and the use of a number of assumptions including expected volatility, risk-free interest rate and expected dividends. Employee stock options for 139,000 and 95,000 shares of stock were granted during fiscal years 2016 and 2015, respectively. RSUs for 20,000 and 24,924 shares of stock were granted during fiscal years 2016 and 2015, respectively. As of March 31, 2016, $218,000 of total unrecognized compensation costs related to nonvested stock is expected to be recognized over a period of five years. The assumptions for employee stock options are summarized as follows: Years Ended March 31, 2016 March 31, 2015 Risk-free interest rate 1.6% 1.4% to 1.7% Expected life (in years) 5.0 5.0 Expected volatility 72% to 75% 74% to 75% Expected dividend 0% 0% Cumulative compensation cost recognized in net income or loss with respect to options that are forfeited prior to vesting is adjusted as a reduction of compensation expense in the period of forfeiture. The volatility of the stock is based on the historical volatility for the period that approximates the expected lives of the options being valued. Fair value computations are highly sensitive to the volatility factor; the greater the volatility, the higher the computed fair value of options granted. The total fair value of options granted was computed to be approximately $58,000 and $51,000, for the fiscal years ended March 31, 2016 and 2015, respectively. For disclosure purposes, these amounts are amortized ratably over the vesting periods of the options. Effects of stock-based compensation, net of the effect of forfeitures, totaled $74,677 and $62,608 for fiscal years 2016 and 2015, respectively. The Black-Scholes model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. In addition, option valuation models require the use of assumptions, including the expected stock price volatility. Because our employee stock options have characteristics significantly different than those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in managements opinion, the existing models do not necessarily provide a reliable single measure of the fair value of our employee stock options. A summary of our stock option activity and related information for equity compensation plans approved by security holders for each of the fiscal years ended March 31, 2016 and 2015 is as follows: STOCK OPTIONS OUTSTANDING Number Outstanding Weighted-Average Exercise Price per Share BALANCE AT MARCH 31, 2014 281,000 $ 1.06 Granted 75,000 0.84 Forfeited/expired (26,000) 1.73 BALANCE AT MARCH 31, 2015 330,000 $ 0.96 Granted 139,000 0.57 Forfeited/expired (58,000) 0.83 BALANCE AT MARCH 31, 2016 411,000 $ 0.85 A summary of our stock option activity and related information for equity compensation plans not approved by security holders for the fiscal year ended March 31, 2016 is as follows: STOCK OPTIONS OUTSTANDING Number Outstanding Weighted-Average Exercise Price per Share BALANCE AT MARCH 31, 2014 250,000 $ 0.97 Granted 20,000 1.00 Forfeited/expired (25,000) 1.12 BALANCE AT MARCH 31, 2015 245,000 $0.96 Granted Forfeited/expired BALANCE AT MARCH 31, 2016 245,000 $ 0.96 The following table summarizes information about employee stock options outstanding and exercisable at March 31, 2016: STOCK OPTIONS OUTSTANDING STOCK OPTIONS EXERCISABLE Range of Exercise Prices Number Outstanding Weighted-Average Remaining Contractual Life (in Years) Weighted-Average Exercise Price per Share Number Exercisable Weighted-Average Exercise Price per Share $0.50 - $0.94 426,000 2.0 $ 0.75 133,061 $ 0.83 $1.00 - $1.09 110,000 2.3 $ 1.02 56,781 $ 1.03 $1.15 - $1.50 120,000 2.1 $ 1.26 85,670 $ 1.28 656,000 2.1 $ 0.89 275,512 $ 1.01 A summary of our RSU activity and related information for equity compensation plans approved by security holders for the fiscal year ended March 31, 2016 is as follows: RSUs OUTSTANDING Number Outstanding Weighted-Average Exercise Price per Share BALANCE AT MARCH 31, 2015 24,924 $ 0.80 Granted 20,000 0.50 BALANCE AT MARCH 31, 2016 44,924 $ 0.67 The 656,000 options outstanding as of March 31, 2016 are nonqualified stock options. The exercise price of all options granted through March 31, 2016 has been equal to or greater than the fair market value, as determined by our Board of Directors or based upon publicly quoted market values of our common stock on the date of the grant. As of March 31, 2016, 600,076 equity units for our common stock remain available for grant under the Plan. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Mar. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Our noncancelable lease agreement extends through July 31, 2019 for 28,696 square feet of space for our facilities at 6797 Winchester Circle, Boulder, Colorado. The lease includes $172,176 of leasehold improvements granted by the landlord. The $172,176 was recorded on our balance sheets as leasehold improvements and deferred rent. The leasehold improvements are being amortized over the lesser of the lease term or the assets life and the deferred rent is being amortized against rent expense over the lease term. The minimum future lease payment, by fiscal year, as of March 31, 2016 is as follows: Fiscal Year Amount 2017 276,732 2018 285,034 2019 293,585 2020 99,800 Total $955,151 In March 2016, we entered into a loan and security agreement with Crestmark Bank. The loan is due on demand and has no financial covenants. Under the agreement, we were provided with a line of credit that is not to exceed the lesser of $1,000,000 or 85% of eligible accounts receivable. The interest rate is prime rate plus 2%, with a floor of 5.5%, plus a monthly maintenance fee of 0.4%, based on the average monthly loan balance. Interest is charged on a minimum loan balance of $500,000, a loan fee of 1% annually, and an exit fee of 3%, 2% and 1% during years one, two and three, respectively. As of March 31, 2016, we had $387,491 of borrowings from the credit facility and had an additional approximately $238,000 available to borrow. We are subject to regulation by the United States Food and Drug Administration (FDA). The FDA provides regulations governing the manufacture and sale of our products and regularly inspects us and other manufacturers to determine our and their compliance with these regulations. As of March 31, 2016, we believe we were in substantial compliance with all known regulations. FDA inspections are conducted periodically at the discretion of the FDA. We were last inspected in December 2012 and were notified of five observations from that inspection, none of which we believe to be material. Our obligation with respect to employee severance benefits is minimized by the at will nature of the employee relationships. Our total obligation with respect to contingent severance benefit obligations was none and $87,282 as of March 31, 2016 and 2015, respectively. |
Income Taxes
Income Taxes | 12 Months Ended |
Mar. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | We account for income taxes under ASC 740, which requires the use of the liability method. ASC 740 provides that deferred tax assets and liabilities are recorded based on the differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes, referred to as temporary differences. Deferred tax assets and liabilities at the end of each period are determined using the currently enacted tax rates applied to taxable income in the periods in which the deferred tax assets and liabilities are expected to be settled or realized. Income tax provision (benefit) for income taxes is summarized below: Years Ended March 31, 2016 March 31, 2015 Current: Federal $ $ State Total current Deferred: Federal (291,000) (461,000) State (30,000) (48,000) Total deferred (321,000) (509,000) Valuation allowance 321,000 509,000 Total $ $ The items accounting for the difference between income taxes computed at the federal statutory rate and the provision for income taxes consists of the following: Years Ended March 31, 2016 March 31, 2015 Federal statutory rate $(299,000) $(470,000) Effect of: State taxes, net of federal tax benefit (31,000) (48,000) Other 15,000 12,000 Valuation allowance 315,000 506,000 Total $ $ The components of the deferred tax asset are as follows: Years Ended March 31, 2016 March 31, 2015 Credits and net operating loss carryforwards $4,190,000 $3,936,000 Other 225,000 158,000 Gross deferred tax assets 4,415,000 4,094,000 Valuation allowance (4,415,000) (4,094,000) Total deferred tax assets $ $ We believe that based on all available evidence, it is more likely than not that the deferred tax assets will not be fully realized. Accordingly, a valuation allowance has been recorded against the deferred tax asset. As of March 31, 2016, we had approximately $11.1 million of net operating loss carryovers for tax purposes. Additionally, we have approximately $233,000 of research and development tax credits available to offset future federal income taxes. The net operating loss and credit carryovers begin to expire in the fiscal year ended March 31, 2019. In fiscal years ended after March 31, 2019, net operating losses expire at various dates through March 31, 2036. Our net operating loss carryovers at March 31, 2016 include $582,000 in income tax deductions related to stock options which will be tax effected and the benefit will be reflected as a credit to additional paid-in capital when realized. As such, these deductions are not reflected in our deferred tax assets. The Internal Revenue Code contains provisions, which may limit the net operating loss carryforwards available to be used in any given year if certain events occur, including significant changes in ownership interests. |
Major Customers_Suppliers
Major Customers/Suppliers | 12 Months Ended |
Mar. 31, 2016 | |
Major Customers/Suppliers | |
Major Customers/Suppliers | We depend on sales that are generated from hospitals ongoing usage of AEM surgical instruments. In fiscal year 2016, we generated sales from over 300 hospitals that have changed to AEM products, but no hospital customer contributed more than 4% to the total sales. We have a relationship with New Deantronics, Inc., who accounted for approximately 11% of our purchases in fiscal year 2016. |
Defined Contribution Employee B
Defined Contribution Employee Benefit Plan | 12 Months Ended |
Mar. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Defined Contribution Employee Benefit Plan | We have adopted a 401(k) Profit Sharing Plan which covers all full-time employees who are age eighteen or older. Participants may defer up to 20% of their gross pay up to a maximum limit determined by law. Participants are immediately vested in their contributions. We may make discretionary contributions based on corporate financial results for the fiscal year. To date, we have not made contributions to the 401(k) Profit Sharing Plan. Vesting in a contribution account (our contribution) is based on years of service, with a participant fully vested after five years of credited service. |
Related Party Transaction
Related Party Transaction | 12 Months Ended |
Mar. 31, 2016 | |
Related Party Transactions [Abstract] | |
Related Party Transaction | We paid consulting fees of $85,504 and $84,733 to an entity owned by one of our directors in fiscal years 2016 and 2015, respectively. We paid consulting fees of none and $4,000 to an entity owned by another director, in fiscal years 2016 and 2015, respectively. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Mar. 31, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | Management evaluated all activity of us and concluded that, as of the date the financial statements were issued, no subsequent events have occurred that would require recognition in the financial statements or disclosure in the notes to the financial statements. |
Summary of Significant Accoun16
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Mar. 31, 2016 | |
Accounting Policies [Abstract] | |
Use of Estimates in the Preparation of Financial Statements | The preparation of financial statements in conformity with accounting principles generally accepted in the United States (GAAP) requires management to make estimates and assumptions. Such estimates and assumptions affect the reported amounts of assets and liabilities as well as disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of sales and expense during the reporting period. Actual results could differ from those estimates. |
Cash and Cash Equivalents | For purposes of reporting cash flows, we consider all cash and highly liquid investments with an original maturity of three months or less to be cash equivalents. Restricted cash is cash that was deposited to obtain a letter of credit for our importing and exporting activities. |
Fair Value of Financial Instruments | Our financial instruments consist of cash and cash equivalents and short-term trade receivables, payables and line of credit. The carrying values of cash and cash equivalents, short-term receivables, payables and line of credit approximate their fair value due to their short maturities. |
Concentration of Credit Risk | We have no significant off-balance sheet concentrations of credit risk such as foreign exchange contracts, options contracts or other foreign hedging arrangements. We maintain the majority of our cash balances with one financial institution in the form of demand deposits. Accounts receivable are typically unsecured and are derived from transactions with and from entities in the healthcare industry primarily located in the United States. Accordingly, we may be exposed to credit risk generally associated with the healthcare industry. We maintain allowances for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. We charge interest on past due accounts on a case-by-case basis. A summary of the activity in our allowance for doubtful accounts is as follows: Years Ended March 31, 2016 March 31, 2015 Balance, beginning of year $11,500 $ 8,000 Provision for estimated (recoveries) losses (1,338) 9,582 Write-off of uncollectible accounts (1,162) (6,082) Balance, end of year $9,000 $11,500 The net accounts receivable balance at March 31, 2016 of $839,850 included no more than 5% from any one customer. The net accounts receivable balance at March 31, 2015 of $965,355 included no more than 5% from any one customer. Financial instruments, which potentially subject us to concentrations of credit risk, consist of cash and cash equivalents, accounts receivable and accounts payable. The carrying value of all financial instruments approximates fair value. The amount of cash on deposit with financial institutions occasionally exceeds the $250,000 federally insured limit at March 31, 2016. However, we believe that cash on deposit that exceeds $250,000 in the financial institutions is financially sound and the risk of loss is minimal. |
Warranty Accrual | We provide for the estimated cost of product warranties at the time sales are recognized. While we engage in extensive product quality programs and processes, including actively monitoring and evaluating the quality of our component suppliers, our warranty obligation is based upon historical experience and is also affected by product failure rates and material usage incurred in correcting a product failure. Should actual product failure rates or material usage costs differ from our estimates, revisions to the estimated warranty liability would be required. A summary of our warranty claims activity, included in other accrued liabilities, is as follows: Years Ended March 31, 2016 March 31, 2015 Balance, beginning of year $ 20,000 $ 35,000 Provision for estimated warranty claims 1,194 (15,000) Claims made (1,194) Balance, end of year $ 20,000 $ 20,000 |
Inventories | We reduce inventory for estimated obsolete or unmarketable inventory equal to the difference between the cost of inventory and the market value based upon assumptions about future demand and market conditions. If actual market conditions are less favorable than those projected by management, additional inventory write-downs may be required. March 31, 2016 March 31, 2015 Raw materials $1,469,630 $1,547,733 Finished goods 671,117 1,029,921 Total gross inventories 2,140,747 2,577,654 Less reserve for obsolescence (410,000) (240,000) Total net inventories $1,730,747 $2,337,654 A summary of the activity in our inventory reserve for obsolescence is as follows: Years Ended March 31, 2016 March 31, 2015 Balance, beginning of year $ 240,000 $ 560,000 Provision for estimated obsolescence 221,427 135,902 Write-off of obsolete inventory (51,427) (455,902) Balance, end of year $ 410,000 $ 240,000 |
Property and Equipment | Property and equipment are stated at cost, with depreciation computed over the estimated useful lives of the assets, generally three to seven years. We use the straight-line method of depreciation for property and equipment. Leasehold improvements are depreciated over the shorter of the remaining lease term or the estimated useful life of the asset. Maintenance and repairs are expensed as incurred and major additions, replacements and improvements are capitalized. Depreciation expense for the years ended March 31, 2016 and 2015 was $292,869 and $357,985, respectively. |
Long-Lived Assets | Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. A long-lived asset is considered impaired when estimated future cash flows related to the asset, undiscounted and without interest, are insufficient to recover the carrying amount of the asset. If deemed impaired, the long-lived asset is reduced to its estimated fair value. Long-lived assets to be disposed of are reported at the lower of their carrying amount or estimated fair value less cost to sell. |
Patents | March 31, 2016 March 31, 2015 Patents issued $280,669 $280,669 Accumulated amortization (165,167) (153,494) Patents issued, net of accumulated amortization 115,502 127,175 Patent applications 151,537 130,181 Accumulated amortization (14,150) Patent applications, net of accumulated amortization 137,387 130,181 Total net patents and patent applications $252,889 $257,356 The expected annual amortization expense related to patents and patent applications as of March 31, 2016, for the next five fiscal years, is as follows: Fiscal Year Amount 2017 $ 25,823 2018 25,823 2019 25,823 2020 25,823 2021 and following 149,597 Total $252,889 |
Other Accrued Liabilities | At March 31, 2016 and 2015, other accrued liabilities consisted of the following: March 31, 2016 March 31, 2015 Warranty $ 20,000 $ 20,000 Sales commissions 83,445 82,132 Lease normalization 31,365 22,655 Sales and use tax 17,453 21,124 Marketing fees 10,363 8,133 Legal and audit fees 40,454 38,493 Payroll taxes 21,823 24,120 Medical device tax 7,651 Employment agreement 87,282 Insurance 20,240 Miscellaneous 12,363 13,336 Total other accrued liabilities $257,506 $324,926 |
Income Taxes | We account for income taxes under the provisions of ASC Topic 740, Accounting for Income Taxes (ASC 740). ASC 740 requires recognition of deferred income tax assets and liabilities for the expected future income tax consequences, based on enacted tax laws, of temporary differences between the financial reporting and tax bases of assets and liabilities. ASC 740 also requires recognition of deferred tax assets for the expected future tax effects of all deductible temporary differences, loss carryforwards and tax credit carryforwards. Deferred tax assets are then reduced, if deemed necessary, by a valuation allowance for the amount of any tax benefits which, more likely than not based on current circumstances, are not expected to be realized. Should we achieve sufficient, sustained income in the future, we may conclude that some or all of the valuation allowance should be reversed (Note 5). ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts. The cumulative effect of adopting ASC 740 on April 1, 2007 has been recorded net in deferred tax assets, which resulted in no ASC 740 liability on the balance sheet. The total amount of unrecognized tax benefits as of the date of adoption was zero. There are open statutes of limitations for taxing authorities in federal and state jurisdictions to audit the Companys tax returns from fiscal year ended March 31, 1999 through the current period. Our policy is to account for income tax related interest and penalties in income tax expense in the statements of operations. There have been no income tax related interest or penalties assessed or recorded. Because the Company has provided a full valuation allowance on all of its deferred tax assets, the adoption of ASC 740 had no impact on our effective tax rate. |
Revenue Recognition | Revenue from product sales, net of discounts, are recorded when we ship the product and title has passed to the customer, provided that we have evidence of a customer arrangement and can conclude that collection is probable. Our shipping policy is FOB Shipping Point. We recognize revenue from sales to stocking distributors when there is no right of return, other than for normal warranty claims. We have no ongoing obligations related to product sales, except for normal warranty. Revenue from engineering services is recognized when invoices are sent to customers and the service is performed. |
Sales Taxes | We collect sales tax from customers and remit the entire amount to each respective state. We recognize revenue from product sales net of sale taxes. |
Research and Development Expenses | We expense research and development costs for products and processes as incurred. |
Advertising Costs | We expense advertising costs as incurred. Advertising expense for the years ended March 31, 2016 and 2015 was minimal. |
Medical Device Tax | The Patient Protection and Affordable Care Act imposed a 2.3% excise tax on the sale of certain medical devices by a manufacturer, producer or importer of such devices in the United States starting after December 31, 2012. We expense the medical device tax in Other Expense. Effective January 1, 2016, the excise tax was suspended for two years. |
Stock-Based Compensation | Stock-based compensation is presented in accordance with the guidance of ASC Topic 718, Compensation Stock Compensation (ASC 718). Under the provisions of ASC 718, companies are required to estimate the fair value of share-based payment awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in our statements of operations. ASC 718 requires companies to estimate the fair value of share-based payment awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in the accompanying statements of operations. Stock-based compensation expense recognized during the period is based on the value of the portion of share-based payment awards that is ultimately expected to vest during the period. Stock-based compensation expense recognized in our statements of operations for fiscal years 2016 and 2015 included compensation expense for share-based payment awards granted prior to, but not yet vested as of March 31, 2016, based on the grant date fair value. Compensation expense for all share-based payment is recognized using the straight-line, single-option method. As stock-based compensation expense recognized in the accompanying statements of operations for fiscal years 2016 and 2015 is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures. ASC 718 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. We used the Black-Scholes option-pricing model (Black-Scholes model) to determine fair value. Our determination of fair value of share-based payment awards on the date of grant using an option-pricing model is affected by our stock price as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to our expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors. Although the fair value of employee stock options is determined in accordance with ASC 718 using an option-pricing model, that value may not be indicative of the fair value observed in a willing buyer/willing seller market transaction. Stock-based compensation expense recognized under ASC 718 for fiscal years 2016 and 2015 was $74,677 and $62,608, respectively, which consisted of stock-based compensation expense related to director and employee stock options. Stock-based compensation expense related to director and employee stock options under ASC 718 for fiscal years 2016 and 2015 was allocated as follows: Years Ended March 31, 2016 March 31, 2015 Cost of sales $ 2,287 $ 1,965 Sales and marketing 11,822 11,076 General and administrative 56,381 46,522 Research and development 4,187 3,045 Stock-based compensation expense $ 74,677 $ 62,608 |
Segment Reporting | We have concluded that we have one operating segment. |
Basic and Diluted Income per Common Share | Net income per share is calculated in accordance with ASC Topic 260, "Earnings Per Share" ("ASC 260"). Under the provisions of ASC 260, basic net income per common share is computed by dividing net income for the period by the weighted average number of common shares outstanding for the period. Diluted net income per common share is computed by dividing the net income for the period by the weighted average number of common and potential common shares outstanding during the period if the effect of the potential common shares is dilutive. Because we had a loss in fiscal years 2016 and 2015, the shares used in the calculation of dilutive potential common shares exclude options to purchase shares and RSUs. Therefore, basic net loss per common share equals dilutive net loss per common share: The following table presents the calculation of basic and diluted net income (loss) per share: Years Ended March 31, 2016 March 31, 2015 Net loss $ (880,200) $(1,382,746) Weighted-average shares basic 10,673,225 10,673,225 Effect of dilutive potential common shares Weighted-average shares diluted 10,673,225 10,673,225 Net loss per share basic and diluted $ (0.08) $ (0.13) Antidilutive equity units 700,924 599,924 |
Recent Accounting Pronouncements | We have reviewed all recently issued, but not yet effective, accounting pronouncements. The Financial Accounting Standards Board issued Accounting Standards Update No. 2014-09 (Revenue from Contracts with Customers), which is effective for annual reporting periods beginning after December 15, 2017. The Company does not expect ASU 2014-09 to have an impact on its financial statements. The Financial Accounting Standards Board has also issued Accounting Standards Update 2014-15, Presentation of Financial Statements Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entitys Ability to Continue as a Going Concern (the ASU), which provides guidance on determining when and how to disclose going concern uncertainties in the financial statements. The ASU requires management to perform an assessment every reporting period (including interim periods) to determine whether there is substantial doubt about a companys ability to continue as a going concern and to provide related footnote disclosures. The ASU also defines that substantial doubt exists when relevant conditions and events, considered in the aggregate, indicate that it is probable that the entity will be unable to meet its obligations as they become due within one year after the date that the financial statements are issued (or available to be issued). The ASU applies to all entities and is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted. We are currently evaluating this new guidance and the related impact on the financial statements. In July 2015, the FASB issued Accounting Standards Update 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory, (ASU 2015-11). ASU 2015-11 affects reporting entities that measure inventory using first-in, first-out (FIFO) or average cost. Specifically, ASU 2015-11 requires that inventory be measured at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Subsequent measurement is unchanged for inventory measured using LIFO or the retail inventory method. ASU 2015-11 is effective for fiscal years beginning after December 15, 2016. Early adoption is permitted. The Company does not expect ASU 2015-11 to have an impact on its financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (ASU 2016-02), which modified lease accounting for both lessees and lessors to increase transparency and comparability by recognizing lease assets and lease liabilities by lessees for those leases classified as operating leases under previous accounting standards and disclosing key information about leasing arrangements. ASU 2016-02 will be effective for the Company beginning in its third quarter of 2020 and early adoption is permitted. The Company is currently evaluating the timing of its adoption and the impact of adopting the new lease standard on its consolidated financial statements. |
Summary of Significant Accoun17
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Mar. 31, 2016 | |
Accounting Policies [Abstract] | |
Summary of the activity in allowance for doubtful accounts | Years Ended March 31, 2016 March 31, 2015 Balance, beginning of year $11,500 $ 8,000 Provision for estimated (recoveries) losses (1,338) 9,582 Write-off of uncollectible accounts (1,162) (6,082) Balance, end of year $9,000 $11,500 |
Summary of warranty claims activity, included in other accrued liabilities | Years Ended March 31, 2016 March 31, 2015 Balance, beginning of year $ 20,000 $ 35,000 Provision for estimated warranty claims 1,194 (15,000) Claims made (1,194) Balance, end of year $ 20,000 $ 20,000 |
Schedule of inventory | March 31, 2016 March 31, 2015 Raw materials $1,469,630 $1,547,733 Finished goods 671,117 1,029,921 Total gross inventories 2,140,747 2,577,654 Less reserve for obsolescence (410,000) (240,000) Total net inventories $1,730,747 $2,337,654 |
Summary of the activity in inventory reserve for obsolescence | Years Ended March 31, 2016 March 31, 2015 Balance, beginning of year $ 240,000 $ 560,000 Provision for estimated obsolescence 221,427 135,902 Write-off of obsolete inventory (51,427) (455,902) Balance, end of year $ 410,000 $ 240,000 |
Summary of patents | March 31, 2016 March 31, 2015 Patents issued $280,669 $280,669 Accumulated amortization (165,167) (153,494) Patents issued, net of accumulated amortization 115,502 127,175 Patent applications 151,537 130,181 Accumulated amortization (14,150) Patent applications, net of accumulated amortization 137,387 130,181 Total net patents and patent applications $252,889 $257,356 |
Schedule of expected annual amortization expense related to patents and patent applications for the next five fiscal years | Fiscal Year Amount 2017 $ 25,823 2018 25,823 2019 25,823 2020 25,823 2021 and following 149,597 Total $252,889 |
Schedule of other accrued liabilities | March 31, 2016 March 31, 2015 Warranty $ 20,000 $ 20,000 Sales commissions 83,445 82,132 Lease normalization 31,365 22,655 Sales and use tax 17,453 21,124 Marketing fees 10,363 8,133 Legal and audit fees 40,454 38,493 Payroll taxes 21,823 24,120 Medical device tax 7,651 Employment agreement 87,282 Insurance 20,240 Miscellaneous 12,363 13,336 Total other accrued liabilities $257,506 $324,926 |
Schedule of stock-based compensation expense related to employee stock options | Years Ended March 31, 2016 March 31, 2015 Cost of sales $ 2,287 $ 1,965 Sales and marketing 11,822 11,076 General and administrative 56,381 46,522 Research and development 4,187 3,045 Stock-based compensation expense $ 74,677 $ 62,608 |
Schedule of calculation of basic and diluted net income (loss) per share | Years Ended March 31, 2016 March 31, 2015 Net loss $ (880,200) $(1,382,746) Weighted-average shares basic 10,673,225 10,673,225 Effect of dilutive potential common shares Weighted-average shares diluted 10,673,225 10,673,225 Net loss per share basic and diluted $ (0.08) $ (0.13) Antidilutive equity units 700,924 599,924 |
Shareholders' Equity (Tables)
Shareholders' Equity (Tables) | 12 Months Ended |
Mar. 31, 2016 | |
Summary of assumptions for employee stock options | Years Ended March 31, 2016 March 31, 2015 Risk-free interest rate 1.6% 1.4% to 1.7% Expected life (in years) 5.0 5.0 Expected volatility 72% to 75% 74% to 75% Expected dividend 0% 0% |
Summary of information about employee stock options outstanding and exercisable | STOCK OPTIONS OUTSTANDING STOCK OPTIONS EXERCISABLE Range of Exercise Prices Number Outstanding Weighted-Average Remaining Contractual Life (in Years) Weighted-Average Exercise Price per Share Number Exercisable Weighted-Average Exercise Price per Share $0.50 - $0.94 426,000 2.0 $ 0.75 133,061 $ 0.83 $1.00 - $1.09 110,000 2.3 $ 1.02 56,781 $ 1.03 $1.15 - $1.50 120,000 2.1 $ 1.26 85,670 $ 1.28 656,000 2.1 $ 0.89 275,512 $ 1.01 |
Summary of RSU activity and related information for equity compensation plans | RSUs OUTSTANDING Number Outstanding Weighted-Average Exercise Price per Share BALANCE AT MARCH 31, 2015 24,924 $ 0.80 Granted 20,000 0.50 BALANCE AT MARCH 31, 2016 44,924 $ 0.67 |
Equity Compensation Plans Approved [Member] | |
Summary of stock option activity and related information for equity compensation plans | STOCK OPTIONS OUTSTANDING Number Outstanding Weighted-Average Exercise Price per Share BALANCE AT MARCH 31, 2014 281,000 $ 1.06 Granted 75,000 0.84 Forfeited/expired (26,000) 1.73 BALANCE AT MARCH 31, 2015 330,000 $ 0.96 Granted 139,000 0.57 Forfeited/expired (58,000) 0.83 BALANCE AT MARCH 31, 2016 411,000 $ 0.85 |
Equity Compensation Plans Not Approved [Member] | |
Summary of stock option activity and related information for equity compensation plans | STOCK OPTIONS OUTSTANDING Number Outstanding Weighted-Average Exercise Price per Share BALANCE AT MARCH 31, 2014 250,000 $ 0.97 Granted 20,000 1.00 Forfeited/expired (25,000) 1.12 BALANCE AT MARCH 31, 2015 245,000 $0.96 Granted Forfeited/expired BALANCE AT MARCH 31, 2016 245,000 $ 0.96 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Mar. 31, 2016 | |
Building [Member] | |
Schedule of Commitments [Line Items] | |
Schedule of minimum future lease payments, by fiscal year | Fiscal Year Amount 2017 276,732 2018 285,034 2019 293,585 2020 99,800 Total $955,151 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Mar. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Schedule of income tax provision (benefit) for income taxes | Years Ended March 31, 2016 March 31, 2015 Current: Federal $ $ State Total current Deferred: Federal (291,000) (461,000) State (30,000) (48,000) Total deferred (321,000) (509,000) Valuation allowance 321,000 509,000 Total $ $ |
Schedule of accounting for the difference between income taxes computed at the federal statutory rate and the provision for income taxes | Years Ended March 31, 2016 March 31, 2015 Federal statutory rate $(299,000) $(470,000) Effect of: State taxes, net of federal tax benefit (31,000) (48,000) Other 15,000 12,000 Valuation allowance 315,000 506,000 Total $ $ |
Schedule of components of the deferred tax asset | Years Ended March 31, 2016 March 31, 2015 Credits and net operating loss carryforwards $4,190,000 $3,936,000 Other 225,000 158,000 Gross deferred tax assets 4,415,000 4,094,000 Valuation allowance (4,415,000) (4,094,000) Total deferred tax assets $ $ |
Description of Business (Detail
Description of Business (Details) - USD ($) | Mar. 31, 2016 | Mar. 31, 2015 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Accumulated deficit | $ 21,220,317 | $ 20,340,117 |
Summary of Significant Accoun22
Summary of Significant Accounting Policies (Details) - USD ($) | 12 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Accounting Policies [Abstract] | ||
Balance, beginning of year | $ 11,500 | $ 8,000 |
Provision for estimated losses | (1,338) | 9,582 |
Write-off of uncollectible accounts | (1,162) | (6,082) |
Balance, end of year | $ 9,000 | $ 11,500 |
Summary of Significant Accoun23
Summary of Significant Accounting Policies (Details 1) - USD ($) | 12 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Accounting Policies [Abstract] | ||
Balance, beginning of year | $ 20,000 | $ 35,000 |
Provision for estimated warranty claims | 1,194 | (15,000) |
Claims made | (1,194) | 0 |
Balance, end of year | $ 20,000 | $ 20,000 |
Summary of Significant Accoun24
Summary of Significant Accounting Policies (Details 2) - USD ($) | Mar. 31, 2016 | Mar. 31, 2015 |
Summary Of Significant Accounting Policies Details 2 | ||
Raw materials | $ 1,469,630 | $ 1,547,733 |
Finished goods | 671,117 | 1,029,921 |
Total gross inventories | 2,140,747 | 2,577,654 |
Less reserve for obsolescence | (410,000) | (240,000) |
Total net inventories | $ 1,730,747 | $ 2,337,654 |
Summary of Significant Accoun25
Summary of Significant Accounting Policies (Details 3) - USD ($) | 12 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Accounting Policies [Abstract] | ||
Balance, beginning of year | $ 240,000 | $ 560,000 |
Provision for estimated obsolescence | 221,427 | 135,902 |
Write-off of obsolete inventory | (51,427) | (455,902) |
Balance, end of year | $ 410,000 | $ 240,000 |
Summary of Significant Accoun26
Summary of Significant Accounting Policies (Details 4) - USD ($) | Mar. 31, 2016 | Mar. 31, 2015 |
Accumulated amortization | $ (179,317) | $ (153,494) |
Total net patents and patent applications | 252,889 | 257,356 |
Patents [Member] | ||
Patents issued | 280,669 | 280,669 |
Accumulated amortization | (165,167) | (153,494) |
Patents issued, net of accumulated amortization | 115,502 | 127,175 |
Patent applications | 151,537 | 130,181 |
Accumulated amortization | (14,150) | 0 |
Patent applications, net of accumulated amortization | 137,387 | 130,181 |
Total net patents and patent applications | $ 252,889 | $ 257,356 |
Summary of Significant Accoun27
Summary of Significant Accounting Policies (Details 5) | Mar. 31, 2016USD ($) |
Expected annual amortization expense related to patents and patent applications | |
2,017 | $ 25,823 |
2,018 | 25,823 |
2,019 | 25,823 |
2,020 | 25,823 |
2021 and following | 149,597 |
Total | $ 252,889 |
Summary of Significant Accoun28
Summary of Significant Accounting Policies (Details 6) - USD ($) | Mar. 31, 2016 | Mar. 31, 2015 |
Accounting Policies [Abstract] | ||
Warranty | $ 20,000 | $ 20,000 |
Sales commissions | 83,445 | 82,132 |
Lease normalization | 31,365 | 22,655 |
Sales and use tax | 17,453 | 21,124 |
Marketing fees | 10,363 | 8,133 |
Legal and audit fees | 40,454 | 38,493 |
Payroll taxes | 21,823 | 24,120 |
Medical device tax | 0 | 7,651 |
Employment agreement | 0 | 87,282 |
Insurance | 20,240 | 0 |
Miscellaneous | 12,363 | 13,336 |
Total other accrued liabilities | $ 257,506 | $ 324,926 |
Summary of Significant Accoun29
Summary of Significant Accounting Policies (Details 7) - USD ($) | 12 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Stock-based compensation expense related to grants of employee stock options | $ 74,677 | $ 62,608 |
Cost Of Sales [Member] | ||
Stock-based compensation expense related to grants of employee stock options | 2,287 | 1,965 |
Selling And Marketing Expense [Member] | ||
Stock-based compensation expense related to grants of employee stock options | 11,822 | 11,076 |
General And Administrative Expense [Member] | ||
Stock-based compensation expense related to grants of employee stock options | 56,381 | 46,522 |
Research And Development Expense [Member] | ||
Stock-based compensation expense related to grants of employee stock options | $ 4,187 | $ 3,045 |
Summary of Significant Accoun30
Summary of Significant Accounting Policies (Details 8) - USD ($) | 12 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Summary Of Significant Accounting Policies Details 8 | ||
Net loss | $ (880,200) | $ (1,382,746) |
Weighted-average shares - basic (in shares) | 10,673,225 | 10,673,225 |
Effect of dilutive potential common shares | 0 | 0 |
Weighted-average shares - diluted (in shares) | 0 | 0 |
Net loss per share-basic and diluted (in dollars per share) | $ (0.08) | $ (0.13) |
Antidilutive equity units (in shares) | 700,924 | 599,924 |
Summary of Significant Accoun31
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 12 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Summary Of Significant Accounting Policies Details Narrative | ||
Accounts receivable | $ 839,850 | $ 965,355 |
Depreciation expense | 292,869 | 357,985 |
Stock based compensation | $ 74,677 | $ 62,608 |
Shareholders' Equity (Details)
Shareholders' Equity (Details) | 12 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Shareholders Equity Details | ||
Risk-free interest rate | 1.60% | |
Risk-free interest rate, minimum (as a percent) | 1.40% | |
Risk-free interest rate, maximum (as a percent) | 1.70% | |
Expected life | 5 years | 5 years |
Expected volatility, minimum (as a percent) | 72.00% | 74.00% |
Expected volatility, maximum (as a percent) | 75.00% | 75.00% |
Expected dividend (as a percent) | 0.00% | 0.00% |
Shareholders' Equity (Details 1
Shareholders' Equity (Details 1) - Employee Stock Option [Member] - $ / shares | 12 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Equity Compensation Plans Approved [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Balance at the beginning of the period (in shares) | 330,000 | 281,000 |
Granted (in shares) | 139,000 | 75,000 |
Forfeited/expired (in shares) | (58,000) | (26,000) |
Balance at the end of the period (in shares) | 411,000 | 330,000 |
Balance at the beginning of the period (in dollars per share) | $ .96 | $ 1.06 |
Granted (in dollars per share) | .57 | .84 |
Forfeited/expired (in dollars per share) | .83 | 1.73 |
Balance at the end of the period (in dollars per share) | $ .85 | $ .96 |
Equity Compensation Plans Not Approved [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Balance at the beginning of the period (in shares) | 245,000 | 250,000 |
Granted (in shares) | 0 | 20,000 |
Forfeited/expired (in shares) | 0 | (25,000) |
Balance at the end of the period (in shares) | 245,000 | 245,000 |
Balance at the beginning of the period (in dollars per share) | $ .96 | $ .97 |
Granted (in dollars per share) | 0 | 1 |
Forfeited/expired (in dollars per share) | 0 | 1.12 |
Balance at the end of the period (in dollars per share) | $ .96 | $ .96 |
Shareholders' Equity (Details 2
Shareholders' Equity (Details 2) - Employee Stock Option [Member] | 12 Months Ended |
Mar. 31, 2016$ / sharesshares | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Number Outstanding (in shares) | shares | 656,000 |
Weighted-Average Remaining Contractual Life | 2 years 1 month 6 days |
Weighted-Average Exercise Price per Share (in dollars per share) | $ / shares | $ .89 |
Number Exercisable (in shares) | shares | 275,512 |
Exercisable Weighted-Average Exercise Price per Share (in dollars per share) | $ / shares | $ 1.01 |
$0.50 To $0.94 [Member] | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Number Outstanding (in shares) | shares | 426,000 |
Weighted-Average Remaining Contractual Life | 2 years |
Weighted-Average Exercise Price per Share (in dollars per share) | $ / shares | $ .75 |
Number Exercisable (in shares) | shares | 133,061 |
Exercisable Weighted-Average Exercise Price per Share (in dollars per share) | $ / shares | $ .83 |
$1.00 To $1.09 [Member] | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Number Outstanding (in shares) | shares | 110,000 |
Weighted-Average Remaining Contractual Life | 2 years 3 months 18 days |
Weighted-Average Exercise Price per Share (in dollars per share) | $ / shares | $ 1.02 |
Number Exercisable (in shares) | shares | 56,781 |
Exercisable Weighted-Average Exercise Price per Share (in dollars per share) | $ / shares | $ 1.03 |
$1.15 To $1.50 [Member] | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Number Outstanding (in shares) | shares | 120,000 |
Weighted-Average Remaining Contractual Life | 2 years 1 month 6 days |
Weighted-Average Exercise Price per Share (in dollars per share) | $ / shares | $ 1.26 |
Number Exercisable (in shares) | shares | 85,670 |
Exercisable Weighted-Average Exercise Price per Share (in dollars per share) | $ / shares | $ 1.28 |
Shareholders' Equity (Details 3
Shareholders' Equity (Details 3) - Restricted Stock Units R S U [Member] | 12 Months Ended |
Mar. 31, 2016$ / sharesshares | |
Balance at the beginning of the period (in shares) | shares | 24,924 |
Granted (in shares) | shares | 20,000 |
Balance at the end of the period (in shares) | shares | 44,924 |
Balance at the beginning of the period (in dollars per share) | $ / shares | $ .80 |
Granted (in dollars per share) | $ / shares | .50 |
Balance at the end of the period (in dollars per share) | $ / shares | $ .67 |
Shareholders' Equity (Details N
Shareholders' Equity (Details Narrative) - USD ($) | 12 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Shareholders Equity Details Narrative | ||
Unrecognized compensation costs | $ 218,000 | |
Fair value of stock options | 58,000 | $ 51,000 |
Stock-based compensation, net of the effect of forfeitures | $ 74,677 | $ 62,608 |
Commitments and Contingencies37
Commitments and Contingencies (Details) | Mar. 31, 2016USD ($) |
Minimum future lease payments, by fiscal year | |
2,017 | $ 276,732 |
2,018 | 285,034 |
2,019 | 293,585 |
2,020 | 99,800 |
Total | $ 955,151 |
Commitments and Contingencies38
Commitments and Contingencies (Details Narrative) - USD ($) | Mar. 31, 2016 | Mar. 31, 2015 |
Commitments And Contingencies Details Narrative | ||
Line of credit | $ 387,491 | $ 0 |
Employee benefit obligation | $ 0 | $ 87,282 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 12 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Current: | ||
Federal | $ 0 | $ 0 |
State | 0 | 0 |
Total Current | 0 | 0 |
Deferred: | ||
Federal | (291,000) | (461,000) |
State | (30,000) | (48,000) |
Total Deferred | (321,000) | (509,000) |
Valuation allowance | 321,000 | 509,000 |
Total provision (benefit) for income taxes | $ 0 | $ 0 |
Income Taxes (Details 1)
Income Taxes (Details 1) - USD ($) | 12 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Income Tax Disclosure [Abstract] | ||
Federal statutory rate | $ (299,000) | $ (470,000) |
Effect of: | ||
State taxes, net of federal tax benefit | (31,000) | (48,000) |
Other | 15,000 | 12,000 |
Valuation allowance | 315,000 | 506,000 |
Total | $ 0 | $ 0 |
Income Taxes (Details 2)
Income Taxes (Details 2) - USD ($) | Mar. 31, 2016 | Mar. 31, 2015 |
Income Taxes Details 2 | ||
Credits and net operating loss carryforwards | $ 4,190,000 | $ 3,936,000 |
Other | 225,000 | 158,000 |
Gross deferred tax assets | 4,415,000 | 4,094,000 |
Valuation allowance | (4,415,000) | (4,094,000) |
Total deferred tax assets | $ 0 | $ 0 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) | 12 Months Ended |
Mar. 31, 2016USD ($) | |
Income Taxes Details Narrative | |
Net operating loss carryovers | $ 11,100,000 |
Operating loss carryforward expiration | Mar. 31, 2036 |
Research and development tax credits | $ 233,000 |
Major Customers_Suppliers (Deta
Major Customers/Suppliers (Details) | 12 Months Ended |
Mar. 31, 2016 | |
New Deantronics Inc [Member] | |
Major Customers and Suppliers [Line Items] | |
Percentage of purchases accounted for by a major supplier | 11.00% |
Related Party Transaction (Deta
Related Party Transaction (Details) - USD ($) | 12 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Director [Member] | ||
Related Party Transaction [Line Items] | ||
Consulting fees paid | $ 85,504 | $ 84,733 |
Director One [Member] | ||
Related Party Transaction [Line Items] | ||
Consulting fees paid | $ 0 | $ 4,000 |
Impairment Cost (Details)
Impairment Cost (Details) | 12 Months Ended |
Mar. 31, 2015USD ($) | |
Impairment Cost. | |
Product impairment cost | $ 0 |