| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Note
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis
of Presentation. The
accompanying condensed interim financial statements have been prepared, in all material respects, in conformity with the standards
of accounting measurements and reflect, in the opinion of management, all adjustments necessary to summarize fairly the financial
position and results of operations for such periods in accordance with GAAP. All adjustments are of a normal recurring nature.
The results of operations for the most recent interim period are not necessarily indicative of the results to be expected for
the full year. We
had a net loss of $181,894 for the fiscal quarter ended June 30, 2019. At June 30, 2019, we had cash of $135,569, borrowings of
$150,000 and $850,000 available under our line of credit. Working capital was $1,573,620, a decrease of $335,128 from March 31,
2019. We used $290,988 of cash in the fiscal quarter ended June 30, 2019, primarily as a result of our loss and reduction of accounts
payable. The principal reason for our loss for the fiscal year ended March 31, 2019 was higher material costs as a result of the
U.S. governmental tariffs. These facts and circumstances were initial indicators that created uncertainty about our ability to
continue as a going concern. To address this uncertainty, management has developed plans to ensure that we have the working capital
necessary to fund operations. In July 2019, we reduced personnel and departmental costs by more than $1 million annualized. We
expect that the $1 million annualized cost reductions will return us, starting in the near-term, to profitability. We have a new
line of credit (see Note 7), for up to $1 million, restricted by eligible receivables. Management concludes that it is probable
that our cash resources and line of credit will be sufficient to meet our cash requirements for twelve months from the issuance
of the consolidated financial statements. In the event that the governmental tariffs are reduced or eliminated then we expect
that the higher material costs that we experienced will be reduced. We are increasing our pricing on products to mitigate somewhat
our higher material costs. Therefore, the accompanying condensed financial statements have been prepared assuming that we will
continue as a going concern. 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. The net accounts receivable balance at June 30, 2019 of $1,021,341 and at March 31, 2019 of $1,009,106 included no more
than 8% from any one customer. Inventories
June
30, 2019 March
31, 2019
Raw
materials $ 1,148,006 $ 1,063,780
Finished
goods 269,713 458,763
Total
gross inventories 1,417,719 1,522,543
Less
reserve for obsolescence (40,000 ) (50,000 )
Total
net inventories $ 1,377,719 $ 1,472,543 Property
and Equipment Long-Lived
Assets. Patents.
Income
Taxes. Revenue
Recognition. Research
and Development Expenses Stock-Based
Compensation Stock-based
compensation expense recognized under ASC 718 for the three months ended June 30, 2019 and 2018 was $7,702 and $12,093, respectively,
which consisted of stock-based compensation expense related to grants of employee stock options and restricted stock units (“RSUs”). Segment
Reporting. Recent
Accounting Pronouncements. ASU
No. 2014-09 (ASC 606), Revenue from Contracts with Customers became effective for us beginning April 1, 2018, and adopted the
new accounting standard using the modified retrospective transition approach. We record revenue under ASC 606 at a single point
in time, when control is transferred to the customer, which is consistent with past practice. We will continue to apply our current
business processes, policies, systems and controls to support recognition and disclosure under the new standard. Based on the
results of the evaluation, we have determined that the adoption of the new standard presents no material impact on our 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. Within the opening balances for the fiscal year beginning April 1, 2019, we recognized leased assets and corresponding
liabilities in other long-term assets of $1,214,983. |
