Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Jun. 30, 2019 | Aug. 31, 2019 | |
Document and Entity Information | ||
Entity Registrant Name | ENCISION INC | |
Entity Central Index Key | 0000930775 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --03-31 | |
Entity's Reporting Status Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | true | |
Entity Shell company | false | |
Entity File Number | 001-11789 | |
Entity Incorporation, State Country Code | CO | |
Entity Interactive Data Current | Yes | |
Entity Common Stock, Shares Outstanding | 11,558,355 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 |
Condensed Balance Sheets (Unaud
Condensed Balance Sheets (Unaudited) - USD ($) | Jun. 30, 2019 | Mar. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 135,569 | $ 273,348 |
Restricted cash | 0 | 25,000 |
Accounts receivable, net of allowance for doubtful accounts of $20,000 at June 30, 2019 and $26,000 at March 31, 2019 | 1,021,341 | 1,009,106 |
Inventories, net of reserve for obsolescence of $40,000 at June 30, 2019 and $50,000 at March 31, 2019 | 1,377,719 | 1,472,543 |
Prepaid expenses | 132,583 | 130,016 |
Total current assets | 2,667,212 | 2,910,013 |
Equipment, at cost: | ||
Furniture, fixtures and equipment | 3,082,315 | 3,061,329 |
Accumulated depreciation | (2,848,095) | (2,811,761) |
Equipment, net | 234,220 | 249,568 |
Right of use asset | 1,181,590 | 0 |
Patents, net of accumulated amortization of $272,526 at June 30, 2019 and $266,028 at March 31, 2019 | 242,886 | 248,579 |
Other assets | 19,548 | 19,548 |
TOTAL ASSETS | 4,345,456 | 3,427,708 |
Current liabilities: | ||
Accounts payable | 437,918 | 578,956 |
Accrued compensation | 208,946 | 295,875 |
Other accrued liabilities | 138,007 | 126,434 |
Line of credit | 150,000 | 0 |
Accrued lease liability | 158,721 | 0 |
Total current liabilities | 1,093,592 | 1,001,265 |
Long-term liability: | ||
Accrued lease liability | 1,074,434 | 0 |
Deferred rent | 0 | 74,821 |
Total liabilities | 2,168,026 | 1,076,086 |
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; 11,558,355 shares issued and outstanding at June 30, 2019 and March 31, 2019 | 24,209,471 | 24,201,769 |
Accumulated (deficit) | (22,032,041) | (21,850,147) |
Total shareholders' equity | 2,177,430 | 2,351,622 |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ 4,345,456 | $ 3,427,708 |
Condensed Balance Sheets (Una_2
Condensed Balance Sheets (Unaudited) (Parenthetical) - USD ($) | Jun. 30, 2019 | Mar. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for doubtful accounts (in dollars) | $ 20,000 | $ 26,000 |
Inventories, reserve for obsolescence (in dollars) | 40,000 | 50,000 |
Accumulated amortization | $ 272,526 | $ 266,028 |
Preferred stock, par value | $ 0 | $ 0 |
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, par value | $ 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 | 11,558,355 | 11,558,355 |
Common stock and additional paid-in capital, shares outstanding | 11,558,355 | 11,558,355 |
Condensed Statements of Operati
Condensed Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Income Statement [Abstract] | ||
NET REVENUE | $ 1,928,575 | $ 2,404,292 |
COST OF REVENUE | 995,604 | 1,103,177 |
GROSS PROFIT | 932,971 | 1,301,115 |
OPERATING EXPENSES: | ||
Sales and marketing | 530,505 | 775,785 |
General and administrative | 345,600 | 320,260 |
Research and development | 236,144 | 166,672 |
Total operating expenses | 1,112,249 | 1,262,717 |
OPERATING INCOME (LOSS) | (179,278) | 38,398 |
Interest expense, net | (2,783) | (18,450) |
Other income (expense), net | 167 | (1,365) |
Interest expense and other income (expense), net | (2,616) | (19,815) |
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES | (181,894) | 18,583 |
Provision for income taxes | 0 | 0 |
NET INCOME (LOSS) | $ (181,894) | $ 18,583 |
Net income (loss) per share - basic and Diluted | $ (0.02) | $ 0 |
Weighted average shares - basic | 11,558,355 | 10,683,355 |
Weighted average shares - diluted | 11,558,355 | 10,704,655 |
Condensed Statements of Cash Fl
Condensed Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Operating activities: | ||
Net income (loss) | $ (181,894) | $ 18,583 |
Adjustments to reconcile net income to net cash used in operating activities: | ||
Depreciation and amortization | 42,832 | 47,587 |
Share-based compensation expense | 7,702 | 12,093 |
(Recovery from) doubtful accounts, net | (6,000) | (3,000) |
(Recovery from) inventory obsolescence, net | (10,000) | 0 |
Changes in operating assets and liabilities: | ||
Right of use asset, net | (23,256) | 0 |
Accounts receivable | (6,235) | (284,959) |
Inventories | 104,824 | 201,506 |
Prepaid expenses and other assets | (2,567) | (44,033) |
Accounts payable | (141,038) | (16,870) |
Accrued compensation and other accrued liabilities | (75,356) | (72,953) |
Net cash (used in) operating activities | (290,988) | (142,046) |
Investing activities: | ||
Acquisition of property and equipment | (20,986) | (5,288) |
Patent costs | (805) | (1,171) |
Net cash (used in) investing activities | (21,791) | (6,459) |
Financing activities: | ||
Borrowings from credit facility, net change | 150,000 | 87,110 |
Net cash generated by financing activities | 150,000 | 87,110 |
Net (decrease) in cash, cash equivalents, and restricted cash | (162,779) | (61,395) |
Cash, cash equivalents, and restricted cash beginning of period | 298,348 | 139,538 |
Cash, cash equivalents, and restricted cash end of period | 135,569 | 78,143 |
Supplemental disclosure: | ||
Right of use asset | 1,214,983 | 0 |
Accrued lease liability | $ 1,279,675 | $ 0 |
ORGANIZATION AND NATURE OF BUSI
ORGANIZATION AND NATURE OF BUSINESS | 3 Months Ended |
Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION AND NATURE OF BUSINESS | Note 1. ORGANIZATION AND NATURE OF BUSINESS Encision Inc. is a medical device company that designs, develops, manufactures and markets patented surgical instruments that provide greater safety to, and saves lives of, patients undergoing minimally-invasive surgery. We believe that our patented AEM ® We have an accumulated deficit of $22,032,041 at June 30, 2019. A significant portion of our operating funds have been provided by issuances of our common stock and warrants, a line of credit, and the exercise of stock options to purchase our common stock. Shareholders’ equity decreased by $174,192 as a result of our loss of $181,894, and increased as a result of share-based compensation of $7,702. Should our liquidity be diminished in the future because of operating losses, we may be required to seek additional capital. Our strategic marketing and sales plan is designed to expand the use of our products in surgically active hospitals and surgery centers in the United States. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
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. |
BASIC AND DILUTED INCOME AND LO
BASIC AND DILUTED INCOME AND LOSS PER COMMON SHARE | 3 Months Ended |
Jun. 30, 2019 | |
Earnings Per Share [Abstract] | |
BASIC AND DILUTED INCOME AND LOSS PER COMMON SHARE | Note 3. Basic and Diluted Income and Loss per Common Share We report both basic and diluted net income (loss) per share. Basic net income or loss per common share is computed by dividing net income or loss for the period by the weighted average number of common shares outstanding for the period. Diluted net income or loss per common share is computed by dividing the net income or loss 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. The shares used in the calculation of dilutive potential common shares exclude options and RSUs to purchase shares where the exercise price was greater than the average market price of common shares for the period. The following table presents the calculation of basic and diluted net loss per share: Three Months Ended June 30, 2019 June 30, 2018 Net income (loss) $ (181,894 ) $ 18,583 Weighted-average shares — basic 11,558,355 10,683,355 Effect of dilutive potential common shares — 21,300 Weighted-average shares — diluted 11,558,355 10,704,655 Net income (loss) per share — basic $ (0.02 ) $ 0.00 Net income (loss) per share — diluted $ (0.02 ) $ 0.00 Antidilutive employee stock options and RSUs 980,286 986,236 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Jun. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | Note 4. COMMITMENTS AND CONTINGENCIES Effective November 9, 2018, we extended our noncancelable lease agreement through July 31, 2024 for our facilities at 6797 Winchester Circle, Boulder, Colorado. The lease includes base rent abatement for the first two months, or $55,583, and $145,000 of leasehold improvements granted by the landlord. 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 either finance or operating leases under previous accounting standards and disclosing key information about leasing arrangements. We adopted Topic 842 on April 1, 2019, using the alternative modified transition method, which requires a cumulative effect adjustment, if any, to the opening balance of retained earnings to be recognized on the date of adoption with prior periods not restated. There was no cumulative effect adjustment recorded on April 1, 2019. Within the opening balances for the fiscal year beginning April 1, 2019, we will recognize leased assets and corresponding liabilities in other long-term assets of $1,214,983. This includes two months of rent abatements. The primary impact for us was the balance sheet recognition of right-of-use (“ROU”) assets and lease liabilities for operating leases as a lessee. We determine if an arrangement contains a lease at inception. We currently do not have any finance leases. Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. ROU assets also include any initial direct costs incurred and any lease payments made at or before the lease commencement date, less lease incentives received. We use our incremental borrowing rate based on the information available at the commencement date in determining the lease liabilities as our leases do not provide an implicit rate. Lease expense is recognized on a straight-line basis over the lease term. The minimum future lease payment, by fiscal year, as of June 30, 2019 is as follows: Fiscal Year Amount 2020 (9 months remaining) $ 199,913 2021 343,167 2022 357,667 2023 372,167 2024 386,667 2025 130,500 Total $ 1,790,081 On July 31, 2018, we signed a new line of credit agreement with Bank of America Merrill Lynch. The facility provides for up to $1 million revolving line of credit. The interest rate is a rate per year equal to the LIBOR Daily Floating Rate plus 2.75 percentage points. There is a minimum quarterly EBITDA covenant and a minimum Collateral Coverage ratio of 2. Minimum Collateral Coverage is the ratio of gross accounts receivable plus inventory to the line of credit commitment. As of June 30, 2019, we had $150,000 of borrowings from the credit facility and had an additional $850,000 available to borrow. For the quarter ended June 30, 2019, we were not in compliance with the minimum quarterly EBITDA covenant. This line was extended to August 31, 2019 and was replaced by a loan and security agreement with Crestmark Bank, see below. On August 9, 2019, we entered into a loan and security agreement with Crestmark Bank, which replaced the Bank of America Merrill Lynch credit agreement. 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 1.5%, with a floor of 6.75%, 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. Aside from the operating lease, we do not have any material contractual commitments requiring settlement in the future. 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 compliance with these regulations. We believe that we were in substantial compliance with all known regulations at June 30, 2019. FDA inspections are conducted periodically at the discretion of the FDA. Our latest inspection by the FDA occurred in October 2016. |
SHARE-BASED COMPENSATION
SHARE-BASED COMPENSATION | 3 Months Ended |
Jun. 30, 2019 | |
Share-based Payment Arrangement [Abstract] | |
SHARE-BASED COMPENSATION | Note 5. SHARE-BASED COMPENSATION The provisions of ASC 718-10-55 requires the measurement and recognition of compensation expense for all share-based payment awards made to our employees and directors, including employee stock options and RSUs, based on estimated fair values. The following table summarizes stock-based compensation expense related to employee stock options, RSUs and employee stock purchases for the three months ended June 30, 2019 and 2018, which was allocated as follows: Three Months Ended June 30, 2019 June 30, 2018 Cost of sales $ 681 $ 601 Sales and marketing 790 1,296 General and administrative 5,622 9,592 Research and development 609 604 Stock-based compensation expense $ 7,702 $ 12,093 Share-based compensation cost for stock options is measured at the grant date, based on the fair value as calculated by the Black-Scholes-Merton ("BSM") option-pricing model. The BSM option-pricing model requires the use of actual employee exercise behavior data and the application of a number of assumptions, including expected volatility, risk-free interest rate and expected dividends. There were 40,000 stock options granted and 50,000 stock options forfeited during the three months ended June 30, 2019. Share-based compensation cost for RSUs is measured based on the closing fair market value of the Company's common stock on the date of grant. As of June 30, 2019, $131,000 of total unrecognized compensation costs related to nonvested stock options is expected to be recognized over a period of five years. |
RELATED PARTY TRANSACTION
RELATED PARTY TRANSACTION | 3 Months Ended |
Jun. 30, 2019 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTION | Note 6. RELATED PARTY TRANSACTION We paid consulting fees of $20,094 and $20,069 to an entity owned by one of our directors during the three months ended June 30, 2019 and 2018, respectively. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Jun. 30, 2019 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | Note 7. SUBSEQUENT EVENTS We evaluated all of our activity as of the date the condensed interim financial statements were issued and concluded that, except for the item that follows, no subsequent events have occurred that would require recognition in our financial statements or disclosed in the notes to our condensed interim financial statements. On August 9, 2019, we entered into a loan and security agreement with Crestmark Bank, which replaced the Bank of America Merrill Lynch credit agreement. 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 1.5%, with a floor of 6.75%, 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. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation | 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 | Use of Estimates in the Preparation of Financial Statements. |
Cash and Cash Equivalents | Cash and Cash Equivalents. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments. |
Concentration of Credit Risk | 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 | 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 | Property and Equipment |
Long-Lived Assets | Long-Lived Assets. |
Patents | Patents. |
Income Taxes | Income Taxes. |
Revenue Recognition | Revenue Recognition. |
Research and Development Expenses | Research and Development Expenses |
Stock-Based Compensation | 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 | Segment Reporting. |
Recent Accounting Pronouncements | 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. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Schedule of inventory | 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 |
BASIC AND DILUTED INCOME AND _2
BASIC AND DILUTED INCOME AND LOSS PER COMMON SHARE (Tables) | 3 Months Ended |
Jun. 30, 2019 | |
Earnings Per Share [Abstract] | |
Schedule of calculation of basic and diluted net loss per share | Three Months Ended June 30, 2019 June 30, 2018 Net income (loss) $ (181,894 ) $ 18,583 Weighted-average shares — basic 11,558,355 10,683,355 Effect of dilutive potential common shares — 21,300 Weighted-average shares — diluted 11,558,355 10,704,655 Net income (loss) per share — basic $ (0.02 ) $ 0.00 Net income (loss) per share — diluted $ (0.02 ) $ 0.00 Antidilutive employee stock options and RSUs 980,286 986,236 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 3 Months Ended |
Jun. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of minimum future lease payments, by fiscal year | Fiscal Year Amount 2020 (9 months remaining) $ 199,913 2021 343,167 2022 357,667 2023 372,167 2024 386,667 2025 130,500 Total $ 1,790,081 |
SHARE-BASED COMPENSATION (Table
SHARE-BASED COMPENSATION (Tables) | 3 Months Ended |
Jun. 30, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of stock-based compensation expense related to employee stock options | Three Months Ended June 30, 2019 June 30, 2018 Cost of sales $ 681 $ 601 Sales and marketing 790 1,296 General and administrative 5,622 9,592 Research and development 609 604 Stock-based compensation expense $ 7,702 $ 12,093 |
ORGANIZATION AND NATURE OF BU_2
ORGANIZATION AND NATURE OF BUSINESS (Details Narrative) - USD ($) | 3 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Mar. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Accumulated deficit | $ (22,032,041) | $ (21,850,147) | |
Net loss | (181,894) | $ 18,583 | |
Decrease in shareholders' equity | 174,192 | ||
Share-based compensation | $ 7,702 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | Jun. 30, 2019 | Mar. 31, 2019 |
Inventories | ||
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 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 3 Months Ended | |||
Jun. 30, 2019 | Jun. 30, 2018 | Apr. 02, 2019 | Mar. 31, 2019 | |
Property, Plant and Equipment [Line Items] | ||||
Net loss | $ (181,894) | $ 18,583 | ||
Cash | 135,569 | |||
Amount of borrowings | 150,000 | |||
Amount available to borrow | 850,000 | |||
Working capital | 1,573,620 | |||
Net cash provided by (used in) operating activities | (290,988) | (142,046) | ||
Federally insured limit | 250,000 | |||
Accounts Receivable | 1,021,341 | $ 1,009,106 | ||
Stock-based compensation expense | 7,702 | $ 12,093 | ||
Unrecognized tax benefits | $ 0 | |||
Other long-term assets | $ 1,214,983 | |||
Minimum [Member] | ||||
Property, Plant and Equipment [Line Items] | ||||
Estimated useful lives of assets | 5 years | |||
Maximum [Member] | ||||
Property, Plant and Equipment [Line Items] | ||||
Estimated useful lives of assets | 7 years |
BASIC AND DILUTED INCOME AND _3
BASIC AND DILUTED INCOME AND LOSS PER COMMON SHARE (Details) - USD ($) | 3 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Earnings Per Share [Abstract] | ||
Net income (loss) | $ (181,894) | $ 18,583 |
Weighted-average shares - basic | 11,558,355 | 10,683,355 |
Effect of dilutive potential common shares | 0 | 21,300 |
Weighted-average shares - diluted | 11,558,355 | 10,704,655 |
Net income (loss) per share-basic | $ (0.02) | $ .00 |
Net income (loss) per share-diluted | $ (0.02) | $ .00 |
Antidilutive employee stock options and RSUs | 980,286 | 986,236 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES (Details) | Jun. 30, 2019USD ($) |
Minimum future lease payments, by fiscal year | |
2020 (9 months remaining) | $ 199,913 |
2021 | 343,167 |
2022 | 357,667 |
2023 | 372,167 |
2024 | 386,667 |
2025 | 130,500 |
Total | $ 1,790,081 |
COMMITMENTS AND CONTINGENCIES_3
COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) | Aug. 09, 2019 | Jun. 30, 2019 |
Amount of borrowings | $ 150,000 | |
Amount available to borrow | $ 850,000 | |
Subsequent Event [Member] | ||
Loan description | 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 1.5%, with a floor of 6.75%, plus a monthly maintenance fee of 0.4%, based on the average monthly loan balance. Interest is charged on a minimum loan balance of $500,000, a loan fee of 1% annually, and an exit fee of 3%, 2% and 1% during years one, two and three, respectively. |
SHARE-BASED COMPENSATION (Detai
SHARE-BASED COMPENSATION (Details) - USD ($) | 3 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Stock-based compensation expense | $ 7,702 | $ 12,093 |
Cost Of Sales [Member] | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Stock-based compensation expense | 681 | 601 |
Selling And Marketing Expense [Member] | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Stock-based compensation expense | 790 | 1,296 |
General And Administrative Expense [Member] | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Stock-based compensation expense | 5,622 | 9,592 |
Research And Development Expense [Member] | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Stock-based compensation expense | $ 609 | $ 604 |
SHARE-BASED COMPENSATION (Det_2
SHARE-BASED COMPENSATION (Details Narrative) | 3 Months Ended |
Jun. 30, 2019USD ($)shares | |
Share-based Compensation Details Narrative | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants | 40,000 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested Options Forfeited | 50,000 |
Unrecognized compensation costs related to nonvested stock options | $ | $ 131,000 |
RELATED PARTY TRANSACTION (Deta
RELATED PARTY TRANSACTION (Details Narrative) - USD ($) | 3 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Director [Member] | ||
Related Party Transaction [Line Items] | ||
Consulting fees paid | $ 20,094 | $ 20,069 |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) | Aug. 09, 2019 |
Subsequent Event [Member] | |
Loan description | 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 1.5%, with a floor of 6.75%, 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. |