| Summary of Significant Accounting Policies | 2. 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 250,000 250,000 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. The
accounts receivable balance at March 31, 2024 of $ 891,129 920,721 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. There was no warranty accrual
at March 31, 2024. Inventories Inventories are stated at the lower of cost
(first-in, first-out basis) or net realizable value. We reduce inventory for estimated obsolete or unmarketable inventory equal to the
difference between the cost of inventory and the net realizable 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. At
March 31, 2024 and 2023, inventory consisted of the following:
Schedule of inventory
March 31,
2024 March 31,
2023
Raw materials $ 1,044,161 $ 1,424,366
Finished goods 358,177 474,836
Total net inventories $ 1,402,338 $ 1,899,202 For
the fiscal year 2024, Encision added $ 153,511 141,511 49,917 34,917 53,948 32,107 9,052 18,893 Right
of Use Assets and Lease Liabilities 900,787 496,004 1,066,987 593,494 Property
and Equipment 61,322 59,290 12,050 173,269 Long-Lived
Assets Patents
Summary of patents
March 31,
2024 March 31,
2023
Patents issued 436,831 $ 432,345
Write off of obsolete patents — (2,500 )
Accumulated amortization (315,530 ) (292,066 )
Patents issued, net of accumulated amortization 121,301 137,779
Patent applications 57,897 37,733
Accumulated amortization (15,188 ) (12,380 )
Patent applications, net of accumulated amortization 42,709 25,353
Total net patents and patent applications $ 164,010 $ 163,132 The
expected annual amortization expense related to patents and patent applications as of March 31, 2024, for the next five fiscal years,
is as follows:
Schedule of expected annual amortization expense
Fiscal Year Amount
2025 $ 20,104
2026 19,150
2027 18,332
2028 17,841
Thereafter 88,583
Total $ 164,010 Other
Accrued Liabilities
Schedule of other accrued liabilities
March 31,
2024 March 31,
2023
Sales commissions $ 9,794 $ 34,668
Sales and use tax 13,006 12,769
Marketing fees 21,217 13,788
Payroll taxes, payroll 45,172 16,883
Miscellaneous 30,615 6,470
Total other accrued liabilities $ 119,804 $ 84,578 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. There
are open statutes of limitations for taxing authorities in federal and state jurisdictions to audit the Company’s tax returns from
fiscal year ended March 31, 2003 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.
The Company has provided a full valuation allowance on all of its deferred tax assets. Revenue
Recognition We
determine revenue recognition through the following steps: (1) identification of the contract with a customer; (2) identification of
the performance obligations in the contract; (3) determination of the transaction price; (4) allocation of the transaction price to the
performance obligations in the contract (where revenue is allocated on a relative standalone selling price basis by maximizing the use
of observable inputs to determine the standalone selling price for each performance obligation); and (5) recognition of revenue when,
or as, we satisfy a performance obligation. Topic
606 requires the disaggregation of revenue into broad categories, which we have defined as shown below.
Schedule of disaggregation revenue
March 31, 2024 March 31, 2023
Product revenue $ 6,431,969 $ 6,885,158
Service revenue 153,913 463,356
Total revenues $ 6,585,882 $ 7,348,514 Sales
Taxes Research
and Development Expenses Advertising
Costs 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 2024
and 2023 included compensation expense for share-based payment awards granted prior to, but not yet vested as of March 31, 2024, 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 2024 and 2023 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 2024 and 2023 was $ 53,552 51,892 Stock-based
compensation expense related to director and employee stock options under ASC 718 for fiscal years 2024 and 2023 was allocated as follows:
Schedule of stock-based compensation expense
Years Ended March 31,
2024 March 31,
2023
Cost of sales $ 134 $ 631
Sales and marketing 7,261 7,009
General and administrative 41,180 39,630
Research and development 4,977 4,622
Stock-based compensation expense $ 53,552 $ 51,892 Segment
Reporting
Schedule of operating segments
Year
Ended March 31, 2024 Year
Ended March 31, 2023
Product Service Total Product Service Total
Net revenue $ 6,431,969 $ 153,913 $ 6,585,882 $ 6,885,158 $ 463,356 $ 7,348,514
Cost of revenue 3,370,855 79,065 3,449,920 3,313,620 2,361 3,315,981
Gross profit 3,061,114 74,848 3,135,962 3,571,538 460,995 4,032,533
Operating income (loss) (715,631 ) 74,848 (640,783 ) (763,792 ) 460,995 (302,797 )
Depreciation and amortization 85,218 — 85,218 86,906 — 86,906
Capital expenditures 12,050 — 12,050 173,269 — 173,269
Equipment and patents, net $ 418,014 $ — $ 418,014 $ 466,409 $ — $ 466,409 Basic
and Diluted Income per Common Share The
following table presents the calculation of basic and diluted net income (loss) per share:
Schedule of basic and diluted net income (loss) per share
Years Ended March
31, 2024 March
31, 2023
Net income (loss) $ (691,783 ) $ (323,945 )
Weighted-average shares — basic 11,770,391 11,762,995
Effect of dilutive potential common shares — —
Weighted-average shares — basic and diluted 11,770,391 11,762,995
Net loss per share — basic and diluted $ (0.06 ) $ (0.03 )
Antidilutive equity units 751,000 1,049,000 |
