Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Mar. 31, 2014 | 31-May-14 | Sep. 30, 2013 | |
Document and Entity Information | ' | ' | ' |
Entity Registrant Name | 'ENCISION INC | ' | ' |
Entity Central Index Key | '0000930775 | ' | ' |
Document Type | '10-K | ' | ' |
Document Period End Date | 31-Mar-14 | ' | ' |
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 | ' | ' | $4,866,254 |
Entity Common Stock, Shares Outstanding | ' | 10,673,225 | ' |
Document Fiscal Year Focus | '2014 | ' | ' |
Document Fiscal Period Focus | 'FY | ' | ' |
Balance_Sheets
Balance Sheets (USD $) | Mar. 31, 2014 | Mar. 31, 2013 |
Current assets: | ' | ' |
Cash and cash equivalents | $1,689,580 | $126,224 |
Accounts receivable, net of allowance for doubtful accounts of $8,000 at March 31, 2014 and $9,000 at March 31, 2013 | 863,220 | 985,770 |
Inventories, net of reserve for obsolescence of $560,000 at March 31, 2014 and $51,000 at March 31, 2013 | 2,224,228 | 2,929,302 |
Prepaid expenses | 65,387 | 65,891 |
Total current assets | 4,842,415 | 4,107,187 |
Equipment, at cost: | ' | ' |
Furniture, fixtures and equipment | 3,535,979 | 2,691,057 |
Customer-site equipment | 1,016,265 | 931,060 |
Equipment-in-progress | 105,058 | 774,004 |
Accumulated depreciation | -3,552,079 | -2,767,195 |
Equipment, net | 1,105,223 | 1,628,926 |
Patents, net of accumulated amortization of $215,969 at March 31, 2014 and $190,770 at March 31, 2013 | 248,971 | 237,606 |
Other assets | 14,127 | 9,215 |
TOTAL ASSETS | 6,210,736 | 5,982,934 |
Current liabilities: | ' | ' |
Accounts payable | 666,159 | 823,347 |
Accrued compensation | 264,595 | 319,116 |
Other accrued liabilities | 408,549 | 446,171 |
Lease payable - short term | 67,057 | ' |
Deferred rent - short term | 30,384 | ' |
Total current liabilities | 1,436,744 | 1,588,634 |
Lease payable - long term | 54,619 | ' |
Deferred rent - long term | 131,664 | ' |
Total liabilities | 1,623,027 | 1,588,634 |
Commitments and contingencies | ' | ' |
Shareholders' equity: | ' | ' |
Preferred stock, no par value: 10,000,000 shares authorized; none issued and outstanding | ' | ' |
Common stock and additional paid-in capital, no par value: 100,000,000 shares authorized; 10,673,225 and 8,210,100 shares issued and outstanding at March 31, 2014 and 2013, respectively | 23,545,080 | 21,569,993 |
Accumulated (deficit) | -18,957,371 | -17,175,693 |
Total shareholders' equity | 4,587,709 | 4,394,300 |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $6,210,736 | $5,982,934 |
Balance_Sheets_Parenthetical
Balance Sheets (Parenthetical) (USD $) | Mar. 31, 2014 | Mar. 31, 2013 |
Balance Sheets | ' | ' |
Accounts receivable, allowance for doubtful accounts (in dollars) | $8,000 | $9,000 |
Inventories, reserve for obsolescence (in dollars) | 560,000 | 51,000 |
Patents, accumulated amortization (in dollars) | $215,969 | $190,770 |
Preferred stock, par value | ' | ' |
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 | ' | ' |
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 | 8,210,100 |
Common stock and additional paid-in capital, shares outstanding | 10,673,225 | 8,210,100 |
Statements_of_Operations
Statements of Operations (USD $) | 12 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
NET REVENUE: | ' | ' |
Product | $10,264,469 | $11,216,100 |
Service | 282,168 | 550,469 |
Total Revenue | 10,546,637 | 11,766,569 |
COST OF REVENUE: | ' | ' |
Product | 4,905,012 | 4,768,511 |
Product - Impairment | 1,100,368 | ' |
Service | 160,658 | 463,239 |
Total Cost of Revenue | 6,166,038 | 5,231,750 |
GROSS PROFIT | 4,380,599 | 6,534,819 |
OPERATING EXPENSES: | ' | ' |
Sales and marketing | 2,951,906 | 3,617,206 |
General and administrative | 1,532,406 | 1,711,267 |
Research and development | 1,407,337 | 1,755,894 |
Total operating expenses | 5,891,649 | 7,084,367 |
OPERATING LOSS | -1,511,050 | -549,548 |
Interest expense, net | -37,622 | -1,730 |
Other income (expense), net | -233,006 | -64,395 |
Interest (expense) and other income, net | -270,628 | -66,125 |
LOSS BEFORE PROVISION FOR INCOME TAXES | -1,781,678 | -615,673 |
NET LOSS | ($1,781,678) | ($615,673) |
Net loss per share-basic and diluted (in dollars per share) | ($0.20) | ($0.08) |
Weighted average shares-basic and diluted (in shares) | 8,921,669 | 8,199,621 |
Statements_of_Shareholders_Equ
Statements of Shareholders' Equity (USD $) | Total | Common Stock and Additional Paid-in Capital | Accumulated Deficit |
BALANCES at Mar. 31, 2012 | $4,736,626 | $21,296,646 | ($16,560,020) |
BALANCES (in shares) at Mar. 31, 2012 | ' | 7,955,100 | ' |
Increase (Decrease) in Stockholders' Equity | ' | ' | ' |
Net loss | -615,673 | ' | -615,673 |
Compensation expense related to stock options | 60,353 | 60,353 | ' |
Issuance of common stock and warrants at $0.80 and $1.00 per share, net of direct offering costs of $59,931 and $54,523 at March 31, 2014 and at March 31, 2013 respectively | 212,994 | 212,994 | ' |
Issuance of common stock and warrants at $0.80 and $1.00 per share, net of direct offering costs of $59,931 and $54,523 at March 31, 2014 and at March 31, 2013 respectively (in shares) | ' | 255,000 | ' |
BALANCES at Mar. 31, 2013 | 4,394,300 | 21,569,993 | -17,175,693 |
BALANCES (in shares) at Mar. 31, 2013 | 8,210,100 | 8,210,100 | ' |
Increase (Decrease) in Stockholders' Equity | ' | ' | ' |
Net loss | -1,781,678 | ' | -1,781,678 |
Compensation expense related to stock options | 64,518 | 64,518 | ' |
Issuance of common stock and warrants at $0.80 and $1.00 per share, net of direct offering costs of $59,931 and $54,523 at March 31, 2014 and at March 31, 2013 respectively | 1,910,569 | 1,910,569 | ' |
Issuance of common stock and warrants at $0.80 and $1.00 per share, net of direct offering costs of $59,931 and $54,523 at March 31, 2014 and at March 31, 2013 respectively (in shares) | ' | 2,463,125 | ' |
BALANCES at Mar. 31, 2014 | $4,587,709 | $23,545,080 | ($18,957,371) |
BALANCES (in shares) at Mar. 31, 2014 | 10,673,225 | 10,673,225 | ' |
Statements_of_Shareholders_Equ1
Statements of Shareholders' Equity (Parenthetical) (USD $) | 12 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Statements of Shareholders' Equity | ' | ' |
Common stock and warrants, issue value (in dollars per share) | $0.80 | $1 |
Issuance of common stock and warrants, direct offering costs | $59,931 | $54,523 |
Statements_of_Cash_Flows
Statements of Cash Flows (USD $) | 12 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Cash flows from operating activities: | ' | ' |
Net loss | ($1,781,678) | ($615,673) |
Adjustments to reconcile net income to net cash provided by operating activities: | ' | ' |
Depreciation and amortization | 499,066 | 318,327 |
Impairment of furniture, fixtures and equipment | 643,867 | ' |
Impairment of inventory | 456,501 | ' |
Impairment of patent costs | ' | 42,212 |
Stock-based compensation expense related to stock options | 64,518 | 60,353 |
Provision for doubtful accounts, net of amounts written off | -1,000 | -6,500 |
Provision for inventory obsolescence, net change after impairment of inventory | 52,499 | -66,000 |
Change in operating assets and liabilities: | ' | ' |
Accounts receivable | 123,550 | 448,696 |
Inventories | 196,074 | -374,294 |
Prepaid expenses and other assets | -4,408 | -39,123 |
Accounts payable | -157,188 | -216,576 |
Accrued compensation and other accrued liabilities | 19,405 | 132,785 |
Net cash provided by (used in) operating activities | 111,206 | -315,793 |
Cash flows from investing activities: | ' | ' |
Acquisition of property and equipment | -421,855 | -301,408 |
Patent costs | -36,564 | -34,240 |
Net cash used in investing activities | -458,419 | -335,648 |
Cash flows from financing activities: | ' | ' |
Proceeds from the issuance of common stock and warrants | 1,970,500 | 255,000 |
Cost of the issuance of common stock | -59,931 | -42,006 |
Net cash provided by financing activities | 1,910,569 | 212,994 |
Net increase (decrease) in cash and cash equivalents | 1,563,356 | -438,447 |
Cash and cash equivalents, beginning of fiscal year | 126,224 | 564,671 |
Cash and cash equivalents, end of fiscal year | 1,689,580 | 126,224 |
Supplemental disclosures of cash flow information: | ' | ' |
Cash paid during the year for interest | 22,888 | ' |
Furniture, fixtures and equipment acquired through leasehold improvements | $172,176 | ' |
Description_of_Business
Description of Business | 12 Months Ended |
Mar. 31, 2014 | |
Description of Business | ' |
Description of Business | ' |
1. 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® surgical instrument technology is changing the marketplace for electrosurgical devices and instruments by providing a solution to a well-documented risk in laparoscopic surgery. Our sales to date have been made primarily in the United States. | |
We have an accumulated deficit of $18,957,371 at March 31, 2014. 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 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_Account
Summary of Significant Accounting Policies | 12 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Summary of Significant Accounting Policies | ' | |||||||
Summary of Significant Accounting Policies | ' | |||||||
2. Summary of Significant Accounting Policies | ||||||||
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. | ||||||||
Fair Value of Financial Instruments. Our financial instruments consist of cash and cash equivalents and short-term trade receivables and payables. The carrying values of cash and cash equivalents, short-term receivables and payables approximate their fair value due to their short maturities. | ||||||||
Concentration of Credit Risk. 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, 2014. 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. | ||||||||
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, 2014 | March 31, 2013 | ||||||
Balance, beginning of year | $ | 9,000 | $ | 15,500 | ||||
Provision for estimated losses | 4,042 | (6,500 | ) | |||||
Write-off of uncollectible accounts | (5,042 | ) | — | |||||
Balance, end of year | $ | 8,000 | $ | 9,000 | ||||
The net accounts receivable balance at March 31, 2014 of $863,220 included no more than 5% from any one customer. The net accounts receivable balance at March 31, 2013 of $985,770 included no more than 6% 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 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, 2014 | March 31, 2013 | ||||||
Balance, beginning of year | $ | 55,000 | $ | 65,000 | ||||
Provision for estimated warranty claims | (20,000 | ) | 4,000 | |||||
Claims made | — | (14,000 | ) | |||||
Balance, end of year | $ | 35,000 | $ | 55,000 | ||||
Inventories. Inventories are stated at the lower of cost (first-in, first-out basis) or market. We reduce inventory for estimated obsolete or unmarketable inventory equal to the difference between the cost of inventory and the estimated 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. At March 31, 2014 and 2013, inventory consisted of the following: | ||||||||
March 31, 2014 | March 31, 2013 | |||||||
Raw materials | $ | 1,498,867 | $ | 1,843,357 | ||||
Finished goods | 1,285,361 | 1,136,945 | ||||||
Total gross inventories | 2,784,228 | 2,980,302 | ||||||
Less reserve for obsolescence | (560,000 | ) | (51,000 | ) | ||||
Total net inventories | $ | 2,224,228 | $ | 2,929,302 | ||||
A summary of the activity in our inventory reserve for obsolescence is as follows: | ||||||||
Years Ended | March 31, 2014 | March 31, 2013 | ||||||
Balance, beginning of year | $ | 51,000 | $ | 117,000 | ||||
Provision for estimated obsolescence | 106,528 | 47,280 | ||||||
Provision for impairment | 456,501 | — | ||||||
Write-off of obsolete inventory | (54,029 | ) | (113,280 | ) | ||||
Balance, end of year | $ | 560,000 | $ | 51,000 | ||||
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. Equipment-in-progress is primarily manufacturing equipment for product that will be produced internally. Depreciation expense for the years ended March 31, 2014 and 2013 was $473,867 and $296,641, 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. See Note 10. | ||||||||
Patents. The costs of applying for patents are capitalized and amortized on a straight-line basis over the lesser of the patent’s economic or legal life (20 years from the date of application in the United States). Capitalized costs are expensed if patents are not issued. We review the carrying value of our patents periodically to determine whether the patents have continuing value and such reviews could result in the conclusion that the recorded amounts have been impaired. A summary of our patents at March 31, 2014 and 2013 is as follows: | ||||||||
March 31, 2014 | March 31, 2013 | |||||||
Patents issued | $ | 367,217 | $ | 243,721 | ||||
Accumulated amortization | (215,969 | ) | (190,770 | ) | ||||
Patents issued, net of accumulated amortization | 151,248 | 52,951 | ||||||
Patent applications | 97,723 | 184,655 | ||||||
Total net patents and patent applications | $ | 248,971 | $ | 237,606 | ||||
The expected annual amortization expense related to patents and patent applications as of March 31, 2014, for the next five fiscal years, is as follows: | ||||||||
Fiscal Year | Amount | |||||||
2015 | $ | 20,934 | ||||||
2016 | 20,242 | |||||||
2017 | 20,011 | |||||||
2018 | 20,011 | |||||||
2019 and following | 167,773 | |||||||
Total | $ | 248,971 | ||||||
Other Accrued Liabilities. At March 31, 2014 and 2013, other accrued liabilities consisted of the following: | ||||||||
March 31, 2014 | March 31, 2013 | |||||||
Warranty | $ | 35,000 | $ | 55,000 | ||||
Sales commissions | 38,065 | 29,492 | ||||||
Lease normalization | 6,310 | 36,610 | ||||||
Sales and use tax | 18,108 | 37,460 | ||||||
Marketing fees | 10,560 | 10,279 | ||||||
Legal and audit fees | 45,439 | 31,426 | ||||||
Payroll taxes | 23,554 | 25,932 | ||||||
Medical device tax | 8,425 | 63,808 | ||||||
Employment agreement | 120,000 | 123,980 | ||||||
Trade shows | 50,000 | — | ||||||
Miscellaneous | 53,088 | 32,184 | ||||||
Total other accrued liabilities | $ | 408,549 | $ | 446,171 | ||||
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 Company’s 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 statement 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. | ||||||||
Sales Recognition. Sales from product sales 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 performed is recognized when invoices are sent to customers. | ||||||||
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, 2014 and 2013 was minimal. | ||||||||
Medical Device Tax. In March 2010, the Patient Protection and Affordable Care Act was enacted in the United States. This legislation includes a provision that imposes 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. | ||||||||
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 statement 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 statement 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 statement of operations for fiscal years 2014 and 2013 included compensation expense for share-based payment awards granted prior to, but not yet vested as of March 31, 2014, 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 statement of operations for fiscal years 2014 and 2013 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 2014 and 2013 was $64,518 and $60,353, respectively, which consisted of stock-based compensation expense related to director and employee stock options. | ||||||||
Stock-based compensation expense related to employee stock options under ASC 718 for fiscal years 2014 and 2013 was allocated as follows: | ||||||||
Years Ended | March 31, 2014 | March 31, 2013 | ||||||
Cost of sales | $ | 1,381 | $ | 2,740 | ||||
Sales and marketing | 10,420 | 2,841 | ||||||
General and administrative | 44,854 | 43,617 | ||||||
Research and development | 7,863 | 11,155 | ||||||
Stock-based compensation expense | $ | 64,518 | 60,353 | |||||
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 2014 and 2013, the shares used in the calculation of dilutive potential common shares exclude options to purchase shares. 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, 2014 | March 31, 2013 | ||||||
Net loss | $ | (1,781,678 | ) | $ | (615,673 | ) | ||
Weighted-average shares — basic | 8,921,669 | 8,199,621 | ||||||
Effect of dilutive potential common shares | — | — | ||||||
Weighted-average shares — diluted | 8,921,669 | 8,199,621 | ||||||
Net loss per share — basic and diluted | $ | (0.20 | ) | $ | (0.08 | ) | ||
Antidilutive employee stock options | 531,000 | 547,000 | ||||||
Recent Accounting Pronouncements. We have reviewed all recently issued, but not yet effective, accounting pronouncements and do not believe the future adoption of any such pronouncements may be expected to cause a material impact on our financial condition or the results of our operations. | ||||||||
Shareholders_Equity
Shareholders' Equity | 12 Months Ended | |||||||||||||
Mar. 31, 2014 | ||||||||||||||
Shareholders' Equity | ' | |||||||||||||
Shareholders' Equity | ' | |||||||||||||
3. Shareholders’ Equity | ||||||||||||||
Stock Option Plan. We adopted our 2007 Stock Option Plan (the “Plan,” as summarized below) to promote our and our shareholders’ interests by helping us to attract, retain and motivate our key employees and associates. Under the terms of the Plan, the Board of Directors may grant either “nonqualified” or “incentive” stock options, as defined by the Internal Revenue Code and related regulations. The purchase price of the shares subject to a stock option will be the fair market value of our common stock on the date the stock option is granted. Generally, vesting of stock options occurs such that 20% becomes exercisable on each anniversary of the date of grant for each of the five years following the grant date of such option. Generally, all stock options must be exercised within five years from the date granted. The number of common shares reserved for issuance under the Plan is 950,000 shares of common stock, subject to adjustment for dividend, stock split or other relevant changes in our capitalization. | ||||||||||||||
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 405,000 and 97,000 shares of stock were granted during fiscal years 2014 and 2013, respectively. | ||||||||||||||
As of March 31, 2014, $279,000 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, 2014 | March 31, 2013 | ||||||||||||
Risk-free interest rate | 0.7% to 1.7% | 0.7% to 1.0% | ||||||||||||
Expected life (in years) | 5 | 5 | ||||||||||||
Expected volatility | 75% to 106% | 99% to 103% | ||||||||||||
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 $275,000 and $88,000, for the fiscal years ended March 31, 2014 and 2013, 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 $64,518 and $60,353 for fiscal years 2014 and 2013, 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 management’s 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, 2014 and 2013 is as follows: | ||||||||||||||
STOCK OPTIONS OUTSTANDING | ||||||||||||||
Number | Weighted-Average | |||||||||||||
Outstanding | Exercise Price per | |||||||||||||
Share | ||||||||||||||
BALANCE AT MARCH 31, 2012 | 635,000 | $ | 1.35 | |||||||||||
Granted | 62,000 | 1.34 | ||||||||||||
Forfeited/expired | (260,000 | ) | 1.55 | |||||||||||
BALANCE AT MARCH 31, 2013 | 437,000 | $ | 1.24 | |||||||||||
Granted | 185,000 | 0.99 | ||||||||||||
Forfeited/expired | (341,000 | ) | 1.25 | |||||||||||
BALANCE AT MARCH 31, 2014 | 281,000 | $ | 1.06 | |||||||||||
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, 2014 is as follows: | ||||||||||||||
STOCK OPTIONS OUTSTANDING | ||||||||||||||
Number | Weighted-Average | |||||||||||||
Outstanding | Exercise Price per | |||||||||||||
Share | ||||||||||||||
BALANCE AT MARCH 31, 2012 | 80,000 | $ | 1.08 | |||||||||||
Granted | 35,000 | 1.32 | ||||||||||||
Forfeited/expired | (5,000 | ) | 1.05 | |||||||||||
BALANCE AT MARCH 31, 2013 | 110,000 | $ | 1.15 | |||||||||||
Granted | 220,000 | 0.93 | ||||||||||||
Forfeited/expired | (80,000 | ) | 1.1 | |||||||||||
BALANCE AT MARCH 31, 2014 | 250,000 | $ | 0.97 | |||||||||||
The following table summarizes information about employee stock options outstanding and exercisable at March 31, 2014: | ||||||||||||||
STOCK OPTIONS OUTSTANDING | STOCK OPTIONS EXERCISABLE | |||||||||||||
Range of Exercise Prices | Number | Weighted-Average | Weighted-Average | Number | Weighted-Average | |||||||||
Outstanding | Remaining Contractual | Exercise Price | Exercisable | Exercise Price | ||||||||||
Life (in Years) | per Share | per Share | ||||||||||||
$0.60 - $1.09 | 366,000 | 4.2 | $ | 0.88 | 22,728 | $ | 0.86 | |||||||
$1.15 - $1.34 | 110,000 | 4.3 | $ | 1.18 | 13,553 | $ | 1.25 | |||||||
$1.45 - $1.90 | 55,000 | 2.3 | $ | 1.6 | 26,155 | $ | 1.74 | |||||||
531,000 | 4 | $ | 1.02 | 62,436 | $ | 1.31 | ||||||||
The 531,000 options outstanding as of March 31, 2014 are nonqualified stock options. The exercise price of all options granted through March 31, 2014 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. The intrinsic value of all stock options exercisable at March 31, 2014 is negligible. As of March 31, 2014, 3,000 options for our common stock remain available for grant under the Plan. | ||||||||||||||
On December 17, 2013, we completed a private placement of 2,463,125 shares of our common stock. The private placement raised, before costs, a total of $1,970,500. The purchase price per share for the shares sold in the private placement was $0.80, representing a discount of approximately 12% based on a 20-day volume-weighted average price as of December 13, 2013. Additionally, the investors received common stock purchase warrants. The warrants are exercisable into 1,231,563 shares of the Company’s common stock with an exercise price of $1.20 per share and a term of five years. The fair value of the warrants, $568,810, was estimated at the date of the grant using the Black-Scholes option pricing model, with an allocation of the proceeds applied to the warrants. The difference between the warrant allocation and the proceeds was allocated to the shares of common stock issued. The fair value of the warrants of $568,810 has been included in the total additional paid-in capital value of $1,970,500 on the Balance Sheets. The following assumptions were used in the Black-Scholes pricing model: | ||||||||||||||
Expected life (in years) | 5 | |||||||||||||
Volatility | 91 | % | ||||||||||||
Risk-free interest rate | 1.5 | % | ||||||||||||
Dividend yield (on common stock) | 0 | % | ||||||||||||
As of March 31, 2014, there were 1,231,563 warrants outstanding with an exercise price of $1.20 with approximately 4.75 years remaining. | ||||||||||||||
Commitments_and_Contingencies
Commitments and Contingencies | 12 Months Ended | ||||
Mar. 31, 2014 | |||||
Commitments and Contingencies | ' | ||||
Commitments and Contingencies | ' | ||||
4. Commitments and Contingencies | |||||
Effective December 1, 2013, we extended our noncancelable lease agreement 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, 2014 is as follows: | |||||
Fiscal Year | Amount | ||||
2015 | $ | 260,847 | |||
2016 | 268,672 | ||||
2017 | 276,732 | ||||
2018 | 285,034 | ||||
2019 | 293,585 | ||||
2020 | 99,800 | ||||
Total | $ | 1,484,670 | |||
Our minimum future capital equipment lease payments with General Electric Capital Corporation as of March 31, 2014, by fiscal year, are as follows: | |||||
Fiscal Year | Amount | ||||
2015 | $ | 76,207 | |||
2016 | 53,470 | ||||
2017 | 4,283 | ||||
Total | 133,960 | ||||
Less portion representing interest | (12,284 | ) | |||
Present value of minimum lease payment | 121,676 | ||||
Less current portion | (67,057 | ) | |||
Long term portion | $ | 54,619 | |||
Included in our furniture, fixtures and equipment balance is leased equipment that was acquired, under the provisions of a long-term capital lease, during the quarter ended June 30, 2013. The equipment had an original cost of $177,547 and has a net book value of $116,453 at March 31, 2014. | |||||
On May 19, 2014, we signed an amendment to our credit facility agreement with Silicon Valley Bank, effective May 10, 2014. The terms of the credit facility include a line of credit for $2,000,000 for one year at an interest rate calculated at the prime rate plus 1.25%, subject to increase upon a default. Our borrowing under the credit facility is limited by our eligible receivables and inventory at the time of borrowing. The credit facility is secured by all tangible and intangible assets, whether now owned or hereafter acquired, wherever located. As of March 31, 2014, under our eligible receivables and inventory limit, we had an additional approximately $869,000 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, 2014, 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 as of March 31, 2014 with respect to contingent severance benefit obligations was $120,000. |
Income_Taxes
Income Taxes | 12 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Income Taxes | ' | |||||||
Income Taxes | ' | |||||||
5. 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, 2014 | March 31, 2013 | ||||||
Current: | ||||||||
Federal | $ | — | $ | — | ||||
State | — | — | ||||||
Total current | — | — | ||||||
Deferred: | ||||||||
Federal | (583,000 | ) | 981,000 | |||||
State | (60,000 | ) | 101,000 | |||||
Total deferred | (643,000 | ) | 1,082,000 | |||||
Valuation allowance | 643,000 | (1,082,000 | ) | |||||
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, 2014 | March 31, 2013 | ||||||
Federal statutory rate | $ | (606,000 | ) | $ | (219,000 | ) | ||
Effect of: | ||||||||
State taxes, net of federal tax benefit | (62,000 | ) | (23,000 | ) | ||||
Other | 22,000 | 40,000 | ||||||
Valuation allowance | 646,000 | 202,000 | ||||||
Total | $ | — | $ | — | ||||
The components of the deferred tax asset are as follows: | ||||||||
Years Ended | March 31, 2014 | March 31, 2013 | ||||||
Credits and net operating loss carryforwards | $ | 3,067,000 | $ | 2,838,000 | ||||
Impairment reserve | 412,000 | — | ||||||
Other | 106,000 | 104,000 | ||||||
Gross deferred tax assets | 3,585,000 | 2,942,000 | ||||||
Valuation allowance | (3,585,000 | ) | (2,942,000 | ) | ||||
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, 2014, we had approximately $8.3 million of net operating loss carryovers for tax purposes. Additionally, we have approximately $186,000 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, 2034. Our net operating loss carryovers at March 31, 2014 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. | ||||||||
Legal_Proceedings
Legal Proceedings | 12 Months Ended |
Mar. 31, 2014 | |
Legal Proceedings | ' |
Legal Proceedings | ' |
6. Legal Proceedings | |
We have been named as a defendant in 47 separate (but similar) product liability lawsuits relating to a surgical mesh product manufactured by another company. We did not distribute or sell the manufacturer’s mesh product, which is the subject of these lawsuits. We believe that we have been named as a defendant in these lawsuits only because we served as a distributor for other unrelated products of that manufacturer. We believe that we have meritorious defenses to these lawsuits. We believe that these lawsuits will be covered by our insurance policies. | |
Based on currently available information, we believe that the resolution of these lawsuits is not likely to have a material adverse effect on our business, financial position or future results of operations. In accordance with generally accepted accounting principles in the United States (U.S. GAAP), we record a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These provisions are reviewed at least quarterly and adjusted to reflect the impacts of negotiations, settlements, rulings, advice of legal counsel, and other information and events pertaining to a particular case. | |
Major_CustomersSuppliers
Major Customers/Suppliers | 12 Months Ended |
Mar. 31, 2014 | |
Major Customers/Suppliers | ' |
Major Customers/Suppliers | ' |
7. Major Customers/Suppliers | |
We depend on sales that are generated from hospitals’ ongoing usage of AEM surgical instruments. In fiscal year 2014, we generated sales from over 350 hospitals that have changed to AEM products, but no hospital customer contributed more than 3% to the total sales. We generate service revenue from our Intuitive Surgical, Inc. agreement. We have a relationship with New Deantronics, Inc., who accounted for approximately 12% of our purchases in fiscal year 2014 | |
Defined_Contribution_Employee_
Defined Contribution Employee Benefit Plan | 12 Months Ended |
Mar. 31, 2014 | |
Defined Contribution Employee Benefit Plan | ' |
Defined Contribution Employee Benefit Plan | ' |
8. Defined Contribution Employee Benefit Plan | |
We have adopted a 401(k) Profit Sharing Plan which covers all full-time employees who have completed at least three months of full-time continuous service and 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, 2014 | |
Related Party Transaction | ' |
Related Party Transaction | ' |
9. Related Party Transaction | |
We paid consulting fees of $92,308 and $76,480 to an entity owned by one of our directors in fiscal years 2014 and 2013, respectively. We paid consulting fees of $89,519 and $77,072 to another director, or an entity owned by the director, in fiscal years 2014 and 2013, respectively. | |
We have an employment agreement with Roger C. Odell, an employee. The employment agreement began January 17, 2014 and continues until January 16, 2016. We have accrued a liability for the employment agreement of $120,000 and $123,980 at March 31, 2014 and 2013, respectively. | |
Impairment_Cost
Impairment Cost | 12 Months Ended |
Mar. 31, 2014 | |
Impairment Cost | ' |
Impairment Cost | ' |
10. Impairment Cost | |
After assessing poor performance of our pistol-grip disposable suction irrigation electrode and our cold scissors, we decided to discontinue future sales of these instruments. As a result, we incurred a product impairment cost of $1,100,368 in our fourth quarter that ended March 31, 2014, for inventory and equipment of these instruments and for other inventory that we will not use in the future. Impairment of furniture, fixtures and equipment was $643,867 and impairment of inventory was $456,501. | |
Subsequent_Events
Subsequent Events | 12 Months Ended |
Mar. 31, 2014 | |
Subsequent Events | ' |
Subsequent Events | ' |
11. Subsequent Events | |
Management evaluated all activity of us and concluded that, except for the events that follows, no subsequent events have occurred that would require recognition in the financial statements or disclosure in the notes to the financial statements. | |
On May 19, 2014, we signed an amendment to our credit facility agreement with Silicon Valley Bank, effective May 10, 2014. The terms of the credit facility include a line of credit for $2,000,000 for one year at an interest rate calculated at the prime rate plus 1.25%, subject to increase upon a default. Our borrowing under the credit facility is limited by our eligible receivables and inventory at the time of borrowing. The credit facility is secured by all tangible and intangible assets, whether now owned or hereafter acquired, wherever located. | |
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policies) | 12 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Summary of Significant Accounting Policies | ' | |||||||
Use of Estimates in the Preparation of Financial Statements | ' | |||||||
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 | ' | |||||||
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. | ||||||||
Fair Value of Financial Instruments | ' | |||||||
Fair Value of Financial Instruments. Our financial instruments consist of cash and cash equivalents and short-term trade receivables and payables. The carrying values of cash and cash equivalents, short-term receivables and payables approximate their fair value due to their short maturities. | ||||||||
Concentration of Credit Risk | ' | |||||||
Concentration of Credit Risk. 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, 2014. 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. | ||||||||
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, 2014 | March 31, 2013 | ||||||
Balance, beginning of year | $ | 9,000 | $ | 15,500 | ||||
Provision for estimated losses | 4,042 | (6,500 | ) | |||||
Write-off of uncollectible accounts | (5,042 | ) | — | |||||
Balance, end of year | $ | 8,000 | $ | 9,000 | ||||
The net accounts receivable balance at March 31, 2014 of $863,220 included no more than 5% from any one customer. The net accounts receivable balance at March 31, 2013 of $985,770 included no more than 6% from any one customer. | ||||||||
Warranty Accrual | ' | |||||||
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, 2014 | March 31, 2013 | ||||||
Balance, beginning of year | $ | 55,000 | $ | 65,000 | ||||
Provision for estimated warranty claims | (20,000 | ) | 4,000 | |||||
Claims made | — | (14,000 | ) | |||||
Balance, end of year | $ | 35,000 | $ | 55,000 | ||||
Inventories | ' | |||||||
Inventories. Inventories are stated at the lower of cost (first-in, first-out basis) or market. We reduce inventory for estimated obsolete or unmarketable inventory equal to the difference between the cost of inventory and the estimated 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. At March 31, 2014 and 2013, inventory consisted of the following: | ||||||||
March 31, 2014 | March 31, 2013 | |||||||
Raw materials | $ | 1,498,867 | $ | 1,843,357 | ||||
Finished goods | 1,285,361 | 1,136,945 | ||||||
Total gross inventories | 2,784,228 | 2,980,302 | ||||||
Less reserve for obsolescence | (560,000 | ) | (51,000 | ) | ||||
Total net inventories | $ | 2,224,228 | $ | 2,929,302 | ||||
A summary of the activity in our inventory reserve for obsolescence is as follows: | ||||||||
Years Ended | March 31, 2014 | March 31, 2013 | ||||||
Balance, beginning of year | $ | 51,000 | $ | 117,000 | ||||
Provision for estimated obsolescence | 106,528 | 47,280 | ||||||
Provision for impairment | 456,501 | — | ||||||
Write-off of obsolete inventory | (54,029 | ) | (113,280 | ) | ||||
Balance, end of year | $ | 560,000 | $ | 51,000 | ||||
Property and Equipment | ' | |||||||
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. Equipment-in-progress is primarily manufacturing equipment for product that will be produced internally. Depreciation expense for the years ended March 31, 2014 and 2013 was $473,867 and $296,641, respectively. | ||||||||
Long-Lived Assets | ' | |||||||
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. See Note 10. | ||||||||
Patents | ' | |||||||
Patents. The costs of applying for patents are capitalized and amortized on a straight-line basis over the lesser of the patent’s economic or legal life (20 years from the date of application in the United States). Capitalized costs are expensed if patents are not issued. We review the carrying value of our patents periodically to determine whether the patents have continuing value and such reviews could result in the conclusion that the recorded amounts have been impaired. A summary of our patents at March 31, 2014 and 2013 is as follows: | ||||||||
March 31, 2014 | March 31, 2013 | |||||||
Patents issued | $ | 367,217 | $ | 243,721 | ||||
Accumulated amortization | (215,969 | ) | (190,770 | ) | ||||
Patents issued, net of accumulated amortization | 151,248 | 52,951 | ||||||
Patent applications | 97,723 | 184,655 | ||||||
Total net patents and patent applications | $ | 248,971 | $ | 237,606 | ||||
The expected annual amortization expense related to patents and patent applications as of March 31, 2014, for the next five fiscal years, is as follows: | ||||||||
Fiscal Year | Amount | |||||||
2015 | $ | 20,934 | ||||||
2016 | 20,242 | |||||||
2017 | 20,011 | |||||||
2018 | 20,011 | |||||||
2019 and following | 167,773 | |||||||
Total | $ | 248,971 | ||||||
Other Accrued Liabilities | ' | |||||||
Other Accrued Liabilities. At March 31, 2014 and 2013, other accrued liabilities consisted of the following: | ||||||||
March 31, 2014 | March 31, 2013 | |||||||
Warranty | $ | 35,000 | $ | 55,000 | ||||
Sales commissions | 38,065 | 29,492 | ||||||
Lease normalization | 6,310 | 36,610 | ||||||
Sales and use tax | 18,108 | 37,460 | ||||||
Marketing fees | 10,560 | 10,279 | ||||||
Legal and audit fees | 45,439 | 31,426 | ||||||
Payroll taxes | 23,554 | 25,932 | ||||||
Medical device tax | 8,425 | 63,808 | ||||||
Employment agreement | 120,000 | 123,980 | ||||||
Trade shows | 50,000 | — | ||||||
Miscellaneous | 53,088 | 32,184 | ||||||
Total other accrued liabilities | $ | 408,549 | $ | 446,171 | ||||
Income Taxes | ' | |||||||
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 Company’s 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 statement 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. | ||||||||
Sales Recognition | ' | |||||||
Sales Recognition. Sales from product sales 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 performed is recognized when invoices are sent to customers. | ||||||||
Sales Taxes | ' | |||||||
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 | ' | |||||||
Research and Development Expenses. We expense research and development costs for products and processes as incurred. | ||||||||
Advertising Costs | ' | |||||||
Advertising Costs. We expense advertising costs as incurred. Advertising expense for the years ended March 31, 2014 and 2013 was minimal. | ||||||||
Medical Device Tax | ' | |||||||
Medical Device Tax. In March 2010, the Patient Protection and Affordable Care Act was enacted in the United States. This legislation includes a provision that imposes 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. | ||||||||
Stock-Based Compensation | ' | |||||||
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 statement 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 statement 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 statement of operations for fiscal years 2014 and 2013 included compensation expense for share-based payment awards granted prior to, but not yet vested as of March 31, 2014, 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 statement of operations for fiscal years 2014 and 2013 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 2014 and 2013 was $64,518 and $60,353, respectively, which consisted of stock-based compensation expense related to director and employee stock options. | ||||||||
Stock-based compensation expense related to employee stock options under ASC 718 for fiscal years 2014 and 2013 was allocated as follows: | ||||||||
Years Ended | March 31, 2014 | March 31, 2013 | ||||||
Cost of sales | $ | 1,381 | $ | 2,740 | ||||
Sales and marketing | 10,420 | 2,841 | ||||||
General and administrative | 44,854 | 43,617 | ||||||
Research and development | 7,863 | 11,155 | ||||||
Stock-based compensation expense | $ | 64,518 | 60,353 | |||||
Segment Reporting | ' | |||||||
Segment Reporting. We have concluded that we have one operating segment. | ||||||||
Basic and Diluted Income per Common Share | ' | |||||||
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 2014 and 2013, the shares used in the calculation of dilutive potential common shares exclude options to purchase shares. 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, 2014 | March 31, 2013 | ||||||
Net loss | $ | (1,781,678 | ) | $ | (615,673 | ) | ||
Weighted-average shares — basic | 8,921,669 | 8,199,621 | ||||||
Effect of dilutive potential common shares | — | — | ||||||
Weighted-average shares — diluted | 8,921,669 | 8,199,621 | ||||||
Net loss per share — basic and diluted | $ | (0.20 | ) | $ | (0.08 | ) | ||
Antidilutive employee stock options | 531,000 | 547,000 | ||||||
Recent Accounting Pronouncements | ' | |||||||
Recent Accounting Pronouncements. We have reviewed all recently issued, but not yet effective, accounting pronouncements and do not believe the future adoption of any such pronouncements may be expected to cause a material impact on our financial condition or the results of our operations. | ||||||||
Summary_of_Significant_Account2
Summary of Significant Accounting Policies (Tables) | 12 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Summary of Significant Accounting Policies | ' | |||||||
Summary of the activity in allowance for doubtful accounts | ' | |||||||
Years Ended | March 31, 2014 | March 31, 2013 | ||||||
Balance, beginning of year | $ | 9,000 | $ | 15,500 | ||||
Provision for estimated losses | 4,042 | (6,500 | ) | |||||
Write-off of uncollectible accounts | (5,042 | ) | — | |||||
Balance, end of year | $ | 8,000 | $ | 9,000 | ||||
Summary of warranty claims activity, included in other accrued liabilities | ' | |||||||
Years Ended | March 31, 2014 | March 31, 2013 | ||||||
Balance, beginning of year | $ | 55,000 | $ | 65,000 | ||||
Provision for estimated warranty claims | (20,000 | ) | 4,000 | |||||
Claims made | — | (14,000 | ) | |||||
Balance, end of year | $ | 35,000 | $ | 55,000 | ||||
Schedule of inventory | ' | |||||||
March 31, 2014 | March 31, 2013 | |||||||
Raw materials | $ | 1,498,867 | $ | 1,843,357 | ||||
Finished goods | 1,285,361 | 1,136,945 | ||||||
Total gross inventories | 2,784,228 | 2,980,302 | ||||||
Less reserve for obsolescence | (560,000 | ) | (51,000 | ) | ||||
Total net inventories | $ | 2,224,228 | $ | 2,929,302 | ||||
Summary of the activity in inventory reserve for obsolescence | ' | |||||||
Years Ended | March 31, 2014 | March 31, 2013 | ||||||
Balance, beginning of year | $ | 51,000 | $ | 117,000 | ||||
Provision for estimated obsolescence | 106,528 | 47,280 | ||||||
Provision for impairment | 456,501 | — | ||||||
Write-off of obsolete inventory | (54,029 | ) | (113,280 | ) | ||||
Balance, end of year | $ | 560,000 | $ | 51,000 | ||||
Summary of patents | ' | |||||||
March 31, 2014 | March 31, 2013 | |||||||
Patents issued | $ | 367,217 | $ | 243,721 | ||||
Accumulated amortization | (215,969 | ) | (190,770 | ) | ||||
Patents issued, net of accumulated amortization | 151,248 | 52,951 | ||||||
Patent applications | 97,723 | 184,655 | ||||||
Total net patents and patent applications | $ | 248,971 | $ | 237,606 | ||||
Schedule of expected annual amortization expense related to patents and patent applications for the next five fiscal years | ' | |||||||
Fiscal Year | Amount | |||||||
2015 | $ | 20,934 | ||||||
2016 | 20,242 | |||||||
2017 | 20,011 | |||||||
2018 | 20,011 | |||||||
2019 and following | 167,773 | |||||||
Total | $ | 248,971 | ||||||
Schedule of other accrued liabilities | ' | |||||||
March 31, 2014 | March 31, 2013 | |||||||
Warranty | $ | 35,000 | $ | 55,000 | ||||
Sales commissions | 38,065 | 29,492 | ||||||
Lease normalization | 6,310 | 36,610 | ||||||
Sales and use tax | 18,108 | 37,460 | ||||||
Marketing fees | 10,560 | 10,279 | ||||||
Legal and audit fees | 45,439 | 31,426 | ||||||
Payroll taxes | 23,554 | 25,932 | ||||||
Medical device tax | 8,425 | 63,808 | ||||||
Employment agreement | 120,000 | 123,980 | ||||||
Trade shows | 50,000 | — | ||||||
Miscellaneous | 53,088 | 32,184 | ||||||
Total other accrued liabilities | $ | 408,549 | $ | 446,171 | ||||
Schedule of stock-based compensation expense related to employee stock options | ' | |||||||
Years Ended | March 31, 2014 | March 31, 2013 | ||||||
Cost of sales | $ | 1,381 | $ | 2,740 | ||||
Sales and marketing | 10,420 | 2,841 | ||||||
General and administrative | 44,854 | 43,617 | ||||||
Research and development | 7,863 | 11,155 | ||||||
Stock-based compensation expense | $ | 64,518 | 60,353 | |||||
Schedule of calculation of basic and diluted net income (loss) per share | ' | |||||||
Years Ended | March 31, 2014 | March 31, 2013 | ||||||
Net loss | $ | (1,781,678 | ) | $ | (615,673 | ) | ||
Weighted-average shares — basic | 8,921,669 | 8,199,621 | ||||||
Effect of dilutive potential common shares | — | — | ||||||
Weighted-average shares — diluted | 8,921,669 | 8,199,621 | ||||||
Net loss per share — basic and diluted | $ | (0.20 | ) | $ | (0.08 | ) | ||
Antidilutive employee stock options | 531,000 | 547,000 | ||||||
Shareholders_Equity_Tables
Shareholders' Equity (Tables) | 12 Months Ended | |||||||||||||
Mar. 31, 2014 | ||||||||||||||
Shareholders' Equity | ' | |||||||||||||
Summary of assumptions for employee stock options | ' | |||||||||||||
Years Ended | March 31, 2014 | March 31, 2013 | ||||||||||||
Risk-free interest rate | 0.7% to 1.7% | 0.7% to 1.0% | ||||||||||||
Expected life (in years) | 5 | 5 | ||||||||||||
Expected volatility | 75% to 106% | 99% to 103% | ||||||||||||
Expected dividend | 0% | 0% | ||||||||||||
Shareholders' Equity | ' | |||||||||||||
Summary of information about employee stock options outstanding and exercisable | ' | |||||||||||||
STOCK OPTIONS OUTSTANDING | STOCK OPTIONS EXERCISABLE | |||||||||||||
Range of Exercise Prices | Number | Weighted-Average | Weighted-Average | Number | Weighted-Average | |||||||||
Outstanding | Remaining Contractual | Exercise Price | Exercisable | Exercise Price | ||||||||||
Life (in Years) | per Share | per Share | ||||||||||||
$0.60 - $1.09 | 366,000 | 4.2 | $ | 0.88 | 22,728 | $ | 0.86 | |||||||
$1.15 - $1.34 | 110,000 | 4.3 | $ | 1.18 | 13,553 | $ | 1.25 | |||||||
$1.45 - $1.90 | 55,000 | 2.3 | $ | 1.6 | 26,155 | $ | 1.74 | |||||||
531,000 | 4 | $ | 1.02 | 62,436 | $ | 1.31 | ||||||||
Schedule of assumptions used to estimate the fair value of warrants | ' | |||||||||||||
Expected life (in years) | 5 | |||||||||||||
Volatility | 91 | % | ||||||||||||
Risk-free interest rate | 1.5 | % | ||||||||||||
Dividend yield (on common stock) | 0 | % | ||||||||||||
Equity compensation plans approved by security holders | ' | |||||||||||||
Shareholders' Equity | ' | |||||||||||||
Summary of stock option activity and related information for equity compensation plans | ' | |||||||||||||
STOCK OPTIONS OUTSTANDING | ||||||||||||||
Number | Weighted-Average | |||||||||||||
Outstanding | Exercise Price per | |||||||||||||
Share | ||||||||||||||
BALANCE AT MARCH 31, 2012 | 635,000 | $ | 1.35 | |||||||||||
Granted | 62,000 | 1.34 | ||||||||||||
Forfeited/expired | (260,000 | ) | 1.55 | |||||||||||
BALANCE AT MARCH 31, 2013 | 437,000 | $ | 1.24 | |||||||||||
Granted | 185,000 | 0.99 | ||||||||||||
Forfeited/expired | (341,000 | ) | 1.25 | |||||||||||
BALANCE AT MARCH 31, 2014 | 281,000 | $ | 1.06 | |||||||||||
Equity compensation plans not approved by security holders | ' | |||||||||||||
Shareholders' Equity | ' | |||||||||||||
Summary of stock option activity and related information for equity compensation plans | ' | |||||||||||||
STOCK OPTIONS OUTSTANDING | ||||||||||||||
Number | Weighted-Average | |||||||||||||
Outstanding | Exercise Price per | |||||||||||||
Share | ||||||||||||||
BALANCE AT MARCH 31, 2012 | 80,000 | $ | 1.08 | |||||||||||
Granted | 35,000 | 1.32 | ||||||||||||
Forfeited/expired | (5,000 | ) | 1.05 | |||||||||||
BALANCE AT MARCH 31, 2013 | 110,000 | $ | 1.15 | |||||||||||
Granted | 220,000 | 0.93 | ||||||||||||
Forfeited/expired | (80,000 | ) | 1.1 | |||||||||||
BALANCE AT MARCH 31, 2014 | 250,000 | $ | 0.97 |
Commitments_and_Contingencies_
Commitments and Contingencies (Tables) | 12 Months Ended | ||||
Mar. 31, 2014 | |||||
Facilities at 6797 Winchester Circle, Boulder, Colorado | ' | ||||
Commitments and contingencies | ' | ||||
Schedule of minimum future lease payments, by fiscal year | ' | ||||
Fiscal Year | Amount | ||||
2015 | $ | 260,847 | |||
2016 | 268,672 | ||||
2017 | 276,732 | ||||
2018 | 285,034 | ||||
2019 | 293,585 | ||||
2020 | 99,800 | ||||
Total | $ | 1,484,670 | |||
Equipment leases with General Electric Capital Corporation | ' | ||||
Commitments and contingencies | ' | ||||
Schedule of minimum future capital equipment lease payments | ' | ||||
Fiscal Year | Amount | ||||
2015 | $ | 76,207 | |||
2016 | 53,470 | ||||
2017 | 4,283 | ||||
Total | 133,960 | ||||
Less portion representing interest | (12,284 | ) | |||
Present value of minimum lease payment | 121,676 | ||||
Less current portion | (67,057 | ) | |||
Long term portion | $ | 54,619 |
Income_Taxes_Tables
Income Taxes (Tables) | 12 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Income Taxes | ' | |||||||
Schedule of income tax provision (benefit) for income taxes | ' | |||||||
Years Ended | March 31, 2014 | March 31, 2013 | ||||||
Current: | ||||||||
Federal | $ | — | $ | — | ||||
State | — | — | ||||||
Total current | — | — | ||||||
Deferred: | ||||||||
Federal | (583,000 | ) | 981,000 | |||||
State | (60,000 | ) | 101,000 | |||||
Total deferred | (643,000 | ) | 1,082,000 | |||||
Valuation allowance | 643,000 | (1,082,000 | ) | |||||
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, 2014 | March 31, 2013 | ||||||
Federal statutory rate | $ | (606,000 | ) | $ | (219,000 | ) | ||
Effect of: | ||||||||
State taxes, net of federal tax benefit | (62,000 | ) | (23,000 | ) | ||||
Other | 22,000 | 40,000 | ||||||
Valuation allowance | 646,000 | 202,000 | ||||||
Total | $ | — | $ | — | ||||
Schedule of components of the deferred tax asset | ' | |||||||
Years Ended | March 31, 2014 | March 31, 2013 | ||||||
Credits and net operating loss carryforwards | $ | 3,067,000 | $ | 2,838,000 | ||||
Impairment reserve | 412,000 | — | ||||||
Other | 106,000 | 104,000 | ||||||
Gross deferred tax assets | 3,585,000 | 2,942,000 | ||||||
Valuation allowance | (3,585,000 | ) | (2,942,000 | ) | ||||
Total deferred tax assets | $ | — | $ | — |
Description_of_Business_Detail
Description of Business (Details) (USD $) | Mar. 31, 2014 | Mar. 31, 2013 |
Description of Business | ' | ' |
Accumulated deficit | $18,957,371 | $17,175,693 |
Summary_of_Significant_Account3
Summary of Significant Accounting Policies (Details) (USD $) | 12 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
item | ||
Concentration of credit risk | ' | ' |
Federally insured limit | $250,000 | ' |
Number of financial institutions which maintain a majority of the entity's cash balances | 1 | ' |
Activity in allowance for doubtful accounts | ' | ' |
Balance, beginning of year | 9,000 | 15,500 |
Provision for estimated losses | 4,042 | -6,500 |
Write-off of uncollectible accounts | -5,042 | ' |
Balance, end of year | 8,000 | 9,000 |
Net accounts receivable | 863,220 | 985,770 |
Warranty claims activity | ' | ' |
Balance, beginning of year | 55,000 | 65,000 |
Provision for estimated warranty claims | -20,000 | 4,000 |
Claims made | ' | -14,000 |
Balance, end of year | 35,000 | 55,000 |
Inventories | ' | ' |
Raw materials | 1,498,867 | 1,843,357 |
Finished goods | 1,285,361 | 1,136,945 |
Total gross inventories | 2,784,228 | 2,980,302 |
Less reserve for obsolescence | -560,000 | -51,000 |
Total net inventories | $2,224,228 | $2,929,302 |
Accounts receivable | Customer concentration risk | ' | ' |
Activity in allowance for doubtful accounts | ' | ' |
Number of major customers | 1 | 1 |
Accounts receivable | Customer concentration risk | One customer | ' | ' |
Activity in allowance for doubtful accounts | ' | ' |
Concentration risk (as a percent) | 5.00% | 6.00% |
Accounts receivable | Credit concentration risk | ' | ' |
Activity in allowance for doubtful accounts | ' | ' |
Concentration risk (as a percent) | 0.00% | ' |
Summary_of_Significant_Account4
Summary of Significant Accounting Policies (Details 2) (USD $) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2013 | |
Inventory reserve | Inventory reserve | |||
Activity in inventory reserve for obsolescence | ' | ' | ' | ' |
Balance, beginning of year | ' | ' | $51,000 | $117,000 |
Provision for estimated obsolescence | ' | ' | 106,528 | 47,280 |
Provision for impairment | 456,501 | 456,501 | 456,501 | ' |
Write-off of obsolete inventory | ' | ' | -54,029 | -113,280 |
Balance, end of year | ' | ' | $560,000 | $51,000 |
Summary_of_Significant_Account5
Summary of Significant Accounting Policies (Details 3) (USD $) | 12 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Property and Equipment | ' | ' |
Depreciation expense | $473,867 | $296,641 |
Minimum | ' | ' |
Property and Equipment | ' | ' |
Estimated useful lives of assets | '3 years | ' |
Maximum | ' | ' |
Property and Equipment | ' | ' |
Estimated useful lives of assets | '7 years | ' |
Summary_of_Significant_Account6
Summary of Significant Accounting Policies (Details 4) (USD $) | 12 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Patents | ' | ' |
Accumulated amortization | ($215,969) | ($190,770) |
Total net patents and patent applications | 248,971 | 237,606 |
Other Accrued Liabilities | ' | ' |
Warranty | 35,000 | 55,000 |
Sales commissions | 38,065 | 29,492 |
Lease normalization | 6,310 | 36,610 |
Sales and use tax | 18,108 | 37,460 |
Marketing fees | 10,560 | 10,279 |
Legal and audit fees | 45,439 | 31,426 |
Payroll taxes | 23,554 | 25,932 |
Medical device tax | 8,425 | 63,808 |
Employment agreement | 120,000 | 123,980 |
Trade shows | 50,000 | ' |
Miscellaneous | 53,088 | 32,184 |
Total other accrued liabilities | 408,549 | 446,171 |
Income Taxes | ' | ' |
ASC 740 liability | 0 | ' |
Unrecognized tax benefits | 0 | ' |
Amount of income tax related interest or penalties assessed or recorded | 0 | ' |
Impact on effective tax rate due to adoption of ASC 740 | 0.00% | ' |
Sales Recognition | ' | ' |
Obligations related to product sales | 0 | ' |
Medical Device Tax | ' | ' |
Excise tax rate on the sale of certain medical devices (as a percent) | 2.30% | ' |
Patents | ' | ' |
Patents | ' | ' |
Economic or legal life | '20 years | ' |
Patents issued | 367,217 | 243,721 |
Accumulated amortization | -215,969 | -190,770 |
Patents issued, net of accumulated amortization | 151,248 | 52,951 |
Patent applications | 97,723 | 184,655 |
Total net patents and patent applications | 248,971 | 237,606 |
Expected annual amortization expense related to patents and patent applications | ' | ' |
2015 | 20,934 | ' |
2016 | 20,242 | ' |
2017 | 20,011 | ' |
2018 | 20,011 | ' |
2019 and following | 167,773 | ' |
Total | $248,971 | ' |
Summary_of_Significant_Account7
Summary of Significant Accounting Policies (Details 5) (USD $) | 12 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
item | ||
Stock-based compensation | ' | ' |
Stock-based compensation expense | $64,518 | $60,353 |
Segment Reporting | ' | ' |
Number of operating segment | 1 | ' |
Basic and Diluted Income per Common Share | ' | ' |
Net loss | -1,781,678 | -615,673 |
Weighted-average shares - basic (in shares) | 8,921,669 | 8,199,621 |
Weighted-average shares - diluted (in shares) | 8,921,669 | 8,199,621 |
Net loss per share - basic and diluted (in dollars per share) | ($0.20) | ($0.08) |
Antidilutive employee stock options (in shares) | 531,000 | 547,000 |
Cost of sales | ' | ' |
Stock-based compensation | ' | ' |
Stock-based compensation expense | 1,381 | 2,740 |
Sales and marketing | ' | ' |
Stock-based compensation | ' | ' |
Stock-based compensation expense | 10,420 | 2,841 |
General and administrative | ' | ' |
Stock-based compensation | ' | ' |
Stock-based compensation expense | 44,854 | 43,617 |
Research and development | ' | ' |
Stock-based compensation | ' | ' |
Stock-based compensation expense | $7,863 | $11,155 |
Shareholders_Equity_Details
Shareholders' Equity (Details) (USD $) | 12 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Additional disclosures | ' | ' |
Stock-based compensation expense | $64,518 | $60,353 |
Fair value of traded options, vesting restrictions | 0.00% | ' |
Stock options | ' | ' |
Assumptions for employee stock options | ' | ' |
Risk-free interest rate, minimum (as a percent) | 0.70% | 0.70% |
Risk-free interest rate, maximum (as a percent) | 1.70% | 1.00% |
Expected life | '5 years | '5 years |
Expected volatility, minimum (as a percent) | 75.00% | 99.00% |
Expected volatility, maximum (as a percent) | 106.00% | 103.00% |
Expected dividend (as a percent) | 0.00% | 0.00% |
Additional disclosures | ' | ' |
Fair value of options granted | 275,000 | 88,000 |
Stock-based compensation expense | 64,518 | 60,353 |
Stock option activity and related information | ' | ' |
Granted (in shares) | 405,000 | 97,000 |
Plan | Stock options | ' | ' |
Shareholders' Equity | ' | ' |
Exercisable on each anniversary (as a percent) | 20.00% | ' |
Vesting period | '5 years | ' |
Exercisable period | '5 years | ' |
Number of shares authorized | 950,000 | ' |
Total unrecognized compensation costs related to nonvested stock options | $279,000 | ' |
Expected period for recognition of compensation costs related to nonvested stock options | '5 years | ' |
Equity compensation plans approved by security holders | Stock options | ' | ' |
Stock option activity and related information | ' | ' |
Balance at the beginning of the period (in shares) | 437,000 | 635,000 |
Granted (in shares) | 185,000 | 62,000 |
Forfeited/expired (in shares) | -341,000 | -260,000 |
Balance at the end of the period (in shares) | 281,000 | 437,000 |
Weighted-Average Exercise Price per Share | ' | ' |
Balance at the beginning of the period (in dollars per share) | $1.24 | $1.35 |
Granted (in dollars per share) | $0.99 | $1.34 |
Forfeited/expired (in dollars per share) | $1.25 | $1.55 |
Balance at the end of the period (in dollars per share) | $1.06 | $1.24 |
Equity compensation plans not approved by security holders | Stock options | ' | ' |
Stock option activity and related information | ' | ' |
Balance at the beginning of the period (in shares) | 110,000 | 80,000 |
Granted (in shares) | 220,000 | 35,000 |
Forfeited/expired (in shares) | -80,000 | -5,000 |
Balance at the end of the period (in shares) | 250,000 | 110,000 |
Weighted-Average Exercise Price per Share | ' | ' |
Balance at the beginning of the period (in dollars per share) | $1.15 | $1.08 |
Granted (in dollars per share) | $0.93 | $1.32 |
Forfeited/expired (in dollars per share) | $1.10 | $1.05 |
Balance at the end of the period (in dollars per share) | $0.97 | $1.15 |
Shareholders_Equity_Details_2
Shareholders' Equity (Details 2) (USD $) | 12 Months Ended |
Mar. 31, 2014 | |
STOCK OPTIONS EXERCISABLE | ' |
Common stock available for grant under the Plan (in shares) | 3,000 |
Stock options | ' |
STOCK OPTIONS OUTSTANDING | ' |
Number Outstanding (in shares) | 531,000 |
Weighted-Average Remaining Contractual Life | '4 years |
Weighted-Average Exercise Price per Share (in dollars per share) | $1.02 |
STOCK OPTIONS EXERCISABLE | ' |
Number Exercisable (in shares) | 62,436 |
Weighted-Average Exercise Price per Share (in dollars per share) | $1.31 |
Nonqualified stock options | ' |
STOCK OPTIONS OUTSTANDING | ' |
Number Outstanding (in shares) | 531,000 |
$0.60 - $1.09 | Stock options | ' |
Employee stock options outstanding and exercisable | ' |
Exercise price, low end of range (in dollars per share) | $0.60 |
Exercise price, high end of range (in dollars per share) | $1.09 |
STOCK OPTIONS OUTSTANDING | ' |
Number Outstanding (in shares) | 366,000 |
Weighted-Average Remaining Contractual Life | '4 years 2 months 12 days |
Weighted-Average Exercise Price per Share (in dollars per share) | $0.88 |
STOCK OPTIONS EXERCISABLE | ' |
Number Exercisable (in shares) | 22,728 |
Weighted-Average Exercise Price per Share (in dollars per share) | $0.86 |
$1.15 - $1.34 | Stock options | ' |
Employee stock options outstanding and exercisable | ' |
Exercise price, low end of range (in dollars per share) | $1.15 |
Exercise price, high end of range (in dollars per share) | $1.34 |
STOCK OPTIONS OUTSTANDING | ' |
Number Outstanding (in shares) | 110,000 |
Weighted-Average Remaining Contractual Life | '4 years 3 months 18 days |
Weighted-Average Exercise Price per Share (in dollars per share) | $1.18 |
STOCK OPTIONS EXERCISABLE | ' |
Number Exercisable (in shares) | 13,553 |
Weighted-Average Exercise Price per Share (in dollars per share) | $1.25 |
$1.45 - $1.90 | Stock options | ' |
Employee stock options outstanding and exercisable | ' |
Exercise price, low end of range (in dollars per share) | $1.45 |
Exercise price, high end of range (in dollars per share) | $1.90 |
STOCK OPTIONS OUTSTANDING | ' |
Number Outstanding (in shares) | 55,000 |
Weighted-Average Remaining Contractual Life | '2 years 3 months 18 days |
Weighted-Average Exercise Price per Share (in dollars per share) | $1.60 |
STOCK OPTIONS EXERCISABLE | ' |
Number Exercisable (in shares) | 26,155 |
Weighted-Average Exercise Price per Share (in dollars per share) | $1.74 |
Shareholders_Equity_Details_3
Shareholders' Equity (Details 3) (USD $) | 0 Months Ended | 12 Months Ended |
Dec. 17, 2013 | Mar. 31, 2014 | |
Shareholders' Equity | ' | ' |
Issue of shares of common stock under private placement | 2,463,125 | ' |
Proceeds from private placement of common stock | $1,970,500 | ' |
Purchase price per share for the shares sold in the private placement (in dollars per share) | $0.80 | ' |
Discount on purchase price per share for the shares sold in the private placement (as a percent) | 12.00% | ' |
Number of days volume-weighted average price on which discount is based | '20 days | ' |
Shares of common stock into which warrants are exercisable | 1,231,563 | ' |
Exercise price of warrants (in dollars per share) | $1.20 | $1.20 |
Term of warrants | '5 years | '4 years 9 months |
Fair value of warrants | 568,810 | ' |
Additional paid-in capital | $1,970,500 | ' |
Assumptions used to estimate the fair value of warrants | ' | ' |
Expected life | ' | '5 years |
Volatility (as a percent) | ' | 91.00% |
Risk-free interest rate (as a percent) | ' | 1.50% |
Dividend yield (on common stock) (as a percent) | ' | 0.00% |
Warrants outstanding | ' | 1,231,563 |
Commitments_and_Contingencies_1
Commitments and Contingencies (Details) (USD $) | 12 Months Ended | 0 Months Ended | 12 Months Ended | ||
Mar. 31, 2014 | Mar. 31, 2014 | 19-May-14 | Mar. 31, 2014 | Mar. 31, 2014 | |
item | Line of credit | Line of credit | Facilities at 6797 Winchester Circle, Boulder, Colorado | Equipment leases with General Electric Capital Corporation | |
Subsequent event | sqft | ||||
Commitments and contingencies | ' | ' | ' | ' | ' |
Currently leased area (in square feet) | ' | ' | ' | 28,696 | ' |
Leasehold improvements granted by the landlord included in lease | $172,176 | ' | ' | $172,176 | ' |
Minimum future lease payments, by fiscal year | ' | ' | ' | ' | ' |
2015 | ' | ' | ' | 260,847 | ' |
2016 | ' | ' | ' | 268,672 | ' |
2017 | ' | ' | ' | 276,732 | ' |
2018 | ' | ' | ' | 285,034 | ' |
2019 | ' | ' | ' | 293,585 | ' |
2020 | ' | ' | ' | 99,800 | ' |
Total | ' | ' | ' | 1,484,670 | ' |
Minimum future capital equipment lease payments | ' | ' | ' | ' | ' |
2015 | ' | ' | ' | ' | 76,207 |
2016 | ' | ' | ' | ' | 53,470 |
2017 | ' | ' | ' | ' | 4,283 |
Total | ' | ' | ' | ' | 133,960 |
Less portion representing interest | ' | ' | ' | ' | -12,284 |
Present value of minimum lease payment | ' | ' | ' | ' | 121,676 |
Less current portion | 67,057 | ' | ' | ' | -67,057 |
Long term portion | 54,619 | ' | ' | ' | 54,619 |
Original cost of lease equipment acquired | ' | ' | ' | ' | 177,547 |
Net book value of lease equipment acquired | ' | ' | ' | ' | 116,453 |
Credit facility agreement | ' | ' | ' | ' | ' |
Maximum borrowing capacity | ' | ' | 2,000,000 | ' | ' |
Term | ' | ' | '1 year | ' | ' |
Variable rate basis | ' | ' | 'prime rate | ' | ' |
Variable rate margin (as a percent) | ' | ' | 1.25% | ' | ' |
Additional amount available to borrow under eligible receivables and inventory limit | ' | 869,000 | ' | ' | ' |
Number of observations under FDA inspection | 5 | ' | ' | ' | ' |
Number of observations under FDA inspection which are believed to be material | 0 | ' | ' | ' | ' |
Contingent severance benefit obligations | $120,000 | ' | ' | ' | ' |
Income_Taxes_Details
Income Taxes (Details) (USD $) | 12 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Deferred: | ' | ' |
Federal | ($583,000) | $981,000 |
State | -60,000 | 101,000 |
Total deferred | -643,000 | 1,082,000 |
Valuation allowance | 643,000 | -1,082,000 |
Total | 0 | 0 |
Reconciliation of the income taxes computed at the federal statutory rate and the provision for income taxes | ' | ' |
Federal statutory rate | -606,000 | -219,000 |
Effect of: | ' | ' |
State taxes, net of federal tax benefit | -62,000 | -23,000 |
Other | 22,000 | 40,000 |
Valuation allowance | 646,000 | 202,000 |
Total | 0 | 0 |
Components of deferred tax asset | ' | ' |
Credits and net operating loss carryforwards | 3,067,000 | 2,838,000 |
Impairment reserve | 412,000 | ' |
Other | 106,000 | 104,000 |
Gross deferred tax assets | 3,585,000 | 2,942,000 |
Valuation allowance | -3,585,000 | -2,942,000 |
Total deferred tax assets | 0 | 0 |
Net operating loss carryovers | 8,300,000 | ' |
Income tax deductions related to stock options | 582,000 | ' |
Research and Development | ' | ' |
Income Taxes | ' | ' |
Research and development tax credits | $186,000 | ' |
Legal_Proceedings_Details
Legal Proceedings (Details) | 12 Months Ended |
Mar. 31, 2014 | |
item | |
Legal Proceedings | ' |
Number of legal proceedings | 47 |
Major_CustomersSuppliers_Detai
Major Customers/Suppliers (Details) | 12 Months Ended |
Mar. 31, 2014 | |
item | |
Major customers/suppliers | ' |
Minimum number of hospitals from which sales were generated | 350 |
Number of hospital customers | 0 |
Maximum percentage of total sales contributed by a single customer | 3.00% |
New Deantronics, Inc. | ' |
Major customers/suppliers | ' |
Percentage of purchases accounted for by a major supplier | 12.00% |
Defined_Contribution_Employee_1
Defined Contribution Employee Benefit Plan (Details) | 12 Months Ended |
Mar. 31, 2014 | |
Defined Contribution Employee Benefit Plan | ' |
Minimum service period required for eligibility under the defined contribution plan | '3 months |
Minimum age for eligibility under the defined contribution plan | '18 years |
Participants contribution limit as a percentage of gross pay, maximum | 20.00% |
Vesting period for participants under the defined contribution plan | '5 years |
Related_Party_Transaction_Deta
Related Party Transaction (Details) (USD $) | 12 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Related party transaction | ' | ' |
Accrued liability under the employment agreement | $120,000 | $123,980 |
Director | ' | ' |
Related party transaction | ' | ' |
Consulting fees paid | 92,308 | 76,480 |
Director, one | ' | ' |
Related party transaction | ' | ' |
Consulting fees paid | 89,519 | 77,072 |
Roger C. Odell | ' | ' |
Related party transaction | ' | ' |
Accrued liability under the employment agreement | $120,000 | $123,980 |
Impairment_Cost_Details
Impairment Cost (Details) (USD $) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2014 | Mar. 31, 2014 | |
Impairment Cost | ' | ' |
Product impairment cost | $1,100,368 | $1,100,368 |
Impairment of furniture, fixtures and equipment | 643,867 | 643,867 |
Impairment of inventory | $456,501 | $456,501 |
Subsequent_Events_Details
Subsequent Events (Details) (Subsequent event, Line of credit, USD $) | 0 Months Ended |
19-May-14 | |
Subsequent event | Line of credit | ' |
Subsequent Events | ' |
Maximum borrowing capacity | $2,000,000 |
Term | '1 year |
Variable rate basis | 'prime rate |
Variable rate margin (as a percent) | 1.25% |