Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Mar. 31, 2017 | Jun. 17, 2017 | Sep. 30, 2016 | |
Document and Entity Information: | |||
Entity Registrant Name | Advansource Biomaterials Corp | ||
Document Type | 10-K | ||
Document Period End Date | Mar. 31, 2017 | ||
Amendment Flag | false | ||
Entity Central Index Key | 1,011,060 | ||
Current Fiscal Year End Date | --03-31 | ||
Entity Common Stock, Shares Outstanding | 21,490,621 | ||
Entity Public Float | $ 1,614,000 | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Well-known Seasoned Issuer | No | ||
Document Fiscal Year Focus | 2,017 | ||
Document Fiscal Period Focus | FY | ||
Trading Symbol | asnb |
Balance Sheets
Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2017 | Mar. 31, 2016 | ||
Current assets | ||||
Cash | $ 27 | $ 80 | ||
Accounts receivable-trade, net | 94 | [1] | 71 | [2] |
Accounts receivable-other | 139 | 121 | ||
Inventories, net | 189 | 257 | ||
Prepaid expenses and other current assets | 5 | 5 | ||
Total current assets | 454 | 534 | ||
Property, plant and equipment, net | 1,865 | 1,922 | ||
Deferred financing costs, net | 66 | 73 | ||
Other assets | 47 | 47 | ||
Total assets | 2,432 | 2,576 | ||
Current liabilities | ||||
Accounts payable | 450 | 276 | ||
Accrued expenses | 255 | 194 | ||
Customer advance | 7 | 42 | ||
Notes payable | 150 | |||
Capital lease obligation | 1 | |||
Deferred revenue | 13 | 13 | ||
Total current liabilities | 875 | 526 | ||
Long-term liabilities | ||||
Long-term financing obligation | 1,986 | 1,986 | ||
Accrued interest on financing obligation | 172 | 160 | ||
Total long-term liabilities | 2,158 | 2,146 | ||
Total liabilities | 3,033 | 2,672 | ||
Commitments and contingencies | ||||
Stockholders' equity | ||||
Preferred stock | [3] | [4] | ||
Common stock | 21 | [5] | 21 | [6] |
Additional paid-in capital | 38,104 | 38,100 | ||
Accumulated deficit | (38,696) | (38,187) | ||
Treasury stock | (30) | [7] | (30) | [8] |
Total stockholders' equity | (601) | (96) | ||
Total liabilities and stockholders' equity | $ 2,432 | $ 2,576 | ||
[1] | Net of allowance of $5 as of 3/31/2017. | |||
[2] | Net of allowance of $5 as 3/31/2016. | |||
[3] | $.001 par value, 5,000,000 shares authorized; no shares issued and outstanding as of 3/31/2017. | |||
[4] | $.001 par value, 5,000,000 shares authorized; no shares issued and outstanding as of 3/31/2016. | |||
[5] | $.001 par value, 50,000,000 shares authorized; 21,567,313 shares issued and 21,490,621 shares outstanding as of 3/31/2017. | |||
[6] | $.001 par value, 50,000,000 shares authorized; 21,567,313 shares issued and 21,490,621 shares outstanding as of 3/31/2016. | |||
[7] | 76,692 shares at cost at 3/31/2017. | |||
[8] | 76,692 shares at cost at 3/31/2016. |
Statements of Operations
Statements of Operations - USD ($) $ in Thousands | 12 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Revenues | ||
Product sales | $ 1,470 | $ 2,563 |
License, royalty and development fees | 814 | 618 |
Total revenues | 2,284 | 3,181 |
Cost of sales | 853 | 1,080 |
Gross profit | 1,431 | 2,101 |
Operating expenses | ||
Research, development and regulatory | 329 | 310 |
Selling, general and administrative | 1,243 | 1,387 |
Total operating expenses | 1,572 | 1,697 |
Income (loss) from operations | (141) | 404 |
Interest expense | 368 | 371 |
Income (loss) before income taxes | (509) | 33 |
Net income (loss) | $ (509) | $ 33 |
Net income (loss) per common share, basic | $ (0.02) | $ 0 |
Net income (loss) per common share, diluted | $ (0.02) | $ 0 |
Shares used in computing net income (loss) per common share, basic | 21,491 | 21,491 |
Shares used in computing net income (loss) per common share, diluted | 21,813 | 22,673 |
Statements of Stockholders' Equ
Statements of Stockholders' Equity - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Treasury Stock | Total Stockholders' Equity |
Stockholders' equity, beginning of period, Value at Mar. 31, 2015 | $ 21 | $ 38,061 | $ (38,220) | $ (30) | $ (168) | |
Stockholders' equity, beginning of period, Shares at Mar. 31, 2015 | 21,491 | (77) | ||||
Stock-based compensation | $ 39 | 39 | 39 | |||
Net income (loss) | 33 | 33 | 33 | |||
Stockholders' equity, end of period, Value at Mar. 31, 2016 | (96) | $ 21 | 38,100 | (38,187) | $ (30) | (96) |
Stockholders' equity, end of period, Shares at Mar. 31, 2016 | 21,491 | (77) | ||||
Stock-based compensation | 4 | 4 | 4 | |||
Net income (loss) | (509) | (509) | (509) | |||
Stockholders' equity, end of period, Value at Mar. 31, 2017 | $ (601) | $ 21 | $ 38,104 | $ (38,696) | $ (30) | $ (601) |
Stockholders' equity, end of period, Shares at Mar. 31, 2017 | 21,491 | (77) |
Statement of Cash Flows
Statement of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Cash flows from operating activities | ||
Net income (loss) | $ (509) | $ 33 |
Depreciation | 57 | 76 |
Amoritization of deferred financing costs | 7 | 7 |
Provision for inventory reserve | 54 | (43) |
Stock-based compensation | 4 | 39 |
(Increase) decrease in accounts receivable-trade | (23) | 143 |
(Increase) decrease in accounts receivable-other | (18) | (45) |
(Increase) decrease in inventories | 13 | 90 |
(Increase) decrease in prepaid expenses and other current assets | 1 | |
Increase (decrease) in accounts payable | 174 | (19) |
Increase (decrease) in accrued expenses | 73 | (155) |
Increase (decrease) in customer advance | (35) | (35) |
Increase (decrease) in deferred revenue | (30) | |
Net cash flows provided by (used in) operating activities | (203) | 62 |
Proceeds from issuance of promissory note | 150 | |
Repayment of promissory note | (50) | |
Repayment of capital lease obligation | (7) | |
Net cash flows provided by (used in) financing activities | 150 | (57) |
Net change in cash | (53) | 5 |
Cash at beginning of period | 80 | 75 |
Cash at end of period | 27 | 80 |
Interest paid | $ 349 | $ 339 |
Description of Business
Description of Business | 12 Months Ended |
Mar. 31, 2017 | |
Notes | |
Description of Business | 1. Nature of Business AdvanSource Biomaterials Corporation (AdvanSource) develops advanced polymer materials which provide critical characteristics in the design and development of medical devices. Our biomaterials are used in devices that are designed for treating a broad range of anatomical sites and disease states. Our business model leverages our proprietary materials science technology and manufacturing expertise in order to expand product sales and royalty and license fee income. Our technology, notably products such as ChronoFlex®, HydroMed , and HydroThane , which have been developed to overcome a wide range of design and functional challenges such as the need for dimensional stability, ease of manufacture and demanding physical properties to overcoming environmental stress cracking and providing heightened lubricity for ease of insertion. Our new product extensions customize proprietary polymers for specific customer applications in a wide range of device categories. Our corporate, development and manufacturing operations are located in Wilmington, Massachusetts. Fiscal Year Our fiscal year ends on March 31. References herein to fiscal 2017 and/or fiscal 2016 refer to the fiscal years ended March 31, 2017 and/or 2016, respectively. |
Significant Accounting Policies
Significant Accounting Policies | 12 Months Ended |
Mar. 31, 2017 | |
Notes | |
Significant Accounting Policies | 2. Summary of Significant Accounting Policies Accounting Principles The financial statements and accompanying notes are prepared in accordance with U.S. generally accepted accounting principles (GAAP). Use of Accounting Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Going Concern The accompanying consolidated financial statements have been prepared on a going concern basis which implies we will continue to meet our obligations for the next twelve months as of the date these financial statements are issued. The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. For the year ended March 31, 2017, we incurred a net loss of approximately $509,000, had negative cash flows from operations of $203,000 and had a working capital deficit of $421,000. Management believes that certain arrangements entered into subsequent to March 31, 2017 with three of our significant customers which provide inventory purchase financing and long-term commitments for continued product purchase alleviate any substantial doubt as to our ability to meet our obligations for the next twelve months as of the date these financial statements are issued. However, management cannot provide any assurances that we will be successful in accomplishing any of our plans. Management also cannot provide any assurance that unforeseen circumstances that could occur at any time within the next twelve months or thereafter will not increase the need for us to raise additional capital on an immediate basis. However, based upon an evaluation, management believes that we are a going concern. Cash Cash includes cash on hand, is deposited at one area bank and may exceed federally insured limits at times. Revenue Recognition We generate revenues primarily from (i) the sale of polymer products and (ii) license, royalty and development agreements. Product Sales Revenues generated from the sale of polymer products is recognized upon shipment, provided that a purchase order has been received or a contract has been executed, there are no uncertainties regarding customer acceptance, the sales price is fixed or determinable and collection is deemed reasonably assured. If uncertainties regarding customer acceptance exist, we recognize revenues when those uncertainties are resolved and title has been transferred to the customer. Amounts collected or billed prior to satisfying the above revenue recognition criteria are recorded as deferred revenue. License, Royalty and Development Fees We also receive license, royalty and development fees, pursuant to agreements with our customers, for the use of our proprietary polymer biomaterials. The terms of the various license, royalty and development agreements may contain multiple deliverables which may include (i) licenses to use our polymer biomaterials in the customers end-product medical device, (ii) research and development activities, (iii) services and/or (iv) the manufacturing of polymer biomaterials. Payments made to us under these agreements may include non-refundable license fees, payments for research and development activities, payments for the manufacture of polymer materials, payments based upon the achievement of certain milestones, payments for the use of our polymer biomaterials in the customers end-product, and/or royalties earned on the sale of the customers end-product. Research, Development and Regulatory Expense Research, development and regulatory expenditures for the years ended March 31, 2017 and 2016 were $329,000 and $310,000, respectively, and consisted primarily of salaries and related costs and are expensed as incurred. We had two full time research and development employees that work on a variety of projects, including production support. Advertising Costs Advertising costs are expensed as incurred or at the first time the advertising takes place. We incurred no advertising costs for the years ended March 31, 2017 and 2016. Income (Loss) Per Share Basic income (loss) per common share is computed by dividing net income (loss) by the weighted-average number of common shares outstanding during the period. Diluted income (loss) per common share are based upon the weighted-average common shares outstanding during the period plus additional weighted-average common equivalent shares outstanding during the period. Common equivalent shares result from the assumed exercise of outstanding stock options and warrants, the proceeds of which are then assumed to have been used to repurchase outstanding common stock using the treasury stock method. In addition, the numerator is adjusted for any changes in income (loss) that would result from the assumed conversion of potential shares. Potentially dilutive shares, which were excluded from the diluted income (loss) per share calculations because the effect would be antidilutive or the options exercise prices were greater than the average market price of the common shares, were 3,001,250 and 1,499,500 shares for the fiscal years ended March 31, 2017 and 2016, respectively. Accounts Receivable We perform various analyses to evaluate accounts receivable balances and record an allowance for bad debts based on the estimated collectability of the accounts such that the amounts reflect estimated net realizable value. Account balances are charged off against the allowance after significant collection efforts have been made and potential for recovery is not considered probable. As of March 31, 2017 and 2016, our allowance for doubtful accounts was $5,000 and $5,000, respectively. Inventories We value our inventory at the lower of our actual cost or the current estimated market value. We regularly review inventory quantities on hand and inventory commitments with suppliers and records a provision for excess and obsolete inventory based primarily on our historical usage. During the fiscal years ended March 31, 2017 and 2016, we provided an additional $110,000 and $43,000, respectively, for excess and obsolete inventory. During the fiscal year ended March 31, 2017 and 2016, we disposed of certain obsolete inventory items in the aggregate amount of approximately $24,000 and $85,000, respectively. As of March 31, 2017 and 2016, our allowance for obsolete and excess inventory was $142,000 and $88,000, respectively. Although we make every effort to ensure the accuracy of our forecasts of future product demand, any significant unanticipated change in demand or technological developments could have a significant impact on the value of our inventory and our reported operating results. Property and Equipment Property and equipment are stated at cost. Equipment is depreciated using the straight-line method over the estimated useful lives of the assets, ranging from three to seven years. Building improvements are amortized using the straight-line method over the remaining estimated life of the building at the time the improvement is put into service. Our building is depreciated using the straight-line method over 40 years. Land is not depreciated. Expenditures for repairs and maintenance are charged to expense as incurred. We record construction in process in the appropriate asset category and commence depreciation upon completion and commencement of use of the asset. Equipment purchased pursuant to capital lease obligations, primarily computer equipment, is recorded at cost and depreciated on a straight line basis over the life of the lease. Deferred Financing Costs We have capitalized certain costs related to the issuance of debt. These costs are amortized to interest expense on a straight-line basis over the term of the debt. During the fiscal years ended March 31, 2017 and 2016, amortization expense related to deferred financing costs were $7,000 and $7,000, respectively. Income Taxes The provision for income taxes includes federal, state, local and foreign taxes. Income taxes are accounted for under the liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences of temporary differences between the financial statement carrying amounts and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which the temporary differences are expected to be recovered or settled. We evaluate the realizability of our deferred tax assets and establish a valuation allowance when it is more likely than not that all or a portion of deferred tax assets will not be realized. We account for uncertain tax positions using a more-likely-than-not threshold for recognizing and resolving uncertain tax positions. The evaluation of uncertain tax positions is based on factors including, but not limited to, changes in tax law, the measurement of tax positions taken or expected to be taken in tax returns, the effective settlement of matters subject to audit, new audit activity and changes in facts or circumstances related to a tax position. We evaluate this tax position on a quarterly basis. We also accrue for potential interest and penalties, if applicable, related to unrecognized tax benefits in income tax expense. (See Note 6). Impairment of Long-Lived Assets We evaluate our long-lived assets, which include property and equipment, for impairment as events and circumstances indicate that the carrying amount may not be recoverable. We evaluate the realizability of our long-lived assets based on reviews of results of sales of similar assets and independent appraisals. As a result of the continued operating losses described above, we evaluated the recoverability of our property and equipment as of March 31, 2017 and 2016 and determined that there existed no impairment of long-lived assets. Stock-Based Compensation Stock-based compensation is measured at the grant date based on the estimated fair value of the award and is recognized as an expense over the requisite service period. The valuation of employee stock options is an inherently subjective process, since market values are generally not available for long-term, non-transferable employee stock options. Accordingly, the Black-Scholes option pricing model is utilized to derive an estimated fair value. The Black-Scholes pricing model requires the consideration of the following six variables for purposes of estimating fair value: · · · · · · Expected Dividends. Expected Volatility. Risk-Free Interest Rate. Expected Term. Stock Option Exercise Price and Grant Date Price of Common Stock. We are required to estimate the level of award forfeitures expected to occur and record compensation expense only for those awards that are ultimately expected to vest. This requirement applies to all awards that are not yet vested. Due to the limited number of unvested options outstanding, the majority of which are held by executives and members of our Board of Directors, we have estimated a zero forfeiture rate. We will revisit this assumption periodically and as changes in the composition of the option pool dictate. Fair Value of Financial Instruments We follow Accounting Standards Codification 820-10 (ASC 820-10), Fair Value Measurements and Disclosures, The hierarchy established under ASC 820-10 gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy under ASC 820-10 are described below: Level 1 - Pricing inputs are quoted prices available in active markets for identical investments as of the reporting date. As required by ASC 820-10, we do not adjust the quoted price for these investments, even in situations where we hold a large position and a sale could reasonably impact the quoted price. Level 2 - Pricing inputs are quoted prices for similar investments, or inputs that are observable, either directly or indirectly, for substantially the full term through corroboration with observable market data. Level 2 includes investments valued at quoted prices adjusted for legal or contractual restrictions specific to these investments. Level 3 - Pricing inputs are unobservable for the investment, that is, inputs that reflect the reporting entitys own assumptions about the assumptions market participants would use in pricing the asset or liability. Level 3 includes investments that are supported by little or no market activity. Recent Accounting Pronouncements We have evaluated all issued but not yet effective accounting pronouncements and determined that, other than the following, they are either immaterial or not relevant to us. In February 2016, the Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU) ASU 2016 - 02 Leases intended to improve financial reporting about leasing transactions. The ASU affects all companies and other organizations that lease assets such as real estate, office equipment and manufacturing equipment. The ASU will require organizations that lease assets - referred to as lessees - to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. Under the new guidance, a lessee will be required to recognize assets and liabilities for leases with lease terms of more than 12 months. Consistent with current Generally Accepted Accounting Principles (GAAP), the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease. However, unlike current GAAP - which requires only capital leases to be recognized on the balance sheet - the new ASU will require both types of leases to be recognized on the balance sheet. The ASU also will require disclosures to help investors and other financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. These disclosures include qualitative and quantitative requirements, providing additional information about the amounts recorded in the financial statements. The accounting by organizations that own the assets leased by the lessee - also known as lessor accounting - will remain largely unchanged from current GAAP. However, the ASU contains some targeted improvements that are intended to align, where necessary, lessor accounting with the lessee accounting model and with the updated revenue recognition guidance issued in 2014. The ASU on leases will take effect for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. For all other organizations, the ASU on leases will take effect for fiscal years beginning after December 15, 2019, and for interim periods within fiscal years beginning after December 15, 2020. It is not anticipated that this updated guidance will have a material impact on our results of operations, cash flows or financial condition. In March 2016, the FASB issued ASU 2016 - 09 Improvements to Employee Share-Based Payment Accounting which is intended to improve the accounting for employee share-based payments. The ASU affects all organizations that issue share-based payment awards to their employees. The ASU, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, simplifies several aspects of the accounting for share-based payment award transactions, including; the income tax consequences, classification of awards as either equity or liabilities, and the classification on the statement of cash flows. The ASU simplifies two areas specific to private companies, with regards to the expected term and intrinsic value measurements. The ASU simplifies the following areas to private and public companies; (a) tax benefits and tax deficiencies with regards to the differences between book and tax deductions, (b) changes in the excess tax benefits classification in the statement of cash flows, (c) make an entity wide accounting policy election for accrual of vested awards verses individual awards, (d) changes in the amount qualifying as an equity award classification subject to statutory tax withholdings, (e) clarification in the classification of shares withheld for statutory tax withholdings on the statement of cash flows. For public companies, the amendments in this ASU are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. For private companies, the amendments are effective for annual periods beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2018. Early adoption is permitted for any organization in any interim or annual period. It is not anticipated that this guidance will have a material impact on our results of operations, cash flows or financial condition. In January 2016, the FASB issued ASU 2016 - 01 Recognition and Measurement of Financial Assets and Financial Liabilities, intended to improve the recognition and measurement of financial instruments. The ASU affects public and private companies, not-for-profit organizations, and employee benefit plans that hold financial assets or owe financial liabilities. The new guidance makes targeted improvements to existing GAAP by: Requiring equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income; Requiring public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; Requiring separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (that is, securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements; Eliminating the requirement to disclose the fair value of financial instruments measured at amortized cost for organizations that are not public business entities; Eliminating the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet; and Requiring a reporting organization to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk (also referred to as own credit) when the organization has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. The ASU on recognition and measurement will take effect for public companies for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. For private companies, not-for-profit organizations, and employee benefit plans, the standard becomes effective for fiscal years beginning after December 15, 2018, and for interim periods within fiscal years beginning after December 15, 2019. The ASU permits early adoption of the own credit provision (referenced above). Additionally, it permits early adoption of the provision that exempts private companies and not-for-profit organizations from having to disclose fair value information about financial instruments measured at amortized cost. It is not anticipated that this guidance will have a material impact on our results of operations, cash flows or financial condition. In April 2016, the FASB issued ASU 2016 - 10 Revenue from Contract with Customers (Topic 606): identifying Performance Obligations and Licensing. The amendments in this Update do not change the core principle of the guidance in Topic 606. Rather, the amendments in this Update clarify the following two aspects of Topic 606: identifying performance obligations and the licensing implementation guidance, while retaining the related principles for those areas. Topic 606 includes implementation guidance on (a) contracts with customers to transfer goods and services in exchange for consideration and (b) determining whether an entitys promise to grant a license provides a customer with either a right to use the entitys intellectual property (which is satisfied at a point in time) or a right to access the entitys intellectual property (which is satisfied over time). The amendments in this Update are intended to render more detailed implementation guidance with the expectation to reduce the degree of judgement necessary to comply with Topic 606. The amendments in this Update affect the guidance in ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which is not yet effective. The effective date and transition requirements for the amendments in this Update are the same as the effective date and transition requirements in Topic 606 (and any other Topic amended by Update 2014-09). ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, defers the effective date of Update2014-09 by one year. It is not anticipated that this updated guidance will have a material impact on our results of operations, cash flows or financial condition. In November 2016, the FASB issued ASU 2016-20, an amendment to ASU 2014-09, Revenue from Contracts with Customers (Topic 606). This ASU addressed several areas related to contracts with customers. This topic is not yet effective and will become effective with Topic 606. We are currently evaluating the impact this topic will have on our financial statements. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Mar. 31, 2017 | |
Notes | |
Related Party Transactions | 3. Related Party Transactions On April 26, 2016, we entered into Promissory Notes in the aggregate principal amount of $50,000 (the Notes) with Khristine Carroll, our Executive VP of Commercial Operations and an affiliate of Michael Adams, our Chief Executive Officer (the Affiliate) (collectively, the Investors). The Notes were initially due on May 25, 2016 and are currently being extended for consecutive monthly periods as mutually agreed upon by the parties and provided for by the terms of the Notes. The Notes bear interest at the rate of 10% per annum and all principal and accrued interest, if any, is due on demand. As of March 31, 2017, the principal balance outstanding was $50,000. During the year ended March 31, 2017, we accrued and paid interest of $5,000 and $0, respectively. As of March 31, 2017 our accrued interest outstanding was $0. On December 5, 2016, we entered into an additional Promissory Note in the principal amount of $100,000 (the Second Note) with the Affiliate. The Second Note bears interest at the rate of 12% per annum, provides for a $3,000 commitment fee and all principal and accrued interest, if any, is due on demand, but not later than June 5, 2017. As of March 31, 2017, the principal balance outstanding was $100,000. During the year ended March 31, 2017 we paid $3,000 of interest and $3,000 of commitment fee on the Second Note. As of March 31, 2017 our accrued interest outstanding was $0. On April 3, 2017, Michael Adams, our CEO and President, advanced and committed to us $20,000 pursuant to a promissory note, as amended (the Advance Note). The Advance Note provides the availability of up to $20,000 at the sole discretion of Mr. Adams through April 2, 2018, bears interest at the rate of 10% per annum, and provides for a $2,000 commitment fee and guaranteed interest of $2,000 payable upon execution of the Advance Note. On April 19, 2017 we paid the commitment fee and guaranteed interest of $2,000 and $2,000, respectively. Additionally, on April 19, 2017 we paid down the $20,000 advance. |
Inventories
Inventories | 12 Months Ended |
Mar. 31, 2017 | |
Notes | |
Inventories | 4. Inventories Inventories, net of allowance for obsolete and excess inventory, are stated at the lower of cost (first in, first out) or market and consist of the following: (in thousands) March 31, 2017 March 31, 2016 Raw materials $ 92 $ 82 Work in progress 59 9 Finished goods 180 254 331 345 Less: allowance for obsolete and excess inventory (142) (88) Total inventories, net $ 189 $ 257 During the fiscal years ended March 31, 2017 and 2016, we recorded charges of approximately $24,000 and $85,000, respectively, for the write-off of inventory. |
Property, Plant and Equipment D
Property, Plant and Equipment Disclosure | 12 Months Ended |
Mar. 31, 2017 | |
Notes | |
Property, Plant and Equipment Disclosure | 5. Property, Plant and Equipment Property, plant and equipment consist of the following: (in thousands) March 31, 2017 March 31, 2016 Land $ 500 $ 500 Building 2,705 2,705 Machinery, equipment and tooling 1,214 1,214 Furniture, fixtures and office equipment 285 285 Office equipment under capital lease 13 13 4,717 4,717 Less: accumulated depreciation (2,852) (2,795) $ 1,865 $ 1,922 Depreciation expense for the fiscal years ended March 31, 2017 and 2016 was approximately $57,000 and $76,000, respectively. During the fiscal year ended March 31, 2015, we acquired computer equipment at an approximate cost of $13,000 pursuant to a two year capital lease agreement. We recorded the equipment under capital lease as furniture, fixtures and office equipment and are depreciating the equipment over the life of the lease. We also recorded the capital lease obligation on the balance sheet and as of March 31, 2017 and 2016, our capital lease obligation is approximately $0 and $1,000, respectively. During the fiscal years ended March 31, 2017 and 2016 we recorded depreciation expense of $0 and $7,000, respectively, and interest expense of approximately $0 and $1,000, respectively. On December 22, 2011, we entered into an agreement with an independent third-party under which we sold and leased back our land and building generating gross proceeds of $2,000,000. The initial minimum lease term is 15 years. At the end of the initial minimum lease term, we have the option to renew the lease for three periods of five years each. Under the terms of the lease, we have provided, as collateral, a security interest in all furnishings, fixtures and equipment owned and used by us, having a net book value of approximately $0 as of March 31, 2017. For accounting purposes, the provision of such collateral constitutes continuing involvement with the associated property. Due to this continuing involvement, this sale-leaseback transaction is accounted for under the financing method, rather than as a completed sale. Under the financing method, we include the sales proceeds received as a financing obligation. The building, building improvements and land remain on the balance sheet and the building and building improvements will continue to be depreciated over their remaining useful lives. Payments made under the lease are applied as payments of imputed interest and deemed principal on the underlying financing obligation. |
Income Taxes
Income Taxes | 12 Months Ended |
Mar. 31, 2017 | |
Notes | |
Income Taxes | 6. Income Taxes As of March 31, 2017 and 2016, we had no material unrecognized tax benefits and no adjustments to liabilities or operations were required. Tax years 2013 through 2017 are subject to examination by the federal and state taxing authorities. There are no income tax examinations currently in process. Reconciliation between our effective tax rate and the United States statutory rate is as follows: Year Ended March 31, 2017 Year Ended March 31, 2016 Expected federal tax rate 34.0% 34.0% State income taxes, net of federal tax benefit 5.5% 5.5% Non-deductible expenses (5.2%) 121.2% Federal R&D tax credits, net 0.0% 0.0% Utilization of net operating losses (34.3%) (160.7%) Change in valuation allowance 0.0% 0.0% Effective tax rate 0.0% 0.0% The following is a summary of the significant components of our deferred tax assets as of March 31, 2017 and 2016: (in thousands) March 31, 2017 March 31, 2016 Deferred Tax Assets: Net operating loss carryforwards $ 9,305 $ 9,276 Capital loss carry forward - - Tax credit carry forward 306 306 Inventory and receivable allowances 147 37 Accrued expenses deductible when paid 111 42 Deferred tax assets 9,869 9,661 Deferred Tax Liabilities: Depreciation and amortization (191) (210) Deferred tax liabilities (191) (210) Net deferred tax assets 9,678 9,451 Valuation allowance (9,678) (9,451) Net deferred tax assets $ - $ - Deferred tax assets and liabilities are determined based on the differences between the financial statement carrying amounts and the tax basis of the assets and liabilities using the enacted tax rate in effect in the years in which the differences are expected to reverse. A 100% valuation allowance has been recorded against the deferred tax asset as it is more likely than not, based upon our analysis of all available evidence, that the tax benefit of the deferred tax asset will not be realized. As of March 31, 2017, we have the following unused net operating loss and tax credit carryforwards available to offset future federal and state taxable income, both of which expire at various times as noted below: (in thousands) Net Operating Losses Investment & Research Credits Expiration Dates Federal $ 26,672 $ - 2020 to 2037 State $ 6,192 $ - 2032 to 2037 Approximately $1,400,000 of the above Federal net operating loss carryforwards relate to stock compensation. The related tax benefit of approximately $553,000 will be credited to additional paid-in capital upon realization. |
Promissory Note
Promissory Note | 12 Months Ended |
Mar. 31, 2017 | |
Notes | |
Promissory Note | 7. Promissory Notes On April 26, 2016, we entered into Promissory Notes in the aggregate principal amount of $50,000 (the Notes) with Khristine Carroll, our Executive VP of Commercial Operations and an affiliate of Michael Adams, our Chief Executive Officer (the Affiliate) (collectively, the Investors). The Notes were initially due on May 25, 2016 and are currently being extended for consecutive monthly periods as mutually agreed upon by the parties and provided for by the terms of the Notes. The Notes bear interest at the rate of 10% per annum and all principal and accrued interest, if any, is due on demand. As of March 31, 2017, the principal balance outstanding was $50,000. During the year ended March 31, 2017, we accrued and paid interest of $5,000 and $0, respectively. As of March 31, 2017 our accrued interest outstanding was $0. On December 5, 2016, we entered into an additional Promissory Note in the principal amount of $100,000 (the Second Note) with the Affiliate. The Second Note bears interest at the rate of 12% per annum, provides for a $3,000 commitment fee and all principal and accrued interest, if any, is due on demand, but not later than June 5, 2017. As of March 31, 2017, the principal balance outstanding was $100,000. During the year ended March 31, 2017 we paid $3,000 of interest and $3,000 of commitment fee on the Second Note. As of March 31, 2017 our accrued interest outstanding was $0. On April 3, 2017, Michael Adams, our CEO and President, advanced and committed to us $20,000 pursuant to a promissory note, as amended (the Advance Note). The Advance Note provides the availability of up to $20,000 at the sole discretion of Mr. Adams through April 2, 2018, bears interest at the rate of 10% per annum, and provides for a $2,000 commitment fee and guaranteed interest of $2,000 payable upon execution of the Advance Note. On April 19, 2017 we paid the commitment fee and guaranteed interest of $2,000 and $2,000, respectively. Additionally, on April 19, 2017 we paid down the $20,000 advance. |
Long-term Financing Obligation
Long-term Financing Obligation | 12 Months Ended |
Mar. 31, 2017 | |
Notes | |
Long-term Financing Obligation | 8. Long-Term Financing Obligation On December 22, 2011, we entered into an agreement with an independent third-party under which we sold and leased back our land and building generating gross proceeds of $2,000,000. Pursuant to a lease agreement, the initial minimum lease term is 15 years. At the end of the initial minimum lease term, we have the option to renew the lease for three periods of five years each. Under the terms of the lease, we were required to place $280,000 of the net proceeds in escrow as a prepayment of the calendar year 2012 lease payments. In addition, we provided, as collateral, a security interest in all furnishings, fixtures and equipment owned and used by us, having a net book value of approximately $0 as of March 31, 2017. For accounting purposes, the provision of such collateral constitutes continuing involvement with the associated property. Due to this continuing involvement, this sale-leaseback transaction is accounted for under the financing method, rather than as a completed sale. Under the financing method, we include the sales proceeds received as a financing obligation. As of March 31, 2017 and 2016, the total financing obligation was $1,986,000 and $1,986,000, respectively, and accrued interest on financing obligation was $172,000 and $160,000, respectively. Through December 2018, interest on the financing obligation exceeds the minimum lease payments, accordingly the principal remains constant through that date. After December 2018, the minimum lease payment will exceed interest and principal will be reduced by the excess of minimum lease payment over interest. The building, building improvements and land remain on the balance sheet and the building and building improvements will continue to be depreciated over their remaining useful lives. Payments made under the lease are applied as payments of imputed interest and deemed principal on the underlying financing obligation. The future minimum lease payments as of March 31, 2017 are as follows: (in thousands) Fiscal Years Ending March 31, 2018 $ 355 2019 366 2020 377 2021 388 2022 400 Thereafter 1,724 $ 3,610 |
Contingencies
Contingencies | 12 Months Ended |
Mar. 31, 2017 | |
Notes | |
Contingencies | 9. Contingencies We are not a party to any legal proceedings, other than ordinary routine litigation incidental to our business, which we believe will not have a material effect on our financial position or results of operations. |
Concentrations of Credit Risk a
Concentrations of Credit Risk and Major Customers | 12 Months Ended |
Mar. 31, 2017 | |
Notes | |
Concentrations of Credit Risk and Major Customers | 10. Concentration of Credit Risk and Major Customers For the year ended March 31, 2017, three customers represented 31%, 19% and 13% of revenues, respectively. For the year ended March 31, 2016, two customers represented 52% and 13%, respectively, of our revenues. As of March 31, 2017, we had accounts receivable-trade of $36,000, or 38%, due from three customers. As of March 31, 2016, we had accounts receivable-trade of $46,000, or 65%, due from four customers. As of March 31, 2017, we had $139,000 due from two customers related to receivables on license fees and royalties. As of March 31, 2016, we had $121,000 due from two customers related to receivables on license fees and royalties. These amounts are classified as accounts receivable-other in our balance sheets. During the year ended March 31, 2017, two vendors represented $180,000, or 75%, of material purchases used in the production process. During the year ended March 31, 2016, two vendors represented, in the aggregate, $471,000, or 70%, of material purchases used in the production process. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Mar. 31, 2017 | |
Notes | |
Stockholders' Equity | 11. Stockholders Deficit Preferred Stock We have authorized 5,000,000 shares, $0.001 par value, Preferred Stock (the Preferred Stock) of which 500,000 shares have been issued and redeemed, therefore are not considered outstanding. In addition, 500,000 shares of Preferred Stock have been designated as Series A Junior Participating Preferred Stock (the Junior Preferred Stock) with the designations and the powers, preferences and rights, and the qualifications, limitations and restrictions specified in the Certificate of Designation of the Junior Preferred Stock filed with the Delaware Department of State on January 28, 2008. Such number of shares may be increased or decreased by resolution of the Board of Directors; provided, that no decrease shall reduce the number of shares of Junior Preferred Stock to a number less than the number of shares then outstanding plus the number of shares reserved for issuance upon the exercise of outstanding options, rights or warrants or upon the conversion of any outstanding securities issued by us that is convertible into Junior Preferred Stock. As of March 31, 2017, there was no Junior Preferred Stock issued or outstanding. Common Stock Options and Warrants On July 22, 2015, we engaged the services of a financial and strategic advisor whose services include, but are not limited to, financial advice, strategic advice and investment banking services. In connection with this engagement, we agreed to compensate the investment bankers approximately $4,000 per quarter for a one year period and we issued them a warrant to purchase 830,500 shares of our common stock at an exercise price of $0.301 per share, the approximate fair value of our common stock on the date of the engagement. The warrant is exercisable at any time until July 21, 2025. The warrant was valued at approximately $28,000 using the Black-Scholes model and treated as permanent equity. There were no exercises of options or warrants by employees and consultants during the fiscal years ended March 31, 2017 and 2016. Treasury Stock and Other Transactions In June 2001, the Board of Directors adopted a share repurchase program authorizing the repurchase of up to 250,000 of our shares of common stock. In June 2004, the Board of Directors authorized the purchase of an additional 500,000 shares of common stock. Since June 2001, we have repurchased a total of 251,379 shares under the share repurchase program, leaving 498,621 shares remaining to purchase under the share repurchase program. No repurchases were made during the years ended March 31, 2017 and 2016. The share repurchase program authorizes repurchases from time to time in open market transactions, through privately negotiated transactions, block transactions or otherwise, at times and prices deemed appropriate by management, and is not subject to an expiration date. Stockholder Rights Plan Our Board of Directors approved the adoption of a stockholder rights plan (the Rights Plan) under which all stockholders of record as of February 8, 2008 will receive rights to purchase shares of the Junior Preferred Stock (the Rights). The Rights will be distributed as a dividend. Initially, the Rights will attach to, and trade with, our common stock. Subject to the terms, conditions and limitations of the Rights Plan, the Rights will become exercisable if (among other things) a person or group acquires 15% or more of our common stock. Upon such an event, and payment of the purchase price, each Right (except those held by the acquiring person or group) will entitle the holder to acquire shares of our common stock (or the economic equivalent thereof) having a value equal to twice the purchase price. Our Board of Directors may redeem the Rights prior to the time they are triggered. In the event of an unsolicited attempt to acquire us, the Rights Plan is intended to facilitate the full realization of our stockholder value and the fair and equal treatment of all of our stockholders. The Rights Plan does not prevent a takeover attempt. |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Mar. 31, 2017 | |
Notes | |
Stock-Based Compensation | 12. Stock Based Compensation AdvanSources 1996 Employee, Director and Consultants Stock Option Plan (the 1996 Plan) was approved by AdvanSources Board of Directors and Stockholders in March 1996. A total of 7,000,000 shares have been reserved for issuance under the Plan. Under the terms of the Plan, the exercise price of Incentive Stock Options issued under the Plan must be equal to the fair market value of the common stock at the date of grant. In the event that Non-Qualified Options are granted under the Plan, the exercise price may be less than the fair market value of the common stock at the time of the grant (but not less than par value). In October 2003, our shareholders approved the AdvanSource 2003 Stock Option Plan (the 2003 Plan), which authorizes the issuance of 3,000,000 shares of common stock with terms similar to the 1996 Plan. In January 2006, we filed Form S-8 with the Securities and Exchange Commission registering an additional 489,920 total shares of common stock in the 1996 Plan and 2003 Plan. Total shares of common stock registered under the 1996 Plan and 2003 Plan (collectively, the Plans) are 10,489,920. Substantially all of the stock options granted pursuant to the 1996 Plan provide for the acceleration of vesting of the shares of Common Stock subject to such options in connection with certain changes in control. A similar provision is not included in the 2003 Plan. Normally, options granted expire ten years from the grant date. As of September 30, 2013, all Plans and shares not granted expired. As of March 31, 2017 and 2016, there are no other equity incentive plans in place for the future issuance of our common stock. Activity under the Plans for the year ended March 31, 2017 is as follows: Options Outstanding Weighted-Average Exercise Price per Share Weighted-Average Remaining Contractual Term in Years Aggregate Intrinsic Value (in thousands) Options outstanding as of April 1, 2016 2,170,750 $ 0.36 4.46 $ 80 Granted - - Exercised - - Cancelled or forfeited - - Options outstanding as of March 31, 2017 2,170,750 $ 0.36 3.44 $ - Options exercisable as of March 31, 2017 2,170,750 $ 0.36 3.44 $ - Options vested or expected to vest as of March 31, 2017 2,170,750 $ 0.36 3.44 $ - The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the closing price of the common stock on March 31, 2017 of $0.044 and the exercise price of each in-the-money option) that would have been received by the option holders had all option holders exercised their options on March 31, 2017. There were no stock options exercised under the Plan for the fiscal years ended March 31, 2017 and 2016. At March 31, 2017 and 2016, there were no shares remaining to be granted under the 1996 Stock Option Plan and the 2003 Stock Option Plan. For the fiscal years ended March 31, 2017 and 2016, we recorded stock-based compensation expense for options of approximately $4,000 and $10,000, respectively. As of March 31, 2017, we had $0 of unrecognized compensation cost related to stock options. |
Compensation and Employee Benef
Compensation and Employee Benefit Plans | 12 Months Ended |
Mar. 31, 2017 | |
Notes | |
Compensation and Employee Benefit Plans | 13. Benefit Plans and Employment Agreements of Executive Officers We established the AdvanSource 401(k) Retirement Savings Plan under Section 401(k) of the Internal Revenue Code. All full-time employees who are twenty-one years of age are eligible to participate on the beginning of the first month after 30 days of employment. Our contributions are discretionary. We made matching contributions of approximately $8,000 and $9,000 during the fiscal years ended March 31, 2017 and 2016, respectively. On August 7, 2006, we appointed Michael F. Adams as our Chief Executive Officer and President. Mr. Adams has been one of our directors since May 1999 and became our Vice President of Regulatory Affairs and Business Development on April 1, 2006. We entered into an employment agreement with Mr. Adams (the Adams Agreement) on September 13, 2006. Under the terms of the Adams Agreement, we agreed to employ Mr. Adams for two years at an annual base salary of $290,000, as amended, which is subject to annual review by our Board of Directors. During the Employment Period, as defined in the Adams Agreement, Mr. Adams may receive an annual bonus to be determined at the sole discretion of the Compensation Committee of the Board of Directors. We did not renew the Adams Agreement at the end of the initial term, however, the Adams agreement provides that lacking any express agreement between the parties at the end of the Employment Period, the Adams Agreement shall be deemed to continue on a month-to-month basis. As a result, the Adams Agreement currently continues on a month-to-month basis and is subject to all of the terms and conditions of the Adams Agreement. Either party has the right to terminate the Adams Agreement upon 30 days written notice. Mr. Adams is eligible for participation in all executive benefit programs, including health insurance, life insurance, and stock-based compensation. If Mr. Adams employment is terminated without cause, we are obligated to (i) pay Mr. Adams an amount equal to two times his annual base salary upon such termination, (ii) provide Mr. Adams with health insurance benefits for a period of 18 months after such termination, of which the premiums for the first six months after such termination shall be paid by us, and (iii) provide Mr. Adams life insurance benefits for one year after such termination at our expense. During the fiscal year ended March 31, 2010, the Compensation Committee of the Board of Directors approved an increase in Mr. Adams annual base salary to $320,000. There was no bonus awarded to Mr. Adams during the fiscal years ended March 31, 2017 and 2016. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Mar. 31, 2017 | |
Notes | |
Subsequent Events | 14. Subsequent Events We evaluated all events or transactions that occurred after the balance sheet date through the date when we filed these financial statements and, with the exception of the events disclosed below, we determined that we did not have any other material recognizable subsequent events. On April 3, 2017, Michael Adams, our CEO and President, advanced and committed to us $20,000 pursuant to a promissory note, as amended (the Advance Note). The Advance Note provides the availability of up to $20,000 at the sole discretion of Mr. Adams through April 2, 2018, bears interest at the rate of 10% per annum, and provides for a commitment fee of $2,000 and guaranteed interest of $2,000 payable upon execution of the Advance Note. On April 19, 2017 we paid the commitment fee and guaranteed interest of $2,000 and $2,000, respectively. Additionally, on April 19, 2017 we paid down the $20,000 advance. |
Significant Accounting Polici20
Significant Accounting Policies: Accounting Principles (Policies) | 12 Months Ended |
Mar. 31, 2017 | |
Policies | |
Accounting Principles | Accounting Principles The financial statements and accompanying notes are prepared in accordance with U.S. generally accepted accounting principles (GAAP). |
Significant Accounting Polici21
Significant Accounting Policies: Use of Accounting Estimates (Policies) | 12 Months Ended |
Mar. 31, 2017 | |
Policies | |
Use of Accounting Estimates | Use of Accounting Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. |
Significant Accounting Polici22
Significant Accounting Policies: Going Concern (Policies) | 12 Months Ended |
Mar. 31, 2017 | |
Policies | |
Going Concern | Going Concern The accompanying consolidated financial statements have been prepared on a going concern basis which implies we will continue to meet our obligations for the next twelve months as of the date these financial statements are issued. The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. For the year ended March 31, 2017, we incurred a net loss of approximately $509,000, had negative cash flows from operations of $203,000 and had a working capital deficit of $421,000. Management believes that certain arrangements entered into subsequent to March 31, 2017 with three of our significant customers which provide inventory purchase financing and long-term commitments for continued product purchase alleviate any substantial doubt as to our ability to meet our obligations for the next twelve months as of the date these financial statements are issued. However, management cannot provide any assurances that we will be successful in accomplishing any of our plans. Management also cannot provide any assurance that unforeseen circumstances that could occur at any time within the next twelve months or thereafter will not increase the need for us to raise additional capital on an immediate basis. However, based upon an evaluation, management believes that we are a going concern. |
Significant Accounting Polici23
Significant Accounting Policies: Cash (Policies) | 12 Months Ended |
Mar. 31, 2017 | |
Policies | |
Cash | Cash Cash includes cash on hand, is deposited at one area bank and may exceed federally insured limits at times. |
Significant Accounting Polici24
Significant Accounting Policies: Revenue Recognition Accounting Policy (Policies) | 12 Months Ended |
Mar. 31, 2017 | |
Policies | |
Revenue Recognition Accounting Policy | Revenue Recognition We generate revenues primarily from (i) the sale of polymer products and (ii) license, royalty and development agreements. Product Sales Revenues generated from the sale of polymer products is recognized upon shipment, provided that a purchase order has been received or a contract has been executed, there are no uncertainties regarding customer acceptance, the sales price is fixed or determinable and collection is deemed reasonably assured. If uncertainties regarding customer acceptance exist, we recognize revenues when those uncertainties are resolved and title has been transferred to the customer. Amounts collected or billed prior to satisfying the above revenue recognition criteria are recorded as deferred revenue. License, Royalty and Development Fees We also receive license, royalty and development fees, pursuant to agreements with our customers, for the use of our proprietary polymer biomaterials. The terms of the various license, royalty and development agreements may contain multiple deliverables which may include (i) licenses to use our polymer biomaterials in the customers end-product medical device, (ii) research and development activities, (iii) services and/or (iv) the manufacturing of polymer biomaterials. Payments made to us under these agreements may include non-refundable license fees, payments for research and development activities, payments for the manufacture of polymer materials, payments based upon the achievement of certain milestones, payments for the use of our polymer biomaterials in the customers end-product, and/or royalties earned on the sale of the customers end-product. |
Significant Accounting Polici25
Significant Accounting Policies: Research, Development and Regulatory Expense (Policies) | 12 Months Ended |
Mar. 31, 2017 | |
Policies | |
Research, Development and Regulatory Expense | Research, Development and Regulatory Expense Research, development and regulatory expenditures for the years ended March 31, 2017 and 2016 were $329,000 and $310,000, respectively, and consisted primarily of salaries and related costs and are expensed as incurred. We had two full time research and development employees that work on a variety of projects, including production support. |
Significant Accounting Polici26
Significant Accounting Policies: Advertising Costs (Policies) | 12 Months Ended |
Mar. 31, 2017 | |
Policies | |
Advertising Costs | Advertising Costs Advertising costs are expensed as incurred or at the first time the advertising takes place. We incurred no advertising costs for the years ended March 31, 2017 and 2016. |
Significant Accounting Polici27
Significant Accounting Policies: Basic and Diluted Earnings (Loss) Per Share (Policies) | 12 Months Ended |
Mar. 31, 2017 | |
Policies | |
Basic and Diluted Earnings (Loss) Per Share | Income (Loss) Per Share Basic income (loss) per common share is computed by dividing net income (loss) by the weighted-average number of common shares outstanding during the period. Diluted income (loss) per common share are based upon the weighted-average common shares outstanding during the period plus additional weighted-average common equivalent shares outstanding during the period. Common equivalent shares result from the assumed exercise of outstanding stock options and warrants, the proceeds of which are then assumed to have been used to repurchase outstanding common stock using the treasury stock method. In addition, the numerator is adjusted for any changes in income (loss) that would result from the assumed conversion of potential shares. Potentially dilutive shares, which were excluded from the diluted income (loss) per share calculations because the effect would be antidilutive or the options exercise prices were greater than the average market price of the common shares, were 3,001,250 and 1,499,500 shares for the fiscal years ended March 31, 2017 and 2016, respectively. |
Significant Accounting Polici28
Significant Accounting Policies: Accounts Receivable (Policies) | 12 Months Ended |
Mar. 31, 2017 | |
Policies | |
Accounts Receivable | Accounts Receivable We perform various analyses to evaluate accounts receivable balances and record an allowance for bad debts based on the estimated collectability of the accounts such that the amounts reflect estimated net realizable value. Account balances are charged off against the allowance after significant collection efforts have been made and potential for recovery is not considered probable. As of March 31, 2017 and 2016, our allowance for doubtful accounts was $5,000 and $5,000, respectively. |
Significant Accounting Polici29
Significant Accounting Policies: Inventories (Policies) | 12 Months Ended |
Mar. 31, 2017 | |
Policies | |
Inventories | Inventories We value our inventory at the lower of our actual cost or the current estimated market value. We regularly review inventory quantities on hand and inventory commitments with suppliers and records a provision for excess and obsolete inventory based primarily on our historical usage. During the fiscal years ended March 31, 2017 and 2016, we provided an additional $110,000 and $43,000, respectively, for excess and obsolete inventory. During the fiscal year ended March 31, 2017 and 2016, we disposed of certain obsolete inventory items in the aggregate amount of approximately $24,000 and $85,000, respectively. As of March 31, 2017 and 2016, our allowance for obsolete and excess inventory was $142,000 and $88,000, respectively. Although we make every effort to ensure the accuracy of our forecasts of future product demand, any significant unanticipated change in demand or technological developments could have a significant impact on the value of our inventory and our reported operating results. |
Significant Accounting Polici30
Significant Accounting Policies: Property and Equipment (Policies) | 12 Months Ended |
Mar. 31, 2017 | |
Policies | |
Property and Equipment | Property and Equipment Property and equipment are stated at cost. Equipment is depreciated using the straight-line method over the estimated useful lives of the assets, ranging from three to seven years. Building improvements are amortized using the straight-line method over the remaining estimated life of the building at the time the improvement is put into service. Our building is depreciated using the straight-line method over 40 years. Land is not depreciated. Expenditures for repairs and maintenance are charged to expense as incurred. We record construction in process in the appropriate asset category and commence depreciation upon completion and commencement of use of the asset. Equipment purchased pursuant to capital lease obligations, primarily computer equipment, is recorded at cost and depreciated on a straight line basis over the life of the lease. |
Significant Accounting Polici31
Significant Accounting Policies: Deferred Financing Costs (Policies) | 12 Months Ended |
Mar. 31, 2017 | |
Policies | |
Deferred Financing Costs | Deferred Financing Costs We have capitalized certain costs related to the issuance of debt. These costs are amortized to interest expense on a straight-line basis over the term of the debt. During the fiscal years ended March 31, 2017 and 2016, amortization expense related to deferred financing costs were $7,000 and $7,000, respectively. |
Significant Accounting Polici32
Significant Accounting Policies: Income Taxes (Policies) | 12 Months Ended |
Mar. 31, 2017 | |
Policies | |
Income Taxes | Income Taxes The provision for income taxes includes federal, state, local and foreign taxes. Income taxes are accounted for under the liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences of temporary differences between the financial statement carrying amounts and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which the temporary differences are expected to be recovered or settled. We evaluate the realizability of our deferred tax assets and establish a valuation allowance when it is more likely than not that all or a portion of deferred tax assets will not be realized. We account for uncertain tax positions using a more-likely-than-not threshold for recognizing and resolving uncertain tax positions. The evaluation of uncertain tax positions is based on factors including, but not limited to, changes in tax law, the measurement of tax positions taken or expected to be taken in tax returns, the effective settlement of matters subject to audit, new audit activity and changes in facts or circumstances related to a tax position. We evaluate this tax position on a quarterly basis. We also accrue for potential interest and penalties, if applicable, related to unrecognized tax benefits in income tax expense. (See Note 6). |
Significant Accounting Polici33
Significant Accounting Policies: Impairment of Long-Lived Assets (Policies) | 12 Months Ended |
Mar. 31, 2017 | |
Policies | |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets We evaluate our long-lived assets, which include property and equipment, for impairment as events and circumstances indicate that the carrying amount may not be recoverable. We evaluate the realizability of our long-lived assets based on reviews of results of sales of similar assets and independent appraisals. As a result of the continued operating losses described above, we evaluated the recoverability of our property and equipment as of March 31, 2017 and 2016 and determined that there existed no impairment of long-lived assets. |
Significant Accounting Polici34
Significant Accounting Policies: Stock-based Compensation (Policies) | 12 Months Ended |
Mar. 31, 2017 | |
Policies | |
Stock-based Compensation | Stock-Based Compensation Stock-based compensation is measured at the grant date based on the estimated fair value of the award and is recognized as an expense over the requisite service period. The valuation of employee stock options is an inherently subjective process, since market values are generally not available for long-term, non-transferable employee stock options. Accordingly, the Black-Scholes option pricing model is utilized to derive an estimated fair value. The Black-Scholes pricing model requires the consideration of the following six variables for purposes of estimating fair value: · · · · · · Expected Dividends. Expected Volatility. Risk-Free Interest Rate. Expected Term. Stock Option Exercise Price and Grant Date Price of Common Stock. We are required to estimate the level of award forfeitures expected to occur and record compensation expense only for those awards that are ultimately expected to vest. This requirement applies to all awards that are not yet vested. Due to the limited number of unvested options outstanding, the majority of which are held by executives and members of our Board of Directors, we have estimated a zero forfeiture rate. We will revisit this assumption periodically and as changes in the composition of the option pool dictate. |
Significant Accounting Polici35
Significant Accounting Policies: Fair Value of Financial Instruments (Policies) | 12 Months Ended |
Mar. 31, 2017 | |
Policies | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments We follow Accounting Standards Codification 820-10 (ASC 820-10), Fair Value Measurements and Disclosures, The hierarchy established under ASC 820-10 gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy under ASC 820-10 are described below: Level 1 - Pricing inputs are quoted prices available in active markets for identical investments as of the reporting date. As required by ASC 820-10, we do not adjust the quoted price for these investments, even in situations where we hold a large position and a sale could reasonably impact the quoted price. Level 2 - Pricing inputs are quoted prices for similar investments, or inputs that are observable, either directly or indirectly, for substantially the full term through corroboration with observable market data. Level 2 includes investments valued at quoted prices adjusted for legal or contractual restrictions specific to these investments. Level 3 - Pricing inputs are unobservable for the investment, that is, inputs that reflect the reporting entitys own assumptions about the assumptions market participants would use in pricing the asset or liability. Level 3 includes investments that are supported by little or no market activity. |
Inventories_ Schedule of Invent
Inventories: Schedule of Inventory (Tables) | 12 Months Ended |
Mar. 31, 2017 | |
Tables/Schedules | |
Schedule of Inventory | (in thousands) March 31, 2017 March 31, 2016 Raw materials $ 92 $ 82 Work in progress 59 9 Finished goods 180 254 331 345 Less: allowance for obsolete and excess inventory (142) (88) Total inventories, net $ 189 $ 257 |
Property, Plant and Equipment37
Property, Plant and Equipment Disclosure: Property, Plant and Equipment (Tables) | 12 Months Ended |
Mar. 31, 2017 | |
Tables/Schedules | |
Property, Plant and Equipment | (in thousands) March 31, 2017 March 31, 2016 Land $ 500 $ 500 Building 2,705 2,705 Machinery, equipment and tooling 1,214 1,214 Furniture, fixtures and office equipment 285 285 Office equipment under capital lease 13 13 4,717 4,717 Less: accumulated depreciation (2,852) (2,795) $ 1,865 $ 1,922 |
Income Taxes_ Summary of Operat
Income Taxes: Summary of Operating Loss Carryforwards (Tables) | 12 Months Ended |
Mar. 31, 2017 | |
Tables/Schedules | |
Summary of Operating Loss Carryforwards | (in thousands) Net Operating Losses Investment & Research Credits Expiration Dates Federal $ 26,672 $ - 2020 to 2037 State $ 6,192 $ - 2032 to 2037 |
Long-term Financing Obligation_
Long-term Financing Obligation: Schedule of Sale Leaseback Transactions (Tables) | 12 Months Ended |
Mar. 31, 2017 | |
Tables/Schedules | |
Schedule of Sale Leaseback Transactions | (in thousands) Fiscal Years Ending March 31, 2018 $ 355 2019 366 2020 377 2021 388 2022 400 Thereafter 1,724 $ 3,610 |
Stock-Based Compensation_ Sched
Stock-Based Compensation: Schedule of Share-Based Compensation Activity (Tables) | 12 Months Ended |
Mar. 31, 2017 | |
Tables/Schedules | |
Schedule of Share-Based Compensation Activity | Options Outstanding Weighted-Average Exercise Price per Share Weighted-Average Remaining Contractual Term in Years Aggregate Intrinsic Value (in thousands) Options outstanding as of April 1, 2016 2,170,750 $ 0.36 4.46 $ 80 Granted - - Exercised - - Cancelled or forfeited - - Options outstanding as of March 31, 2017 2,170,750 $ 0.36 3.44 $ - Options exercisable as of March 31, 2017 2,170,750 $ 0.36 3.44 $ - Options vested or expected to vest as of March 31, 2017 2,170,750 $ 0.36 3.44 $ - |
Significant Accounting Polici41
Significant Accounting Policies: Research, Development and Regulatory Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Details | ||
Research, development and regulatory | $ 329 | $ 310 |
Significant Accounting Polici42
Significant Accounting Policies: Accounts Receivable (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Mar. 31, 2016 |
Details | ||
Allowance for Doubtful Accounts Receivable | $ 5,000 | $ 5,000 |
Significant Accounting Polici43
Significant Accounting Policies: Inventories (Details) - USD ($) | 12 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Details | ||
Provision for inventory reserve | $ 54,000 | $ (43,000) |
Inventory Write-down | 24,000,000 | 85,000,000 |
Inventory Valuation Reserves | $ (142) | $ (88) |
Significant Accounting Polici44
Significant Accounting Policies: Deferred Financing Costs (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Details | ||
Amortization of Debt Issuance Costs | $ 7,000 | $ 7,000 |
Inventories_ Schedule of Inve45
Inventories: Schedule of Inventory (Details) - USD ($) | Mar. 31, 2017 | Mar. 31, 2016 |
Details | ||
Inventory, Raw Materials, Gross | $ 92 | $ 82 |
Inventory, Work in Process, Gross | 59 | 9 |
Inventory, Finished Goods, Gross | 180 | 254 |
Inventory Valuation Reserves | $ (142) | $ (88) |
Property, Plant and Equipment46
Property, Plant and Equipment Disclosure: Property, Plant and Equipment (Details) - USD ($) | Mar. 31, 2016 | Mar. 31, 2015 |
Details | ||
Land | $ 500 | $ 500 |
Buildings and Improvements, Gross | 2,705 | 2,705 |
Machinery and Equipment, Gross | 1,214 | 1,214 |
Furniture and Fixtures, Gross | 285 | 285 |
Capital Leased Assets, Gross | 13 | 13 |
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment | $ (2,852) | $ (2,795) |
Property, Plant and Equipment47
Property, Plant and Equipment Disclosure (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Mar. 31, 2016 | Mar. 31, 2017 | Mar. 31, 2016 |
Details | ||||
Depreciation | $ 57,000 | $ 76,000 | $ 57 | $ 76 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 12 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Details | ||
Schedule of Effective Income Tax Rate Reconciliation | 0.0% | 0.0% |
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 34.00% | 34.00% |
Effective Income Tax Rate Reconciliation, State and Local Income Taxes, Percent | 5.50% | 5.50% |
Effective Income Tax Rate Reconciliation, Nondeductible Expense, Other, Percent | (5.20%) | 121.20% |
Effective Income Tax Rate Reconciliation, Tax Credit, Research, Percent | 0.00% | 0.00% |
Effective Income Tax Rate Reconciliation, Deduction, Other, Percent | (34.30%) | (160.70%) |
Effective Income Tax Rate Reconciliation, Change in Deferred Tax Assets Valuation Allowance, Percent | 0.00% | 0.00% |
Deferred Tax Assets, Operating Loss Carryforwards | $ 9,305 | $ 9,276 |
Deferred Tax Assets, Tax Credit Carryforwards | 306 | 306 |
Deferred Tax Assets, Tax Deferred Expense, Other | 147 | 37 |
Deferred Tax Assets, Tax Deferred Expense, Reserves and Accruals, Accrued Liabilities | 111 | 42 |
Deferred Tax Assets, Gross | 9,869 | 9,661 |
Deferred Tax Liabilities, Property, Plant and Equipment | (191) | (210) |
Deferred Tax Liabilities, Gross | (191) | (210) |
Deferred Income Tax Assets, Net | 9,678 | 9,451 |
Deferred Tax Assets, Valuation Allowance | $ (9,678) | $ (9,451) |