Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Jun. 30, 2021 | Aug. 16, 2021 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2021 | |
Entity Registrant Name | THE ALKALINE WATER COMPANY INC. | |
Entity Central Index Key | 0001532390 | |
Current Fiscal Year End Date | --03-31 | |
Entity Incorporation, State or Country Code | NV | |
Entity File Number | 001-38754 | |
Entity Tax Identification Number | 99-0367049 | |
Entity Address, Address Line One | 8541 E. Anderson Drive | |
Entity Address, Address Line Two | Suite 100 | |
Entity Address, City or Town | Scottsdale | |
Entity Address, State or Province | AZ | |
City Area Code | 480 | |
Entity Address, Postal Zip Code | 85255 | |
Local Phone Number | 656-2423 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 94,586,502 | |
Entity Current Reporting Status | Yes | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q1 | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Trading Symbol | WTER | |
Security Exchange Name | NASDAQ | |
Title of 12(b) Security | Common stock | |
Entity Interactive Data Current | Yes | |
Document Transition Report | false | |
Document Quarterly Report | true |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Jun. 30, 2021 | Mar. 31, 2021 |
Current assets | ||
Cash | $ 4,497,905 | $ 9,130,956 |
Accounts receivable, net | 8,221,373 | 8,458,176 |
Inventory | 5,037,575 | 4,407,720 |
Prepaid expenses | 3,066,889 | 1,037,961 |
Operating lease right-of-use asset - current portion | 213,397 | 236,446 |
Total current assets | 21,037,139 | 23,271,259 |
Fixed assets - net | 912,612 | 1,010,183 |
Operating lease right-of-use asset | 227,342 | 269,167 |
Total assets | 22,177,093 | 24,550,609 |
Current liabilities | ||
Accounts payable | 7,708,547 | 7,055,348 |
Accrued expenses | 1,361,920 | 1,306,106 |
Revolving financing | 5,107,111 | 4,324,412 |
PPP loan payable - current portion | 329,071 | 328,570 |
Operating lease liability - current portion | 235,055 | 229,605 |
Total current liabilities | 14,741,704 | 13,244,041 |
Operating lease liability | 227,342 | 292,582 |
Total liabilities | 14,969,046 | 13,536,623 |
Commitments and contingencies | ||
Stockholders' equity | ||
Preferred stock, $0.001 par value, 100,000,000 shares authorized, 6,681,090 Series S nil issued and outstanding on June 30, 2021 and nil issued and outstanding on March 31, 2021 | 6,681 | 0 |
Common stock, Class A - $0.001 par value, 200,000,000 shares authorized 89,761,122 and 87,465,178 shares issued and outstanding at June 30, 2021 and March 31, 2021, respectively | 89,761 | 87,464 |
Additional paid in capital | 84,468,451 | 80,857,742 |
Stock Payable | 0 | 0 |
Accumulated deficit | (77,356,846) | (69,931,220) |
Total stockholders' equity | 7,208,047 | 11,013,986 |
Total liabilities and stockholders' equity | $ 22,177,093 | $ 24,550,609 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Jun. 30, 2021 | Mar. 31, 2021 |
Preferred stock, par value per share | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 100,000,000 | 100,000,000 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Common stock, par value per share | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares, issued | 89,761,122 | 87,465,178 |
Common stock, shares, outstanding | 89,761,122 | 87,465,178 |
Series S Preferred Stock [Member] | ||
Preferred stock, shares issued | 6,681,090 | |
Preferred stock, shares outstanding | 6,681,090 |
CONSOLIDATED STATEMENT OF OPERA
CONSOLIDATED STATEMENT OF OPERATIONS (unaudited) - USD ($) | 3 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Statement of Operations [Abstract] | ||
Revenue | $ 14,113,578 | $ 13,432,310 |
Cost of Goods Sold | 9,311,011 | 8,594,841 |
Gross Profit | 4,802,567 | 4,837,469 |
Operating expenses | ||
Sales and marketing expenses | 7,156,400 | 3,718,231 |
General and administrative | 4,964,374 | 3,949,917 |
Total operating expenses | 12,120,774 | 7,668,148 |
Total operating loss | (7,318,207) | (2,830,679) |
Other expense | ||
Interest expense | (107,419) | (190,324) |
Total other expense | (107,419) | (190,324) |
Net loss | $ (7,425,626) | $ (3,021,003) |
LOSS PER SHARE (Basic and Diluted) | $ (0.08) | $ (0.05) |
WEIGHTED AVERAGE SHARES OUTSTANDING (Basic and Diluted) | 88,342,316 | 57,231,724 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (unaudited) - USD ($) | Preferred Stock [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Stock Payable [Member] | Accumulated Deficit [Member] | Total |
Beginning balance at Mar. 31, 2020 | $ 3,400 | $ 45,585 | $ 54,094,848 | $ 1,000,000 | $ (53,521,700) | $ 1,622,133 |
Beginning balance (in shares) at Mar. 31, 2020 | 3,400,000 | 45,585,592 | ||||
Preferred stock conversion | $ (3,400) | $ 3,400 | 0 | |||
Preferred stock conversion (in shares) | (3,400,000) | 3,400,000 | ||||
Common shares issued in connection with offerings | $ 9,750 | 3,890,250 | (1,000,000) | 2,900,000 | ||
Common shares issued in connection with offerings (in shares) | 9,750,000 | |||||
Common shares issued upon exercise of warrants | $ 288 | 258,612 | 258,900 | |||
Common shares issued upon exercise of warrants (in shares) | 287,666 | |||||
Common shares issued to non-employees and employees | $ 472 | 486,828 | 487,300 | |||
Common shares issued to non-employees and employees (in shares) | 472,000 | |||||
Stock Option expense | 661,959 | 661,959 | ||||
Stock Option exercise | $ 116 | 61,364 | 61,480 | |||
Stock Option exercise (in shares) | 116,000 | |||||
Stock Payable | 1,999,998 | 1,999,998 | ||||
Net (loss) | (3,021,003) | (3,021,003) | ||||
Ending balance at Jun. 30, 2020 | $ 0 | $ 59,611 | 59,453,861 | 1,999,998 | (56,542,703) | 4,970,767 |
Ending balance (in shares) at Jun. 30, 2020 | 0 | 59,611,258 | ||||
Beginning balance at Mar. 31, 2021 | $ 0 | $ 87,464 | 80,857,742 | 0 | (69,931,220) | 11,013,986 |
Beginning balance (in shares) at Mar. 31, 2021 | 0 | 87,465,178 | ||||
Preferred stock issuance | $ 6,681 | 2,220,350 | 2,227,031 | |||
Preferred stock issuance (in shares) | 6,681,090 | |||||
Common shares issued upon exercise of warrants | $ 1,278 | 651,499 | 652,777 | |||
Common shares issued upon exercise of warrants (in shares) | 1,277,777 | |||||
Common shares issued to non-employees and employees | $ 856 | 39,144 | 40,000 | |||
Common shares issued to non-employees and employees (in shares) | 855,499 | |||||
Stock option and RSU - restricted stock compensation expense | 651,648 | 651,648 | ||||
Stock Option exercise | $ 163 | 48,068 | $ 48,231 | |||
Stock Option exercise (in shares) | 162,668 | 162,668 | ||||
Net (loss) | (7,425,626) | $ (7,425,626) | ||||
Ending balance at Jun. 30, 2021 | $ 6,681 | $ 89,761 | $ 84,468,451 | $ 0 | $ (77,356,846) | $ 7,208,047 |
Ending balance (in shares) at Jun. 30, 2021 | 6,681,090 | 89,761,122 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 3 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net loss | $ (7,425,626) | $ (3,021,003) |
Adjustments to reconcile net loss to net cash used in operating activities | ||
Depreciation expense | 159,015 | 227,911 |
Shares issue and vested, options and RSU amortized for employee and non-employee services | 2,918,680 | 1,149,259 |
Right-of-use asset amortization | 5,084 | (2,200) |
Changes in operating assets and liabilities: | ||
Accounts receivable | 236,803 | 295,467 |
Inventory | (629,855) | 25,498 |
Prepaid expenses and other current assets | (2,028,928) | (116,358) |
Accounts payable | 653,199 | (25,440) |
Accrued expenses | 56,315 | 61,195 |
NET CASH USED IN OPERATING ACTIVITIES | (6,055,313) | (1,405,671) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchase of fixed assets | (61,444) | (68,519) |
CASH USED IN INVESTING ACTIVITIES | (61,444) | (68,519) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from (repayment of) revolving financing | 782,699 | (3,015,907) |
Proceeds from promissory note payable | 0 | 325,800 |
Proceeds from sale of common stock, net | 0 | 2,900,000 |
Proceeds from stock payable | 0 | 1,999,998 |
Proceeds for the exercise of warrants, net | 652,777 | 258,899 |
Proceeds for the exercise of stock options | 48,230 | 61,480 |
CASH PROVIDED BY FINANCING ACTIVITIES | 1,483,706 | 2,530,270 |
NET CHANGE IN CASH | (4,633,051) | 1,056,080 |
CASH AT BEGINNING OF PERIOD | 9,130,956 | 4,561,682 |
CASH AT END OF PERIOD | 4,497,905 | 5,617,762 |
INTEREST PAID | 105,197 | 164,101 |
TAXES PAID | $ 0 | $ 0 |
NATURE OF BUSINESS AND SUMMARY
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Jun. 30, 2021 | |
Accounting Policies [Abstract] | |
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Text Block] | NOTE 1 -NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Business The Company offers retail consumers bottled alkaline water in 500-milliliter, 700-milliliter, 1-liter, 1.5 -liter, 2-liter, 3-liter and 1-gallon sizes, all of which is produced through an electrolysis process that uses specialized electronic cells coated with a variety of rare earth minerals to produce 8.8 pH drinking water without the use of any manmade chemicals. In addition to its bottled alkaline water, the Company also offers retail consumers flavor infused bottled water in the 500-milliliter size in six flavors: Raspberry, Watermelon, Lemon, Lemon Lime, Peach Mango and Blood Orange. The Company recently introduced and began selling hemp-derived CBD topical and ingestible products under the brand name "A88CBD™". Our hemp-derived CBD products are produced and sold in compliance with the Agriculture Improvement Act of 2018 (also known as the 2018 Farm Bill, Public Law 115-334). Basis of presentation These unaudited financial statements represent the condensed consolidated financial statements of The Alkaline Water Company and its wholly owned subsidiaries (collectively, the "Company"). These unaudited condensed consolidated financial statements should be read in conjunction with the Company's consolidated financial statements and the notes thereto as set forth in the Company's Form 10-K, filed with the SEC on July 2, 2021, which included all disclosures required by generally accepted accounting principles ("GAAP") In the opinion of management, these unaudited condensed consolidated financial statements contain all adjustments necessary to present fairly the Company's financial position on a consolidated basis and the consolidated results of operations, equity and cash flows for the interim periods presented. The results of operations for the three months ended June 30, 2021 and 2020 are not necessarily indicative of expected operating results for the full year. The information presented throughout the document as of and for the three months ended June 30, 2021 and 2020 is unaudited. The condensed consolidated balance sheet at March 31, 2021 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles in the U.S. for complete financial statements. Principles of consolidation The consolidated financial statements include the accounts of The Alkaline Water Company Inc. (a Nevada Corporation) and its five wholly owned subsidiaries: A88 Infused Beverage Division Inc. (a Nevada Corporation), A88 International, Inc. (a Nevada Corporation), A88 Infused Products Inc. (a Nevada Corporation), AWC Acquisition Company Inc. (a Nevada corporation), and Alkaline 88, LLC (an Arizona Limited Liability Company). All significant intercompany balances and transactions have been eliminated. The Alkaline Water Company Inc., A88 Infused Beverage Division, Inc., A88 Infused Products Inc., A88 International, Inc., AWC Acquisition Company Inc., and Alkaline 88, LLC will be collectively referred herein to as the "Company". Any reference herein to "The Alkaline Water Company Inc.", the "Company", "we", "our" or "us" is intended to mean The Alkaline Water Company Inc., including the subsidiaries indicated above, unless otherwise indicated. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make 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 revenues and expenses during the reporting period. Actual results could differ significantly from those estimates. Cash and Cash Equivalents The Company considers all highly liquid instruments with an original maturity of three months or less to be considered cash equivalents. The carrying value of these investments approximates fair value. As of the balance sheet date and periodically throughout the period, the Company has maintained balances in various operating accounts in excess of federally insured limits. In addition, the Company has maintained balances in its attorney's client trust account in both C$ and US$. The Company has not experienced any losses in such accounts and periodically evaluates the credit worthiness of the financial institutions and has determined the credit exposure to be negligible. The Company had $4,497,905 and $9,130,956 in cash at June 30, 2021 and March 31, 2021, respectively. Accounts Receivable and Allowance for Doubtful Accounts The Company generally does not require collateral, and the majority of its trade receivables are unsecured. The carrying amount for accounts receivable approximates fair value. Accounts receivable consisted of the following as of June 30, 2021 and March 31, 2021: June 30, 2021 (unaudited) March 31, 2021 Trade receivables, net $ 8,561,373 $ 8,798,176 Less: Allowance for doubtful accounts (340,000 ) (340,000 ) Net accounts receivable $ 8,221,373 $ 8,458,176 Accounts receivable are periodically evaluated for collectability based on past credit history with clients. Provisions for losses on accounts receivable are determined on the basis of loss experience, known and inherent risk in the account balance and current economic conditions. The accounts receivable balance is pledged as collateral for the Company's revolving financing as disclosed in Note 3. Inventory Inventory represents raw materials and finished goods valued at the lower of cost or market with cost determined using the weight average method which approximates first-in first-out method, and with market defined as the lower of replacement cost or realizable value. The inventory balance is pledged as collateral for the Company's revolving financing as disclosed in Note 3. As of June 30, 2021 and March 31, 2021, inventory consisted of the following: June 30, 2021 March 31, 2021 Raw materials $ 2,091,450 $ 3,055,091 Finished goods 2,946,125 1,352,629 Total inventory $ 5,037,575 $ 4,407,720 Property and Equipment The Company records all property and equipment at cost less accumulated depreciation. Improvements are capitalized while repairs and maintenance costs are expensed as incurred. Depreciation is calculated using the straight-line (half-life convention) method over the estimated useful life of the assets, which the Company has determined to be 3 years. Going Concern The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. The Company has not generated sufficient revenues from product sales to provide for cash flows to enable the Company to finance its operations internally thus there is substantial doubt about the Company’s ability to continue as a going concern within one year from the date of filing. The Company’s ability to continue as a going concern is dependent on the Company’s ability to generate revenues and raise capital. The Company currently anticipates the release of the funds from escrow from the July 6, 2021 private placements subject to shareholder approval (Note 5) and funds from the exercise of outstanding warrants (Note 9) will adequately fund the Company’s planned operations and capital needs for the next 12 months. However, if our current plans change or are accelerated or we choose to increase our production capacity, we may seek to sell additional equity or debt securities or obtain additional credit facilities, including seeking investments from strategic investors. The sale of additional equity securities will result in dilution to our stockholders. The incurrence of indebtedness will result in increased debt service obligations and could require us to agree to operating and financial covenants that could restrict our operations or modify our plans to grow the business. Financing may not be available in amounts or on terms acceptable to us, if at all. Any failure by us to raise additional funds on terms favorable to us, or at all, will limit our ability to continue as a going concern. Stock-Based Compensation The Company accounts for stock-based compensation in accordance with Accounting Standards Codification ("ASC") 718. Stock-based compensation is measured at the grant date, based on the fair value of the award, and is recognized as expense over the requisite service period. The Company estimates the fair value of stock-based payments using the Black-Scholes option-pricing model for common stock options and warrants and the closing price of the Company's common stock for common share issuances. Revenue Recognition The Company recognizes revenue per ASC 606. The Company recognizes revenue when our performance obligations are satisfied. Our primary obligation (the distribution and sale of beverage products) is satisfied upon the delivery of products to our customers, which is also when control is transferred. The Company does not accept returns due to the nature of the product. However, the Company will provide credit to our customers for damaged goods. The Company provides credit to its customers which typically require payment within 30 days. As an incentive to pay early the Company also typically provides a 2% discount if the customer pays within 10 days. The Company estimates the amount of the discount that the customer is likely to take and recognizes it as variable consideration. The amounts are not considered material. After evaluating the revenue disclosure requirements, the Company does not believe that any revenues are required to be disaggregated. Revenue consists of the gross sales price, less variable consideration, including estimated allowances for which provisions are made at the time of sale, and less certain other discounts and allowances. Shipping and handling charges that are billed to customers are included as a component of revenue. Costs incurred by the Company for shipping and handling charges are included in selling expenses and amounted to $2,906,900 and $1,807,030 for the quarters ended June 30, 2021 and 2020, respectively. Concentration Risks The Company has 1 major customer that accounts for 12% of accounts receivable at June 30, 2021, and 2 customers that together account for 36% (20% and 16%, respectively) of the total revenues earned for the quarter ended June 30, 2021. The Company has 2 vendors that accounted for 43% (27%, and 16% respectively) of purchases for the quarter ended June 30, 2021. The Company has 2 major customers that together account for 32% (22% and 10%, respectively) of accounts receivable at June 30, 2020, and 2 customers that together account for 45% (25% and 20%, respectively) of the total revenues earned for the quarter ended June 30, 2020. The Company has 3 vendors that accounted for 55% (27%, 15% and 13% respectively) of purchases for the quarter ended June 30, 2020. Income Taxes The Company uses an estimated annual effective tax rate method in computing its interim tax provision. This effective tax rate is based on forecasted annual pre-tax income (loss), permanent tax differences and statutory tax rates. Deferred income taxes are recognized for differences between the basis of assets and liabilities for financial statement and income tax purposes. The differences relate principally to net operating loss carryforwards. Deferred tax assets and liabilities represent the future tax consequence for those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Basic and Diluted Loss Per Share Basic and diluted earnings or loss per share ("EPS") amounts in the consolidated financial statements are computed in accordance ASC 260- 10 "Earnings per Share", which establishes the requirements for presenting EPS. Basic EPS is based on the weighted average number of common shares outstanding. Diluted EPS is based on the weighted average number of common shares outstanding and dilutive common stock equivalents. Basic EPS is computed by dividing net income or loss available to common stockholders (numerator) by the weighted average number of common shares outstanding (denominator) during the period. Potentially dilutive securities were excluded from the calculation of diluted loss per share, because their effect would be anti-dilutive. For the three months ended June 30, 2021 and 2020, respectively, the Company had 3,897,897 and 2,417,322 shares relating to options, 4,761,690 and 5,559,205 shares relating to warrants and 2,227,030 and nil convertible preferred shares that were not included in the diluted earnings per share calculation because they were antidilutive. Business Segments The Company operates on one segment in one geographic location - the United States of America and; therefore, segment information is not presented. Fair Value of Financial Instruments The carrying amounts of the company's financial instruments including accounts payable, accrued expenses, and notes payable approximate fair value due to the relative short period for maturity these instruments. The company does not use derivative financial instruments to hedge exposures to cash-flow, market or foreign-currency risks. Authoritative guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. The guidance establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability, developed based on market data obtained from sources independent of the company. Unobservable inputs are inputs that reflect the company's assumptions of what market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The hierarchy is broken down into three levels based on reliability of the inputs as follows: Level 1: Observable inputs such as quoted prices in active markets; Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. As of June 30, 2021 and 2020, the Company did not have any financial instruments that are measured on a recurring basis as Level 1, 2 or 3. Correction of Previously Issued Financial Statements The accompanying consolidated statement of operations for the three months ended June 30, 2020 has been corrected for the following: a reclassification of depreciation expense of $225,315 to cost of goods sold related to assets utilized in the production of inventory and ad adjustment to reclassify sales and marketing expenses of $787,114 as a reduction in revenue as such amounts were related to consideration payable to a customer which the Company determined was not for distinct goods or services received. The Company assessed the materiality of the misstatement quantitively and qualitatively and has concluded that the correction of the classification error is immaterial to the consolidated financials taken as a whole. As a result of the correction, cost of goods sold increased from $8,369,526 to $8,594,841 and revenue decreased from $14,219,424 to $13,432,310 which combined resulted in a decrease of gross profit from $5,849,898 to $4,837,469. The correction had no impact on total operating loss and net loss. Recent Accounting Pronouncements Standards Required to be Adopted in Future Years. In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 amends the guidance on the impairment of financial instruments. This update adds an impairment model (known as the current expected credit losses model) that is based on expected losses rather than incurred losses. Under the new guidance, an entity recognizes, as an allowance, its estimate of expected credit losses. In November 2018, ASU 2016-13 was amended by ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments - Credit Losses. ASU 2018-19 changes the effective date of the credit loss standards (ASU 2016-13) to fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Further, the ASU clarifies that operating lease receivables are not within the scope of ASC 326-20 and should instead be accounted for under the new leasing standard, ASC 842. The Company does not believe that the impact of adopting this standard will have a material effect on its financial statements. The Company has evaluated other recent accounting pronouncements through June 30, 2021 and believes that none of them will have a material effect on our consolidated financial statements. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 3 Months Ended |
Jun. 30, 2021 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT [Text Block] | NOTE 2 - PROPERTY AND EQUIPMENT Fixed assets consisted of the following at: Fixed assets consisted of the following at: June 30, 2021 (unaudited) March 31, 2021 Machinery and Equipment $ 4,873,788 $ 4,812,344 Office Equipment 55,439 55,439 Less: Accumulated Depreciation (4,016,615 ) (3,857,600 ) Fixed Assets, net $ 912,612 $ 1,010,183 Depreciation expense for the quarter ended June 30, 2021 and 2020 was $159,015 and $227,911, respectively. |
REVOLVING FINANCING
REVOLVING FINANCING | 3 Months Ended |
Jun. 30, 2021 | |
Receivables [Abstract] | |
REVOLVING FINANCING [Text Block] | NOTE 3 - REVOLVING FINANCING On February 1, 2017, we entered into a credit and security agreement (the "Credit Agreement") with SCM Specialty Finance Opportunities Fund, L.P. ("SCM" or "Lender"), which subsequently changed its name to CNH Finance Fund I, L.P. The Credit Agreement provides our company with a revolving credit facility (the "Revolving Facility"), the proceeds of which are to be used to repay existing indebtedness of our company, transaction fees incurred in connection with the Credit Agreement and for the working capital needs of our company. Under the terms of the Credit Agreement, SCM has agreed to make cash advances to our company in an aggregate principal at any one time outstanding not to exceed the lesser of (i) $7 million (the "Revolving Loan Commitment Amount") and (ii) the Borrowing Base (defined to mean, as of any date of determination, 85% of net eligible billed receivables plus 65% of eligible unbilled receivables, minus certain reserves). The Credit Agreement expires on July 1, 2022, unless earlier terminated by the parties in accordance with the terms of the Credit Agreement. The principal amount of the Revolving Facility outstanding bears interest at a rate per annum equal to (i) a fluctuating interest rate per annum equal at all times to the rate of interest announced, from time to time, within Wells Fargo Bank at its principal office in San Francisco as its "prime rate," plus (ii) 3.25%, payable monthly in arrears. The interest rate as of March 31, 2021 was 7.0% To secure the payment and performance of the obligations under the Credit Agreement, we granted to SCM a continuing security interest in all of our assets and agreed to a lockbox account arrangement in respect of certain eligible receivables. The Company agreed to pay to SCM monthly an unused line fee in amount equal to 0.083% per month of the difference derived by subtracting (i) the average daily outstanding balance under the Revolving Facility during the preceding month, from (ii) the Revolving Loan Commitment Amount. The unused line fee will be payable monthly in arrears. We also agreed to pay SCM as additional interest a monthly collateral management fee equal to 0.35% per month calculated on the basis of the average daily balance under the Revolving Facility outstanding during the preceding month. The collateral management fee will be payable monthly in arrears. Upon a termination of the Revolving Facility, we agreed to pay SCM a termination fee in an amount equal to 1% of the Revolving Loan Commitment Amount if the termination occurs before July 1, 2022. We must also pay certain fees in the event that receivables are not properly deposited in the appropriate lockbox account. The interest rate will be increased by 5% in the event of a default under the Credit Agreement. Events of default under the Credit Agreement, some of which are subject to certain cure periods, include a failure to pay obligations when due, the making of a material misrepresentation to SCM, the rendering of certain judgments or decrees against our company and the commencement of a proceeding for the appointment of a receiver, trustee, liquidator or conservator or filing of a petition seeking reorganization or liquidation or similar relief. The Credit Agreement contains customary representations and warranties and various affirmative and negative covenants including the right of first refusal to provide financing for our company and the financial and loan covenants, such as the loan turnover rate, minimum EBITDA, fixed charge coverage ratio and minimum liquidity requirements. |
PAYCHECK PROTECTION PROGRAM LOA
PAYCHECK PROTECTION PROGRAM LOAN | 3 Months Ended |
Jun. 30, 2021 | |
Debt Disclosure Abstract | |
PAYCHECK PROTECTION PROGRAM LOAN [Text Block] | NOTE 4 - PAYCHECK PROTECTION PROGRAM LOAN On April 29, 2020, Alkaline 88, LLC (the "Borrower"), a wholly owned subsidiary of the Company, signed a promissory note with MidFirst Bank (the "Lender") in the amount of $325,800, pursuant to the Paycheck Protection Program (the "PPP") under Division A, Title I of the CARES Act, which was enacted March 27, 2020. The promissory note issued by Borrower, matures on April 29, 2022 and bears interest at a rate of 1% per annum. Borrower shall pay principal plus interest accrued under the promissory note in 18 equal monthly installments beginning on October 29, 2020. The Note may be prepaid by the Borrower at any time prior to maturity with no prepayment penalties. Funds from the Loan may only be used for payroll costs, costs used to continue group health care benefits, mortgage payments, rent, utilities, and interest on other debt obligations incurred before February 15, 2020. The Company intends to use the entire Loan amount for qualifying expenses. Under the terms of the PPP, certain amounts of the Loan may be forgiven if they are used for qualifying expenses as described in the CARES Act. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 3 Months Ended |
Jun. 30, 2021 | |
Stockholders' Equity Note [Abstract] | |
STOCKHOLDERS' EQUITY [Text Block] | NOTE 5 - STOCKHOLDERS' EQUITY Preferred Shares On October 7, 2013, the Company amended its articles of incorporation to create 100,000,000 shares of preferred stock by filing a Certificate of Amendment to Articles of Incorporation with the Secretary of State of Nevada. The preferred stock may be divided into and issued in series, with such designations, rights, qualifications, preferences, limitations and terms as fixed and determined by our board of directors. Series S Convertible Preferred Stock On May 12, 2021, The Alkaline Water Company Inc. (the "Company") entered into an Endorsement Agreement (the "Endorsement Agreement"), with ABG-Shaq, LLC ("ABG-Shaq"), an entity affiliated with Shaquille O'Neal, for the personal services of Mr. O'Neal. Pursuant to the Endorsement Agreement, the Company received the right and license to use Mr. O'Neal's name, nickname, initials, autograph, voice, video or film portrayals, photograph, likeness and certain other intellectual property rights, in each case, solely as approved by ABG-Shaq, in connection with the advertising, promotion and sale of the Company's branded products. Mr. O'Neal will also provide brand ambassador services related to appearances, social media and public relations matters. The Endorsement Agreement also includes customary exclusivity, termination, and indemnification clauses. As consideration for the rights and services granted under the Endorsement Agreement, the Company agreed to pay to ABG-Shaq aggregate cash payments of $3 million over the three years of the Endorsement Agreement. The Company will also pay expenses related to the marketing and personal services provided by Mr. O'Neal. As of June 30, 2021, the Company has paid $500,000 under this agreement and anticipates paying an additional $500,000 in the quarter ended September 30, 2020 and the Company will be paying $250,000 in each quarter in the fiscal years ended March 31, 2023 and March 31, 2024 In addition, the Company agreed to grant 6,681,090 shares of Series S Preferred Stock to ABG, each vested share of which is convertible into one share of the Company's common stock. The shares of Series S Preferred Stock will vest as to 1/3 on May 12, 2021, May 1, 2022, and May 1, 2023. The term of the Endorsement Agreement ends on May 1, 2024. The Series S Preferred was value at $6,681,090 based on the Company's closing stock price of $1.00 on May 12, 2021. The Company the value of the vested Series S Preferred Stock in the amount of $2,227,030 was recognized as a prepaid expense which is being expense over the initial twelve months of the agreement. The prepaid expense at June 30, 2021 was $1,855,858. In the quarter ended June 30, 2021, the Company recognized an expense of $871,172 in connection with the agreement and anticipates recognizing an expense in quarter ended September 30, 2021 in the amount of 1,056,758 and $556,758 for the quarter ended December 31, 2021 and March 31, 2022 for a total expense of $3,041,444 for the year ended March 31, 2022. In the years ended March 31, 2023 and March 31, 2024, the Company anticipates recognizing an expense in the amount of $3,227,030 and $3,227,030 respectively. Common Stock Share Issuance Effective as April 15, 2021, the Company issued 38,834 shares, respectively of our common stock to non-employees in consideration for services to be rendered to our company. The total fair value of the shares is $40,000 based upon the per share closing price of the Company's common stock on the NASDAQ stock exchange April 15, 2021. These shares were issues pursuant to a consulting agreement dated June 15, 2020, whereby the Company engaged an entity to perform consulting services for the Company for a period of one year. The Company agreed to pay a retainer in the amount of $40,000 per month, for a total of $480,000 to be paid in the form of the common stock of the Company, which shares are to be issued monthly. Restricted Awards On May 3, 2021, the Company issued 816,665 shares of our common stock to employees upon the exercise of vested restricted awards under our 2020 Equity Incentive Plan. |
OPTIONS AND WARRANTS
OPTIONS AND WARRANTS | 3 Months Ended |
Jun. 30, 2021 | |
Share-based Payment Arrangement [Abstract] | |
OPTIONS AND WARRANTS [Text Block] | NOTE 6 - OPTIONS AND WARRANTS The Company issued 162,668 shares of common stock during the three months ending June 30, 2021 in connection with the exercise of stock options of which 91,000 options were with a payment to the Company for the exercise price of $48,230 and the remaining amount of stock options were exercised as a cashless exercise under the plan. Effective as of June 14, 2021, we issued an aggregate of 277,777 shares of our common stock upon exercise of our common stock purchase warrants with an exercise price of $0.55 per share for aggregate gross proceeds of $152,777.35. We issued these shares to one U.S. person (as that term is defined in Regulation S of the Securities Act of 1933) and in issuing these shares, we relied on the exemption from the registration requirements of the Securities Act of 1933 provided by Section 4(a)(2) of the Securities Act of 1933 and/or Rule 506 promulgated under the Securities Act of 1933. Effective as of June 15, 2021, we issued an aggregate of 1,000,000 shares of our common stock upon exercise of our common stock purchase warrants with an exercise price of $0.50 per share for aggregate gross proceeds of $500,000. We issued these shares to one non-U.S. person (as that term is defined in Regulation S of the Securities Act of 1933) in an offshore transaction relying on Regulation S and/or Section 4(a)(2) of the Securities Act of 1933. |
LEASES
LEASES | 3 Months Ended |
Jun. 30, 2021 | |
Leases [Abstract] | |
LEASES [Text Block] | NOTE 7 - LEASES As of July 1, 2020, the Company entered into a lease for 14,530 square feet of warehouse space from a third party through December 2021 at a rate of $7,992 per month for the first twelve months, then at a rate of $8,231 per month for the last six months of the lease. The Company determined this lease was an operating lease under ASC 842 and using an interest rate of 7%, the Company determined that the ROU for this lease was $130,989 and the lease liability for this lease was $138,266, at inception of this lease, respectively. As of October 1, 2020, the company entered into a lease for 9,166 square feet of corporate office and warehouse space from a third party through September 2023 at a rate of $10,083 per month for the first twelve months, then at a rate of $10,385 for the next 12 months, and $10,697 for the final 12 months of the lease. The Company determined this lease was an operating lease under ASC 842 and using an interest rate of 7%, the Company determined that the ROU for this lease was $337,932 and the lease liability for this lease was $337,932, at inception of this lease, respectively. Previously, the Company leased its corporate office space with a size of 3,352 square feet leased from a third party which leased through November 2020 at the current rate of $7,891 per month. As of November 1, 2020, the company entered into a lease for 2,390 square feet of corporate office space from a third party through January 2024 at a rate of $5,280 per month for the first twelve months starting January 2021, then at a rate of $5,377 for the next 12 months, and $5,497 for the final 13 months of the lease. The Company determined this lease was an operating lease under ASC 842 and using an interest rate of 7%, the Company determined that the ROU for this lease was $177,629 and the lease liability for this lease was $177,629, at inception of this lease, respectively At inception the ROU and Lease Liability was calculated based on the net present value of the future lease payments over the term of the lease. When available, the Company uses the rate implicit in the lease discount payments as the incremental borrowing rate to calculate the net present value; however, the rate implicit in the lease is not readily determinable for our corporate office lease. In this case, the Company estimated its incremental borrowing rate as the interest rate it could borrow an amount equal to the lease payments over a similar term, with similar collateral as the lease, and in a similar economic environment. The Company estimated its rate using available evidence such as rates imposed by third-party lenders to the Company in recent financings or observable risk-free interest rate and credit spreads for commercial debt of a similar duration, with credit spreads correlating to the Company's estimated creditworthiness. For operating leases that include rent holidays and rent escalation clauses, the Company recognizes lease expense on a straight-line basis over the lease term from the date it takes possession of the leased property. The Company records the straight-line lease expense and any contingent rent, if applicable, in general and administrative expenses on the condensed consolidated statements of operations. The corporate office, lease also requires the Company to pay real estate taxes, common area maintenance costs and other occupancy costs which are included in the general and administrative expenses on the condensed consolidated statements of operations. Operating Lease expense for the three months ended June 30, 2021 was $100,915 and for the three months ended June 30, 2020 was $34,754. Operating Leases: June 30, 2021 Operating lease right-of-use asset - current portion $ 213,397 Operating lease right-of-use asset - non-current portion 227,342 Total Operating lease right-of-use asset $ 440,739 Operating lease liability - current portion $ 235,055 Operating lease liability - non-current portion 227,342 Total Operating lease liability $ 462,397 Weighted average remaining lease term (in years): Operating leases 1.1 Weighted average discount rate: Operating leases 7% Maturities of undiscounted lease liabilities as of June 30, 2021 are as follows: Operating Leases Year ending March 31, 2022 189,758 Year ending March 31, 2023 191,379 Year ending March 31, 2024 119,150 Total lease payments 500,287 Less: Imputed interest (37,890 ) Total lease obligations 462,397 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Jun. 30, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES [Text Block] | NOTE 8 - COMMITMENTS AND CONTINGENCIES The Company is involved in various legal proceedings, claims and litigation arising in the ordinary course of business. The Company does not believe that the disposition of matters that are pending or asserted will have a material effect on its consolidated financial statements. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Jun. 30, 2021 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS [Text Block] | NOTE 9 - SUBSEQUENT EVENTS On July 6, 2021, we completed a private placement of 4,757,381 subscription receipts at a price of $1.05 per subscription receipt for total gross proceeds of $4,995,250.05. In the event of the occurrence of the escrow release condition (as defined below), each subscription receipt will automatically convert into one unit consisting of one share of our common stock and one transferable share purchase warrant, for no additional consideration. Each warrant will entitle the holder thereof to acquire one share of our common stock for a period of three years from the date of issuance thereof at a price of $1.25 per share. The subscription amounts will be held by an escrow agent until the escrow release condition occurs. The escrow release condition is the receipt by our company of an ordinary resolution of our stockholders approving the private placement and the issuance of the securities thereunder. In the event that the escrow release condition is satisfied prior to 5:00 p.m. (Vancouver time) on September 30, 2021, we will deliver a notice to the escrow agent confirming the escrow release condition has been satisfied. Upon receipt of the notice, the escrow agent will, as soon as practicable thereafter, release the subscription amounts to our company and each subscription receipt will automatically convert into one unit without payment of any additional consideration. If the escrow release condition is not satisfied by 5:00 p.m. (Vancouver time) on September 30, 2021 or if we deliver a written default notice to the escrow agent that the escrow release condition will not be satisfied by that time, the subscription receipts will expire and be of no further force and effect, effective as of the earlier of (i) 5:00 p.m. (Vancouver time) on September 30, 2021 (ii) the date of the receipt of the default notice, and the subscribers will be entitled to receive from the escrow agent a refund of the subscription amounts held in escrow, without interest and less applicable expenses. As of August 16, 2021 since June 30, 2021, the Company has issued 4,761,688 shares in connection with the exercise of warrants at $1.25 per share for total proceeds received of approximately $6 million. In addition, for the same time period, the Company has issued 63,692 shares in connection with the cashless exercise of 86,666 options. On July 27, 2021, the Company granted an aggregate of 454,000 stock options to certain employees for the purchase of up to 454,000 shares of common stock pursuant to the 2020 Equity Incentive Plan. Each stock option is exercisable at a price of $1.75 per share until July 27, 2031. |
NATURE OF BUSINESS AND SUMMAR_2
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Jun. 30, 2021 | |
Accounting Policies [Abstract] | |
Nature of Business [Policy Text Block] | Nature of Business The Company offers retail consumers bottled alkaline water in 500-milliliter, 700-milliliter, 1-liter, 1.5 -liter, 2-liter, 3-liter and 1-gallon sizes, all of which is produced through an electrolysis process that uses specialized electronic cells coated with a variety of rare earth minerals to produce 8.8 pH drinking water without the use of any manmade chemicals. In addition to its bottled alkaline water, the Company also offers retail consumers flavor infused bottled water in the 500-milliliter size in six flavors: Raspberry, Watermelon, Lemon, Lemon Lime, Peach Mango and Blood Orange. The Company recently introduced and began selling hemp-derived CBD topical and ingestible products under the brand name "A88CBD™". Our hemp-derived CBD products are produced and sold in compliance with the Agriculture Improvement Act of 2018 (also known as the 2018 Farm Bill, Public Law 115-334). |
Basis of presentation [Policy Text Block] | Basis of presentation These unaudited financial statements represent the condensed consolidated financial statements of The Alkaline Water Company and its wholly owned subsidiaries (collectively, the "Company"). These unaudited condensed consolidated financial statements should be read in conjunction with the Company's consolidated financial statements and the notes thereto as set forth in the Company's Form 10-K, filed with the SEC on July 2, 2021, which included all disclosures required by generally accepted accounting principles ("GAAP") In the opinion of management, these unaudited condensed consolidated financial statements contain all adjustments necessary to present fairly the Company's financial position on a consolidated basis and the consolidated results of operations, equity and cash flows for the interim periods presented. The results of operations for the three months ended June 30, 2021 and 2020 are not necessarily indicative of expected operating results for the full year. The information presented throughout the document as of and for the three months ended June 30, 2021 and 2020 is unaudited. The condensed consolidated balance sheet at March 31, 2021 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles in the U.S. for complete financial statements. |
Principles of consolidation [Policy Text Block] | Principles of consolidation The consolidated financial statements include the accounts of The Alkaline Water Company Inc. (a Nevada Corporation) and its five wholly owned subsidiaries: A88 Infused Beverage Division Inc. (a Nevada Corporation), A88 International, Inc. (a Nevada Corporation), A88 Infused Products Inc. (a Nevada Corporation), AWC Acquisition Company Inc. (a Nevada corporation), and Alkaline 88, LLC (an Arizona Limited Liability Company). All significant intercompany balances and transactions have been eliminated. The Alkaline Water Company Inc., A88 Infused Beverage Division, Inc., A88 Infused Products Inc., A88 International, Inc., AWC Acquisition Company Inc., and Alkaline 88, LLC will be collectively referred herein to as the "Company". Any reference herein to "The Alkaline Water Company Inc.", the "Company", "we", "our" or "us" is intended to mean The Alkaline Water Company Inc., including the subsidiaries indicated above, unless otherwise indicated. |
Use of Estimates [Policy Text Block] | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make 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 revenues and expenses during the reporting period. Actual results could differ significantly from those estimates. |
Cash and Cash Equivalents [Policy Text Block] | Cash and Cash Equivalents The Company considers all highly liquid instruments with an original maturity of three months or less to be considered cash equivalents. The carrying value of these investments approximates fair value. As of the balance sheet date and periodically throughout the period, the Company has maintained balances in various operating accounts in excess of federally insured limits. In addition, the Company has maintained balances in its attorney's client trust account in both C$ and US$. The Company has not experienced any losses in such accounts and periodically evaluates the credit worthiness of the financial institutions and has determined the credit exposure to be negligible. The Company had $4,497,905 and $9,130,956 in cash at June 30, 2021 and March 31, 2021, respectively. |
Accounts Receivable and Allowance for Doubtful Accounts [Policy Text Block] | Accounts Receivable and Allowance for Doubtful Accounts The Company generally does not require collateral, and the majority of its trade receivables are unsecured. The carrying amount for accounts receivable approximates fair value. Accounts receivable consisted of the following as of June 30, 2021 and March 31, 2021: June 30, 2021 (unaudited) March 31, 2021 Trade receivables, net $ 8,561,373 $ 8,798,176 Less: Allowance for doubtful accounts (340,000 ) (340,000 ) Net accounts receivable $ 8,221,373 $ 8,458,176 Accounts receivable are periodically evaluated for collectability based on past credit history with clients. Provisions for losses on accounts receivable are determined on the basis of loss experience, known and inherent risk in the account balance and current economic conditions. The accounts receivable balance is pledged as collateral for the Company's revolving financing as disclosed in Note 3. |
Inventory [Policy Text Block] | Inventory Inventory represents raw materials and finished goods valued at the lower of cost or market with cost determined using the weight average method which approximates first-in first-out method, and with market defined as the lower of replacement cost or realizable value. The inventory balance is pledged as collateral for the Company's revolving financing as disclosed in Note 3. As of June 30, 2021 and March 31, 2021, inventory consisted of the following: June 30, 2021 March 31, 2021 Raw materials $ 2,091,450 $ 3,055,091 Finished goods 2,946,125 1,352,629 Total inventory $ 5,037,575 $ 4,407,720 |
Property and equipment [Policy Text Block] | Property and Equipment The Company records all property and equipment at cost less accumulated depreciation. Improvements are capitalized while repairs and maintenance costs are expensed as incurred. Depreciation is calculated using the straight-line (half-life convention) method over the estimated useful life of the assets, which the Company has determined to be 3 years. |
Going Concern [Policy Text Block] | Going Concern The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. The Company has not generated sufficient revenues from product sales to provide for cash flows to enable the Company to finance its operations internally thus there is substantial doubt about the Company’s ability to continue as a going concern within one year from the date of filing. The Company’s ability to continue as a going concern is dependent on the Company’s ability to generate revenues and raise capital. The Company currently anticipates the release of the funds from escrow from the July 6, 2021 private placements subject to shareholder approval (Note 5) and funds from the exercise of outstanding warrants (Note 9) will adequately fund the Company’s planned operations and capital needs for the next 12 months. However, if our current plans change or are accelerated or we choose to increase our production capacity, we may seek to sell additional equity or debt securities or obtain additional credit facilities, including seeking investments from strategic investors. The sale of additional equity securities will result in dilution to our stockholders. The incurrence of indebtedness will result in increased debt service obligations and could require us to agree to operating and financial covenants that could restrict our operations or modify our plans to grow the business. Financing may not be available in amounts or on terms acceptable to us, if at all. Any failure by us to raise additional funds on terms favorable to us, or at all, will limit our ability to continue as a going concern. |
Stock-Based Compensation [Policy Text Block] | Stock-Based Compensation The Company accounts for stock-based compensation in accordance with Accounting Standards Codification ("ASC") 718. Stock-based compensation is measured at the grant date, based on the fair value of the award, and is recognized as expense over the requisite service period. The Company estimates the fair value of stock-based payments using the Black-Scholes option-pricing model for common stock options and warrants and the closing price of the Company's common stock for common share issuances. |
Revenue Recognition [Policy Text Block] | Revenue Recognition The Company recognizes revenue per ASC 606. The Company recognizes revenue when our performance obligations are satisfied. Our primary obligation (the distribution and sale of beverage products) is satisfied upon the delivery of products to our customers, which is also when control is transferred. The Company does not accept returns due to the nature of the product. However, the Company will provide credit to our customers for damaged goods. The Company provides credit to its customers which typically require payment within 30 days. As an incentive to pay early the Company also typically provides a 2% discount if the customer pays within 10 days. The Company estimates the amount of the discount that the customer is likely to take and recognizes it as variable consideration. The amounts are not considered material. After evaluating the revenue disclosure requirements, the Company does not believe that any revenues are required to be disaggregated. Revenue consists of the gross sales price, less variable consideration, including estimated allowances for which provisions are made at the time of sale, and less certain other discounts and allowances. Shipping and handling charges that are billed to customers are included as a component of revenue. Costs incurred by the Company for shipping and handling charges are included in selling expenses and amounted to $2,906,900 and $1,807,030 for the quarters ended June 30, 2021 and 2020, respectively. |
Concentration Risks [Policy Text Block] | Concentration Risks The Company has 1 major customer that accounts for 12% of accounts receivable at June 30, 2021, and 2 customers that together account for 36% (20% and 16%, respectively) of the total revenues earned for the quarter ended June 30, 2021. The Company has 2 vendors that accounted for 43% (27%, and 16% respectively) of purchases for the quarter ended June 30, 2021. The Company has 2 major customers that together account for 32% (22% and 10%, respectively) of accounts receivable at June 30, 2020, and 2 customers that together account for 45% (25% and 20%, respectively) of the total revenues earned for the quarter ended June 30, 2020. The Company has 3 vendors that accounted for 55% (27%, 15% and 13% respectively) of purchases for the quarter ended June 30, 2020. |
Income Taxes [Policy Text Block] | Income Taxes The Company uses an estimated annual effective tax rate method in computing its interim tax provision. This effective tax rate is based on forecasted annual pre-tax income (loss), permanent tax differences and statutory tax rates. Deferred income taxes are recognized for differences between the basis of assets and liabilities for financial statement and income tax purposes. The differences relate principally to net operating loss carryforwards. Deferred tax assets and liabilities represent the future tax consequence for those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. |
Basic and Diluted Loss Per Share [Policy Text Block] | Basic and Diluted Loss Per Share Basic and diluted earnings or loss per share ("EPS") amounts in the consolidated financial statements are computed in accordance ASC 260- 10 "Earnings per Share", which establishes the requirements for presenting EPS. Basic EPS is based on the weighted average number of common shares outstanding. Diluted EPS is based on the weighted average number of common shares outstanding and dilutive common stock equivalents. Basic EPS is computed by dividing net income or loss available to common stockholders (numerator) by the weighted average number of common shares outstanding (denominator) during the period. Potentially dilutive securities were excluded from the calculation of diluted loss per share, because their effect would be anti-dilutive. For the three months ended June 30, 2021 and 2020, respectively, the Company had 3,897,897 and 2,417,322 shares relating to options, 4,761,690 and 5,559,205 shares relating to warrants and 2,227,030 and nil convertible preferred shares that were not included in the diluted earnings per share calculation because they were antidilutive. |
Business Segments [Policy Text Block] | Business Segments The Company operates on one segment in one geographic location - the United States of America and; therefore, segment information is not presented. |
Fair Value of Financial Instruments [Policy Text Block] | Fair Value of Financial Instruments The carrying amounts of the company's financial instruments including accounts payable, accrued expenses, and notes payable approximate fair value due to the relative short period for maturity these instruments. The company does not use derivative financial instruments to hedge exposures to cash-flow, market or foreign-currency risks. Authoritative guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. The guidance establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability, developed based on market data obtained from sources independent of the company. Unobservable inputs are inputs that reflect the company's assumptions of what market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The hierarchy is broken down into three levels based on reliability of the inputs as follows: Level 1: Observable inputs such as quoted prices in active markets; Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. As of June 30, 2021 and 2020, the Company did not have any financial instruments that are measured on a recurring basis as Level 1, 2 or 3. |
Correction of Previously Issued Financial Statements [Policy Text Block] | Correction of Previously Issued Financial Statements The accompanying consolidated statement of operations for the three months ended June 30, 2020 has been corrected for the following: a reclassification of depreciation expense of $225,315 to cost of goods sold related to assets utilized in the production of inventory and ad adjustment to reclassify sales and marketing expenses of $787,114 as a reduction in revenue as such amounts were related to consideration payable to a customer which the Company determined was not for distinct goods or services received. The Company assessed the materiality of the misstatement quantitively and qualitatively and has concluded that the correction of the classification error is immaterial to the consolidated financials taken as a whole. As a result of the correction, cost of goods sold increased from $8,369,526 to $8,594,841 and revenue decreased from $14,219,424 to $13,432,310 which combined resulted in a decrease of gross profit from $5,849,898 to $4,837,469. The correction had no impact on total operating loss and net loss. |
Recent Accounting Pronouncements [Policy Text Block] | Recent Accounting Pronouncements Standards Required to be Adopted in Future Years. In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 amends the guidance on the impairment of financial instruments. This update adds an impairment model (known as the current expected credit losses model) that is based on expected losses rather than incurred losses. Under the new guidance, an entity recognizes, as an allowance, its estimate of expected credit losses. In November 2018, ASU 2016-13 was amended by ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments - Credit Losses. ASU 2018-19 changes the effective date of the credit loss standards (ASU 2016-13) to fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Further, the ASU clarifies that operating lease receivables are not within the scope of ASC 326-20 and should instead be accounted for under the new leasing standard, ASC 842. The Company does not believe that the impact of adopting this standard will have a material effect on its financial statements. The Company has evaluated other recent accounting pronouncements through June 30, 2021 and believes that none of them will have a material effect on our consolidated financial statements. |
NATURE OF BUSINESS AND SUMMAR_3
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended |
Jun. 30, 2021 | |
Accounting Policies [Abstract] | |
Schedule of accounts receivable [Table Text Block] | June 30, 2021 (unaudited) March 31, 2021 Trade receivables, net $ 8,561,373 $ 8,798,176 Less: Allowance for doubtful accounts (340,000 ) (340,000 ) Net accounts receivable $ 8,221,373 $ 8,458,176 |
Schedule of inventory current [Table Text Block] | June 30, 2021 March 31, 2021 Raw materials $ 2,091,450 $ 3,055,091 Finished goods 2,946,125 1,352,629 Total inventory $ 5,037,575 $ 4,407,720 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 3 Months Ended |
Jun. 30, 2021 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property plant and equipment [Table Text Block] | Fixed assets consisted of the following at: June 30, 2021 (unaudited) March 31, 2021 Machinery and Equipment $ 4,873,788 $ 4,812,344 Office Equipment 55,439 55,439 Less: Accumulated Depreciation (4,016,615 ) (3,857,600 ) Fixed Assets, net $ 912,612 $ 1,010,183 |
LEASES (Tables)
LEASES (Tables) | 3 Months Ended |
Jun. 30, 2021 | |
Leases [Abstract] | |
Schedule of operating lease expense [Table Text Block] | Operating Leases: June 30, 2021 Operating lease right-of-use asset - current portion $ 213,397 Operating lease right-of-use asset - non-current portion 227,342 Total Operating lease right-of-use asset $ 440,739 Operating lease liability - current portion $ 235,055 Operating lease liability - non-current portion 227,342 Total Operating lease liability $ 462,397 Weighted average remaining lease term (in years): Operating leases 1.1 Weighted average discount rate: Operating leases 7% |
Schedule of maturities of undiscounted lease liabilities [Table Text Block] | Operating Leases Year ending March 31, 2022 189,758 Year ending March 31, 2023 191,379 Year ending March 31, 2024 119,150 Total lease payments 500,287 Less: Imputed interest (37,890 ) Total lease obligations 462,397 |
NATURE OF BUSINESS AND SUMMAR_4
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Narrative) (Details) | 3 Months Ended | ||
Jun. 30, 2021USD ($)customersvendorsshares | Jun. 30, 2020USD ($)customersvendorsshares | Mar. 31, 2021USD ($) | |
Nature Of Business And Summary Of Significant Accounting Policies [Line Items] | |||
Cash | $ 4,497,905 | $ 9,130,956 | |
Property, plant and equipment, estimated useful lives, years | 3 years | ||
Selling expenses | $ 2,906,900 | $ 1,807,030 | |
Reclassification Of Depreciation Expenses To Cost Of Goods Sold | 225,315 | ||
Reclassification of Depreciation Expenses to General and Administrative Expense | 787,114 | ||
Cost of Goods and Services Sold | 9,311,011 | 8,594,841 | |
Revenue | 14,113,578 | 13,432,310 | |
Gross Profit | $ 4,802,567 | 4,837,469 | |
Previously Reported [Member] | |||
Nature Of Business And Summary Of Significant Accounting Policies [Line Items] | |||
Cost of Goods and Services Sold | 8,369,526 | ||
Revenue | 14,219,424 | ||
Gross Profit | $ 5,849,898 | ||
Accounts Receivable [Member] | |||
Nature Of Business And Summary Of Significant Accounting Policies [Line Items] | |||
Number of major customers | customers | 1 | 2 | |
Concentration Risk, Percentage | 12.00% | 32.00% | |
Accounts Receivable [Member] | Customer 1 [Member] | |||
Nature Of Business And Summary Of Significant Accounting Policies [Line Items] | |||
Concentration Risk, Percentage | 22.00% | ||
Accounts Receivable [Member] | Customer 2 [Member] | |||
Nature Of Business And Summary Of Significant Accounting Policies [Line Items] | |||
Concentration Risk, Percentage | 10.00% | ||
Revenues [Member] | |||
Nature Of Business And Summary Of Significant Accounting Policies [Line Items] | |||
Number of major customers | customers | 2 | 2 | |
Concentration Risk, Percentage | 36.00% | 45.00% | |
Revenues [Member] | Customer 1 [Member] | |||
Nature Of Business And Summary Of Significant Accounting Policies [Line Items] | |||
Concentration Risk, Percentage | 20.00% | 25.00% | |
Revenues [Member] | Customer 2 [Member] | |||
Nature Of Business And Summary Of Significant Accounting Policies [Line Items] | |||
Concentration Risk, Percentage | 16.00% | 20.00% | |
Purchases [Member] | |||
Nature Of Business And Summary Of Significant Accounting Policies [Line Items] | |||
Number of major vendors | vendors | 2 | 3 | |
Concentration Risk, Percentage | 43.00% | 55.00% | |
Purchases [Member] | Vendor 1 [Member] | |||
Nature Of Business And Summary Of Significant Accounting Policies [Line Items] | |||
Concentration Risk, Percentage | 27.00% | 27.00% | |
Purchases [Member] | Vendor 2 [Member] | |||
Nature Of Business And Summary Of Significant Accounting Policies [Line Items] | |||
Concentration Risk, Percentage | 16.00% | 15.00% | |
Purchases [Member] | Vendor 3 [Member] | |||
Nature Of Business And Summary Of Significant Accounting Policies [Line Items] | |||
Concentration Risk, Percentage | 13.00% | ||
Employee Stock Option [Member] | |||
Nature Of Business And Summary Of Significant Accounting Policies [Line Items] | |||
Antidilutive securities excluded from computation of earnings per share, amount | shares | 3,897,897 | 2,417,322 | |
Warrant [Member] | |||
Nature Of Business And Summary Of Significant Accounting Policies [Line Items] | |||
Antidilutive securities excluded from computation of earnings per share, amount | shares | 4,761,690 | 5,559,205 | |
Convertible Preferred Stock [Member] | |||
Nature Of Business And Summary Of Significant Accounting Policies [Line Items] | |||
Antidilutive securities excluded from computation of earnings per share, amount | shares | 2,227,030 | 0 |
NATURE OF BUSINESS AND SUMMAR_5
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Schedule of Accounts Receivable (Details) - USD ($) | Jun. 30, 2021 | Mar. 31, 2021 |
Accounting Policies [Abstract] | ||
Trade receivables, net | $ 8,561,373 | $ 8,798,176 |
Less: Allowance for doubtful accounts | (340,000) | (340,000) |
Net accounts receivable | $ 8,221,373 | $ 8,458,176 |
NATURE OF BUSINESS AND SUMMAR_6
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -Schedule of Inventory, Current (Details) - USD ($) | Jun. 30, 2021 | Mar. 31, 2021 |
Accounting Policies [Abstract] | ||
Raw materials | $ 2,091,450 | $ 3,055,091 |
Finished goods | 2,946,125 | 1,352,629 |
Total inventory | $ 5,037,575 | $ 4,407,720 |
PROPERTY AND EQUIPMENT (Narrati
PROPERTY AND EQUIPMENT (Narrative) (Details) - USD ($) | 3 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Property, Plant and Equipment [Line Items] | ||
Depreciation expense | $ 159,015 | $ 227,911 |
PROPERTY AND EQUIPMENT - Schedu
PROPERTY AND EQUIPMENT - Schedule of Property, Plant and Equipment (Details) - USD ($) | Jun. 30, 2021 | Mar. 31, 2021 |
Property, Plant and Equipment [Line Items] | ||
Less: Accumulated Depreciation | $ (4,016,615) | $ (3,857,600) |
Property and Equipment, net | 912,612 | 1,010,183 |
Machinery and Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment | 4,873,788 | 4,812,344 |
Office Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment | $ 55,439 | $ 55,439 |
REVOLVING FINANCING (Narrative)
REVOLVING FINANCING (Narrative) (Details) | 3 Months Ended |
Jun. 30, 2021 | |
Line of Credit Facility, Borrowing Capacity, Description | Under the terms of the Credit Agreement, SCM has agreed to make cash advances to our company in an aggregate principal at any one time outstanding not to exceed the lesser of (i) $7 million (the "Revolving Loan Commitment Amount") and (ii) the Borrowing Base (defined to mean, as of any date of determination, 85% of net eligible billed receivables plus 65% of eligible unbilled receivables, minus certain reserves). |
Line of Credit Facility, Interest Rate Description | The principal amount of the Revolving Facility outstanding bears interest at a rate per annum equal to (i) a fluctuating interest rate per annum equal at all times to the rate of interest announced, from time to time, within Wells Fargo Bank at its principal office in San Francisco as its "prime rate," plus (ii) 3.25%, payable monthly in arrears. The interest rate as of March 31, 2021 was 7.0% |
Line of Credit Facility, Commitment Fee Percentage | 0.083% |
Line of Credit Facility, Interest Rate During Period | 0.35% |
Line of Credit Facility, Termination Fee | 1.00% |
Line of Credit Facility, Interest Increase Upon Default | 5.00% |
PAYCHECK PROTECTION PROGRAM L_2
PAYCHECK PROTECTION PROGRAM LOAN (Narrative) (Details) - Promissory Note [Member] | Apr. 29, 2020USD ($) |
Short-term Debt [Line Items] | |
Amount of promissory note | $ 325,800 |
Maturity date of promissory note | Apr. 29, 2022 |
Interest rate on promissory note | 1.00% |
Payment term of promissory note | Borrower shall pay principal plus interest accrued under the promissory note in 18 equal monthly installments beginning on October 29, 2020. |
STOCKHOLDERS' EQUITY (Narrative
STOCKHOLDERS' EQUITY (Narrative) (Details) - USD ($) | May 12, 2021 | May 03, 2021 | Apr. 15, 2021 | Jun. 30, 2021 | Jun. 30, 2020 | May 12, 2022 | Jun. 15, 2021 | Mar. 31, 2021 | Oct. 07, 2013 |
Stockholders Equity Note [Line Items] | |||||||||
Preferred stock, shares authorized | 100,000,000 | 100,000,000 | 100,000,000 | ||||||
Stock compensation expense | $ 871,172 | ||||||||
Stock compensation expense in quarter ended September 30, 2021 | 1,056,758 | ||||||||
Stock compensation expense for quarter ended December 31, 2021 | 556,758 | ||||||||
Total stock compensation expense for year ended March 31, 2022 | 3,041,444 | ||||||||
Stock compensation expense for years ended March 31, 2023 | 3,227,030 | ||||||||
Stock compensation expense years ended March 31, 2024 | 3,227,030 | ||||||||
Aggregate cash payments | $ 3,000,000 | 500,000 | |||||||
Additional aggregate cash payments | 500,000 | ||||||||
Aggregate cash payments for fiscal year 2023 | 250,000 | ||||||||
Aggregate cash payments for fiscal year 2024 | 250,000 | ||||||||
Value of common stock shares issued upon conversion | $ 0 | ||||||||
Non-employees [Member] | One U.S. person [Member] | |||||||||
Stockholders Equity Note [Line Items] | |||||||||
Stock Issued During Period, Shares, Issued for Services (shares) | 38,834 | ||||||||
Stock Issued During Period, Value, Issued for Services | $ 40,000 | ||||||||
Monthly retainer for consulting services | $ 40,000 | ||||||||
Retainer for consulting services | $ 480,000 | ||||||||
2020 Equity Incentive Plan [Member] | |||||||||
Stockholders Equity Note [Line Items] | |||||||||
Number of restricted common stock shares granted | 816,665 | ||||||||
Series S Preferred Stock [Member] | |||||||||
Stockholders Equity Note [Line Items] | |||||||||
Number of common stock shares issued upon conversion | 6,681,090 | ||||||||
Price per share | $ 1 | ||||||||
Value of common stock shares issued upon conversion | $ 6,681,090 | ||||||||
Vesting of stock recognized as prepaid expense | $ 2,227,030 | ||||||||
Prepaid expense | $ 1,855,858 |
OPTIONS AND WARRANTS (Narrative
OPTIONS AND WARRANTS (Narrative) (Details) - USD ($) | Jun. 14, 2021 | Jun. 15, 2021 | Jun. 30, 2021 | Jun. 30, 2020 |
Share-based Payment Arrangement [Abstract] | ||||
Stock issued upon exercise of stock option | 162,668 | |||
Number of stock options issued | 91,000 | |||
Proceeds from stock options exercised | $ 48,230 | $ 61,480 | ||
Class of warrant or right, exercises in period | 277,777 | 1,000,000 | ||
Warrant exercise price | $ 0.55 | $ 0.50 | ||
Proceeds from warrants exercised | $ 152,777.35 | $ 500,000 | $ 652,777 | $ 258,899 |
LEASES (Narrative) (Details)
LEASES (Narrative) (Details) | 1 Months Ended | 3 Months Ended | |||
Nov. 30, 2020USD ($)ft² | Oct. 31, 2020USD ($)ft² | Jul. 31, 2020USD ($)ft² | Jun. 30, 2021USD ($)ft² | Jun. 30, 2020USD ($) | |
Leases [Abstract] | |||||
Area of property under operating lease | ft² | 2,390 | 9,166 | 14,530 | 3,352 | |
Lease and rent expense per month | $ 5,280 | $ 10,083 | $ 7,992 | $ 7,891 | |
Lease rate for extension | 5,377 | 10,385 | $ 8,231 | ||
Lease rate for second extension period | $ 5,497 | $ 10,697 | |||
Weighted average discount rate: Operating leases | 7.00% | 7.00% | 7.00% | 7.00% | |
Operating lease right-of-use asset | $ 177,629 | $ 337,932 | $ 130,989 | $ 440,739 | |
Operating lease liability | $ 177,629 | $ 337,932 | $ 138,266 | 462,397 | |
Short-term lease cost | $ 100,915 | $ 34,754 |
LEASES - Schedule of Operating
LEASES - Schedule of Operating Leases (Details) - USD ($) | Jun. 30, 2021 | Mar. 31, 2021 | Nov. 30, 2020 | Oct. 31, 2020 | Jul. 31, 2020 |
Leases [Abstract] | |||||
Operating lease right-of-use asset - current portion | $ 213,397 | $ 236,446 | |||
Operating lease right-of-use asset - Non current portion | 227,342 | 269,167 | |||
Total Operating lease right-of-use asset | 440,739 | $ 177,629 | $ 337,932 | $ 130,989 | |
Operating lease liability - current portion | 235,055 | 229,605 | |||
Operating lease liability - non-current portion | 227,342 | $ 292,582 | |||
Total Operating lease liability | $ 462,397 | $ 177,629 | $ 337,932 | $ 138,266 | |
Weighted average remaining lease term (in years): Operating leases | 1 year 1 month 6 days | ||||
Weighted average discount rate: Operating leases | 7.00% | 7.00% | 7.00% | 7.00% |
LEASES - Schedule of maturities
LEASES - Schedule of maturities of undiscounted lease liabilities (Details) | Jun. 30, 2021USD ($) |
Leases [Abstract] | |
Year ending March 31, 2022 | $ 189,758 |
Year ending March 31, 2023 | 191,379 |
Year ending March 31, 2024 | 119,150 |
Total lease payments | 500,287 |
Less: Imputed interest | (37,890) |
Total lease obligations | $ 462,397 |
SUBSEQUENT EVENTS (Narrative) (
SUBSEQUENT EVENTS (Narrative) (Details) - USD ($) | Jul. 06, 2021 | Jun. 14, 2021 | Jul. 27, 2021 | Jun. 15, 2021 | Aug. 16, 2021 | Jun. 30, 2021 | Jun. 30, 2020 |
Subsequent Event [Line Items] | |||||||
Proceeds from warrants exercised | $ 152,777.35 | $ 500,000 | $ 652,777 | $ 258,899 | |||
Proceeds from issuance of common stock | $ 0 | $ 2,900,000 | |||||
Stock issued upon cashless exercise of options | 162,668 | ||||||
Number of stock options issued | 91,000 | ||||||
Subsequent Event [Member] | |||||||
Subsequent Event [Line Items] | |||||||
Number of common stock issued upon exercise of warrants | 4,761,688 | ||||||
Exercise price of warrants | $ 1.25 | ||||||
Proceeds from warrants exercised | $ 6,000,000 | ||||||
Stock issued upon cashless exercise of options | 63,692 | ||||||
Cashless exercise of options | 86,666 | ||||||
Number of stock options issued | 454,000 | ||||||
Stock options granted, exercise price | $ 1.75 | ||||||
Subsequent Event [Member] | Private Placement [Member] | |||||||
Subsequent Event [Line Items] | |||||||
Number of shares issued in subscription | 4,757,381 | ||||||
Per share price of subscription receipt | $ 1.05 | ||||||
Proceeds from issuance of private placement | $ 4,995,250.05 | ||||||
Term of warrant | 3 years | ||||||
Exercise price of warrants | $ 1.25 |