Summary of Significant Accounting Policies (Policies)

12 Months Ended

Mar. 31, 2020

Accounting Policies [Abstract]

Accounting Principles

Accounting Principles

The financial statements and accompanying notes are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”).

Use of Accounting Estimates

Use of Accounting Estimates

The preparation of financial statements in conformity with U.S. GAAP (“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.

Cash

Cash

Cash includes cash on hand, is deposited at one area bank and may exceed federally insured limits at times.

Revenue Recognition

Revenue Recognition

Subsequent to January 31, 2020, we ceased any revenue generating operations, accordingly, we did not recognize revenue from February 1, 2020 through March 31, 2020 and through the date of the filing of this Annual Report on Form 10-K. Prior to February 1, 2020, we maintained revenue generating operations, which included total revenues of approximately $2,698,000 for the ten month period ended January 31, 2020 and $3,347,000 for the year ended March 31, 2019 which are included in our income from discontinued operations.

We adopted the Accounting Standard Codification (“ASC”) 606, “Revenue from Contracts with Customers” as of April 1, 2018, using the modified retrospective method, and concluded that, consistent with prior reporting, we have two separate revenue streams: (i) product sales, and (ii) royalty and licensing revenues. Results for reporting periods after April 1, 2018 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported in accordance with legacy accounting guidance under ASC 605, “Revenue Recognition.” The adoption of ASC 606 had no impact upon adoption, to our net income for the years ended March 31, 2020 and 2019.

ASC 606 defines a five-step process to recognize revenues at the time and in an amount that reflects the consideration expected to be received for the performance obligations that have been provided. ASC 606 defines contracts as written, oral and through customary business practice. Under this definition, the Company considers contracts to be created at the time that an order to purchase product is agreed upon regardless of whether or not there is a written contract or when a contract is entered into for licensing and royalties.

Revenues from discontinued operations had two separate and distinct performance obligations offered to our customers: a product sales performance obligation and a licensing and royalty performance obligation. These performance obligations were related to separate revenue streams and at no point were they combined into a single transaction.

We generated the majority of our revenues, which are included in our income from discontinued operations, from product sales, and to a lesser extent from fees generated from licensing and royalty arrangements primarily with two customers. Our revenue related to product sales was recognized upon shipment, provided that a purchase order had been received or a contract had been executed, there were no uncertainties regarding customer acceptance, the sales price was fixed or determinable and collection was deemed reasonably assured. If uncertainties regarding customer acceptance existed, we recognized revenues when those uncertainties were resolved and title had been transferred to the customer. Amounts collected or billed prior to satisfying the above revenue recognition criteria were recorded as deferred revenue. Our revenue related to licensing and royalty arrangements was recognized in accordance with the terms of the arrangements which typically provide for quarterly payment of exclusivity fees and royalties earned on the sale of customer products on a quarterly basis.

Research, Development and Regulatory Expense

Research, Development and Regulatory Expense

Subsequent to January 31, 2020, we ceased any research, development and regulatory operations, accordingly, we did not recognize any research, development and regulatory expenses from February 1, 2020 through March 31, 2020 and through the date of the filing of this Annual Report on Form 10-K. Prior to February 1, 2020, we engaged in research, development and regulatory activities, which included total research, development and regulatory expenses of approximately $314,000 for the ten month period ended January 31, 2020 and $345,000 for the year ended March 31, 2019 which are included in our income from discontinued operations. Research, development and regulatory expenditures consisted primarily of salaries and related costs and were expensed as incurred.

Advertising Costs

Advertising Costs

Subsequent to January 31, 2020, we ceased any sales and marketing operations, including expenditures on advertising. Accordingly, we did not recognize any advertising expenses from February 1, 2020 through March 31, 2020 and through the date of the filing of this Annual Report on Form 10-K. Prior to February 1, 2020, we incurred total advertising expenses of approximately $1,000 for the ten month period ended January 31, 2020 and $1,000 for the year ended March 31, 2019 which are included in our income from discontinued operations.

Loss Per Share

Loss Per Share

Basic loss per common share is computed by dividing net loss by the weighted-average number of common shares outstanding during the period. Diluted 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 loss that would result from the assumed conversion of potential shares. Potentially dilutive shares, which were excluded from the diluted 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 0 shares and 7,563,556 shares for the fiscal years ended March 31, 2020 and 2019, respectively.

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, 2020 and 2019, our allowance for doubtful accounts was $0 and $5,000, respectively.

Inventories

Inventories

On January 31, 2020, we sold all of our inventory, having a net value of approximately $271,000, in connection with the Asset Sale and ceased all production operations. Accordingly, we maintained no inventory as of January 31, 2020 and March 31, 2020, respectively, and do not anticipate purchasing or maintaining any inventory subsequent to March 31, 2020.

Prior to January 31, 2020, we valued our inventory at the lower of our actual cost or the current estimated market value. We regularly reviewed 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 year ended March 31, 2019, we provided additional net amounts of approximately $11,000 for excess and obsolete inventory. During the fiscal year ended March 31, 2019, we disposed of certain obsolete inventory items in the aggregate amount of approximately $42,000. As of March 31, 2019, our allowance for obsolete and excess inventory was approximately $81,000.

Property and Equipment

Property and Equipment

On January 31, 2020, we sold all of our property and equipment, having a net value of approximately $1,749,000, in connection with the Asset Sale and ceased all operations. Accordingly, we maintained no property and equipment as of January 31, 2020 and March 31, 2020, respectively, and do not anticipate the need to purchase any property and equipment subsequent to March 31, 2020.

Prior to the January 31, 2020, property and equipment was stated at cost. Equipment was depreciated using the straight-line method over the estimated useful lives of the assets, ranging from three to seven years. Building improvements were 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 was depreciated using the straight-line method over 40 years. Land was not depreciated. Expenditures for repairs and maintenance were charged to expense as incurred. Equipment purchased pursuant to capital lease obligations, primarily computer equipment, was recorded at cost and depreciated on a straight-line basis over the life of the lease.

Deferred Financing Costs

Deferred Financing Costs

Prior to January 31, 2020, we capitalized certain costs related to the issuance of debt. These costs were amortized to interest expense on a straight-line basis over the term of the debt. During the ten month period ended January 31, 2020 and the fiscal year ended March 31, 2019, amortization expense related to deferred financing costs were $5,000 and $7,000, respectively, and included in income from discontinued operations.

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).

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:

·●	the stock option exercise price;
·●	the expected term of the option;
·●	the grant date price of our common stock, which is issuable upon exercise of the option;
·●	the expected volatility of our common stock;
·●	the expected dividends on our common stock (we do not anticipate paying dividends in the foreseeable future); and
·●	the risk free interest rate for the expected option term.

Expected Dividends. We have never declared or paid any cash dividends on any of our capital stock and do not expect to do so in the foreseeable future. Accordingly, we use an expected dividend yield of zero to calculate the grant-date fair value of a stock option.

Expected Volatility. The expected volatility is a measure of the amount by which our stock price is expected to fluctuate during the expected term of options granted. We determine the expected volatility solely based upon the historical volatility of our common stock over a period commensurate with the option’s expected term. We do not believe that the future volatility of our common stock over an option’s expected term is likely to differ significantly from the past.

Risk-Free Interest Rate. The risk-free interest rate is the implied yield available on U.S. Treasury zero-coupon issues with a remaining term equal to the option’s expected term on the grant date.

Expected Term. For option grants subsequent to the adoption of the fair value recognition provisions of the accounting standards, the expected life of stock options granted is based on the actual vesting date and the end of the contractual term.

Stock Option Exercise Price and Grant Date Price of Common Stock. The closing market price of our common stock on the date of grant.

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

Fair Value of Financial Instruments

We follow Accounting Standards Codification 820-10 (“ASC 820-10”), “Fair Value Measurements and Disclosures,” for fair value measurements. ASC 820-10 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The standard provides a consistent definition of fair value, which focuses on an exit price, which is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The standard also prioritizes, within the measurement of fair value, the use of market-based information over entity specific information and establishes a three-level hierarchy for fair value measurement based on the nature of inputs used in the valuation of an asset or liability as of the measurement date.

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 entity’s 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

Recent Accounting Pronouncements

We have evaluated all issued but not yet effective accounting pronouncements and determined that they are either immaterial or not relevant to us.