XML 42 R18.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Significant Accounting Policies (Policies)
9 Months Ended
Dec. 31, 2019
Accounting Policies [Abstract]  
Consolidation, Policy [Policy Text Block]
PRINCIPLES OF CONSOLIDATION
 
The condensed consolidated financial statements include the accounts of ADM Tronics Unlimited, Inc. and its wholly owned subsidiary, Sonotron Medical Systems, Inc. All significant intercompany balances and transactions have been eliminated in consolidation.
Use of Estimates, Policy [Policy Text Block]
USE OF ESTIMATES
 
These unaudited condensed consolidated financial statements have been prepared in accordance with US GAAP and, accordingly, requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. Significant estimates made by management include expected economic life and value of our medical devices, reserves, deferred tax assets, valuation allowance, impairment of long lived assets, fair value of equity instruments issued to consultants for services and fair value of equity instruments issued to others, option and warrant expenses related to compensation to employees and directors, consultants and investment banks, allowance for doubtful accounts, and warranty reserves. Actual results could differ from those estimates.  
Concentration Risk, Credit Risk, Policy [Policy Text Block]
CREDIT RISK
 
Financial instruments that potentially subject us to significant concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable.
Cash and Cash Equivalents, Policy [Policy Text Block]
CASH AND CASH EQUIVALENTS
 
For financial statement purposes, the Company considers as cash equivalents all highly liquid investments with an original maturity of
three
months or less at inception. The Company deposits cash and cash equivalents with high credit quality financial institutions and believes that any amounts in excess of insurance limitations to be at minimal risk. Cash and cash equivalents held at these accounts are current insured by the Federal Deposit Insurance Corporation (“FDIC”) up to a maximum of
$250,000.
At
December 31, 2019,
approximately
$1,288,000
exceeded the FDIC limit.
Revenue [Policy Text Block]
REVENUE RECOGNITION 
 
ADM extends credit terms to our customers based on their credit worthiness. As such, we record accounts receivable at the time of shipment, when our right to the consideration becomes unconditional. Accounts receivable from our customers are typically due within
30
days of invoicing. An allowance for doubtful accounts is provided based on a periodic analysis of individual account balances, including an evaluation of days outstanding, payment history, recent payment trends, and our assessment of our customers' creditworthiness.
 
CHEMICAL PRODUCTS:
 
Revenues are recognized upon shipment to a customer because that is when the customer obtains control of the promised good.
  
ELECTRONICS: 
 
We recognize revenue from the sale of our electronic products upon shipment to a customer because that is when the customer obtains control of the promised good. We offer a limited 
90
-day warranty on our electronics products. We have 
no
 other post shipment obligations. Based on prior experience, 
no
 amounts have been accrued for potential warranty costs and actual costs were less than 
$2,000
,
 for the
three
and
nine
months ended
December 31, 2019
and
2018.
 For contract manufacturing, revenues are recognized after shipment of the completed products. 
 
Amounts received from customers in advance of our satisfaction of applicable performance obligations are recorded as customer deposits. Such amounts are recognized as revenues when the related performance obligations are satisfied. Customer deposits of approximately
$310,000
were recognized as revenues during the
nine
months ended
December 31, 2019.
 
ENGINEERING SERVICES: 
 
We provide certain engineering services, including research, development, quality control, and quality assurance services along with regulatory compliance services. We recognize revenue from engineering services as the services are provided.  
Earnings Per Share, Policy [Policy Text Block]
EARNINGS PER SHARE
 
Basic earnings per share is calculated based on the weighted average number of common shares outstanding during the periods. Diluted earnings per share is computed similar to basic earnings per share, except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential shares had been issued and if the additional shares were dilutive.
  
Per share basic and diluted earnings amounted to 
$0.00
 for the 
three
and
nine
months ended 
December 31, 2019
and
December 31, 2018, 
respectively.
Lessee, Leases [Policy Text Block]
LEASES
 
The Company determines if a contractual arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, current operating lease liabilities, and noncurrent operating lease liabilities on the Company’s Condensed Consolidated Balance Sheets. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date of the lease based on the present value of lease payments over the lease term. The lease payments included in the present value are fixed lease payments. As most of the Company’s leases do
not
provide an implicit rate, the Company estimates its collateralized incremental borrowing rate, based on information available at the commencement date, in determining the present value of lease payments. The operating lease ROU assets include any payments made before the commencement date and exclude lease incentives. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Company defines a short-term lease as a lease that, at the commencement date, has a lease term of
12
months or less and does
not
contain an option to purchase the underlying asset that the lease is reasonably certain to exercise, and recognizes short-term lease payments as an expense on a straight-line basis over the lease term. Lease and nonlease components are generally accounted for separately.
New Accounting Pronouncements, Policy [Policy Text Block]
RECENT ACCOUNTING PRONOUNCEMENTS
 
Lease Accounting
. In
February 2016,
the Financial Accounting Standards Board (“FASB”) issued authoritative guidance which changes financial reporting as it relates to leasing transactions. Under the new guidance, lessees are required to recognize a lease liability, measured on a discounted basis; and a right-of-use asset, for the lease term. The Company adopted this guidance as of
April 1, 2019,
using the transition method that allowed it to initially apply the guidance as of the adoption date. The Company elected the package of practical expedients available under the new standard, which allowed the Company to forgo a reassessment of (
1
) whether any expired or existing contracts are or contain leases, (
2
) the lease classification for any expired or existing leases, and (
3
) the initial direct costs for any existing leases. The Company made a policy election to recognize short-term lease payments as an expense on a straight-line basis over the lease term. The adoption of this guidance had a material impact on the Company’s Condensed Consolidated Balance Sheet beginning
April 1, 2019.
Prior periods were
not
restated. See Note
6
for further discussion of leases.
 
In
June 2016,
the FASB issued ASU-
2016
-
13
“Financial Instruments – Credit Losses”. This guidance affects organizations that hold financial assets and net investments in leases that are
not
accounted for at fair value with changes in fair value reported in net income. The guidance requires organizations to measure all expected credit losses for financial instruments at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. It is effective for fiscal years beginning after
December 15, 2019.
The Company is evaluating the potential impact on the Company’s consolidated financial statements.
 
Management does
not
believe that any other recently issued, but
not
yet effective accounting pronouncement, if adopted, would have a material effect on the accompanying consolidated financial statements.