Significant Accounting Policies
|3 Months Ended|
Jun. 30, 2011
|Significant Accounting Policies||
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 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 and Cash Equivalents
For purposes of the statement of cash flows, cash and cash equivalents include cash and all debt securities with an original maturity of 90 days or less. As of June 30, 2011 and 2010, book balances totaled $996,790 and $1,957,370, respectively. These deposits were insured entirely by insurance accounts held by the Companys banks guaranteed by the Province of Alberta, Canada.
Receivables from the sale of goods and services are stated at net realizable value. This value includes an appropriate allowance for estimated uncollectible accounts. The allowance is calculated based on past collectability and customer relationships. The Company recorded an allowance for doubtful accounts of $19,405 and $19,524 as of June 30, 2011 and March 31, 2011, respectively.
In accordance with ASC 330, the Companys inventory is valued at the lower of cost (the purchase price, including additional fees) or market based on using the entire value of inventory. Inventories are determined based on the first-in first-out (FIFO) basis. As of June 30, 2011 and March 31, 2011 inventory consisted of the following:
The Company records sales when a firm sales agreement is in place, delivery has occurred or services have been rendered, and collectability of the fixed or determinable sales price is reasonably assured. If customer acceptance of products is not assured, the Company records sales only upon formal customer acceptance.
The Company is subject to Canadian income taxes on its world-wide income with a credit provided for foreign taxes paid. Any income earned in the United States is subject to applicable state and federal tax rates in the United States. The combined effective rates of income tax expense (benefit) are 28% and 22% for the three months ended June 30, 2011 and 2010, respectively.
Basic Earnings Per Share
The computation of basic earnings per share of common stock is based on the weighted average number of shares outstanding during the periods presented. The computation of fully diluted earnings per share includes common stock equivalents outstanding at the balance sheet date. The Company had 255,250 and -0- stock options included in the fully diluted earnings per share as of June 30, 2011 and 2010, respectively. The Company uses the treasury stock method to calculate the dilutive effects of stock options and warrants.
Foreign Currency and Comprehensive Income
The Companys functional currency is the Canadian dollar (CAD). The financial statements of the Company were translated to United States Dollar (USD) using year-end exchange rates for the balance sheet, and average exchange rates for the statements of operations. Equity transactions were translated using historical rates. The period-end exchange rates of 1.02379 and 1.0301 were used to convert the Companys June 30, 2011 and March 31, 2011 balance sheets, respectively, and the statements of operations used weighted average rates of 1.03290 and 1.0272 for the three months ended June 30, 2011 and 2010, respectively. All amounts in the financial statements and footnotes are presumed to be stated in USD, unless otherwise identified. Foreign currency translation gains or losses as a result of fluctuations in the exchange rates are reflected in the Statement of Operations and Other Comprehensive Income.
Recent Accounting Pronouncements
The Company has evaluated recent accounting pronouncements and their adoption has not had or is not expected to have a material impact on the Companys financial position, or statements.
The entire disclosure for the basis of presentation, or accounting, and significant accounting policies.