Organization and Summary of Significant Accounting Policies (Policies)
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12 Months Ended |
Mar. 31, 2017 |
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| Accounting Policies [Abstract] |
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| Description of Business |
| A. |
Description of business — The consolidated financial statements include the accounts of Castle Brands Inc. (“the Company”), its wholly-owned domestic subsidiaries, Castle Brands (USA) Corp. (“CB-USA”) and McLain & Kyne, Ltd. (“McLain & Kyne”), the Company’s wholly-owned foreign subsidiaries, Castle Brands Spirits Group Limited (“CB-IRL”) and Castle Brands Spirits Marketing and Sales Company Limited, and the Company’s 80.1% ownership interest in Gosling-Castle Partners Inc. (“GCP”), with adjustments for income or loss allocated based upon percentage of ownership. The accounts of the subsidiaries have been included as of the date of acquisition. All significant intercompany transactions and balances have been eliminated. |
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| Organization and Operations |
| B. |
Organization and operations — The Company is principally engaged in the importation, marketing and sale of premium and super premium rums, whiskey, liqueurs, vodka, tequila and related non-alcoholic beverage products in the United States, Canada, Europe and Asia. |
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| Brands - Rum and Ginger Beer |
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C. |
Brands — Rum and Ginger Beer — Goslings rums, a family of premium rums with a 200-year history, including the award-winning Goslings Black Seal rum, for which the Company is, through its export venture GCP, the exclusive marketer outside of Bermuda, and Goslings Stormy Ginger Beer, an essential non-alcoholic ingredient in Goslings trademarked Dark ‘n Stormy ® rum cocktail. |
Whiskey —Premium
small batch bourbons: Jefferson’s, Jefferson’s Reserve, Jefferson’s Chef’s Collaboration, Jefferson’s
Ocean Aged at Sea, Jefferson’s Wine Finish Collection, Jefferson’s Wood Experiments and Jefferson’s Presidential
Select, Jefferson’s Rye, an aged rye whiskey, and Jefferson’s The Manhattan: Barrel Finished Cocktail, a ready-to-drink
cocktail; the Clontarf Irish whiskeys, a family of premium Irish whiskeys, available in single malt and classic pure grain versions;
Knappogue Castle Whiskey, a vintage-dated premium single-malt Irish whiskey; Knappogue Castle 1951, a pure pot-still whiskey that
has been aged for 36 years, Knappogue Twin Wood, the first Sherry Finished Knappogue Castle Whiskey; and the Arran Scotch Whiskeys:
the single malts, including the 10 Years Old, the 18 Years Old and special finishes, as well as the official Robert Burns whiskeys.
Liqueur — Pallini
Limoncello, Raspicello and Peachcello premium Italian liqueurs, pursuant to an exclusive U.S. marketing arrangement; Brady’s
Irish Cream, a premium Irish cream liqueur; Celtic Honey, a premium Irish liqueur; and Gozio amaretto, a premium Italian liqueur,
pursuant to a U.S. distribution agreement.
Vodka — Boru
vodka, an ultra-pure, five-times distilled and specially filtered premium vodka. Boru is produced in Ireland.
Tequila — a
USDA certified organic, super-premium tequila, Tequila Tierras Autenticas de Jalisco or Tierras. The Company is the exclusive
U.S. importer and marketer of Tierras, which is available as blanco, reposado and añejo.
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| Cash and Cash Equivalents |
| D. |
Cash and cash equivalents — The Company considers all highly liquid instruments with a maturity at date of acquisition of three months or less to be cash equivalents. |
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| Equity Investments |
| E. |
Equity investments - Equity investments are carried at original cost adjusted for the Company’s proportionate share of the investees’ income, losses and distributions. The Company assesses the carrying value of its equity investments when an indicator of a loss in value is present and records a loss in value of the investment when the assessment indicates that an other-than-temporary decline in the investment exists. The Company classifies its equity earnings of equity investments as a component of net income or loss. |
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| Trade Accounts Receivable |
| F. |
Trade accounts receivable — The Company records trade accounts receivable at net realizable value. This value includes an appropriate allowance for estimated uncollectible accounts to reflect anticipated losses on the trade accounts receivable balances. The Company calculates this allowance based on its history of write-offs, level of past due accounts based on contractual terms of the receivables and its relationships with and economic status of its customers. For the years ended March 31, 2017, 2016 and 2015, the Company recorded an addition to allowances for doubtful accounts of $123,200, $61,000 and $236,000, respectively. |
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| Revenue Recognition |
| G. |
Revenue recognition — Revenue from product sales is recognized when the product is shipped to a customer (generally a distributor), title and risk of loss has passed to the customer in accordance with the terms of sale (FOB shipping point or FOB destination), and collection is reasonably assured. Revenue is not recognized on shipments to control states in the United States until such time as product is sold through to the retail channel. |
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| Inventories |
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H. |
Inventories — Inventories are comprised of distilled spirits, dry good raw materials (bottles, labels, corks and caps), packaging, finished goods, excise taxes and freight and are valued at the lower of cost or market, using the weighted average cost method. The Company assesses the valuation of its inventories and reduces the carrying value of those inventories that are obsolete or in excess of the Company’s forecasted usage to their estimated net realizable value. The Company estimates the net realizable value of such inventories based on analyses and assumptions including, but not limited to, historical usage, expected future demand and market requirements. A change to the carrying value of inventories is recorded in cost of goods sold. See Note 3. |
During the years ended March
31, 2017, 2016 and 2015, the Company recorded an addition to allowances for obsolete and slow moving inventory of $240,000, $200,000
and $281,000, respectively. The Company recorded these allowances and write-offs on both raw materials and finished goods, primarily
in connection with spoilage and slow moving inventory, label and packaging changes made to certain brands, as well as adjustments
to estimated freight costs and excise taxes and certain cost variances. The charges have been recorded as increases to Cost of
Sales in the respective years.
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| Revisions to March 31, 2016 Balance Sheet |
| I. |
Revisions to March 31, 2016 Balance Sheet — The Company has revised its March 31, 2016 consolidated balance sheet for an error in the historical carrying value of inventory. The Company determined that inventory at March 31, 2016 was overstated by $1,493,130, the cumulative result of changes in estimated freight costs and excise taxes and certain cost variances in prior years. The Company assessed the materiality of this error on previously issued consolidated financial statements and concluded that the error was immaterial to any one year. As a result, inventory was decreased by $1,493,130 with accumulated deficit increased by $1,493,130 at March 31, 2016 on the accompanying consolidated balance sheet. |
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| Equipment |
| J. |
Equipment — Equipment consists of office equipment, computers and software and furniture and fixtures. When assets are retired or otherwise disposed of, the cost and related depreciation is removed from the accounts, and any resulting gain or loss is recognized in the statement of operations. Equipment is depreciated using the straight-line method over the estimated useful lives of the assets ranging from three to five years. |
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| Goodwill and Other Intangible Assets |
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K. |
Goodwill and other intangible assets — Goodwill represents the excess of purchase price including related costs over the value assigned to the net tangible and identifiable intangible assets of businesses acquired. Goodwill and other identifiable intangible assets with indefinite lives are not amortized, but instead are tested for impairment annually, or more frequently if circumstances indicate a possible impairment may exist. Intangible assets with estimable useful lives are amortized over their respective estimated useful lives, generally on a straight-line basis, and are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. |
Under Financial Accounting
Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 350, “Intangibles - Goodwill and
Other”, impairment of goodwill must be tested at least annually by comparing the fair values of the applicable reporting
units with the carrying amount of their net assets, including goodwill. An entity may first assess qualitative factors to determine
whether it is necessary to perform the two-step goodwill impairment test. If determined to be necessary, the two-step impairment
test shall be used. The required two-step approach uses accounting judgments and estimates of future operating results. Changes
in estimates or the application of alternative assumptions could produce significantly different results. The estimates that most
significantly affect the fair value calculation are related to revenue growth, cost of sales, selling and marketing expenses and
discount rates. Impairment testing is done at the reporting level. If the carrying amount of the reporting unit’s net assets
exceeds the unit’s fair value, an impairment loss is recognized in an amount equal to the excess of the carrying amount of
goodwill over its implied fair value. The implied fair value of goodwill is determined in the same manner as the amount of goodwill
recognized in a business combination with the fair value of the reporting unit deemed to be the purchase price paid. Rights, trademarks,
trade names and formulations are indefinite lived intangible assets not subject to amortization and are tested for impairment at
least annually. The impairment test consists of a comparison of the fair value of the asset group allocated to each reporting unit
with its allocated carrying amount.
Under the goodwill qualitative
assessment at March 31, 2017 and 2016, various events and circumstances that would affect the estimated fair value of each reporting
unit were identified, including, but not limited to: prior years’ impairment testing results, budget to actual results,
Company-specific facts and circumstances, industry developments, and the economic environment. Based on this assessment, the Company
determined that no quantitative assessment was required.
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| Impairment and Disposal of Long-lived Assets |
| L. |
Impairment and disposal of long-lived assets — Under ASC 310, “Accounting for the Impairment or Disposal of Long-lived Assets”, the Company periodically reviews whether changes have occurred that would require revisions to the carrying amounts of its definite lived, long-lived assets. When the sum of the expected future cash flows is less than the carrying amount of the asset, an impairment loss is recognized based on the fair value of the asset. There were no impairments recorded during the years ended March 31, 2017, 2016 and 2015. |
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| Shipping and Handling |
| M. |
Shipping and handling — The Company reflects as inventory costs freight-in and related external handling charges relating to the purchase of raw materials and finished goods. These costs are charged to cost of sales at the time the underlying product is sold. The Company also incurs shipping costs in connection with its various marketing activities, including the shipment of point of sale materials to the Company’s regional sales managers and customers, and the costs of shipping product in connection with its various marketing programs and promotions. These shipping charges are included in selling expense and were $2,347,121, $2,635,430 and $2,574,471 for the years ended March 31, 2017, 2016 and 2015, respectively. |
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| Excise Taxes and Duty |
| N. |
Excise taxes and duty — Excise taxes and duty are computed at standard rates based on alcohol proof per gallon/liter and are paid after finished goods are imported into the United States or other relevant jurisdiction and then transferred out of “bond.” Excise taxes and duty are recorded to inventory as a component of the cost of the underlying finished goods. When the underlying products are sold “ex warehouse”, the sales price reflects the taxes paid and the inventoried excise taxes and duties are charged to cost of sales. |
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| Distributor Charges and Promotional Goods |
| O. |
Distributor charges and promotional goods — The Company incurs charges from its distributors for a variety of transactions and services rendered by the distributor, including product depletions, product samples for various promotional purposes, in-store tastings and training where legal, and local advertising where legal. Such charges are reflected as selling expense as incurred. Also, the Company has entered into arrangements with certain of its distributors whereby the purchase of a particular product or products by a distributor is accompanied by a percentage of the sale being composed of promotional goods or as a predetermined discount percentage of dollars off invoice. In such cases, the cost of the promotional goods is charged to cost of sales and dollars off invoice are a reduction to revenue. |
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| Foreign Currency |
| P. |
Foreign currency — The functional currency for the Company’s foreign operations is the Euro in Ireland and the British Pound in the United Kingdom. Under ASC 830, “Foreign Currency Matters”, the translation from the applicable foreign currencies to U.S. Dollars is performed for balance sheet accounts using exchange rates in effect at the balance sheet date and for revenue and expense accounts using a weighted average exchange rate during the period. The resulting translation adjustments are recorded as a component of other comprehensive income. Gains or losses resulting from foreign currency transactions are shown as a separate line item in the consolidated statements of operations. |
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| Fair Value of Financial Instruments |
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Q. |
Fair value of financial instruments — ASC 825, “Financial Instruments”, defines the fair value of a financial instrument as the amount at which the instrument could be exchanged in a current transaction between willing parties and requires disclosure of the fair value of certain financial instruments. The Company believes that there is no material difference between the fair-value and the reported amounts of financial instruments in the Company’s balance sheets due to the short term maturity of these instruments, or with respect to the Company’s debt, as compared to the current borrowing rates available to the Company. |
The Company’s investments
are reported at fair value in accordance with authoritative guidance, which accomplishes the following key objectives:
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Defines fair value as 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; |
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Establishes a three-level hierarchy (“valuation hierarchy”) for fair value measurements; |
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Requires consideration of the Company’s creditworthiness when valuing liabilities; and |
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Expands disclosures about instruments measured at fair value. |
The valuation hierarchy is
based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. A financial instrument’s
categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.
The three levels of the valuation hierarchy are as follows:
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Level 1 — inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. |
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Level 2 — inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are directly or indirectly observable for the asset or liability for substantially the full term of the financial instrument. |
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Level 3 — inputs to the valuation methodology are unobservable and significant to the fair value measurement. |
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| Income Taxes |
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R. |
Income taxes — Under ASC 740, “Income Taxes”, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. A valuation allowance is provided to the extent a deferred tax asset is not considered recoverable. |
The Company has adopted the
provisions of ASC 740 and as of March 31, 2017, the Company had reserves for uncertain tax positions (including related interest
and penalties) for various state and local tax issues of $20,666. The Company recognizes interest and penalties related to uncertain
tax positions in general and administrative expense.
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| Research and Development Costs |
| S. |
Research and development costs — The costs of research, development and product improvement are charged to expense as incurred and are included in selling expense. |
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| Advertising |
| T. |
Advertising — Advertising and marketing costs are expensed when the advertising first appears in its respective medium. Advertising expense, which is included in selling expense, was $4,486,796, $4,960,301 and $3,184,392 for the years ended March 31, 2017, 2016 and 2015, respectively. |
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| Use of Estimates |
| U. |
Use of estimates — The preparation of financial statements in conformity with U.S. Generally Accepted Accounting Principles (“GAAP”) 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 from those estimates. Estimates include the accounting for items such as evaluating annual impairment tests, derivative instruments and equity issuances, warrant valuation, stock-based compensation, allowances for doubtful accounts and inventory obsolescence, depreciation, amortization and expense accruals. |
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| Recent Accounting Pronouncements |
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V. |
Recent accounting pronouncements
— In May 2017, the FASB issued ASU 2017-09, “Compensation — Stock Compensation (Topic 718): Scope of Modification
Accounting.” ASU 2017-09 provides guidance about which changes to the terms or conditions of a share-based payment award
require an entity to apply modification accounting. This guidance is effective for the Company as of April 1, 2018, with early
adoption permitted. The Company is currently evaluating the new guidance to determine the impact the adoption of this guidance
will have on the Company’s results of operations, cash flows and financial condition.
In February 2017, the FASB issued ASU
2017-05, “Other Income — Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying
the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets.” ASU 2017-05 clarifies
the scope and accounting of a financial asset that meets the definition of an “in-substance nonfinancial asset” and
defines the term “in-substance nonfinancial asset.” ASU 2017-05 also adds guidance for partial sales of nonfinancial
assets. This guidance is effective for the Company as of April 1, 2018, with early adoption permitted. The Company is currently
evaluating the new guidance to determine the impact the adoption of this guidance will have on the Company’s results of operations,
cash flows and financial condition.
In January 2017, the FASB issued ASU
2017-04, “Intangibles — Goodwill and Other: Simplifying the Test for Goodwill Impairment (Topic 350).” ASU 2017-04
removes Step 2 from the goodwill impairment test. This guidance is effective for the Company as of April 1, 2020, with early adoption
permitted. The Company is currently evaluating the new guidance to determine the impact the adoption of this guidance will have
on the Company’s results of operations, cash flows and financial condition.
In January 2017, the FASB issued ASU
No. 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business.” This ASU, which must be
applied prospectively, provides a narrower framework to be used to determine if a set of assets and activities constitutes a business
than under current guidance and is generally expected to result in greater consistency in the application of ASC Topic 805, Business
Combinations. This guidance is effective for the Company as of April 1, 2018, with early adoption permitted. The Company is currently
evaluating the new guidance to determine the impact the adoption of this guidance will have on the Company’s results of operations,
cash flows and financial condition.
In November 2016, the FASB issued ASU
No. 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash, a consensus of the FASB’s Emerging Issues Task
Force (the “Task Force”).” The new standard requires that the statement of cash flows explain the change during
the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents.
Entities will also be required to reconcile such total to amounts on the balance sheet and disclose the nature of the restrictions.
This guidance is effective for the Company as of April 1, 2018, with early adoption permitted. The Company is currently evaluating
the new guidance to determine the impact the adoption of this guidance will have on the Company’s results of operations,
cash flows and financial condition.
In October 2016, the FASB issued ASU
2016-16, “Income Taxes: Intra-Entity Transfers of Assets Other than Inventory.” This ASU removes the prohibition against
the immediate recognition of the current and deferred income tax effects of intra-entity transfers of assets other than inventory.
This guidance is effective for the Company as of April 1, 2018, with early adoption permitted. Entities must apply a modified retrospective
basis through a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption. The Company is
currently evaluating the new guidance to determine the impact the adoption of this guidance will have on the Company’s results
of operations, cash flows and financial condition.
In August 2016, the FASB issued ASU
No. 2016-15, “Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments”, which provides guidance
on eight cash flow classification issues with the objective of reducing differences in practice. The new standard is effective
for the Company as of April 1, 2018, with early adoption permitted. Adoption is required to be on a retrospective basis, unless
impracticable for any of the amendments, in which case a prospective application is permitted. The Company is currently evaluating
the new guidance to determine the impact the adoption of this guidance will have on the Company’s results of operations,
cash flows and financial condition.
In March 2016, the FASB issued ASU 2016-09,
“Improvements to Employee Share-Based Payment Accounting”, which simplifies several aspects of the accounting for employee
share-based payment transactions, including the accounting for income taxes and statutory tax withholding requirements, as well
as classification in the statement of cash flows. The new standard is effective for the Company as of April 1, 2017. The Company
is currently evaluating the new guidance to determine the impact the adoption of this guidance will have on the Company’s
results of operations, cash flows and financial condition.
In February 2016, the FASB issued ASU
2016-02, “Leases.” The new standard establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset
and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either
finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard
is effective for the Company as of April 1, 2019. A modified retrospective transition approach is required for lessees for capital
and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial
statements, with certain practical expedients available. The Company is currently evaluating the new guidance to determine the
impact the adoption of this guidance will have on the Company’s results of operations, cash flows and financial condition. |
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In January 2016, the FASB issued ASU
2016-01, “Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial
Liabilities”, which amends the guidance in U.S. GAAP on the classification and measurement of financial instruments. Changes
to the current guidance primarily affect the accounting for equity investments, financial liabilities under the fair value option,
and the presentation and disclosure requirements for financial instruments. In addition, the ASU clarifies guidance related to
the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale
debt securities. The new standard is effective for the Company as of April 1, 2018, and upon adoption, an entity should apply the
amendments by means of a cumulative-effect adjustment to the balance sheet at the beginning of the first reporting period in which
the guidance is effective. Early adoption is not permitted except for the provision to record fair value changes for financial
liabilities under the fair value option resulting from instrument-specific credit risk in other comprehensive income. The Company
is currently evaluating the new guidance to determine the impact the adoption of this guidance will have on the Company’s
results of operations, cash flows and financial condition.
In July 2015, the FASB issued ASU 2015-11,
“Inventory (Topic 330): Simplifying the Measurement of Inventory”, which changes the measurement principle for inventory
from the lower of cost or market to the lower of cost and net realizable value. Net realizable value is defined as estimated selling
prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The new
guidance must be applied on a prospective basis and is effective for the Company as of April 1, 2017, with early adoption permitted.
The Company determined that the adoption of this guidance did not have a material effect on the Company’s results of operations,
cash flows and financial condition.
In May 2014, the FASB issued ASU No.
2014-09, “Revenue from Contracts with Customers”, to clarify the principles for recognizing revenue. This guidance
includes the required steps to achieve the core principle that an entity should recognize revenue to depict the transfer of promised
goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange
for those goods or services. This guidance is effective for the Company as of April 1, 2018. The Company is currently evaluating
the new guidance to determine the impact the adoption of this guidance will have on the Company’s results of operations,
cash flows and financial condition.
The Company does not believe that any
other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the accompanying
condensed consolidated financial statements. |
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| Accounting Standards Adopted |
| W. |
Accounting standards adopted
— In January 2017, the FASB issued ASU 2017-03, “Accounting Changes and Error Corrections (Topic 250) and Investments
- Equity Method and Joint Ventures”. The amendments in ASU 2017-03 provide additional detail surrounding disclosures required
related to adoption of new pronouncements. The ASU is effective for the periods of each related pronouncement. The Company adopted
this guidance beginning with its Annual Report on Form 10-K for the fiscal year ended March 31, 2017. The Company determined that
the adoption of this guidance did not have a material effect on the Company’s results of operations, cash flows and financial
condition.
In November 2015, the FASB issued ASU
No. 2015-17, “Balance Sheet Classification of Deferred Taxes.” ASU 2015-17 simplifies the presentation of deferred
taxes by requiring deferred tax assets and liabilities be classified as noncurrent on the balance sheet. ASU 2015-17 is effective
for public companies for annual reporting periods beginning after December 15, 2016, and interim periods within those fiscal years.
The guidance may be adopted prospectively or retrospectively and early adoption is permitted. The Company elected to adopt ASU
2015-17 early, and applied it retrospectively as allowed by the standard. The adoption of ASU 2015-17 did not have a material effect
on the Company’s results of operations, cash flows and financial condition.
In September 2015, the FASB issued ASU
2015-16, “Business Combination (Topic 805): Simplifying the Accounting for Measurement Period Adjustments”, which requires
adjustments to provisional amounts initially recorded in a business combination that are identified during the measurement period
to be recognized in the reporting period in which the adjustment amounts are determined. This includes any effect on earnings of
changes in depreciation, amortization, or other income effects as a result of the change to the provisional amounts, calculated
as if the accounting had been completed at the acquisition date. ASU 2015-16 also requires the disclosure of the nature and amount
of measurement-period adjustments recognized in the current period, including separately the amounts in current-period income statement
line items that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized
as of the acquisition date. The guidance became effective for the Company beginning April 1, 2016. The Company will apply the guidance
prospectively for all future business combinations.
In June, 2015, the FASB issued ASU No.
2015-15, “Interest - Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs
Associated with Line-of-Credit Arrangements - Amendments to SEC Paragraphs Pursuant to Staff Announcement” at June 18, 2015
EITF Meeting. This update addresses presentation and subsequent measurement of debt issuance costs related to line of credit arrangements.
Commitment fees paid to the lender represent the benefit of being able to access capital over the contractual term, and therefore,
are not in the scope of the new guidance and it is appropriate to present such fees as an asset on the balance sheet, regardless
of whether or not there are outstanding borrowings under the revolver. The Company adopted this guidance beginning with its Annual
Report on Form 10-K for the fiscal year ended March 31, 2016. The Company determined that the adoption of this guidance did not
have a material effect on the Company’s results of operations, cash flows and financial condition.
In April 2015, the FASB issued ASU 2015-03,
“Simplifying the Presentation of Debt Issuance Costs” (“ASU 2015-03”), which requires that debt issuance
costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of
that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected.
Upon adoption, the Company applied the new guidance on a retrospective basis and adjusted the balance sheet of each individual
period presented to reflect the period-specific effects of applying the new guidance, reclassifying $100,049 and $170,895 in debt
issuance costs from Other Assets to Credit Facility, net at March 31, 2017 and 2016, respectively, on the accompanying Consolidated
Balance Sheet.
In August 2014, the FASB issued ASU
No. 2014-15, “Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”, which requires
management to assess a company’s ability to continue as a going concern and to provide related footnote disclosures in certain
circumstances. Before this new standard, there was minimal guidance in U.S. GAAP specific to going concern. Under the new standard,
disclosures are required when conditions give rise to substantial doubt about a company’s ability to continue as a going
concern within one year from the financial statement issuance date. This guidance was effective for the Company beginning with
its Annual Report on Form 10-K for the fiscal year ended March 31, 2017. The Company adopted this guidance beginning with its Annual
Report on Form 10-K for the fiscal year ended March 31, 2017. The Company determined that the adoption of this guidance did not
have a material effect on the Company’s results of operations, cash flows and financial condition. |
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