Note 3 - Revenue Recognition

9 Months Ended

Nov. 30, 2024

Notes to Financial Statements

Revenue from Contract with Customer [Text Block]

3. REVENUE RECOGNITION

Sales returns and allowances accrual activity is shown below for the three and nine months ended November 30, 2024, and November 30, 2023, respectively:

	Fiscal quarters ended					Nine fiscal months ended
	November 30, 2024			November 30, 2023		November 30, 2024			November 30, 2023
Beginning Balance	$	363,000		$	471,000	$	471,000		$	471,000
Accrued Allowances		(33,000	)		-		(141,000	)		-
Credits Issued		-			-		-			-
Ending Balance	$	330,000		$	471,000	$	330,000		$	471,000

As mentioned in Note 2 above, one of our distributor agreements has a termination clause that would allow for a full credit for all inventory upon 60 days’ notice of terminating the agreement. As of November 30, 2024, and February 29, 2024, the inventory balance at that distributor was believed to be $1,281,000 and $1,454,000, respectively. Based upon sales levels to and by the distributor during the period, inventory levels at the distributors, current and projected market conditions, and historical experience under the programs, we believe it is highly unlikely that the distributor would exercise termination. Should termination occur, we believe the products could be sold to other distributors or held in inventory for future sale.

The Company warrants that its products, when delivered, will be free from defects in material workmanship under normal use and service. The obligations are limited to replacing, repairing, or reimbursing for, at the option of the Company, any products that are returned within one year after the date of shipment. The Company does not reserve for potential warranty costs based on historical experience and the nature of its cost tracking system.