Note 5 - Revenue Recognition |
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Feb. 28, 2026 | ||||||||||||||||||||||||||||||||||||||||||||||
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| Revenue from Contract with Customer [Text Block] |
5. REVENUE RECOGNITION
As of February 28, 2026, and February 28, 2025, sales returns and allowances accrual activity is shown below and included in the accrued expense and other current liabilities section of the balance sheet:
As discussed 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 February 28, 2026, and February 28, 2025, the inventory balance at that distributor was $1,014,000 and $1,199,000, respectively. Based upon sales levels to and by the distributor during the period, inventory levels at the distributor, current and projected market conditions, and historical experience under the program, we believe it is highly unlikely that the distributor would exercise termination. Should it occur, we believe the products could be sold to other distributors or held in inventory for future sale. The Company reduced the sales returns allowance by $45,000 based on the decrease in inventory balances at the distributor during the fiscal year ended February 28, 2026.
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.
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