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Note 1 - Basis of Presentation
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9 Months Ended |
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Jun. 30, 2013
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| Organization, Consolidation, Basis of Presentation, Business Description and Accounting Policies [Text Block] | |
| Organization, Consolidation, Basis of Presentation, Business Description and Accounting Policies [Text Block] |
NOTE
1 - Basis of
Presentation
The
accompanying condensed consolidated financial statements are
unaudited but in the opinion of management contain all the
adjustments (consisting of those of a normal recurring
nature) considered necessary to present fairly the financial
position and the results of operations and cash flow for the
periods presented in conformity with generally accepted
accounting principles for interim financial information and
the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of
the information and footnotes required by United States
generally accepted accounting principles for complete
financial statements.
Operating
results for the three and nine months ended June 30, 2013,
are not necessarily indicative of the results that may be
expected for the fiscal year ending September 30, 2013. For
further information, refer to the consolidated financial
statements and footnotes thereto included in the Company's
annual report on Form 10-K for the fiscal year ended
September 30, 2012.
Principles
of Consolidation and Nature of Operations
The
consolidated financial statements include the accounts of the
Company and its wholly owned subsidiary, The Female Health
Company-UK, and its wholly owned subsidiaries, The Female
Health Company-UK, plc and The Female Health Company (M)
SDN.BHD. All significant intercompany transactions and
accounts have been eliminated in consolidation. The Female
Health Company ("FHC" or the "Company") is currently engaged
in the marketing, manufacture and distribution of a consumer
health care product, the FC2 Female Condom
("FC2"). The Female Health Company-UK, is the
holding company of The Female Health Company-UK, plc, which
is located in a 6,400 sq. ft. leased office facility located
in London, England. The Female Health Company (M) SDN.BHD
leases a 16,000 sq. ft. manufacturing facility located in
Selangor D.E., Malaysia.
FC2
is currently sold or available in either or both commercial
(private sector) and public health sector markets in 143
countries. The product is marketed directly to consumers in
16 countries by various country-specific commercial
partners.
The
Company also derives revenue from licensing its intellectual
property under an agreement with its exclusive distributor in
India, Hindustan Lifecare Limited
(“HLL”). HLL is authorized to
manufacture FC2 at HLL's facility in Kochi, India, for sale
in India, and the Company receives a royalty based on the
number of units sold by HLL in India. Such revenue
appears as royalty income on the Unaudited Condensed
Consolidated Statements of Income for the three and nine
months ended June 30, 2013 and 2012, and is recognized in the
period in which the sale is made by HLL.
The
Company's standard credit terms vary from 30 to 90 days,
depending on the class of trade and customary terms within a
territory, so accounts receivable is affected by the mix of
purchasers within the quarter. As is typical in
the Company's business, extended credit terms may
occasionally be offered as a sales promotion. For
the past twelve months, the Company's average days’
sales outstanding has averaged approximately 58 days. Over
the past five years, the Company’s bad debt expense has
been less than 0.05% of product sales. The balance
in the allowance for doubtful accounts was $68,694 at June
30, 2013 and $41,625 at September 30, 2012.
Restricted
cash
Restricted
cash relates to security provided to one of the
Company’s U.K. banks for performance bonds issued in
favor of customers. Such security has been extended
infrequently and only on occasions where it has been a
contract term expressly stipulated as an absolute requirement
by the funds’ provider. The expiration of the bond is
defined by the completion of the event such as, but not
limited to, delivery of goods or at a period of time after
product has been distributed.
Foreign
Currency and Change in Functional Currency
The
Company recognized a foreign currency transaction loss of
$33,280 and $100,173 for the three and nine months ended June
30, 2013, respectively, compared to a gain of $15,235 and
loss of $69,294 for the three and nine months ended June 30,
2012, respectively. The consistent use of the U.S. dollar as
functional currency across the Company reduces its foreign
currency risk and stabilizes its operating results. As a
result of the U.S. dollar being the functional currency of
the Company and all of its subsidiaries, comprehensive income
is equivalent to the reported net income.
Reclassifications
Certain
items in the September 30, 2012 consolidated financial
statements have been reclassified to conform to the June 30,
2013 presentation.
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