Universal Security Instruments(UUU) - 2020 Q3 - Quarterly Report

Financial Performance - Net sales for the three months ended December 31, 2019 were $3,223,678, a decrease of $1,268,184 (28.2%) compared to the same period in 2018 [60]. - Gross profit margin for the three months ended December 31, 2019 was 23.9%, slightly up from 23.6% in the prior year [61]. - Selling, general and administrative expenses for the three months ended December 31, 2019 were $1,083,913, representing 33.6% of net sales, an increase from 24.9% in the prior year [62]. - The net loss for the quarter ended December 31, 2019 was $1,011,833, an increase of $494,840 (95.7%) compared to the same quarter in 2018 [65]. - Net sales for the nine months ended December 31, 2019 were $11,189,238, a decrease of $1,874,872 (14.3%) compared to the prior period [66]. - Gross profit margin for the nine months ended December 31, 2019 was 27.8%, down from 28.8% in the same period of the prior year [67]. - Selling, general and administrative expenses for the nine months ended December 31, 2019 were $3,455,661, representing 30.9% of sales, up from 26.2% in the prior year [68]. - The net loss for the nine months ended December 31, 2019 was $2,321,601, an increase of $1,244,451 (115.5%) compared to the same period in 2018 [71]. - The Joint Venture reported net sales of $1,680,617 for the three months ended December 31, 2019, a decrease of 47.8% compared to the prior year [72]. Lease Accounting - The Company adopted the new lease accounting standard (ASC 842) on April 1, 2019, with no net cumulative effect adjustment to the accumulated deficit [84]. - Right-of-use assets and lease liabilities related to the Company's operating leases amount to $475,538 at the date of adoption [87]. - The Company elected to account for lease and non-lease components as a single lease component under ASC 842 [85]. - Lease expense for operating leases is recognized on a straight-line basis over the lease term, including options to extend or terminate [86]. - The Company uses its incremental borrowing rate to determine the present value of lease payments when implicit rates are not provided [87]. - All existing lease agreements classified as operating leases under ASC 840 remain classified as operating leases under ASC 842 [86]. - The Company's leases include fixed lease payments and may also include variable payments based on a rate or index [85]. - None of the Company's lease agreements contain residual value guarantees or material restrictive covenants [86]. - The Company has options to renew certain leases at its sole discretion [85]. - Lease payments are included in the measurement of the Company's lease liabilities to the extent they are fixed or variable amounts based on the lease contract [85].