Universal Security Instruments(UUU) - 2025 Q4 - Annual Report

PART I - BUSINESS OVERVIEW AND RISK FACTORS Item 1. Business The company designs and markets safety products, recently sold its core alarm business, and saw a 20.7% sales increase in FY2025, returning to profitability - Company designs and markets popularly priced safety products, primarily smoke and carbon monoxide alarms, for retail and electrical distribution[15] - On May 22, 2025, the company completed the sale of its smoke and carbon monoxide alarm business and non-tangible assets (including trade names) to Feit Electric Company, Inc[16] - The company intends to continue importing and marketing product lines other than smoke and carbon monoxide alarms and is exploring other business opportunities[16] Financial Performance (FY2025 vs FY2024) | Metric | FY2025 | FY2024 | Change | | :---------------- | :----------- | :----------- | :----------- | | Sales | $23,563,554 | $19,517,673 | +20.7% | | Net Income (Loss) | $500,684 | $(695,790) | +$1,196,474 | General Business Overview The company designs and markets safety products and recently sold its core smoke and carbon monoxide alarm business - Universal Safety Products, Inc (formerly Universal Security Instruments, Inc) designs and markets popularly priced safety products, primarily smoke alarms, carbon monoxide alarms, and related products[15] - On May 22, 2025, the company closed on the asset sale of its smoke and carbon monoxide alarm business and non-tangible assets to Feit Electric Company, Inc[16] - The company intends to continue importing and marketing its product lines other than smoke and carbon monoxide alarms and is exploring other business opportunities[16] Safety Products The company's product lines included various battery and wired smoke/CO alarms, door chimes, and ventilation products - The company marketed residential smoke and carbon monoxide alarms under 'UNIVERSAL' and 'USI Electric' trade names, manufactured by Eyston Company Limited in China[19] - Product lines included replaceable battery, ten-year sealed battery, or 120-volt units with battery backup, as well as door chimes, ventilation products, and ground fault circuit interrupters (GFCI's)[20] Import Matters The company imports all products from China and faces uncertainty from significant tariff increases - The company imports all its products, with substantially all safety products sourced from the People's Republic of China[22] - Tariffs on certain products increased from 25% to 55% subsequent to March 31, 2025, raising uncertainty about competitive pricing and import sustainability[22] Sales and Marketing; Customers Products are sold through retail and electrical distribution channels, with a significant decrease in order backlog in FY2025 - Products are sold to retailers (including wholesale distributors, chain, discount, television retailers, home center stores, catalog/mail order companies) and the electrical distribution trade (electrical/lighting distributors and manufactured housing companies)[24] - Sales are primarily made through approximately 40 independent sales organizations, representing about 100 sales representatives[25] - The decrease in backlog is primarily due to pending orders to a large retailer in the prior fiscal year that were delayed due to a backlog in critical components and shipping delays[27] Order Backlog (March 31) | Year | Backlog Amount | | :--- | :------------- | | 2025 | $2,142,000 | | 2024 | $5,314,000 | Suppliers The company is heavily reliant on its principal supplier, Eyston Company Limited, based in China - Eyston Company Limited in the People's Republic of China is the principal supplier, accounting for approximately 96.3% of purchases in FY2025 and 84.3% in FY2024[28] Competition The company competes with major players like First Alert and Walter Kidde based on product features and pricing - In the smoke and carbon monoxide alarm market, the company competes with First Alert and Walter Kidde Portable Equipment, Inc, primarily on styling, features, and pricing[29] - Success depends on the ability to improve and update products in a timely manner and adapt to new technological advances[30] Employees As of March 31, 2025, the company employed a small team of eleven individuals - As of March 31, 2025, the company had eleven employees: seven in administration and sales, and four in product development[31] Future Business Following its asset sale, the company will continue marketing other product lines while exploring new business opportunities - Following the May 22, 2025, asset sale to Feit, the company intends to continue importing and marketing product lines other than smoke alarms and carbon monoxide alarms[32] - The company is exploring other business opportunities to drive long-term value for shareholders[32] Item 1A. Risk Factors As a smaller reporting company, a detailed discussion of risk factors is not required - This section is not applicable because the registrant is a smaller reporting company[33] Item 1B. Unresolved Staff Comments This item is not applicable to the company - Not applicable[34] Item 1C. Cybersecurity The company employs a comprehensive cybersecurity strategy and has reported no material incidents Risk Management and Strategy The cybersecurity program utilizes industry best practices and third-party assessments to protect information systems - The cybersecurity program is designed to detect threats, protect information systems, and ensure confidentiality, integrity, and availability of systems and information[36] - The program includes adopting information security protocols, standards, guidelines consistent with industry best practices, and engaging third-party service providers for security assessments[36] - The company has not experienced any cybersecurity incidents that have materially affected its business strategy, results of operations, or financial condition[39] Governance The Board of Directors oversees cybersecurity risk management, with executive officers handling day-to-day responsibilities - The Board of Directors provides informed oversight of the company's risk management process, including cybersecurity threats, with executive officers managing day-to-day risks[40] Item 2. Properties The company maintains a leased office and warehouse in Maryland, believing its current facilities are adequate - Operating lease for a 15,000 sq ft office and warehouse in Baltimore County, Maryland, extended to expire in October 2025 (monthly rental ~$15,000)[41] - Operating lease for 3,400 sq ft office space in Naperville, Illinois, expired on June 30, 2025, and was not renewed (monthly rental ~$4,900)[42] - The company believes its current facilities are suitable and adequate[43] Item 3. Legal Proceedings Routine litigation matters are not expected to have a material adverse effect on the company's financial condition - The company is involved in various claims and routine litigation matters from time to time[44] - Management believes the outcomes of such matters are not anticipated to have a material adverse effect on the company's consolidated financial position, results of operations, or cash flows[44] Item 4. Mine Safety Disclosures This item is not applicable to the company - Not applicable[45] PART II - FINANCIAL INFORMATION Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The company's common stock (UUU) trades on the NYSE American, with 121 record holders as of July 2025, and no cash dividends have been paid - The company's common stock (UUU) trades on the NYSE American LLC exchange[47] - As of July 18, 2025, there were 121 record holders of common stock, with a closing price of $3.29[47] - The company has not paid any cash dividends and intends to retain all cash flow for future operations[47] - No recent sales of unregistered securities or purchases of equity securities by the issuer or affiliated purchasers[49][50] Item 6. [Reserved] This item is reserved and contains no information - This item is reserved[51] Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Sales and net income increased in FY2025, though operations face tariff impacts and identified material weaknesses in internal controls General Overview The company's business depends on the US housing market and is impacted by tariffs on Chinese imports - The company's business involves marketing and distributing safety and security products, primarily manufactured in the People's Republic of China[52] - Overall sales are primarily dependent upon the strength of the U.S housing market[53] - Tariffs on certain imported products increased to 55% after March 31, 2025, raising uncertainty about competitive pricing and sales sustainability[54] - Following the asset sale to Feit, the company is exploring strategic alternatives and business opportunities, including an investment MOU with Ault & Company, Inc (A&C), which led to the appointment of new directors[55] Comparison of Results of Operations for the Years Ended March 31, 2025 and 2024 Net sales grew 20.7% in FY2025, driving a return to profitability with a net income of $500,684 - The increase in net income for FY2025 is primarily attributed to an increase in sales to retail customers and an income tax benefit from the asset sale[56][63] - Selling, general and administrative expenses increased in dollar amount due to increased freight costs, insurance, and professional fees, but decreased as a percentage of net sales[58] Key Financial Results (FY2025 vs FY2024) | Metric | FY2025 | FY2024 | Change (YoY) | | :-------------------------------- | :----------- | :----------- | :----------- | | Net Sales | $23,563,554 | $19,517,673 | +20.7% | | Gross Profit Percentage | 29.0% | 28.7% | +0.3 pp | | Selling, General and Administrative Expense | $6,004,507 | $5,735,584 | +$268,923 | | SG&A as % of Net Sales | 25.5% | 29.4% | -3.9 pp | | Engineering and Product Development Expense | $424,849 | $427,234 | -$2,385 | | Interest Expense | $262,365 | $155,731 | +$106,634 | | Net Income (Loss) | $500,684 | $(695,790) | +$1,196,474 | Financial Condition, Liquidity and Capital Resources Working capital increased, while cash from operations decreased, with liquidity supported by a factoring agreement - Short-term borrowings are financed through a Factoring Agreement with Merchant Factors Corporation, secured by all company assets[71] - Unused availability of the factoring facility was approximately $348,000 on March 31, 2025, down from $610,000 on March 31, 2024[71] Working Capital (March 31) | Year | Amount | | :--- | :----------- | | 2025 | $5,163,711 | | 2024 | $4,485,400 | Cash Flow Summary | Activity | FY2025 | FY2024 | | :-------------------------- | :----------- | :----------- | | Operating Activities | Used $1,048,612 | Provided $604,076 | | Investing Activities | $0 | $0 | | Financing Activities | Provided $1,331,605 | Used $690,497 | | Overall Cash Change | Increased $282,993 | Decreased $86,421 | Related Party Transactions Company expenses were charged to the CEO's credit cards and subsequently reimbursed in full - Inventory purchases and other company expenses of approximately $1,097,000 (FY2025) and $1,699,000 (FY2024) were charged to credit card accounts of the CEO, Harvey B Grossblatt, and his immediate family members[73] - These charges were subsequently reimbursed in full, with no amounts outstanding at March 31, 2025, or 2024[73] Critical Accounting Policies Key accounting policies involve significant judgments related to credit losses, inventories, income taxes, and revenue recognition - Management's discussion of critical accounting policies involves significant judgments and estimates related to credit losses, inventories, income taxes, and contingencies[74] - Assets held for sale are valued at the lower of their carrying value or fair value less selling cost[75] - Income taxes involve recognizing deferred tax consequences and providing a valuation allowance when realization of deferred tax assets is not likely[76] - Revenue is recognized at the point in time when the customer obtains control over the product, net of estimates for variable consideration like trade discounts and returns[80][81] Concentrations The company has significant customer and supplier concentration, with two customers comprising 36.6% of net sales - Eyston Company, Ltd was the primary supplier, accounting for approximately 96.3% of purchases in FY2025 and 84.3% in FY2024[85] - Amounts due from or to Eyston were settled in full subsequent to March 31, 2025, in connection with the asset sale[85] Customer Concentration (FY2025) | Customer | % of Net Sales | % of Accounts Receivable | | :------- | :------------- | :----------------------- | | Customer 1 | 21.7% | 17.3% | | Customer 2 | 14.9% | 13.8% | New Accounting Standards Recently adopted accounting standards for credit losses and segment reporting did not have a material impact - The company adopted ASU 2016-02 (credit losses) effective April 1, 2023, and ASU 2023-07 (segment reporting) for FY2025, neither having a material impact[86][221] - The company is currently evaluating ASU 2023-09 (income tax disclosures), effective for annual periods beginning after December 15, 2024[86][222] Item 7A. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, this section is not applicable - This section is not applicable because the registrant is a smaller reporting company[87] Item 8. Financial Statements and Supplementary Data This item refers to the financial statements and data included elsewhere in the Annual Report - The financial statements and supplementary data required by this Item 8 are included in the Company's Consolidated Financial Statements and set forth in the pages indicated in Item 15(a)[88] Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure This item is not applicable to the company - Not applicable[89] Item 9A. Controls and Procedures Disclosure controls and internal control over financial reporting were deemed not effective due to material weaknesses Evaluation of Disclosure Controls and Procedures The company's disclosure controls and procedures were concluded to be not effective as of March 31, 2025 - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were not effective as of March 31, 2025[90] Management's Annual Report on Internal Control over Financial Reporting Management identified material weaknesses in internal controls, including a lack of segregation of duties - Management concluded that the company's internal control over financial reporting was not effective as of March 31, 2025, due to material weaknesses[92] - Material weaknesses include a lack of segregation of duties due to limited accounting staff, and continued weaknesses in management review controls over financial statement classification, disclosure, income tax accounting, and general ledger documentation[93][94][95][96] - Remediation plans include adding accounting personnel, clarifying classifications, engaging an independent expert for tax provisions, and improving documentation procedures[93][94][95][96] Changes in Internal Control over Financial Reporting No material changes to internal controls occurred during the last fiscal quarter, aside from the newly noted weakness - Except for the additional material weakness noted, there were no other material changes in internal control over financial reporting during the fiscal quarter ended March 31, 2025[97] Item 9B. Other Information No directors or Section 16 officers adopted or terminated a Rule 10b5-1 trading arrangement during the quarter - No director or Section 16 officer adopted or terminated a 'Rule 10b5-1 trading arrangement' or 'non-Rule 10b5-1 trading arrangement' during the three months ended March 31, 2025[98] Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections This item is not applicable to the company - Not applicable[99] PART III - CORPORATE GOVERNANCE AND EXECUTIVE COMPENSATION Item 10. Directors, Executive Officers and Corporate Governance The Board expanded to six directors in May 2025 and maintains independent Audit and Compensation Committees Directors and Executive Officers The Board of Directors increased from four to six members with the appointment of two new independent directors - As of March 31, 2025, the Board consisted of four directors; effective May 22, 2025, two additional directors, Milton C Ault, III and Henry C W Nisser, were appointed, increasing the total to six[103][104] - Key executive officers include Harvey B Grossblatt (President and CEO) and James B Huff (Secretary/Treasurer/CFO)[108][111] - Milton C Ault, III and Henry C W Nisser were appointed as independent directors in May 2025[105][106][109] Corporate Governance The company has independent audit and compensation committees but lacks formal stock ownership or hedging policies - The Board of Directors convened three times during the fiscal year ended March 31, 2025[112] - The Audit Committee, composed of independent directors (Mr Bormel, Dr Seff, Mr Luskin), met four times in FY2025, with Mr Bormel designated as the audit committee financial expert[113] - The Compensation Committee, also composed of independent directors (Mr Luskin, Dr Seff, Mr Bormel), met once in FY2025[115] - The company has adopted a Code of Business Conduct and Ethics but does not have formal stock ownership guidelines, a distinct insider trading policy (relying on the Code of Ethics), or hedging policies[116][117][118][119] Item 11. Executive Compensation Executive compensation primarily consists of base salary and discretionary bonuses, with no equity-based awards Summary Compensation Table This table details the compensation for named executive officers for fiscal years 2025 and 2024 Named Executive Officer Compensation (FY2025 vs FY2024) | Name and Principal Position | Year | Base Salary ($) | Bonus ($) | All Other Compensation ($) | Total ($) | | :-------------------------- | :--- | :-------------- | :-------- | :------------------------- | :-------- | | Harvey B. Grossblatt, President and CEO | 2025 | 352,286 | 0 | 80,994 | 433,280 | | | 2024 | 352,286 | 0 | 71,162 | 423,448 | | James B. Huff, Secretary/Treasurer/CFO | 2025 | 198,153 | 0 | 18,399 | 216,552 | | | 2024 | 198,957 | 0 | 18,430 | 217,387 | | Glenda Anderson, Sales Manager | 2025 | 156,030 | 0 | 17,391 | 173,421 | | | 2024 | 156,030 | 5,000 | 17,391 | 178,421 | | Phillip Haigh, Sales Manager | 2025 | 150,000 | 0 | 24,460 | 179,460 | | | 2024 | 150,000 | 5,000 | 24,475 | 179,475 | Compensation Program Elements The compensation program is based on base salary and discretionary bonuses, with no equity component - The compensation program includes base salary (contractual for PEO, reviewed annually for others) and discretionary bonuses (contractual for PEO, based on individual and company performance)[128][129][130] - The company does not provide for equity-based compensation[130] 401(k) Plan The company offers a 401(k) plan with an employer match of up to 4% - The company has a 401(k) plan with a matching contribution of up to 4% of employee contributions, and participants are immediately vested[131] - Employer contributions to the plan were $47,097 in fiscal 2025 and $47,262 in fiscal 2024[252] Stock Incentive Plan The company does not have a stock incentive plan - The company does not have a stock incentive plan[132] Executive Employment Agreements The CEO's employment agreement includes a base salary of $352,000 and performance-based bonus criteria - The CEO's (Harvey B Grossblatt) employment agreement, effective April 1, 2002, as amended, expires on July 31, 2025[133] - The agreement provides for a base annual salary of $352,000 and bonus compensation based on pre-tax net income exceeding 4% of shareholders' equity[133] - Benefits include life, health, and disability insurance, medical reimbursement, automobile allowance, and company-paid retirement plan contributions[133] Potential Payments upon Termination or Change in Control The CEO is entitled to specific severance payments upon termination or a change in control event - Payments upon termination or change in control for the CEO are subject to specific contractual terms, including limitations for change of control based on average annual taxable compensation[139][140] Estimated Incremental Value Transfer to Harvey B. Grossblatt upon Termination (as of March 31, 2025) | Scenario | Severance ($) | Health Benefits ($) | 401(k) Contribution ($) | Tax Gross Up ($) | | :-------------------------- | :------------ | :------------------ | :---------------------- | :--------------- | | Non Renewal | 352,286 | 85,000 | 72,000 | — | | Resignation for Good Reason | 352,286 | 85,000 | 72,000 | 144,000 | | Following Change in Control | 1,053,000 | 85,000 | 72,000 | 430,000 | | Death | 353,000 (minus benefits) | 85,000 | 72,000 | — | | Disability | 353,000 (minus benefits) | 85,000 | 72,000 | — | Policies and Practices Related to the Grant of Certain Equity Awards Close in Time to the Release of Material Nonpublic Information The company has no formal policy on the timing of equity grants and made no such grants in FY2025 - The company does not have a formal policy regarding the timing of equity-based compensation grants relative to the release of material nonpublic information[142] - No equity grants were made to executive officers during any period beginning four business days before and ending one business day after the filing of a periodic or current report in FY2025[143] Advisory Vote on Executive Compensation Stockholders approved the executive compensation plan at the 2024 annual meeting - Stockholders approved the executive compensation on an advisory basis at the annual meeting held on November 7, 2024[144] - An advisory vote on executive compensation is held every year[144] Director Compensation Outside directors receive a $10,000 annual fee for their service - Each outside director received a $10,000 annual fee for service in FY2025, payable in cash or common stock[145] - The CEO received no additional compensation for serving as a director[145] Director Compensation (FY2025) | Name | Fees Earned or Paid in Cash ($) | Option Awards ($) | Total ($) | | :------------------- | :------------------------------ | :---------------- | :-------- | | Cary Luskin | 10,000 | 0 | 10,000 | | Ronald A. Seff, M.D. | 10,000 | 0 | 10,000 | | Ira F. Bormel, CPA | 10,000 | 0 | 10,000 | Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Ault & Company, Inc is the largest beneficial owner with 10.3% of common stock Beneficial Ownership of 5% or More Three entities hold beneficial ownership of 5% or more of the company's stock - Ault & Company, Inc (A&C) holds significant voting and disposition authority over shares through a coordination agreement[149] Beneficial Owners of 5% or More (as of July 18, 2025) | Name and Address | Shares Beneficially Owned | Percent of Class | | :------------------------------------------------ | :------------------------ | :--------------- | | JLA Realty Associates, LLC | 227,400 | 9.8% | | Ault & Company, Inc. | 239,245 | 10.3% | | Poplar Point Capital Management LLC | 122,564 | 5.3% | Beneficial Ownership by Directors and Executive Officers Directors and executive officers as a group beneficially own 21.0% of the company's common stock Beneficial Ownership by Directors and Executive Officers (as of July 18, 2025) | Name of Beneficial Owner | Shares Beneficially Owned | Percent of Class | | :-------------------------------- | :------------------------ | :--------------- | | Harvey B. Grossblatt | 110,402 | 4.77% | | Cary Luskin | 59,423 | 2.57% | | Ronald A. Seff, M.D. | 77,469 | 3.35% | | James B. Huff | 510 | 0.02% | | Ira F. Bormel, CPA | — | — | | Milton C. Ault, III | 239,245 | 10.3% | | Henry Nisser | — | — | | All directors and executive officers as a group (7 persons) | 487,049 | 21.0% | Equity Compensation Information The company has no equity compensation plans or outstanding awards - As of March 31, 2025, the company had no outstanding options, warrants, or rights, and no securities remaining available for future issuance under equity compensation plans[153] Item 13. Certain Relationships and Related Transactions, and Director Independence The Audit Committee reviews all related party transactions, including reimbursed expenses charged to the CEO's credit cards - The Audit Committee reviews and approves all transactions with related persons[154] - Inventory purchases and other company expenses of approximately $1,097,000 (FY2025) and $1,699,000 (FY2024) were charged to credit card accounts of CEO Harvey B Grossblatt and his immediate family members, and were fully reimbursed[154] - Information regarding director independence is incorporated by reference to Item 10[155] Item 14. Principal Accountant Fees and Services Audit fees were $293,000 in FY2025, with no fees for other services, and all fees are pre-approved by the Audit Committee - The Audit Committee reviews and pre-approves all audit and non-audit services provided by the independent auditors and their fees[158] Auditor Fees (FY2025 vs FY2024) | Fee Type | FY2025 ($) | FY2024 ($) | | :--------------- | :--------- | :--------- | | Audit Fees | 293,000 | 258,000 | | Audit Related Fees | 0 | 0 | | Tax Fees | 0 | 0 | | All Other Fees | 0 | 0 | PART IV - EXHIBITS, FINANCIAL STATEMENTS & SIGNATURES Item 15. Exhibits and Financial Statement Schedules This section lists all filed financial statements, schedules, and material agreements, including interactive data files Financial Statements The listed financial statements include the independent auditor's report, balance sheets, and statements of operations, equity, and cash flows - The financial statements include the Report of Independent Registered Public Accounting Firm, Consolidated Balance Sheets, Statements of Operations, Shareholders' Equity, Cash Flows, and Notes to Consolidated Financial Statements[161] Exhibits Required by Item 601 of Regulation S-K Filed exhibits include corporate organizational documents, key material agreements, and interactive data files - Exhibits include corporate organizational documents (Articles of Incorporation, Bylaws), key agreements (Discount Factoring Agreement, Lease, Amended and Restated Employment Agreement for CEO), and interactive data files in XBRL format[162][163] Item 16. Form 10-K Summary This item indicates that no Form 10-K Summary is provided - No Form 10-K Summary is provided[164] Signatures The report was signed by executive officers and all directors on July 28, 2025 - The report is signed by the President and Chief Executive Officer, Chief Financial Officer, and all directors[169][170] - The report was signed on July 28, 2025[169] Report of Independent Registered Public Accounting Firm (for 2025) CBIZ CPAs P.C issued an unqualified opinion on the FY2025 financial statements with no critical audit matters - CBIZ CPAs P.C issued an unqualified opinion on the consolidated financial statements for the year ended March 31, 2025[172] - The financial statements present fairly, in all material respects, the financial position, results of operations, and cash flows in conformity with US GAAP[172] - No critical audit matters were determined for the current period audit[176] Report of Independent Registered Public Accounting Firm (for 2024) Marcum LLP issued an unqualified opinion on the FY2024 financial statements - Marcum LLP issued an unqualified opinion on the consolidated financial statements for the year ended March 31, 2024[179] - The financial statements present fairly, in all material respects, the financial position, results of operations, and cash flows in conformity with US GAAP[179] Consolidated Financial Statements This section presents the company's audited consolidated financial statements for fiscal years 2025 and 2024 Consolidated Balance Sheets Total assets increased by 17.8% and total shareholders' equity grew by 10.7% in FY2025 - Assets Held for Sale amounted to $1,681,937 as of March 31, 2025[185] Consolidated Balance Sheet Highlights (March 31) | Metric | 2025 ($) | 2024 ($) | Change (YoY) | | :------------------------------------ | :--------- | :--------- | :----------- | | Cash | 348,074 | 65,081 | +434.8% | | Total Current Assets | 9,816,279 | 8,143,793 | +20.5% | | Total Assets | 9,816,279 | 8,334,750 | +17.8% | | Line of Credit – Factor | 2,100,458 | 768,853 | +173.2% | | Total Current Liabilities | 4,652,568 | 3,658,393 | +27.2% | | Total Shareholders' Equity | 5,163,711 | 4,663,027 | +10.7% | Consolidated Statements of Operations The company returned to profitability in FY2025 with a net income of $500,684, driven by a 20.7% increase in net sales - A provision for income tax benefit of $361,000 was recorded in FY2025, compared to none in FY2024[187] Consolidated Statements of Operations Highlights (Year Ended March 31) | Metric | 2025 ($) | 2024 ($) | Change (YoY) | | :------------------------------------ | :----------- | :----------- | :----------- | | Net Sales | 23,563,554 | 19,517,673 | +20.7% | | Cost of goods sold | 16,732,149 | 13,919,660 | +20.2% | | GROSS PROFIT | 6,831,405 | 5,598,013 | +22.0% | | Operating income (loss) | 402,049 | (564,805) | +$966,854 | | Net income (loss) | 500,684 | (695,790) | +$1,196,474 | | Basic and diluted loss per share | 0.22 | (0.30) | +$0.52 | Consolidated Statements of Shareholders' Equity Net income in FY2025 increased total shareholders' equity and reduced the accumulated deficit - Net income of $500,684 in FY2025 contributed to the increase in total shareholders' equity and a reduction in the accumulated deficit[189] Consolidated Statements of Shareholders' Equity (March 31) | Metric | 2025 ($) | 2024 ($) | | :-------------------- | :--------- | :--------- | | Common Stock (Shares) | 2,312,887 | 2,312,887 | | Common Stock (Amount) | 23,129 | 23,129 | | Additional Paid-In Capital | 12,885,841 | 12,885,841 | | Accumulated Deficit | (7,745,259) | (8,245,943) | | Total Shareholders' Equity | 5,163,711 | 4,663,027 | Consolidated Statements of Cash Flows Cash from operations was negative in FY2025, offset by cash provided by financing activities - Operating activities used cash in FY2025, primarily due to increases in accounts receivable and inventory, and decreases in accounts payable and accrued expenses, partially offset by net income[65][192] - Financing activities provided cash in FY2025 due to increased net borrowing from the factor[67][192] Consolidated Statements of Cash Flows (Year Ended March 31) | Activity | 2025 ($) | 2024 ($) | | :------------------------------------ | :----------- | :----------- | | Net Cash (Used in) Provided by Operating Activities | (1,048,612) | 604,076 | | Net Cash Provided by (Used in) Financing Activities | 1,331,605 | (690,497) | | Increase (Decrease) in Cash | 282,993 | (86,421) | | Cash at End of Year | 348,074 | 65,081 | Notes to Consolidated Financial Statements These notes provide detailed information on accounting policies, subsequent events, and financial statement components NOTE A – NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The company's accounting policies cover revenue recognition, assets held for sale, and the impact of tariffs on its imported products - The company's primary business is the sale of safety products, all imported from foreign manufacturers, primarily China, and subject to tariffs[195] - Assets held for sale related to the Feit Electric Company, Inc transaction are valued at the lower of carrying value or fair value less selling cost[196] - Non-material errors in FY2024 financial statements (underestimated insurance expense, reclassification, underestimated credit losses) were identified and revised[197][201] - The company adopted ASU 2016-02 and ASU 2023-07 with no material impact and is evaluating ASU 2023-09 (income tax disclosures)[221][222] Disaggregation of Revenue (Year Ended March 31) | Product Category | 2025 ($) | 2024 ($) | | :-------------------------- | :----------- | :----------- | | Sales of safety alarms | 21,140,157 | 16,854,535 | | Sales of GFCI's and ventilation fans | 2,423,397 | 2,663,138 | | Total Net Sales | 23,563,554 | 19,517,673 | NOTE B – SUBSEQUENT EVENTS Subsequent to year-end, the company completed its asset sale to Feit Electric and faces increased import tariffs - On May 22, 2025, the company completed the asset sale to Feit Electric Company, Inc, including $1,655,000 of finished goods inventory and intangible assets, and changed its name to Universal Safety Products, Inc[223] - The company will continue importing and marketing product lines other than smoke and carbon monoxide alarms and is seeking strategic business combinations[223] - Tariffs on certain imported products increased to 55% after March 31, 2025, increasing uncertainty regarding competitive pricing[224] NOTE C – SHORT-TERM BORROWINGS AND CREDIT ARRANGEMENTS The company utilizes a factoring agreement for short-term borrowing, secured by all company assets - The company has a factoring agreement with Merchant Financial Group, allowing borrowing of 80% of eligible receivables, secured by all assets, with interest at prime plus 2%[227] - Outstanding borrowings under the factoring agreement were $2,100,458 on March 31, 2025, compared to $768,853 on March 31, 2024[227] - Unused availability under the factoring facility was approximately $348,000 on March 31, 2025, down from $610,000 on March 31, 2024[227] - Merchant approved additional funding via an overadvance of up to $1,600,000 secured by inventory in June 2024[228] NOTE D – PROPERTY AND EQUIPMENT AND RIGHT OF USE ASSET - NET Property and equipment are depreciated using the straight-line method over their estimated useful lives - Property and equipment are recorded at cost and depreciated using the straight-line method over estimated useful lives[230] - Depreciation and amortization totaled $159,656 for FY2025 and $163,457 for FY2024[232] Net Property and Equipment and Right-of-Use Asset (March 31) | Year | Amount ($) | | :--- | :--------- | | 2025 | 0 | | 2024 | 159,656 | NOTE E – LEASES The company leases office space, with future minimum lease payments of $13,381 for fiscal year 2026 - The company leases office space, recognizing right-of-use (ROU) assets and lease liabilities based on the present value of lease payments[233][237] - Rent expense, including common area maintenance, totaled approximately $296,000 for FY2025 and $293,000 for FY2024[236] - Future minimum operating lease payments for fiscal year 2026 are $13,381[240] Lease Information (March 31, 2025) | Metric | Amount | | :------------------------------------ | :----- | | Right-of-use assets | $0 | | Lease liabilities | $13,330 | | Weighted-average remaining lease term | 1 month | | Weighted-average discount rate | 5.5% | NOTE F – INCOME TAXES The company recognized a deferred tax asset by reversing a portion of its valuation allowance due to an expected gain on an asset sale - As of March 31, 2025, the company had total federal net operating loss carry-forwards of approximately $3,683,000 with no fixed expiration date, and research and development tax credit carry-forwards of approximately $35,000[242] - A $361,000 deferred tax asset was recognized in FY2025 by reversing a portion of the valuation allowance, anticipating the use of $1,765,000 of NOLs against the expected gain on asset sale[242] - A valuation allowance fully offsets the remaining deferred tax assets due to prior losses and uncertainty of future taxable income[243] Reconciliation of Federal Income Tax Provision (Year Ended March 31) | Item | 2025 ($) | 2024 ($) | | :------------------------------------------------ | :--------- | :--------- | | Federal tax (benefit) at statutory rate (20.0%) | 100,137 | (83,116) | | Permanent and other differences | (169,522) | 65,581 | | State income tax benefit – net of federal effect | (19,764) | (18,761) | | Change in deferred tax asset valuation allowance | (271,851) | 36,296 | | Current income tax benefit | (361,000) | — | NOTE G – COMMITMENTS AND CONTINGENCIES The company has no material claims outside the normal course of business but has post-employment payment obligations to the CEO - Management believes there are no outstanding material claims outside the normal course of business[247] - The CEO's employment agreement requires post-employment payments ranging from approximately $74,000 to $1,640,000 depending on the termination event[248] NOTE H - CONCENTRATIONS The company exhibits significant customer and supplier concentration, with one supplier accounting for 96.3% of purchases - Eyston Company, Ltd accounted for approximately 96.3% of purchases in FY2025 and 84.3% in FY2024[251] - Amounts due from or to Eyston were settled in full subsequent to March 31, 2025, in connection with the asset sale[251] Customer Concentration (FY2025) | Customer | % of Net Sales | % of Accounts Receivable | | :------- | :------------- | :----------------------- | | Customer 1 | 21.7% | 17.3% | | Customer 2 | 14.9% | 13.5% | NOTE I – RETIREMENT PLAN The company offers a 401(k) plan with employer matching contributions - The company offers a 401(k) retirement savings plan with employer matching contributions up to 4% of employee contributions[252] - Employer contributions were $47,097 in FY2025 and $47,262 in FY2024[252] NOTE J – RELATED PARTY TRANSACTIONS Company expenses were charged to the CEO's credit cards and subsequently reimbursed in full - Inventory purchases and other company expenses of approximately $1,097,000 (FY2025) and $1,699,000 (FY2024) were charged to credit card accounts of CEO Harvey B Grossblatt and his immediate family members[253] - These charges were fully reimbursed, with no amounts outstanding at March 31, 2025, or 2024[253] NOTE K – INTANGIBLE ASSET - NET Intangible assets, consisting of capitalized legal fees for patents, were reduced to zero due to the asset sale - Intangible assets consist of capitalized legal expenses for patents, amortized on a straight-line basis over twenty years[254] - Net intangible assets were $0 as of March 31, 2025, compared to $31,301 as of March 31, 2024, due to the asset sale[185] - Amortization expense was $4,470 for FY2025 and $4,474 for FY2024[254]