Financial Performance - For the fiscal year 2021, the company's net sales increased to $17,520,151, representing an 18.4% increase from $14,803,024 in fiscal 2020[53]. - The gross profit percentage for fiscal year 2021 was 32.2%, up from 25.4% in fiscal 2020, attributed to increased demand and tariff refunds[54]. - Selling, general and administrative expenses rose to $5,034,380 in fiscal 2021, but decreased as a percentage of net sales to 28.7% from 31.3% in fiscal 2020[55]. - The company reported a net income of $268,343 for fiscal year 2021, a significant improvement from a net loss of $5,813,891 in fiscal 2020[59]. Cash Flow and Working Capital - Working capital increased by $505,103 from $5,059,498 on March 31, 2020, to $5,564,601 on March 31, 2021[61]. - Operating activities generated cash of $1,388,172 for the year ended March 31, 2021, primarily from a decrease in inventories of $942,766[62]. Future Outlook - The company anticipates that improved housing market conditions and sales of sealed products will enhance profitability going forward[63]. Research and Development - Research and development expenses decreased to $471,545 in fiscal 2021 from $691,886 in fiscal 2020 due to reduced independent testing[56]. Customer Concentration - One customer represented 21.9% of the Company's net sales for the fiscal year ending March 31, 2021, while two customers accounted for 12.2% and 10.3% of net sales for the fiscal year ending March 31, 2020[82]. Revenue Recognition - Revenue is recognized at the point when control over the product is transferred to the customer, typically upon shipment or delivery[77]. - The primary source of revenue is from the sale of safety and security products based on purchase orders or contracts[77]. Inventory Management - The Company evaluates inventories quarterly and writes down obsolete or unmarketable inventory based on future demand and market conditions[80]. - The Company uses the expected value method to estimate variable consideration, including trade discounts and product returns, ensuring that significant reversals in recognized revenue are unlikely[78]. Accounts Receivable - Accounts receivable due from Eyston Company, Ltd. amounted to $381,401 as of March 31, 2021, as the Company acquires all smoke alarm and carbon monoxide alarm products from this supplier[82]. - The Company established allowances for doubtful accounts based on historical experience[79]. Tax Positions - The Company recognized a liability for deferred tax assets due to temporary differences, establishing a valuation allowance to offset the value of these assets based on historical losses and uncertainty in generating future taxable income[74]. - The Company follows ASC 740-10 for tax positions, recognizing the impact of tax positions that are more likely than not to be sustained[75]. Off-Balance Sheet Arrangements - The Company does not have any off-balance sheet arrangements that materially affect liquidity or capital resources[81]. Loan Forgiveness - The company received a Paycheck Protection Program loan of $221,400 in May 2020, which was subsequently forgiven[67]. Joint Venture Performance - The Hong Kong Joint Venture reported sales of $8,054,070 for fiscal year 2020, with gross margins of 3.4%[68][69].
Universal Security Instruments(UUU) - 2021 Q4 - Annual Report