Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Mar. 31, 2023 | Jul. 14, 2023 | Sep. 30, 2022 | |
Document and Entity Information | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Mar. 31, 2023 | ||
Current Fiscal Year End Date | --03-31 | ||
Document Transition Report | false | ||
Entity File Number | 001-31747 | ||
Entity Registrant Name | UNIVERSAL SECURITY INSTRUMENTS INC | ||
Entity Incorporation, State or Country Code | MD | ||
Entity Tax Identification Number | 52-0898545 | ||
Entity Address, Address Line One | 11407 Cronhill Drive | ||
Entity Address, Address Line Two | Suite A | ||
Entity Address, City or Town | Owings Mills | ||
Entity Address, State or Province | MD | ||
Entity Address, Postal Zip Code | 21117 | ||
City Area Code | 410 | ||
Local Phone Number | 363-3000 | ||
Title of 12(b) Security | Common Stock | ||
Trading Symbol | UUU | ||
Security Exchange Name | NYSE | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 7,970,834 | ||
Entity Common Stock, Shares Outstanding | 2,312,887 | ||
Auditor Name | Marcum LLP | ||
Auditor Firm ID | 688 | ||
Auditor Location | Philadelphia, PA | ||
Entity Central Index Key | 0000102109 | ||
Document Fiscal Year Focus | 2023 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Mar. 31, 2023 | Mar. 31, 2022 |
CURRENT ASSETS | ||
Cash | $ 151,502 | $ 438,735 |
Accounts receivable: | ||
Trade, less allowance for doubtful accounts | 414,689 | 993,846 |
Other receivables | 305,889 | 303,366 |
Total accounts receivable | 720,578 | 1,297,212 |
Amount due from factor | 2,944,370 | 2,792,901 |
Inventories - finished goods | 4,063,632 | 6,229,061 |
Prepaid expenses | 165,378 | 241,342 |
TOTAL CURRENT ASSETS | 8,045,460 | 10,999,251 |
INTANGIBLE ASSETS - NET | 35,773 | 40,243 |
PROPERTY AND EQUIPMENT - NET | 318,641 | 477,627 |
OTHER ASSETS | 4,000 | |
TOTAL ASSETS | 8,399,874 | 11,521,121 |
CURRENT LIABILITIES | ||
Line of credit - factor | 1,459,350 | 2,157,086 |
Short-term portion of operating lease liability | 151,230 | 131,880 |
Accounts payable - trade | 293,465 | 1,572,356 |
Note payable - Eyston Company Ltd. | 1,081,440 | |
Accounts payable - Eyston Company Ltd. | 655,000 | 985,077 |
Accrued liabilities: | ||
Accrued payroll and employee benefits | 125,415 | 160,025 |
Accrued commissions and other | 184,525 | 459,440 |
TOTAL CURRENT LIABILITIES | 2,868,985 | 6,547,304 |
LONG-TERM PORTION OF OPERATING LEASE LIABILITY | 172,072 | 335,411 |
TOTAL LONG-TERM LIABILITIES | 172,072 | 335,411 |
COMMITMENTS AND CONTINGENCIES | ||
SHAREHOLDERS' EQUITY | ||
Common stock, $.01 par value per share; 20,000,000 shares authorized, 2,312,887 shares issued and outstanding at March 31, 2023 and 2022 | 23,129 | 23,129 |
Additional paid-in capital | 12,885,841 | 12,885,841 |
Accumulated Deficit | (7,550,153) | (8,270,564) |
TOTAL SHAREHOLDERS' EQUITY | 5,358,817 | 4,638,406 |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ 8,399,874 | $ 11,521,121 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Mar. 31, 2023 | Mar. 31, 2022 |
CONSOLIDATED BALANCE SHEETS | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 20,000,000 | 20,000,000 |
Common stock, shares issued | 2,312,887 | 2,312,887 |
Common stock, shares outstanding | 2,312,887 | 2,312,887 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
CONSOLIDATED STATEMENTS OF OPERATIONS | ||
Net sales | $ 22,178,873 | $ 19,549,785 |
Cost of goods sold | 15,829,154 | 13,517,552 |
GROSS PROFIT | 6,349,719 | 6,032,233 |
Selling, general and administrative expense | 4,974,453 | 5,524,343 |
Engineering and product development expense | 402,692 | 438,200 |
Operating income | 972,574 | 69,690 |
Other expense: | ||
Interest expense, net | (237,686) | (147,840) |
Earnings (loss) before income taxes | 734,888 | (78,150) |
Income tax expense | 14,477 | |
NET INCOME (LOSS) | $ 720,411 | $ (78,150) |
Earnings (loss) per share: | ||
Basic | $ 0.31 | $ (0.03) |
Diluted | $ 0.31 | $ (0.03) |
Shares used in computing net earnings (loss) per share: | ||
Weighted average basic shares outstanding | 2,312,887 | 2,312,887 |
Weighted average diluted shares outstanding | 2,312,887 | 2,312,887 |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
Balance at Mar. 31, 2021 | $ 23,129 | $ 12,885,841 | $ (8,192,414) | $ 4,716,556 |
Balance (in shares) at Mar. 31, 2021 | 2,312,887 | |||
Net income (loss) | (78,150) | (78,150) | ||
Balance at Mar. 31, 2022 | $ 23,129 | 12,885,841 | (8,270,564) | 4,638,406 |
Balance (in shares) at Mar. 31, 2022 | 2,312,887 | |||
Net income (loss) | 720,411 | 720,411 | ||
Balance at Mar. 31, 2023 | $ 23,129 | $ 12,885,841 | $ (7,550,153) | $ 5,358,817 |
Balance (in shares) at Mar. 31, 2023 | 2,312,887 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
OPERATING ACTIVITIES: | ||
Net Income (loss) | $ 720,411 | $ (78,150) |
Adjustments to reconcile net income (loss) to net cash provided by (used by) operating activities: | ||
Depreciation and amortization | 11,692 | 7,694 |
Depreciation of right-of-use asset and decrease in other assets | 155,764 | 171,122 |
Decrease in allowance for inventory reserve | (70,000) | |
Changes in operating assets and liabilities: | ||
Decrease (Increase) in accounts receivable and amounts due from factor | 425,165 | (1,506,650) |
Decrease (Increase) in inventories | 2,165,429 | (1,977,868) |
Decrease in prepaid expenses | 75,964 | 95,357 |
(Decrease) Increase in accounts payable and accrued expenses | (1,918,493) | 1,669,566 |
Decrease in operating lease liability | (143,989) | (171,122) |
NET CASH PROVIDED BY (USED BY) OPERATING ACTIVITIES | 1,491,943 | (1,860,051) |
FINANCING ACTIVITIES: | ||
Repayment of Note Payable - Eyston | (1,081,440) | |
Net (repayment) borrowing of line of credit - factor | (697,736) | 2,138,182 |
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES | (1,779,176) | 2,138,182 |
(DECREASE) INCREASE IN CASH | (287,233) | 278,131 |
Cash at beginning of year | 438,735 | 160,604 |
CASH AT END OF YEAR | 151,502 | 438,735 |
Supplemental information: | ||
Interest paid | $ 237,686 | 147,840 |
Supplemental disclosures of non-cash activities: | ||
Right-of-use asset in exchange for operating lease liability | $ 467,291 |
NATURE OF BUSINESS AND SUMMARY
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Mar. 31, 2023 | |
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE A – NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Business: Proposed Merger: Principles of Consolidation: Use of Estimates: Cash: Revenue Recognition: The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for products sold. Purchase orders may contain stand-alone pricing applied to each of the multiple products ordered. Revenue is recorded at the transaction price net of estimates of variable consideration. The Company uses the expected value method based on historical data in considering the impact of estimates of variable consideration, which may include trade discounts, allowances, product returns (including rights of return) or warranty replacements. Estimates of variable consideration are included in revenue to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur. Disaggregation of Revenue disaggregation best depicts how our various product lines perform and are affected by economic factors. Revenue recognized by these categories for the fiscal years ended March 31, 2023, and 2022 are as follows: Fiscal Year ended March 31, 2023 March 31, 2022 Sales of safety alarms $ 18,691,090 $ 16,487,028 Sales of GFCI’s and ventilation fans 3,487,783 3,062,757 $ 22,178,873 $ 19,549,785 Accounts Receivable: The Company assigns the majority of its trade receivables on a pre-approved non-recourse basis to Merchant Factors Corporation (Merchant or Factor) under a factoring agreement on an ongoing basis. Factoring charges recognized on assignment of receivables are deducted from revenue in the consolidated statements of operations and amounted to $191,225 and $165,579 for the years ended March 31, 2023, and 2022, respectively. Management considers amounts due from the Company’s factor to be “financing receivables”. Trade accounts receivable, foreign receivables, and receivables from our suppliers are not considered to be financing receivables. At the time a receivable is assigned to our factor, the credit risk associated with the credit worthiness of the debtor is assumed by the factor. The Company continues to bear any credit risk associated with delivery or warranty issues related to the products sold. Management assesses the credit risk of both its trade accounts receivable and its financing receivables based on the specific identification of accounts that have exceeded credit terms. An allowance for uncollectible receivables is provided based on that assessment. Changes in the allowance account from one accounting period to the next are charged to operations in the period the change is determined. Amounts ultimately determined to be uncollectible are eliminated from the receivable accounts and from the allowance account in the period that the receivables’ status is determined to be uncollectible. Based on the nature of the factoring agreement and prior experience, no allowance for uncollectible financing receivables has been provided and no amounts are considered to be past due at March 31, 2023. At March 31, 2023, and 2022, an allowance of $157,000 has been provided for uncollectible trade accounts receivable. Inventories: Impairment of long-lived assets Leases Income Taxes: The Company follows Accounting Standards Codification (ASC) 740-10 that gives guidance to tax positions related to the recognition and measurement of a tax position taken or expected to be taken in a tax return and requires that we recognize in our financial statements the impact of a tax position, if that position is more likely than not to be sustained upon an examination, based on the technical merits of the position. Interest and penalties, if any, related to income tax matters are recorded as income tax expenses. See Note E, Income Taxes. Warranties: one Engineering and Product Development: Shipping and Handling Fees and Costs: Net Earnings (Loss) per Share: Recently Issued Accounting Standards: |
SHORT-TERM BORROWINGS AND CREDI
SHORT-TERM BORROWINGS AND CREDIT ARRANGEMENTS | 12 Months Ended |
Mar. 31, 2023 | |
SHORT-TERM BORROWINGS AND CREDIT ARRANGEMENTS | |
SHORT-TERM BORROWINGS AND CREDIT ARRANGEMENTS | NOTE B – SHORT-TERM BORROWINGS AND CREDIT ARRANGEMENTS On January 15, 2015, the Company entered into an Agreement with Merchant for the purpose of factoring the Company’s trade accounts receivable and to provide financing secured by finished goods inventory. Under the modified Agreement the Company may borrow eighty percent (80%) of eligible accounts receivable. Additional funding, characterized by Merchant as an over advance, may be provided up to one hundred percent (100%) of eligible accounts receivable. The over advance portion, if any, may not exceed fifty percent (50%) of eligible inventory up to a maximum of $500,000. The Agreement, which was extended and expires on January 6, 2024, provides for continuation of the program for successive two-year periods until terminated by one of the parties to the Agreement. The amount available to borrow from Merchant is approximately $852,000 at March 31, 2023. Advances on factored trade accounts receivable and borrowing on inventories are secured by all of the Company’s trade accounts receivable and inventories, are repaid periodically as collections are made by Merchant but are otherwise due upon demand, and bear interest at the prime commercial rate of interest, as published, plus two percent (effective rate 10.0% and 5.50% at March 31, 2023 and March 31, 2022, respectively). Advances under the Agreement are made at the sole discretion of Merchant, based on their assessment of the receivables, inventory and our financial condition at the time of each request for an advance. At March 31, 2023 and 2022 there was $1,459,350 and $2,157,086 borrowed and outstanding under the factoring agreement, respectively. Under the Agreement, the Company assigned receivables of $22,581,988 and $18,449,900 during the years ended March 31, 2023, and 2022, respectively. The uncollected balance of receivables held by the factor amounted to $2,944,370 and $2,792,901 at March 31, 2023 and 2022. Included in the uncollected balance of receivables held by the factor are amounts classified by the factor as amounts at client risk of approximately $633,000 and $589,000 at March 31, 2023 and 2022, respectively. Collected cash maintained on deposit with the factor earns interest at the factor’s prime rate of interest less 2.5 percent (effective rate of 5.50% and 1.00% at March 31, 2023 and 2022, respectively.) There was no cash on deposit with the Factor at March 31, 2023 or 2022. |
PROPERTY AND EQUIPMENT - NET
PROPERTY AND EQUIPMENT - NET | 12 Months Ended |
Mar. 31, 2023 | |
PROPERTY AND EQUIPMENT - NET | |
PROPERTY AND EQUIPMENT - NET | NOTE C – PROPERTY AND EQUIPMENT - NET Property and equipment are recorded at cost, less accumulated depreciation and amortization. Depreciation and amortization are provided by using the straight-line method based on estimated useful lives. Expenditures for major betterments that extend the useful life of property and equipment are capitalized. Repair and maintenance costs are expensed as incurred. When property and equipment are retired or otherwise disposed of, the cost and accumulated depreciation and amortization are removed from the accounts and any resulting gain or loss is included in the results of operations. The estimated useful lives for financial reporting purposes are as follows: Leasehold improvements - Shorter of term of lease or useful life of asset Machinery and equipment - 5 to 10 years Furniture and fixtures - 5 to 15 years Computer equipment - 5 years Property and equipment consist of the following: March 31, 2023 2022 Leasehold improvements $ 1,119,961 $ 1,119,961 Machinery and equipment 190,400 190,400 Furniture and fixtures 261,292 261,292 Computer equipment 302,634 302,634 1,874,287 1,874,287 Less accumulated depreciation (1,555,646) (1,396,660) $ 318,641 $ 477,627 Depreciation expense totaled $158,986, which includes $155,764 of amortization of right-of-use lease asset for fiscal year ended March 31, 2023. For the fiscal year ended March 31, 2022, depreciation expense totaled $174,342 which included $171,122 of amortization of right-of-use lease asset. Right-of-use lease assets of $311,527 and $467,291, net, are included in leasehold improvements in Property and Equipment on the Consolidated Balance Sheets as of March 31, 2023, and 2022, respectively. |
LEASES
LEASES | 12 Months Ended |
Mar. 31, 2023 | |
LEASES | |
LEASES | NOTE D – LEASES The Company is a lessee in lease agreements for office space. Certain of the Company’s leases contain provisions that provide for one or more options to terminate or extend the lease at the Company’s sole discretion. The Company’s leases are comprised of fixed lease payments, with its real estate leases including lease payments subject to a rate or index which may be variable. Certain real estate leases also include executory costs such as common area maintenance (non-lease component). As a practical expedient permitted under ASC 842, the Company has elected to account for the lease and non-lease components as a single lease component. The Company utilizes certain practical expedients for short-term leases including the election not to reassess its prior conclusions about lease identification, lease classification and initial direct costs, as well as the election not to separate lease and non-lease components for arrangements where the Company is a lessee. Lease payments, which may include lease components and non-lease components, are included in the measurement of the Company’s lease liabilities to the extent that such payments are either fixed amounts or variable lease amounts based on a rate or index (fixed in substance) as stipulated in the lease contract. Effective March 2022, we extended our operating lease for a 15,000 square foot office and warehouse located in Baltimore County, Maryland to expire in April 2025 subject to a right to terminate the lease if the Company enters into a binding agreement to sell the assets of the Company. No option to continue the lease beyond April 2025 has been provided in the lease extension. Monthly rental expense, with common area maintenance, currently approximates $15,000 and increases 3.0% per year. The Company maintains an operating lease for office space in Naperville, Illinois. This lease, consisting of 3,400 square feet, and renews on a month-to-month basis. The monthly rental, with common area maintenance, was approximately $4,900 per month during the current fiscal year. Our operating leases for real estate are generally renewable with terms and conditions similar to the original lease. Rent expense, including common area maintenance, totaled $265,990 and $252,975 for the years ended March 31, 2023, and 2022, respectively. None of the Company’s lease agreements contain any residual value guarantees or material restrictive covenants. As a result of the Company’s election of the package of practical expedients Right-of-use assets represent the Company’s right to use an underlying asset during the lease term and lease liabilities represent the Company’s obligation to make lease payments as specified in the lease. Right-of-use assets and lease liabilities related to the Company’s operating leases are recognized at the lease commencement date based on the present value of the remaining lease payments over the lease term and amounted to approximately $485,000 at the date of adoption and increased by approximately $468,000 effective with the lease amendment and extension dated March 2022. When the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available surrounding the Company’s borrowing rates at the lease commencement date in determining the present value of lease payments. The right-of use asset also includes any lease payments made at or before lease commencement less any lease incentives. As of March 31, 2023, the Company had right-of-use assets of $311,527 and As of March 31, 2022, the Company had right-of-use assets of $467,291 and The future minimum payments under operating leases were as follows at March 31, 2023: 2024 $ 116,918 2025 159,398 2026 53,492 2027 — 2028 — Total operating lease payments $ 329,808 Less: amounts representing interest (6,506) Present value of net operating lease payments $ 323,302 Less: current portion (151,230) Long-term portion of operating lease obligations $ 172,072 |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Mar. 31, 2023 | |
INCOME TAXES | |
INCOME TAXES | NOTE E – INCOME TAXES The Company files its income tax returns in the U.S. federal jurisdiction, and various state jurisdictions. Income tax returns filed for the fiscal years ended March 31, 2022, 2021, and 2020 are considered open and subject to examination by tax authorities. Deferred income tax assets and liabilities are computed and recognized for those differences that have future tax consequences and will result in net taxable or deductible amounts in future periods. Deferred tax expense or benefit is the result of changes in the net asset or liability for deferred taxes. The deferred tax liabilities and assets for the Company result primarily from net operating loss and tax credit carry forwards, reserves, and accrued liabilities. At March 31, 2023, the Company has total net federal operating loss carry forwards and of approximately $5,253,000 that has no fixed expiration date. In addition, the Company has research and development tax credit carry forwards of approximately $62,000 that begin to expire in the fiscal year ending 2030. There are certain limitations to the use and application of these items. Management reviews net operating loss carry forwards and income tax credit carry forwards to evaluate if those amounts are recoverable. After a review of projected taxable income, the components of the deferred tax asset, and the current global economic conditions including unresolved supply chain issues related to the acquisition of electronic microchips, it was determined that it is more likely than not that the tax benefits associated with the remaining components of the deferred tax assets will not be realized. This determination was made based on the Company’s prior history of losses from operations and the uncertainty as to whether the Company will generate sufficient taxable income to use the deferred tax assets prior to their expiration. Accordingly, a valuation allowance was established to fully offset the value of the deferred tax assets. Our ability to realize the tax benefits associated with the deferred tax assets depends primarily upon the timing of future taxable income and the expiration dates of the components of the deferred tax assets. If sufficient future taxable income is generated, we may be able to offset a portion of future tax expenses. The reconciliation between the statutory federal income tax provision and the actual effective tax provision is as follows: Years ended March 31, 2023 2022 Federal tax (benefit) at statutory rate (21%) before loss carry-forward $ 154,326 $ (16,412) Permanent and other differences (24,657) 12,017 State income tax (benefit) – net of federal effect 24,558 15,646 Change in deferred tax asset valuation allowance (139,750) (11,251) Current income tax expense $ 14,477 $ — The individual components of the Company’s deferred tax assets are as follows: March 31, 2023 2022 Deferred tax assets: Accruals and allowances $ 68,553 $ 68,553 Non-deductible capitalized inventory 6,196 54,895 Net operating loss carry forward 1,103,173 1,194,224 Research and development tax credit carry forward 61,701 61,701 Allowance for unrealizable deferred tax assets (1,239,623) (1,379,373) Net deferred tax asset $ — $ — |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Mar. 31, 2023 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | NOTE F – COMMITMENTS AND CONTINGENCIES From time to time, the Company is involved in various lawsuits and legal matters. It is the opinion of management, based on consultation with legal counsel, that there are no outstanding material claims outside of the normal course of business. The Company’s employment agreement with its CEO (the “CEO Agreement”) requires the Company to make certain post-employment payments to the CEO in the event of his termination following a change in control, death, disability, non-renewal, or resignation under terms of the CEO Agreement. Additionally, the CEO Agreement requires the Company to make post-employment payments, which can range from approximately $74,000 to $2,048,000, dependent upon the controlling event, as discussed above. In June, 2023, the Company renewed the CEO Agreement through July 31, 2024. |
CONCENTRATIONS
CONCENTRATIONS | 12 Months Ended |
Mar. 31, 2023 | |
CONCENTRATIONS | |
CONCENTRATIONS | NOTE G - CONCENTRATIONS The Company is primarily a distributor of safety products for use in home and business under both its trade names and private labels for other companies. The Company had one customer during the fiscal year ended March 31, 2023, that represented 18.2% of the Company’s net sales, and no customers in the fiscal year that ended March 31, 2022, that represented greater than 10% of the Company’s net sales. The Company had no customers in the fiscal year ended March 31, 2023, that represented greater than 10% of the Company’s accounts receivable, and one customer in the fiscal year ended 2022, that represented 13.6% of the Company’s accounts receivable on March 31, 2022. The Company acquires all the smoke alarm and carbon monoxide alarm safety products that it sells from Eyston Company, Ltd. Products manufactured for us by Eyston amounted to approximately 88.5% and 83.6% of our purchases for the fiscal years ended March 31, 2023, and 2022, respectively. At March 31, 2023, and 2022, the Company had accounts receivable due from Eyston of $75,947 and $358,958, respectively. |
RETIREMENT PLAN
RETIREMENT PLAN | 12 Months Ended |
Mar. 31, 2023 | |
RETIREMENT PLAN | |
RETIREMENT PLAN | NOTE H – RETIREMENT PLAN The Company has a retirement savings plan under Section 401(k) of the Internal Revenue Code. All full-time employees who have completed 12 months of service are eligible to participate. Employees are permitted to contribute up to the amounts prescribed by law. The Company may provide contributions to the plan consisting of a matching amount equal to a percentage of the employee’s contribution, not to exceed four percent (4%). Employer contributions were $45,777 and $43,688 for the years ended March 31, 2023, and 2022, respectively. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Mar. 31, 2023 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | NOTE I – RELATED PARTY TRANSACTIONS During the fiscal year ended March 31, 2023, and 2022, inventory purchases and other company expenses of approximately $1,748,000 and $1,582,000, respectively, were charged to credit card accounts of Harvey B. Grossblatt, the Company’s Chief Executive Officer and certain of his immediate family members. The Company subsequently reimbursed these charges in full. Mr. Grossblatt receives travel mileage and other credit card benefits from these charges. The maximum amount outstanding and due to Mr. Grossblatt at any point during the fiscal year ended March 31, 2023, and 2022 may include amounts submitted for personal expense reimbursement and amounts paid by Mr. Grossblatt for inventory purchases or other company expenses and amounted to approximately $217,000 and $211,000, respectively. The amount outstanding at March 31, 2023 and 2022 is approximately $0 and $44,000, respectively. |
INTANGIBLE ASSETS - NET
INTANGIBLE ASSETS - NET | 12 Months Ended |
Mar. 31, 2023 | |
INTANGIBLE ASSETS - NET | |
INTANGIBLE ASSETS - NET | NOTE J – INTANGIBLE ASSETS - NET Intangible assets consist of legal expenses of $89,434 incurred in obtaining and perfecting patents used by the Company in newly developed detector technology and are capitalized for financial statement purposes. Upon issuance, patents are amortized on a straight-line basis over twenty years. Amortization expense for the fiscal year ended March 31, 2023, and 2022 was $4,470 and $4,474, respectively. Accumulated amortization at March 31, 2023 and 2022 was $53,661 and $49,191, respectively. Amortization expense for the next five years is expected to be $4,472 per fiscal year through 2027. |
NOTE PAYABLE - EYSTON COMPANY,
NOTE PAYABLE - EYSTON COMPANY, LTD. | 12 Months Ended |
Mar. 31, 2023 | |
NOTE PAYABLE - EYSTON COMPANY, LTD. | |
NOTE PAYABLE - EYSTON COMPANY, LTD. | NOTE K – NOTE PAYABLE – EYSTON COMPANY, LTD. On March 31, 2020, the Company sold its fifty percent ownership interest in the Hong Kong Joint Venture and converted $1,081,440 of trade accounts payable due to the Hong Kong Joint Venture to an unsecured long-term interest only note payable with the principal balance due in April 2022. The terms of the note payable were amended subsequent to March 31, 2022, to provide for monthly payments of $100,000 beginning April 2022 and until the note payable is paid in full. Interest is based on the Shanghai Commercial Bank Limited in Hong Kong US Dollar prime rate published on the first day of each calendar month plus 2% (5.5% effective rate at March 31, 2022) and is payable monthly. The balance of the note payable at March 31, 2023 is $0. |
SHAREHOLDERS' EQUITY
SHAREHOLDERS' EQUITY | 12 Months Ended |
Mar. 31, 2023 | |
SHAREHOLDERS' EQUITY | |
SHAREHOLDERS' EQUITY | NOTE L – SHAREHOLDERS’ EQUITY Under the terms of the Company’s 2011 Non-Qualified Stock Option Plan, 120,000 shares of common stock are reserved for the granting of stock options. There were no stock options outstanding at March 31, 2023 or 2022. |
NATURE OF BUSINESS AND SUMMAR_2
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Mar. 31, 2023 | |
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Nature of Business | Nature of Business: |
Proposed Merger | Proposed Merger: |
Principles of Consolidation | Principles of Consolidation: |
Use of Estimates | Use of Estimates: |
Cash | Cash: |
Revenue Recognition | Revenue Recognition: The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for products sold. Purchase orders may contain stand-alone pricing applied to each of the multiple products ordered. Revenue is recorded at the transaction price net of estimates of variable consideration. The Company uses the expected value method based on historical data in considering the impact of estimates of variable consideration, which may include trade discounts, allowances, product returns (including rights of return) or warranty replacements. Estimates of variable consideration are included in revenue to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur. Disaggregation of Revenue disaggregation best depicts how our various product lines perform and are affected by economic factors. Revenue recognized by these categories for the fiscal years ended March 31, 2023, and 2022 are as follows: Fiscal Year ended March 31, 2023 March 31, 2022 Sales of safety alarms $ 18,691,090 $ 16,487,028 Sales of GFCI’s and ventilation fans 3,487,783 3,062,757 $ 22,178,873 $ 19,549,785 |
Accounts Receivable | Accounts Receivable: The Company assigns the majority of its trade receivables on a pre-approved non-recourse basis to Merchant Factors Corporation (Merchant or Factor) under a factoring agreement on an ongoing basis. Factoring charges recognized on assignment of receivables are deducted from revenue in the consolidated statements of operations and amounted to $191,225 and $165,579 for the years ended March 31, 2023, and 2022, respectively. Management considers amounts due from the Company’s factor to be “financing receivables”. Trade accounts receivable, foreign receivables, and receivables from our suppliers are not considered to be financing receivables. At the time a receivable is assigned to our factor, the credit risk associated with the credit worthiness of the debtor is assumed by the factor. The Company continues to bear any credit risk associated with delivery or warranty issues related to the products sold. Management assesses the credit risk of both its trade accounts receivable and its financing receivables based on the specific identification of accounts that have exceeded credit terms. An allowance for uncollectible receivables is provided based on that assessment. Changes in the allowance account from one accounting period to the next are charged to operations in the period the change is determined. Amounts ultimately determined to be uncollectible are eliminated from the receivable accounts and from the allowance account in the period that the receivables’ status is determined to be uncollectible. Based on the nature of the factoring agreement and prior experience, no allowance for uncollectible financing receivables has been provided and no amounts are considered to be past due at March 31, 2023. At March 31, 2023, and 2022, an allowance of $157,000 has been provided for uncollectible trade accounts receivable. |
Inventories | Inventories: |
Impairment of long-lived assets | Impairment of long-lived assets |
Leases | Leases |
Income Taxes | Income Taxes: The Company follows Accounting Standards Codification (ASC) 740-10 that gives guidance to tax positions related to the recognition and measurement of a tax position taken or expected to be taken in a tax return and requires that we recognize in our financial statements the impact of a tax position, if that position is more likely than not to be sustained upon an examination, based on the technical merits of the position. Interest and penalties, if any, related to income tax matters are recorded as income tax expenses. See Note E, Income Taxes. |
Warranties | Warranties: one |
Engineering and Product Development | Engineering and Product Development: |
Shipping and Handling Fees and Costs | Shipping and Handling Fees and Costs: |
Net Earnings (Loss) per Share | Net Earnings (Loss) per Share: |
Recently Issued Accounting Standards | Recently Issued Accounting Standards: |
NATURE OF BUSINESS AND SUMMAR_3
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Mar. 31, 2023 | |
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of revenue recognized by categories | Fiscal Year ended March 31, 2023 March 31, 2022 Sales of safety alarms $ 18,691,090 $ 16,487,028 Sales of GFCI’s and ventilation fans 3,487,783 3,062,757 $ 22,178,873 $ 19,549,785 |
PROPERTY AND EQUIPMENT - NET (T
PROPERTY AND EQUIPMENT - NET (Tables) | 12 Months Ended |
Mar. 31, 2023 | |
PROPERTY AND EQUIPMENT - NET | |
Schedule of estimated useful lives for financial reporting purposes | Leasehold improvements - Shorter of term of lease or useful life of asset Machinery and equipment - 5 to 10 years Furniture and fixtures - 5 to 15 years Computer equipment - 5 years |
Schedule of property and equipment | March 31, 2023 2022 Leasehold improvements $ 1,119,961 $ 1,119,961 Machinery and equipment 190,400 190,400 Furniture and fixtures 261,292 261,292 Computer equipment 302,634 302,634 1,874,287 1,874,287 Less accumulated depreciation (1,555,646) (1,396,660) $ 318,641 $ 477,627 |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Mar. 31, 2023 | |
LEASES | |
Summary of future minimum payments under operating leases | The future minimum payments under operating leases were as follows at March 31, 2023: 2024 $ 116,918 2025 159,398 2026 53,492 2027 — 2028 — Total operating lease payments $ 329,808 Less: amounts representing interest (6,506) Present value of net operating lease payments $ 323,302 Less: current portion (151,230) Long-term portion of operating lease obligations $ 172,072 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Mar. 31, 2023 | |
INCOME TAXES | |
Schedule of reconciliation between the statutory federal income tax provision and the actual effective tax provision | Years ended March 31, 2023 2022 Federal tax (benefit) at statutory rate (21%) before loss carry-forward $ 154,326 $ (16,412) Permanent and other differences (24,657) 12,017 State income tax (benefit) – net of federal effect 24,558 15,646 Change in deferred tax asset valuation allowance (139,750) (11,251) Current income tax expense $ 14,477 $ — |
Schedule of deferred tax assets | March 31, 2023 2022 Deferred tax assets: Accruals and allowances $ 68,553 $ 68,553 Non-deductible capitalized inventory 6,196 54,895 Net operating loss carry forward 1,103,173 1,194,224 Research and development tax credit carry forward 61,701 61,701 Allowance for unrealizable deferred tax assets (1,239,623) (1,379,373) Net deferred tax asset $ — $ — |
NATURE OF BUSINESS AND SUMMAR_4
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | 12 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Revenues | $ 22,178,873 | $ 19,549,785 |
Sales of safety alarms | ||
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Revenues | 18,691,090 | 16,487,028 |
Sales of GFCI's and ventilation fans | ||
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Revenues | $ 3,487,783 | $ 3,062,757 |
NATURE OF BUSINESS AND SUMMAR_5
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Additional Information (Details) - USD ($) | 12 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Factoring charges | $ 191,225 | $ 165,579 |
Allowance for uncollectible financing receivables | 0 | |
Amounts are considered to be past due | 0 | |
Allowance for uncollectible trade accounts receivable | 157,000 | 157,000 |
Expenses incurred for inventory quality control | 45,000 | 45,000 |
Shipping and handling costs | 524,016 | 426,740 |
Impairment to long-lived assets | $ 0 | $ 0 |
Warranty period for products purchased for resale | 1 year | |
Number of securities outstanding other than common stock | 0 | 0 |
Minimum | ||
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Warranty period for all products sold | 1 year | |
Maximum | ||
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Warranty period for all products sold | 10 years |
SHORT-TERM BORROWINGS AND CRE_2
SHORT-TERM BORROWINGS AND CREDIT ARRANGEMENTS (Details) - USD ($) | 12 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Short-term Debt | ||
Line of credit - factor | $ 1,459,350 | $ 2,157,086 |
Line of credit facility borrowing capacity description | Under the modified Agreement the Company may borrow eighty percent (80%) of eligible accounts receivable. Additional funding, characterized by Merchant as an over advance, may be provided up to one hundred percent (100%) of eligible accounts receivable. The over advance portion, if any, may not exceed fifty percent (50%) of eligible inventory up to a maximum of $500,000. | |
Line of credit facility interest rate description | Collected cash maintained on deposit with the factor earns interest at the factor’s prime rate of interest less 2.5 percent (effective rate of 5.50% and 1.00% at March 31, 2023 and 2022, respectively.) | |
Factoring agreement receivables sold | $ 22,581,988 | 18,449,900 |
Amount due from factor | 2,944,370 | 2,792,901 |
Due from factors at client risk | 633,000 | 589,000 |
Merchant Factors Corporation | ||
Short-term Debt | ||
Long-term line of credit | 852,000 | |
Line of credit - factor | $ 1,459,350 | $ 2,157,086 |
Line of credit facility interest rate description | bear interest at the prime commercial rate of interest, as published, plus two percent (effective rate 10.0% and 5.50% at March 31, 2023 and March 31, 2022, respectively). | |
Accounts receivables factoring agreement expiration date | Jan. 06, 2024 | |
Accounts receivables factoring agreement term | 2 years |
PROPERTY AND EQUIPMENT - NET -
PROPERTY AND EQUIPMENT - NET - Estimated useful lives for financial reporting purposes (Details) | 12 Months Ended |
Mar. 31, 2023 | |
Leasehold improvements | |
Property, Plant and Equipment | |
Property plant and equipment useful life description | Shorter of term of lease or useful life of asset |
Machinery and equipment | Maximum | |
Property, Plant and Equipment | |
Property, plant and equipment, useful life | 10 years |
Machinery and equipment | Minimum | |
Property, Plant and Equipment | |
Property, plant and equipment, useful life | 5 years |
Furniture and fixtures | Maximum | |
Property, Plant and Equipment | |
Property, plant and equipment, useful life | 15 years |
Furniture and fixtures | Minimum | |
Property, Plant and Equipment | |
Property, plant and equipment, useful life | 5 years |
Computer equipment | |
Property, Plant and Equipment | |
Property, plant and equipment, useful life | 5 years |
PROPERTY AND EQUIPMENT - NET _2
PROPERTY AND EQUIPMENT - NET - Property and equipment (Details) - USD ($) | Mar. 31, 2023 | Mar. 31, 2022 |
Property, Plant and Equipment | ||
Property plant and equipment gross | $ 1,874,287 | $ 1,874,287 |
Less accumulated depreciation | (1,555,646) | (1,396,660) |
Property, plant and equipment, net, total | 318,641 | 477,627 |
Leasehold improvements | ||
Property, Plant and Equipment | ||
Property plant and equipment gross | 1,119,961 | 1,119,961 |
Machinery and equipment | ||
Property, Plant and Equipment | ||
Property plant and equipment gross | 190,400 | 190,400 |
Furniture and fixtures | ||
Property, Plant and Equipment | ||
Property plant and equipment gross | 261,292 | 261,292 |
Computer equipment | ||
Property, Plant and Equipment | ||
Property plant and equipment gross | $ 302,634 | $ 302,634 |
PROPERTY AND EQUIPMENT - NET _3
PROPERTY AND EQUIPMENT - NET - Additional information (Details) - USD ($) | 12 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Property, Plant and Equipment | ||
Depreciation expense | $ 158,986 | $ 174,342 |
Depreciation of right-of-use asset and decrease in other assets | 155,764 | 171,122 |
Right-of-use lease assets | 311,527 | 467,291 |
Leasehold improvements | ||
Property, Plant and Equipment | ||
Right-of-use lease assets | $ 311,527 | $ 467,291 |
LEASES (Details)
LEASES (Details) - USD ($) | Mar. 31, 2023 | Mar. 31, 2022 |
Future minimum payments under operating leases | ||
2024 | $ 116,918 | |
2025 | 159,398 | |
2026 | 53,492 | |
Total operating lease payments | 329,808 | |
Less: amounts representing interest | (6,506) | |
Present value of net operating lease payments | 323,302 | $ 467,291 |
Less: current portion | 151,230 | |
Long-term portion of operating lease obligations | $ 172,072 |
LEASES - Additional Information
LEASES - Additional Information (Details) | 12 Months Ended | |
Mar. 31, 2023 USD ($) ft² | Mar. 31, 2022 USD ($) | |
Leases | ||
Monthly rental expense | $ 15,000 | |
Operating lease rent increment percentage | 3% | |
Operating lease, rent expenses | $ 265,990 | $ 252,975 |
Lease, practical expedients, package [true false] | true | |
Right-of-use asset in exchange for operating lease liability | $ 485,000 | |
Adoption of lease payment increased | 468,000 | |
Right-of-use lease assets | $ 311,527 | $ 467,291 |
Right-of-use lease assets | Property, Plant and Equipment, Net | Property, Plant and Equipment, Net |
Lease liabilities | $ 323,302 | $ 467,291 |
Weighted-average remaining lease term | 2 years | 3 years |
Weighted-average discount rate | 5.50% | 5.50% |
Cash paid for amounts included in measurement of lease liabilities | $ 143,989 | $ 175,770 |
Operating lease costs | 184,370 | $ 175,770 |
Rent expense | $ 4,900 | |
Office in Naperville | ||
Leases | ||
Land subject to ground leases | ft² | 3,400 | |
Office In Baltimore | ||
Leases | ||
Land subject to ground leases | ft² | 15,000 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) | 12 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
INCOME TAXES | ||
Federal tax (benefit) at statutory rate (21%) before loss carry-forward | $ 154,326 | $ (16,412) |
Permanent and other differences | (24,657) | 12,017 |
State income tax (benefit) - net of federal effect | 24,558 | 15,646 |
Change in deferred tax asset valuation allowance | (139,750) | $ (11,251) |
Current income tax expense | $ 14,477 |
INCOME TAXES - Company's deferr
INCOME TAXES - Company's deferred tax assets (Details) - USD ($) | Mar. 31, 2023 | Mar. 31, 2022 |
Deferred tax assets: | ||
Accruals and allowances | $ 68,553 | $ 68,553 |
Non deductible capitalized inventory and reorganization expenditures | 6,196 | 54,895 |
Net operating loss carry forward | 1,103,173 | 1,194,224 |
Research and development tax credit carry forward | 61,701 | |
Allowance for unrealizable deferred tax assets | $ (1,239,623) | $ (1,379,373) |
INCOME TAXES - Additional Infor
INCOME TAXES - Additional Information (Details) - USD ($) | 12 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
INCOME TAXES | ||
Operating loss carryforwards | $ 5,253,000 | |
Research and development tax credit carry forward | $ 61,701 | |
Percentage of federal statutory income tax rate | (21.00%) |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) | Mar. 31, 2023 USD ($) |
Maximum | |
Post-employment payments | $ 2,048,000 |
Minimum | |
Post-employment payments | $ 74,000 |
CONCENTRATIONS (Details)
CONCENTRATIONS (Details) - USD ($) | 12 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
CONCENTRATIONS | ||
Receivables due from Eyston Company, Ltd. | $ 75,947 | $ 358,958 |
One Customer | Net sales | Customer Concentration Risk | ||
CONCENTRATIONS | ||
Concentration risk, percentage | 18.20% | 13.60% |
Two Customer | Net sales | Customer Concentration Risk | ||
CONCENTRATIONS | ||
Concentration risk, percentage | 88.50% | 83.60% |
RETIREMENT PLAN (Details)
RETIREMENT PLAN (Details) - USD ($) | 12 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
RETIREMENT PLAN | ||
Percentage of the employee's contribution | 4% | |
Contributions by employer | $ 45,777 | $ 43,688 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - Chief Executive Officer - USD ($) | 12 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
RELATED PARTY TRANSACTIONS | ||
Inventory purchases and other company expenses | $ 1,748,000 | $ 1,582,000 |
Due to related parties | 0 | 44,000 |
Maximum | ||
RELATED PARTY TRANSACTIONS | ||
Inventory purchases and other company expenses | $ 217,000 | $ 211,000 |
INTANGIBLE ASSETS - NET (Detail
INTANGIBLE ASSETS - NET (Details) - USD ($) | 12 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Intangible assets of legal expenses | $ 89,434 | |
Amortization expenses | 4,470 | $ 4,474 |
Accumulated amortization | 53,661 | $ 49,191 |
Amortization expenses for the next five years | $ 4,472 | |
Patents | ||
Finite-lived intangible asset, useful life | 20 years |
NOTE PAYABLE - EYSTON COMPANY_2
NOTE PAYABLE - EYSTON COMPANY, LTD. (Details) | 1 Months Ended | ||
Mar. 31, 2020 USD ($) | Mar. 31, 2023 USD ($) | Mar. 31, 2022 USD ($) | |
NOTE PAYABLE - EYSTON COMPANY, LTD. | |||
Principal balance due and payable | $ 100,000 | ||
Notes payable outstanding | $ 1,081,440 | ||
Unsecured long-term interest only note payable | |||
NOTE PAYABLE - EYSTON COMPANY, LTD. | |||
Trade accounts payable converted to an unsecured long-term note payable | $ 1,081,440 | ||
Effective interest rate (as a percent) | 5.50% | ||
Unsecured long-term interest only note payable | Prime Rate | |||
NOTE PAYABLE - EYSTON COMPANY, LTD. | |||
Spread on variable interest rate (as a percent) | 2% | ||
Hong Kong Joint Venture | |||
NOTE PAYABLE - EYSTON COMPANY, LTD. | |||
Notes Payable | $ 0 | ||
Hong Kong Joint Venture | Disposed by sale | |||
NOTE PAYABLE - EYSTON COMPANY, LTD. | |||
Ownership interest disposed | 50 |
SHAREHOLDERS' EQUITY (Details)
SHAREHOLDERS' EQUITY (Details) | Mar. 31, 2023 shares |
SHAREHOLDERS' EQUITY | |
Share-based compensation arrangement by share-based payment award, number of shares authorized | 120,000 |