DeFi Capital Markets, Inc 10-Q, filed Aug 19, 2025
DeFi Capital Markets, Inc. (DCM)
About this 10-Q
DeFi Capital Markets, Inc filed this 10-Q on August 19, 2025, covering the quarter ended June 30, 2025.
Headline figures
Quarter ended June 30, 2025, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $3.82M
- down 16.8% from $4.6M a year earlier
- Net income
- $1.81M
- compared with a net loss of $442.21K a year earlier
- Diluted EPS
- $0.78
- compared with -$0.19 a year earlier
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly period ended
OR
SECURITIES EXCHANGE ACT OF 1934
Commission file number
(Exact name of registrant as specified in its charter)
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incorporation or organization) |
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(Address of principal executive offices) |
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Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading symbol(s) | Name of each exchange on which registered |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark if the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ |
| Accelerated filer ☐ |
| Smaller reporting company | |
Emerging growth company | | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
At August 19, 2025, the number of shares outstanding of the registrant’s common stock was
TABLE OF CONTENTS
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| | Condensed Consolidated Balance Sheets at June 30, 2025 (unaudited) and March 31, 2025 | 3 | |
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| | Notes to Condensed Consolidated Financial Statements (unaudited) | 8 | |
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| Management’s Discussion and Analysis of Financial Condition and Results of Operations | 13 | ||
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PART I - FINANCIAL INFORMATION
ITEM 1. | CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
UNIVERSAL SAFETY PRODUCTS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS | | (unaudited) | | (audited) | ||
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CURRENT ASSETS |
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Cash | | $ | | $ | | |
Cash – investment | |
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Accounts receivable: | |
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Trade, net of provision for credit losses of $ | |
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Receivables - other | | | | | | |
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Amount due from factor | |
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Inventories – finished goods | |
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Assets – Held for Sale | | | — | | | |
Prepaid expenses | |
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Deferred tax asset | | | — | | | |
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TOTAL CURRENT ASSETS | |
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TOTAL ASSETS | | $ | | | $ | |
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LIABILITIES AND SHAREHOLDERS’ EQUITY | |
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CURRENT LIABILITIES | |
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Line of credit - factor | | $ | — | | $ | |
Short-term portion of operating lease liability | | | — | | | |
Accounts payable - trade | |
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Accounts payable – Eyston Company Ltd. | |
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Accrued liabilities: | |
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Accrued payroll and employee benefits | |
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Accrued commissions and other | |
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TOTAL CURRENT LIABILITIES | |
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COMMITMENTS AND CONTINGENCIES | |
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SHAREHOLDERS’ EQUITY | |
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Common stock, $ | | | | | | |
Additional paid-in capital | | | | | | |
Accumulated Deficit | | | ( | | | ( |
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TOTAL SHAREHOLDERS’ EQUITY | | | | | | |
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | | $ | | | $ | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
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UNIVERSAL SAFETY PRODUCTS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| | Three Months Ended June 30, | ||||
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Net sales | | $ | | | $ | |
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Cost of goods sold | |
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GROSS PROFIT | |
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Selling, general and administrative expense | |
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Engineering and product development expense | |
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Operating loss | |
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Other income (expense): | |
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Gain on sale of assets | | | | | | — |
Interest income (expense) | |
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Net income (loss) before taxes | | | | | | ( |
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Provision for income taxes: | | | | | | |
Current | | | | | | — |
Deferred | | | | | | — |
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NET INCOME (LOSS) | | $ | | | $ | ( |
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Earnings (loss) per share: | |
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Basic and diluted | | $ | | | $ | ( |
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Shares used in computing (loss) earnings per share: | |
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Weighted average basic and diluted shares outstanding | |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
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UNIVERSAL SAFETY PRODUCTS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY
THREE MONTHS ENDED JUNE 30, 2025
(Unaudited)
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Balance at April 1, 2025 |
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Net Income |
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Balance at June 30, 2025 | | | | $ | | | $ | | | $ | ( | | $ | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
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UNIVERSAL SAFETY PRODUCTS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY
THREE MONTHS ENDED JUNE 30, 2024
(Unaudited)
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Balance at April 1, 2024 |
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Net Loss | | | | | | | | | | | ( | | | ( |
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Balance at June 30, 2024 | | | | $ | | | $ | | | $ | ( | | $ | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
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UNIVERSAL SAFETY PRODUCTS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
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OPERATING ACTIVITIES: |
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Net income (loss) | | $ | | | $ | ( |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |
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Gain on sale of assets | | | ( | | | — |
Depreciation and amortization | |
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Deferred income taxes | |
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Changes in operating assets and liabilities: | |
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Decrease in accounts receivable and amount due from factor | |
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Decrease (increase) in inventories and prepaid expenses | |
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Decrease in accounts payable, accrued liabilities, and operating lease liability | |
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NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES | |
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INVESTING ACTIVITIES: | | | | | | |
Proceeds from sale of assets | |
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Decrease in inventories and intangible assets – held for sale | |
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Decrease in trade accounts payable related to closing costs on sale | |
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NET CASH PROVIDED BY INVESTING ACTIVITIES | |
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FINANCING ACTIVITIES: | | | | | | |
Net (repayment) borrowing – line of credit - Factor | | | ( | | | |
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES | | | ( | | | |
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NET INCREASE IN CASH | |
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CASH AT BEGINNING OF PERIOD | |
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CASH AT END OF PERIOD | | $ | | | $ | |
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Supplemental Information: | | | | | | |
Interest paid | | $ | — | | $ | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
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UNIVERSAL SAFETY PRODUCTS, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Statement of Management
Universal Safety Products, Inc., formerly “Universal Security Instruments, Inc.” (“we” or “the Company”) designs and markets a variety of popularly priced safety products which, during the period covered by this Quarterly Report, consisted primarily of smoke alarms, carbon monoxide alarms and related products. Most of our products require minimal installation and are designed for easy installation by the consumer without professional assistance and are sold through retail stores. We also market products to the electrical distribution trade through our wholly owned subsidiary, Universal Safety Electric, Inc., formerly, USI Electric, Inc. (“Universal Electric”). The electrical distribution trade includes electrical and lighting distributors as well as manufactured housing companies. Products sold by Universal Electric usually require professional installation.
Management had been seeking access to additional funding or other resources, or the right strategic business combination, which would allow the Company to drive long-term value for its shareholders while taking advantage of growth opportunities that the Company seeks to execute. In furtherance thereof, as previously announced on October 31, 2024, the Company entered into an Asset Purchase Agreement with Feit Electric Company, Inc. (“Feit”) pursuant to which Feit agreed to acquire the smoke and carbon monoxide alarm portion of the Company’s business and the non-tangible assets of the Company, including but not limited to the trade name of Universal Security Instruments, Inc. and Universal Electric, Inc. The Closing was subject to the approval of the transaction by the requisite vote of the shareholders of the Company. A special meeting of the shareholders to approve the sale and related actions was held on April 15, 2025, and the asset sale was approved. Accordingly on May 22, 2025, the Company closed on the asset sale to Feit pursuant to the terms of the Asset Purchase Agreement. The assets held for sale in accordance with the Asset Purchase Agreement at March 31, 2025, are shown separately in the financial statements accompanying this Quarterly Report and are valued at the lower of the assets carrying value or fair value less selling cost. The Company currently intends to continue importing and marketing its product lines other than smoke alarms and carbon monoxide alarms and is exploring other business opportunities to drive long-term value for our shareholders.
The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiary Universal Electric. Except for the condensed consolidated balance sheet as of March 31, 2025, which was derived from audited financial statements, the accompanying condensed consolidated financial statements are unaudited. Significant inter-company accounts and transactions have been eliminated in consolidation. In the opinion of the Company’s management, the interim condensed consolidated financial statements include all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation of the results for the interim periods. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (US-GAAP) have been condensed or omitted. The interim condensed consolidated financial statements should be read in conjunction with the Company’s March 31, 2025, audited financial statements filed with the Securities and Exchange Commission on Form 10-K as filed on July 29, 2025. The interim operating results are not necessarily indicative of the operating results for the full fiscal year.
Line of Credit – Factor
The Company entered into an Agreement with Merchant Financial Group (Merchant) for the purpose of factoring the Company’s trade accounts receivable. Under the Agreement the Company may borrow eighty percent (
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Use of Estimates
The preparation of the condensed consolidated financial statements in conformity with US-GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ materially from those estimates.
Revenue Recognition
The Company’s primary source of revenue is the sale of safety and security products based upon purchase orders or contracts with customers. Revenue is recognized at a point in time once the Company has determined that the customer has obtained control over the product. Control is typically deemed to have been transferred to the customer when the product is shipped or delivered to the customer. Customers may not return, exchange or refuse acceptance of goods without our approval. Generally, the Company does not grant extended payment terms. Shipping and handling costs associated with outbound freight, after control over a product has transferred to a customer, are accounted for as a cost to complete the sale and are recorded in selling, general and administrative expense. Remaining performance obligations represent the transaction price of firm orders for satisfied or partially satisfied performance obligations on contracts with an original expected duration of one year or more. The Company’s contracts are predominantly short-term in nature with a contract term of one year or less. For those contracts, the Company has utilized the practical expedient in ASC Topic 606 exempting the Company from disclosure of the transaction price allocated to remaining performance obligations if the performance obligation is part of a contract that has an original expected duration of one year or less.
The amount of revenue recognized reflects the consideration 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
The Company presents below revenue associated with sales of products acquired from Eyston Company Ltd. (Eyston) separately from revenue associated with sales of ground fault circuit interrupters (GFCI’s) and ventilation fans. The Company believes this disaggregation best depicts how our various product lines perform and are affected by economic factors. Revenue recognized by these categories for the three months ended June 30, 2025, and 2024 are as follows:
| | Three months ended | ||||
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| June 30, 2024 | ||
Sales of products acquired from Eyston | | $ | | | $ | |
Sales of GFCI’s and ventilation fans | | | | | | |
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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 acquires all of the smoke alarm and carbon monoxide alarm safety products that it sells from Eyston Company, Ltd. The Company had
The Company did not have any customers that exceeded ten percent of sales for the three-month period ended June 30, 2024. The Company had
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Related Party Transactions
During the three-month periods ended June 30, 2025, and 2024, inventory purchases and other company expenses of approximately $
Receivables
Receivables are recorded when the Company has an unconditional right to consideration. We have established a provision for credit losses based upon historical experience and the consideration of current and future economic conditions.
Income Taxes
We calculate our interim tax provision in accordance with the guidance for accounting for income taxes in interim periods. We estimate the annual effective tax rate and apply that tax rate to our ordinary quarterly pre-tax income. The tax expense or benefit related to discrete events during the interim period is recognized in the interim period in which those events occurred.
The Company recognizes a liability or asset for the deferred tax consequences of temporary differences between the tax basis of assets or liabilities and their reported amounts in the condensed consolidated financial statements. These temporary differences may result in taxable or deductible amounts in future years when the reported amounts of the assets or liabilities are recovered or settled.
Management reviews net operating loss carry-forwards and income tax credit carry forwards to evaluate if those amounts are recoverable. The Company expects to use approximately $
The Company follows ASC 740-10 which provides guidance for 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 condensed consolidated 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.
Accounts Receivable, Amount Due From Factor, and Allowance for Credit Losses
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. 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 sales to customers that are denied credit by the factor, dispute delivery, and/or have warranty issues related to the products sold.
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.
Management assesses the credit risk of both its trade accounts receivables and its financing receivables based on the specific identification of accounts. A provision for credit losses is provided based on that assessment. Changes in the provision 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 provision for credit losses in the period that the receivables’ status is determined to be uncollectible. Management considers the following factors when determining the collectability of specific customer accounts: customer creditworthiness, past transaction history with the customer, current industry trends, and changes in customer payment terms. Our normal collection cycle
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ranges between thirty and forty days. Estimated uncollectible amounts are charged to earnings and a credit to a valuation allowance. Balances which remain outstanding after reasonable collection efforts are written off through a charge to the valuation allowance and a credit to accounts receivable. Historically, the level of uncollectible accounts has not been significant. Based on the nature of the factoring agreement and prior experience,
Earnings per Common Share
Basic earnings per common share is computed based on the weighted average number of common shares outstanding during the periods presented. Diluted earnings per common share is computed based on the weighted average number of common shares outstanding plus the effect of stock options and other potentially dilutive common stock equivalents. The dilutive effect of stock options and other potentially dilutive common stock equivalents is determined using the treasury stock method based on the Company’s average stock price. There were
Contingencies
From time to time, the Company is involved in various claims and routine litigation matters. In the opinion of management, after consultation with legal counsel, the outcomes of such matters are not anticipated to have a material adverse effect on the Company’s condensed consolidated financial position, results of operations, or cash flows in future years.
Leases
The Company is a lessee in lease agreements for office space. Certain of the Company’s leases contain provisions 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 April 2025, we extended our operating lease for a
The Company maintained an operating lease for office space in Naperville, Illinois. This lease, consisting of
Rent expense, including common area maintenance, totaled approximately $
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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. 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 lease incentives. As of March 31, 2025, the Company had right-of-use assets of $
Recent Accounting Pronouncements Not Yet Adopted
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which is intended to improve income tax disclosure requirements by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) the disaggregation of income taxes paid by jurisdiction. The guidance makes several other changes to the income tax disclosure requirements. The guidance in this ASU is effective for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. The Company is currently evaluating the effect this ASU will have on its consolidated financial statements and footnote disclosures.
Subsequent Events
On August 13, 2025 (the “Execution Date”), the Company entered into a Securities Purchase Agreement (the “Agreement”) with SJC Lending LLC, a Delaware limited liability company (“SJC”), pursuant to which the Company agreed to sell to SJC convertible promissory notes in the aggregate principal amount of up to $
The consummation of the transactions contemplated by the Agreement, specifically the conversion of the Convertible Notes in an aggregate number in excess of
The material terms of the Agreement and the Convertible Notes are summarized in Form 8-K, filed on August 14, 2025, and are included herein by reference.
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ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
As used throughout this Report, “we,” “our,” “the Company” and similar words refers to Universal Safety Products, Inc.
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains certain forward-looking statements reflecting our current expectations with respect to our operations, performance, financial condition, and other developments. These forward-looking statements may generally be identified by the use of the words “may”, “will”, “believes”, “should”, “expects”, “anticipates”, “estimates”, and similar expressions. These statements are necessarily estimates reflecting management’s best judgment based upon current information and involve a number of risks and uncertainties. We caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made, and readers are advised that various factors could affect our financial performance and could cause our actual results for future periods to differ materially from those anticipated or projected. While it is impossible to identify all such factors, such factors include, but are not limited to, those risks identified in our periodic reports filed with the Securities and Exchange Commission.
OVERVIEW
We are in the business of marketing and distributing safety and security products. Our financial statements detail our sales and other operational results for the three-month periods ended June 30, 2025, and 2024.
Management had been seeking access to additional funding or other resources, or the right strategic business combination, which would allow the Company to drive long-term value for its shareholders while taking advantage of growth opportunities that the Company seeks to execute. In furtherance thereof, as previously announced on October 31, 2024, the Company entered into an Asset Purchase Agreement with Feit Electric Company, Inc. (“Feit”) pursuant to which Feit agreed to acquire the smoke and carbon monoxide alarm portion of the Company’s business and the non-tangible assets of the Company, including but not limited to the trade name of Universal Security Instruments, Inc. and Universal Electric, Inc. The Closing was subject to the approval of the transaction by the requisite vote of the shareholders of the Company. A special meeting of the shareholders to approve the sale and related actions was held on April 15, 2025, and the asset sale was approved. Accordingly on May 22, 2025, the Company closed on the asset sale to Feit pursuant to the terms of the Asset Purchase Agreement. The Company currently intends to continue importing and marketing its product lines other than smoke alarms and carbon monoxide alarms and is exploring other business opportunities to drive long-term value for our shareholders.
Changes in international trade duties and other aspects of international trade policy, both in the U.S. and abroad, could materially impact the cost of our products. We import all our products. As an importer, we are subject to numerous tariffs which vary depending on types of products and country of origin, changes in economic and political conditions in the country of manufacture, potential trade restrictions, and currency fluctuations. Substantially all our safety products are imported from the People’s Republic of China. Certain of these products are currently subject to tariffs of fifty-five (55%) percent. The imposition of and modification of tariffs during the latter half of the fiscal year ended March 31, 2025, and subsequent thereto, has increased uncertainty as to the short-term sustainability of importing products from our principal suppliers. If the Company is unable to import products at a competitive price point our sales could be adversely affected.
RESULTS OF OPERATIONS
Three Months Ended June 30, 2025 and 2024
Sales. Net sales for the three months ended June 30, 2025, were $3,824,247 compared to $4,598,516 for the comparable three months in the prior year, a decrease of $774,269 (16.8%). As previously discussed, the Company sold the rights to sell a significant portion of its product line on May 22, 2025. Sales subsequent to this date include only those products which the Company continues to import and market.
Gross Profit Margin. Gross profit margin is calculated as net sales less cost of goods sold expressed as a percentage of net sales. Our gross profit margin was 18 2% and 23.7% of sales for the quarters ended June 30, 2025, and 2024, respectively. Gross margins were negatively impacted in the periods ended June 30, 2025, and 2024 principally due to tariffs, the mix of products sold due to the previously discussed sale of a portion of our business, and higher ocean freight costs.
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Expenses. Selling, general and administrative expenses were $1,113,303 for the three months ended June 30, 2025, and $1,397,421 for the comparable three months in the prior year. As a percentage of net sales, these expenses decreased to 29.1% for the three-month period ended June 30, 2025, from 30.4% for the 2024 period. These expenses, as a percentage of net sales, were comparable to the same period of the prior fiscal year.
Engineering and Product Development. Engineering and product development expenses were $112,007 for the three-month period ended June 30, 2025, were comparable to $87,601 for the same quarter of the prior year.
Interest Expense. Our interest income was $3,827 for the quarter ended June 30, 2025, compared to interest expense of $44,888 for the quarter ended June 30, 2024. Interest expense is dependent upon the total amounts borrowed from the Factor and interest rates during the period as compared to the corresponding period of the prior year.
Gain on Sale of Assets. We reported a gain on the sale of assets previously held for sale in the amount of $2,820,668. The purchase price of approximately $4,955,000 was reduced by the basis of the assets held for sale amounting to approximately $1,682,000 and by certain customary costs associated with the sale, including commissions and consulting fees amounting to approximately $834,000.
Provision for Income Taxes. Current and deferred income tax provisions amounting to $122,000 and $361,000, respectively were provided in the current fiscal quarter ended June 30, 2025, to record the expected tax liability associated with net earnings, principally arising as a result of the gain on the sale of assets held for sale. The deferred tax liability is a reversal of the deferred tax asset recorded in the fiscal year ended March 31, 2025, related to the sale of assets held for sale.
Net Income (Loss). We reported net income of $1,810,321 for the quarter ended June 30, 2025, compared to a net loss of $442,206 for the corresponding quarter of the prior fiscal year, a $2,252,527 increase in net income. The primary reason for the increase in the net income is the Company’s sale of a portion of its business, as previously discussed, resulting in a gain on the sale of $2,820,668.
Operating activities provided cash of $2,752,110 for the three months ended June 30, 2025. This was primarily due to a decrease in accounts receivable and amounts due from factor or $1,579,321, a decrease in inventories and prepaid expenses of $3,768,052, net income of $1,810,321, a decrease in deferred tax assets of $361,000, and offset by a decrease in accounts payable and accrued expenses of $1,945,916 and the gain on sale of asset of $2,820,668.
Operating activities used cash of $1,198,108 for the three months ended June 30, 2024. This was primarily due to an increase in inventories, prepaid expenses and other of $260,271, a decrease in accounts payable and accrued liabilities of $852,240, and a net loss of $442,206, and offset by a decrease in accounts receivable and amount due from factor of $354,990.
Investing activities for the three months ended June 30, 2025, provided cash from the sale of assets, net of the payment of related liabilities, of $2,820,668.
Financing activities used cash of $2,100,458 during the three months ended June 30, 2025, which is comprised of repayments net of advances from the factor. Financing activities provided cash of $1,454,566 during the three months ended June 30, 2024, which is comprised of borrowings net of advances from the factor.
Liquidity and Capital Resources
The Company believes its balances of cash, funds available to borrow under the terms of its factoring agreement, and cash generated by ongoing operations will be sufficient to satisfy its cash requirements over the next twelve months and beyond. The Company’s contractual cash requirements have not changed materially since it filed its Form 10-K for the fiscal year ended March 31, 2025.
14
CRITICAL ACCOUNTING POLICIES
In the notes to the consolidated financial statements, and in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Form 10-K, we have disclosed those accounting policies that we consider to be significant in determining our results of Operations and financial condition. There have been no material changes to those policies that we consider to be significant since the filing of our Form 10-K. The accounting principles used in preparing our unaudited condensed consolidated financial statements conform in all material respects to accounting principles generally accepted in the United States of America.
ITEM 4.CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We maintain a system of disclosure controls and procedures (as such item is defined in Rules 13a – 15(e) and 15d – 15(e) of the Exchange Act) that is designed to provide reasonable assurance that information, which is required to be disclosed by us in the reports that we file or submit under the Securities and Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission, and is accumulated and communicated to management in a timely manner. Our Chief Executive Officer and Chief Financial Officer have evaluated this system of disclosure controls and procedures in accordance with applicable Securities and Exchange Commission guidance as of the end of the period covered by this quarterly report and have concluded that disclosure controls and procedures were not effective because the Company has not yet completed its remediation of the material weaknesses previously identified and disclosed in the Company’s Annual Report on Form 10-K for the year ended March 31, 2025, the end of its most recent fiscal year.
Material weaknesses arose during the fiscal year ended March 31, 2025, that continued to exist in the fiscal quarter ended June 30, 2025, related to the inherent risk associated with the lack of segregation of duties due to limited staffing in the accounting function. The Company plans to remediate the material weakness by adding additional personnel to the accounting function, which has not yet occurred.
Material weaknesses arose during the fiscal year ended March 31, 2024, that continued to exist in the fiscal quarter ended June 30, 2025, in the management review controls over classification of and disclosure of amounts within the financial statements resulting in revisions of amounts previously published in the March 31, 2024, financial statements. The Company plans to remediate the material weakness by changing to the proper reporting of the classification of amounts, and inclusion of the required disclosures.
Material weaknesses arose during the fiscal year ended March 31, 2024, that continued to exist in the fiscal quarter ended June 30, 2025, in the management review controls over the classification of and accounting for income taxes. The Company plans to remediate the material weakness by engaging an independent expert to review the Company’s current and deferred tax provisions.
Material weaknesses arose during the fiscal year ended March 31, 2024, that continued to exist in the fiscal quarter ended June 30, 2025 in management’s review and control over documentation supporting entries posted to the Company’s general ledger. The Company plans to remediate the material weakness by implementing procedures to improve the review of, and documentation used to support, entries to the Company’s general ledger.
Changes in Internal Control over Financial Reporting
There have been no changes in internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting during the quarter ended June 30, 2025.
15
PART II - OTHER INFORMATION
ITEM 1. | LEGAL PROCEEDINGS |
From time to time, the Company is involved in various lawsuits and legal matters. It is the opinion of management, based on the advice of legal counsel, that these matters will not have a material adverse effect on the Company’s financial statements.
ITEM 5. | OTHER INFORMATION |
None of the Company’s directors and officers
ITEM 6. | EXHIBITS |
Exhibit No. |
| |
3.1 | | |
3.2 | | |
3.3 | | |
31.1 | | Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer* |
31.2 | | Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer* |
32.1 | | |
99.1 | | |
101 | | Interactive data files providing financial information from the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2025 in XBRL (eXtensible Business Reporting Language) pursuant to Rule 405 of Regulation S-T: (i) Condensed Consolidated Balance Sheets as of June 30, 2025 and March 31, 2025, (ii) Condensed Consolidated Statements of Operations for the three months ended June 30, 2025 and 2024, (iii) Condensed Consolidated Statements of Cash Flows for the three months ended June 30, 2025 and 2024, (v) Condensed Consolidated Statements of Shareholders’ Equity for the three months ended June 30, 2025 and 2024, and (vi) Notes to Condensed Consolidated Financial Statements* |
104 | | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
* | Filed herewith |
** | Furnished herewith |
16
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| UNIVERSAL SAFETY PRODUCTS, INC. | |
| (Registrant) | |
|
| |
Date: August 19, 2025 | By: | /s/ Harvey B. Grossblatt |
| | Harvey B. Grossblatt |
| | President, Chief Executive Officer |
| | |
| By: | /s/ James B. Huff |
| | James B. Huff |
| | Vice President, Chief Financial Officer |
17
Exhibit 31.1
CERTIFICATION
I, Harvey B. Grossblatt, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of Universal Safety Products, Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;
4.The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and |
5.The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of Registrant’s board of directors (or persons performing the equivalent function):
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting. |
August 19, 2025 |
| /s/ Harvey B. Grossblatt |
| | Harvey B. Grossblatt |
| | Chief Executive Officer |
Exhibit 31.2
CERTIFICATION
I, James B. Huff, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of Universal Safety Products, Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;
4.The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and |
5.The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of Registrant’s board of directors (or persons performing the equivalent function):
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting. |
August 19, 2025 |
| /s/ James B. Huff |
| | James B. Huff |
| | Chief Financial Officer |
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Universal Safety Products, Inc. (the “Company”) on Form 10-Q for the period ending June 30, 2025 as filed with the Securities and Exchange Commission and to which this Certification is an exhibit (the “Report”), the undersigned hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company for the periods reflected therein. |
August 19, 2025 |
| /s/ Harvey B. Grossblatt |
| | Harvey B. Grossblatt |
| | Chief Executive Officer |
| | |
| | /s/ James B. Huff |
| | James B. Huff |
| | Chief Financial Officer |
Exhibit 99.1
For Immediate Release
Contact: Harvey Grossblatt, CEO
Universal Safety Products, Inc.
(410) 363-3000, Ext. 224
Universal Safety Products, Inc. Reports First-Quarter Results
OWINGS MILLS, Md. August 19, 2025 - Universal Safety Products, Inc. (NYSE American: UUU) today announced results for its fiscal quarter ended June 30, 2025.
The Company reported sales of $3,824,247 for the quarter ending June 30, 2025, versus $4,598,516 for the comparable period of last year. The Company reported net income of $1,810,321 or $0.78 per basic and diluted share, compared to a net loss of $(442,206), or $(0.19) per basic and diluted share, for the same period last year. Included in the June 30, 2025 results was a gain of $2,820,668 from the sale of our smoke and carbon monoxide alarm segment.
Harvey Grossblatt - President and CEO said: “Sales were lower in the current quarter since we sold our smoke alarm segment in May 2025. Sales were further negatively impacted by the increased import tariffs on all of our products. Our plans are to continue operations in the wiring device and bath fan segments of our business and look for other opportunities to grow shareholder value.”
UNIVERSAL SAFETY PRODUCTS, INC. is a distributor of safety and security devices. Founded in 1969, the Company has an over 56-year heritage of developing innovative and easy-to-install products. For more information on Universal Safety Products, Inc., visit our website at www.universalsafetyprod.com.
------------------------------------------------------------
“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: Certain matters discussed in this news release may constitute forward-looking statements within the meaning of the federal securities laws that inherently include certain risks and uncertainties. Actual results could differ materially from those projected in or contemplated by the forward-looking statements due to a number of factors, including, among other items, currency fluctuations, the impact of current and future laws and governmental regulations, and other factors which may be identified from time to time in our Securities and Exchange Commission filings and other public announcements. We do not undertake and specifically disclaim any obligation to update any forward-looking statements to reflect occurrence of anticipated or unanticipated events or circumstances after the date of such statements. We will revise our outlook from time to time and frequently will not disclose such revisions publicly.
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Universal/Page 2
UNIVERSAL SAFETY PRODUCTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
|
| Three Months Ended June 30, | ||||
| | 2025 |
| 2024 | ||
Sales | | $ | 3,824,247 | | $ | 4,598,516 |
| | | | | | |
Net Income (Loss): | | | 1,810,321 | | | (442,206) |
Net Income (Loss) per share – basic and diluted | | | 0.78 | | | (0.19) |
| | | | | | |
Weighted average number of common shares outstanding: | | | | | | |
Basic and diluted | | | 2,312,887 | | | 2,312,887 |
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
ASSETS | | | | | ||||
|
| June 30, 2025 |
| June 30, 2024 | ||||
Cash | | $ | 3,820,394 | | $ | 321,539 | ||
Accounts receivable and amount due from factor | | | 2,676,543 | | | 2,955,164 | ||
Inventory | | | 1,012,259 | | | 5,106,588 | ||
Prepaid expense | | | 71,030 | | | 132,241 | ||
| | | | | | | ||
TOTAL CURRENT ASSETS | | | 7,580.226 | | | 8,515,532 | ||
| | | | | | | ||
PROPERTY, EQUIPMENT AND INTANGIBLE ASSETS–NET | | | — | | | 149,925 | ||
| | | | | | | ||
TOTAL ASSETS | | $ | 7,580,226 | | $ | 8,665,457 | ||
| | | | | | | ||
LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | ||
| | | | | | | ||
Line of credit – factor | | $ | — | | $ | 2,223,419 | ||
Short-term portion of operating lease liability | | | — | | | 132,659 | ||
Accounts payable | | | 260,212 | | | 1,526,605 | ||
Accrued liabilities | | | 345,982 | | | 261,953 | ||
TOTAL CURRENT LIABILITIES | | | 606,194 | | | 4,144,636 | ||
| | | | | | | ||
COMMITMENTS AND CONTINGENCIES | | | — | | | — | ||
| | | | | | | ||
SHAREHOLDERS’ EQUITY: | | | | | | | ||
Common stock, $.01 par value per share; authorized 20,000,000 shares; issued and outstanding 2,312,887 at June 30, 2025 and 2024 | | | 23,129 | | | 23,129 | ||
Additional paid-in capital | | | 12,885,841 | | | 12,885,841 | ||
Accumulated Deficit | | | (5,934,938) | | | (8,388,149) | ||
| | | | | | | ||
TOTAL SHAREHOLDERS’ EQUITY | | | 6,974,032 | | | 4,520,821 | ||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | | $ | 7,580,226 | | $ | 8,665,457 | ||