UUU 10-K & 10-Q changes, risk factors and insider trading
Universal Safety Products, Inc. · NYSE · Wholesale-Electronic Parts & Equipment, Nec · CIK 102109 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “Risks Related to Our Company”
New heading “We have an evolving business model, which increases the complexity of our business.”
New heading “We are heavily dependent on our senior management, and a loss of a member of our senior management team could cause our stock price to suffer.”
New heading “We rely on highly skilled personnel and the continuing efforts of our executive officers and, if we are unable to retain, motivate or hire qualified personnel, our business may be severely disrupted.”
New heading “Risks Related to Universal DeFi”
New heading “Universal DeFi has a limited operating history, which makes it difficult to evaluate its business and prospects.”
New heading “Universal DeFi will require substantial additional capital, which may not be available when needed.”
New heading “Universal DeFi has limited personnel and must build the operational, compliance, and information security functions necessary to operate its business.”
New heading “Universal DeFi’s planned services and business model may change materially before it commences full operations.”
New heading “Universal DeFi’s tokenization platform is not yet operational and may never launch or achieve market acceptance.”
New heading “The market for tokenized assets is new and unproven and may not develop as Universal DeFi expects.”
New heading “Universal DeFi faces competition in tokenization services, including from larger and better-resourced providers.”
New heading “Universal DeFi’s issuer onboarding occurs before issuance and is not ongoing, and it may not detect issuer misconduct or asset problems that arise after issuance.”
New heading “Under the platform’s design, issuers control their own tokens after issuance, and the loss or compromise of an issuer’s approvals may permanently impair control of a token, which Universal DeFi may be unable to remedy.”
New heading “Universal DeFi’s association with assets tokenized through its platform could expose it to reputational harm and claims if those assets prove fraudulent, unbacked, or impaired.”
New heading “If Universal DeFi elects to administer token environments on behalf of issuers, its responsibilities and risk profile would change materially.”
New heading “Universal DeFi’s node and validator operations, and its tokenization platform, depend on the Ault Blockchain, a new network developed by an affiliated organization that may not achieve adoption or operate as intended.”
New heading “The digital tokens Universal DeFi earns from its node and validator operations have no current market value, are non-cash and illiquid, and may never have value.”
New heading “Universal DeFi’s validator must stake tokens and is subject to penalties, including the loss of staked tokens, for downtime or improper operation.”
New heading “Universal DeFi’s validator is operated by an affiliate under an arrangement that has not been formalized, which involves conflicts of interest and may be disrupted.”
New heading “The rewards Universal DeFi earns from its Ault Nodes depend on the continued performance of work and on a selection process, and may be less than Universal DeFi expects.”
New heading “Universal DeFi acquired its node licenses at a cost, the licenses are subject to transfer restrictions, and they may decline in value or be impaired.”
New heading “Affiliates of the Company are involved in the Ault Blockchain as its developer and as network participants, which creates conflicts of interest and concentration.”
New heading “Universal DeFi depends on a third-party developer to build and maintain its tokenization platform.”
New heading “The platform’s token control depends on a single third-party security provider, and a failure of that provider could disrupt the platform.”
New heading “Smart contracts and software underlying the platform and the Ault Blockchain may contain vulnerabilities that could be exploited.”
New heading “A cybersecurity breach, or the loss or theft of cryptographic keys, could result in the loss of assets or the disruption of Universal DeFi’s operations.”
New heading “The Ault Blockchain is a new network that may experience outages, forks, congestion, or technical failures.”
New heading “Technological change or obsolescence could render Universal DeFi’s platform or operations uncompetitive.”
New heading “The regulatory framework for tokenized and digital assets is new, unsettled, and evolving.”
New heading “The classification of a tokenized asset as a security, a commodity, or another type of asset is uncertain and varies by underlying asset and jurisdiction.”
New heading “Regulatory requirements applicable to tokenized assets could materially limit, delay, or prevent Universal DeFi from offering its tokenization services, and could require it to curtail or cease that business.”
New heading “Universal DeFi may be required to obtain licenses or registrations, and may be deemed to be acting as a broker-dealer, transfer agent, money transmitter, or other regulated entity.”
New heading “Regulation varies by jurisdiction and may restrict, condition, or prohibit Universal DeFi’s services in markets that are material to its business.”
New heading “International regulatory regimes impose additional and differing requirements that could increase Universal DeFi’s costs or restrict its operations.”
New heading “Universal DeFi relies on issuers to perform holder-level identity verification, and it may nonetheless face anti-money-laundering liability for the misuse of tokens issued through its platform.”
New heading “Universal DeFi may become subject to enforcement actions, investigations, or litigation.”
New heading “Risks Related to Our Indebtedness and Liquidity”
New heading “We have incurred losses and we may not be able to manage our business on a profitable basis.”
New heading “Our losses from operations and liquidity conditions raise substantial doubt regarding our ability to continue as a going concern.”
New heading “To service any future indebtedness and other obligations, we will require a significant amount of cash.”
New heading “We will need to raise additional capital to fund our operations in furtherance of our business plan.”
New heading “Risks Related to our Business and Operations”
New heading “If we are unable to sell our remaining electrical products after the Feit Asset Sale at acceptable prices relative to our costs including import tariffs, or if we fail to develop and introduce on a timely basis new electrical products from which we can derive additional sales, our financial results will suffer and may negatively impact our ability to achieve our business objectives.”
New heading “Changes in trade policy in the U.S. and other countries, specifically the People’s Republic of China, including the imposition of additional tariffs and the resulting consequences, may adversely impact our results of operations and financial condition.”
New heading “Global economic and capital market conditions may cause our access to capital to be more difficult in the future and/or costs to secure such capital more expensive.”
New heading “Our overall sales are primarily dependent upon the strength of the U.S. housing market.”
New heading “Competition from a number of companies could result in price reduction, reduced revenue and loss of market share and could harm our results of operations.”
New heading “Risks Related to Ownership of Our Common Stock and Future Offerings”
New heading “If we do not continue to satisfy the NYSE American continued listing requirements, our common stock could be delisted from NYSE American.”
New heading “You may experience future dilution as a result of future equity offerings.”
New heading “Our common stock price may be volatile.”
New heading “Volatility in our common stock price may subject us to securities litigation.”
New heading “We are controlled by current officers, directors and principal stockholders.”
New heading “The issuance of shares of common stock upon the conversion of convertible notes could affect our stock price.”
New heading “If securities or industry analysts do not publish research or reports about our business, or if they publish a negative report regarding our shares of common stock, the price of our common stock and trading volume could decline.”
New heading “General Risk Factors”
New heading “Deterioration of global economic conditions could adversely affect our business.”
New heading “If we fail to establish and maintain an effective system of internal control over financial reporting, we may not be able to report our financial results accurately or prevent fraud. Any inability to report and file our financial results accurately and timely could harm our reputation and adversely impact the trading price of our common stock.”
New heading “If our accounting controls and procedures are circumvented or otherwise fail to achieve their intended purposes, our business could be seriously harmed.”
New heading “Our internal computer systems may fail or suffer security breaches, which could result in a material disruption of our operations.”
New heading “Many of our competitors are larger and have greater financial and other resources than we do.”
New heading “The requirements of being a public company may strain our resources, divert management’s attention and affect our ability to attract and retain qualified board members.”
New heading “We have identified material weaknesses in our internal control over financial reporting and may identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, which may result in material misstatements of our financial statements or cause us to fail to meet our periodic reporting obligations.”
New heading “The elimination of monetary liability against our directors, officers and employees under law and the existence of indemnification rights for or obligations to our directors, officers and employees may result in substantial expenditures by us and may discourage lawsuits against our directors, officers and employees.”
New heading “We do not anticipate paying cash dividends on our common stock and, accordingly, stockholders must rely on stock appreciation for any return on their investment.”
Largest changes
“The global economy and capital and credit markets have experienced exceptional turmoil and upheaval over the past several years. …”see in full comparison
“Our losses from operations and liquidity conditions raise substantial doubt regarding our ability to continue as a going concern.”see in full comparison
“Given the unsettled and evolving regulation of tokenized and digital assets and the novelty of Universal DeFi’s activities, Universal DeFi may become subject to investigations, enforcement actions, or litigation by regulators, governmental authorities, or private parties, including in connection with the tokens issued through its platform, its node and validator operations, or its compliance with applicable law. …”see in full comparison
“We have identified material weaknesses in our internal control over financial reporting and may identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, which may result in material misstatements of our financial statements or cause us to fail to meet our periodic reporting obligations.”see in full comparison
“We are a public company and subject to the reporting requirements of the Exchange Act, and the Sarbanes-Oxley Act of 2002. The Exchange Act requires, among other things, that we file annual, quarterly and current reports with respect to our business and financial condition. The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal controls for financial reporting. …”see in full comparison
“Changes in trade policy in the U.S. and other countries, specifically the People’s Republic of China, including the imposition of additional tariffs and the resulting consequences, may adversely impact our results of operations and financial condition.”see in full comparison
Full comparison: every changed paragraph (151)
An investment in our common stock involves significant risks. You should carefully consider the following risks and all other information set forth in this Annual Report before deciding to invest in our common stock. If any of the events or developments described below occurs, our business, financial condition and results of operations may suffer. In that case, the value of our common stock may decline and you could lose all or part of your investment.
You should consider each of the following risk factors and any other information set forth in this Annual Report and the other reports filed by the Company with the SEC, including the Company’s financial statements and related notes, in evaluating the Company’s business and prospects. The risks and uncertainties described below are not the only ones that impact on the Company’s operations and business. Additional risks and uncertainties not presently known to the Company, or that the Company currently considers immaterial, may also impair its business or operations. If any of the following risks actually occurs, the Company’s business and financial condition, results or prospects could be harmed. Please also read carefully the section entitled “Cautionary Note About Forward-Looking Statements” at the beginning of this Annual Report.
Risks Related to Our Company
We have an evolving business model, which increases the complexity of our business.
Our business model has evolved in the past and continues to do so. In prior years we have added, modified and/or discontinued various services and product offerings. As discussed elsewhere in this Annual Report, we are expanding into decentralized finance (DeFi) services, which are services that we do not have any prior experience providing. We intend to continue to try to offer new products or services, and we do not know whether any of them will be successful. The additions and modifications to our business have increased the complexity of our business and placed significant strain on our management, personnel, operations, systems, technical performance, financial resources, and internal financial control and reporting functions. Future additions to or modifications of our business are likely to have similar effects. Further, any new business or applications we launch that is not favorably received by the market could damage our reputation or our brand. The occurrence of any of the foregoing could have a material adverse effect on our business.
We are heavily dependent on our senior management, and a loss of a member of our senior management team could cause our stock price to suffer.
If we lose the services of Harvey Grossblatt, our President and Chief Executive Officer or Milton C. Ault, III, our Executive Vice Chairman, and/or certain key employees, we may not be able to find appropriate replacements on a timely basis, and our business could be adversely affected. Our existing operations and continued future development depend to a significant extent upon the performance and active participation of these individuals and certain key employees. Although we have entered into an employment agreement with Mr. Grossblatt, and we may enter into employment agreements with additional key employees in the future, we cannot guarantee that we will be successful in retaining the services of these individuals. If we were to lose any of these individuals, we may not be able to find appropriate replacements on a timely basis and our financial condition and results of operations could be materially adversely affected.
We rely on highly skilled personnel and the continuing efforts of our executive officers and, if we are unable to retain, motivate or hire qualified personnel, our business may be severely disrupted.
Our performance largely depends on the talents, knowledge, skills, know-how and efforts of highly skilled individuals and in particular, the expertise held by our Executive Vice Chairman, Milton C. Ault, III. In particular, we are relying upon Mr. Ault’s knowledge and expertise in the DeFi industry, as we look to pivot and expand our operations and services into that space. His absence, were it to occur, would materially and adversely impact the development and implementation of our projects and businesses. Our future success depends on our continuing ability to identify, hire, develop, motivate and retain highly skilled personnel for all areas of our organization. Our continued ability to compete effectively depends on our ability to attract, among others, new technology developers and to retain and motivate our existing contractors. If one or more of our executive officers are unable or unwilling to continue in their present positions, we may not be able to replace them readily, if at all. Therefore, our business may be severely disrupted, and we may incur additional expenses to recruit and retain new officers. In addition, if any of our executives joins a competitor or forms a competing company, we may lose some customers.
Risks Related to Universal DeFi
Risks Related to Universal DeFi – General
Universal DeFi has a limited operating history, which makes it difficult to evaluate its business and prospects.
Universal DeFi was formed in July 2025 and has a limited operating history. Its tokenization platform has not commenced operations, and although its node and validator operations on the Ault Blockchain have commenced, the digital tokens those operations receive do not currently have a market value. As a result, there is limited information on which to evaluate its business, and its prospects must be considered in light of the risks and uncertainties encountered by early-stage companies in new and rapidly evolving markets.
Universal DeFi will require substantial additional capital, which may not be available when needed.
The development of Universal DeFi’s tokenization platform and the operation and expansion of its node and validator activities are expected to require substantial capital. Universal DeFi does not currently generate cash revenue and expects to depend on outside funding to support its operations for the foreseeable future. There can be no assurance that additional capital will be available when needed on acceptable terms or at all. If Universal DeFi is unable to obtain adequate funding, it may be required to delay, reduce, or abandon the development of its tokenization platform or the operation of its business, and the Company’s business, financial condition, and results of operations could be materially and adversely affected.
Universal DeFi has limited personnel and must build the operational, compliance, and information security functions necessary to operate its business.
To launch its tokenization platform and operate its business, Universal DeFi must develop and maintain operational, compliance, risk management, and information security functions appropriate for a business that performs issuer onboarding, handles tokenized assets, and operates blockchain infrastructure. Universal DeFi is in the early stages of building these functions and currently relies in part on the Company and its affiliates. If Universal DeFi is unable to recruit and retain qualified personnel, to build and maintain these functions, or to manage the demands of growth, it may be unable to launch or operate its business as planned, may fail to meet regulatory or security requirements, and may be exposed to operational failures or security incidents. Any of the foregoing could materially and adversely affect the Company’s business, financial condition, and results of operations.
Universal DeFi’s planned services and business model may change materially before it commences full operations.
Universal DeFi’s business plan is at an early stage, and the descriptions of its planned services in this report reflect its current intentions rather than established operations. The services Universal DeFi ultimately offers, the markets in which it operates, and the manner in which it generates revenue may differ materially from its current plans in response to market conditions, regulatory developments, technological changes, or strategic decisions by management. If Universal DeFi modifies its business plan in ways that prove unsuccessful or that subject it to unanticipated costs or obligations, the Company’s business, financial condition, and results of operations could be materially and adversely affected.
Risks Related to the Tokenization Business
Universal DeFi’s tokenization platform is not yet operational and may never launch or achieve market acceptance.
Universal DeFi’s tokenization platform, which is being developed to represent ownership of real-world or financial assets as digital tokens recorded on a blockchain remains in development and has not launched. Completing and launching the platform will depend on factors including the performance of third-party developers and service providers, the resolution of technical and operational challenges, and the availability of funding.
Even if the platform launches, there can be no assurance that issuers will choose to tokenize assets through it or that the platform will achieve market acceptance. If Universal DeFi fails to launch the platform, experiences significant delays, or launches a platform that does not attract issuers, the Company’s investment in Universal DeFi may be impaired, and the Company’s business, financial condition, and results of operations could be materially and adversely affected.
The market for tokenized assets is new and unproven and may not develop as Universal DeFi expects.
The tokenization of real-world and financial assets is a new and rapidly evolving activity, and a large and sustainable market for tokenized assets may not develop. Demand for Universal DeFi’s tokenization services will depend on factors outside its control, including the willingness of asset owners to tokenize assets, the development of supporting market infrastructure such as trading venues and custodians, investor demand for tokenized assets, and the evolution of the regulatory environment. If the market for tokenized assets does not develop, develops more slowly than expected, or develops in ways that do not favor Universal DeFi’s services, Universal DeFi may be unable to attract issuers or generate revenue, and the Company’s business, financial condition, and results of operations could be materially and adversely affected.
Universal DeFi faces competition in tokenization services, including from larger and better-resourced providers.
The market for tokenization services is attracting a range of participants, including technology companies, financial institutions, and other blockchain-based ventures, some of which have greater financial, technical, and marketing resources, more established relationships, and longer operating histories than Universal DeFi. Competitors may offer services that are more advanced, less costly, more widely supported, or better aligned with regulatory requirements. There can be no assurance that Universal DeFi will be able to compete effectively. If Universal DeFi is unable to attract and retain issuers in the face of competition, the Company’s business, financial condition, and results of operations could be materially and adversely affected.
Universal DeFi’s issuer onboarding occurs before issuance and is not ongoing, and it may not detect issuer misconduct or asset problems that arise after issuance.
Before an asset is tokenized, Universal DeFi intends to conduct an onboarding process designed to verify the identity of the issuer, screen the issuer for illicit activity, and confirm the issuer’s ownership of the asset to be tokenized. This onboarding is performed at a point in time before issuance of the token and is not a continuing assessment, and Universal DeFi does not intend to guarantee, insure, or vouch for the ongoing performance, value, or legitimacy of any tokenized asset after issuance. Because the onboarding review is not ongoing, Universal DeFi may not detect issuer misconduct, the loss or impairment of an underlying asset, the issuance of tokens not backed by the represented asset, or other problems that arise after an asset has been tokenized. An issuer that passes onboarding may subsequently act in ways that harm token holders without Universal DeFi’s knowledge and outside its control. Problems with assets tokenized through the platform could result in claims against Universal DeFi, regulatory scrutiny, and reputational harm, any of which could materially and adversely affect the Company’s business, financial condition, and results of operations.
Under the platform’s design, issuers control their own tokens after issuance, and the loss or compromise of an issuer’s approvals may permanently impair control of a token, which Universal DeFi may be unable to remedy.
The platform is being designed to secure control of each token using multi-party computation (a method of securing a digital asset in which the authority to approve a transaction is divided among multiple parties or systems so that no single participant can act alone). Under the platform’s intended standard model, the issuer controls its own token and holds the approvals necessary to authorize transactions affecting it, and Universal DeFi does not hold approvals sufficient to control a token after issuance. Control of a token therefore depends on the issuer safeguarding its approvals. The loss, theft, or compromise of an issuer’s approvals may impair or permanently eliminate the ability to control the affected token, including the ability to create or remove tokens from circulation. Because Universal DeFi does not hold sufficient approvals under its standard model, it may be unable to assist an issuer that loses control of its approvals, and any disaster recovery measures may not restore access in all circumstances. Loss of control of tokens issued through the platform could result in disputes, claims against Universal DeFi, and reputational harm, any of which could materially and adversely affect the Company’s business, financial condition, and results of operations.
Universal DeFi’s association with assets tokenized through its platform could expose it to reputational harm and claims if those assets prove fraudulent, unbacked, or impaired.
Universal DeFi provides the technology and onboarding services used to tokenize assets, but it does not act as the issuer of tokenized assets, take ownership of underlying assets, or guarantee their value or legitimacy. Notwithstanding this, Universal DeFi may be associated, in the view of investors, counterparties, or regulators, with the assets tokenized through its platform. If assets tokenized through the platform prove to be fraudulent, unbacked, impaired, or otherwise problematic, Universal DeFi could suffer reputational harm, lose the confidence of issuers and other participants, and become the subject of claims or regulatory scrutiny, even where it did not cause and could not have prevented the problem. Any of the foregoing could materially and adversely affect the Company’s business, financial condition, and results of operations.
If Universal DeFi elects to administer token environments on behalf of issuers, its responsibilities and risk profile would change materially.
Universal DeFi is evaluating whether to offer administration of a token project’s environment on behalf of an issuer that engages it to do so. No determination has been made to offer this service. Under Universal DeFi’s intended standard model, the issuer controls its own environment and holds the approvals necessary to authorize transactions affecting its token. If Universal DeFi elects to administer environments on behalf of issuers, it would hold or control approvals capable of authorizing transactions affecting issuer tokens. This would expose Universal DeFi directly to the risk of loss, theft, or compromise of those approvals, to potential liability for unauthorized or erroneous transactions, and to the operational burden of safeguarding control of multiple issuers’ tokens. Holding such control could also cause Universal DeFi to be characterized as providing custodial or other regulated services, subjecting it to requirements it does not currently satisfy. If Universal DeFi offers environment administration and is unable to manage the associated security and regulatory risks, the Company’s business, financial condition, and results of operations could be materially and adversely affected.
Risks Related to Node and Validator Operations and Digital Assets
Universal DeFi’s node and validator operations, and its tokenization platform, depend on the Ault Blockchain, a new network developed by an affiliated organization that may not achieve adoption or operate as intended.
Universal DeFi’s node and validator operations are conducted on the Ault Blockchain, and its tokenization platform is being built initially to issue tokens on that network. The Ault Blockchain is a new blockchain network developed by Ault DAO, and its success depends on achieving adoption by users, applications, and other participants. Universal DeFi does not control the development, operation, security, or governance of the Ault Blockchain. If the Ault Blockchain fails to launch fully, fails to achieve or sustain adoption, experiences a decline in activity, or is discontinued, the value of the tokens Universal DeFi earns could decline or disappear, demand for its node and validator services could fall, and its tokenization platform could be impaired. Because both of Universal DeFi’s lines of business depend on this single network, Universal DeFi has concentrated exposure to the network’s success. Any of the foregoing could materially and adversely affect the Company’s business, financial condition, and results of operations.
The digital tokens Universal DeFi earns from its node and validator operations have no current market value, are non-cash and illiquid, and may never have value.
The rewards Universal DeFi earns from its node and validator operations are paid in the Ault Blockchain’s native digital token. That token does not currently have a market value, and there can be no assurance that a market for it will develop or that it will have any value in the future. These tokens are a non-cash, illiquid asset. The value of these tokens, if any, will depend on the development, adoption, and activity of the Ault Blockchain and on the existence of a market in which the tokens can be sold, none of which is assured. Universal DeFi may be unable to convert the tokens into cash, may be subject to restrictions on transferring them, and may never realize any value from them. Digital asset prices, where markets exist, have historically been highly volatile. If the tokens Universal DeFi earns do not have or do not retain value, Universal DeFi may be unable to generate meaningful revenue from its node and validator operations, and the Company’s business, financial condition, and results of operations could be materially and adversely affected.
Universal DeFi’s validator must stake tokens and is subject to penalties, including the loss of staked tokens, for downtime or improper operation.
To operate its validator, Universal DeFi must commit, or stake, a quantity of the Ault Blockchain’s native token; staking is the locking up of tokens to support a blockchain network and to qualify to perform validation. Validators on the Ault Blockchain are subject to penalties, commonly referred to as slashing, for failures such as downtime, improperly approving invalid transactions, or other misbehavior, which can result in the loss of a portion of the staked tokens. If Universal DeFi’s validator experiences downtime, is misconfigured, is compromised, or otherwise fails to operate correctly, including as a result of acts or omissions by the affiliate that currently operates it, Universal DeFi could lose staked tokens, forfeit rewards, or be removed from the set of active validators. Any of the foregoing could reduce the value Universal DeFi derives from its validator and could materially and adversely affect the Company’s business, financial condition, and results of operations.
Universal DeFi’s validator is operated by an affiliate under an arrangement that has not been formalized, which involves conflicts of interest and may be disrupted.
The day-to-day operation, maintenance, and hosting of Universal DeFi’s validator are currently performed by an affiliate of the Company on Universal DeFi’s behalf, and that affiliate currently bears the related costs. Universal DeFi expects to enter into a managed services agreement with that affiliate to formalize these services, but no such agreement has been executed, and the terms on which the services are provided, including their cost and duration, are not fixed. Because this arrangement is with an affiliate, it involves conflicts of interest and is not the result of arm’s-length negotiation, and the terms ultimately agreed may be less favorable to Universal DeFi than those it could obtain from an unaffiliated provider. If the affiliate ceases to provide these services, if the services are disrupted or provided improperly, or if Universal DeFi is unable to operate the validator itself or obtain equivalent services elsewhere on acceptable terms, its validator operations could be impaired. Any disruption of these arrangements could result in the loss of rewards or staked tokens and could materially and adversely affect the Company’s business, financial condition, and results of operations.
The rewards Universal DeFi earns from its Ault Nodes depend on the continued performance of work and on a selection process, and may be less than Universal DeFi expects.
Universal DeFi’s Ault Nodes earn rewards by performing verifiable off-chain work for the network, currently the generation of verifiable randomness, and rewards are allocated among licensed nodes in proportion to the verified work each node performs. The work is performed through a process in which nodes are selected to contribute, and rewards depend on factors including a node’s uptime, the correctness of its work, and the total amount of work performed across the network. If Universal DeFi’s nodes experience downtime, perform incorrectly, or are selected to contribute less frequently, or if the total work performed across the network increases such that Universal DeFi’s proportional share declines, the rewards Universal DeFi earns could be lower than expected. Any of the foregoing could materially and adversely affect the Company’s business, financial condition, and results of operations.
Universal DeFi acquired its node licenses at a cost, the licenses are subject to transfer restrictions, and they may decline in value or be impaired.
Universal DeFi operates its Ault Nodes under licenses it acquired from the entity that issues node licenses for the Ault Blockchain. The licenses were acquired at a cost, are subject to a period during which they cannot be transferred, and confer the right to operate a node and earn rewards, together with associated governance rights. The value of these licenses depends on the success and economics of the Ault Blockchain, including the value, if any, of the rewards they generate. If the network does not succeed, if rewards decline or have no value, or if the rights associated with the licenses are changed, the licenses may decline in value or become impaired, and Universal DeFi may be unable to sell or otherwise realize value from them, including during the period in which they cannot be transferred. Any resulting impairment could materially and adversely affect the Company’s business, financial condition, and results of operations.
Affiliates of the Company are involved in the Ault Blockchain as its developer and as network participants, which creates conflicts of interest and concentration.
The Ault Blockchain was developed by Ault DAO, and affiliates of the Company participate in the network, including through the operation of Universal DeFi’s validator by an affiliate and through the holding of node licenses and associated governance rights. As a result, the interests of the Company and its affiliates are concentrated in the Ault Blockchain, and decisions affecting the network may be made by, or influenced by, parties affiliated with the Company. These relationships create conflicts of interest, including in the development, governance, and economics of the network, and there can be no assurance that decisions affecting the Ault Blockchain will be made in the best interests of Universal DeFi. The concentration of the Company’s and its affiliates’ interests in a single network also increases the effect on the Company if the network does not succeed. Any of the foregoing could materially and adversely affect the Company’s business, financial condition, and results of operations.
Technology Risk Factors
Universal DeFi depends on a third-party developer to build and maintain its tokenization platform.
Universal DeFi’s tokenization platform is being developed by a third-party developer rather than by Universal DeFi itself. As a result, the timely completion, functionality, and security of the platform depend on the developer’s performance, on the continuation of the relationship, and on the quality of the software the developer delivers. Universal DeFi may also depend on the developer for ongoing maintenance, updates, and support after launch. If the developer fails to deliver the platform on the expected timeline or to the expected specifications, fails to remediate defects or vulnerabilities, or if the relationship is interrupted or terminated, Universal DeFi could experience significant delays and additional costs, and the launch or continued operation of the platform could be impaired. There can be no assurance that Universal DeFi could transition development to itself or another provider without disruption. Any of the foregoing could materially and adversely affect the Company’s business, financial condition, and results of operations.
The platform’s token control depends on a single third-party security provider, and a failure of that provider could disrupt the platform.
The platform is being designed to secure control of issued tokens using multi-party computation provided by a single third-party digital asset security provider, which is also expected to provide disaster recovery services. The platform’s token control layer is therefore expected to depend on a single provider. A failure, outage, security breach, insolvency, or termination of that provider, or a defect in its technology, could disrupt the operation of the platform, impair the ability of issuers to control their tokens, or render token environments inaccessible, and disaster recovery services may not be available or successful in all circumstances. Further, the provider contractually disclaims liability for digital asset loss, caps its liability, and may suspend or disconnect the network. Transitioning to a different provider may be difficult, time-consuming, or impossible without disrupting existing token projects. Any of the foregoing could materially and adversely affect the Company’s business, financial condition, and results of operations.
Smart contracts and software underlying the platform and the Ault Blockchain may contain vulnerabilities that could be exploited.
Universal DeFi’s tokenization platform and the Ault Blockchain rely on smart contracts (self-executing software programs stored on a blockchain that automatically carry out their terms) and other software. Such software may contain bugs, errors, or vulnerabilities, and once deployed on a blockchain, smart contracts may be difficult or impossible to modify. If vulnerabilities in the platform’s or the network’s software are exploited, tokens or other digital assets could be lost, stolen, or rendered inaccessible, transactions could be processed incorrectly, and the platform or the network could be disrupted. The discovery of vulnerabilities, even if they are not exploited, could undermine confidence in the platform or the network. Any of the foregoing could materially and adversely affect the Company’s business, financial condition, and results of operations.
A cybersecurity breach, or the loss or theft of cryptographic keys, could result in the loss of assets or the disruption of Universal DeFi’s operations.
Universal DeFi’s operations depend on the security of its systems and of the cryptographic keys and approvals used to control digital assets and to operate its nodes and validator. Digital assets and blockchain infrastructure are frequent targets of cyberattacks, and the theft, loss, or compromise of keys or approvals can result in the permanent and irreversible loss of assets. A cybersecurity breach, a failure of security controls, or the loss, theft, or compromise of keys or approvals, whether affecting Universal DeFi, the affiliate that operates its validator, or its third-party providers, could result in the loss of digital assets, the disruption of operations, liability, and reputational harm. There can be no assurance that the security measures of Universal DeFi or of the parties it relies on will be sufficient. Any of the foregoing could materially and adversely affect the Company’s business, financial condition, and results of operations.
The Ault Blockchain is a new network that may experience outages, forks, congestion, or technical failures.
Management's Discussion & Analysis (MD&A)
Largest changes
“We prepared the financial statements included within this Annual Report on Form 10-K assuming we will continue operations, even though we reported a net loss of $2,485,763 for the fiscal year ended March 31, 2026, and had an accumulated deficit of $12,543,809, that creates substantial doubt about our ability to continue as a going concern. Sales were lower during the March 31, 2026 fiscal year since we sold our smoke and carbon monoxide alarm segment during the first fiscal quarter. Sales were further negatively impacted by the increased import tariffs on all our products. …”see in full comparison
“As previously discussed, following the May 22, 2025 asset sale to Feit, we intend to continue importing and marketing our product lines other than smoke alarms and carbon monoxide alarms. Virtually all of the products we intend to continue selling are manufactured in the Peoples Republic of China. Our ability to sell those products at competitive prices depends, among other things, on the tariffs to which imports of those products will be subject, and our need for capital to purchase and import these items will depend on our ability to sell those products. …”see in full comparison
“Fair Value Measurements: We account for fair value of financial instruments in accordance with ASC 820, Fair Value Measurement, which defines fair value and establishes a framework to measure fair value and the related disclosures about fair value measurements. The fair value of a financial instrument is the amount that could be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets are marked to bid prices and financial liabilities are marked to offer prices. …”see in full comparison
“Use of Estimates: In preparing financial statements in conformity with accounting principles generally accepted in the United States of America (US-GAAP), management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. …”see in full comparison
“Our overall sales are primarily dependent upon the strength of the U.S. housing market. As stated elsewhere in this report, our Universal Electric subsidiary markets our products to the electrical distribution trade (primarily electrical and lighting distributors and manufactured housing companies); demand in new home construction and new home sales directly impacts sales by our Universal Electric subsidiary. Our operating results for the fiscal years ended March 31, 2025, and 2024 continue to be dependent upon the economic conditions of the U.S. housing market. …”see in full comparison
“When used in this discussion and elsewhere in this Annual Report on Form 10-K, the words or phrases “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “project” or similar expressions are intended to identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. …”see in full comparison
Full comparison: every changed paragraph (46)
Cautionary Note Regarding Forward-Looking Statements
This Annual Report on Form 10-K contains forward-looking statements. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Such forward-looking statements include statements regarding, among others, (a) our expectations about possible business combinations, (b) our growth strategies, (c) our future financing plans, and (d) our anticipated needs for working capital. Forward-looking statements, which involve assumptions and describe our future plans, strategies, and expectations, are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “anticipate,” “approximate,” “estimate,” “believe,” “intend,” “plan,” “budget,” “could,” “forecast,” “might,” “predict,” “shall” or “project,” or the negative of these words or other variations on these words or comparable terminology. This information may involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from the future results, performance, or achievements expressed or implied by any forward-looking statements. These statements may be found in this Annual Report.
Forward-looking statements are based on our current expectations and assumptions regarding our business, potential target businesses, the economy and other future conditions. Because forward-looking statements relate to the future, by their nature, they are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by the forward-looking statements as a result of various factors, including, without limitation, the risks outlined under “Risk Factors” in this Annual Report, changes in local, regional, national or global political, economic, business, competitive, market (supply and demand) and regulatory conditions and the following:
We caution you therefore that you should not rely on any of these forward-looking statements as statements of historical fact or as guarantees or assurances of future performance. All forward-looking statements speak only as of the date of this Annual Report. We undertake no obligation to update any forward-looking statements or other information contained herein unless required by law.
Information regarding market and industry statistics contained in this Annual Report is included based on information available to us that we believe is accurate. It is generally based on academic and other publications that are not produced for purposes of securities offerings or economic analysis. Forecasts and other forward-looking information obtained from these sources are subject to the same qualifications and the additional uncertainties accompanying any estimates of future market size, revenue and market acceptance of products and services. Except as required by U.S. federal securities laws, we have no obligation to update forward-looking information to reflect actual results or changes in assumptions or other factors that could affect those statements. See the section entitled “Risk Factors” for a more detailed discussion of risks and uncertainties that may have an impact on our future results.
In this Annual Report, the “Company,” “we,” “us” and “our” refer to Universal Safety Products, Inc., a Maryland corporation, and its subsidiaries.
When used in this discussion and elsewhere in this Annual Report on Form 10-K, the words or phrases “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “project” or similar expressions are intended to identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. 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, including Risk Factors discussed in earlier filings, and other risks could affect our financial performance and could cause our actual results for future periods to differ materially from those anticipated or projected. We do not undertake and specifically disclaim any obligation to update any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.
During the period covered by this Annual Report, we were in the business of marketing and distributing safety and security products which are primarily manufactured in the Peoples Republic of China (PRC). Our consolidated financial statements detail our sales and other operational results. Accordingly, the following discussion and analysis of the fiscal years ended March 31, 2025,2026, and 20242025 relate to the operational results of the Company and its consolidated subsidiary.subsidiaries.
Our overall sales are primarily dependent upon the strength of the U.S. housing market. As stated elsewhere in this report, our Universal Electric subsidiary markets our products to the electrical distribution trade (primarily electrical and lighting distributors and manufactured housing companies); conditions that impact new home construction and new home sales directly impacts sales by our Universal Electric subsidiary. Our operating results for the fiscal years ended March 31, 2025,2026, and 20242025 continue to be dependent upon the economic conditions ofimpacting the U.S. housing market.
The importation of certain wiring devices, carbon-monoxide alarms, and photo-electric alarms are currently subject to tariffs of 25%,twenty-five percent (25%). During the period covered by this Annual Report there has been unprecedented activity involving the implementation and subsequentimposition toof Marchglobal 31,tariffs, 2025the invalidation of those tariffs onby thesethe productsU.S. increasedSupreme toCourt, 55%.and the subsequent implementation of new tariffs under different statutes. The imposition of and modification of tariffs during the latter half of the current 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.
Subsequent to the May 22, 2025 sale of the smoke alarm and carbon monoxide portion of our business to Feit Electric Company, Inc. (“Feit”), we continue importing and marketing our other product lines. Our ability to sell those products at competitive prices depends, among other things, on the tariffs to which imports of those products will be subject. In July 2025, we formed a wholly owned subsidiary called Universal DeFi LLC (“Universal DeFi”) as a new venture to diversify the business and explore new paths for revenue and stockholder value. Universal DeFi is pursuing two lines of business. First, Universal DeFi is developing and intends to own and operate a tokenization platform. Second, Universal DeFi has acquired and commenced limited operations running licensed nodes and a validator on the Ault Blockchain, as described elsewhere in this Annual Report. To date, Universal DeFi has not generated any revenue.
Subsequent to the May 22, 2025 asset sale to Feit, we intend to continue importing and marketing our product lines other than smoke alarms and carbon monoxide alarms and we are exploring. Our ability to sell those products at competitive prices depends, among other things, on the tariffs to which imports of those products will be subject. We also are exploring strategic alternatives available to the Company and other business opportunities to drive long-term value for our shareholders. As previously announced, on April 15, 2025, the Company entered into a Memorandum of Understanding (MOU) with Ault & Company, Inc., a Delaware corporation (“A&C”), with respect to the investment in the Company of operating capital for a business to be mutually agreed upon by the Company and A&C. In accordance with provisions of the MOU, the Company added two Board of Director seats and appointed new directors selected by A&C to fill the available seats.
Sales. In fiscal year 2025,2026, our net sales were $23,563,554$4,847,163 compared to sales in the prior year of $19,517,673,$23,563,554, ana increasedecrease of $4,045,881$18,716,391 (20.7%79.4%). The increasedecrease in the net incomesales for the fiscal year ended March 31, 2025,2026, is attributed primarily to an increase in sales to retail customers, and to recording an income tax benefit associated with the reversal of a portion of the reserve for deferred tax assets arising from the gain on the sale of assetsthe discussedsmoke above.and Incarbon addition,monoxide alarm portion of our business as furtherpreviously discussed later, certain revisions increasing the net loss in the prior year have been recorded.discussed.
Gross Profit. Gross profit percentage is calculated as net sales less cost of goods sold expressed as a percentage of net sales. Our gross profit percentage for the fiscal year ended March 31, 2025,2026, was 29.0%16.6% compared to 28.7%29.0% in fiscal 2024.2025. Changes in gross margin isare generally attributed to variations in the mix of products sold as certain products are subject to tariff charges that directly impact gross margin.
Selling, General and Administrative Expense. Selling, general and administrative expenses increaseddecreased to $5,233,428 in fiscal 2026 from $6,004,507 in fiscal 2025 from $5,735,584 in fiscal 2024.2025. As a percentage of net sales, these expenses were 108.0% for the fiscal year ended March 31, 2026, and 25.5% for the fiscal year ended March 31, 2025, and 29.4% for the fiscal year ended March 31, 2024.2025. These expenses decreasedincreased as a percentage of net sales as they do not change in direct proportion to a change in sales. TheseIn addition, for the fiscal year ended March 31, 2026, these expenses increasedincluded asstock abased dollarcompensation amountexpense dueassociated primarilywith tothe increasedissuance freightof costs,incentive stock options, insurance, and professional fees.fees associated with the consideration of other business opportunities as previously discussed.
Engineering and Product Development. Engineering and product development expense for the fiscal year ended March 31, 2026, was $223,794. Engineering and product development expense for the fiscal year ended March 31, 2025, was $424,849. Engineering and product development expense fordecreased as a significant portion related to the business unit we sold in the first fiscal quarter of the 2026 fiscal year ended March 31, 2024, was $427,234. Engineering and product development expense for the 2025 period was comparable to the 2024 period.end.
Interest Expense and Interest Income. For the fiscal years ended March 31, 2025,2026 and 2024,2025, the Companywe incurred interest expense of $262,365$345,918 and $155,731,$262,365, respectively,respectively. Interest is related to borrowing costs associated with convertible debt and interest paid on amounts borrowed from our factor. We earned $134,320 on cash deposits for the fiscal year ended March 31, 2026. The increase in interest expense resulted primarily from increased borrowing fromassociated ourwith factorthe issuance of convertible debentures during the fiscal year ended March 31, 2025.2026.
For the fiscal year ended March 31, 2024, the Company received interest income of $24,746 related to refunds of customs payments made in the prior fiscal year.
Income Taxes. For the fiscal years ended March 31, 2025,2026 and 2024,2025, our statutory Federal tax rate was 20.0%. TheWe Company hashad accumulated net operating losses and other income tax credits for which a partial valuation allowance has been established. Accordingly, income taxes or deferred income tax benefits indicated by the provision for income taxes as shown on the Consolidated Statements of Operations for the fiscal years ended March 31, 2025,2026 and 2024,2025, varies from the expected statutory rate. Footnote F to the financial statements provides a reconciliation of the amount of tax that would be expected at statutory rates and the amount of tax expense or benefit provided at the effective rate of tax for each fiscal period.
Net Income. We reported a net loss of $2,485,763 for the fiscal year 2026, compared to net income of $500,684 for the fiscal year 2025, compared to a net loss of $695,790 for fiscal 2024, an increasedecrease in net income of $1,196,474$2,986,447 (172.0%596.5%). The increasedecrease in the net income for the fiscal year ended March 31, 2025,2026 is attributed to the increasedecrease in sales associated with the initial placement sale toof the smoke and carbon monoxide alarm portion of our business as previously discussed, and non-cash items including stock based compensation of $896,700, and an increase in the allowance for credit losses of $297,000, and partially offset by a largegain national retail customer and a deferred tax benefit attributed toon the sale of certain assets toof Feit as previously discussed.$2,820,668.
Financial Condition, Liquidity andLiquidity, Capital Resources and Going Concern
The CompanyWe reported net income of $500,684, and a net loss of $695,790$2,485,763 and net income of $500,684 for the years ended March 31, 2025,2026 and 2024,2025, respectively. As of March 31, 2025,2026, working capital (computed as the excess of current assets over current liabilities) increaseddecreased by $678,311$1,927,705, from $4,485,400 on March 31, 2024, to $5,163,711 on March 31, 2025.2025 to $3,236,006 on March 31, 2026.
Our operating activities provided cash of $536,185 for the year ended March 31, 2026. Operating activities provided cash principally by decreasing trade accounts receivable and amounts due from factor of $3,641,110, by decreasing inventories and assets held for sale by 2,543,262, and offset by decreasing accounts payable and accrued expenses by $2,179,879, increases to prepaid expenses of $197,300, and a net loss of $2,485,763. In addition, the following non-cash items are reflected in net cash provided by operating activities: stock based compensation of $896,700, a reversal of a provision for income tax benefits of $361,000, the change in the fair value of the derivative component of convertible debt of $75,000, the amortization of original issue discount on convertible debt of $309,053, a change in the allowance for credit losses of $297,000, an increase to the reserve for excess and obsolete inventory of $110,000, and a decrease in the operating lease liability of $13,330.
Our operating activities provided cash of $604,076 for the year ended March 31, 2024. Operating activities provided cash principally by decreasing trade accounts receiveable and amounts due from factor of $186,806, by increasing accounts payable and accrued expenses by $1,472,394, and offset by increases in inventories of $688,194, increased prepaid expenses of $61,354, a decrease in operating lease liability of $151,230, and a net loss of $695,790. In addition, the following non-cash items are reflected in net cash provided by operating activities: depreciation and amortization amounted to $163,456 and was offset by changes in the allowance for credit losses of $377,988.
Our investing activities did not provide or useprovided cash duringof $4,502,605 resulting from proceeds from the sale of assets for the fiscal yearsyear ended March 31, 20252026, and did not use or 2024.provide cash for the fiscal year ended March 31, 2025.
Financing activities during the fiscal year ended March 31, 2026 used cash of $1,913,245 resulting from the payment of dividends on common stock of $2,312,787, and the repayment of net borrowings from the factor of $2,100,458, and offset by the issuance of convertible debt of $2,500,000. Financing activities during the fiscal year ended March 31, 2025 provided cash of $1,331,605 reflecting the increase in net borrowing from the factor.
We prepared the financial statements included within this Annual Report on Form 10-K assuming we will continue operations, even though we reported a net loss of $2,485,763 for the fiscal year ended March 31, 2026, and had an accumulated deficit of $12,543,809, that creates substantial doubt about our ability to continue as a going concern. Sales were lower during the March 31, 2026 fiscal year since we sold our smoke and carbon monoxide alarm segment during the first fiscal quarter. Sales were further negatively impacted by the increased import tariffs on all our products. Our plans are to continue operations in the wiring device and bath fan segments of our business, and to develop an additional line of business, as more fully described herein, financed through the issuance of convertible debentures, of which $10,000,000 has been contracted subject to the lenders discretion. However, these plans are not certain to succeed and the financial statements do not include adjustments that would be necessary if we cannot continue.
Financing activities provided cash of $1,331,605 reflecting the increase in net borrowing from the Factor during the fiscal year ended March 31, 2025. Financing activities used cash of $690,497 reflecting the decrease in net borrowing from the Factor during the fiscal year ended March 31, 2024.
Overall, our cash increased by $282,993 during the fiscal year ended March 31, 2025, and decreased by $86,421 for the fiscal year ended March 31, 2024.
Our overall sales are primarily dependent upon the strength of the U.S. housing market. As stated elsewhere in this report, our Universal Electric subsidiary markets our products to the electrical distribution trade (primarily electrical and lighting distributors and manufactured housing companies); demand in new home construction and new home sales directly impacts sales by our Universal Electric subsidiary. Our operating results for the fiscal years ended March 31, 2025, and 2024 continue to be dependent upon the economic conditions of the U.S. housing market. Management believes that with an improved housing market and sales of our sealed products, the Company will continue to improve profitability. However, as previously discussed, the imposition of and modification of tariffs during the latter half of the current 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.
Our product offerings, including sealed battery alarm and ground fault circuit interrupter products, compete in price and functionality with similar products offered by our larger competitors. While we believe there will be market acceptance of our products, we cannot be assured of this. Should our products not achieve the level of acceptance we anticipate, this could have a significant effect on our future operations, and our sales may decline, affecting our ability to continue operating in our current fashion.
Our short-term borrowings to finance operations, trade accounts receivable, and foreign inventory purchases are provided pursuant to the terms of our Factoring Agreement with Merchant Factors Corporation (Merchant or Factor). Borrowings under our Factoring Agreement bear interest at prime plus 2% and are secured by all of the Company’s assets. Advances from Merchant are at the sole discretion of Merchant based on their assessment of the Company’s receivables, inventory and financial condition at the time of each request for an advance. The unused availability of this facility totaled approximately $348,000 and $610,000 on March 31, 2025 and 2024, respectively.
As previously discussed, following the May 22, 2025 asset sale to Feit, we intend to continue importing and marketing our product lines other than smoke alarms and carbon monoxide alarms. Virtually all of the products we intend to continue selling are manufactured in the Peoples Republic of China. Our ability to sell those products at competitive prices depends, among other things, on the tariffs to which imports of those products will be subject, and our need for capital to purchase and import these items will depend on our ability to sell those products. We are also exploring other business opportunities to drive long-term value for our shareholders and we will not know our capital needs until we have clearly identified one or more opportunities.
During the fiscal year ended March 31, 2025,2026 and 2024,2025, inventory purchases and other company expenses of approximately $1,097,000$162,000 and $1,699,000,$1,097,000, respectively, were charged to credit card accounts of Harvey B. Grossblatt, the Company’sour Chief Executive Officer and certain of his immediate family members. The CompanyWe 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, 2025,2026 and 20242025 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 $285,000$23,000 and $276,000,$285,000, respectively, and thethere amountwere no amounts outstanding at March 31, 2025,2026 andor 2024 is approximately $0 and $0, respectively.2025.
Assets Held for Sale: As previously discussed in Part I, Item 1, the asset sale to Feit closed on May 22, 2025. Under the terms of the Asset Purchase Agreement, the Companywe sold finished good inventories of $1,655,000, and all of the Company’sour fully amortized intangible assets including, but not limited to, all of the Company’sour patents, trademarks, copyrights, and the trade name Universal Security Instruments, Inc. and USI Electric, Inc. Accordingly, the assets held for sale on March 31, 2025 pursuant to the terms of the Asset Purchase Agreement, are shown separately in the financial statements accompanying this Annual Report and are valued at the lower of the carrying value or fair value less selling cost.
Income Taxes: TheWe Company recognizesrecognize 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 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. The deferred tax assets are reviewed periodically for recoverability and a valuation allowance is provided whenever it is more likely than not that a deferred tax asset will not be realized. The Company expects to record a gain on the sale of assets, as previously discussed, of between $2,000,000 and $2,750,000, and accordingly, may be able to use existing operating loss carry-forwards to offset the expected gain on the sale with the filing of its tax returns for the fiscal year ending March 31, 2026. The amount of the operating loss carryforwards to be utilized is anticipated to be approximately $1,765,000 for the fiscal year ended March 31, 2025. The Company has established a deferred tax asset for this portion of its existing loss carry-forwards.
Further, after a review of projected taxable income, the remaining components of the deferred tax asset, and current global economic conditions, it was determined that it is more likely than not, that the tax benefits associated with the remaining components of deferred tax assets after the sale of a segment of the business, will not be realized. This determination was made based on the Company’sour prior history of losses from operations and the uncertainty as to whether the Companywe 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 remaining deferred tax assets. Our ability to realize the tax benefits associated with the remaining 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.
TheWe Company followsfollow 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 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.
Fair Value Measurements: We account for fair value of financial instruments in accordance with ASC 820, Fair Value Measurement, which defines fair value and establishes a framework to measure fair value and the related disclosures about fair value measurements. The fair value of a financial instrument is the amount that could be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets are marked to bid prices and financial liabilities are marked to offer prices. Fair value measurements do not include transaction costs. The Financial Accounting Standards Board, or FASB, establishes a fair value hierarchy used to prioritize the quality and reliability of the information used to determine fair values. Categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is defined into the following three categories: Level 1: Inputs based upon quoted market prices for identical assets or liabilities in active markets at the measurement date; Level 2: Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data; and Level 3: Inputs that are management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. The inputs are unobservable in the market and significant to the instruments’ valuation. In addition, we will measure fair value in an inactive or dislocated market based on facts and circumstances and significant management judgment. We will use inputs based on management estimates or assumptions or adjust observable inputs to determine fair value when markets are not active and relevant observable inputs are not available.
ASC 825, Financial Instruments, requires disclosures about the fair value of financial instruments. The carrying amount of cash, accounts receivable and amounts due from factor, accounts payable, and accrued expenses, as presented in the balance sheet, approximates fair value due to the short-term nature of these instruments.
Use of Estimates: In preparing financial statements in conformity with accounting principles generally accepted in the United States of America (US-GAAP), management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. We believe our estimates as to the collectability of trade accounts receivable and the amount of finished goods inventory that we consider to be excess or obsolete are critical estimates. On an ongoing basis, we evaluate these estimates, including those related to credit losses, inventories, income taxes, and contingencies and litigation. We base these estimates on historical experiences and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily available from other sources. Actual results could differ from those estimates.
Stock Based Compensation: We account for share-based payments using the fair value method. We recognize all share-based payments to employees and non-employee directors in our financial statements based on their effective date fair values, calculated using the Black-Scholes option pricing model. The expected term of stock options granted is estimated to be five years from the effective date of the grant based on the simplified safe harbor calculation provided under ASC 718-10-55-20 and 21. The expected volatility of the option is determined based on the Company’s stock price over a five-year look-back period. The risk-free interest rate is determined using the yield available for zero-coupon U.S. government issues with a remaining term equal to the expected term of the options.
The impact to the Company’s current and deferred income tax position that may be effected by changes to the Internal Revenue Code resulting from passage of the One Big Beautiful Bill Act, subsequent to the Company’s fiscal year ended March 31, 2025, has not been evaluated.
Revenue Recognition: The Company’sOur 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 thewe Company hashave 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, thewe Company doesdo 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 of completing the sale and are recorded in selling, general and administrative expense.
The amount of revenue recognized reflects the consideration to which thewe Company expectsexpect to be entitled to receive in exchange for products sold. Revenue is recorded at the transaction price net of estimates of variable consideration. TheWe Company usesuse 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.
TheWe Company isare primarily a distributor of safety products for use in home and businessbusiness. underWe bothhad itsthree tradecustomers namesduring the fiscal year ended March 31, 2026 that represented 13.0%, 12.5%, and private10.8% labelsof forour othernet companies.sales, The Company hadand two customers during the fiscal year ended March 31, 2025 that represented 21.7% and 14.9% of the Company’sour net sales.sales, Therespectively. CompanyWe had three customers during the fiscal year ended March 31, 2024,2026 that represented 13.7%,20.0%, 13.7%,19.0%, and 10.6%10.0% of theour Company’saccounts netreceivable, sales. The Company hadand two customers during the fiscal year ended March 31, 2025 that represented 17.3% and 13.8% of the Company’sour accounts receivable.receivable, The Company had no customers in the fiscal year ended March 31, 2024, that represented greater than 10% of the Company’s accounts receivable. During the period covered by this Annual Report, the Company acquired its inventory of smoke alarm and carbon monoxide alarm safety products from Eyston Company, Ltd.respectively. Products manufactured for us by Eyston amounted to approximately 96.3%82.6% and 84.3%96.3% of our purchases for the fiscal years ended March 31, 2025,2026 and 2024,2025, respectively. At March 31, 2025,2026 and 2024,2025, the Companywe had accounts receivable due from Eyston of $114,204$0 and $133,401, respectively. At March 31, 2025,$114,204, and 2024, the Company had trade accounts payable due to Eyston of approximately $1,146,000$0 and $1,501,000,$1,146,000, respectively. Subsequent to March 31, 2025, and in connection with the previously discussed asset sale to Feit, amounts due from, or due to Eyston were settled in full.
What changed in the latest 10-Q
Risk Factors
Not available: the section could not be located automatically in one of the filings (non-standard layout or incorporated by reference). See the original filing. Open the filing on SEC.gov.
Management's Discussion & Analysis (MD&A)
New heading “Gross Profit Margin”
New heading “Engineering and Product Development”
New heading “Interest (Expense) Income”
New heading “Change in Fair Value of Derivative Liabilities”
New heading “Gain on Sale of Assets”
New heading “Net (Loss) Income”
Removed heading “Nine Months Ended December 31, 2025 and 2024”
Largest changes
“We have a history of net operating losses and have financed our operations primarily through issuances of convertible debt. These conditions raise substantial doubt about our ability to continue as a going concern. See “Liquidity and Capital Resources” below and Note 2 to the condensed consolidated financial statements.”see in full comparison
“As of June 30, 2026, we had cash and cash equivalents of $3.7 million, working capital of $3.4 million and a history of net operating losses for each of the three-month periods during the last year. We have financed our operations primarily through issuances of convertible debt. These conditions raise substantial doubt about our ability to continue as a going concern for at least one year after the date that the condensed consolidated financial statements are issued.”see in full comparison
“Our ability to continue as a going concern is dependent on our ability to generate cash flows from operations and find additional sources of funding through either equity offerings, debt financings, or a combination of any such transactions.”see in full comparison
“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. …”see in full comparison
Full comparison: every changed paragraph (50)
As used throughout this Report, “we,” “our,” “the Company” and similar words refers to Universal Safety Products, Inc. and Subsidiaries.
The following discussion and analysis should be read in conjunction with the condensed consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q, and with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2026 (the “2026 Annual Report”). This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors” in the 2026 Annual Report.
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.
We are engaged in the business of marketing and distributingdistribution of safety and security products. OurThe accompanying condensed consolidated financial statements detailpresent our sales and other operationaloperating results for the three and nine-monththree-month periods ended DecemberJune 31,30, 2025,2026 and 2024.2025.
ManagementHistorically, hadour beenproducts seekingconsisted 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 advantageprimarily of growthsmoke opportunitiesalarms, thatcarbon themonoxide Companyalarms seeksand torelated execute.products. In furtherance thereof, as previously announced onOn October 31, 2024, the Companywe entered into an Asset Purchase Agreement with Feit Electric Company, Inc. (“Feit”), pursuant to which Feit agreed to acquire the smoke alarm and carbon monoxide alarm portion of theour Company’sbusiness, businesstogether andwith thecertain non-tangibleintangible assets of the Company,assets, including but not limited to the trade name ofnames Universal Security Instruments, Inc. and Universal Electric, Inc. The Closingtransaction was subject to the approval of the transactionapproved by the requisite vote of theour shareholders ofat the Company. Aa special meeting of the shareholders to approve the sale and related actions was held on April 15, 2025, and the asset sale was approved. Accordinglyclosed on May 22, 2025,2025. Following the Companyclosing, closedour oncontinuing product operations consist primarily of the assetimportation saleand tomarketing Feitof pursuantground fault circuit interrupters (“GFCIs”) and ventilation fans, which we sell to the termsretail ofand electrical distribution trades, the Assetlatter Purchasethrough Agreement.our Thewholly Companyowned currentlysubsidiary, intendsUniversal Safety Electric, Inc. We continue to continueexplore importing and marketing its product lines other than smoke alarms and carbon monoxide alarms and is exploring otheradditional business opportunities intended to drive long-term value for our shareholders.
As part of that effort, in July 2025 we formed Universal DeFi, LLC (“Universal DeFi”), a wholly owned subsidiary, to pursue two lines of business: a tokenization platform, which had not commenced operations as of June 30, 2026, and the operation of licensed nodes and a validator on the Ault Blockchain network. On April 6, 2026, Ault Capital Group, Inc. (“Ault Capital Group”), acting as authorized agent for Ault DAO, LLC, transferred and activated to Universal DeFi 125,000 node licenses and the right to operate one validator, together with the wallet holding the related reward tokens, for no upfront cash consideration. Through these arrangements, Universal DeFi earns AULT tokens (the “AULT Tokens”), the native digital asset of the Ault Blockchain. In consideration of the transfer and delivery of the 125,000 Node Licenses, on June 30, 2026, Universal DeFi entered into a node revenue sharing agreement with Ault Capital Group under which it will pay Ault Capital Group 25% of net proceeds actually received from the sale of AULT Tokens and rewards, retaining the remaining 75%, until cumulative payments to Ault Capital Group total $93,750,000. As of June 30, 2026, AULT Tokens were not being traded on any exchange or other market, and no observable market price or other reliable indicator of fair value existed as of June 30, 2026. Accordingly, we have not recognized any asset or revenue with respect to the node licenses, the validator right or the AULT Tokens earned, and no revenue share liability or expense has been recorded, for the three months ended June 30, 2026. Universal DeFi has generated no revenue to date and expects to continue to incur losses as it develops its operations. See Notes 1, 3 and 10 to the condensed consolidated financial statements for additional information.
We have a history of net operating losses and have financed our operations primarily through issuances of convertible debt. These conditions raise substantial doubt about our ability to continue as a going concern. See “Liquidity and Capital Resources” below and Note 2 to the condensed consolidated financial statements.
Changes in international trade duties and other aspects of international trade policy, both in the U.S.United States and abroad, could materially impactaffect the cost of our products. We import all of our products.products, Asand as an importer,importer we are subject to numerous tariffs whichthat vary dependingby onproduct types of productstype and country of origin, as well as to changes in economic and political conditions in the country of manufacture, potential trade restrictions,restrictions and currency fluctuations. Substantially all of our safety products are imported from the People’s Republic of China.China, Certainand certain of these products are currently subject to tariffs of from twenty (20%) to forty-five (45%) percent.20%. The imposition of and modification of tariffs during the latter half of the fiscal year ended March 31, 2025, and subsequent thereto,subsequently has increased uncertainty as to the short-term sustainability of importing products from our principal suppliers. If thewe Company isare unable to import products at a competitive price pointpoint, our sales could be adversely affected.
Three Months Ended DecemberJune 31,30, 20252026 and 20242025
Sales
Sales. Net sales for the three months ended DecemberJune 31,30, 2025,2026, were $22,549$109,559 compared to $5,535,148$3,824,247 for the comparable three months in the prior year, a decrease of $5,512,599$3,714,688, (99.6%).or Sales97%. decreasedAs principallypreviously duediscussed, we sold the rights to thesell salea of the smoke and carbon monoxide alarmsignificant portion of theour Company’sproduct businessline ason previouslyMay discussed.22, In2025. addition,Sales asubsequent one-timeto returnthis ofdate goodsincluded wasonly approvedthose forproducts athat largewe customer.continue to import and market.
Gross Profit Margin
Gross Profit Margin. Gross profit margin is calculated as net sales less cost of goods sold expressed as a percentage of net sales. Gross margins for the three-month period ended December 31, 2025, decreased principally due to sales returns and allowances.
Expenses. Selling, general and administrative expenses were $1,896,159 for the three months ended December 31, 2025, compared to $1,762,446 for the comparable three months in the prior year. These expenses did not decrease in proportion to the decrease in sales or as a dollar amount principally due to the timing of expenditures related to efforts in the current quarter to pursue strategic alternatives and merger activities including approximately $600,000 of professional fees, as previously discussed. In addition, a charge of $896,700 to salaries expense associated with the granting of incentive stock options, and charges associated with reductions in the work force were recorded in the three-month period ended December 31, 2025. These increases were partially offset by a reduction of $220,000 in the allowance for credit losses at December 31, 2025.
Engineering and product development expenses were $14,193 for the three-month period ended December 31, 2025, and $130,395 for the comparable quarter of the prior year, a $116,202 (89.1%) decrease. These expenses decreased primarily due the cessation of engineering and product development activities during the current fiscal year due to the sale of the smoke and carbon monoxide portion of the Company’s business as previously discussed.
Other expense. Other expense recorded during the three-month period ended December 31, 2025, included the change in the fair value of the derivative component of convertible debentures issued in the period of $135,000. Net interest expense was $78,824 for the quarter ended December 31, 2025, compared to interest expense of $77,409 for the quarter ended December 31, 2024. Interest expense is dependent upon the total amounts borrowed from the Factor and changes in interest rates during the period as compared to the corresponding period for 2024.
Net Loss. We reported a net loss of $2,287,174 for the quarter ended December 31, 2025, compared to a net loss of $936,639 for the corresponding quarter of the prior fiscal year, a $1,350,535 (144.2%) increase in net loss. The net loss increased principally due to the sale of the smoke and carbon monoxide portion of the Company’s business, the recording of the charge for the issuance of incentive stock options, charges for reductions in work force, and the efforts in the current quarter to pursue strategic alternatives, and partially offset by the reduction in the allowance for credit losses, as previously discussed.
Nine Months Ended December 31, 2025 and 2024
Sales. Net sales for the nine months ended December 31, 2025, were $4,606,795 compared to $17,336,933 for the comparable nine months in the prior fiscal year, a decrease of $12,730,138 (73.4%). Sales decreased principally due to the sale of the smoke and carbon monoxide alarm portion of the Company’s business as previously discussed.
Gross Profit Margin. The gross profit margin is calculated as net sales less cost of goods sold expressed as a percentage of net sales. The Company’sOur gross profit margin was 19.0%8.3% and 18.2% of sales for the nine monthsquarters ended DecemberJune 31,30, 2026, and 2025, and 23.7% for the nine months ended December 31, 2024.respectively. Gross margins forwere negatively impacted in the nine-month periodquarters ended DecemberJune 31,30, 2026 and 2025, decreasedprimarily principallydue to tariffs, the mix of products sold due to the previously discussed sale of the smoke and carbon monoxide alarma portion of theour Company’sbusiness, businessand ashigher previouslyfreight discussed.costs.
Expenses
Selling, general and administrative expenses were $743,823 for the three months ended June 30, 2026, and $1,113,303 for the comparable three months in 2025. Although these expenses decreased in absolute dollars, as a percentage of net sales they increased to 679% for the three-month period ended June 30, 2026, from 29.1% for the 2025 period. This increase as a percentage of net sales is primarily attributable to the substantial decline in net sales following the sale of our rights to a significant product line in May 2025, while certain selling, general and administrative expenses, including fixed and recurring corporate and administrative costs, and costs associated with exploring strategic alternatives to our existing business, remain in place and do not decline proportionately with sales.
Engineering and Product Development
Engineering and product development expenses were $1,367 and $112,007 for the three-month periods ended June 30, 2026 and 2025, respectively. The decreased expenses were primarily due to the previously discussed sale of a significant portion of our business.
Interest (Expense) Income
Interest expense of $75,527 was recognized during the quarter ended June 30, 2026, compared to interest income of $3,828 for the quarter ended June 30, 2025. Interest expense is primarily related to the convertible debt issued and the amortization of the related original issuance discounts during the quarter ended June 30, 2026, as compared to the corresponding period of the prior year during which there were no notes issued and interest income was highly dependent upon the total amounts borrowed from the Factor coupled with interest rates during the period.
Change in Fair Value of Derivative Liabilities
The Company recognized income of $150,635 from the change in fair value of derivative liabilities during the quarter ended June 30, 2026, compared to $0 for the quarter ended June 30, 2025. The derivative liabilities represent the conversion features embedded in the 2026 and 2025 convertible notes, which are bifurcated from the host debt instruments and measured at fair value using a Monte Carlo simulation and the binomial valuation models. The income recognized reflects the decrease in the fair value of these derivative liabilities between April 1, 2026 and June 30, 2026.
Gain on Sale of Assets
For the three-month period ended June 30, 2025, 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 $453,000.
Net (Loss) Income
We reported a net loss of $662,086 for the quarter ended June 30, 2026, compared to net income of $1,810,321 for the corresponding quarter of the prior fiscal year, a $2,472,407 or 137% decrease in net income. The primary reason for the decrease in the net income is our sale of a significant portion of its business, as previously discussed, resulting in a gain on the sale of $2,820,668 during the prior year period.
Operating activities used cash of $687,805 for the three months ended June 30, 2026, driven primarily by our net loss for the period, which reflects the sale of a portion of our business, as previously discussed, and the legal and organizational costs of building Universal DeFi as a new venture.
Expenses. Selling, general and administrative expenses were $4,320,649 for the nine months ended December 31, 2025, compared to $4,369,219 for the comparable nine months in the prior year. These expenses did not change materially in proportion to the decrease in sales or as a dollar amount principally due to the timing of expenditures related to efforts in the current quarter to pursue strategic alternatives and merger activities, as previously discussed. These expenses included an increase in the allowance for credit losses of $180,000, a charge to salaries expense for $896,700 related to the issuance of incentive stock options, charges associated with reductions in work force, and the timing of expenditures related to efforts in the current nine-month period to pursue strategic alternatives as previously discussed.
Engineering and product development expenses were $202,882 for the nine months ended December 31, 2025, compared to $328,367 for the comparable period of the prior year. These expenses decreased primarily due the cessation of engineering and product development activities during the period due to the sale of the smoke and carbon monoxide portion of the Company’s business as previously discussed.
Other income (expense). Other expense for the nine-month period ended December 31, 2025, included the change in the fair value of the derivative component of convertible debentures issued of $182,000. Other income included the gain of the sale of inventory and intangible assets of $2,820,668. Our net interest expense was $86,049 for the nine months ended December 31, 2025, compared to interest expense of $211,939 for the nine months ended December 31, 2024. Interest expense is dependent upon the total amounts borrowed from the Factor and changes in interest rates during the period as compared to the corresponding period of the prior year.
Net Income. We reported a net loss of $1,476,633 for the nine months ended December 31, 2025, compared to a net loss of $801,867 for the corresponding period of the prior fiscal year, an increase in the net loss of $674,766 (84.1%). The net loss increased due principally to the sale of the smoke and carbon monoxide portion of the Company’s business, the recording of the charge for the issuance of incentive stock options, and the efforts in the current year to pursue strategic alternatives, as previously discussed.
Operating activities provided cash of $1,347,625$1,070,173 for the ninethree months ended DecemberJune 31,30, 2025. This was primarily due to a decrease in accounts receivable and amountamounts due from factor of $3,743,519,$1,579,321, a decrease in inventories and prepaid expenses of $2,294,183,$3,768,052, andnet partiallyincome offsetof by$1,810,321, a componentdecrease ofin thedeferred gain on the sale oftax assets of $2,820,668,$361,000, offset by a decrease in accounts payable and accrued expenses of $2,148,596,$1,945,916 and the non-cashgain changeson sale of asset of $2,820,668. Operating cash flow amounts for the three months ended June 30, 2025 reflect the reclassification described in theNote fair3 value ofto the derivativecondensed componentconsolidated offinancial convertible debt of $182,000, the non-cash amortization of accrued interest of $70,957, the increase in the allowance for credit losses of $180,000, the issuance of incentive stock options of $896,700, and $361,000 in deferred income taxes.statements.
Operating activities used cash of $736,999 for the nine months ended December 31, 2024. This was primarily due to a decrease in accounts receivable and amount due from factor of $32,581, and an increase in accounts payable and accrued expenses of $1,233,487, offset by an increase in inventories and prepaid expenses of $1,505,513, and a net loss of $801,867.
Investing activities for the ninethree months ended DecemberJune 31,30, 2025,2026 used $45,401 cash for the purchase of property, plant and equipment. 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 $4,502,605. ThereInvesting werecash noflow investing activitiesamounts for the ninethree months ended DecemberJune 31,30, 2024.2025 reflect the reclassification described in Note 3 to the condensed consolidated financial statements.
Financing activities provided net cash of $970,000 during the three months ended June 30, 2026. This reflects the issuance of convertible debt of $1,060,000, less the original issue discount of $60,000 and debt issuance expenses of $30,000. Financing activities used cash of $2,100,458 during the three months ended June 30, 2025, which was comprised of repayments net of advances from the Factor.
Financing activities used cash of $1,905,828 during the nine months ended December 31, 2025, which is comprised of net repayments to the factor of $2,093,041, a one-time special dividend to shareholders in the amount of $2,312,787 and partially offset by net borrowing of convertible debt of $2,500,000.
Financing activities provided cash of $730,800 during the nine months ended December 31, 2024, which is comprised of net borrowings from the factor net of repayments.
LiquidityLIQUIDITY, andCAPITAL CapitalRESOURCES ResourcesAND GOING CONCERN
As of June 30, 2026, we had cash and cash equivalents of $3.7 million, working capital of $3.4 million and a history of net operating losses for each of the three-month periods during the last year. We have financed our operations primarily through issuances of convertible debt. These conditions raise substantial doubt about our ability to continue as a going concern for at least one year after the date that the condensed consolidated financial statements are issued.
Our ability to continue as a going concern is dependent on our ability to generate cash flows from operations and find additional sources of funding through either equity offerings, debt financings, or a combination of any such transactions.
Our contractual cash requirements have not changed materially since we filed our Form 10-K for the fiscal year ended March 31, 2026.
In June 2026, we entered into a securities purchase agreement providing for the sale of convertible notes in an aggregate principal amount of up to $10,600,000. During the three months ended June 30, 2026, we closed the first tranche, which consisted of the issuance of a note with a principal amount of $1,060,000, for cash proceeds of $970,000 net of an original issue discount of $60,000 and issuance costs of $30,000. The closing of the remaining tranches is subject to various contingencies, some of which are outside our control, and there is no assurance that the additional funding will be available when needed or that we will be able to obtain other financing on terms acceptable to us, if at all.
The Company believes its balances of cash received from the sales of convertible debentures, 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. Subsequent to December 31, 2025, $1,545,458 of convertible debt was converted to 405,000 shares of common stock.
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 Operationsoperations and financial condition. With the exception of the adoption of accounting principles relating to convertible debt and the fair value of the derivative component thereof, thereThere 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.
UUU insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 14 Form 4 filings (1 insider, 25 trade dates, 493,044 shares, about $95.1M) and open-market sales in 0 filings. Net open-market shares: 493,044 (purchases minus sales); net value about $95.1M.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-09-30 | Ault Milton C Iii |
Open-market purchase | 18,000 | $5134.00 | $92.4M |
| 2026-09-23 | Ault Milton C Iii |
Open-market purchase | 12,034 | $5.11 | $61.5K |
| 2026-09-23 | Ault Milton C Iii |
Open-market purchase | 300 | $4.98 | $1.5K |
| 2026-09-22 | Ault Milton C Iii |
Open-market purchase | 3,000 | $5.02 | $15.1K |
| 2026-09-21 | Ault Milton C Iii |
Open-market purchase | 100 | $5.07 | $507 |
| 2026-09-18 | Ault Milton C Iii |
Open-market purchase | 100 | $5.01 | $501 |
| 2026-09-17 | Ault Milton C Iii |
Open-market purchase | 200 | $4.86 | $972 |
| 2026-09-08 | Ault Milton C Iii |
Open-market purchase | 300 | $5.65 | $1.7K |
| 2026-09-04 | Ault Milton C Iii |
Open-market purchase | 700 | $5.42 | $3.8K |
| 2026-09-04 | Ault Milton C Iii |
Open-market purchase | 700 | $5.42 | $3.8K |
| 2026-09-03 | Ault Milton C Iii |
Open-market purchase | 100 | $5.49 | $549 |
| 2026-09-03 | Ault Milton C Iii |
Open-market purchase | 100 | $5.49 | $549 |
| 2026-09-01 | Ault Milton C Iii |
Open-market purchase | 100 | $5.15 | $515 |
| 2026-08-31 | Ault Milton C Iii |
Open-market purchase | 200 | $4.96 | $992 |
| 2026-08-31 | Ault Milton C Iii |
Open-market purchase | 2,500 | $5.05 | $12.6K |
| 2026-08-28 | Ault Milton C Iii |
Open-market purchase | 800 | $5.49 | $4.4K |
| 2026-08-28 | Ault Milton C Iii |
Open-market purchase | 10,000 | $5.16 | $51.6K |
| 2026-08-27 | Ault Milton C Iii |
Open-market purchase | 5,000 | $6.02 | $30.1K |
| 2026-08-27 | Ault Milton C Iii |
Open-market purchase | 300 | $5.78 | $1.7K |
| 2026-08-26 | Ault Milton C Iii |
Open-market purchase | 200 | $5.95 | $1.2K |
| 2026-08-26 | Ault Milton C Iii |
Open-market purchase | 10,000 | $6.08 | $60.8K |
| 2026-08-25 | Ault Milton C Iii |
Open-market purchase | 8,729 | $6.03 | $52.6K |
| 2026-08-25 | Ault Milton C Iii |
Open-market purchase | 500 | $5.85 | $2.9K |
| 2026-08-24 | Ault Milton C Iii |
Open-market purchase | 10,000 | $6.59 | $65.9K |
| 2026-08-21 | Ault Milton C Iii |
Open-market purchase | 1,000 | $6.37 | $6.4K |
| 2026-08-21 | Ault Milton C Iii |
Open-market purchase | 20,672 | $6.34 | $131.1K |
| 2026-08-20 | Ault Milton C Iii |
Open-market purchase | 6,006 | $6.15 | $36.9K |
| 2026-08-20 | Ault Milton C Iii |
Open-market purchase | 1,500 | $6.07 | $9.1K |
| 2026-08-19 | Ault Milton C Iii |
Open-market purchase | 1,000 | $5.87 | $5.9K |
| 2026-08-19 | Ault Milton C Iii |
Open-market purchase | 24,328 | $5.58 | $135.8K |
| 2026-08-19 | Ault Milton C Iii |
Open-market purchase | 1,500 | $4.53 | $6.8K |
| 2026-08-18 | Ault Milton C Iii |
Open-market purchase | 700 | $4.38 | $3.1K |
| 2026-08-18 | Ault Milton C Iii |
Open-market purchase | 5,275 | $4.44 | $23.4K |
| 2026-08-17 | Ault Milton C Iii |
Open-market purchase | 1,200 | $4.12 | $4.9K |
| 2026-08-17 | Ault Milton C Iii |
Open-market purchase | 5,000 | $4.09 | $20.4K |
| 2026-08-17 | Ault Milton C Iii |
Open-market purchase | 300 | $3.83 | $1.1K |
| 2026-07-08 | Ault Milton C Iii |
Open-market purchase | 200 | $3.96 | $792 |
| 2026-07-08 | Ault Milton C Iii |
Open-market purchase | 100 | $3.89 | $389 |
| 2026-07-07 | Ault Milton C Iii |
Open-market purchase | 300 | $4.06 | $1.2K |
| 2026-05-15 | Ault Milton C Iii |
Open-market purchase | 185,000 | $5.75 | $1.1M |
| 2026-04-30 | Ault Milton C Iii |
Open-market purchase | 155,000 | $5.75 | $891.2K |
Well-known investors holding UUU (13F)
None of the 59 investors we track reported a position in their latest 13F.