What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-06-26 compared with 2025-06-27 · 146 added, 128 removed, 546 unchanged (33% of the section changed)

45 unchanged sentences

Net product sales

$ 10,449 $ 8,677

Licensing revenue

Royalty income

Costs and expenses:

2 unchanged sentences

Total cost of sales and SG&A

16,400 12,469

Operating loss

( 5,615 ) ( 3,399 )

Other income:

Settlement of litigation

Interest income, net

(Loss) income before income taxes

( 4,728 ) 856

Provision for income taxes

Net (loss) income

( 4,731 ) 766

Basic (loss) income per share

$ ( 0.22 ) $ 0.04

Diluted (loss) income per share

$ ( 0.22 ) $ 0.04

(Loss) before income taxes

Provision for income tax expense

Basic (loss) per share

Diluted (loss) per share

Weighted average shares outstanding

21,042,652 21,042,652

The accompanying notes are an integral part of the consolidated financial statements.

25 unchanged sentences

Accounts payable and other current liabilities

$ 808 $ 1,158

Due to affiliate

7 unchanged sentences

Long-term finance lease liability

Income tax payable

Total Non-Current Liabilities

27 unchanged sentences

Balance — March 31, 2024

3,677 $ 3,310 52,965,797 $ 529 $ 79,792 $ ( 24,971 ) $ ( 33,201 ) $ 25,459

— — — — — 766 — 766

Balance — March 31, 2025

3,677 $ 3,310 52,965,797 $ 529 $ 79,792 $ ( 24,205 ) $ ( 33,201 ) $ 26,225

— — — — — ( 4,731 ) — ( 4,731 )

Balance — March 31, 2026

3,677 $ 3,310 52,965,797 $ 529 $ 79,792 $ ( 28,936 ) $ ( 33,201 ) $ 21,494

The accompanying notes are an integral part of the consolidated financial statements

5 unchanged sentences

Cash Flows from Operating Activities:

Net (loss) income

$ ( 4,731 ) $ 766

Adjustments to reconcile net loss to net cash (used) by operating activities:

Adjustments to reconcile net loss to net cash (used in) operating activities:

Non-cash lease expense

3 unchanged sentences

Accounts receivable

( 1,262 ) ( 215 )

Licensing receivable

2,044 ( 3,140 )

Prepaid purchases

2 unchanged sentences

Right of use assets-operating

( 313 ) ( 248 )

Right of use assets-finance

2 unchanged sentences

Income taxes payable

( 531 ) ( 404 )

Advanced deposits

Deferred revenue

Net cash (used) by operating activities

( 3,647 ) ( 5,258 )

Net cash (used in) operating activities

Cash Flows From Investing Activities:

1 unchanged sentence

Purchases of short-term investments

( 16,277 ) ( 18,505 )

Additions to property and equipment

( 195 ) ( 119 )

Net cash (used) by investing activities

( 15,063 ) ( 119 )

Net cash provided by (used in) investing activities

Cash Flows from Financing Activities:

1 unchanged sentence

Long term finance liability

Net cash provided (used) by financing activities

Net (decrease) in cash and cash equivalents

( 18,704 ) ( 5,378 )

Net cash (used in) provided by financing activities

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of the year

19,890 25,268

Cash and cash equivalents at end of the year

$ 1,186 $ 19,890

Supplemental disclosure of non-cash investing and financing activities:

25 unchanged sentences

Long-Lived Assets

The Company’s long-lived assets include property and equipment and right of use assets.

At March 31, 2025 , the Company had ap proximate ly $ 211,000 o f property and equipment, net of accumulated depreciation.

The C ompany’s long-lived assets include property and equipment and right of use assets.

At March 31, 2026 , the Company had approximately $ 129,000 of property and equipment, net of accumulated depreciation.

At March 31, 2026 , the Company's right of use assets were approximately $ 304,000 .

1 unchanged sentence

The recoverability of assets held and used is measured by a comparison of the carrying amount of the asset to the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset.

Future events could cause the Company to conclude that impairment indicators exist and that long-lived assets may be impaired.

Future events could cause the Company to conclude that impairment indicators exist and that long-lived as sets may be impaired.

If impairment is deemed to exist, the asset will be written down to fair value.

27 unchanged sentences

Conversely, the sales return reserve could be decreased if the actual return rates are less than the historical return rates, which were used to establish the reserve.

The Company adopted ASC topic 606.

The Company adopted ASC topic 606, "Revenue from Contracts with Customers" ("ASC 606" ).

Sales allowances, marketing support programs, promotions and other volume-based incentives which are provided to retailers and distributors are accounted for on an accrual basis as a reduction to net revenues in the period in which the related sales are recognized.

Prior to the adoption of ASC topic 606, the Company followed the provisions of ASC topic 605.

The adoption of ASC topic 606 did not have a material impact on revenue recognition as compared to revenue recognition provided under ASC topic 605.

Prior to the adoption of ASC 606, the Company followed the provisions of ASC topic 605, "Revenue Recognition" ("ASC 605" ).

The adoption of ASC 606 did not have a material impact on revenue recognition as compared to revenue recognition provided under ASC 605.

If additiona l marketing support programs, promotions and other volume-based incentives are required to promote the Company’s products subsequent to the initial sale, then additional reserves may be required and are accrued for when such support is offered.

6 unchanged sentences

In the case where a royalty is paid to the Company in advance, the royalty payment is initially recorded as deferred revenue on the consolidated balance sheets and recognized as revenue as the royalties are deemed to be earned according to the principles outlined above.

As of March 31, 2025, the Company recorded deferred revenue of approximately $ 96,000 as compared to approximately $ 191,000 as of March 31, 2024 and approximately $ 149,000 as of March 31, 2023 on its condensed consolidated balance sheets.

As of March 31, 2026, the Company recorded deferred revenue of nil as compared to approximately $ 96,000 as of March 31, 2025 and approximately $ 191,000 as of March 31, 2024 on its condensed consolidated balance sheets.

All of the deferred revenue for the periods presented are related to licensing revenue.

5 unchanged sentences

Licensing revenue

Royalty income

Net revenues by customers:

$ 2,656 $ 4,156

$ 3,495 $ 7,478

Inventory is valued at the lower of cost or net realizable value.

9 unchanged sentences

The accounts receivable balance on a net basis was approximately $ 1,293,000 as of March 31, 2026 as compared to approximately $ 1,499,000 as of March 31, 2025 and approximately $ 1,343,000 as of March 31, 2024.

The allowance for credit losses increased approximately $ 1,082,000 for the year ended March 31, 2025 and increased by $ 800 for the year ended March 31, 2024 .

As of March 31, 2025 , Amazon and Variety Wholesalers accounted for 59 % and 19 %, respectively, of the Company’s total trade accounts receivable, net of specific reserves.

As of March 31, 2024 , Walmart, Chedraui and Amazon accounted for 34 %, 30 % and 25 %, respectively, of the Company’s total trade accounts receivable, net of specific reserves.

No other customer accounted for more than 10% of the Company’s total trade accounts receivable, net of specific reserves, as of March 31, 2025 or March 31, 2024 .

The allowance for credit losses decreased approximately $ 1,100,000 for the year ended March 31, 2026 and increased by $ 1,082,000 for the year ended March 31, 2025 .

As of March 31, 2026 , Amazon and Fred Meyer accounted for 64 % and 20 %, respectively, of the Company’s total trade accounts receivable, net of specific reserves.

As of March 31, 2025 , Amazon and Variety Wholesalers accounted for approximately 59 % and 19 %, respectively, of the Company’s total trade accounts receivable, net of specific reserves.

No other customer accounted for more than 10% of the Company’s total trade accounts receivable, net of speci fic reserves, as of March 31, 2026 or March 31, 2025 .

Accounts receivable roll-forward:

11 unchanged sentences

Reserve adjustment

1,100 ( 1,082 )

Allowance for credit losses

10 unchanged sentences

Conversely, the sales return reserve could be decreased if the actual return rates are less than the historical return rates, which were used to establish the reserve.

At March 31, 2026 the sales return reserve balance was approximately $ 57,000 as compared to approximately $ 70,000 as of March 31, 2025 , a decrease of $ 13,000 during fiscal 2026 .

At March 31, 2025 , the sales return reserve balance was approximately $ 70,000 as compared to approximately $ 67,000 as of March 31, 2024 , an increase of $ 3,000 during fiscal 2025 .

At March 31, 2024 , the sales return reserve balance was approximately $ 67,000 as compared to approximately $ 83,000 as of March 31, 2023 , a decrease o f $ 16,000 duri ng fiscal 2024 .

Foreign Currency

5 unchanged sentences

Advertising expenses are charged against earnings as incurred and are included in selling, general and administrative expenses.

The Company incurred approx imately $ 165,000 of advertising expenses during fiscal 2025 and approximately $ 122,000 during fiscal 2024 .

The Company incurred approximately $ 234,000 of advertising expenses during fiscal 2026 and approximately $ 165,000 during fisc al 2025 .

Sales Allowance and Marketing Support Expenses

At the time of sale, the Company reduces recognized gross revenue by allowances to cover, in addition to estimated sales returns as required by ASC topic 606, “Revenue from Contracts with Customers.” (i) sales incentives offered to customers that meet the criteria for accrual and (ii) an estimated amount to recognize additional non-offered deductions it anticipates and can reasonably estimate will be taken by customers which it does not expect to recover.

Accruals for the estimated amount of future non-offered deductions are required to be made as contra-revenue items because that percentage of shipped revenue fails to meet the collectability criteria within ASC topic 606.

At the time of sale, the Company reduces recognized gross revenue by allowances to cover, in addition to estimated sales returns as required by ASC 606, (i) sales incentives offered to customers that meet the criteria for accrual and (ii) an estimated amount to recognize additional non-offered deductions it anticipates and can reasonably estimate will be taken by customers which it does not expect to recover.

If additional marketing support programs, promotions and other volume-based incentives are required to promote the Company’s products subsequent to the initial sale, then additional reserves may be required and are accrued for when such support is offered.

11 unchanged sentences

Interest income, net

$ 887 $ 1,155

Deferred income taxes are recorded to account for the tax effects of differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

6 unchanged sentences

As of March 31, 2026 and March 31, 2025 , the Company had no outstanding options or warrants.

Recently Adopted Accounting Pronouncements

Accounting Standards Update 2025 - 05 Financial Instruments — Credit Losses (Topic 326 ):

Measurement of Credit Losses for Accounts Receivable and Contract Assets

In July 2025, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2025 - 05, which provides ( 1 ) all entities with a practical expedient and ( 2 ) entities other than public business entities with an accounting policy election when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under Topic 606, Revenue from Contracts with Customers.

The practical expedient allows an entity to assume that, when estimating expected credit losses, current conditions as of the balance sheet date remain unchanged for the remaining life of the asset.

The accounting policy election permits nonpublic entities that elect the practical expedient to also consider collection activity occurring after the balance sheet date when estimating expected credit losses.

The standard is effective for fiscal years beginning after December 15, 2025, and for interim periods within those annual reporting periods.

Early adoption is permitted.

The Company has adopted ASU 2025 - 05 for the three and nine month periods ended December 31, 2025.

The adoption did not have a material impact on its financial condition, results of operations or cash flows.

Accounting Standards Update 2023 - 09 Income Taxes (Topic 740 ) :

"Improvements to Income Tax Disclosures" Income Statement Expenses " (Issued December 2023 )

In December 2023, the FASB issued ASU No.

2023 - 09, “Income Taxes (Topic 740 ):

Improvements to Income Tax Disclosures.” ASU2023 - 09 requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid.

ASU 2023 - 09 is effective for public entities with annual periods beginning after December 15, 2024, with early adoption permitted.

The Company adopted ASU 2023 - 09 on a prospective basis effective March 31, 2026.

Accordingly, the enhanced income tax disclosures are presented beginning in fiscal 2026 and prior disclosures have not been recast.

The adoption of this guidance did not have an impact on the Company's consolidated results of operations, financial condition or cash flows, as the amendments relate solely to disclosure requirements.

Recent Accounting Pronouncements

The following ASUs were issued by the FASB which relate to or could relate to the Company as concerns the Company’s normal ongoing operations or the industry in which the Company operates.

Accounting Standards Update 2023 - 07 Segment Reporting (Topic 280 ):

"Improvements to Reportable Segment Disclosures " (Issued October 2023 )

In November 2023, the FASB issued ASU 2023 - 07, Segment Reporting (Topic 280 ):

"Improvements to Reportable Segment Disclosures" ("ASU 2023 - 07" ) to update reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses and information used to assess segment performance.

This update is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

The adoption of this guidance did not have any impact on the Company's segment reporting.

Accounting Standards Update 2024 - 03 Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220 - 40 ):

6 unchanged sentences

The Company is currently evaluating the impact that the adoption of this ASU will have on its consolidated financial statements.

Accounting Standards Update 2023 - 09 Income Taxes (Topic 740 ) :

"Improvements to Income Tax Disclosures" Income Statement Expenses " (Issued December 2023 )

In December 2023, the FASB issued ASU No.

2023 - 09, “Income Taxes (Topic 740 ):

Improvements to Income Tax Disclosures.” ASU2023 - 09 requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid.

ASU 2023 - 09 is effective for public entities with annual periods beginning after December 15, 2024, with early adoption permitted.

The Company is currently evaluating the impact of this guidance on its consolidated financial statements.

NOTE 2 — INVENTORIES:

2 unchanged sentences

As of March 31, 2026 and March 31, 2025 , inventories consisted exclusively of purchased finished goods.

As of March 31, 2025 , inventory was valued at approximat ely $ 4,909,000 which included a valuation reserve of approximately $ 354,000 .

As of March 31, 2026 , inventory was valued at approximately $ 4,128,000 which included a valuation reserve of approximately $ 343,000 .

As of March 31, 2025 , inventory was valued at approximately $ 4,909,000 which included a valuation reserve of approximately $ 354,000 .

NOTE 3 — RELATED PARTY TRANSACTIONS:

7 unchanged sentences

Charges of rental and utility fees on office space in Hong Kong

During fiscal 2025 and fiscal 2024 , the Company was billed approximately $ 138,000 and $ 158,000 , respectively, for rental and utility fees from Vigers Appraisal and Consulting Ltd (“VACL”), which is a company related to the Company’s Chairman of the Board.

D uring fiscal 2026 and fiscal 2025 , the Company was billed approximately $ 130,000 and $ 138,000 , respectively, for rental and utility fees from Vigers Appraisal and Consulting Ltd (“VACL”), which is a company related to the Company’s Chairman of the Board.

The Company owed $ 802 to VACL related to rental charges as of March 31, 2026 and $ 819 as of March 31, 2025 .

During fiscal 2025 and fiscal 2024 , the Company was billed approximately $ 385 and nil, respectively, for its share of installation charges related to an air conditioning system, and purchase of protective materials for coronavirus from Vigers Strategic Services Ltd (“VSSL”), which is a company related to the Company’s Chairman of the Board.

During fiscal 2026 and fiscal 2025 , the Company was billed nil and approximately $ 385 , respectively, for its share of installation charges related to an air conditioning system, and purchase of protective materials for coronavirus from Vigers Strategic Services Ltd (“VSSL”), which is a company related to the Company’s Chairman of the Board.

Vigers Strategic Services Ltd was formerly known as Lafe Strategic Services Ltd.

1 unchanged sentence

Charges for promotional items

During fiscal 2025 , the Company purchased approximately $ 30,000 of promotional items from The Whisky Capital Pte Ltd ("TWCPL"), which is a company related to the Company's Chairman.

The Company owed nil to TWCPL related to these charges as at March 31, 2025 .

The Company had no transactions with TWCPL during fiscal 2024 .

During fiscal 2026 and 2025 , the Company purchased nil and approximately $ 30,000 , resp ectively, of promotional items from The Whisky Capital Pte Ltd ("TWCPL"), which is a company related to the Company's Chairman.

The Company owed nil to TWCPL related to these charges as at March 31, 2026 and March 31, 2025 .

NOTE 4 — PROPERTY AND EQUIPMENT:

6 unchanged sentences

Total property and equipment

Depreciation of property and equipment amounted to a pproximately $ 78,000 and $ 26,000 for the twelve months ended March 31, 2025 and 2024 , respectively.

During fiscal 2025 and 2024 , the Company did not dispose of any property and equipment.

Depreciation of property and equipment amounted to approximately $ 83,000 and $ 78,000 for the twelve months ended March 31, 2026 and 2025 , respectively.

During fiscal 2026 and 2025 , the Company disposed of fully depreciated computer equipment of approximately $ 10,000 with no gain or loss on the disposal.

NOTE 5 — INCOME TAXES:

The Company accounts for uncertain tax positions in accordance with the provisions of ASC Topic 740 -Accounting for Income Taxes.

The Company accounts for uncertain tax positions in accordance with the provisions of ASC Topic 740, "Accounting for Income Taxes" ("ASC 740" ).

When uncertain tax positions exist, the Company will recognize the tax benefit of tax positions to the extent that the benefit will more likely than not be realized.

12 unchanged sentences

In general, an ownership change, as defined by Section 382, occurs when there is greater than 50% change in the ownership of stock among certain 5% shareholders over a three -year period.

The Company is taxed as a C corporation for federal income tax purposes.

Income taxes for the Company are recorded in accordance with ASC 740, which provides for deferred taxes using an asset and liability approach.

Income taxes have been calculated on a separate tax return basis.

The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements.

Under this method, the Company determined deferred tax assets and liabilities on the basis of the differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse.

The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

The Company recognized deferred tax assets to the extent that it believes that these assets are more likely than not to be realized.

In making such a determination, the Company considers all positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and results of recent operations.

If the Company determines that it would be able realize its deferred tax assets in the future in excess of their net recorded amount, it would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes.

The Company records uncertain tax positions in accordance with ASC 740 on the basis of a two -step process in which ( 1 ) it determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and ( 2 ) for those tax positions that meet the more-likely-than- not threshold, the Company recognizes the largest amount of tax benefit that is more than 50% likely to be realized upon ultimate settlement with the related tax authority.

The Company recognizes interest and penalties related to unrecognized tax benefits on the income tax expense line in the accompanying consolidated statement of operations.

As of March 31,2026, there were no interest or penalties to be accrued for.

Improvements to income tax disclosures

In December 2023, the financial, the FASB issued ASU 2023 - 09, Income Taxes (Topic 740 ) - Improvements to Income Tax Disclosures.

The ASU enhances the transparency and decision usefulness of income tax disclosures by requiring additional disaggregation of information related to the effective tax rate reconciliation, income taxes paid and income tax expense and pretax income by jurisdiction.

The Company adopted ASU 2023 - 09 on a prospective basis effective March 31,2026.

Accordingly, the enhanced income tax disclosures are presented beginning in fiscal year 2026 and prior period disclosures have not been recast.

The adoption of this guidance did not have an impact on the Company's consolidated results of operations, financial position or cash flows, as the amendments relate solely to disclosure requirements.

The Company’s provision for income tax expense for fiscal 2026 and fiscal 2025 was as follows:

The income/(loss) from operations before tax expense (benefit) consisted of the following for the years ended March 31, 2026 and 2025:

(In thousands)

Foreign, state and other

Pre-tax (loss)/income

$ ( 4,964 ) $ ( 5,653 )

Total pre-tax (loss)/income

$ ( 4,300 ) $ ( 4,728 )

The income tax provision consisted of the following for the years ended March 31, 2026 and 2025.

(In thousands)

State and local

Total Current Expense

State and local

Total Deferred Expense

Provision for income tax expense

The Company adopted ASU 2019 - 12 (Topic 740 ) Simplifying the Accounting for Income Taxes during fiscal 2025 .

In the table above, the income tax expense of $ 8,000 in fiscal 2025 and $ 9,000 in fiscal 2024 , was removed as it represented non-income based taxes.

In the table above, the inco me tax expense of $ 11,000 in fiscal 2026 and $ 8,000 in fis cal 2025 , was removed as it represented non-income based taxes.

The Company files a consolidated federal return and certain state and local income tax returns.

The difference between the effective rate reflected in the provision for income taxes and the amounts determined by applying the statutory federal rate of 21 % to earnings before income taxes for fiscal 2025 and fiscal 2024 is analyzed below:

(In thousands)

The difference between the effective rate reflected in the provision for income taxes and the amounts determined by applying th e statutory federal rate of 21 % to earnings before income ta xes for fiscal 2026 and fiscal 2025 is analyzed below:

A reconciliation of the provision for income to the amount computed by applying the 21% statutory U.S federal income tax rate to income before income taxes after the adoption of ASU 2023-09 as follows:

As of March 31, 2026

(In thousands) (percentage)

Federal Statutory Tax Rate

$ ( 901 ) 20.9 %

State and Local Income Taxes, Net of Federal Income Tax Effect

Foreign Tax Effects

Foreign rate differential

Interest Income

Change in valuation allowance

Effect of Cross-Border Tax Laws

Global intangible low-taxed income (GILTI)

Changes in Valuation Allowances

910 ( 21.2 )%

Nontaxable or Nondeductible Items

Effective Income Tax

As previously disclosed for the years ended March 31, 2025 prior to the adoption of ASU 2023-09, the following is a reconciliation of the difference between the effective income tax rate and federal statutory rate:

As of March 31, 2025

(In thousands) (percentage)

Statutory provision

2 unchanged sentences

( 118 ) 3.0 %

( 293 ) 7.0 %

Permanent differences

Adjustment to prior year taxes

( 355 ) 8.0 %

Valuation allowance

1 unchanged sentence

Provision for income tax expense

As of March 31, 2025 and March 31, 2024, the significant components of the Company's deferred tax assets and liabilities which were classified as non-current were as follows:

As of March 31, 2026 and March 31, 2025 , the principal components of the Company's deferred tax assets are as follows:

(In thousands)

6 unchanged sentences

Net deferred tax assets:

Deferred tax liabilities:

Property and equipment

( 16 ) ( 19 )

Total deferred tax liabilities:

$ ( 16 ) $ ( 19 )

ASC 740 requires a valuation allowance to reduce the deferred tax assets reported if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

After consideration of all of the evidence, both positive and negative, the Company has recorded a full valuation allowance against its deferred tax assets at March 31, 2026 and 2025, as the Company's management has determined that it is more likely than not that these assets will not be realized.

The increase in the valuation allowance relates to the net loss incurred by the Company.

The Company has $ 24.4 million of U.S.

federal net operating loss carry forwards (“NOLs”) and $ 21.1 million of state NOLs as of March 31, 2025 as follows:

federal net operating loss carry forwards (“NOLs”) and $ 25.5 million of state NOLs a s of March 31, 2026 as follows:

Federal NOL's

3 unchanged sentences

Expiration Year (Fiscal)

$ — $ 0.6 2036

$ — $ 0.8 2037

$ — $ 0.6 State 2036

$ — $ 0.8 State 2037

$ — $ 2.6 State 2038

$ 1.9 $ 2.7 Federal indefinite/State 2039

7 unchanged sentences

The tax benefits related to these state NOLs and future deductible temporary differences are recorded to the extent management believes it is more likely than not that such benefits will be realized.

The income of foreign subsidiaries before taxes was $ 925,000 for the fiscal year ended March 31, 2025 as compared to income before taxes of $ 1,181,000 for the fiscal year ended March 31, 2024 , respectively.

The Company analyzed the future reasonability of recognizing its deferred tax assets at March 31, 2026 .

As a result, the Company concluded that a valuation allowance of approximately $ 6,145,000 would be recorded against the assets.

As a result, the Company concluded that a valuation allowance of approxima tely $ 7,312,000 would be rec orded against the assets.

The net operating loss and tax credit carryforwards are subject to review and possible adjustment by the Internal Revenue Service and state taxing authorities.

Net operating loss and tax credit carryforwards may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant stockholders over a three year period in excess of 50%, as defined under Sections 382 and 383 of the Internal Revenue Code, respectively, as well as similar state provisions and other provisions within the Internal Revenue Code.

This could limit the amount of tax attribute s that can be utilized annually to offset future taxable income or tax liabilities.

The amount of the annual limitation is determined based on the value of the Company immediately prior to the ownership change.

Subsequent ownership changes may further affect the limitation in future years.

Interest and penalty charges, if any, related to unrecognized tax benefits will be classified as income tax expense in the accompanying statements of operations and comprehensive loss.

As of March 31, 2026 and 2025, the Company had no accrued interest or penalties related to uncertain tax positions.

The Company is subject to examination and assessment by tax authorities in numerous jurisdictions.

1 unchanged sentence

federal tax are tax years ending March 31, 2022 and forward.

Based on the outcome of tax examinations or due to the expiration of statutes of limitations, it is reasonably possible that the unrecognized tax benefits related to uncertain tax positions taken in previously filed returns may be different from the liabilities that have been recorded for these unrecognized tax benefits.

As a result, the Company may be subject to additional tax expense.

The Company is not currently under examination by the Internal Revenue Service or any other jurisdictions for any tax years.

As of March 31, 2026 the Company is asserting under ASC 740 - 30 that all of the unremitted earnings of its foreign subsidiaries are indefinitely invested.

3 unchanged sentences

and the tax consequences of any decision to repatriate earnings of foreign subsidiaries to the U.S.

The Tax Cut and Job Act (“TCJA”) establishes new tax rules designed to tax U.S.

The One Big Beautiful Bill ("OBBB") and the Tax Cut and Job Act (“TCJA”) establishes new tax rules designed to tax U.S.

companies on global intangible low-taxed income (GILTI) earned by foreign subsidiaries.

The Company has evaluated this provision of the TCJA and the application of ASC 740 and its impact is reflected in the financial statements as of March 31, 2025 .

The Company has evaluated this provision of the OBBB and the TCJA and the application of ASC 740 and its impact is reflected in the financial statements as of March 31, 2026 .

NOTE 6 — COMMITMENTS AND CONTINGENCIES:

The Company’s ERP software provider is subscription based with annual commitments as follows (in thousands).

Rent expense resulting from leases with non-affiliated companies ag gregated $ 64,000 and $ 49,000 for fiscal 2025 and 2024 .

Rent expense resulting from leases with non-affiliated companies were approximately $ 67,000 and $ 64,000 for fiscal 2026 and fiscal 2025 , respectively.

Letters of Credit:

6 unchanged sentences

The Company matches a percentage of the participants’ contributions up to a specified amount.

These contributions to the plan for fiscal 2025 and 2024 were approxi mately $ 19,000 for both p eriods and were charged against earnings for the periods presented.

These contributions to the plan for fiscal 2026 and 2025 were approximately $ 14,000 and $ 19,000 , respectively, and were charged against earnings for the periods presented.

NOTE 7 — SHAREHOLDERS ’ EQUITY:

3 unchanged sentences

Series A Preferred Stock:

The Company has issued and outstanding 3,677 shares of Series A Preferred Stock, $.

01 par value (“Preferred Stock”), with a face value of $ 3,677,000 , which had no determinable market value as of March 31, 2025 .

The Company has issued and outstanding 3,677 shares of Series A Preferred Stock, $.01 par value (“Preferred Stock”), with a face value of $ 3,677,000 , which had no determinable market value as of March 31, 2026 .

The Preferred Stock is non-voting, has no dividend preferences and has not been convertible since March 31, 2002;

3 unchanged sentences

These short term deposits have maturity dates of 90 days or less and are classified as cash equivalents.

The Company also held short-term investments in deposits totaling approximately $ 14.9 million at March 31, 2025 as compared to nil at March 31, 2024 .

These short-term i nvestments in deposits have maturity dates greater than 90 days and are classified as short-term investments.

The Company also held short-term investments in deposits totaling approximately $ 3.1 million at March 31, 2026 as compared to approximately $ 14.9 million at March 31, 2025 .

These short-term investments in deposits have maturity dates greater than 90 days and are classified as short-term investments.

Under ASC Topic 820 Fair Value Measurement, t he carrying amounts of the Company’s financial instruments, such as cash, short term deposits and short term investments approximate fair values due to the short-term nature of these instruments and are classified under the fair value hierarchy of Level 1.

2 unchanged sentences

Twelve Months Ended March 31,

Net (loss) income

$ ( 4,300 ) $ ( 4,731 )

Denominator for basic and diluted loss/income per share — weighted average shares

Denominator for basic and diluted loss per share — weighted average shares

21,042,652 21,042,652

Net (loss) income per share:

Basic and diluted (loss) income per share

Net (loss) per share:

Basic and diluted (loss) per share

$ ( 0.20 ) $ ( 0.22 )

1 unchanged sentence

NOTE 10 — LICENSE AGREEMENTS:

During fiscal 2025 the Company was party to two license agreements.

During fiscal 2024 the Company was party to three license agreements, one of which was terminated by the Company in June 2023.

The remaining agreements allow the licensee to access the Company’s trademarks for the manufacture and/or the sale of consumer electr onics and other products.

During fiscal 2026 and 2025 , the Company was party to two license agreements.

These agreements allow the licensee to access the Company’s trademarks for the manufacture and/or the sale of consumer electr onics and other products.

The license agreements (i) allow the licensee to use the Company’s trademarks for a specific product category, or for sales within specific geographic areas, or for sales to a specific customer base, or any combination of the above, or any other category that might be defined in the applicable license agreement and (ii) may be subject to renewal at the initial expiration of the applicable license agreement and are governed by the laws of the United States.

The Company recorded licensing revenues of approximately $ 336,000 in fiscal 2025 and $ 218,000 in fiscal 2024 under the license agreements.

The Company also recorded several one -time settlement agreements with customers of Emerson Quiet Kool, which aggregated nil in fiscal 2025 and $ 175,000 in fiscal 2024 .

The agreements allow Emerson Quiet Kool's customers to sell-off their on hand inventories over a limited period.

These amounts are presented separately as Royalty Income in the Consolidated Statements of Operations.

The Company recorded licensing revenues of app roximately $ 386,000 in fiscal 2026 and $ 336,000 in fiscal 2025 under the l icense agreements.

NOTE 11 — LEGAL PROCEEDINGS:

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Customer Concentration

For fiscal 2025 , the Company’s three largest customers accounted for approximately 79 % of the Company’s net revenues, with Amazon accounting for 39 %, Walmart accounting for 31 % and Big Lots accounting for 9 %.

For fiscal 2024 , the Company’s three largest customers accounted for approximately 83 % of the Company’s net revenues with Walmart accounting for 53 %, Amazon accounting for 20 % and Fred Meyer accounting for 10 %.

For fiscal 2026 , the Company’s two largest customers accounted for approximately 55 % of the Company’s net revenues, with Amazon accounting for 42 % and Fred Meyer accounting for 13 %.

For fiscal 2025 , the Company’s two largest customers accounted for approximately 70 % of the Company’s net revenues with Amazon accounting for 39 % and Walmart accounting for 31 %.

No other customer accounted for more than 10% of net revenues in either period.

Product Concentration

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Concentrations of Credit Risk

As a percent of the Company’s total trade ac counts receivable, net of specific reserves, Amazon and Variety Wholesalers accounted for 59 % and 19 %, respectively, as of March 31, 2025 .

As a percent of the Company’s total trade accounts receivable, net of specific reserves, Walmart, Chedraui and Amazon accounted for 34 %, 30 % and 25 %, respectively, as of March 31, 2024 .

As a percent of the Company’s total trade accounts receivable, net of specific reserves, Amazon and Fred Meyer accounted for 64 % and 20 %, respectively, as of March 31, 2026 .

As a percent of the Company’s total trade accounts receivable, net of specific reserves, Amazon and Variety Wholesalers accounted for 59 % and 19 %, respectively, as of March 31, 2025 .

No other customer accounted for more than 10% of the Company’s total trade accounts receivable, net of specific reserves, as of March 31, 2026 or March 31, 2025 .

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Supplier Concentration

During both fiscal 2025 and 2024 , the Company procured 95 % of its products for resale from its four largest factory suppliers.

Approximately 37 % of these products were procured from its largest supplier in both periods.

During fiscal 2026 and 2025 , the Company procured approximately 96 % and 95 %, respectively, of its products for resale from its four largest factory suppliers.

Approximately 49 % of these products were procured from its largest supplier in fiscal 2026 and approximately 37 % in fiscal 2025 .

See the Supplier table under the heading "Design and Manufacturing " in this Form 10 -K, for further details.

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Third Party Representatives

In fiscal 2025 , the Company utilized 5 sales representative organizations, two of these representative organizations were responsible for approximately 48 % of the Company's net revenues, including one which represented approximately 38 % and another which represented 10 % of its net revenues.

In fiscal 2024 , the Company utilized 6 sales representative organizations, including one which represented 30 % of its net revenues.

In fiscal 2026 , the Company utilized six sales representative organizations, two of which were responsible for approximately 68 % of the Company's net revenues, including one which represented approximately 43 % and another which represented approximately 25 % of its net revenues.

In fiscal 2025 , the Company utilized five sales representative organizations, two of which were responsible for approximately 48 % of the Company's net revenues, including one which represented approximately 38 % and another which represented approximately 10 % of its net revenues.

No other sales representative organization accounted for more than 10% of the Company's net revenues in fiscal 2026 or fiscal 2025 .

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and in Hong Kong as well as a copier in the U.S.

These leases have remaining non-cancellable lease terms of twenty-nine to fifty-one months.

These leases have remaining non-cancellable lease terms of seventeen to thirty-nine months.

The Company has elected not to separate lease and non-lease components for all leased assets.

48 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data