What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-06-26 compared with 2025-06-30 · 92 added, 79 removed, 155 unchanged (52% of the section changed)

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rate fluctuation, reduced product demand, increased competition, inability to produce required capacity, unavailability of financing,

government action, weather conditions, and other uncertainties, including those detailed in our Commission filings and at the forepart of this

Annual Report.

We assume no duty to update forward-looking statements to reflect events or circumstances after the date of such statements.

government action, weather conditions, and other uncertainties, including those detailed in our Commission filings and at the forepart

of this Annual Report.

We assume no duty to update forward-looking statements to reflect events or circumstances after the date of such

following discussion should be read in conjunction with our financial statements contained in Part II, Item 8, Financial Statements ,

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programs are sponsored, administered, and/or supported by local school districts, and we employ considerable efforts to build relationships

with these types of school districts to provide desired programing for their out-of-school programs.

with these types of school districts to provide desired programming for their out-of-school programs.

The majority of the time, the out-of-school

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The Company sells to all of these types

given the new administration’s stated goals of removing federal influence and administration from education, and returning those

functions to the states, we are now considering which of our products would be adaptable to the educational standards of certain larger

given the administration’s stated goals of removing federal influence and administration from education, and returning those functions

to the states, we are now considering which of our products would be adaptable to the educational standards of certain larger states.

We intend to continue to weigh state-level priorities much more heavily in the development of future products as well.

a transition from federal dominance to state dominance of the application of educational standards to curriculum as likely, albeit over

a long time frame, and we are adapting our product development to this change in our market.

We view a transition

from federal dominance to state dominance of the application of educational standards to curriculum as likely, albeit over a long-time

frame, and we are adapting our product development to this change in our market.

feedback also indicates that products that have evidence of their effectiveness are increasingly being demanded, especially in state-funded

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but we intend to substantially build out our library of evidence of our products’ effectiveness.

The course we take to accomplish

this endeavor will depend on our experiences with these early initiatives.

course we take to accomplish this endeavor will depend on our experiences with these early initiatives.

offer professional development training for instructors using our products, and typically charge a fee for this service, with the fee

primarily covering our expenses.

Management does not view this service as a profit center, but rather as a customer service component

Management does not view this service as a profit center, but rather 1) a customer service component

of our product that adds to its uniqueness and value in the marketplace and 2) as a market development endeavor to build out the Company’s

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factors that negatively impacted our revenue in fiscal year 2026 versus that in fiscal year 2025.

did not win an Iowa STEM Scale-Up contract in fiscal year 2025 and reported no revenue from that customer.

In fiscal year 2024, our

revenue from our Iowa STEM Scale-Up contract was $823,143.

In fiscal year 2023, our revenue from this customer was $467,457.

a contract for fiscal year 2026 and expect associated revenue for this contract to be closer to our fiscal year 2023 experience.

Catapult order was significantly less in fiscal year 2025 versus that of fiscal year 2024.

Catapult administers summer programming

in Missouri due to the state’s public funding of such programs.

They experience annual fluctuations in their customer base,

and they inventory our products over the course of the year.

Thus, seasons when their customer base is down and when their inventory

of our products is high produce smaller orders than seasons when their customer base is up and they have a low inventory of our products.

We believe that their order placed with us in fiscal year 2025, in the aggregate amount of $587,100, was under the former conditions,

and that their order placed with us in fiscal year 2024, in the amount of $1,286,695, was under the latter conditions.

reseller revenue was significantly less in fiscal year 2026 versus that of fiscal year 2025.

For the year ended March 31, 2026, reseller

revenue was $1.02 million versus $1.59 million for the year ended March 31, 2025.

Catapult order was less in fiscal year 2026 versus that of fiscal year 2025.

Catapult administers summer programming in Missouri

due to the state’s public funding of such programs.

They experience annual fluctuations in their customer base, and they have

moved to a just-in-time inventory system.

Consequently, they worked down our inventory that they held during this past season, resulting

in a lower order volume compared to the prior year.

For the year ended March 31, 2026, Catapult revenue was $0.33 million versus

$0.59 million for the year ended March 31, 2025.

Air Force JROTC (“AFJROTC”) contract produces less revenue as the contract ages.

The AFJROTC has approximately 884 sites, and we have

sold into approximately 642 of them thus far.

expiration of ESSER funds on September 30, 2024, eliminated a key funding stream for our products during the second half of our fiscal

The AFJROTC has approximately 884 sites,

and we have sold into approximately 652 of them thus far.

For the year ended March 31, 2026, ARJROTC revenue was $0.09 million versus

$0.45 million for the year ended March 31, 2025.

customer orders were fewer in fiscal year 2026 versus that for fiscal year 2025.

For the year ended March 31, 2026, we had eleven

(11) customer relationships whose revenue exceeded $100,000 and no customer relationships that exceeded $500,000 in revenue.

the year ended March 31, 2025, we had sixteen (16) customer relationships that exceeded $100,000 and two (2) customer relationships

that exceeded $500,000.

change in Presidential administration created significant changes in the education market regarding funding streams, administration

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and, thus, disruptive to our market.

Company has been soliciting larger customers for over three (3) years and has seen some success.

The AFJROTC is the Company’s largest

success by a wide margin, producing revenue of $453,314 in the year ended March 31, 2025, $1,269,036 in the year ended March 31, 2024,

and $2,655,336 in the year ended March 31, 2023.

have experienced other successes in our campaign to find larger customers.

The table below shows customer transactions by size for the

periods indicated.

Company has been soliciting larger customers for over four (4) years and has seen some success until fiscal year 2026.

The table below

shows customer transactions by size for the periods indicated.

of Customer Transactions by size

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Year ended March 31, 2024

believe that we can continue to experience success in soliciting larger customers, but we can offer no assurances that success will be

certain, nor can we offer any numerical framework in describing the success that may occur.

Risk factors include anything that would

negatively affect educational funding in the United States;

finding and retaining employees that meet our high standards;

that would negatively affect our supply chain of critical components.

Year ended March 31, 2023

we continue to find success increasing customer revenue sizes below the $50,000 threshold, the relationships larger than that were more

elusive during fiscal year 2026.

the year ended March 31, 2026, our cost of sales was $2,509,692, or 39.5% of revenue.

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percentage of reseller sales

the year ended March 31, 2026, reseller sales were 16.1% of total revenue as compared to 21.4% for the year ended March 31, 2025.

lower reseller revenue, as a percentage of total revenue, for fiscal year 2026 versus fiscal year 2025 was the primary factor behind

the lower cost of sales, as a percentage of revenue, for fiscal year 2026 versus fiscal year 2025.

expenses are divided into two categories – salary + wages, and general + administrative.

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retain employees over the long term, which requires periodic increases in compensation as their value to the Company increases.

Company also has a discretionary quarterly bonus program based on qualified revenue.

Qualified revenue is defined as revenue where there

are no reseller fees or other price adjustments associated with that revenue.

Thus, all reseller sales are disqualified from the discretionary

quarterly bonus calculation, as are other miscellaneous transactions where the Company did not receive a full margin.

During quarters

with higher revenue, salaries and wages will increase all other things equal.

to January 1, 2026, the Company had a discretionary quarterly bonus program based on qualified revenue.

Qualified revenue was defined

as revenue where there were no reseller fees or other price adjustments associated with that

Thus, all reseller sales were disqualified from the discretionary quarterly bonus calculation, as were other miscellaneous transactions

where the Company did not receive a full margin.

January 1, 2026, the Company modified the formula for its quarterly bonus program to be 10% of income before interest and taxes.

quarterly bonuses depend on profitability, not revenue.

Management believes that this new bonus program formula better aligns employee

incentives with shareholder interests.

beginning January 1, 2026, the Company initiated a Simple IRA program.

Employees can withhold a percentage of their income each pay period

which is deposited into an IRA for the employee.

The company matches the first 3% of employee income contributions.

Management believes

that this program helps retain employees.

quarters with higher profitability, salaries and wages will increase all other things equal.

and wages were $2,205,008 for the year ended March 31, 2026, compared to $1,914,941 for the year ended March 31, 2025.

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For the year ended March 31, 2025, general and administrative expenses were

In late October and early November of 2024, we ended our lease on our 10,000 square foot combined warehouse and office facility,

and entered into two (2) new leases - a 20,880 square foot warehouse and R&D facility, and a 5,016 square foot corporate office facility.

This expansion was the primary driver in the increase in general and administrative expenses in fiscal year 2025 versus fiscal year 2024,

although general inflation also played a significant role.

While most expenses increased, we experienced significant decreases from two (2) areas.

late October and early November of 2024, we ended our lease on our 10,000 square foot combined warehouse and office facility, and entered

into two (2) new leases - a 20,880 square foot warehouse and R&D facility, and a 5,016 square foot corporate office facility.

expenses associated with those moves, which were part of the general and administrative expenses in fiscal year 2025, were not present

in fiscal year 2026.

tax expenses for fiscal year 2026 were $32,056 versus $153,041 in fiscal year 2025.

The decrease is primarily attributable to

significantly lower taxable income in the current year compared to the prior year.

Additionally, the state income tax payments for fiscal

year 2025 included approximately $88,000 related to underpaid state estimated taxes from the fiscal year ended March 31, 2024.

year 2024 was an exceptionally strong year financially, and the state estimated tax payments made during that year were insufficient

to fully cover the ultimate tax liability due upon filing.

As a result, a substantial portion of the taxes paid during fiscal year 2025

related to the prior year liability rather than current year operations.

Operating expenses for the year ended March 31, 2026, were $3,623,091, compared to $3,301,118 for the year ended March 31, 2025.

Income/Expenses

income and expenses are those outside of the Company’s ordinary course of business.

During the Covid pandemic, the Employee Retention

Tax Credit was offered to companies to keep employees on the payroll during the lockdowns.

The Company qualified for those benefits,

which are disclosed under other income and expenses.

income and interest expense are also disclosed under other income and expenses.

The Company had considerable interest expense prior to

paying off all of its promissory note debt as of March 31, 2023.

Since that time and as the Company has accumulated cash, it has invested

surplus cash in a Vanguard money market fund that invests exclusively in repurchase agreements and short-term U.S.

income for the years ended March 31, 2026, and 2025, was entirely comprised of net interest income.

The Company invests surplus cash

in a Vanguard money market fund that invests exclusively in repurchase agreements and short-term U.S.

government securities.

The ticker symbol of this fund is “VMFXX.”

the year ended March 31, 2025, other income and expenses were $127,930, with net interest income comprising the entire amount.

year ended March 31, 2024, other income and expenses were $104,328, with interest income totaling $48,904.

symbol of this fund is “VMFXX.” Interest accrues daily and is paid monthly.

the year ended March 31, 2026, other income was $104,477.

For the year ended March 31, 2025, other income was $127,930.

Average account

balances in our savings account and interest rates were lower in fiscal year 2026 versus those in fiscal year 2025, which accounts for

the decline in interest income.

Income Before Tax

the year ended March 31, 2026, net income before tax was $321,455 versus $1,211,263 for the year ended March 31, 2025.

experienced a lower sales level in fiscal year 2025 versus that of fiscal year 2024, which largely accounts for the difference in net

income before tax for these two periods.

Operating expenses in fiscal year 2025 were also higher than those for fiscal year 2024.

The Company experienced

a lower sales level in fiscal year 2026 versus that of fiscal year 2025, which largely accounts for the difference in net income before

tax for these two periods.

Operating expenses in fiscal year 2026 were also higher than those for fiscal year 2025 due to increased employee

Company has significant net operating losses which arose due to past losses.

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31, 2026, the Company’s provision for income taxes was ($68,273).

For the fiscal year ending March 31, 2025, the Company’s

provision for income taxes was ($317,235).

the year ended March 31, 2026, net income was $253,182 versus $946,865 for the year ended March 31, 2025.

Removing the tax loss carry-forward

valuation allowance added $1,529,793 to net income for the year ended March 31, 2024.

and Capital Resources

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year ended March 31, 2025.

A decrease in accounts receivable and prepaid expenses, and a smaller increase in inventory as of March 31,

2025, compared to March 31, 2024, were the largest factors behind the increase of cash flow from operations in fiscal year 2025 over

that in fiscal year 2024.

Several factors contributed to the decline in cash provided by operations from fiscal year 2025 to fiscal

The largest factors were net income decreased by $693,683;

the provision for income taxes decreased by 209,952;

receivable increased by $338,726 in fiscal year 2026 versus a decrease of $1,291,987 in fiscal year 2025;

of March 31, 2026, total current assets were $5,631,022 and total current liabilities were $448,856, resulting in working capital of

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Company had a current ratio as of March 31, 2026, of 12.5 compared to a current ratio of 18.1 as of March 31, 2025.

of March 31, 2025, we had $3,223,147 in cash and cash equivalents compared to $1,329,708 in cash as of March 31, 2024.

The improvements

in working capital, current ratio, and cash on hand are largely due to the realization of $1,675,859 of accounts receivable during fiscal

year 2025 that were on the books at the end of fiscal year 2024.

of March 31, 2026, we had $2,674,538 in cash compared to $3,223,147 in cash as of March 31, 2025.

Flow from Investing Activities

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We purchased warehouse and office equipment related to our move from one facility to two during fiscal

year 2025, which accounts for the increase in cash used by investing activities.

These expenses were absent in fiscal year 2026, which accounts for the decrease in cash used by investing activities.

Flow from Financing Activities

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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 7. Management’s Discussion and Analysis