7 unchanged sentences
Accordingly, the following discussion and analysis of the fiscal years ended March 31, 2024, and 2023 relate to the operational results of the Company and its consolidated subsidiaries.
−Removed: In light of shutdowns, quarantines and other restrictions and delays in operations caused by or related to COVID-19 in the PRC and the United States, the Company experienced delays in shipping and receiving of products during the fiscal year ended March 31, 2022, and continues to experience shortages of critical components for manufacturing of our products through and subsequent to March 31, 2023.
−Removed: Other than as reflected in our financial statements, we are not yet able to quantify the full impact of the COVID-19 pandemic on our sales and financial results.
−Removed: Sales during our fiscal year ended March 31, 2023, increased when compared to sales for the comparable 2022 period, primarily due to less delays in unloading freight at California ports of entry thereby improving delivery schedules.
−Removed: However, domestic freight costs have increased.
−Removed: Our sales growth has been due primarily to increased retail sales to large national retailers.
Our overall sales are primarily dependent upon the strength of the U.S.
7 unchanged sentences
Comparison of Results of Operations for the Years Ended March 31, 2024 and 2023
−Removed: In fiscal year 2023, our net sales were $22,178,873 compared to sales in the prior year of $19,549,785, an increase of $2,629,088 (13.4%).
−Removed: The increase in sales was primarily due to increased sales to existing retail customers.
+Added: In fiscal year 2024, our net sales were $19,902,673 compared to sales in the prior year of $22,178,873, a decrease of $2,276,200 (10.3%).
+Added: The decrease in sales was primarily due to decreased sales to existing retail customers as a result of delays in obtaining certain electronic components used in manufacturing our products and due to delays in ocean freight shipments.
Gross Profit.
1 unchanged sentence
Our gross profit percentage for the fiscal year ended March 31, 2024, was 29.2% compared to 28.6% in fiscal 2023.
−Removed: The decrease in 2023 gross margin is attributed to variations in the mix of products sold as certain products are subject to tariff charges that directly impact gross margin.
+Added: The increase in 2024 gross margin is 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.
−Removed: Selling, general and administrative expenses decreased to $4,974,453 in fiscal 2023 from $5,524,343 in fiscal 2022.
+Added: Selling, general and administrative expenses increased to $5,645,584 in fiscal 2024 from $4,974,453 in fiscal 2023.
As a percentage of net sales, these expenses were 28.4% for the fiscal year ended March 31, 2024, and 22.4% for the fiscal year ended March 31, 2023.
−Removed: These expenses decreased as a percentage of net sales as they do not change in direct proportion to increases in sales.
−Removed: These expenses decreased as a dollar amount due primarily due to decreases in salaries and wages which decreased by approximately $181,000 resulting from the federal employee retention credit program, and legal and consulting fees associated with the terminated proposed Merger.
+Added: These expenses increased as a percentage of net sales as they do not change in direct proportion to a change in sales.
+Added: These expenses increased as a dollar amount due primarily to increases in the provision for credit losses, salaries as the prior fiscal year reflected an employee retention credit, and due to increased freight costs, insurance, and professional fees.
Engineering and Product Development.
1 unchanged sentence
Engineering and product development expense for the fiscal year ended March 31, 2023, was $402,692.
−Removed: The decrease in overall engineering and product development expense for the 2023 period compared to the 2022 period was due to reduced payroll expenditures and decreased independent testing of products.
−Removed: Interest Expense (Net).
−Removed: For the fiscal years ended March 31, 2023, and 2022, the Company incurred net interest expense of $237,686 and $147,840, respectively, related to borrowing costs associated with interest paid on amounts borrowed from our factor and on extended trade payables due to Eyston.
−Removed: The increase in interest expense resulted primarily from increases in interest rates on borrowing from our factor during the fiscal year ended March 31, 2023, to fund inventory purchases and operating cash requirements.
+Added: The increase in overall engineering and product development expense for the 2024 period compared to the 2023 period was due to independent testing of products.
+Added: Net Interest Expense and Interest Income.
+Added: For the fiscal years ended March 31, 2024, and 2023, the Company incurred net interest expense of $155,731 and $237,686, respectively, related to borrowing costs associated with interest paid on amounts borrowed from our factor.
+Added: The decrease in interest expense resulted primarily from decreased borrowing from our factor during the fiscal year ended March 31, 2024.
+Added: 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.
3 unchanged sentences
Footnote E 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.
−Removed: Net Income (Loss).
−Removed: We reported net income of $720,411 for the fiscal year 2023, compared to a net loss of $78,150 for fiscal 2022, an increase of $798,561 (1,021.8%) in net income.
−Removed: The increase in net income for the fiscal year ended March 31, 2023, is primarily due to increases in sales to retail as previously discussed above and to decreased expenditures related to a terminated proposed Merger and payroll expenditures as compared to the prior fiscal year.
−Removed: The net loss for the fiscal year ended March 31, 2022, is attributed to increased legal and consulting expense associated with the terminated proposed Merger.
+Added: Net (Loss) Income.
+Added: We reported a net loss of $395,790 for the fiscal year 2024, compared to net income of $720,411 for fiscal 2023, a decrease of $1,116,201 (154.9%) in net income.
+Added: The net loss for the fiscal year ended March 31, 2024, is attributed to decreased sales resulting from manufacturing delays caused by shortages of critical components and to delays experienced in ocean freight shipments, to increases in salaries as the prior fiscal year reflected an employee retention credit, an increase in the provision for credit losses, and due to increased freight costs, insurance, and professional fees.
Financial Condition, Liquidity and Capital Resources
−Removed: The Company reported net income of $720,411, and a net loss of $78,150 for the years ended March 31, 2023, and 2022, respectively.
−Removed: As of March 31, 2023, working capital (computed as the excess of current assets over current liabilities) increased by $724,528 from $4,451,947 on March 31, 2022, to $5,176,475 on March 31, 2023.
+Added: The Company reported a net loss of $395,790, and net income of $720,411 for the years ended March 31, 2024, and 2023, respectively.
+Added: As of March 31, 2024, working capital (computed as the excess of current assets over current liabilities) decreased by $391,075 from $5,176,475 on March 31, 2023, to $4,785,400 on March 31, 2024.
Our operating activities provided cash of $604,076 for the year ended March 31, 2024.
+Added: Operating activities provided cash principally by decreasing trade accounts receivable and amounts due from factor of $354,794, and by increasing accounts payable and accrued expenses by $1,382,394 and offset by increases in inventories of $688,194, increased prepaid expenses of $61,354, and a net loss of $395,790.
+Added: Our operating activities provided cash of $1,491,943 for the year ended March 31, 2023.
Operating activities provided cash principally from a decrease in inventories of $2,165,429, net income of $720,411, and decreases in accounts receivable and amounts due from factor of $425,165.
Operating activities used cash principally due to repayment of accounts payable and accrued expenses of $1,918,493.
−Removed: Our operating activities used cash of $1,860,051 for the year ended March 31, 2022.
−Removed: Operating activities used cash principally to increase trade accounts receivable and amounts due from factor of $1,506,650, to increase inventories by $1,977,868, a net loss of $78,150, and is partially offset by an increase in accounts payable and accrued expenses of $1,669,566, and a decrease in prepaid expenses of $95,357.
Our investing activities did not provide or use cash during the fiscal years ended March 31, 2024, or 2023.
+Added: Financing activities used cash of $690,497 reflecting the decrease in net borrowing from the Factor during the fiscal year ended March 31, 2024.
Financing activities used cash of $1,779,176 reflecting the decrease in net borrowing from the Factor of $697,736 and the repayment of the Note Payable to Eyston in the amount of $1,081,440 during the fiscal year ended March 31, 2023.
−Removed: During the fiscal year ended March 31, 2022, financing activities provided cash of $2,138,182 reflecting the increase in net borrowing from the Factor.
Our overall sales are primarily dependent upon the strength of the U.S.
9 unchanged sentences
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).
−Removed: Borrowings under our Factoring Agreement bear interest at prime plus 2% and are secured by trade accounts receivable and inventory.
+Added: 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.
12 unchanged sentences
The preparation of these consolidated financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures of contingent assets and liabilities.
−Removed: On an ongoing basis, we evaluate these estimates, including those related to bad debts, inventories, income taxes, and contingencies and litigation.
+Added: 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.
10 unchanged sentences
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.
−Removed: After a review of projected taxable income, the components of the deferred tax asset, and the current global economic conditions including unresolved supply chain issues related to the acquisition of electronic microchips, it was determined that it is more likely than not that the tax benefits associated with the remaining components of the deferred tax assets will not be realized.
+Added: After a review of projected taxable income, the 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 the deferred tax assets will not be realized.
This determination was made based on the Company’s prior history of losses from operations and the uncertainty as to whether the Company will generate sufficient taxable income to use the deferred tax assets prior to their expiration.
15 unchanged sentences
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.
−Removed: We have established allowances to cover anticipated doubtful accounts based upon historical experience.
+Added: We have established a provision to cover anticipated credit losses based upon historical experience.
Inventories are valued at the lower of cost or net realizable value.
5 unchanged sentences
The Company is primarily a distributor of safety products for use in home and business under both its trade names and private labels for other companies.
−Removed: The Company had one customer during the fiscal year ended March 31, 2023, that represented 18.2% of the Company’s net sales, and no customers in the fiscal year that ended March 31, 2022, that represented greater than 10% of the Company’s net sales.
−Removed: The Company had no customers in the fiscal year ended March 31, 2023, that represented greater than 10% of the Company’s accounts receivable, and one customer in the fiscal year ended 2022, that represented 13.6% of the Company’s accounts receivable on March 31, 2022.
+Added: The Company had three customers during the fiscal year ended March 31, 2024, that represented 13.7%, 13.7%, and 10.6% of the Company’s net sales.
+Added: The Company had one customer during the fiscal year ended March 31, 2023, that represented 18.2% of the Company’s net sales.
+Added: The Company had no customers in the fiscal years ended March 31, 2024 and 2023, that represented greater than 10% of the Company’s accounts receivable.
The Company acquires all the smoke alarm and carbon monoxide alarm safety products that it sells from Eyston Company, Ltd.
8 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.