UNIVERSAL SAFETY PRODUCTS, INC.
For the period ended Jun 30, 2026. Filed Aug 14, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2026 · Filed Aug 14, 2026
UUU$5.29+3.7%Stored close · as of Oct 16, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-12-31; filed 2026-02-19.
0001104659-26-017568
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-14.
0001104659-26-097233
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 31 previous paragraphs and 39 current paragraphs.
5 unchanged; 9 reworded; 24 added; 15 removed; 2 previous and 1 current paragraphs rearranged.
Tables are not compared: 1 previous and 0 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (24)
Current report
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.
Current report
Historically, our products consisted primarily of smoke alarms, carbon monoxide alarms and related products. On October 31, 2024, we 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 our business, together with certain intangible assets, including the trade names Universal Security Instruments, Inc. and Universal Electric, Inc. The transaction was approved by the requisite vote of our shareholders at a special meeting held on April 15, 2025, and closed on May 22, 2025. Following the closing, our continuing product operations consist primarily of the importation and marketing of ground fault circuit interrupters (“GFCIs”) and ventilation fans, which we sell to the retail and electrical distribution trades, the latter through our wholly owned subsidiary, Universal Safety Electric, Inc. We continue to explore additional business opportunities intended to drive long-term value for our shareholders.
Current report
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.
Current report
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.
Current report
Sales
Current report
Net sales for the three months ended June 30, 2026, were $109,559 compared to $3,824,247 for the comparable three months in the prior year, a decrease of $3,714,688, or 97%. As previously discussed, we sold the rights to sell a significant portion of our product line on May 22, 2025. Sales subsequent to this date included only those products that we continue to import and market.
Current report
Gross Profit Margin
Current report
Expenses
Current report
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.
Current report
Engineering and Product Development
Current report
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.
Current report
Interest (Expense) Income
Current report
Change in Fair Value of Derivative Liabilities
Current report
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.
Current report
Gain on Sale of Assets
Current report
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.
Current report
Net (Loss) Income
Current report
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.
Current report
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.
Current report
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.
Current report
LIQUIDITY, CAPITAL RESOURCES AND GOING CONCERN
Current report
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.
Current report
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.
Current report
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.
Removed paragraphs (15)
Previous 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.
Previous report
Management had been seeking access to additional funding or other resources, or the right strategic business combination, which would allow the Company to drive long-term value for its shareholders while taking advantage of growth opportunities that the Company seeks to execute. In furtherance thereof, as previously announced on October 31, 2024, the Company entered into an Asset Purchase Agreement with Feit Electric Company, Inc. (“Feit”) pursuant to which Feit agreed to acquire the smoke and carbon monoxide alarm portion of the Company’s business and the non-tangible assets of the Company, including but not limited to the trade name of Universal Security Instruments, Inc. and Universal Electric, Inc. The Closing was subject to the approval of the transaction by the requisite vote of the shareholders of the Company. A special meeting of the shareholders to approve the sale and related actions was held on April 15, 2025, and the asset sale was approved. Accordingly on May 22, 2025, the Company closed on the asset sale to Feit pursuant to the terms of the Asset Purchase Agreement. The Company currently intends to continue importing and marketing its product lines other than smoke alarms and carbon monoxide alarms and is exploring other business opportunities to drive long-term value for our shareholders.
Previous report
Sales. Net sales for the three months ended December 31, 2025, were $22,549 compared to $5,535,148 for the comparable three months in the prior year, a decrease of $5,512,599 (99.6%). Sales decreased principally due to the sale of the smoke and carbon monoxide alarm portion of the Company’s business as previously discussed. In addition, a one-time return of goods was approved for a large customer.
Previous report
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.
Previous report
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.
Previous report
*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.
Previous report
Nine Months Ended December 31, 2025 and 2024
Previous report
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.
Previous report
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.
Previous report
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.
Previous report
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.
Previous report
NetIncome. 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.
Previous report
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.
Previous report
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.
Previous report
Liquidity and Capital Resources
Reworded paragraphs (9)
Previous wording
As used throughout this Report, “we,” “our,” “the Company” and similar words refers to Universal Safety Products, Inc.
Current wording
As used throughout this Report, “we,” “our,” “the Company” and similar words refers to Universal Safety Products, Inc. and Subsidiaries.
Previous wording
We are in the business of marketing and distributing safety and security products. Our financial statements detail our sales and other operational results for the three and nine-month periods ended December 31, 2025, and 2024.
Current wording
We are engaged in the marketing and distribution of safety and security products. The accompanying condensed consolidated financial statements present our sales and other operating results for the three-month periods ended June 30, 2026 and 2025.
Previous wording
Changes in international trade duties and other aspects of international trade policy, both in the U.S. and abroad, could materially impact the cost of our products. We import all our products. As an importer, we are subject to numerous tariffs which vary depending on types of products and country of origin, changes in economic and political conditions in the country of manufacture, potential trade restrictions, and currency fluctuations. Substantially all our safety products are imported from the People’s Republic of China. Certain of these products are currently subject to tariffs of from twenty (20%) to forty-five (45%) percent. The imposition of and modification of tariffs during the latter half of the fiscal year ended March 31, 2025, and subsequent thereto, has increased uncertainty as to the short-term sustainability of importing products from our principal suppliers. If the Company is unable to import products at a competitive price point our sales could be adversely affected.
Current wording
Changes in international trade duties and other aspects of international trade policy, both in the United States and abroad, could materially affect the cost of our products. We import all of our products, and as an importer we are subject to numerous tariffs that vary by product type and country of origin, as well as to changes in economic and political conditions in the country of manufacture, potential trade restrictions and currency fluctuations. Substantially all of our safety products are imported from the People’s Republic of China, and certain of these products are currently subject to tariffs of 20%. The imposition and modification of tariffs during the latter half of the fiscal year ended March 31, 2025, and subsequently has increased uncertainty as to the short-term sustainability of importing products from our principal suppliers. If we are unable to import products at a competitive price point, our sales could be adversely affected.
Previous wording
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’s gross profit margin was 19.0% for the nine months ended December 31, 2025, and 23.7% for the nine months ended December 31, 2024. Gross margins for the nine-month period ended December 31, 2025, decreased principally due to the sale of the smoke and carbon monoxide alarm portion of the Company’s business as previously discussed.
Current wording
Gross profit margin is calculated as net sales less cost of goods sold expressed as a percentage of net sales. Our gross profit margin was 8.3% and 18.2% of sales for the quarters ended June 30, 2026, and 2025, respectively. Gross margins were negatively impacted in the quarters ended June 30, 2026 and 2025, primarily due to tariffs, the mix of products sold due to the previously discussed sale of a portion of our business, and higher freight costs.
Previous wording
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.
Current wording
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.
Previous wording
Operating activities provided cash of $1,347,625 for the nine months ended December 31, 2025. This was primarily due to a decrease in accounts receivable and amount due from factor of $3,743,519, a decrease in inventories and prepaid expenses of $2,294,183, and partially offset by a component of the gain on the sale of assets of $2,820,668, a decrease in accounts payable and accrued expenses of $2,148,596, the non-cash changes in the fair value of the derivative component of 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.
Current wording
Operating activities provided cash of $1,070,173 for the three months ended June 30, 2025. This was primarily due to a decrease in accounts receivable and amounts due from factor of $1,579,321, a decrease in inventories and prepaid expenses of $3,768,052, net income of $1,810,321, a decrease in deferred tax assets of $361,000, offset by a decrease in accounts payable and accrued expenses of $1,945,916 and the gain on sale of asset of $2,820,668. Operating cash flow amounts for the three months ended June 30, 2025 reflect the reclassification described in Note 3 to the condensed consolidated financial statements.
Previous wording
Investing activities for the nine months ended December 31, 2025, provided cash from the sale of assets, net of the payment of related liabilities, of $4,502,605. There were no investing activities for the nine months ended December 31, 2024.
Current wording
Investing activities for the three months ended June 30, 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. Investing cash flow amounts for the three months ended June 30, 2025 reflect the reclassification described in Note 3 to the condensed consolidated financial statements.
Previous wording
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.
Current wording
Our contractual cash requirements have not changed materially since we filed our Form 10-K for the fiscal year ended March 31, 2026.
Previous wording
In the notes to the consolidated financial statements, and in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Form 10-K, we have disclosed those accounting policies that we consider to be significant in determining our results of Operations and financial condition. With the exception of the adoption of accounting principles relating to convertible debt and the fair value of the derivative component thereof, there have been no material changes to those policies that we consider to be significant since the filing of our Form 10-K. The accounting principles used in preparing our unaudited condensed consolidated financial statements conform in all material respects to accounting principles generally accepted in the United States of America.
Current wording
In the notes to the consolidated financial statements, and in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Form 10-K, we have disclosed those accounting policies that we consider to be significant in determining our results of operations and financial condition. There have been no material changes to those policies that we consider to be significant since the filing of our Form 10-K. The accounting principles used in preparing our unaudited condensed consolidated financial statements conform in all material respects to accounting principles generally accepted in the United States of America.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
**ITEM 2.**MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
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.
Previous report — wording carried elsewhere
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.