DeFi Capital Markets, Inc.
For the period ended Dec 31, 2024. Filed Feb 14, 2025.
View on SEC.govAbout this filing
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.
Dec 31, 2024 · Filed Feb 14, 2025
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 2024-09-30; filed 2024-11-19.
0001410578-24-002023
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-12-31; filed 2025-02-14.
0001410578-25-000141
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 30 previous paragraphs and 29 current paragraphs.
11 unchanged; 15 reworded; 3 added; 3 removed; 1 previous and 0 current paragraphs rearranged.
Tables are not compared: 0 previous and 1 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 (3)
Current report
Nine Months Ended December 31, 2024 and 2023
Current report
Net (Loss) Income. We reported a net loss of $801,867 for the nine months ended December 31, 2024, compared to net income of $80,881 for the corresponding period of the prior fiscal year, a decrease in net income of $882,748. Net income decreased principally due to lower gross profit margins as discussed above and due to expenditures related to efforts in the nine months ended December 31, 2024, to pursue strategic alternatives and merger activities.
Current report
During the nine-month period ending December 31, 2024, the Company recorded a net loss of $801,867 and used cash of $736,999 in operating activities. Approximately $435,000 of the loss from operations is related to costs incurred in furtherance of the proposed sale of the operating assets of the Company in accordance with the Asset Purchase Agreement noted above. These expenditures used significant cash and have negatively impacted the Company’s availability of cash advances under its factoring agreement. The Company has previously disclosed that it has limited financial resources and access to capital. Financing is limited to amounts available under the factoring agreement as previously discussed. The uncertainty associated with the recurring operating losses, and limited financial resources and access to capital, raise substantial doubt about our ability to continue as a going concern for at least one-year after the date the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q are issued.
Removed paragraphs (3)
Previous report
Six Months Ended September 30, 2024 and 2023
Previous report
Net Income (Loss). We reported net income of $134,772 for the six months ended September 30, 2024, compared to a net loss of $21,295 for the corresponding period of the prior fiscal year, an increase in net income of $156,067 (732.9%).
Previous report
The Company believes its balances of cash, 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 period ended March 31, 2024.
Reworded paragraphs (15)
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 six-month periods ended September 30, 2024, and 2023.
Current 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, 2024, and 2023.
Previous wording
Sales. Net sales for the three months ended September 30, 2024, were $7,203,269 compared to $3,717,455 for the comparable three months in the prior year, an increase of $3,485,814 (93.8%). Sales increased principally due to the timing of orders from a large retail customer.
Current wording
Sales. Net sales for the three months ended December 31, 2024, were $5,535,148 compared to $4,654,978 for the comparable three months in the prior year, an increase of $880,170 (18.9%). Sales increased principally due to the timing of orders from a large retail customer.
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 26.1% for the period ended September 30, 2024, and 29.0% for the period ended September 30, 2023. Gross margins for the six-month period ended September 30, 2024, decreased principally due to an increase in the allowance for excess and obsolete inventory recorded during the period ended September 30, 2024. Gross margins are also impacted by variations in the mix of products sold and due to continued increases in the cost of certain electronic components.
Current wording
Gross Profit Margin. 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 18.5% and 32.3% of sales for the quarters ended December 31, 2024, and 2023, respectively. Gross margins for the three-month period ended December 31, 2024, decreased principally due to the bulk sale of certain excess and obsolete inventory at reduced gross profit margins. In addition, gross margins in the current and prior comparable three-month periods were impacted by variations in the mix of products sold.
Previous wording
Expenses. Selling, general and administrative expenses were $1,209,352 for the three months ended September 30, 2024, compared to $1,334,351 for the comparable three months in the prior year. As a percentage of net sales, these expenses decreased to 16.8% for the three-month period ended September 30, 2024, from 35.9% for the 2023 period. These expenses decreased as a percentage of net sales principally since selling, general, and administrative expenses do not increase or decrease in direct proportion to changes in sales. These expenses decreased as a dollar amount principally due to the timing of expenditures related to efforts in the current quarter and the comparable quarter of the prior year to pursue strategic alternatives and merger activities.
Current wording
Expenses. Selling, general and administrative expenses were $1,762,446 for the three months ended December 31, 2024, compared to $1,310,872 for the comparable three months in the prior year. As a percentage of net sales, these expenses increased to 31.8% for the three-month period ended December 31, 2024, from 28.2% for the 2023 period. These expenses increased as a dollar amount principally due to the timing of expenditures comprised principally of legal, proxy solicitation, proxy tabulation, and consulting business advisors related to efforts in the current quarter to pursue the previously mentioned Asset Purchase Agreement pursuant to which the Company has agreed, subject to shareholder approval, to sell certain inventory and non-tangible assets of the Company, constituting substantially all of the assets of the Company.
Previous wording
Engineering and product development expenses were $110,371 for the three-month period ended September 30, 2024, and $131,415 for the comparable quarter of the prior year, a $21,044 (16.0%) decrease. These expenses decreased primarily due to a reduction in product development costs.
Current wording
Engineering and product development expenses were $130,395 for the three-month period ended December 31, 2024, and $77,295 for the comparable quarter of the prior year, a $53,100 (68.7%) increase. These expenses increased primarily due to an increase in product development costs.
Previous wording
Interest Expense. Our interest expense was $89,642 for the quarter ended September 30, 2024, compared to interest expense of $33,509 for the quarter ended September 30, 2023. 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.
Current wording
Interest Expense. Our interest expense was $77,409 for the quarter ended December 31, 2024, compared to interest expense of $36,310 for the quarter ended December 31, 2023. 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 wording
Net Income (Loss). We reported net income of $576,978 for the quarter ended September 30, 2024, compared to a net loss of $186,425 for the corresponding quarter of the prior fiscal year, a $763,403 (409.5%) increase in net income. Net income increased principally due to the timing of orders to a large retailer as discussed above.
Current wording
Net (Loss) Income. We reported a net loss of $936,639 for the quarter ended December 31, 2024, compared to net income of $102,176 for the corresponding quarter of the prior fiscal year, a $1,038,815 decrease in net income. Net income decreased principally due to lower gross profit margins as discussed above and due to expenditures related to efforts in the current quarter to pursue strategic alternatives and merger activities.
Previous wording
Sales. Net sales for the six months ended September 30, 2024, were $11,801,785 compared to $10,416,226 for the comparable six months in the prior period, an increase of $1,385,559 (13.3%). Sales increased principally due to the timing of orders to a large retailer, and due to improvements in deliveries of products, due to the easing of supply chain disruptions in shipping and handling of containers at California ports of entry. While delays in manufacturing and shipping have improved somewhat over the past fiscal year, we continue to experience delays in receiving inventory for sale.
Current wording
Sales. Net sales for the nine months ended December 31, 2024, were $17,336,933 compared to $15,071,204 for the comparable nine months in the prior period, an increase of $2,265,729 (15.0%). Sales increased principally due to the timing of orders to a large retailer, improvements in deliveries of products, and the easing of supply chain disruptions in shipping and handling of containers at California ports of entry. While delays in manufacturing and shipping have improved somewhat over the past fiscal year, we continue to experience delays in receiving inventory for sale.
Previous wording
Gross Profit Margin. 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 27.7% and 35.2% of sales for the quarters ended September 30, 2024, and 2023, respectively. Gross margins for the three-month period ended September 30, 2024, decreased principally due to an increase in the allowance for excess and obsolete inventory recorded during the period ended September 30, 2024. In addition, gross margins in the current quarter decreased due to continued increases in the cost of certain electronic components and variations in the mix of products sold. Gross margins were negatively impacted in the period ended September 30, 2023, principally due to increases in the cost of certain electronic components.
Current 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 23.7% for the period ended December 31, 2024, and 30.0% for the period ended December 31, 2023. Gross margins for the nine-month period ended December 31, 2024, decreased principally due to an increase in the allowance for excess and obsolete inventory recorded during the nine-month period ended December 31, 2024, and due to the bulk sale of certain excess and obsolete inventory at reduced gross profit margins. In addition, gross margins in the nine-month period decreased due to increases in the cost of certain electronic components and variations in the mix of products sold. Gross margins are also impacted by variations in the mix of products sold and due to continued increases in the cost of certain electronic components.
Previous wording
Expenses. Selling, general and administrative expenses were $2,606,773 for the six months ended September 30, 2024, compared to $2,757,290 for the comparable six months in the prior year. As a percentage of sales, these expenses were 22.1% for the six-month period ended September 30, 2024, and 26.5% for the comparable 2023 period. These expenses decreased as a percentage of net sales principally since selling, general, and administrative expenses do not increase or decrease in direct proportion to changes in sales. These expenses decreased as a dollar amount principally due to the timing of expenditures related to efforts in the current six-month period and the comparable period of the prior year to pursue strategic alternatives and merger activities.
Current wording
Expenses. Selling, general and administrative expenses were $4,369,219 for the nine months ended December 31, 2024, compared to $4,068,162 for the comparable nine months in the prior year. As a percentage of sales, these expenses were 25.2% for the nine-month period ended December 31, 2024, and 27.0% for the comparable 2023 period. These expenses increased as a dollar amount principally due to the timing of expenditures related to efforts in the current nine-month period and the comparable period of the prior year to pursue strategic alternatives and merger activities.
Previous wording
Engineering and product development expenses were comparable at $197,972 for the six months ended September 30, 2024, to $196,378 for the comparable period of the prior year.
Current wording
Engineering and product development expenses were $328,367 for the nine months ended December 31, 2024, compared to $273,673 for the comparable period of the prior year. These expenses increased primarily due to an increase in product development costs.
Previous wording
Interest Expense. Our interest expense was $134,530 for the six months ended September 30, 2024, compared to interest expense of $84,005 for the six months ended September 30, 2023. 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.
Current wording
Interest Expense. Our interest expense was $211,939 for the nine months ended December 31, 2024, compared to interest expense of $120,315 for the nine months ended December 31, 2023. Net interest income of $24,746 was earned in the nine month period ended December 31, 2023 primarily on refunded customs charges. 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 wording
Operating activities used cash of $3,278,163 for the six months ended September 30, 2024. This was primarily due to an increase in accounts receivable and amount due from factor of $3,150,214, and an increase in inventories and prepaid expenses of $1,154,669, and partially offset by an increase in accounts payable and accrued expenses of $888,890 and net income of $134,772. Operating activities provided cash of $650,519 for the six months ended September 30, 2023. This was primarily due to a decrease in accounts receivable and amount due from factor of $534,490, and an increase in accounts payable and accrued expenses and of $1,239,275, and partially offset by an increase in inventories, prepaid expenses of $1,105,053 and a net loss of $21,295.
Current wording
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. Operating activities provided cash of $225,962 for the nine months ended December 31, 2023. This was primarily due to net income of $80,881, a decrease in accounts receivable and amount due from factor of $311,821, and an increase in accounts payable and accrued expenses of $874,648, and offset by an increase in inventories, prepaid expenses of $1,050,814.
Previous wording
There were no investing activities for the six months ended September 30, 2024, or 2023.
Current wording
There were no investing activities for the nine months ended December 31, 2024, or 2023.
Previous wording
Financing activities provided cash of $3,447,281 during the six months ended September 30, 2024, which is comprised of borrowings net of repayments to the factor. Financing activities used cash of $547,203 during the six months ended September 30, 2023, which is comprised of repayments net of borrowings from the factor.
Current wording
Financing activities provided cash of $730,800 during the nine months ended December 31, 2024, and used cash of $338,286 during the nine months ended December 30, 2023, which is comprised of borrowings from the factor net of repayments.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
ITEM 2**.** MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND****RESULTS OF OPERATIONS