Universal Security Instruments : Quarterly report

SECURITIES & EXCHANGE COMMISSION EDGAR FILING

UNIVERSAL SECURITY INSTRUMENTS INC

Form: 10-Q

Date Filed: 2019-08-19

Corporate Issuer CIK: 102109

© Copyright 2019, Issuer Direct Corporation. All Right Reserved. Distribution of this document is strictly prohibited, subject to the terms of use.

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly period ended June 30, 2019

OR

• TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	Commission file number 001-31747
	UNIVERSAL SECURITY INSTRUMENTS, INC.
	(Exact name of registrant as specified in its charter)
Maryland	52-0898545
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)
11407 Cronhill Drive, Suite A
Owings Mills, Maryland	21117
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code: [phone]

Inapplicable

(Former name, former address and former fiscal year if changed from last report.) Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading symbol	Name of each exchange on which registered
Common Stock	UUU	NYSE MKT LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ❑

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ❑

Indicate by check mark if the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. Large accelerated filer ❑ Accelerated filer ❑ Non-Accelerated Filer x Smaller Reporting Company x Emerging Growth Company ❑

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ❑

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ❑ No x

At August 19, 2019, the number of shares outstanding of the registrant's common stock was 2,312,887.

	TABLE OF CONTENTS
		Page
Part I - Financial Information
Item 1.	Condensed Consolidated Financial Statements:
	Condensed Consolidated Balance Sheets at June 30, 2019 (unaudited) and March 31, 2019	3
	Condensed Consolidated Statements of Operations for the Three Months Ended June 30, 2019 and 2018
	(unaudited)	4
	Condensed Consolidated Statements of Comprehensive Loss for the Three Months Ended June 30, 2019
	and 2018 (unaudited)	5
	Condensed Consolidated Statements of Shareholders' Equity Three Months Ended June 30, 2019	6
	Condensed Consolidated Statements of Shareholders' Equity Three Months Ended June 30, 2018	7
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended June 30, 2019 and 2018
	(unaudited)	8
	Notes to Condensed Consolidated Financial Statements (unaudited)	9
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	14
Item 4 .	Controls and Procedures	17
Part II - Other Information
Item 1.	Legal Proceedings	18
Item 6.	Exhibits	18
	Signatures	20
	2

	PART I - FINANCIAL INFORMATION
ITEM 1.	CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
	UNIVERSAL SECURITY INSTRUMENTS, INC. AND SUBSIDIARY
	CONDENSED CONSOLIDATED BALANCE SHEETS
			(unaudited)			(audited)
			June 30, 2019		March 31, 2019
	ASSETS
CURRENT ASSETS
Cash		$	223,598	$	374,472
Accounts receivable:
Trade, less allowance for doubtful accounts		482,963			365,293
Receivables from employees		54,930			54,916
Receivable from Hong Kong Joint Venture		12,144			45,217
			550,037			465,426
Amount due from factor		1,943,961			2,549,986
Inventories - finished goods		7,487,800			6,852,305
Prepaid expenses		130,163			145,190
TOTAL CURRENT ASSETS		10,335,559			10,387,379
INVESTMENT IN HONG KONG JOINT VENTURE		7,923,355			8,441,889
INTANGIBLE ASSET - NET		52,542			53,660
PROPERTY AND EQUIPMENT - NET		465,883			19,998
OTHER ASSETS		4,000			4,000
TOTAL ASSETS	$	18,781,339	$	18,906,926
	LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Line of credit - factor	$	1,695,381	$	1,851,591
Short-term portion of lease asset liability		162,906			-
Accounts payable - Hong Kong Joint Venture		5,625,164			4,962,023
Accounts payable - trade		391,823			616,444
Accrued liabilities:
Accrued payroll and employee benefits		99,401			132,132
Accrued commissions and other		407,544			470,876
TOTAL CURRENT LIABILITIES		8,382,219			8,033,066
LONG-TERM PORTION OF LEASE ASSET LIABILITY		283,784			-
COMMITMENTS AND CONTINGENCIES		-			-
SHAREHOLDERS' EQUITY
Common stock, $.01 par value per share; authorized 20,000,000 shares; 2,312,887 shares issued and outstanding
at June 30, 2019 and March 31, 2019		23,129			23,129
Additional paid-in capital		12,885,841			12,885,841
Accumulated Deficit		(3,255,820)			(2,646,866)
Accumulated other comprehensive income		462,186			611,756
TOTAL SHAREHOLDERS' EQUITY		10,115,336			10,873,860
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	18,781,339	$	18,906,926

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

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UNIVERSAL SECURITY INSTRUMENTS, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

		Three Months Ended June 30,
		2019				2018
Net sales	$	4,343,291	$	4,045,996
Cost of goods sold - acquired from Joint Venture		2,793,539			2,618,867
Cost of goods sold - other		304,923			186,985
GROSS PROFIT		1,244,829			1,240,144
Selling, general and administrative expense		1,236,839			1,197,771
Research and development expense		140,643			153,387
Operating loss		(132,653)			(111,014)
Other expense:
Loss from investment in Hong Kong Joint Venture		368,964			244,400
Interest expense		107,337			83,419
NET LOSS	$	(608,954)	$	(438,833)
Loss per share:
Basic and diluted	$	(0.26)	$	(0.19)
Shares used in computing net loss per share:
Weighted average basic and diluted shares outstanding		2,312,887			2,312,887

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

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