Universal Security Instruments Inc has a market cap of $14.4 million; its shares were traded at around $6.05 with a P/E ratio of 8 and P/S ratio of 0.5.
Highlight of Business Operations:Our sales for the year ended March 31, 2010 were $26,439,118 compared to $26,097,596 for the year ended March 31, 2009, an increase of approximately 1.3%. We reported income from continuing operations of $2,268,048 in fiscal 2010 compared to income from continuing operations of $1,442,336 in fiscal 2009, an increase of 57.2%.
Our backlog of orders believed to be firm as of March 31, 2010 was approximately $334,729. Our backlog as of March 31, 2009 was approximately $458,590. This decrease in backlog is primarily due to the timing of orders of our safety products.
Our purchases from the Hong Kong Joint Venture represented approximately 51.1% of the Hong Kong Joint Venture s total sales during fiscal 2010 and 63.2% of total sales during fiscal 2009, with the balance of the Hong Kong Joint Venture s sales being primarily made in Europe and Australia, to unrelated customers. The Hong Kong Joint Venture s sales to unrelated customers were $14,099,350 in fiscal 2010 and $13,299,688 in fiscal 2009. Please see Note C of the Financial Statements for a comparison of annual sales and earnings of the Hong Kong Joint Venture.
As a result of continuing losses at Icon, we undertook an evaluation of the goodwill from our acquisition of Icon during the third quarter of fiscal year 2008 to determine whether the value of the goodwill had been impaired. Based on that evaluation, we determined that the value of the goodwill from our acquisition of Icon was impaired, and we recognized an impairment charge of US$1,926,696 at December 31, 2007 for the goodwill. In addition, as a result of Icon s receivership and the steps taken to liquidate Icon s assets, the non-cash assets of Icon were written down to their estimated net realizable value and a further impairment charge of US$7,087,297 was recognized as of March 31, 2008. These impairments have been recorded in discontinued operations in the consolidated statements of operations for the fiscal year ended March 31, 2008.
On September 22, 2008, Icon s obligations were settled in the receivership action by Ontario Superior Court order. As a result of the settlement of Icon s obligations, a gain of CAD$5,101,674 (US$4,910,718) was realized by Icon in the quarter ended September 30, 2008. Approximately US$3,000,000 of the gain related to extinguishment of liabilities due to unsecured creditors as the Company determined that a legal release of the liabilities had been achieved to allow recognition of the gain on extinguishment of liabilities. This gain was partially offset in consolidation by the US$1,518,375 after-tax effect loss recognized by the Company in settlement of its guarantee of Icon s secured debt and other losses attributable to the Icon discontinued operation to arrive at the gain from discontinued operations of $3,423,021 for the fiscal year ended March 31, 2009.
As of March 31, 2010, there are outstanding options to purchase an aggregate of 53,427 shares of our common stock at per share exercise prices ranging from $3.25 to $16.09. The exercise of such outstanding options would dilute the percentage ownership of our existing stockholders, and any sales in the public market of shares of our common stock underlying such options may adversely affect prevailing market prices for our common stock.
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