Financial Analysis

Note 12 COMMITMENTS AND CONTINGENCIES: The Company maintains its operations in facilities located in both New York and Pennsylvania. On December 1, 2020, the Company entered into a 120-month extension of its lease agreement for an industrial building in Brooklyn, New York, expiring December 1, 2030. Monthly rent at inception was $20,400, which escalates annually to a monthly rent of $28,426 for the final year of the lease term. The Company maintains a security deposit of $40,800, which is included in Security deposit on the accompanying balance sheet. On January 29, 2021, the Company entered into an 87-month lease agreement for an industrial building in Allentown, Pennsylvania, expiring March 30, 2028. Monthly rent at inception was $18,046, which escalates annually to a monthly rent of $20,920 for the final year of the lease term. The Company maintains a security deposit of $35,040, which is included in Security deposit on the accompanying balance sheet. The Company has a collective bargaining multi-employer pension plan (Multi-Employer Plan) with the United Auto Workers of America, Local 259 (ID No. 136115077). The Multi-Employer Plan is covered by a collective bargaining agreement with the Company, which expires on March 31, 2027. Contributions are made in accordance with a negotiated labor contract and are based on the number of covered employees employed per month. With the passage of the Multi-Employer Pension Plan Amendments Act of 1990 (the 1990 Act), the Company may b …

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Note 8 EQUIPMENT FINANCING LINE OF CREDIT: On September 8, 2025, the Company entered into a $450,000 equipment financing arrangement with Chase Bank, bearing interest at a fixed rate of 5.51%, to be repaid over a 60-month period (Equipment Financing Line of Credit). The Equipment Financing Line of Credit is expected to be utilized to purchase machine tools for production. Funding is on an equipment project basis, and once a project is fully funded, the obligation for that project is to be repaid by the execution of term note payable to Chase Bank. The Equipment Financing Line of Credit contains certain financial covenants, consistent with the requirements under the Revolving Line of Credit. As of March 31, 2026, the Companys FCCR was below the covenant requirement for the Equipment Financing Line of Credit. Effective for the fiscal year ended March 31, 2026, Chase Bank waived the covenant exception. As of March 31, 2026, the Company had an outstanding draw of $415,924, of which $256,257 is reflected within equipment financing line of credit on the balance sheet and $159,667 is reflected within equipment financing line of credit, net of current on the balance sheet. The borrowings under the Equipment Financing Line of Credit are collateralized by a first lien on the related equipment financed under the arrangement. …

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The Companys disaggregated revenue by geographical location is as follows: For the Fiscal Years Ended March 31, 2026 2025 Domestic $ 27,704,583 $ 27,138,838 International 1,713,017 1,645,023 Total $ 29,417,600 $ 28,783,861 …

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Note 10 EQUITY INCENTIVE PLANS: 2011 Equity Incentive Plan On August 31, 2011, the Companys shareholder approved the adoption of the Companys 2011 Equity Incentive Plan (2011 Plan) to provide for the grant of stock options and restricted stock awards to purchase up to 750,000 shares of the Companys common stock to all employees, consultants and other eligible participants including senior management and members of the Board of Directors of the Company. The 2011 Equity Incentive Plan expired on August 31, 2021 after which no further awards will be granted under such plan. 2020 Equity Incentive Plan On November 18, 2020, the Board of Directors approved the Companys 2020 Equity Based Compensation Plan (the 2020 Plan) for submission to shareholders at the 2020 annual meeting of shareholders. On December 16, 2020, the Companys shareholders approved the adoption of the 2020 Plan, which provides for the grant of stock options and restricted stock awards to purchase up to 750,000 shares of the Companys common stock to award in the future as incentive compensation to employees, senior management and members of the Board of Directors of the Company. Options granted to employees under both the 2011 Plan and the 2020 Plan (together the Plans) may be designated as options which qualify for incentive stock option treatment under Section 422A of the Internal Revenue Code, or options which do not qualify (non-qualified stock options). Under the Plans, the exercise price of an option designat …

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Note 9 INCOME TAXES: The Company accounts for income taxes under the provisions of ASC Topic 740 (ASC 740), Income Taxes. Under ASC 740, deferred income tax assets or liabilities are computed based upon the temporary differences between the financial statement and income tax bases of assets and liabilities using the currently enacted marginal income tax rates. Deferred income tax expense or credits are based on the changes in the deferred income tax assets or liabilities from period to period. The provision (benefit) for income taxes consists of the following: For the Fiscal Years Ended March 31, 2026 2025 Current: Federal $ (42,010 ) $ 64,300 State and local (736 ) (63,185 ) Total current tax provision (benefit) (42,746 ) 1,115 Deferred: Federal - - State and local - - Total deferred tax expense - - Total provision (benefit) $ (42,746 ) $ 1,115 The tax effects of temporary differences that give rise to significant portions of the deferred tax assets are as follows: As of March 31, 2026 2025 Deferred tax assets: Net operating loss $ 1,713,110 $ 1,416,684 Stock options 832,484 903,449 Operating right-of-use liability 444,981 519,058 Inventory 255,855 187,534 Capitalized research and development costs 167,957 241,761 Research and development tax credits 27,632 - Deferred expenses 18,995 - Total deferred tax assets 3,461,014 3,268,486 Valuation allowance (2,666,961 ) (2,319,591 ) Deferred tax assets, net of valuation allowance 794,053 948,895 Deferred tax liabilities: Depreciati …

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Note 6 LEASES: Under ASC Topic 842, Leases, lease expense is recognized as a single lease cost on a straight-line basis over the lease term. The lease term consists of non-cancelable periods and may include options to extend or terminate the lease term, when it is reasonably certain such options will be exercised. The Company enters into contracts in the normal course of business and assesses whether any such contracts contain a lease. The Company determines if an arrangement is a lease at inception if it conveys the right to control the identified asset for a period of time in exchange for consideration. The Company classifies leases as operating or financing in nature and records the associated lease liability and right-of-use asset on its balance sheet. The lease liability represents the present value of future lease payments, net of lease incentives, discounted using an incremental borrowing rate, which is a management estimate based on the information available at the commencement date of a lease arrangement. With respect to operating lease arrangements, the Company accounts for lease components, and non-lease components that are fixed, as a single lease component. Non-lease components that are variable are expensed as incurred as in the statement of operations. The Company recognizes costs associated with lease arrangements having an initial term of 12 months or less (short-term leases) on a straight-line basis over the lease term; such short-term leases are not recorde …

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Recent Accounting Standard Adopted : In December 2023, the FASB issued Accounting Standards Update (ASU) 2023-09 Improvements to Income Tax Disclosures (ASU 2023-09). ASU 2023-09 enhances the transparency of income tax disclosures, primarily by requiring public business entities to disclose specific categories in the rate reconciliation tabular presentation, as well as by providing additional information for reconciling items that meet a quantitative threshold. ASU 2023-09 also requires disaggregated disclosures of federal and state income taxes paid. The Company adopted ASU 2023-09 in the fourth quarter of the year ended March 31, 2026 on a prospective basis. The adoption of this ASU had no material impact on the Companys financial position, results of operations, or cash flows. Additional required disclosure has been included within Note 9 Income Taxes. …

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Note 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Revenue Recognition: The core principle underlying Accounting Standards Codification (ASC) ASC Topic 606 Revenue from Contracts with Customers (ASC 606), is to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. ASC 606 sets out the following steps for an entity to follow when applying the core principle to its revenue generating transactions: Identify the contract with a customer Identify the performance obligations in the contract Determine the transaction price Allocate the transaction price to the performance obligations Recognize revenue when (or as) each performance obligation is satisfied The Company recognizes revenue and the related cost of products sold when the performance obligations are satisfied. The performance obligations are typically satisfied upon shipment of physical goods. In addition to the satisfaction of the performance obligations, the following conditions are required for revenue recognition: an arrangement exists, there is a fixed price, and collectability is reasonably assured. The Company does not offer any discounts, credits or other sales incentives. Historically, the Company has not had an issue with uncollectible accounts receivable. The Company will accept a return of defective products within one year from shipment for repair or r …

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