Executive Summary

Q3 FY2025 revenue rose 18.9% year over year to $5.54M, but the company swung to a net loss of $(0.94)M (EPS $(0.40)) as gross margin compressed to 18.5% on bulk sales of excess/obsolete inventory and transaction-related costs tied to the Feit Electric asset sale process .
Sequentially, results deteriorated from a one-off Q2 boost driven by a large national retail order; management previously warned that Q2’s level was not sustainable .
Liquidity tightened and risk increased: management highlighted substantial doubt about going-concern status given recurring losses, limited access to capital, and constrained factoring availability ($324K available; $1.50M outstanding at 9.5% effective rate) .
Strategic catalyst: the $6M asset sale to Feit Electric remains subject to stockholder approval; expected closing timing shifted from “Q1 calendar 2025” to “Q2 calendar 2025,” with potential NYSE MKT delisting and SEC reporting termination if the deal is not approved .

What Went Well and What Went Wrong

What Went Well
- Revenue growth: Q3 sales +18.9% YoY to $5.54M, supported by timing of orders from a large retail customer .
- Prior-quarter execution: Q2 delivered $7.20M revenue and $0.25 EPS on a large national retail order (~$3.54M), proving demand elasticity when supply/orders align .
- Inventory movement: Company executed bulk sales of excess/obsolete inventory, monetizing stock despite margin trade-offs .
What Went Wrong
- Margin compression and losses: Q3 gross margin fell to 18.5% (vs 32.3% LY) and operating loss was $(0.87)M as the inventory clear-out and transaction costs weighed on profitability .
- Rising financing pressure: Interest expense was $77K in Q3; liquidity strained with only ~$324K availability under the factoring line at quarter-end .
- Increased business risk: Management disclosed substantial doubt about going concern and warned of possible delisting and reporting cessation if the asset sale is not approved .

Financial Results

Metric	Q1 FY2025 (Jun 30, 2024)	Q2 FY2025 (Sep 30, 2024)	Q3 FY2025 (Dec 31, 2024)
Revenue ($USD)	$4,598,516	$7,203,269	$5,535,148
Gross Profit ($USD)	$1,087,704	$1,997,943	$1,022,011
Gross Margin %	23.7%	27.7%	18.5%
Operating Income (Loss) ($USD)	$(397,318)	$678,220	$(870,830)
Net Income (Loss) ($USD)	$(442,206)	$576,978	$(936,639)
Diluted EPS ($)	$(0.19)	$0.25	$(0.40)
Interest Expense ($USD)	$44,888	$89,642	$77,409

Year-over-Year Q3 comparison:

Metric	Q3 FY2024 (Dec 31, 2023)	Q3 FY2025 (Dec 31, 2024)
Revenue ($USD)	$4,654,978	$5,535,148
Diluted EPS ($)	$0.04	$(0.40)

Disaggregated sales (product mix):

Category	Q1 FY2025	Q2 FY2025	Q3 FY2025
Sales of products acquired from Eyston ($USD)	$3,934,490	$6,556,544	$4,929,918
Sales of GFCIs and ventilation fans ($USD)	$664,026	$646,725	$605,230

KPIs and balance-sheet indicators:

KPI	Q1 FY2025	Q2 FY2025	Q3 FY2025
Cash ($USD)	$321,539	$234,199	$58,882
Inventory ($USD)	$5,106,588	$5,980,798	$6,060,327
Line of credit – factor outstanding ($USD)	$2,223,419	$4,216,134	$1,499,653
Availability under factoring agreement ($USD)	~$806,000	~$91,000	~$324,000
Accounts payable ($USD)	$1,526,605	$3,064,147	$3,431,950

Drivers/notes:

Q3 gross margin step-down driven by bulk sales of excess/obsolete inventory and higher transaction-related expenses tied to the Feit deal .
Q2 benefited from a large retail order (~$3.54M) that management flagged as non-recurring .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Asset sale closing timing (Feit Electric)	Calendar 2025	Expected in Q1 2025	Expected in Q2 2025	Delayed
Operating cadence pending close	Near term	“Continue business as usual” pending approval/close	“Continue business as usual” pending approval/close	Maintained
If transaction not approved	Post vote	N/A	Company may consider delisting from NYSE MKT and terminating periodic SEC reporting	New risk disclosure

No quantitative revenue/EPS/margin guidance was provided in Q3 materials .

Earnings Call Themes & Trends

(Note: No earnings call transcript was posted in our document set; themes reflect filings and press releases.)

Topic	Q1 FY2025 (Jun)	Q2 FY2025 (Sep)	Q3 FY2025 (Dec)	Trend
Asset sale to Feit Electric	N/A	Asset Purchase Agreement signed; $6M base price; stockholder approval required	Continued; expected close shifted to Q2 CY2025; vote pending; alternative of delisting if not approved	Progressing but delayed; risk elevated
Gross margin drivers	Mix/ocean freight pressures	Inventory reserve increased $300K; margin down YoY	Bulk sale of excess/obsolete inventory at reduced margins	Pressure persists
Supply chain/components	Delays in chips constrained sales	Easing somewhat in deliveries, though delays persist	Continued component cost pressure cited	Gradual improvement, not resolved
Customer/order timing	No >10% customers in Q1	Large national retail order (~$3.54M), not expected to repeat	Q3 increase tied to timing at a large retailer	Lumpy, concentrated
Tariffs/macro	25% tariffs on certain products; monitoring	Same	Same	Ongoing headwind
Liquidity/financing	Access via factoring; over-advance approved	Availability ~$91K; borrowings $4.22M	Availability ~$324K; borrowings $1.50M; going-concern doubt	Tight but slightly improved availability; higher risk

Management Commentary

“The quarterly and year-to-date results…were lower due to bulk sales of excess and obsolete inventory at reduced gross profit margins and substantial expenses…in furtherance of the potential asset sale.” — Harvey Grossblatt, CEO
“If the asset sale is not approved, the Company will need to consider alternatives, including delisting its shares from the NYSE MKT and terminating its periodic reporting obligations under the federal securities laws.”
“Included in the results for the quarter ended September 30, 2024, were sales to a national retail chain which accounted for approximately $3,541,000… The Company does not anticipate that this level of sales and net income will continue in succeeding quarters.”
“Sales were lower due to supply chain delays in obtaining components… and gross margins were reduced in the June quarter by higher ocean freight and component costs.”

Q&A Highlights

Key disclosures appeared in filings rather than a call:
- Factoring line details: ~$324K availability at Dec 31, 2024; $1.50M drawn; effective rate ~9.5% .
- Special meeting for transaction approval adjourned to March 6, 2025 due to insufficient votes; approval remains a gating item .
- Customer concentration: in 9M FY2025 two customers represented 23.9% and 14.0% of sales; in Q3 they represented 10.7% and 15.8% of sales .

Estimates Context

We did not identify published Wall Street (S&P Global) consensus EPS or revenue estimates for UUU’s Q3 FY2025; estimate-based comparisons are omitted.
Company press materials and filings do not reference comparisons versus consensus for the quarter .

Key Takeaways for Investors

The narrative shifted from a one-off Q2 boost to margin repair and liquidity management in Q3; the quarter’s loss reflects tactical inventory monetization and deal costs, not demand weakness alone .
The Feit Electric asset sale is the core catalyst; timing pushed to Q2 calendar 2025, adding execution and calendar risk .
Downside scenario if the deal fails is material (potential delisting and reporting cessation), elevating event risk for equity holders .
Liquidity remains tight but manageable via factoring; availability improved sequentially to ~$324K with lower borrowings than Q2, yet going-concern doubt underscores urgency of the strategic path .
Revenue remains concentrated and lumpy (large retail order timing); mix and inventory actions will drive near-term margin volatility .
Tariffs and component costs persist as structural headwinds; improving supply-chain flows help but have not normalized margins .
Focus in the near term: shareholder vote outcome, closing timeline certainty, and cash/working capital discipline through the transition .

Sources

Q3 FY2025 8-K (Item 2.02) and press release (Exhibit 99.1)
Q3 FY2025 10-Q (Dec 31, 2024) — financials, MD&A, liquidity/going concern, disaggregation, concentrations
Q2 FY2025 10-Q and press release (Sept 30, 2024)
Q1 FY2025 10-Q and press release (June 30, 2024)
Asset Purchase Agreement and related 8-Ks
Correction press release (public wire) corroborating Q3 results

UNIVERSAL SECURITY INSTRUMENTS INC (UUU)·Q3 2025 Earnings Summary