SEC Company Response from UNIVERSAL SAFETY PRODUCTS, INC. (UUU) (CIK 0000102109) (DCM) — Jan 28, 2011
UNIVERSAL SAFETY PRODUCTS, INC. (UUU) (CIK 0000102109)
Date: Jan. 28, 2011 · CIK: 0000102109 · Accession: 0001144204-11-004641
AI Filing Summary & Sentiment
Reasoning
File numbers found in text: 001-31747
Letter
Via EDGAR and FEDEX Division of Corporate Finance Securities and Exchange Commission RE: Universal Security Instruments, Inc. (the “Company”) Form 10-K for the Fiscal Year ended March 31, 2010 File No. 001-31747
Dear Mr. Vaughn:
I am writing to you in response to your letter of January 11, 2011, regarding the above referenced filing. Below are the Company’s responses to the comments raised.
Form 10-K for the fiscal year ended March 31, 2010
Item 1. Business, page 3
1. We repeated the disclosure in the paragraph noted because the process of evaluation, research, and of obtaining certifications and patents on our new technology was, at the time of filing, continuing. We had previously anticipated a portion of this process would be completed prior to our fiscal year ending March 31, 2010. However, we do not believe that we experienced significant or unusual delay considering the products submitted for certification and the complexity of the process such that additional or modified disclosure was warranted. At March 31, 2010 and at the date of filing of our form10-K we had submitted applications for patents to the U.S. Patent office and our products were still in the independent certification process. The ultimate status of the certification process, material progress to date, or what remained to be completed at that time, was information under the control of the independent testing facilities and the U. S. Patent office, and we were unable to provide additional disclosure at that time.
Subsequently, in December of 2010, we received certification for certain of the products submitted for certification. With these certifications for the North American market we believe we will achieve the delivery date anticipated in our March 31, 2010 disclosure. We will update our disclosure in the December 31, 2010 form 10-Q. In addition we anticipate that certain of our patents should be issued in the calendar year ended December 31, 2011, and we will include disclosure regarding the issuance of patents in future filings.
Kevin L. Vaughn
Division of Corporation Finance
Securities and Exchange Commission
January 28, 2011
Page
The process of developing additional products to be manufactured with our Hong Kong Joint Venture is ongoing. The Hong Kong Joint Venture is our principal manufacturer and any change in the status of our ability to work closely with the JV on the development of products would have a detrimental impact on our continuing operations and we feel the repeated disclosure of this fact as a risk factor is appropriate. As development efforts continue to evolve we will review and modify our disclosure in future filings as appropriate.
2. The Company currently has no patents or other material items that would be disclosed pursuant to the optional provisions of paragraph (h) in satisfying the disclosure requirements of Regulation S-K Item 101. However, information on an item we considered to be immaterial called for by Item 101(h)(4)(vii) is set forth in the paragraphs on page 3 which the Staff cited in this comment and on page 10, under “Item 3. Legal Proceedings”, in reporting the settlement of the UTC and Kidde litigation, and in MD&A, under “Comparison of Results of Operations for the Years Ended March 31, 2010, 2009 and 2008 - Research and Development”, on page 15. However, we note your comment and will enhance our disclosure regarding these issues in Section 1 of future filings.
Executive Officers of the Registrant, page 10
3. Messrs. Lazarus and Knepper are not executive officers of the Company. Both Messrs. Lazarus and Knepper are included in the Summary Compensation Table set forth in the Company’s Proxy Statement and incorporated by reference into its Annual Report on Form 10-K in accordance with Regulation S-K Item 402(m)(2)(iii). Mr. Lazarus was inadvertently omitted from the Share Ownership of Management table. The Company will include Mr. Lazarus in all applicable tables in future filings.
Item 7. Management’s Discussion and Analysis of Financial Condition, page
Comparison of Results of Operations, page 15
4. We note your comment and will quantify in future filings the effects of each of the significant items impacting our results.
Financial Condition, Liquidity and Capital Resources, page 16
5. We note your comment and will revise future filings to discuss material changes in the underlying drivers of our working capital changes.
6. We note your comment and will expand future filings to discuss liquidity on a short-term and long-term basis as well as describe any other factors which may materially impact our liquidity. With regard to the solvency of our factor please note that the factor was recapitalized and is no longer considered to present risk to our short or long-term liquidity.
Kevin L. Vaughn
Division of Corporation Finance
Securities and Exchange Commission
January 28, 2011
Page
Income Taxes, page
7. We note your comment and respectfully request that this discussion be included in future filings. We note the disclosure requirements of Regulation S-K. The provision for income taxes related to the earnings of the Joint Venture is recognized at the time dividends are received and the impact of the dividends received can cause the effective rate to fluctuate significantly from period to period due to its relative size in comparison to the results of our domestic operations. While we should have provided this further discussion in the noted section for our operations for the fiscal year ended March 31, 2010, it was more fully discussed in Note A to the financial statements on page F-9 and in Note G on pages F-12 and F-13. We will endeavor to improve our explanation of this process in the noted sections of future filings.
Item 11. Executive Compensation, page 21
8. We note your comment and will revise future filings as appropriate in accordance with Regulation S-K Item 402(r)(2)(iii).
Signatures, page
9. We note your comment and will indicate in future filings who is signing in the capacity of principal executive officer, principal financial officer, and principal accounting officer or controller. Please note that the Company’s chief financial officer is both the principal financial officer and principal accounting officer.
Notes to Consolidated Financial Statements, page F-6
Note A – Nature of Business and Summary of Significant Accounting Policies, page F-6
Foreign Currency, page F-9
10. We note your comment and will revise future filings to clarify that this policy applies to translating and recording the earnings from our foreign joint venture.
Note C – Investment in the Hong Kong Joint Venture, page F-10
11. We note your comment and will revise future filings to include additional disclosure regarding the JV participants in future disclosures. While this information is included in the Joint Venture Agreement incorporated in this filing as noted in Exhibit No. 10.2, in future filings we will include this information in the body of the document.
Kevin L. Vaughn
Division of Corporation Finance
Securities and Exchange Commission
January 28, 2011
Page
Note G – Income Taxes, page F-12
12. We do not provide deferred taxes on the unremitted earnings of our joint venture. Dividends, derived from earnings of the joint venture, are taxed when received and accordingly are a component of our tax provision. The dividends are the “changes” in the unremitted earnings of the joint venture referred to in our disclosure. However, we note the reference to the unremitted earnings of the Hong Kong Joint Venture in the context of deferred taxes and will amend our disclosure in future filings.
13. The item described as “Change in temporary differences” should not have been included as a line item in the reconciliation. The “non-repatriated earnings of the Hong Kong Joint Venture” were inadvertently included at the gross amount instead of being tax affected. In addition, the tax provision was impacted by a “true-up” adjustment to the actual filed tax return of the previous period that was not shown. As the tax provision amount did not change, we respectfully request that we revise the line items within the reconciliation in our filing of the March 31, 2011 form 10-K.
Form 10-Q for the quarterly period ended September 30, 2010
Results of Operations, page
14. We note your comment and will revise future fillings to differentiate our discussion of items in the research and development category from items in the selling, general, and administrative category.
Definitive Proxy Statement on Schedule 14A filed June 28, 2010
15. We note your comment and will revise future filings to disclose if and how our Board considers diversity in its nominations for directors.
16. We note your comment and will revise future filings to disclose whether we have a lead independent director. As stated in our Proxy Statement, in accordance with Regulation S-K Item 407(h), the Board has not elected a Chairman and, accordingly, the Company’s President is Chief Executive Officer and is also a member of the Board. All other members of the Board are independent. The Company’s independent directors bring experience, oversight and expertise from outside the Company, while the Chief Executive Officer brings company-specific experience and expertise. The Board believes that the strong emphasis on Board independence provides effective independent oversight of management.
General
The Company hereby acknowledges that the Company is responsible for the adequacy and accuracy of the disclosure in the filing, and staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing. The Company further acknowledges that the Company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.
Kevin L. Vaughn
Division of Corporation Finance
Securities and Exchange Commission
January 28, 2011
Page
Should you require any further information or have additional comments, please contact me.
Sincerely,
UNIVERSAL
SECURITY INSTRUMENTS, INC.
Show Raw Text
CORRESP
1
filename1.htm
[USI
LETTERHEAD]
January
28, 2011
Via EDGAR
and FEDEX
Kevin L.
Vaughn
Accounting
Branch Chief
Division
of Corporate Finance
Securities
and Exchange Commission
100 F
Street, N.E.
Washington,
DC 20549
RE:
Universal
Security Instruments, Inc. (the “Company”)
Form
10-K for the Fiscal Year ended March 31, 2010
File
No. 001-31747
Dear Mr.
Vaughn:
I am
writing to you in response to your letter of January 11, 2011, regarding the
above referenced filing. Below are the Company’s responses to the
comments raised.
Form
10-K for the fiscal year ended March 31, 2010
Item 1. Business,
page 3
1. We
repeated the disclosure in the paragraph noted because the process of
evaluation, research, and of obtaining certifications and patents on our new
technology was, at the time of filing, continuing. We had
previously anticipated a portion of this process would be completed prior to our
fiscal year ending March 31, 2010. However, we do not believe that we
experienced significant or unusual delay considering the products submitted for
certification and the complexity of the process such that additional or modified
disclosure was warranted. At March 31, 2010 and at
the date of filing of our form10-K we had submitted applications for patents to
the U.S. Patent office and our products were still in the independent
certification process. The ultimate status of the certification
process, material progress to date, or what remained to be completed at that
time, was information under the control of the independent testing facilities
and the U. S. Patent office, and we were unable to provide additional disclosure
at that time.
Subsequently,
in December of 2010, we received certification for certain of the products
submitted for certification. With these certifications for the
North American market we believe we will achieve the delivery date anticipated
in our March 31, 2010 disclosure. We will update our
disclosure in the December 31, 2010 form 10-Q. In addition we
anticipate that certain of our patents should be issued in the calendar year
ended December 31, 2011, and we will include disclosure regarding the issuance
of patents in future filings.
Kevin L.
Vaughn
Division
of Corporation Finance
Securities
and Exchange Commission
January
28, 2011
Page
2
The
process of developing additional products to be manufactured with our Hong Kong
Joint Venture is ongoing. The Hong Kong Joint Venture is our
principal manufacturer and any change in the status of our ability to work
closely with the JV on the development of products would have a detrimental
impact on our continuing operations and we feel the repeated disclosure of this
fact as a risk factor is appropriate. As development efforts continue
to evolve we will review and modify our disclosure in future filings as
appropriate.
2. The
Company currently has no patents or other material items that would be disclosed
pursuant to the optional provisions of paragraph (h) in satisfying the
disclosure requirements of Regulation S-K Item 101. However,
information on an item we considered to be immaterial called for by Item
101(h)(4)(vii) is set forth in the paragraphs on page 3 which the Staff cited in
this comment and on page 10, under “Item 3. Legal Proceedings”, in
reporting the settlement of the UTC and Kidde litigation, and in MD&A, under
“Comparison of Results of Operations for the Years Ended March 31, 2010, 2009
and 2008 - Research and Development”, on page 15. However, we note
your comment and will enhance our disclosure regarding these issues in Section 1
of future filings.
Executive Officers of the
Registrant, page 10
3. Messrs. Lazarus
and Knepper are not executive officers of the Company. Both Messrs.
Lazarus and Knepper are included in the Summary Compensation Table set forth in
the Company’s Proxy Statement and incorporated by reference into its Annual
Report on Form 10-K in accordance with Regulation S-K Item
402(m)(2)(iii). Mr. Lazarus was inadvertently omitted from the Share
Ownership of Management table. The Company will include Mr. Lazarus
in all applicable tables in future filings.
Item
7. Management’s Discussion and Analysis of Financial Condition, page
13
Comparison of Results of
Operations, page 15
4. We
note your comment and will quantify in future filings the effects of each of the
significant items impacting our results.
Financial Condition,
Liquidity and Capital Resources, page 16
5. We
note your comment and will revise future filings to discuss material changes in
the underlying drivers of our working capital changes.
6. We
note your comment and will expand future filings to discuss liquidity on a
short-term and long-term basis as well as describe any other factors which may
materially impact our liquidity. With regard to the solvency of our
factor please note that the factor was recapitalized and is no longer considered
to present risk to our short or long-term liquidity.
Kevin L.
Vaughn
Division
of Corporation Finance
Securities
and Exchange Commission
January
28, 2011
Page
3
Income Taxes, page
16
7. We
note your comment and respectfully request that this discussion be included in
future filings. We note the disclosure requirements of Regulation
S-K. The provision for income taxes related to the
earnings of the Joint Venture is recognized at the time dividends are received
and the impact of the dividends received can cause the effective rate to
fluctuate significantly from period to period due to its relative size in
comparison to the results of our domestic
operations. While we should have provided this
further discussion in the noted section for our operations for the fiscal year
ended March 31, 2010, it was more fully discussed in Note A to the financial
statements on page F-9 and in Note G on pages F-12 and F-13. We
will endeavor to improve our explanation of this process in the noted sections
of future filings.
Item
11. Executive Compensation, page 21
8. We
note your comment and will revise future filings as appropriate in accordance
with Regulation S-K Item 402(r)(2)(iii).
Signatures, page
24
9. We
note your comment and will indicate in future filings who is signing in the
capacity of principal executive officer, principal financial officer, and
principal accounting officer or controller. Please note that the
Company’s chief financial officer is both the principal financial officer and
principal accounting officer.
Notes to Consolidated
Financial Statements, page F-6
Note A – Nature of Business
and Summary of Significant Accounting Policies, page F-6
Foreign Currency, page
F-9
10. We
note your comment and will revise future filings to clarify that this policy
applies to translating and recording the earnings from our foreign joint
venture.
Note C – Investment in the
Hong Kong Joint Venture, page F-10
11. We
note your comment and will revise future filings to include additional
disclosure regarding the JV participants in future
disclosures. While this information is included in the Joint
Venture Agreement incorporated in this filing as noted in Exhibit No. 10.2, in
future filings we will include this information in the body of the
document.
Kevin L.
Vaughn
Division
of Corporation Finance
Securities
and Exchange Commission
January
28, 2011
Page
4
Note G – Income Taxes, page
F-12
12. We
do not provide deferred taxes on the unremitted earnings of our joint
venture. Dividends, derived from earnings of the joint
venture, are taxed when received and accordingly are a component of our tax
provision. The dividends are the “changes” in the unremitted earnings
of the joint venture referred to in our disclosure. However, we note
the reference to the unremitted earnings of the Hong Kong Joint Venture in the
context of deferred taxes and will amend our disclosure in future
filings.
13. The
item described as “Change in temporary differences” should not have been
included as a line item in the reconciliation. The
“non-repatriated earnings of the Hong Kong Joint Venture” were inadvertently
included at the gross amount instead of being tax affected. In
addition, the tax provision was impacted by a “true-up” adjustment to the actual
filed tax return of the previous period that was not
shown. As the tax provision amount did not change,
we respectfully request that we revise the line items within the reconciliation
in our filing of the March 31, 2011 form 10-K.
Form
10-Q for the quarterly period ended September 30, 2010
Results of Operations, page
9
14. We
note your comment and will revise future fillings to differentiate our
discussion of items in the research and development category from items in the
selling, general, and administrative category.
Definitive
Proxy Statement on Schedule 14A filed June 28, 2010
15. We
note your comment and will revise future filings to disclose if and how our
Board considers diversity in its nominations for directors.
16. We
note your comment and will revise future filings to disclose whether we have a
lead independent director. As stated in our Proxy Statement, in
accordance with Regulation S-K Item 407(h), the Board has not elected a Chairman
and, accordingly, the Company’s President is Chief Executive Officer and is also
a member of the Board. All other members of the Board are
independent. The Company’s independent directors bring experience,
oversight and expertise from outside the Company, while the Chief Executive
Officer brings company-specific experience and expertise. The Board
believes that the strong emphasis on Board independence provides effective
independent oversight of management.
General
The
Company hereby acknowledges that the Company is responsible for the adequacy and
accuracy of the disclosure in the filing, and staff comments or changes to
disclosure in response to staff comments do not foreclose the Commission from
taking any action with respect to the filing. The Company further
acknowledges that the Company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the federal
securities laws of the United States.
Kevin L.
Vaughn
Division
of Corporation Finance
Securities
and Exchange Commission
January
28, 2011
Page
5
Should
you require any further information or have additional comments, please contact
me.
Sincerely,
UNIVERSAL
SECURITY INSTRUMENTS, INC.
/s/ James
B. Huff
James B.
Huff
Chief
Financial Officer