UNIVERSAL SAFETY PRODUCTS, INC.

Universal Safety Products, Inc. designs and markets a variety of popularly priced safety products, which during the period covered by this Annual Report consisted primarily of smoke alarms, carbon monoxide alarms and related products. The company also markets products to the electrical distribution trade through its wholly owned subsidiary, Universal Safety Electric, Inc., which includes electrical and lighting distributors as well as manufactured housing companies. In July 2025, the company formed a wholly owned subsidiary called Universal DeFi LLC as a new venture to diversify the business and explore new paths for revenue and stockholder value, pursuing a tokenization platform and node and validator operations on the Ault Blockchain. The company imports substantially all its products from the People's Republic of China, and certain of these products are currently subject to tariffs of twenty-five percent ¹, with wiring devices subject to tariffs between 25% and 45% of their cost ².

In the sale of smoke alarms and carbon monoxide alarms, the company competed in all of its markets with First Alert and Walter Kidde Portable Equipment, Inc., which have greater financial resources and financial strength than the company. The company believes that these products compete favorably in the market primarily on the basis of styling, features, and pricing. The company's product offerings, including ground fault circuit interrupter products, compete in functionality with similar products offered by larger competitors. Prior to the imposition of tariffs, the company's products also competed favorably with similar products offered by larger competitors.

The company designs and markets a variety of popularly priced safety products, which during the period covered by this Annual Report consisted primarily of smoke alarms, carbon monoxide alarms and related products, with most products requiring minimal installation designed for easy installation by the consumer without professional assistance and sold through retail stores. The company also markets products to the electrical distribution trade through its wholly owned subsidiary, Universal Safety Electric, Inc., which includes electrical and lighting distributors as well as manufactured housing companies, with products usually requiring professional installation. In July 2025, the company formed Universal DeFi LLC as a new venture to diversify the business and explore new paths for revenue and stockholder value, pursuing two lines of business: developing and intending to own and operate a tokenization platform, and acquiring and commencing limited operations running licensed nodes and a validator on the Ault Blockchain. To date, Universal DeFi has not generated any revenue. The company's sales are made through approximately 40 independent sales organizations, compensated by commission, which represents approximately 100 sales representatives, some of which have warehouses where Universal Electric products are maintained for sale, and the company maintained a national distribution system with eight regional stocking warehouses throughout the United States.

During the period covered by this Annual Report, the company marketed a line of residential smoke and carbon monoxide alarms under the trade names "UNIVERSAL" and "USI Electric", both manufactured by Eyston Company Limited in the People's Republic of China, a principal supplier. The line of safety alarms consisted of units powered by replaceable batteries, ten-year sealed batteries, or 120-volt units with a battery backup, with replaceable battery products containing different types of batteries with different battery lives, and some including alarm silencers, and smoke alarms marketed to the electrical distribution trade also included hearing impaired and heat alarms with a variety of features. On May 22, 2025, the company closed on the sale of the smoke and carbon monoxide portion of the company's business to Feit Electric Company, Inc. pursuant to the terms of an Asset Purchase Agreement entered into in October 2024. The company also markets door chimes, ventilation products, ground fault circuit interrupters (GFCI's), and other electrical devices, and currently intends to continue importing and marketing its product lines other than smoke alarms and carbon monoxide alarms and is exploring other business opportunities.

In July 2025, the company formed Universal DeFi LLC as a new venture to diversify the business and explore new paths for revenue and stockholder value. Universal DeFi is pursuing two lines of business: first, it is developing and intends to own and operate a tokenization platform, which has not yet commenced operations, designed to support a wide range of asset types including securities, commodities such as precious metals, and other assets such as collectibles, though initially it intends to focus on a limited number of real world assets. The platform will provide technology and infrastructure for issuers to tokenize their assets, and Universal DeFi expects to charge issuers an initial fee when an issuer and its asset are onboarded, then a separate fee for each token issued, as well as ongoing fees for continued use of the platform. Second, subsequent to the last fiscal year end, Universal DeFi acquired and commenced limited operations running licensed nodes and a validator on the Ault Blockchain. Universal DeFi operates as a validator and also owns Licensed Mining Nodes on the Ault Blockchain, a Layer 1 network that uses a hybrid architecture combining proof-of-stake consensus for validators and off-chain work for Licensed Mining Nodes. The native digital asset of the Ault Blockchain is the AULT Token, with a total supply fixed at 100 billion ³, all minted at genesis, with approximately 99.9999% ⁴ of total supply allocated to the Emissions Supply distributed over a ten-year schedule. Of that Emissions Supply, 95% ⁵ is allocated to Licensed Mining Node rewards and 5% ⁶ is allocated to staking rewards for validators and their delegators. The Emissions Supply follows a declining schedule with approximately 9.4% ⁷ annual decay, beginning at approximately 41 million Ault Tokens per day ⁸ during the first year following the emission and declining to approximately 17 million such tokens per day ⁹ by the tenth year. Universal DeFi operates only the nodes and validator it owns and does not currently intend to operate nodes or validators for third parties. On June 30, 2026, Universal DeFi entered into a node revenue sharing agreement with Ault Capital Group, Inc., which acknowledged that on April 6, 2026, Ault Capital Group transferred, assigned, and activated to Universal DeFi 125,000 Node Licenses ¹⁰ and the right to operate one validator, together with the wallet holding all reward tokens earned. In consideration, Universal DeFi will pay Ault Capital Group a revenue share equal to 25% ¹¹ of net proceeds and will retain the remaining 75% ¹² of net proceeds, with the obligation terminating once Ault Capital Group has received cumulative Revenue Share payments totaling $93,750,000 ¹³. The total number of Node Licenses is fixed at one million ¹⁴, and each Node License confers one governance vote in the Ault DAO, subject to a per-member cap of two hundred thousand votes ¹⁵ regardless of total licenses held. As of July 1, 2026, Universal DeFi owned approximately 425 million AULT tokens ¹⁶.

On May 22, 2025, the company closed on the asset sale to Feit Electric Company, Inc. pursuant to the terms of the Asset Purchase Agreement entered into in October 2024, under which Feit agreed to acquire the smoke and carbon monoxide alarm portion of the business and the company's intangible assets including the trade name of Universal Security Instruments, Inc. and Universal Electric, Inc. In July 2025, the company formed Universal DeFi LLC as a wholly owned subsidiary. In June 2026, the company entered into a securities purchase agreement to sell up to $10 million ¹⁷ of convertible notes, of which $1.0 million ¹⁸ has been funded to date, though the closing of the remaining $9.0 million ¹⁹ is subject to various contingencies. On June 30, 2026, Universal DeFi entered into a node revenue sharing agreement with Ault Capital Group, Inc. acknowledging the transfer of 125,000 Node Licenses ²⁰ and the right to operate one validator. The company's backlog of orders as of March 31, 2026, was $0 ²¹, compared to approximately $2,142,000 ²² as of March 31, 2025.

For the fiscal year ended March 31, 2026, the company reported net sales of $4,847,163 ²³ compared to $23,563,554 ²⁴ for the fiscal year ended March 31, 2025, a significant decrease attributed primarily to the sale of the smoke and carbon monoxide alarm portion of the business to Feit. The company reported a net loss of $2,485,763 ²⁵ in fiscal 2026 compared to net income of $500,684 ²⁶ in fiscal 2025, a decrease of $2,986,447 ²⁷. Included in the March 31, 2026 results was a non-recurring gain of $2,820,668 ²⁸ from the sale of the smoke and carbon monoxide alarm segment. The company had an accumulated deficit of $12,543,809 ²⁹ as of March 31, 2026. The decrease in net income from the prior year and the net loss for the fiscal year ended March 31, 2026, is attributed primarily to the sale of smoke and carbon monoxide portion of the business to Feit.

The primary growth vector is the formation and development of Universal DeFi LLC, formed in July 2025, as a new venture to diversify the business and explore new paths for revenue and stockholder value. Universal DeFi is developing a tokenization platform to represent ownership of real-world or financial assets as digital tokens recorded on a blockchain, which has not yet commenced operations, and expects to generate revenue from initial onboarding fees, per-token issuance fees, and ongoing platform usage fees, as well as potentially from additional services such as providing identity verification tools to issuers. The second growth vector is Universal DeFi's node and validator operations on the Ault Blockchain, where it operates 125,000 Node Licenses and one validator, earning digital tokens from the Ault Blockchain under separate mechanisms: token emissions allocated to its licensed nodes in proportion to the work they perform, and a share of transaction fees, priority tips, and staking rewards attributable to its validator. The Ault Blockchain's Emissions Supply follows a declining schedule with approximately 9.4% annual decay, beginning at approximately 41 million Ault Tokens per day during the first year and declining to approximately 17 million such tokens per day by the tenth year, with 95% allocated to Licensed Mining Node rewards and 5% allocated to staking rewards. Universal DeFi expects to generate revenue from these operations if a market develops for the AULT tokens, which currently have no market value.

The company's cost structure has been significantly impacted by the sale of the smoke and carbon monoxide alarm segment, which eliminated the primary revenue source but generated a non-recurring gain of $2,820,668 . The company's gross margins are affected by import tariffs, with certain products such as wiring devices currently subject to tariffs between 25% and 45% of their cost, and the company cannot determine at this time how tariffs will affect future profitability or whether tariff costs could be passed on to customers through price adjustments. Universal DeFi has incurred losses since inception and expects to continue to incur losses as it develops and launches its operations, and there can be no assurance that it will fully launch its operations or achieve or sustain profitability.

The company imports all its products and is subject to numerous tariffs which vary depending on types of products and country of origin, with substantially all safety products imported from the People's Republic of China. Certain products are currently subject to tariffs of twenty-five percent , and wiring devices are subject to tariffs between 25% and 45% of their cost. The company maintained a national distribution system with eight regional stocking warehouses throughout the United States. As of March 31, 2026, the company had seven full-time employees located in the U.S., of whom five were engaged in sales and marketing and two in general administration and finance. As of March 31, 2026, approximately 43% ³⁰ of the current workforce is female, 57% ³¹ male, and the average tenure is 21 years ³², an increase of 10.5% ³³ from an average tenure of 19 years ³⁴ as of March 31, 2025. Universal DeFi's tokenization platform is being developed by a third-party developer, and the platform's token control depends on a single third-party digital asset security provider.

The company reported a net loss of $2,485,763 for the fiscal year ended March 31, 2026, and had an accumulated deficit of $12,543,809 as of March 31, 2026, which conditions raise substantial doubt about the company's ability to continue as a going concern within one year after the date of the issuance of the audited consolidated financial statements. In June 2026, the company entered into a securities purchase agreement to sell up to $10 million of convertible notes, of which $1.0 million has been funded to date, though the closing of the remaining $9.0 million is subject to various contingencies, some of which are outside the company's control. The company's ability to continue as a going concern is dependent on its ability to generate cash flows from operations and find additional sources of funding through either equity offerings, debt financings, or a combination of any such transactions. The company's overall sales are primarily dependent upon the strength of the U.S. housing market, and changes in trade policy in the U.S. and other countries, specifically the People's Republic of China, including the imposition of additional tariffs and the resulting consequences, may adversely impact results of operations and financial condition.

The company's overall sales are primarily dependent upon the strength of the U.S. housing market, and any downward changes in the housing market could adversely affect sales. Changes in trade policy in the U.S. and other countries, specifically the People's Republic of China, including the imposition of additional tariffs and the resulting consequences, may adversely impact results of operations and financial condition, as substantially all products are imported from the People's Republic of China and certain products such as wiring devices are currently subject to tariffs between 25% and 45% of their cost. The company faces competition from companies with greater financial resources, including First Alert and Walter Kidde Portable Equipment, Inc. in the smoke alarm and carbon monoxide alarm markets, and competition from a number of companies could result in price reduction, reduced revenue and loss of market share. The company's listing on the NYSE American is contingent on compliance with continued listing requirements, and if the company fails to meet any of these requirements, it may be subject to delisting.

The company faces substantial doubt about its ability to continue as a going concern, having reported a net loss of $2,485,763 for fiscal 2026 and an accumulated deficit of $12,543,809 as of March 31, 2026, with its ability to continue dependent on generating cash flows from operations and finding additional funding, as a June 2026 securities purchase agreement to sell up to $10 million of convertible notes has only funded $1.0 million to date with the remaining $9.0 million subject to contingencies. The company is heavily dependent on imports from the People's Republic of China, with certain products subject to tariffs of twenty-five percent and wiring devices subject to tariffs between 25% and 45% of their cost, and changes in trade policy could adversely impact results. Universal DeFi has a limited operating history, its tokenization platform has not commenced operations, and the digital tokens earned from node and validator operations have no current market value, with the company's exposure concentrated on the Ault Blockchain, a new network developed by an affiliated organization that may not achieve adoption. The company's overall sales are primarily dependent upon the strength of the U.S. housing market, and it faces competition from larger companies including First Alert and Walter Kidde Portable Equipment, Inc. The company's common stock is listed on the NYSE American, and failure to satisfy continued listing requirements could result in delisting.

Management's message to shareholders is conveyed through the business description and risk factors, emphasizing the significant transformation of the company following the sale of the smoke and carbon monoxide alarm segment to Feit Electric Company, Inc. on May 22, 2025, and the formation of Universal DeFi LLC in July 2025 as a new venture to diversify the business and explore new paths for revenue and stockholder value. The company reported a net loss of $2,485,763 for fiscal 2026 compared to net income of $500,684 in fiscal 2025, with the decrease attributed primarily to the sale of the smoke and carbon monoxide portion of the business. Management states that the company intends to continue importing and marketing its product lines other than smoke alarms and carbon monoxide alarms and is exploring other business opportunities to drive long-term value for shareholders. The strategic priorities emphasized for the period ahead are the development and launch of Universal DeFi's tokenization platform, the operation and expansion of its node and validator activities on the Ault Blockchain, and the continued sale of remaining electrical product lines including door chimes, ventilation products, ground fault circuit interrupters, and other electrical devices. Management acknowledges substantial doubt about the company's ability to continue as a going concern, noting that in June 2026 the company entered into a securities purchase agreement to sell up to $10 million of convertible notes, of which $1.0 million has been funded to date, though the closing of the remaining $9.0 million is subject to various contingencies.