COMMITMENTS AND CONTINGENCIES

12 Months Ended

Mar. 31, 2012

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies Disclosure [Text Block]

NOTE 8 - COMMITMENTS AND CONTINGENCIES

LEGAL MATTERS

Management is currently not aware of any legal proceedings.

INCOME TAXES

In a letter dated July 21, 2008 the Internal Revenue Service (IRS) notified International SMC (HK) Limited “ISMC (HK)”, a former foreign subsidiary, of an unpaid tax balance on Income Tax Return of a Foreign Corporation (Form 1120-F) for the period ending March 31, 2003. According to the notice ISMC (HK) has an unpaid balance due in the amount of $241,639 that includes an interest assessment of $74,125. ISMC (HK) was sold in its entirety by the Company on September 25, 2006 to a British Virgin Islands company (“Purchaser”). The sale and purchase agreement with the Purchaser of ISMC (HK) specifies that the Purchaser would ultimately be responsible for any liabilities, including tax matters. On June 3, 2009 the IRS filed a federal tax lien in the amount of approximately $170,000 against ISMC (HK) under ISMC (HK)’s federal Tax ID. Management sought independent legal counsel to assess the potential liability, if any, on the Company. In a memorandum from independent counsel, the conclusion based on the facts presented was that the IRS would not prevail against the Company for collection of the ISMC (HK) income tax liability based on:

· The Internal Revenue Service’s asserted position that the Company is not the taxpayer.

· The 1120- F tax liability was recorded under the taxpayer identification number belonging to ISMC and not the Company’s taxpayer identification number

· The IRS would be barred from recovery since it failed to assess or issue a notice of levy within the three year statute of limitations

Based on the conclusion reached in the legal memorandum, management does not believe that the Company will have any further liability and has not accrued any liability in this matter.

LEASES

The Company has entered into various operating lease agreements for office and warehouse facilities in Fort Lauderdale, Florida, City of Industry, California and Macau. The leases expire at varying dates. Rent expense for the years ended March 31, 2012, 2011 and 2010 was $800,198, $773,964 and $864,523, respectively. On July 31, 2011, the Company executed a sixty-four (64) month lease of its new corporate headquarters in Fort Lauderdale, Florida. The lease commenced on September 1, 2011 and expires on December 31, 2016 and includes three months of base rent free as well as basic office preparation charges and use of office furniture and fixtures already located on the premises.

In addition, the Company maintains various warehouse equipment and computer equipment operating leases.

Future minimum lease payments under property and equipment leases with terms exceeding one year as of March 31, 2012 are as follows:

	Property Leases
For fiscal year ending March 31,
2013	$	729,266
2014		127,471
2015		60,968
2016		61,507
2017 and beyond		47,121
	$	1,026,333

The above property lease payments are gross payments which are not net of supplemental sublease fees we receive. During fiscal years 2012, 2011 and 2010 the Company received fees of approximately $0, $15,000 and $45,000 respectively, for sublease of warehouse space and warehousing services provided to affiliated entities out of its California warehouse.

Such fees have been offset against rent expense in the consolidated statements of operations.

 FINANCING

The Company primarily relied on its parent company, The Group, favorable vendor payment terms and one major customer’s “Quick-Pay” program for financing the company’s operations during Fiscal 2012. The company will continue to rely on The Group to finance any working capital shortfalls (if any) during fiscal year ending March 31, 2013 as the Company attempts to secure alternative financing facilities. Any change in the ability of The Group to provide financing or the company’s inability to secure new financing facilities could adversely affect our ability to pay vendors and receive product to fill customer orders.