Liquidity	3 Months Ended
Jun. 30, 2018
Liquidity
Liquidity	NOTE 2 - LIQUIDITY The Company reported a net loss of approximately $1,034,000 for the three months ended June 30, 2018 as compared to a net loss of approximately $527,000 for the three months ended June 30, 2017. The Company’s net income and cash flow continue to be affected by the Toys R Us bankruptcy as net sales decreased from approximately $3,940,000 for the three months ended June 30, 2017 to approximately $1,837,000. Lost sales from Toys R Us of approximately $936,000 accounted for approximately 45% of the decrease and approximately $873,000 or 48% of the decrease was due to reduced sales to our European and Canadian distributors due the timing of shipments as orders from these customers were received later as compared to the same period of the prior year. Inventory relating to Toys R Us commitments that was not shipped due to the bankruptcy of approximately $1,000,000 from the prior year ended March 31, 2018 remained in inventory as of June 30, 2018 and is expected be sold during peak season during the current fiscal year. To assist with the Company’s cash requirements during fiscal 2019 our parent company agreed to continue to delay payment of related party trade debt as well as payments due on subordinated debt until the end of peak season when liquidity improves. Our parent company has also agreed to suspend a portion of monthly service and development fees totaling approximately $99,000 for the six months commencing July 1, 2018 through December 31, 2018. Management believes that it has adequate cash available on its revolving credit facility to meet all obligations for the next twelve months. To assist the Company in remaining compliant with its revolving credit facility covenants, PNC Bank issued a third amendment and waiver in August 2018 to the Revolving Credit Facility and the Security Agreement in effect for fiscal 2019 amending the agreements such that for purposes of calculating the fixed charge coverage ratio only, a $550,000 one-time credit for bad debt expense relating to the Toys R Us bankruptcy is allowed to be taken as of March 31, 2018 and annual capital expenditure limits were increased to $375,000 for fiscal 2019 and for each fiscal year thereafter. While management continues to assess the long term effect of the Toys R Us bankruptcy, management is confident that the temporary suspension of payments on related party debt, suspension of service and development fees for six months, availability of cash from our revolving credit facility and significant efforts to reduce inventory levels during the current fiscal year will be adequate to meet the company’s liquidity requirements for the next twelve months.

Liquidity

3 Months Ended

Jun. 30, 2018

NOTE 2 - LIQUIDITY

The Company reported a net loss of approximately $1,034,000 for the three months ended June 30, 2018 as compared to a net loss of approximately $527,000 for the three months ended June 30, 2017. The Company’s net income and cash flow continue to be affected by the Toys R Us bankruptcy as net sales decreased from approximately $3,940,000 for the three months ended June 30, 2017 to approximately $1,837,000. Lost sales from Toys R Us of approximately $936,000 accounted for approximately 45% of the decrease and approximately $873,000 or 48% of the decrease was due to reduced sales to our European and Canadian distributors due the timing of shipments as orders from these customers were received later as compared to the same period of the prior year. Inventory relating to Toys R Us commitments that was not shipped due to the bankruptcy of approximately $1,000,000 from the prior year ended March 31, 2018 remained in inventory as of June 30, 2018 and is expected be sold during peak season during the current fiscal year. To assist with the Company’s cash requirements during fiscal 2019 our parent company agreed to continue to delay payment of related party trade debt as well as payments due on subordinated debt until the end of peak season when liquidity improves. Our parent company has also agreed to suspend a portion of monthly service and development fees totaling approximately $99,000 for the six months commencing July 1, 2018 through December 31, 2018. Management believes that it has adequate cash available on its revolving credit facility to meet all obligations for the next twelve months. To assist the Company in remaining compliant with its revolving credit facility covenants, PNC Bank issued a third amendment and waiver in August 2018 to the Revolving Credit Facility and the Security Agreement in effect for fiscal 2019 amending the agreements such that for purposes of calculating the fixed charge coverage ratio only, a $550,000 one-time credit for bad debt expense relating to the Toys R Us bankruptcy is allowed to be taken as of March 31, 2018 and annual capital expenditure limits were increased to $375,000 for fiscal 2019 and for each fiscal year thereafter. While management continues to assess the long term effect of the Toys R Us bankruptcy, management is confident that the temporary suspension of payments on related party debt, suspension of service and development fees for six months, availability of cash from our revolving credit facility and significant efforts to reduce inventory levels during the current fiscal year will be adequate to meet the company’s liquidity requirements for the next twelve months.