Nordicus Partners Corp - Annual Report: 2020 (Form 10-K)

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

Issuer’s telephone number (978) 657-0075

Securities registered under Section 12(b) of the Exchange Act:

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [  ] No [X]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes [  ] No [X]

Indicate whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [  ] No [X]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [  ] No [X]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained in this herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. Yes [  ] No [X]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company in Rule 12b-2 of the Exchange Act (Check one):

Indicate by check mark whether the registrant is an emerging growth company [  ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act [  ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [X] No [  ]

As of July 16, 2021, 28,262,371 shares of the registrant’s Common Stock were outstanding. As of September 30, 2019, the aggregate market value of the registrant’s Common Stock held by non-affiliates of the registrant (without admitting that such person whose shares are not included in such calculation is an affiliate) was approximately $3,715,000 based on the last sale price as quoted on the OTC Markets quoting system on such date.

EKIMAS CORPORATION

FORM 10-K

FOR THE YEAR ENDED MARCH 31, 2020

INDEX

PART I

Cautionary Note Regarding Forward Looking Statements

This Report on Form 10-K contains certain statements that are “forward-looking” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Litigation Reform Act”). These forward looking statements and other information are based on our beliefs as well as assumptions made by us using information currently available.

The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “will,” “should” and similar expressions, as they relate to us, are intended to identify forward-looking statements. Such statements reflect our current views with respect to future events and are subject to certain risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated, expected, intended or using other similar expressions.

In accordance with the provisions of the Litigation Reform Act, we are making investors aware that such forward-looking statements, because they relate to future events, are by their very nature subject to many important factors that could cause actual results to differ materially from those contemplated by the forward-looking statements contained in this Report on Form 10-K. For example, given the cessation of our operations as a developer, manufacturer, marketer and seller of advanced polymers on January 31, 2020, resulting from the sale of substantially all of our assets to an independent third party, we became engaged in efforts to identify either an (i) operating company to acquire or merge with through an equity-based exchange transaction or (ii) investor interested in purchasing a majority interest in our common stock, whereby either transaction would likely result in a change in control. If we are unable to effect a transaction with an operating company or investor, we may be required to cease all operations, including liquidation through bankruptcy proceedings. Accordingly, the reader is cautioned not to place undue reliance on forward-looking statements contained herein, which speak only as of the date hereof. In addition, you should read and carefully consider the Risk Factors discussed in Part I, Item 1A of this Form 10K. We assume no responsibility to update any forward-looking statements as a result of new information, future events, or otherwise except as required by law.

General

Business Description

On January 31, 2020, EKIMAS Corporation (the “Company”), formerly AdvanSource Biomaterials Corporation, sold substantially all of its assets, pursuant to an asset purchase agreement dated November 25, 2019 as approved by the Company’s stockholders on January 21, 2020, to Mitsubishi Chemical Performance Polymers, Inc. for a total purchase price of $7,250,000. As a result, we ceased operating as a manufacturer and seller of advanced polymers. Subsequent to January 31, 2020, we became engaged in efforts to identify an (i) operating company to acquire or merge with through an equity-based exchange transaction or (ii) investor interested in purchasing a majority interest in our common stock, whereby either transaction would likely result in a change in control. Although certain opportunities have been investigated to determine whether a potential merger or investment opportunity could add value for the benefit of our shareholders, we have not yet entered into any binding arrangements.

Corporate History

We were founded in 1993 as a subsidiary of PolyMedica Corporation (“PolyMedica”). In June 1996, PolyMedica distributed all of the shares of CardioTech International, Inc.’s common stock, par value $0.01 per share, which PolyMedica owned, to PolyMedica stockholders of record. We were engaged in the business of developing advanced polymer materials for use in medical devices designed for treating a broad range of anatomical sites and disease states. In July 1999, we acquired the assets of Tyndale-Plains-Hunter (“TPH”), a manufacturer of specialty hydrophilic polyurethanes.

In April 2001, we acquired Catheter and Disposables Technology, Inc. (“CDT”), a contract manufacturer of advanced disposable medical devices. In April 2003, we acquired Gish Biomedical, Inc. (“Gish”), a manufacturer of single use cardiopulmonary bypass products. In the development of our business model, we reviewed the strategic fit of our various business operations and determined that CDT and Gish did not fit our strategic direction. Gish was sold in July 2007 and CDT was sold in March 2008.

Effective October 26, 2007, pursuant to stockholder approval, we were reincorporated from a Massachusetts corporation to a Delaware corporation. We changed our name from CardioTech International, Inc. to AdvanSource Biomaterials Corporation, effective October 15, 2008.

On November 25, 2019, we entered into an asset purchase agreement (the “Asset Purchase Agreement”) with Mitsubishi Chemical Performance Polymers, Inc., a Delaware corporation (“MCPP”) for the sale of substantially all of our assets for a total purchase price of $7,250,000. The Asset Purchase Agreement was approved by our stockholders on January 21, 2020. As a result, we ceased operating as a manufacturer and seller of advanced polymers on January 31, 2020 (the “Closing Date”). Subsequent to the Closing Date, we became engaged in efforts to identify an (i) operating company to acquire or merge with through an equity-based exchange transaction or (ii) investor interested in purchasing a majority interest in our common stock, whereby either transaction would likely result in a change in control. Although certain opportunities have been investigated to determine whether a potential merger or investment opportunity could add value for the benefit of our shareholders, we have not yet entered into any binding arrangements.

On March 3, 2020, we filed a Certificate of Amendment to the Company’s Certificate of Incorporation, which amendment was unanimously approved by our Board of Directors, to change our name AdvanSource Biomaterials Corporation to EKIMAS Corporation.

Employees

As of March 31, 2020, we had no employees. Since February 1, 2020, Mr. Michael Adams, has served as our chief executive officer in a consultative capacity.

You should carefully consider the risks and uncertainties described below and the other information in this filing before deciding to purchase our common stock. If any of these risks or uncertainties occurs, our business, financial condition or operating results could be materially harmed. In that case the trading price of our common stock could decline and you could lose all or part of your investment. The risks and uncertainties described below are not the only ones we may face. We believe that this filing contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Such statements are based on management’s current expectations and are subject to facts that could cause results to differ materially from the forward-looking statements. See Item 1. Description of Business – “Cautionary Note Regarding Forward Looking Statements.”

We have no operations and minimal assets, which raises substantial doubt about our ability to return any additional value to our stockholders.

On November 25, 2019, we entered into an asset purchase agreement (the “Asset Purchase Agreement”) with Mitsubishi Chemical Performance Polymers, Inc., a Delaware corporation (“MCPP”) for the sale of substantially all of our assets for a total purchase price of $7,250,000 (the “Asset Sale”). The Asset Purchase Agreement was approved by our stockholders on January 21, 2020. As a result, we ceased operating as a manufacturer and seller of advanced polymers on January 31, 2020 (the “Closing Date”). Subsequent to the Closing Date, we became engaged in efforts to identify an (i) operating company to acquire or merge with through an equity-based exchange transaction or (ii) investor interested in purchasing a majority interest in our common stock, whereby either transaction would likely result in a change in control. Although certain opportunities have been investigated to determine whether a potential merger or investment opportunity could add value for the benefit of our shareholders, we have not yet entered into any binding arrangements and there are no assurances that we will be successful in our efforts. If we are not successful, our management and the board of directors may determine it to be in our best interest and the best interest of our stockholders to liquidate the Company and terminate our existence, which would result in a complete loss in the value of our common stock.

We have no active market for our shares.

As a result of the Asset Sale and cessation of operations as a manufacturer and seller of advanced polymers, the we believe the costs associated with continued listing on the QB Tier of the OTC Markets outweigh the benefits of remaining on the QB Tier. Accordingly, in July 2020, we notified the OTC Markets of our intent to be delisted from the QB Tier and to be listed on the OTC Markets Pink Tier. Effective August 1, 2020, our shares were listed on the OTC Markets Pink Tier. Notwithstanding our voluntary request for delisting to the OTC Pink Tier of the OTC Markets, we will use our best efforts and available resources to remain in compliance with the reporting requirements set forth for QB Tier company, however, there can be no assurances that we will have the financial or human resources necessary to file timely reports, if filed at all, with the Securities and Exchange Commission pursuant to the regulatory requirements of the Securities Acts of 1933 or 1934.

We may be subject to the applicability of low-priced stock risk disclosure requirements.

Our common stock may be considered a low priced security under rules promulgated under the Securities Exchange Act of 1934. Under these rules, broker-dealers participating in transactions in low priced securities must first deliver a risk disclosure document which describe the risks associated with such stocks, the broker-dealer’s duties, the customer’s rights and remedies, certain market and other information, and make a suitability determination approving the customer for low priced stock transactions based on the customer’s financial situation, investment experience and objectives. Broker-dealers must also disclose these restrictions in writing to the customer, obtain specific written consent of the customer, and provide monthly account statements to the customer. With all these restrictions, the likely effect of designation as a low priced stock will be to decrease the willingness of broker-dealers to make a market for the stock, to decrease the liquidity of the stock and to increase the transaction cost of sales and purchases of such stock compared to other securities.

Additional authorized shares of our common stock and preferred stock available for issuance may adversely affect the market.

We are authorized to issue 50,000,000 shares of our common stock. As of March 31, 2020, there were 28,339,063 shares of our common stock issued and 28,262,371 shares of our common stock outstanding. As of March 31, 2020, there were 76,692 shares of treasury stock which were acquired prior to the fiscal year ended March 31, 2010. All shares underlying vested options and warrants granted prior to March 31, 2020 have been exercised, resulting in the issuance of an aggregate of 6,771,750 shares of our common stock, and are included in the total number of shares of our common stock issued and outstanding as of March 31, 2020. As of March 31, 2020, we had 160,000 shares of outstanding stock options pursuant to the 2003 Stock Option Plan and 450,000 shares of outstanding stock options pursuant to our 2017 Non-Qualified Equity Incentive Plan available for grant. If these remaining options are granted, our stockholders will also experience dilution upon the exercise of future option grants. In addition, in the event that any future financing, acquisition, or consideration for services rendered should be in the form of, be convertible into or exchangeable for, equity securities, investors will experience additional dilution.

The exercise of the outstanding stock options and warrants will reduce the percentage of common stock held by our current stockholders. Further, the terms on which we could obtain additional capital during the life of the stock options and warrants may be adversely affected, and it should be expected that the holders of the stock options and warrants would exercise them at a time when we would be able to obtain equity capital on terms more favorable than those provided for by such stock options and warrants. As a result, any issuance of additional shares of common stock may cause our current stockholders to suffer significant dilution which may adversely affect the market. In addition to the above referenced shares of common stock which may be issued without stockholder approval, we have 5,000,000 shares of authorized preferred stock, the terms of which may be fixed by our Board, of which 500,000 preferred shares were previously issued, but none are currently outstanding. While we have no present plans to issue any additional shares of preferred stock, our Board has the authority, without stockholder approval, to create and issue one or more series of such preferred stock and to determine the voting, dividend and other rights of holders of such preferred stock. The issuance of any of such series of preferred stock may have an adverse effect on the holders of common stock.

Shares eligible for future sale may adversely affect the market.

From time to time, certain of our stockholders may be eligible to sell all or some of their shares of common stock by means of ordinary brokerage transactions in the open market pursuant to Rule 144, promulgated under the Securities Act, subject to certain limitations. In general, pursuant to Rule 144, a stockholder (or stockholders whose shares are aggregated) who has satisfied a one year holding period may, under certain circumstances, sell within any three month period a number of securities which does not exceed the greater of 1% of the then outstanding shares of common stock or the average weekly trading volume of the class during the four calendar weeks prior to such sale. Rule 144 also permits, under certain circumstances, the sale of securities, without any limitation, by our stockholders that are non-affiliates that have satisfied a two year holding period. Any substantial sale of our common stock pursuant to Rule 144 or pursuant to any resale prospectus may have material adverse effect on the market price of our securities.

None.

None.

We are not the subject of any pending legal proceedings; and to the knowledge of management, no proceedings are presently contemplated against us by any federal, state or local governmental agency. Further, to the knowledge of management, no director or executive officer is party to any action in which any has an interest adverse to us.

Not applicable.

PART II

Prior to August 1, 2020, our common stock was quoted on the OTCQB tier of The OTC Markets under the ticker symbol “ASNB.” Effective August 1, 2020, we voluntarily downgraded to the OTC PINK tier of the OTC Markets.

On January 31, 2020 (the “Closing Date”), we ceased operating as a developer, manufacturer, marketer and seller of advanced polymers. Subsequent to the Closing Date, we became engaged in efforts to identify an operating company (the “Potential Target”) to acquire or merge with through an equity-based exchange transaction that would likely result in a change in control. Currently, we have not executed any definitive agreements with any Potential Targets and there can be no assurance that a definitive agreement will be executed with a Potential Target. Our activities are subject to significant risks and uncertainties, including the need to raise additional capital if we are unable unable to execute a definitive agreement with a Potential Target desiring to acquire or merge with us. As a result, we believed the costs associated with continued quotation on the QB Tier of the OTC Markets outweighed the benefits of remaining on the QB Tier. Given the limited resources available to us, there can be no assurance that we will remain in compliance with the reporting requirements required of the OTC Markets. As a result, trading of our common stock on the OTC Markets could be curtailed or halted indefinitely and we could be subjected to delisting entirely.

As of June 21, 2021, there were approximately 318 stockholders of record. The last sale price as quoted by the PINK tier of The OTC Markets on July 12, 2021 was $0.0186 per share.

On April 23, 2020, we paid a special cash distribution of $0.18 per share to shareholders of record as of April 16, 2020 resulting in a total distribution of approximately $5,087,000.

We have never paid a cash dividend on our common stock and do not anticipate the payment of cash dividends in the foreseeable future.

Securities Authorized for Issuance under Equity Compensation Plans as of the End of Fiscal 2020 Equity Compensation Plan Information

Recent Sales of Unregistered Securities

On November 27, 2019, we issued 830,500 shares of our common stock to an advisor upon the exercise of common stock purchase warrant that was granted to the advisor on July 22, 2015.

On December 5, 2019, we issued to our directors and certain employees a total of 656,250 shares of our common stock upon the exercise of incentive and non-qualified stock options granted pursuant to the terms of our 2003 Stock Option Plan.

On December 5, 2019, we issued to our directors, certain employees and one consultant a total of 5,285,000 shares of our common stock upon the exercise of non-qualified stock options granted pursuant to the terms of our 2017 Non-Qualified Equity Incentive Plan.

Stock Repurchase Plan

In June 2001, the Board of Directors adopted a share repurchase program authorizing the repurchase of up to 250,000 of our shares of common stock. In June 2004, the Board of Directors authorized the purchase of an additional 500,000 shares of common stock. Since June 2001, a total of 251,379 shares have been repurchased by us under the share repurchase program, leaving 498,621 shares remaining to purchase under the share repurchase program. No repurchases were made during the fiscal years ended March 31, 2020 and 2019. The share repurchase program authorizes repurchases from time to time in open market transactions, through privately negotiated transactions, block transactions or otherwise, at times and prices deemed appropriate by management, is not subject to an expiration date.

Stockholder Rights Plan

Our Board of Directors approved the adoption of a stockholder rights plan (the “Rights Plan”) under which all stockholders of record as of February 8, 2008 will receive rights to purchase shares of a new series of preferred stock (the “Rights”). The Rights will be distributed as a dividend. Initially, the Rights will attach to, and trade with, our common stock. Subject to the terms, conditions and limitations of the Rights Plan, the Rights will become exercisable if (among other things) a person or group acquires 15% or more of our common stock. Upon such an event, and payment of the purchase price, each Right (except those held by the acquiring person or group) will entitle the holder to acquire shares of the Company’s common stock (or the economic equivalent thereof) having a value equal to twice the purchase price. Our Board of Directors may redeem the Rights prior to the time they are triggered. In the event of an unsolicited attempt to acquire us, the Rights Plan is intended to facilitate the full realization of our stockholder value and the fair and equal treatment of all of our stockholders. The Rights Plan will not prevent a takeover attempt. Rather, it is intended to guard against abusive takeover tactics and encourage anyone seeking to acquire us to negotiate with the Board of Directors. We did not adopt the Rights Plan in response to any particular proposal.

Not Applicable.

Forward-Looking Statements

This Report on Form 10-K contains certain statements that are “forward-looking” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Litigation Reform Act”). These forward looking statements and other information are based on our beliefs as well as assumptions made by us using information currently available.

The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “will,” “should” and similar expressions, as they relate to us, are intended to identify forward-looking statements. Such statements reflect our current views with respect to future events and are subject to certain risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated, expected, intended or using other similar expressions.

In accordance with the provisions of the Litigation Reform Act, we are making investors aware that such forward-looking statements, because they relate to future events, are by their very nature subject to many important factors that could cause actual results to differ materially from those contemplated by the forward-looking statements contained in this Report on Form 10-K. For example, we may encounter competitive, technological, financial and business challenges making it more difficult than expected to continue to develop and market our products; the market may not accept our existing and future products; we may not be able to retain our customers; we may be unable to retain existing key management personnel; and there may be other material adverse changes in our operations or business. Certain important factors affecting the forward-looking statements made herein also include, but are not limited to (i) continued downward pricing pressures in our targeted markets, (ii) the continued acquisition of our customers by certain of our competitors, and (iii) continued periods of net losses, which could require us to find additional sources of financing to fund operations, implement our financial and business strategies, meet anticipated capital expenditures and fund research and development costs. In addition, assumptions relating to budgeting, marketing, product development and other management decisions are subjective in many respects and thus susceptible to interpretations and periodic revisions based on actual experience and business developments, the impact of which may cause us to alter our marketing, capital expenditure or other budgets, which may in turn affect our financial position and results of operations. For all of these reasons, the reader is cautioned not to place undue reliance on forward-looking statements contained herein, which speak only as of the date hereof. In addition, you should read and carefully consider the Risk Factors discussed in Part I, Item 1A of this Form 10-K. We assume no responsibility to update any forward-looking statements as a result of new information, future events, or otherwise except as required by law.

Overview

On January 31, 2020 (the “Closing Date”), we completed the sale of substantially all of our assets (the “Asset Sale”) for a total purchase price of $7,250,000 pursuant to an Asset Purchase Agreement entered into between us and Mitsubishi Chemical Performance Polymers, Inc., a Delaware corporation (“MCPP”). Prior to the Closing Date, we developed and manufactured advanced polymer materials which provide critical characteristics in the design and development of medical devices. Our biomaterials were marketed and sold to medical device manufacturers who used our advanced polymers in devices designed for treating a broad range of anatomical sites and disease states.

As a result of the Asset Sale, we ceased operating as a developer, manufacturer, marketer and seller of advanced polymers. Subsequent to the Closing Date, we became engaged in efforts to identify an operating company to acquire or merge with through an equity-based exchange transaction that would likely result in a change in control. As our efforts in engaging with an operating company subsequent to the Closing Date has not yet commenced, our activities are subject to significant risks and uncertainties, including the need to raise additional capital if we are unable to identify an operating company desiring to acquire or merge with us.

Fiscal Year

Our fiscal year ends on March 31. Reference in this annual report on Form 10-K to a fiscal year is reference to the fiscal year ended March 31. For example, references to “fiscal 2020” or our “2020 fiscal year” refer to the fiscal year ended March 31, 2020.

Critical Accounting Policies

Our significant accounting policies are summarized in Note 2 to our financial statements. However, certain of our accounting policies require the application of significant judgment by our management, and such judgments are reflected in the amounts reported in our financial statements. In applying these policies, our management uses its judgment to determine the appropriate assumptions to be used in the determination of estimates. Those estimates are based on our historical experience, terms of existing contracts, our observance of market trends, information provided by our strategic partners and information available from other outside sources, as appropriate. Actual results may differ significantly from the estimates contained in our financial statements. Our critical accounting policies are as follows:

We are also required to estimate the level of pre-vesting award forfeitures expected to occur and record compensation expense only for those awards that are ultimately expected to vest. This requirement applies to all awards that are not yet vested. Due to the exercise of substantially all of our options, we have estimated a zero forfeiture rate. As of March 31, 2020, there were fully vested options exercisable into 160,000 shares of our common stock pursuant to the 2003 Stock Option Plan. As a result of the termination of all of our employees on the Closing Date of the Asset Sale, all options exercisable into 160,000 shares of our common stock were terminated on April 30, 2020 pursuant to the provisions of the 2003 Stock Option Plan.

Results of Operations

As a result of the Asset Sale described above, which closed on January 31, 2020, our sole business operations of developing, manufacturing, marketing and selling of advanced polymers ceased. Accordingly, we have recorded all operations for the fiscal years ended March 31, 2020 and 2019 as discontinued operations. The following separately presents our results of continuing operations, which are composed of costs necessary to operate as a public company; and results of our discontinued operations, composed of revenue and costs of operating the advanced polymer business.

Results of Continuing Operations

Our loss from continuing operations represents those costs necessary to operate a public company. During the fiscal years ended March 31, 2020 and 2019, these costs were approximately $246,000 and $172,000, respectively, an increase of approximately $74,000 or 43.0%. These costs were composed of accounting fees, professional fees, regulatory fees, board of directors’ fees, and director and officer liability insurance premiums.

Results of Discontinued Operations

Given that the Asset Sale closing date was January 31, 2020, the results from discontinued operations for the fiscal year ended March 31, 2020 represents only 10 months of operating activity as compared to 12 months of operating activity for the fiscal year ended March 31, 2019. Accordingly, the comparative analysis of operating activity for discontinued operations may not be meaningful.

Fiscal Year Ended March 31, 2020 vs. March 31, 2019

Revenues

Total revenues from discontinued operations for the fiscal year ended March 31, 2020 were approximately $2,698,000 as compared with approximately $3,347,000 for the prior year period. Product sales from discontinued operations for the fiscal year ended March 31, 2020 were approximately $1,839,000 as compared with approximately $2,409,000 for the prior year period. License and royalty fees from discontinued operations for the fiscal year ended March 31, 2020 were approximately $859,000 as compared with approximately $938,000 for the prior year period. The decrease in total revenues, revenues by product and license and royalty fees is primarily a result of reporting 10 months of operating activity for the fiscal year ended March 31, 2020 as compared to 12 months of operating activity for the fiscal year ended March 31, 2019. Management did not recognize any adverse trends in revenue generating activity.

Gross Profit

Gross profit on total revenues from discontinued operations for the fiscal year ended March 31, 2020 was approximately $1,979,000, or 73.4% of total revenues, compared with approximately $2,470,000, or 73.8% of total revenues, for the prior year period. Gross profit dollars for the fiscal year ended March 31, 2020 decreased as compared to the prior year period as a result of reporting 10 months of operating activity for the fiscal year ended March 31, 2020 as compared to 12 months of operating activity for the fiscal year ended March 31, 2019. Gross profit as a percentage of total revenues remained relatively stable.

Gross profit on product sales from discontinued operations for the fiscal year ended March 31, 2020 was approximately $1,120,000, or 60.9% of product sales, compared with approximately $1,532,000, or 63.6% of product sales, for the prior year period. Gross profit dollars for the fiscal year ended March 31, 2020 decreased as compared to the prior year period as a result of reporting 10 months of operating activity for the fiscal year ended March 31, 2020 as compared to 12 months of operating activity for the fiscal year ended March 31, 2019. Gross profit as a percentage of total revenues for the fiscal year ended March 31, 2020 increased slightly as compared to the prior year period.

Research, Development and Regulatory Expenses

Research, development and regulatory expenses of discontinued operations for the fiscal year ended March 31, 2020 were approximately $314,000 as compared with approximately $345,000 for the prior year period, a decrease of approximately $31,000, or 9.0%. The decrease in research, development and regulatory expenses is primarily a result of reporting 10 months of operating activity for the fiscal year ended March 31, 2020 as compared to 12 months of operating activity for the fiscal year ended March 31, 2019. Management did not recognize any adverse trends in research, development and regulatory activity.

Selling, General and Administrative Expenses

Selling, general and administrative expenses of discontinued operations for the fiscal year ended March 31, 2020 were approximately $1,277,000 as compared with approximately $1,202,000 for the comparable prior year period, an increase of approximately $75,000 or 6.2%. The increase in selling, general and administrative expenses is primarily a result of a bonus of approximately $151,000 awarded to our chief executive officer. This increase was offset by the effect of reporting 10 months of operating activity for the fiscal year ended March 31, 2020 as compared to 12 months of operating activity for the fiscal year ended March 31, 2019. Management did not recognize any adverse trends in selling, general and administrative activity.

Interest Expense

Interest expense of discontinued operations for the fiscal year ended March 31, 2020 was approximately $398,000 as compared to approximately $417,000 for the comparable prior year period, a decrease of approximately $19,000 or 4.6%. The decrease in interest expense is primarily a result of reporting 10 months of operating activity for the fiscal year ended March 31, 2020 as compared to 12 months of operating activity for the fiscal year ended March 31, 2019.I

Liquidity, Capital Resources and Going Concern

As of March 31, 2020, we had cash of approximately $5,538,000, an increase of approximately $5,366,000 when compared with a balance of approximately $172,000 as of March 31, 2019.

During the fiscal year ended March 31, 2020, we had net cash of approximately $5,333,000 provided by operating activities as compared with net cash of approximately $31,000 used in operating activities for the comparable prior year period. Our uses of cash for operating activities have primarily consisted of professional and consulting fees. As a result of the Asset Sale, we realized a gain of approximately $5,708,000 during the fiscal year ended March 31, 2020.

During the fiscal year ended March 31, 2020, we had net cash of approximately $16,000 used in investing activities as compared to net cash of approximately $88,000 provided by investing activities during the fiscal year ended March 31, 2019.

During the year ended March 31, 2020, we had net cash of approximately $49,000 provided by financing activities due to the issuance of common stock upon the exercise of stock options and warrants which increases were offset by the repayment of $140,000 of principal on our related party promissory notes.

On January 31, 2020 (the “Closing Date”), we completed the sale of substantially all of our assets (the “Asset Sale”) for a total gross purchase price of $7,250,000 pursuant to an Asset Purchase Agreement entered into between us and Mitsubishi Chemical Performance Polymers, Inc., a Delaware corporation (“MCPP”). Prior to the Closing Date, we developed and manufactured advanced polymer materials which provide critical characteristics in the design and development of medical devices. As a result of the Asset Sale, we ceased operating as a developer, manufacturer, marketer and seller of advanced polymers. Subsequent to the Closing Date, we became engaged in efforts to identify potential operating companies interested in merging into us through an equity-based exchange transaction that would likely result in a change in control. As our efforts in engaging with an operating company subsequent to the Closing Date has not resulted in the execution of a definitive agreement to consummate such a transaction, our activities are subject to significant risks and uncertainties, including the need to raise additional capital if we are unable to identify an operating company desiring to acquire or merge with us.

Our financial statements have been presented on the basis that we are a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. At March 31, 2020, we recorded our normal business operations as discontinued operations as a result of the previously described Asset Sale. On the Closing Date we received net proceeds from the Asset Sale of approximately $6,100,000. After giving effect to (i) collection of accounts receivable retained as of January 31, 2020, (ii) payment of accounts payable assumed as of January 31, 2020; and (iii) retention of a reasonable amount of cash for anticipated future obligations and operations, our Board of Directors approved a special cash distribution of $0.18 per share. The cash distribution of approximately $5,087,000 was paid on April 23, 2020 to shareholders of record as of April 16, 2020. As a result, we expect our funds will not be sufficient to meet our needs for more than twelve months from the date of issuance of these financial statements. Accordingly, management believes there is substantial doubt about our ability to continue as a going concern.

Management is seeking to identify an operating company for the purpose of effecting a merger or business combination, or to acquire assets or shares of an entity actively engaged in a business that generates sustained revenues. Although we have investigated certain opportunities to determine whether they would have the potential to add value to us for the benefit of our stockholders, we have not yet entered into any binding arrangements.

We do not intend to restrict our consideration to any particular business or industry segment. Because we have limited resources, the scope and number of suitable candidates to merge with is relatively limited. Because we may participate in a business opportunity with a newly formed firm, a firm that is in the development stage, or a firm that is entering a new phase of growth, we may incur further risk due to the inability of the target’s management to have proven its abilities or effectiveness, or the lack of an established market for the target’s products or services, or the inability to reach profitability in the next few years.

Any business combination or transaction will likely result in a significant issuance of shares and substantial dilution to our present stockholders. As it is expected that the closing of such a transaction will result in a change in control, such transaction is expected to be accounted for as a reverse merger, with the operating company being considered the legal acquiree and accounting acquirer, and we would be considered the legal acquirer and the accounting acquiree. As a result, at and subsequent to closing of any such transaction, the financial statements of the operating company would become our financial statements for all periods presented.

Off-Balance Sheet Arrangements

As of March 31, 2020, we did not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our financial condition, results of operations, liquidity, capital expenditures or capital resources.

Not Applicable.

The following documents are filed as part of this report on Form 10-K:

None.

The certificates of our principal executive officer and principal financial and accounting officer attached as Exhibits 31.1 and 31.2 to this Annual Report on Form 10-K include, in paragraph 4 of such certifications, information concerning our disclosure controls and procedures, and internal control over financial reporting. Such certifications should be read in conjunction with the information contained in this Item 9A for a more complete understanding of the matters covered by such certifications.

Disclosure Controls and Procedures.

Our management, with the participation of our chief executive officer, evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2020. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its chief executive officer and chief financial officer, as appropriate, to allow timely decisions to be made regarding required disclosure. It should be noted that any system of controls and procedures, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system are met and that management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on this evaluation, our chief executive officer concluded that our disclosure controls and procedures as of March 31, 2020 were not effective at the reasonable assurance level due to limited resources in the finance and accounting functions. If successful in effecting a transaction with an operating company, we intend to take appropriate and reasonable steps to make improvements to remediate these deficiencies.

Management’s Annual Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934). A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the interim or annual financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management, with the participation of our Chief Executive Officer, conducted an evaluation of the effectiveness of our internal control over financial reporting as of March 31, 2020 based on the framework in Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, our management concluded that, as of March 31, 2020, our internal control over financial reporting were not effective at the reasonable assurance level due to limited resources in the finance and accounting functions. If successful in effecting a transaction with an operating company, we intend to take appropriate and reasonable steps to make improvements to remediate these deficiencies.

This annual report on Form 10-K does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to Securities and Exchange Commission rules that permit us to provide only management’s report in this annual report.

Changes in Internal Control Over Financial Reporting

During the fourth quarter ended March 31, 2020, we sold all of our assets and terminated our employees. As a result, the limited resources rendered our internal control over financial reporting to be ineffective. If successful in effecting a transaction with an operating company, we intend to take appropriate and reasonable steps to make improvements to remediate these deficiencies.

None.

PART III

The information required by this item 10 will be filed as an amendment to our Form 10-K.

The information required by this Item 11 will be filed as an amendment to our Form 10-K.

The information required by this Item 12 will be filed as an amendment to our Form 10-K.

The information required by this Item 13 will be filed as an amendment to our Form 10-K.

The information required by this Item 14 will be filed as an amendment to our Form 10-K.

PART IV

The following are filed as part of this Form 10-K:

________________

* Filed herewith.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors of EKIMAS Corporation

Wilmington, Massachusetts

Opinion on the Financial Statements

We have audited the accompanying balance sheet of EKIMAS Corporation (the “Company”) as of March 31, 2020 and 2019 and the related statements of operations, stockholders’ equity (deficit), and cash flows for each of the two years in the period ended March 31, 2020, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2020 and 2019, and the results of its operations and its cash flows for each of the two years in the period ended March 31, 2020, in conformity with U.S. generally accepted accounting principles.

The Company’s Ability to Continue as a Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has suffered recurring losses from operations, will require additional capital to fund its current operating plan, and has stated that substantial doubt exists about the Company’s ability to continue as a going concern. Management’s plans regarding these matters are also described in Note 2. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

EKIMAS Corporation

Balance Sheets

(In thousands, except per share and per share amounts)

The accompanying notes are an integral part of these financial statements.

EKIMAS Corporation

Statements of Operations

(In thousands, except per share amounts)

The accompanying notes are an integral part of these financial statements.

EKIMAS Corporation

Statements of Stockholders’ Equity (Deficit)

For the Years Ended March 31, 2020 and 2019

(In thousands)

The accompanying notes are an integral part of these financial statements.

EKIMAS Corporation

Statements of Cash Flows

(In thousands)

The accompanying notes are an integral part of these financial statements.

EKIMAS CORPORATION

NOTES TO FINANCIAL STATEMENTS

MARCH 31, 2020

1. Business Description

On January 31, 2020 (the “Closing Date”), we completed the sale of substantially all of our assets (the “Asset Sale”) for a total purchase price of $7,250,000 pursuant to an Asset Purchase Agreement entered into between us and Mitsubishi Chemical Performance Polymers, Inc., a Delaware corporation (“MCPP”). Prior to the Closing Date, we developed and manufactured advanced polymer materials which provide critical characteristics in the design and development of medical devices. Our biomaterials were marketed and sold to medical device manufacturers who used our advanced polymers in devices designed for treating a broad range of anatomical sites and disease states.

As a result of the Asset Sale, we ceased operating as a developer, manufacturer, marketer and seller of advanced polymers. Subsequent to the Closing Date, we became engaged in efforts to identify an operating company to acquire or merge with through an equity-based exchange transaction that would likely result in a change in control. As our efforts in engaging with an operating company subsequent to the Closing Date has not yet been successful, our activities are subject to significant risks and uncertainties, including the need to raise additional capital if we are unable to identify an operating company desiring to acquire or merge with us and consummate a merger transaction.

Prior to the Closing Date, our corporate, development and manufacturing operations were located in a leased facility in Wilmington, Massachusetts. As of March 31, 2020 we did not own or lease any property and maintain a corporate address at 95 Washington Street, Canton Massachusetts.

Fiscal Year

Our fiscal year ends on March 31. References herein to fiscal 2020 and/or fiscal 2019 refer to the fiscal years ended March 31, 2020 and/or 2019, respectively.

2. Liquidity and Going Concern

Our financial statements have been presented on the basis that we are a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. As of January 31, 2020, we recorded our normal business operations as discontinued operations as a result of the previously described Asset Sale. Our Board of Directors declared a cash distribution of approximately $5,087,000 of the net proceeds from the Asset Sale to our shareholders, after making adjustments for (i) collection of accounts receivable retained as of January 31, 2020, (ii) payment of accounts payable assumed as of January 31, 2020; and (iii) retention of a reasonable amount of cash for anticipated future obligations and ongoing operations to maintain our status as a public registrant and identification and consummation of any possible merger or business combination as further described herein. For the year ended March 31, 2020, we reported net loss from continuing operation of approximately $246,000. Although cash flows from operations for the fiscal year ended March 31, 2020 was approximately $5,270,000, we made a cash distribution of $5,087,000 on April 23, 2020 to our shareholders of record as of April 16, 2020.

Management is seeking to identify an operating company for the purpose of effecting a merger or business combination, or to acquire assets or shares of an entity actively engaged in a business that generates sustained revenues. We do not intend to restrict our consideration to any particular business or industry segment. Because we have limited resources, the scope and number of suitable candidates to merge with is relatively limited. Because we may participate in a business opportunity with a newly formed firm, a firm that is in the development stage, or a firm that is entering a new phase of growth, we may incur further risk due to the inability of the target’s management to have proven its abilities or effectiveness, or the lack of an established market for the target’s products or services, or the inability to reach profitability in the next few years.

Any business combination or transaction will likely result in a significant issuance of shares and substantial dilution to our present stockholders. It is expected that if a transaction is consummated, although no such transaction is assured, then the closing of such a transaction will result in a change in control and such transaction would be expected to be accounted for as a reverse merger, with the operating company being considered the legal acquiree and accounting acquirer, and we would be considered the legal acquirer and the accounting acquiree. As a result, at and subsequent to closing of any such transaction, the financial statements of the operating company would become our financial statements for all periods presented.

Although we have investigated certain opportunities to determine whether they would have the potential to add value to us for the benefit of our stockholders, we have not yet entered into any binding arrangements and there can be no assurance that we will ever identify an opportunity that could result in the consummation of merger or other business combination. As a result of the limited retained funds and uncertainty in consummating a possible merger or business combination, we expect our funds will not be sufficient to meet our needs for more than twelve months from the date of issuance of these financial statements. Accordingly, management believes there is substantial doubt about our ability to continue as a going concern.

EKIMAS CORPORATION

NOTES TO FINANCIAL STATEMENTS

MARCH 31, 2020

3. Summary of Significant Accounting Policies

Accounting Principles

The financial statements and accompanying notes are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”).

Use of Accounting Estimates

The preparation of financial statements in conformity with U.S. GAAP (“GAAP”) requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Cash

Cash includes cash on hand, is deposited at one area bank and may exceed federally insured limits at times.

Revenue Recognition

Subsequent to January 31, 2020, we ceased any revenue generating operations, accordingly, we did not recognize revenue from February 1, 2020 through March 31, 2020 and through the date of the filing of this Annual Report on Form 10-K. Prior to February 1, 2020, we maintained revenue generating operations, which included total revenues of approximately $2,698,000 for the ten month period ended January 31, 2020 and $3,347,000 for the year ended March 31, 2019 which are included in our income from discontinued operations.

We adopted the Accounting Standard Codification (“ASC”) 606, “Revenue from Contracts with Customers” as of April 1, 2018, using the modified retrospective method, and concluded that, consistent with prior reporting, we have two separate revenue streams: (i) product sales, and (ii) royalty and licensing revenues. Results for reporting periods after April 1, 2018 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported in accordance with legacy accounting guidance under ASC 605, “Revenue Recognition.” The adoption of ASC 606 had no impact upon adoption, to our net income for the years ended March 31, 2020 and 2019.

ASC 606 defines a five-step process to recognize revenues at the time and in an amount that reflects the consideration expected to be received for the performance obligations that have been provided. ASC 606 defines contracts as written, oral and through customary business practice. Under this definition, the Company considers contracts to be created at the time that an order to purchase product is agreed upon regardless of whether or not there is a written contract or when a contract is entered into for licensing and royalties.

Revenues from discontinued operations had two separate and distinct performance obligations offered to our customers: a product sales performance obligation and a licensing and royalty performance obligation. These performance obligations were related to separate revenue streams and at no point were they combined into a single transaction.

We generated the majority of our revenues, which are included in our income from discontinued operations, from product sales, and to a lesser extent from fees generated from licensing and royalty arrangements primarily with two customers. Our revenue related to product sales was recognized upon shipment, provided that a purchase order had been received or a contract had been executed, there were no uncertainties regarding customer acceptance, the sales price was fixed or determinable and collection was deemed reasonably assured. If uncertainties regarding customer acceptance existed, we recognized revenues when those uncertainties were resolved and title had been transferred to the customer. Amounts collected or billed prior to satisfying the above revenue recognition criteria were recorded as deferred revenue. Our revenue related to licensing and royalty arrangements was recognized in accordance with the terms of the arrangements which typically provide for quarterly payment of exclusivity fees and royalties earned on the sale of customer products on a quarterly basis.

EKIMAS CORPORATION

NOTES TO FINANCIAL STATEMENTS

MARCH 31, 2020

Research, Development and Regulatory Expense

Subsequent to January 31, 2020, we ceased any research, development and regulatory operations, accordingly, we did not recognize any research, development and regulatory expenses from February 1, 2020 through March 31, 2020 and through the date of the filing of this Annual Report on Form 10-K. Prior to February 1, 2020, we engaged in research, development and regulatory activities, which included total research, development and regulatory expenses of approximately $314,000 for the ten month period ended January 31, 2020 and $345,000 for the year ended March 31, 2019 which are included in our income from discontinued operations. Research, development and regulatory expenditures consisted primarily of salaries and related costs and were expensed as incurred.

Advertising Costs

Subsequent to January 31, 2020, we ceased any sales and marketing operations, including expenditures on advertising. Accordingly, we did not recognize any advertising expenses from February 1, 2020 through March 31, 2020 and through the date of the filing of this Annual Report on Form 10-K. Prior to February 1, 2020, we incurred total advertising expenses of approximately $1,000 for the ten month period ended January 31, 2020 and $1,000 for the year ended March 31, 2019 which are included in our income from discontinued operations.

Loss Per Share

Basic loss per common share is computed by dividing net loss by the weighted-average number of common shares outstanding during the period. Diluted loss per common share are based upon the weighted-average common shares outstanding during the period plus additional weighted-average common equivalent shares outstanding during the period. Common equivalent shares result from the assumed exercise of outstanding stock options and warrants, the proceeds of which are then assumed to have been used to repurchase outstanding common stock using the treasury stock method. In addition, the numerator is adjusted for any changes in loss that would result from the assumed conversion of potential shares. Potentially dilutive shares, which were excluded from the diluted loss per share calculations because the effect would be antidilutive or the options exercise prices were greater than the average market price of the common shares, were 0 shares and 7,563,556 shares for the fiscal years ended March 31, 2020 and 2019, respectively.

Accounts Receivable

We perform various analyses to evaluate accounts receivable balances and record an allowance for bad debts based on the estimated collectability of the accounts such that the amounts reflect estimated net realizable value. Account balances are charged off against the allowance after significant collection efforts have been made and potential for recovery is not considered probable. As of March 31, 2020 and 2019, our allowance for doubtful accounts was $0 and $5,000, respectively.

Inventories

On January 31, 2020, we sold all of our inventory, having a net value of approximately $271,000, in connection with the Asset Sale and ceased all production operations. Accordingly, we maintained no inventory as of January 31, 2020 and March 31, 2020, respectively, and do not anticipate purchasing or maintaining any inventory subsequent to March 31, 2020.

Prior to January 31, 2020, we valued our inventory at the lower of our actual cost or the current estimated market value. We regularly reviewed inventory quantities on hand and inventory commitments with suppliers and records a provision for excess and obsolete inventory based primarily on our historical usage. During the fiscal year ended March 31, 2019, we provided additional net amounts of approximately $11,000 for excess and obsolete inventory. During the fiscal year ended March 31, 2019, we disposed of certain obsolete inventory items in the aggregate amount of approximately $42,000. As of March 31, 2019, our allowance for obsolete and excess inventory was approximately $81,000.

Property and Equipment

On January 31, 2020, we sold all of our property and equipment, having a net value of approximately $1,749,000, in connection with the Asset Sale and ceased all operations. Accordingly, we maintained no property and equipment as of January 31, 2020 and March 31, 2020, respectively, and do not anticipate the need to purchase any property and equipment subsequent to March 31, 2020.

EKIMAS CORPORATION

NOTES TO FINANCIAL STATEMENTS

MARCH 31, 2020

Prior to the January 31, 2020, property and equipment was stated at cost. Equipment was depreciated using the straight-line method over the estimated useful lives of the assets, ranging from three to seven years. Building improvements were amortized using the straight-line method over the remaining estimated life of the building at the time the improvement is put into service. Our building was depreciated using the straight-line method over 40 years. Land was not depreciated. Expenditures for repairs and maintenance were charged to expense as incurred. Equipment purchased pursuant to capital lease obligations, primarily computer equipment, was recorded at cost and depreciated on a straight-line basis over the life of the lease.

Deferred Financing Costs

Prior to January 31, 2020, we capitalized certain costs related to the issuance of debt. These costs were amortized to interest expense on a straight-line basis over the term of the debt. During the ten month period ended January 31, 2020 and the fiscal year ended March 31, 2019, amortization expense related to deferred financing costs were $5,000 and $7,000, respectively, and included in income from discontinued operations.

Income Taxes

The provision for income taxes includes federal, state, local and foreign taxes. Income taxes are accounted for under the liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences of temporary differences between the financial statement carrying amounts and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which the temporary differences are expected to be recovered or settled. We evaluate the realizability of our deferred tax assets and establish a valuation allowance when it is more likely than not that all or a portion of deferred tax assets will not be realized.

We account for uncertain tax positions using a “more-likely-than-not” threshold for recognizing and resolving uncertain tax positions. The evaluation of uncertain tax positions is based on factors including, but not limited to, changes in tax law, the measurement of tax positions taken or expected to be taken in tax returns, the effective settlement of matters subject to audit, new audit activity and changes in facts or circumstances related to a tax position. We evaluate this tax position on a quarterly basis. We also accrue for potential interest and penalties, if applicable, related to unrecognized tax benefits in income tax expense. (See Note 6).

Stock-Based Compensation

Stock-based compensation is measured at the grant date based on the estimated fair value of the award and is recognized as an expense over the requisite service period. The valuation of employee stock options is an inherently subjective process, since market values are generally not available for long-term, non-transferable employee stock options. Accordingly, the Black-Scholes option pricing model is utilized to derive an estimated fair value. The Black-Scholes pricing model requires the consideration of the following six variables for purposes of estimating fair value:

Expected Dividends. We have never declared or paid any cash dividends on any of our capital stock and do not expect to do so in the foreseeable future. Accordingly, we use an expected dividend yield of zero to calculate the grant-date fair value of a stock option.

Expected Volatility. The expected volatility is a measure of the amount by which our stock price is expected to fluctuate during the expected term of options granted. We determine the expected volatility solely based upon the historical volatility of our common stock over a period commensurate with the option’s expected term. We do not believe that the future volatility of our common stock over an option’s expected term is likely to differ significantly from the past.

EKIMAS CORPORATION

NOTES TO FINANCIAL STATEMENTS

MARCH 31, 2020

Risk-Free Interest Rate. The risk-free interest rate is the implied yield available on U.S. Treasury zero-coupon issues with a remaining term equal to the option’s expected term on the grant date.

Expected Term. For option grants subsequent to the adoption of the fair value recognition provisions of the accounting standards, the expected life of stock options granted is based on the actual vesting date and the end of the contractual term.

Stock Option Exercise Price and Grant Date Price of Common Stock. The closing market price of our common stock on the date of grant.

We are required to estimate the level of award forfeitures expected to occur and record compensation expense only for those awards that are ultimately expected to vest. This requirement applies to all awards that are not yet vested. Due to the limited number of unvested options outstanding, the majority of which are held by executives and members of our Board of Directors, we have estimated a zero forfeiture rate. We will revisit this assumption periodically and as changes in the composition of the option pool dictate.

Fair Value of Financial Instruments

We follow Accounting Standards Codification 820-10 (“ASC 820-10”), “Fair Value Measurements and Disclosures,” for fair value measurements. ASC 820-10 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The standard provides a consistent definition of fair value, which focuses on an exit price, which is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The standard also prioritizes, within the measurement of fair value, the use of market-based information over entity specific information and establishes a three-level hierarchy for fair value measurement based on the nature of inputs used in the valuation of an asset or liability as of the measurement date.

The hierarchy established under ASC 820-10 gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy under ASC 820-10 are described below:

Level 1 - Pricing inputs are quoted prices available in active markets for identical investments as of the reporting date. As required by ASC 820-10, we do not adjust the quoted price for these investments, even in situations where we hold a large position and a sale could reasonably impact the quoted price.

Level 2 - Pricing inputs are quoted prices for similar investments, or inputs that are observable, either directly or indirectly, for substantially the full term through corroboration with observable market data. Level 2 includes investments valued at quoted prices adjusted for legal or contractual restrictions specific to these investments.

Level 3 - Pricing inputs are unobservable for the investment, that is, inputs that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability. Level 3 includes investments that are supported by little or no market activity.

Recent Accounting Pronouncements

We have evaluated all issued but not yet effective accounting pronouncements and determined that they are either immaterial or not relevant to us.

4. Asset Sale and Discontinued Operations

Asset Sale

On November 25, 2019, we entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Mitsubishi Chemical Performance Polymers, Inc., a Delaware corporation (“MCPP”), pursuant to which we agreed to sell substantially all of our assets to MCPP on the terms and subject to the conditions set forth in the Purchase Agreement (the “Asset Sale”). As consideration for the Asset Sale, MCPP agreed to pay us $7,250,000. The Purchase Agreement and the consummation of the transactions contemplated thereby required us to receive the requisite approval from our stockholders. On January 21, 2020, we held a special meeting of stockholders at which time the stockholders authorized and approved the Purchase Agreement. On January 31, 2020 (the “Closing Date”), we completed the Asset Sale. In connection with the closing of the Asset Sale, MCPP paid us a cash payment of $7,250,000 of which approximately $1,150,000 was immediately disbursed to satisfy approximately $567,000 of transaction and legal costs; approximately $483,000 of facility related obligations; and $100,000 for agreed upon contingent facility maintenance costs. We received approximately $6,100,000 in net proceeds which were used to pay additional transaction costs, trade accounts payable and other obligations not assumed by MCPP, and working capital for the ongoing maintenance of the public shell that survived the Asset Sale.

EKIMAS CORPORATION

NOTES TO FINANCIAL STATEMENTS

MARCH 31, 2020

Total transaction costs incurred in connection with the Asset Sale are as follows:

Pursuant to the Purchase Agreement, we sold all of our inventory; property, plant and equipment; and intangible assets, including but not limited to all intellectual property, business know-how, customer lists and related contracts, and all other assets necessary to operate our advanced polymer business. Total assets sold in connection with the Asset Sale are as follows:

The net inventories sold were composed of the following approximate amounts:

The net property, plant and equipment sold were composed of the following approximate amounts:

Assignment of Facility Lease

On December 22, 2011, we entered into an agreement (the “Facility Lease”) with an independent third-party under which we sold and leased back our land and building generating gross proceeds of $2,000,000. For accounting purposes, this sale-leaseback transaction was accounted for under the financing method, rather than as a completed sale. Under the financing method, we included the sales proceeds received as a financing obligation. As of March 31, 2020 and 2019, the total financing obligation was $0 and $1,986,000, respectively, and accrued interest on financing obligation was approximately $0 and $168,000, respectively.

In connection with the Asset Sale, we assigned the Facility Lease to Mitsubishi Chemical Performance Polymers, Inc. (“MCPP”) and the financing obligation and accrued interest on financing obligation of $1,986,000 and $155,000 as of January 31, 2020, the Asset Sale closing date, was eliminated. Subsequent to the January 31, 2020, we had no further obligations with respect to the lease agreement.

EKIMAS CORPORATION

NOTES TO FINANCIAL STATEMENTS

MARCH 31, 2020

Discontinued Operations

As a result of the Asset Sale, we discontinued operating as a developer, manufacturer, marketer and seller of advanced polymers on the Closing Date. Subsequent to the Closing Date, we became engaged in efforts to identify an operating company to acquire or merge with through an equity-based exchange transaction that would likely result in a change in control. Accordingly, the results of our operations are reported as discontinued operations for all periods are presented below.

5. Related Party Transactions

On April 26, 2016, we issued a Promissory Note to Khristine Carroll, our Executive VP of Commercial Operations in the principal amount of $25,000 (the “Carroll Note”). The Carroll Note was initially due on May 25, 2016 and, per mutually agreement by the parties, extended for consecutive monthly periods subsequent to the initial term of May 25, 2016. The Carroll Note bears interest at the rate of 10% per annum and all principal and accrued interest, if any, were due on demand. During the fiscal year ended March 31, 2020 and 2019, we repaid $15,000 and $5,000, respectively, of the principal on the Carroll Note. As of March 31, 2020 and 2019, the principal balance outstanding was $0 and $15,000, respectively.

On April 26, 2016, we issued a Promissory Note to an affiliate of Michael Adams, our Chief Executive Officer (the “Affiliate”) in the principal amount of $25,000 (the “First Affiliate Note”). The First Affiliate Note was initially due on May 25, 2016 and, per mutually agreement by the parties, extended for consecutive monthly periods subsequent to the initial term of May 25, 2016. The First Affiliate Note bears interest at the rate of 10% per annum and all principal and accrued interest, if any, were due on demand. During the fiscal year ended March 31, 2019, there were no repayments made on the First Affiliate Note. The First Affiliate Note was repaid in full on December 5, 2019 as discussed in more detail below. As of March 31, 2020 and 2019, the principal balance outstanding was $0 and $25,000, respectively.

EKIMAS CORPORATION

NOTES TO FINANCIAL STATEMENTS

MARCH 31, 2020

On December 5, 2016, we issued a second additional Promissory Note to the Affiliate in the principal amount of $100,000 (the “Second Affiliate Note”). The Second Affiliate Note was initially due on June 5, 2017 and, per mutually agreement by the parties, extended for consecutive monthly periods subsequent to the initial term of June 5, 2017. The Second Affiliate Note bears interest at the rate of 12% per annum, and provided for a $3,000 commitment fee, which fee was paid in February 2017. During the fiscal year ended March 31, 2019, there were no repayments made on the Second Affiliate Note. The Second Affiliate Note was repaid in full on December 5, 2019 as discussed in more detail below. As of March 31, 2020 and 2019, the principal balance outstanding was $0 and $100,000, respectively.

As discussed above, the First Affiliate Note and Second Affiliate Note (collectively, the “Affiliate Notes”) were repaid on December 5, 2019. In lieu of repayment in cash, the Affiliate authorized that the principal balance due, in the aggregate amount of $125,000, be used for purposes of exercising stock options granted to Mr. Adams pursuant to our 2017 Non-Qualified Equity Incentive Plan (the “2017 Option Plan”). As a result, Mr. Adams was issued 2,083,333 shares of our common stock granted pursuant to the 2017 Option Plan. The aggregate purchase price upon exercise of these stock options was $125,000.

During the fiscal year ended March 31, 2020 and 2019, we recorded interest expense of approximately $1,000 and $2,000, respectively, on the Carroll Note. During the fiscal year ended March 31, 2020 and 2019, we recorded interest expense of approximately $10,000 and $10,000, respectively, on the Affiliate Notes.

6. Income Taxes

As of March 31, 2020 and 2019, we had no material unrecognized tax benefits and no adjustments to liabilities or operations were required. We recorded state income tax expense of approximately $15,000 for the fiscal year ended March 31, 2020. There was no federal income tax expense for the fiscal year ended March 31, 2020.

Tax years 2015 through 2020 are subject to examination by the federal and state taxing authorities. There are no income tax examinations currently in process.

Reconciliation between our effective tax rate and the United States statutory rate is as follows:

Significant components of our deferred tax assets and deferred tax liabilities consist of the following:

EKIMAS CORPORATION

NOTES TO FINANCIAL STATEMENTS

MARCH 31, 2020

Deferred tax assets and liabilities are determined based on the differences between the financial statement carrying amounts and the tax basis of the assets and liabilities using the enacted tax rate in effect in the years in which the differences are expected to reverse. A 100% valuation allowance has been recorded against the deferred tax asset as it is more likely than not, based upon our analysis of all available evidence, that the tax benefit of the deferred tax asset will not be realized. The decrease in the valuation allowance resulted from the utilization of net operating losses during 2020.

As of March 31, 2020, we have the following unused net operating loss and tax credit carryforwards available to offset future federal and state taxable income, both of which expire at various times as noted below:

7. Promissory Notes

On April 26, 2016, we issued a Promissory Note to Khristine Carroll, our Executive VP of Commercial Operations in the principal amount of $25,000 (the “Carroll Note”). The Carroll Note was initially due on May 25, 2016 and, per mutually agreement by the parties, extended for consecutive monthly periods subsequent to the initial term of May 25, 2016. The Carroll Note bears interest at the rate of 10% per annum and all principal and accrued interest, if any, were due on demand. During the fiscal year ended March 31, 2020 and 2019, we repaid $15,000 and $5,000, respectively, of the principal on the Carroll Note. As of March 31, 2020 and 2019, the principal balance outstanding was $0 and $15,000, respectively.

On April 26, 2016, we issued a Promissory Note to an affiliate of Michael Adams, our Chief Executive Officer (the “Affiliate”) in the principal amount of $25,000 (the “First Affiliate Note”). The First Affiliate Note was initially due on May 25, 2016 and, per mutually agreement by the parties, extended for consecutive monthly periods subsequent to the initial term of May 25, 2016. The First Affiliate Note bears interest at the rate of 10% per annum and all principal and accrued interest, if any, were due on demand. During the fiscal year ended March 31, 2019, there were no repayments made on the First Affiliate Note. The First Affiliate Note was repaid in full on December 5, 2019 as discussed in more detail below. As of March 31, 2020 and 2019, the principal balance outstanding was $0 and $25,000, respectively.

On December 5, 2016, we issued a second additional Promissory Note to the Affiliate in the principal amount of $100,000 (the “Second Affiliate Note”). The Second Affiliate Note was initially due on June 5, 2017 and, per mutually agreement by the parties, extended for consecutive monthly periods subsequent to the initial term of June 5, 2017. The Second Affiliate Note bears interest at the rate of 12% per annum, and provided for a $3,000 commitment fee, which fee was paid in February 2017. During the fiscal year ended March 31, 2019, there were no repayments made on the Second Affiliate Note. The Second Affiliate Note was repaid in full on December 5, 2019 as discussed in more detail below. As of March 31, 2020 and 2019, the principal balance outstanding was $0 and $100,000, respectively.

As discussed above, the First Affiliate Note and Second Affiliate Note (collectively, the “Affiliate Notes”) were repaid on December 5, 2019. In lieu of repayment in cash, the Affiliate authorized that the principal balance due, in the aggregate amount of $125,000, be used for purposes of exercising stock options granted to Mr. Adams pursuant to our 2017 Non-Qualified Equity Incentive Plan (the “2017 Option Plan”). As a result, Mr. Adams was issued 2,083,333 shares of our common stock granted pursuant to the 2017 Option Plan. The aggregate purchase price upon exercise of these stock options was $125,000.

During the fiscal year ended March 31, 2020 and 2019, we recorded interest expense of approximately $1,000 and $2,000, respectively, on the Carroll Note. During the fiscal year ended March 31, 2020 and 2019, we recorded interest expense of approximately $10,000 and $10,000, respectively, on the Affiliate Notes.

8. Contingencies

We are not a party to any legal proceedings, other than ordinary routine litigation incidental to our business, which we believe will not have a material effect on our financial position or results of operations.

EKIMAS CORPORATION

NOTES TO FINANCIAL STATEMENTS

MARCH 31, 2020

9. Concentration of Credit Risk and Major Customers

For the fiscal year ended March 31, 2020 and 2019, we had no revenues from continuing operations. As of March 31, 2020, we had accounts receivable-trade from continuing operations of approximately $44,000, or 70%, due from four customers.

For the fiscal year ended March 31, 2020, three customers represented approximately 22%, 16% and 12%, respectively, of our revenues from discontinued operations. For the fiscal year ended March 31, 2019, two customers represented approximately 24% and 11% of revenues from discontinued operations, respectively.

As of March 31, 2019, we had accounts receivable-trade from discontinued operations of approximately $61,000, or 13%, due from one customer.

As of March 31, 2020, we had $0 due from two customers related to receivables on license fees and royalties from discontinued operations. As of March 31, 2019, we had approximately $185,000 due from two customers related to receivables on license fees and royalties from discontinued operations.

10. Stockholders’ Equity (Deficit)

Preferred Stock

We have authorized 5,000,000 shares, $0.001 par value, Preferred Stock (the Preferred Stock”) of which 500,000 shares have been issued and redeemed, therefore are not considered outstanding. In addition, 500,000 shares of Preferred Stock have been designated as Series A Junior Participating Preferred Stock (the “Junior Preferred Stock”) with the designations and the powers, preferences and rights, and the qualifications, limitations and restrictions specified in the Certificate of Designation of the Junior Preferred Stock filed with the Delaware Department of State on January 28, 2008. Such number of shares may be increased or decreased by resolution of the Board of Directors; provided, that no decrease shall reduce the number of shares of Junior Preferred Stock to a number less than the number of shares then outstanding plus the number of shares reserved for issuance upon the exercise of outstanding options, rights or warrants or upon the conversion of any outstanding securities issued by us that is convertible into Junior Preferred Stock. As of March 31, 2020, there was no Junior Preferred Stock issued or outstanding.

Warrants

On July 22, 2015, we engaged the services of a financial and strategic advisor (the “Advisor”) whose services include, but are not limited to, financial advice, strategic advice and investment banking services. In connection with this engagement, we agreed to compensate the investment bankers approximately $4,000 per quarter for a one-year period and we issued them a warrant to purchase 830,500 shares of our common stock at an exercise price of $0.301 per share, the approximate fair value of our common stock on the date of the engagement. The warrant is exercisable at any time until July 21, 2025. The warrant was valued at approximately $28,000 using the Black-Scholes model and treated as permanent equity. The Advisor exercised the warrant in November 2019 and was issued 830,500 shares of our common stock in consideration of cash proceeds of approximately $25,000.

Treasury Stock and Other Transactions

In June 2001, the Board of Directors adopted a share repurchase program authorizing the repurchase of up to 250,000 of our shares of common stock. In June 2004, the Board of Directors authorized the purchase of an additional 500,000 shares of common stock. Since June 2001, we have repurchased a total of 251,379 shares under the share repurchase program, leaving 498,621 shares remaining to purchase under the share repurchase program. No repurchases were made during the years ended March 31, 2017 and 2016. The share repurchase program authorizes repurchases from time to time in open market transactions, through privately negotiated transactions, block transactions or otherwise, at times and prices deemed appropriate by management, and is not subject to an expiration date.

Stockholder Rights Plan

Our Board of Directors approved the adoption of a stockholder rights plan (the “Rights Plan”) under which all stockholders of record as of February 8, 2008 will receive rights to purchase shares of the Junior Preferred Stock (the “Rights”). The Rights will be distributed as a dividend. Initially, the Rights will attach to, and trade with, our common stock. Subject to the terms, conditions and limitations of the Rights Plan, the Rights will become exercisable if (among other things) a person or group acquires 15% or more of our common stock. Upon such an event, and payment of the purchase price, each Right (except those held by the acquiring person or group) will entitle the holder to acquire shares of our common stock (or the economic equivalent thereof) having a value equal to twice the purchase price. Our Board of Directors may redeem the Rights prior to the time they are triggered. In the event of an unsolicited attempt to acquire us, the Rights Plan is intended to facilitate the full realization of our stockholder value and the fair and equal treatment of all of our stockholders. The Rights Plan does not prevent a takeover attempt.

EKIMAS CORPORATION

NOTES TO FINANCIAL STATEMENTS

MARCH 31, 2020

11. Stock Based Compensation

In October 2003, our shareholders approved the AdvanSource 2003 Stock Option Plan (the “2003 Plan”), which authorizes the issuance of 3,000,000 shares of common stock. Under the terms of the Plan, the exercise price of Incentive Stock Options issued under the Plan must be equal to the fair market value of the common stock at the date of grant. In the event that Non-Qualified Options are granted under the Plan, the exercise price may be less than the fair market value of the common stock at the time of the grant (but not less than par value). Total shares of common stock registered under the 2003 Plan are 7,000,000 shares. Normally, options granted expire ten years from the grant date.

Activity under the 2003 Plan for the fiscal years ended March 31, 2020 and 2019 are as follows:

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the closing price of the common stock on March 31, 2020 of $0.145 and the exercise price of each in-the-money option) that would have been received by the option holders had all option holders exercised their options on March 31, 2020.

On December 5, 2019, our directors and certain employees exercised options to purchase 656,250 shares of our common stock pursuant to grants made under the 2003 Plan. In consideration for the exercise of these options we received approximately $40,000 in cash. There were no stock options exercised under the 2003 Plan for the fiscal year ended March 31, 2019. As of March 31, 2020, there were no shares remaining to be granted under the 2003 Plan.

For the fiscal year ended ended March 31, 2020 and 2019, we recorded no stock-based compensation expense for options pursuant to the 2003 Plan. As of March 31, 2020, we had no unrecognized compensation cost related to stock options.

EKIMAS CORPORATION

NOTES TO FINANCIAL STATEMENTS

MARCH 31, 2020

On August 14, 2017, our board of directors approved and adopted the 2017 Non-Qualified Equity Incentive Plan (the “2017 Plan”), which authorized the grant of non-qualified stock options exercisable into a maximum of 7,000,000 shares of our common stock. Under the terms of the 2017 Plan, the exercise price of stock options issued under the 2017 Plan must be equal to the fair market value of the common stock at the date of grant. Options granted expire ten years from the grant date. From August 17, 2017 through December 13, 2018, the board of directors approved the grant of stock options to certain directors, employees and a consultant which were immediately vested and exercisable into a total of 6,550,000 shares of our common stock. There were no additional stock options granted pursuant to the 2017 Plan for the period subsequent to December 31, 2018. In determining the fair value of the options granted pursuant to the 2017 Plan, we utilized the Black-Scholes pricing model utilizing the following assumptions:

On August 17, 2017, Michael Adams, our chief executive officer, was granted an option to purchase 2,500,000 shares of our common stock (the “Adams Option”) at an exercise price of $0.06 per share pursuant to the 2017 Plan. On December 5, 2019, Mr. Adams effected a partial exercise of the Adams Option and purchased 2,083,333 shares of our common stock. As consideration for the exercise of a portion of the Adams Option, an affiliate of Mr. Adams authorized that the principal balance due on the Affiliate Notes, previously described in Notes 5 and 7, in the aggregate amount of $125,000, be used for purposes of exercising this portion of the Adams Option. Additionally, on December 5, 2019, Mr. Adams exercised the remaining 416,667 shares exercisable pursuant to the Adams Option, by means of a cashless exercise. As a result of the cashless exercise, Mr. Adams was issued 291,667 shares of our common stock. We received no cash proceeds in connection with this cashless exercise.

On various dates from August 17, 2017 through December 13, 2018, our directors, certain employees and one consultant (the “Grantees”) were granted options to purchase 4,050,000 shares of our common stock at exercise prices ranging from $0.04 per share to $0.06 per share pursuant to the 2017 Plan. On December 5, 2019, the Grantees exercised their options to purchase 4,050,000 shares of our common stock, by means of a cashless exercise. As a result of the cashless exercise, the Grantees were issued 2,910,000 shares of our common stock. We received no cash proceeds in connection with this cashless exercise.

As of March 31, 2020, there were 450,000 shares available to grant pursuant to the 2017 Plan and no options outstanding or exercisable.

12. Benefit Plans and Employment Agreements of Executive Officers

We established the AdvanSource 401(k) Retirement Savings Plan under Section 401(k) of the Internal Revenue Code. All full-time employees who are twenty-one years of age are eligible to participate on the beginning of the first month after 30 days of employment. Our contributions are discretionary. We made matching contributions of approximately $8,000 and $8,000 during the fiscal years ended March 31, 2019 and 2018, respectively.

On August 7, 2006, we appointed Michael F. Adams as our Chief Executive Officer and President. Mr. Adams has been one of our directors since May 1999 and became our Vice President of Regulatory Affairs and Business Development on April 1, 2006. We entered into an employment agreement with Mr. Adams (the “Adams Agreement”) on September 13, 2006. Under the terms of the Adams Agreement, we agreed to employ Mr. Adams for two years at an annual base salary of $290,000, as amended, which is subject to annual review by our Board of Directors. During the Employment Period, as defined in the Adams Agreement, Mr. Adams may receive an annual bonus to be determined at the sole discretion of the Compensation Committee of the Board of Directors. We did not renew the Adams Agreement at the end of the initial term, however, the Adams agreement provides that lacking any express agreement between the parties at the end of the Employment Period, the Adams Agreement shall be deemed to continue on a month-to-month basis. As a result, the Adams Agreement currently continues on a month-to-month basis and is subject to all of the terms and conditions of the Adams Agreement. Either party has the right to terminate the Adams Agreement upon 30 days written notice. Mr. Adams is eligible for participation in all executive benefit programs, including health insurance, life insurance, and stock-based compensation. If Mr. Adams’ employment is terminated without cause, we are obligated to (i) pay Mr. Adams an amount equal to two times his annual base salary upon such termination, (ii) provide Mr. Adams with health insurance benefits for a period of 18 months after such termination, of which the premiums for the first six months after such termination shall be paid by us, and (iii) provide Mr. Adams life insurance benefits for one year after such termination at our expense.

EKIMAS CORPORATION

NOTES TO FINANCIAL STATEMENTS

MARCH 31, 2020

During the fiscal year ended March 31, 2010, the Compensation Committee of the Board of Directors approved an increase in Mr. Adams’ annual base salary to $320,000.

During the fiscal year ended March 31, 2020 and 2019, Mr. Adams received a performance-based bonus of approximately $1510,000 and $0 , respectively, as approved by our Board of Directors.

In connection with the change of control provision of the Adams Agreement, Mr. Adams also received $650,000 in February 2020.

13. Subsequent Events

We evaluated all events or transactions that occurred after the balance sheet date through the date when we filed these financial statements and we determined that we did not have any other material recognizable subsequent events.

Our Board of Directors approved a special cash distribution of $0.18 per share to be paid on April 23, 2020 to shareholders of record as of April 16, 2020. The total cash distribution was approximately $5,087,000.

From October 9, 2020 through October 13, 2020, Messrs. Mark Tauscher, Michael L. Barretti and William J. O’Neill, Jr. (collectively referred to herein as the “Independent Directors”) notified the Board of Directors that they would be retiring and resigning their positions as members of the Board of Directors effective immediately upon the date of their respective notifications. The Independent Directors’ resignations were not a result of any disagreements with us on any matters relating to our operations, policies or practices.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.