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Item 1. Financial Statements

2024-06-26 compared with 2009-08-19 · 483 added, 823 removed, 63 unchanged (95% of the section changed)

2 unchanged sentences

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except earnings per share data)

Three Months Ended

Net revenues-related party

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

Three Months Ended December 31,

Nine Months Ended December 31,

Net revenues:

Net product sales

Licensing revenue

Royalty income

Costs and expenses:

Cost of sales

Other operating costs and expenses

Selling, general and administrative expenses (exclusive of non-cash compensation shown below)

Non-cash compensation, net of recoveries

Operating (loss) income

Selling, general and administrative expenses

Total costs and expenses

Operating loss

Other income:

Settlement of litigation

Interest income, net

Interest income-related party

Realized/unrealized holding gains on trading securities

(Loss) income before income taxes and minority interest

Provision for income taxes

Minority interest in loss of consolidated subsidiary

Net (loss) income

Net (loss) income per share:

Income from governmental assistance programs

Income (loss) before income taxes

Provision for income tax expense

Net income (loss)

Basic income (loss) per share

Diluted income (loss) per share

Weighted average shares outstanding

The accompanying notes are an integral part of the interim

consolidated financial statements.

The accompanying notes are an integral part of the condensed consolidated financial statements.

EMERSON RADIO CORP.

AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands except share data)

June 30, 2008

March 31, 2008(A)

December 31, 2023

March 31, 2023

Current Assets:

Cash and cash equivalents

Restricted cash

Foreign exchange forward contracts

Accounts receivable (less allowances of $3,327 and $4,148, respectively)

Other receivables

Due from affiliates

Inventory, net

$ 3,637 $ 25,268

Short term investments

Accounts receivable, net

Licensing receivable

Prepaid purchases

Prepaid expenses and other current assets

Deferred tax assets

Total Current Assets

Property, plant and equipment, net

Trademarks and other intangible assets, net

Investments in marketable securities

Deferred tax assets

29,719 31,095

Non-Current Assets:

Property and equipment, net

Right-of-use asset-operating leases

Right-of-use asset-finance leases

Total Non-Current Assets

$ 30,222 $ 31,371

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current Liabilities:

Current maturities of long-term borrowings

Accounts payable and other current liabilities

Due to affiliates

Accrued sales returns

Income taxes payable

Due to affiliate

Short-term operating lease liability

Short-term finance lease liability

Income tax payable, current portion

Advanced deposits

Deferred revenue

Total Current Liabilities

Long-term borrowings

Deferred tax liabilities

Minority interest

Non-Current Liabilities:

Long-term operating lease liability

Income tax payable-deferred

Total Non-Current Liabilities

Total Liabilities

$ 3,114 $ 5,912

Shareholders’ Equity:

shares 10,000,000 shares authorized;

3,677 shares issued and

Series A Preferred shares — 10,000,000 shares authorized;

3,677 shares issued and outstanding;

liquidation preference of $ 3,677,000

Common shares — $ 0.01 par value, 75,000,000 shares authorized;

52,965,797 shares issued at June 30, 2008 and March 31, 2008;

27,129,832 shares outstanding at June 30, 2008 and March 31, 2008

Capital in excess of par value

Accumulated other comprehensive losses

52,965,797 shares issued at December 31, 2023 and March 31, 2023, respectively;

21,042,652 shares outstanding at December 31, 2023 and March 31, 2023, respectively

Additional paid-in capital

79,792 79,792

Accumulated deficit

Treasury stock, at cost, 25,835,965 shares

( 23,322 ) ( 24,971 )

Treasury stock, at cost ( 31,923,145 shares at December 31, 2023 and March 31, 2023, respectively)

( 33,201 ) ( 33,201 )

Total Shareholders’ Equity

27,108 25,459

Total Liabilities and Shareholders’ Equity

Reference is made to the Companys Annual Report on Form 10-K for the fiscal year ended March

31, 2008 filed with the Securities and Exchange Commission in July 2008 and amended in July

The accompanying notes are an integral part of the interim consolidated financial statements.

$ 30,222 $ 31,371

The accompanying notes are an integral part of the condensed consolidated financial statements.

EMERSON RADIO CORP.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

Three Months Ended

Nine Months Ended December 31,

Cash Flows from Operating Activities:

Net (loss) income

Adjustments to reconcile net income to net cash provided by operating activities:

Minority interest

Net income (loss)

Adjustments to reconcile net income (loss) to net cash (used) by operating activities:

Non-cash lease expense

Depreciation and amortization

Non cash compensation

Deferred tax expense (benefit)

Asset allowances, reserves and other

Unrealized holding gains on trading securities

Changes in assets and liabilities:

Restricted cash

Foreign exchange foreign contracts

Accounts receivable

Other receivables

Due from affiliates

Licensing receivable

Prepaid purchases

Prepaid expenses and other current assets

Accounts payable and other current liabilities

Due to affiliates

Right of use assets-operating

Short term lease liabilities

Long term lease liabilities

Due to affiliate

Income taxes payable

Net cash provided by operating activities

Advanced deposits

Deferred revenue

Net cash (used) provided by operating activities

Cash Flows From Investing Activities:

Proceeds from partial calls on securities

Purchases of investments

Additions to property and equipment

Net cash provided (used) by investing activities

Net cash (used) by investing activities

Cash Flows from Financing Activities:

Short-term borrowings

Net borrowings (repayments) under foreign bank facilities

Exercise of stock options

Long-term borrowings

Repayments of long-term borrowings

Net cash (used) by financing activities

Net increase in cash and cash equivalents

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

Supplemental disclosures of non-cash investing and financing activities:

The Company has entered into certain capital lease agreements.

For the three

month periods ended

June 30, 2008 and June 30, 2007, the Company entered into agreements related to

approximately $0

and $39 of equipment, respectively, which are excluded from the statement of

cash flows as the

transactions were non-cash in nature.

Cash paid during the period for:

The accompanying notes are an integral part of the interim consolidated financial statements.

Net cash provided by financing activities

Net (decrease) increase in cash and cash equivalents

Cash and cash equivalents at beginning of the year

Cash and cash equivalents at end of the year

Supplemental disclosure of non-cash investing and financing activities :

Right-of-use assets obtained in exchange for new operating lease liabilities

Supplemental disclosures:

Cash paid for:

The accompanying notes are an integral part of the condensed consolidated financial statements.

EMERSON RADIO CORP.

AND SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS ’ EQUITY

(In thousands)

Preferred Stock

Shareholders’

Balance — March 31, 2023

Balance — December 31, 2023

Preferred Stock

Shareholders’

Balance — March 31, 2022

Balance — December 31, 2022

The accompanying notes are an integral part of the condensed consolidated financial statements.

EMERSON RADIO CORP.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 — BACKGROUND AND BASIS OF PRESENTATION

The consolidated financial statements include the accounts of Emerson Radio Corp.

consolidated the Company), which operates in the consumer electronics business.

electronics business includes the design, sourcing, importing and marketing of a variety of

consumer electronic products and the licensing of the (EMERSON LOGO) and H.H.

Scott(R) trademarks

for a variety of products domestically and internationally to certain licensees.

The unaudited interim consolidated financial statements reflect all normal and recurring

adjustments that are, in the opinion of management, necessary to present a fair statement of our

consolidated financial position as of June 30, 2008 and the results of operations for the three

month periods ended June 30, 2008 and June 30, 2007.

All significant intercompany accounts and

transactions have been eliminated in consolidation.

The preparation of the unaudited interim

consolidated financial statements requires management to make estimates and assumptions that affect

the amounts reported in the financial statements and accompanying notes;

actual results could

materially differ from those estimates.

The unaudited interim consolidated financial statements

have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission

and accordingly do not include all of the disclosures normally made in our annual consolidated

financial statements.

Accordingly, these unaudited interim consolidated financial statements should

be read in conjunction with the consolidated financial statements and notes thereto for the fiscal

year ended March 31, 2008 (fiscal 2008), included in our annual report on Form 10-K, as amended,

for fiscal 2008.

Due to the seasonal nature of Emersons business, the results of operations for the three

month period ended June 30, 2008 are not necessarily indicative of the results of operations that

may be expected for any other interim period or for the full year ending March 31, 2009 (fiscal

Certain reclassifications were made to conform the prior years financial statements to the

current presentation.

Stock- Based Compensation

The Company accounts for all share based payments in accordance with Statement of Financial

Accounting Standard (FAS) No.

123R, Share-Based Payment (FAS 123R).

As a result, the Company

has applied FAS 123R to new awards and to awards modified, repurchased, or cancelled.

cost for the portion of awards for which the requisite service had not been rendered are being

recognized as the requisite service is rendered (generally over the remaining option vesting

The compensation cost for that portion of awards has been based on the grant-date fair

value of those awards as calculated for pro forma disclosures under previously issued accounting

As a result of applying the provisions of FAS 123R, the Company has recorded

compensation costs of $18,000 and $79,000 for the three months ended June 30, 2008 and June 30,

2007, respectively.

NOTE 2 COMPREHENSIVE INCOME

Comprehensive income for the three month periods ended June 30, 2008 and June 30,2007 is as

follows (in thousands):

Three months ended

Net (loss) income

Unrealized holding gains arising during period

reclassification adjustment for gains included in net income

Comprehensive (loss) income

NOTE 3 NET EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per share (in

thousands, except per share amounts):

Three months ended

Net (loss) income for basic and diluted earnings per share

Denominator for basic earnings per share weighted average shares

Effect of dilutive securities on denominator:

Options and warrants

Denominator for diluted earnings per share weighted average shares and assumed conversions

Basic and diluted (loss) earnings per share

and its subsidiaries (“Emerson” or the “Company”).

The Company designs, sources, imports and markets certain houseware and consumer electronic products, and licenses the Company’s trademarks for a variety of products.

The unaudited condensed consolidated financial statements reflect all normal and recurring adjustments that are, in the opinion of management, necessary to present a fair statement of the Company’s consolidated financial position as of December 31, 2023 and the results of operations for the three and nine month periods ended December 31, 2023 and December 31, 2022 .

In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary in order to make the financial statements not misleading have been included.

All significant intercompany accounts and transactions have been eliminated in consolidation.

The preparation of the unaudited condensed consolidated financial statements requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes;

actual results could materially differ from those estimates.

The unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the SEC and accordingly do not include all of the disclosures normally made in the Company’s annual consolidated financial statements.

Accordingly, these unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the fiscal year ended March 31, 2023 (“fiscal 2023” ), included in the Company’s Annual Report on Form 10 -K, as amended, for fiscal 2023.

The results of operations for the three and nine month periods ended December 31, 2023 are not necessarily indicative of the results of operations that may be expected for any other condensed period or for the full year ending March 31, 2024 (“fiscal 2024” ).

Whenever necessary, reclassifications are made to conform the prior year’s consolidated financial statements to the current year’s presentation.

Recently Issued Accounting Pronouncements

The following Accounting Standards Update (“ASU”) was issued by the Financial Accounting Standards Board (“FASB”) which relate to or could relate to the Company as concerns the Company’s normal ongoing operations or the industry in which the Company operates.

Accounting Standards Update 2016 - 13 “ Financial Instruments – Credit Losses ” (Issued June 2016)

In June 2016, the FASB issued ASU 2016 - 13 “Financial Instruments - Credit Losses” to introduce new guidance for the accounting for credit losses on instruments within its scope.

ASU 2016 - 13 requires among other things, the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable supportable forecasts.

Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses.

In addition, ASU 2016 - 13 amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration.

ASU 2016 - 13 is effective for fiscal years and condensed periods beginning after December 15, 2022.

The adoption of ASU 2016 - 13 had no material impacts on the Company's financial statements.

Revenue recognition :

Sales to customers and related cost of sales are primarily recognized at the point in time when control of goods transfers to the customer.

The Company recognizes revenue at the time title passes to the customer as this is when the Company satisfies its performance obligation under the contracts with its customers.

Control is considered to be transferred when the customer has the ability to direct the use of and obtain substantially all of the remaining benefits of that good.

Under the Direct Import Program, title passes in the country of origin when the goods are passed over the rail of the customer’s vessel.

Under the Domestic Program, title passes primarily at the time of shipment.

Estimates for future expected returns are based upon historical return rates and netted against revenues.

Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring goods.

Revenue is recorded net of customer discounts, promotional allowances, volume rebates and similar charges.

When the Company offers the right to return product, historical experience is utilized to establish a liability for the estimate of expected returns.

Sales and other tax amounts collected from customers for remittance to governmental authorities are excluded from revenue.

Management must make estimates of potential future product returns related to current period product revenue.

Management analyzes historical returns, current economic trends and changes in customer demand for the Company’s products when evaluating the adequacy of the reserve for sales returns.

Management judgments and estimates must be made and used in connection with establishing the sales return reserves in any accounting period.

Additional reserves may be required if actual sales returns increase above the historical return rates.

Conversely, the sales return reserve could be decreased if the actual return rates are less than the historical return rates, which were used to establish the reserve.

Sales allowances, marketing support programs, promotions and other volume-based incentives which are provided to retailers and distributors are accounted for on an accrual basis as a reduction to net revenues in the period in which the related sales are recognized in accordance with ASC topic 606, “Revenue from Contracts with Customers” (“ASC 606” ).

At the time of sale, the Company reduces recognized gross revenue by allowances to cover, in addition to estimated sales returns as required by ASC 606, (i) sales incentives offered to customers that meet the criteria for accrual and (ii) an estimated amount to recognize additional non-offered deductions it anticipates and can reasonably estimate will be taken by customers, which it does not expect to recover.

Accruals for the estimated amount of future non-offered deductions are required to be made as contra-revenue items, because that percentage of shipped revenue fails to meet the collectability criteria within ASC 606.

If additional marketing support programs, promotions and other volume-based incentives are required to promote the Company’s products subsequent to the initial sale, then additional reserves may be required and are accrued for when such support is offered.

The Company offers limited warranties for its consumer electronics, comparable to those offered to consumers by the Company’s competitors in the United States.

Such warranties typically consist of a one year period for microwaves and a 90 day period for audio products, under which the Company pays for labor and parts, or offers a new or similar unit in exchange for a non-performing unit.

In addition to the distribution of products, the Company grants licenses for the right to access the Company’s intellectual property, specifically the Company’s trademarks, for a stated term for the manufacture and/or sale of consumer electronics and other products under agreements which require payment of either (i) a non-refundable minimum guaranteed royalty or, (ii) the greater of (a) the actual royalties due (based on a contractual calculation, normally comprised of actual product sales by the licensee multiplied by a stated royalty rate, or “Sales Royalties”) or (b) a minimum guaranteed royalty amount.

In the case of the foregoing clause (i), such amounts are recognized as revenue on a straight-line basis over the term of the license agreement.

In the case of the foregoing clause (ii), Sales Royalties in excess of guaranteed minimums are accounted for as variable fees and are not recognized as revenue until the Company has ascertained that the licensee’s sales of products have exceeded the guaranteed minimum.

In effect, the Company recognizes the greater of Sales Royalties earned to date or the straight-line amount of minimum guaranteed royalties to date.

In the case where a royalty is paid to the Company in advance, the royalty payment is initially recorded as a liability and recognized as revenue as the royalties are deemed to be earned according to the principles outlined above.

NOTE 2 — EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share amounts).

Weighted average shares includes the impact of shares held in treasury.

Three Months Ended December 31,

Nine Months Ended December 31,

Net income (loss)

Denominator for basic and diluted income (loss) per share — weighted average shares

Net income (loss) per share:

Basic and diluted income (loss) per share

NOTE 3 — SHAREHOLDERS ’ EQUITY

Outstanding capital stock at June 30, 2008 consisted of common stock and Series A convertible

preferred stock.

The Series A convertible preferred stock is non-voting, has no dividend

preferences and has not been convertible since March 31, 2002;

however, it retains a liquidation

At June 30, 2008, Emerson had approximately 212,000 options outstanding with exercise prices

ranging from $1.00 to $3.23.

In September 2003, the Company publicly announced the Emerson Radio Corp.

repurchase program.

The program provides for share repurchase of up to 2,000,000 shares of

Emersons outstanding common stock.

No shares were repurchased in the three months ended June 30,

2008 and June 30, 2007.

As of June 30, 2008, 732,377 shares remain available for repurchase under

the program established in September 2003.

Repurchases of the Companys shares are subject to

certain conditions under Emersons banking facility.

Outstanding capital stock at December 31, 2023 consisted of common stock and Series A preferred stock.

The Series A preferred stock is non-voting, has no dividend preferences and has not been convertible since March 31, 2002;

however, it retains a liquidation preference.

At December 31, 2023 , the Company had no options, warrants or other potentially dilutive securities outstanding.

NOTE 4 — INVENTORY

Inventories are stated at the lower of cost or market.

Cost is determined using the first-in,

first-out method.

As of June 30, 2008 and March 31, 2008, inventories consisted of the following

(in thousands):

June 30, 2008

Inventories, which consist primarily of finished goods, are stated at the lower of cost or net realizable value.

Cost is determined using the first -in, first -out method.

As of December 31, 2023 and March 31, 2023 , inventories consisted of the following (in thousands):

December 31, 2023

March 31, 2023

Finished goods

Less inventory allowances

Net inventory

NOTE 5 — INCOME TAXES

The Company has tax net operating loss carry forwards included in net deferred tax assets that

are available to offset future taxable income and can be carried forward for 15 to 20 years.

Although realization is not assured, management believes it is more likely than not that all of the

net deferred tax assets will be realized through tax planning strategies available in future

periods and through future profitable operating results.

The amount of the deferred tax asset

considered realizable could be reduced or eliminated if certain tax planning strategies are not

successfully executed or estimates of future taxable income during the carryforward period are

If management determines that the Company would not be able to realize all or part of the

net deferred tax asset in the future, an adjustment to the deferred tax asset would be charged to

income in the period such determination was made.

As of April 1, 2007, the Company had $149,000 of unrecognized tax benefits related to state

All of the unrecognized tax benefits could impact our effective tax rate if recognized.

Estimated interest and penalties related to the underpayment of income taxes are classified as

a component of income tax expense in the Consolidated Statement of Operations.

Accrued interest and

penalties were $49,000 as of June 30, 2008 and are recognized in the balance sheet.

Our effective tax rate differs from the federal statutory rate primarily due to expenses that

are not deductible for federal income tax purposes and state income taxes.

The Company is subject to examination and assessment by tax authorities in numerous

jurisdictions.

A summary of the Companys open tax years is as follows as of June 30, 2008:

Open tax years

Based on the outcome of tax examinations or due to the expiration of statutes of limitations,

it is reasonably possible that the unrecognized tax benefits related to uncertain tax positions

taken in previously filed returns may be different from the liabilities that have been recorded for

these unrecognized tax benefits.

At December 31, 2023 , the Company had $ 14.0 million of U.S.

federal net operating loss (“NOL”) carry forwards.

These losses do not expire but are limited to utilization of 80 % of taxable income in any one year.

At December 31, 2023 , the Company had approximately $ 16.1 million of U.S.

state NOL carry forwards.

The tax benefits related to these state NOL carry forwards and future deductible temporary differences are recorded to the extent management believes it is more likely than not that such benefits will be realized.

The income of foreign subsidiaries before taxes was $ 293,000 for the three month period ended December 31, 2023 as compared to income of foreign subsidiaries before taxes of $ 247,000 for the three month period ended December 31, 2022 .

The income of foreign subsidiaries before taxes was $ 892,000 for the nine month period ended December 31, 2023 as compared to income of foreign subsidiaries before taxes of $ 489,000 for the nine month period ended December 31, 2022 .

The Company analyzed the future reasonability of recognizing its deferred tax assets at December 31, 2023 .

As a result, the Company concluded that a 100 % valuation allowance of approximately $ 4,287,000 would be recorded against the assets.

The Company recorded an income tax benefit of $ 14,000 and income tax expense of $ 74,000 , respectively, during the three and nine month periods ended December 31, 2023 .

During the three and nine month periods ended December 31, 2022 , the Company recorded income tax expense of nil and $ 10,950 , respectively, primarily resulting from state income taxes.

After the adoption of ASU 2019 - 12 “Income Taxes (Topic 740 ) – Simplifying the Accounting for Income Taxes” during fiscal 2022, these non-income based state taxes are now reported within selling, general and administrative expenses.

The Company is subject to examination and assessment by tax authorities in numerous jurisdictions.

As of December 31, 2023 , the Company’s open tax years for examination for U.S.

federal tax are 2018 - 2023, and for U.S.

states’ tax are 2017 - 2023.

Based on the outcome of tax examinations or due to the expiration of statutes of limitations, it is reasonably possible that the unrecognized tax benefits related to uncertain tax positions taken in previously filed returns may be different from the liabilities that have been recorded for these unrecognized tax benefits.

As a result, the Company may be subject to additional tax expense.

In May 2007, the FASB issued FASB Staff Position (FSP) FIN 48-1 Definition of a Settlement

in FASB Interpretation No.

48 (FSP FIN 48-1).

FSP FIN 48-1 provides guidance on how to determine

whether a tax position is effectively settled for the purpose of recognizing previously

unrecognized tax benefits.

FSP FIN 48-1 is effective retroactively to April 1, 2007.

implementation of this standard did not have a material impact on our consolidated balance sheets

or statements of operations.

As of December 31, 2023 , the Company is asserting under ASC 740 - 30 that all of the unremitted earnings of its foreign subsidiaries are indefinitely invested.

The Company evaluates this assertion each period based on a number of factors, including the operating plans, budgets, and forecasts for both the Company and its foreign subsidiaries;

the long-term and short-term financial requirements in the U.S.

and in each foreign jurisdiction;

and the tax consequences of any decision to repatriate earnings of foreign subsidiaries to the U.S.

As of December 31, 2023 and March 31, 2023 , the Company had a federal tax liability of approximately $ 1,202,000 and $ 1,603,000 , respectively, related to the repatriation of the Company’s undistributed earnings of its foreign subsidiaries as required by the Tax Cuts and Jobs Act of 2017 (the “Tax Act”).

As of December 31, 2023 and March 31, 2023, the Company’s short term portion was approximately $ 534,000 and $ 401,000 , respectively, and the long term portion was approximately $ 668,000 and $ 1,202,000 , respectively.

The liability is payable over 8 years.

The first five installments are each equal to 8 %, the sixth is equal to 15 %, the seventh is equal to 20 % and the final installment is equal to 25 % of the liability.

As of December 31, 2023 , the Company has paid six of the eight installments.

Each installment must be remitted on or before July 15 th of the year in which such installment is due.

On July 12, 2023, the Company paid its sixth installment of approximately $ 401,000 .

In addition to the federal tax liabilities recorded under the Tax Act mentioned above, the Company incurred approximately $ 74,000 of additional federal tax liabilities resulting from the net income generated during the nine months ended December 31, 2023.

Under the Tax Act, the Company was limited to 80% utilization of NOLs against taxable income in any one year.

This limitation generated the additional $ 74,000 of federal tax liabilities as of December 31, 2023.

NOTE 6 — RELATED PARTY TRANSACTIONS

From time to time, Emerson engages in business transactions with its controlling shareholder,

The Grande Holdings Limited and its subsidiaries (Grande).

Set forth below is a summary of such

transactions.

As of June 30, 2008, substantially all monies then currently due to Emerson from

Grande have been paid in full.

Grandes Purchase of Controlling Interest in Emerson.

On December 5, 2005, Grande purchased

approximately 37% of the Companys outstanding common stock (10,000,000 shares) from our former

Chairman and Chief Executive Officer, Geoffrey P.

Since its initial purchase, Grande has

increased its ownership of the Companys common stock through open market and private purchases,

including the purchase on September 21, 2007 from a former holder of more than five percent of

Emersons common stock of 1,853,882 shares.

Grande beneficially owned approximately 57.6% of the

Companys common stock on June 30, 2008.

License Agreement for Scott Brands.

In April 2008, Emerson terminated its agreement with a

consumer electronics distributor, APH (the Licensee), pursuant to which, among other things,

Emerson had agreed to grant the Licensee a license to distribute and sell LCD televisions (LCD

sets) in North America under Emersons H.H.

Scott brand name.

The licensee also had a

distributor relationship with Grande, a related party to Emerson.

Emerson was paid royalties of

$110,000 in March 2007 as a result of sales of LCD televisions bearing the H.H.

Unsecured Financial Assistance to Grande.

During the third quarter of fiscal 2007, Emerson

provided unsecured financial assistance to Capetronic Display Limited (Capetronic), Nakamichi

Corporation (Nakamichi), Akai Electric (China) Co.

(Akai), and Sansui Electric (China) Co.

(Sansui), each of which is a wholly-owned subsidiary of Grande, the manufacturer of the LCD sets,

in the form of letters of credit and loans which aggregated approximately $22.0 million at December

In reviewing the documentation for certain of the letters of credit referred to above,

Emerson determined that some of the parts for which letters of credit were opened were to be used

for the manufacture of 27 and 42 television sets to be sold to the Licensee by Akai.

no direct or indirect interest in such sales, and Capetronic paid Emerson $57,000 as a fee for

facilitating these transactions.

As a result of the transactions described in the preceding paragraph, Emerson may have been

deemed to be in breach of certain covenants contained in Emersons credit facility.

under the credit facility agreed to waive such breaches and Emerson and the lender negotiated an

amendment to the credit facility.

Emerson was required to pay $125,000 to the lender in connection

with the amendment.

Emerson charged this amount to Capetronic and $125,000 was paid to one of

Emersons foreign subsidiaries on August 14, 2007 by Capetronic.

On February 21, 2007, Capetronic, Nakamichi, Akai, and Sansui (collectively, the Borrowers),

each of which is a wholly-owned subsidiary of Grande, jointly and severally, issued a promissory

note (the Note) in favor of the Company in the principal amount of $23,501,514.

The principal

amount of the Note represented the outstanding amount owed to the Company as of February 21, 2007,

as a result of certain related party transactions entered into between the Company and the

Borrowers described above, including interest that had accrued from the date of such related party

transactions until the date of the Note.

Simultaneously with the execution of the Note, Grande

executed a guaranty (the Guaranty) in favor of the Company pursuant to which Grande guaranteed

payment of all of the obligations of the Borrowers under the Note in accordance with the terms

Interest on the unpaid principal balance of the Note accrued at a rate of 8.25% per annum,

commencing on February 21, 2007, until all obligations under the Note were paid in full, subject to

an automatic increase of 2% per annum in the event of default under the Note in accordance with the

terms thereof.

Payments of principal and interest under the Note were to be made in nine

installments from April 1, 2007 through June 3, 2007 in such amounts and on such dates as set forth

in the Note, with all amounts of interest due under the Note scheduled to be paid with the final

By June 3, 2007, all amounts due under the note were repaid.

In February 2008, Emerson

accepted a debit note from Capetronic for $4,604 resulting from a previous overpayment of the note.

Product Sourcing Transactions.

Since August 2006, Emerson has been providing to Sansui Sales

PTE Ltd (Sansui Sales) and Akai Sales PTE Ltd (Akai Sales), both of which are subsidiaries of

Grande, assistance with acquiring certain products for sale.

Emerson issues purchase orders to

third-party suppliers who manufacture these products, and Emerson issues sales invoices to Sansui

Sales and Akai Sales at gross amounts for these products.

Financing is provided by Sansui Sales

and Akai Sales customers in the form of transfer letters of credit to the suppliers, and goods are

shipped directly from the suppliers to Sansui Sales and Akai Sales customers.

Emerson recorded

income totaling $13,000 and $85,000 for providing this service in the three months ended June 30,

2008 and June 30, 2007, respectively.

On June 30, 2008 Akai Sales and Sansui Sales collectively

paid Emerson the outstanding receivable of $134,000 as of March 31, 2008 as well as $8,000 on

current activity.

Sansui Sales and Akai Sales collectively owe Emerson $5,000 at June 30, 2008

related to current activity.

Sales of goods.

In addition to the product sourcing transactions described in the preceding

paragraph, Emerson has also purchased products on behalf of Sansui Sales and Akai Sales from

third-party suppliers and sold these goods to Sansui Sales and Akai Sales.

These transactions are

similar to the transactions described in the preceding paragraph;

however, instead of utilizing

transfer letters of credit provided by Sansui Sales and Akai Sales customers, Emerson utilizes

its own cash to pay Sansui Sales and Akai Sales suppliers.

Emerson invoices Sansui Sales and Akai

Sales an amount that is marked up between two and three percent from the cost of the product.

Sales deducted $9,000 for storage charges from its June 30, 2008 settlement payment to Emerson,

which was deemed to be in error by Emerson, which resulted in an outstanding balance owed to

Emerson of $9,000 at June 30, 2008.

Emerson has outstanding liabilities with suppliers of product

invoiced to Sansui Sales and Akai Sales totaling $3,000 at June 30, 2008.

Leases and Other Real Estate Transactions.

Effective January 1, 2006, we entered into a lease

for office space in Hong Kong with Grande and an agreement for services in connection with this

office space rental from Grande, which was extended through December 31, 2008, and which will

expire at that date unless terminated earlier by either party upon three months prior written

notice of termination by either party.

Under a new agreement commencing March 1, 2008, the office

space rented was increased from 7,810 square feet to 18,476 square feet.

Rent expense with Grande

was $119,000 and $35,000 for the three months ended June 30, 2008 and June 30, 2007, respectively.

The amount of expense incurred with Grande for all other services in connection with this office

space rental was approximately $20,000 and $7,000 for the fiscal 2009 and fiscal 2008,

respectively.

Emerson owed Grande $11,000 related to this activity at June 30, 2008.

Emerson utilizes the services of Grande employees for certain administrative and executive

Grande pays Emersons quality assurance personnel in RMB in China on Emersons behalf

for which Emerson subsequently pays a reimbursement to Grande.

Payroll and travel expenses,

including utilization of Grande employees as well as payroll and travel expenses paid on Emersons

behalf and reimbursed to Grande, were $91,000 for each of the three months ended June 30, 2008 and

June 30, 2007, respectively.

Emerson has a balance paid in advance to Grande of $7,000 related to

this activity as of June 30, 2008.

From May to October 2007, Emerson occupied office space in Shenzhen, China under a lease

agreement with Akai AV Multimedia (Zhongshan) Co Ltd, an affiliate of Grande.

Rent expense was

$28,000 and other expenses in connection with this agreement were $15,000 in the three months ended

June 30, 2007.

The agreement was not renewed.

In May 2007 Emerson paid a $10,000 commission to Vigers Hong Kong Ltd, a property agent and a

subsidiary of Grande, related to the sale of a building owned by Emerson to an unaffiliated buyer.

Toy Musical Instruments.

In May 2007, Emerson entered into an agreement with Goldmen

Electronic Co.

(Goldmen), pursuant to which we agreed to pay $1,682,220 in exchange for

Goldmens manufacture and delivery to us of musical instruments in order for us to meet our

delivery requirements of these instruments in the first week of September 2007.

In July 2007, we

learned that Goldmen had filed for bankruptcy and was unable to manufacture the musical instruments

we had ordered.

Promptly after we learned of Goldmens bankruptcy, Capetronic agreed to manufacture

the musical instruments on substantially the same terms and conditions, including the price, as

Goldmen had agreed to manufacture them.

Accordingly, on July 12, 2007, we paid Tomei Shoji Limited,

an affiliate of Grande, $125,000 to acquire from Goldmen and deliver to Capetronic the molds and

equipment necessary for Capetronic to manufacture the musical instruments.

In July, 2007, Emerson

made two upfront payments to Capetronic totaling $546,000.

On July 20, 2007, Capetronic advised us

that it was unable to manufacture the musical instruments for us because it did not have the

requisite governmental licenses to do so.

In June 2008, Capetronic repaid the $546,000 advance it

received from Emerson in July 2007.

Capetronic currently physically possesses our musical

instrument molds, which we wrote off in fiscal 2008.

Freight Forwarding Services.

In June 2007, Emerson and Capetronic signed an agreement for

Emerson to provide freight forwarding services to Capetronic.

Under this agreement, Emerson will

pay the costs of importation of Capetronics inventory on Capetronics behalf, and to arrange for

the inventory to be received at a port of entry, cleared through the United States Customs Service

using Emersons regularly engaged broker, and transfer the inventory to a common carrier as

arranged by Capetronics customer.

If Capetronics customer failed to make such arrangements with a

common carrier, Emerson agreed to transfer the inventory to Emersons warehouse for storage or make

other arrangements with a public warehouse.

Following the transfer of Capetronics inventory,

Emerson is required to provide Next Day delivery of all importation documents and bills of lading

to Capetronics customer.

Capetronic agreed to reimburse Emerson for all costs incurred by Emerson

in connection with the activity just described within thirty days of demand by Emerson, after which

interest accrues.

As compensation, Capetronic agreed to pay Emerson a service fee of 12% of the

importation costs.

Emerson billed Capetronic for the reimbursement of importation costs totaling

$246,000 and a commission of $29,000.

Capetronic paid Emerson $275,000 on November 14, 2007.

Between August and December 2007, Emerson paid invoices and incurred charges for goods

and services relating to the Hong Kong Electronics Fair of $153,069.

Portions of these charges

totaling $87,353, have been allocated and invoiced to affiliates of Grande in proportion to their

respective share of space occupied and services rendered during the Electronics Fair as follows:

Nakamichi Corporation Ltd.

$17,143, Akai Sales PTE Ltd $44,495 and Sansui Sales PTE Ltd $25,715.

Akai Sales and Sansui Sales collectively owed Emerson $70,210 in connection with the Hong Kong

Electronics Fair as of March 31, 2008, for which they collectively paid $63,774 to Emerson on June

Akai Sales owes Emerson $6,436 for this activity as of June 30, 2008.

Also related to the annual Hong Kong Electronics Fairs, Capetronic incurred charges and paid

invoices on behalf of Emerson in the amount of $76,000 for which Emerson reimbursed Capetronic

$48,000 in March 2008.

Emerson paid Capetronic the remaining balance of $28,000 for these trade

shows on June 30, 2008.

In June 2007 Emerson paid a one-time sales commission in the amount of $14,000 to an Executive

Director of Grande Holdings, who is also a Director of Emerson.

The commission was 50% of the net

margin on a sale by Emerson to an unaffiliated customer.

In January 2008, Grande transferred computer, office equipment, and furniture to Emerson for

which Emerson paid $12,000, which represented the carrying amount of the assets on the books of

Grande at the time of sale.

In June 2008, Emerson paid Capetronic $160,000 for reimbursement of payroll and travel

expenses paid on behalf of Emerson from October 2007 through May 2008.

Also included in the payment

was a reimbursement for expenses Capetronic paid on behalf of Emerson for a trade show.

NOTE 8 BORROWINGS

Short-term Borrowings

At June 30, 2008 and March 31, 2008 there were no short-term borrowings outstanding.

Long-term Borrowings

As of June 30, 2008 and March 31, 2008, borrowings under long-term facilities consisted of the

June 30, 2008

March 31, 2008

From time to time, Emerson engages in business transactions with its controlling shareholder, Nimble Holdings Company Limited (“Nimble”), formerly known as The Grande Holdings Limited (“Grande”), and one or more of Nimble’s direct and indirect subsidiaries, or with entities related to the Company’s Chief Executive Officer.

Set forth below is a summary of such transactions.

Controlling Shareholder

S&T International Distribution Limited (“S&T”), which is a wholly owned subsidiary of Grande N.A.K.S.

Ltd., which is a wholly owned subsidiary of Nimble, collectively have, based on a Schedule 13D/A filed with the SEC on February 15, 2019, the shared power to vote and direct the disposition of 15,243,283 shares, or approximately 72.4 %, of the Company’s outstanding common stock as of December 31, 2023 .

Accordingly, the Company is a “controlled company” as defined in Section 801 (a) of the NYSE American Company Guide.

Related Party Transactions

Charges of rental and utility fees on office space in Hong Kong

During the three and nine month periods ended December 31, 2023 , the Company was billed approximately $ 40,000 and $ 119,000 , respectively, for rental and utility fees from Vigers Appraisal and Consulting Ltd (“VACL”), which is a company related to the Company’s Chairman of the Board of Directors.

As of December 31, 2023 the Company owed approximately $ 1,000 to VACL related to these charges.

NOTE 7 — SHORT TERM DEPOSITS AND INVESTMENTS

As of December 31, 2023 and March 31, 2023 , the Company held $ 2.7 million and $ 23.1 million, respectively, in term deposits.

Such term deposits had maturity dates of 90 days or less and, as a result, were classified as cash equivalents.

As of December 31, 2023 and March 31, 2023 , the Company held $ 18.5 million and nil, respectively, in short term investments which had maturity dates greater than 90 days.

NOTE 8 — CONCENTRATION RISK

Customer Concentration

For the three month period ended December 31, 2023 , the Company’s two largest customers accounted for approximately 84 % of the Company’s net revenues, of which Walmart accounted for approximately 65 % and Amazon accounted for approximately 19 %.

No other customer accounted for greater than 10% of the Company's net revenues during the period.

For the nine month period ended December 31, 2023 , the Company’s three largest customers accounted for approximately 89 % of the Company’s net revenues, of which Walmart accounted for approximately 58 %, Amazon accounted for approximately 21 % and Fred Meyer accounted for approximately 10 %.

No other customer accounted for greater than 10% of the Company's net revenues during the period.

For the three month period ended December 31, 2022 , the Company’s two largest customers accounted for approximately 84 % of the Company’s net revenues, of which Walmart accounted for approximately 50 % and Amazon accounted for approximately 34 %.

No other customer accounted for greater than 10% of the Company's net revenues during the period.

For the nine month period ended December 31, 2022 , the Company’s three largest customers accounted for approximately 74 % of the Company’s net revenues, of which Walmart accounted for approximately 42 %, Amazon accounted for approximately 21 % and Fred Meyer accounted for approximately 11 %.

No other customer accounted for greater than 10% of the Company's net revenues during the period.

A significant decline in net sales to any of the Company’s key customers would have a material adverse effect on the Company’s business, financial condition and results of operation.

Product Concentration

For the three and nine month periods ended December 31, 2023 , the Company’s gross product sales included microwave ovens, which generated approximately 22 % and 28 %, respectively, of the Company’s gross product sales and audio products, which generated approximately 76 % and 70 %, respectively, of the Company’s gross product sales.

No other products accounted for greater than 10% of the Company's gross product sales during the period.

For the three and nine month periods ended December 31, 2022 , the Company’s gross product sales included microwave ovens, which generated approximately 9 % and 24 %, respectively, of the Company’s gross product sales and audio products, which generated approximately 91 % and 75 %, respectively, of the Company’s gross product sales.

No other products accounted for greater than 10% of the Company's gross product sales during the period.

Concentrations of Credit Risk

As a percentage of the Company’s total trade accounts receivable, net of specific reserves, the Company’s top three customers accounted for approximately 48 %, 20 % and 15 %, respectively, as of December 31, 2023 .

No other customers accounted for greater than 10% of the Company's total trade accounts receivable, net of specific reserves, as of such date.

As a percentage of the Company’s total trade accounts receivable, net of specific reserves, the Company’s top three customers accounted for approximately 43 %, 35 % and 11 %, respectively, as of March 31, 2023 .

No other customers accounted for greater than 10% of the Company's total trade accounts receivable, net of specific reserves, as of such date.

The Company periodically performs credit evaluations of its customers but generally does not require collateral, and the Company provides for any anticipated credit losses in the financial statements based upon management’s estimates and ongoing reviews of recorded allowances.

Due to the high concentration of the Company’s net trade accounts receivables among just two customers, any significant failure by one of these customers to pay the Company the amounts owing against these receivables would result in a material adverse effect on the Company’s business, financial condition and results of operations.

The Company maintains its cash accounts with major U.S.

and foreign financial institutions.

The Company’s cash and restricted cash balances on deposit in the U.S.

as of December 31, 2023 and March 31, 2023 were insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $ 250,000 per qualifying bank account in accordance with FDIC rules.

The Company’s cash, cash equivalents and restricted cash balances in excess of these FDIC-insured limits were approximately $ 3.4 million and approximately $ 25.0 million at December 31, 2023 and March 31, 2023 , respectively.

Supplier Concentration

During the three month period ended December 31, 2023 , the Company procured approximately 86 % of its products for resale from its three largest factory suppliers, of which approximately 37 % was supplied by its largest supplier and approximately 28 % and 21 %, respectively, by the other two suppliers.

During the three month period ended December 31, 2022 , the Company procured approximately 95 % of its products for resale from its two largest factory suppliers, of which approximately 74 % was supplied by its largest supplier and approximately 21 % by another supplier.

No other suppliers accounted for greater than 10% for either three month periods ended December 31, 2023 or December 31, 2022 .

During the nine month period ended December 31, 2023 , the Company procured approximately 93 % of its products for resale from its four largest factory suppliers, of which approximately 29 % was supplied by its largest supplier and approximately 26 %, 23 % and 15 %, respectively, by the other three suppliers.

During the nine month period ended December 31, 2022 , the Company procured approximately 99 % of its products for resale from its two largest factory suppliers, of which approximately 71 % was supplied by its largest supplier and approximately 28 % by another supplier.

No other suppliers accounted for greater than 10% for either nine month periods ended December 31, 2023 or December 31, 2022 .

NOTE 9 — LEASES

The Company leases office space in the U.S.

and in Hong Kong as well as a copier in the U.S.

These leases have remaining non-cancellable lease terms of six to sixty months.

The Company has elected not to separate lease and non-lease components for all leased assets.

The Company did not identify any events or conditions during the quarter ended December 31, 2023 to indicate that a reassessment or re-measurement of the Company’s existing leases was required.

As of December 31, 2023 , the Company’s current operating lease liabilities and finance lease liabilities were $ 128,000 and $ 1,000 , respectively and its non-current operating lease liabili ties and finance lease liabilities were $ 208,000 and nil, respectively.

The Company’s operating and finance lease right-of-use asset balances are presented in non-current assets.

The net balance of the Company’s operating and finance lease right-of-use assets as of December 31, 2023 was $ 327,000 and $ 1,000 , r espectively.

As disclosed in "Note 3 - Related Party Transactions", the Company's Hong Kong office space is being leased from Vigers Appraisal and Consulting Ltd (“VACL”), which is a company related to the Company’s Chairman of the Board.

As of December 31, 2023, the current operating liability of this lease is approximately $ 98,000 and its non-current liability is nil.

Its right-of-use asset value is approximately $ 97,000 , as of December 31, 2023.

In January 2023, the Company relocated its corporate headquarters to a temporary office space, while its new landlord built out the agreed-upon space.

The Company was not obligated to pay rent while it resided in the temporary office space.

The Company took possession of the completed space on July 1, 2023, which became the commencement date of a 66 month lease.

The right-of-use asset value of this operating lease is approximately $ 248,000 .

The components of lease costs, which were included in operating expenses in the Company’s condensed consolidated statements of operations, were as follows:

Three Months Ended December 31,

Nine Months Ended December 31,

(in thousands)

Capitalized lease obligations and other

Less current maturities

Long term debt and notes payable

Credit Facility On December 23, 2005, Emerson entered into a $45.0 million Revolving Credit

Agreement with Wachovia Bank.

The loan agreement provides for a $45.0 million revolving line of

credit for revolving loans subject to individual maximums which, in the aggregate, are not to

exceed the lesser of $45.0 million or a Borrowing Base as defined in the loan agreement.

Borrowing Base amount is established by specified percentages of eligible accounts receivables and

inventories and bears interest ranging from Prime (5.00% as of June 30, 2008) plus 0.00% to 0.50%

or, at Emersons election, the London Interbank Offered Rate (LIBOR which was 2.47% as of June

30, 2008) plus 1.25% to 2.25% depending on excess availability.

Pursuant to the Revolving Credit

Agreement, Emerson is restricted from, among other things, paying certain cash dividends, and

entering into certain transactions without the lenders prior consent and is subject to certain

leverage financial covenants.

Amounts outstanding under the loan agreement are secured by

substantially all of Emersons tangible assets.

During the quarter ended September 30, 2006, Emerson amended its Revolving Credit Agreement

with Wachovia Bank, National Association to finance its working capital requirements through

October 31, 2006, primarily to ensure funding of the promotional item purchases totaling over $30.0

Under this amendment, Emersons line of credit was increased to $53 million from $45

million for this period, and its revolver commitments, letters of credit and inventory borrowing

bases were increased.

Emerson did not utilize the additional available funds during the amendment

period, and this amendment expired at October 31, 2006.

At June 30, 2008, there were no borrowings outstanding under the facility.

As of June 30, 2008, the carrying value of this credit facility approximated fair value.

(in thousands)

Operating lease cost

$ 52 $ 60 $ 141 $ 185

The supplemental cash flow information related to leases are as follows:

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows from operating leases

43 62 123 187

Right-of-use assets obtained in exchange for lease obligations:

Operating leases

Finance leases

Information relating to the lease term and discount rate are as follows:

Weighted average remaining lease term (in months)

As of December 31, 2023

As of December 31, 2022

Operating leases

Finance leases

Weighted average discount rate

Operating leases

9.58 % 7.50 %

Finance leases

7.50 % 7.50 %

As of December 31, 2023 the maturities of lease liabilities were as follows:

(in thousands)

Operating Leases

Finance Leases

Total lease payments

Imputed interest

NOTE 10 — GOVERNMENTAL ASSISTANCE PROGRAMS

During the three month periods ended December 31, 2023 and December 31, 2022 , the Company’s Hong Kong subsidiary recorded income of nil and $ 4,000 , respectively, under the governmental program called the Employment Support Scheme (“ESS”).

During the nine month periods ended December 31, 2023 and December 31, 2022 , the Company’s Hong Kong subsidiary recorded income of nil and $ 34,000 , respectively, under the ESS program.

The proceeds were required to be used for payroll expenses and the Company was subject to government-appointed random reviews to verify the information submitted by the applicant.

The income realized from the amount granted under the ESS program is presented as Other Income under the description called “Income from governmental assistance programs” in the Consolidated Statements of Operations.

NOTE 11 — LEGAL PROCEEDINGS

In late July 2008, the Court of Chancery of the State of Delaware (the Court) entered an

Order (the Order) consolidating for all purposes two previously disclosed derivative actions (the

Berkowitz and Pinchuk lawsuits) filed on our behalf against certain of our current and former

The complaints in each of such actions alleged that the named defendants violated their

fiduciary duties to us in connection with a number of previously disclosed related party

transactions with affiliates of Grande Holdings, our controlling shareholder.

The Order also

organizes counsel for the plaintiffs in the consolidated action, relieves the defendants of their

obligation to answer the Berkowitz and Pinchuk complaints and contemplates the filing of a

consolidated complaint as soon as practicable.

The recovery, if any, in the consolidated action,

will inure to our benefit.

Except for the litigation matters described above, we are not currently a party to any legal

proceedings other than litigation matters, in most cases involving ordinary and routine claims

incidental to our business.

We cannot estimate with certainty our ultimate legal and financial

liability with respect to such pending litigation matters.

However, we believe, based on our

examination of such matters, that our ultimate liability will not have a material adverse effect on

our financial position, results of operations or cash flows.

NOTE 10 FINANCIAL INSTRUMENTS

In March 2007, the Company entered into fixed period foreign exchange forward contracts

(between the US and Hong Kong dollar), based on economic and market conditions and solely for the

purpose of speculative trading, not for the purpose of hedging other business opportunities.

contract terms are for fixed periods and at March 31, 2008, the Companys foreign exchange forward

contracts had expiration dates that ranged from one to two months, with notional amounts of $10

At each balance sheet date the Company accounts for its foreign exchange forward contracts as

a current asset with corresponding realized or unrealized gains and losses included in the income

Realized gains of $132,647 have been recorded as non-operating income in the three

months ended June 30, 2008.

Realized gains of $13,835 were recorded in the three months ended June

At June 30, 2008, all foreign exchange forward contracts have expired and the Company has not

entered into any new contracts.

NOTE 11 MARKETABLE SECURITIES:

As of June 30, 2008, the Company has $12.2 million invested in trading securities, consisting

entirely of auction rate securities (ARS).

These securities have long-term nominal maturities for

which interest rates are reset through a Dutch auction process at pre-determined calendar

a process which had historically provided a liquid market for these securities.

continues to be paid by the issuers of these securities even through the continued liquidity issues

experienced in the global credit and capital markets despite these ARS having multiple failed

Based on an independent valuation and its internal analysis, the Company concluded that

these securities had experienced an other-than-temporary decline in fair value and recorded an

impairment charge of $1.95 million in fiscal 2008.

These ARS have AAA/Aaa credit ratings as of June

30, 2008, and have been classified as long-term investments in the Companys Consolidated Balance

Sheets as a consequence of their uncertain liquidity.

The Company adopted Statement of Financial Accounting Standards (SFAS) No.

157, Accounting

for Fair Value Measurements (SFAS 157), on April 1, 2008.

SFAS 157 defines fair value as 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 (an exit price).

outlines a valuation framework and creates a fair value hierarchy in order to increase the

consistency and comparability of fair value measurements and the related disclosures.

Financial assets and liabilities are measured using inputs from the three levels of the fair

value hierarchy.

The three levels are as follows:

Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities

that the Company has the ability to access at the measurement date.

Level 2 inputs are other than quoted prices included within Level 1 that are observable for the

asset or liability, either directly or indirectly.

Level 2 inputs include quoted prices for

similar assets and liabilities in active markets, quoted prices for identical or similar assets

or liabilities that are not active, inputs other than quoted prices that are observable for the

asset or liability (i.e., interest rates, yield curves, etc.), and inputs that are derived

principally from or corroborated by observable market data by correlation or other means (market

corroborated inputs).

Level 3 inputs are unobservable inputs that reflect our own assumptions about the assumptions

that market participants would use in pricing the asset or liability.

The Company would develop

these inputs based on the best information available, including its own data.

In accordance with the fair value hierarchy described above, the following table shows the

fair value of our securities available for sale that are required to be measured at fair value as

of June 30, 2008:

Fair Value Measurement at Reporting Date Using:

Significant Unobservable Inputs (Level 3)

June 30, 2008

Investments in marketable securities (classified as trading securities)

Investments in marketable securities

The following table summarizes the changes in fair value for our Level 3 assets:

Measurement of

Asset using Level 3

Trading Securities

Principal amount invested

Total gains (losses) (realized or unrealized):

Unrealized included in earnings at March 31, 2008

Balance at March 31, 2008

Total gains (losses) (realized or unrealized):

Realized included in earnings at June 30, 2008

Unrealized included in earnings at June 30, 2008

Redemptions of principal

Balance at June 30, 2008

On April 19, 2022, the U.S.

District Court for the District of Delaware (the "District Court") granted judgment in favor of the Company in its trademark infringement lawsuit against air conditioning and heating products provider Emerson Quiet Kool and wholesaler Home Easy (the “Defendants”).

Among other things, the District Court's order included an injunction prohibiting Defendants’ distribution, manufacturing, and sales of EMERSON QUIET KOOL branded products or use of that trademark and directed the U.S.

Patent and Trademark Office to cancel Defendants’ trademark registration for the EMERSON QUIET KOOL trademark and prohibited Defendants from attempting to register that mark or any other confusingly similar mark in the future.

The judgment also awards $ 6.5 million to the Company.

The Defendants, through a third party, made certain payments to the Company, including certain advances towards a portion of their liability.

Those amounts were previously reflected as advanced deposits in the Consolidated Balance Sheets.

The aggregate amount of the payments is $ 4.1 million, which has been reduced by approximately $ 784,000 for legal fees incurred in fiscal 2023 and approximately $ 216,000 for legal fees incurred in fiscal 2024, in pursuit of the advanced deposits.

Separately, on July 11, 2023, the U.S.

Court of Appeals for the Third Circuit affirmed the District Court's judgment against the Defendants.

On September 29, 2023, the District Court granted the Company’s request for final judgement including approximately $ 3.16 million in legal fees and $ 700,000 in enhanced damages, along with the prospect of additional damages due to Defendants’ alleged contempt of court.

The Company is pursuing all available remedies against the Defendants and those acting in concert with them.

There is no guarantee that the Company will be able to collect the entire judgment or that any negotiated resolution regarding these matters will ever be agreed among the parties or, if agreed, how soon the parties might be able to do so.

Due to the legal judgement having been affirmed as stated above, the Company released the balance of the advanced deposits of approximately $ 3,100,000 , to other income during the quarter ended September 30, 2023.

NOTE 12 — SUBSEQUENT EVENTS

As of the filing date of this Form 10 -Q/A, there were no subsequent events to disclose.

Management ’ s Discussion and Analysis of Results of Operations and Financial Condition.

The following discussion of our operations and financial condition should be read in

conjunction with the Financial Statements and notes thereto included elsewhere in this Quarterly

In the following discussions, most percentages and dollar amounts have been rounded to aid

presentation.

The following discussion of the Company’s operations and financial condition should be read in conjunction with the Financial Statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q.

In the following discussions, most percentages and dollar amounts have been rounded to aid presentation.

Accordingly, all amounts are approximations.

Forward-Looking Information

This report contains forward looking statements within the meaning of Section 27A of the

Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as

Forward-looking statements include statements with respect to Emersons beliefs, plans,

objectives, goals, expectations, anticipations, assumptions, estimates, intentions, and future

performance, and involve known and unknown risks, uncertainties and other factors, which may be

beyond Emersons control, and which may cause Emersons actual results, performance or achievements

to be materially different from future results, performance or achievements expressed or implied by

such forward-looking statements.

All statements other than statements of historical fact are statements that could be

forward-looking statements.

You can identify these forward-looking statements through Emersons use

of words such as may, will, can, anticipate, assume, should, indicate, would,

believe, contemplate, expect, seek, estimate, continue, plan, project, predict,

could, intend, target, potential, and other similar words and expressions of the future.

These forward-looking statements may not be realized due to a variety of factors, including,

without limitation:

the loss of any of our key customers or reduction in the purchase of our products by any

such customers;

our inability to maintain effective internal controls or the failure by our personnel to

comply with such internal controls;

the failure to maintain our relationships with our licensees and distributors or the

failure to obtain new licensees or distribution relationships on favorable terms;

our inability to anticipate market trends, enhance existing products or achieve market

acceptance of new products;

our dependence on a limited number of suppliers for our components and raw materials;

our dependence on third parties to manufacture and deliver our products;

the seasonality of our business, as well as changes in consumer spending and economic

the failure of third party sales representatives to adequately promote, market and sell

our products;

our inability to protect our intellectual property;

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Forward-looking statements include statements with respect to the Company’s beliefs, plans, objectives, goals, expectations, anticipations, assumptions, estimates, intentions, and future performance, and involve known and unknown risks, uncertainties and other factors, which may be beyond the Company’s control, and which may cause the Company’s actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements.

All statements other than statements of historical fact are statements that could be forward-looking statements.

The reader can identify these forward-looking statements through the Company’s use of words such as “may,” “will,” “can,” “anticipate,” “assume,” “should,” “indicate,” “would,” “believe,” “contemplate,” “expect,” “seek,” “estimate,” “continue,” “plan,” “project,” “predict,” “could,” “intend,” “target,” “potential,” and other similar words and expressions of the future.

These forward-looking statements may not be realized due to a variety of factors, including, without limitation:

the Company’s ability to generate sufficient revenue to achieve and maintain profitability;

the Company’s ability to obtain new customers and retain key existing customers, including the Company’s ability to maintain purchase volumes of the Company’s products by its key customers;

the Company’s ability to obtain new licensees and distribution relationships and maintain relationships with its existing licensees and distributors;

the Company’s ability to resist price increases from its suppliers or pass through such increases to its customers;

changes in consumer spending for retail products, such as the Company’s products, and in consumer practices, including sales over the Internet;

the Company’s ability to maintain effective internal controls or compliance by its personnel with suc h internal controls;

the Company’s ability to successfully manage its operating cash flows to fund its operations;

the Company’s ability to anticipate market trends, enhance existing products or achieve market acceptance of new products;

the Company’s ability to accurately forecast consumer demand and adequately manage inventory;

the Company’s dependence on a limited number of suppliers for its components a nd raw materials;

the Company’s dependence on third party manufacturers to manufacture and deliver its products;

increases in shipping costs for the Company’s products or other service issues with the Company’s third-party shippers;

the Company’s dependence on a third party logistics provider for the storage and distribution of its products in the United States;

the ability of third party sales representatives to adequately promote, market and sell the Company’s products;

the Company’s ability to maintain, protect and enhance its intellectual property;

the effects of competition;

changes in foreign laws and regulations and changes in the political and economic

conditions in the foreign countries in which we operate;

conflicts of interest that exist based on our relationship with Grande;

the outcome of the Audit Committees review of our related party transactions and

internal controls;

the Company’s ability to distribute its products in a timely fashion, including the impact of labor disputes, public health threats and social unrest, if any;

evolving cybersecurity threats to the Company’s information technology systems or those of its customers or suppliers;

changes in foreign laws and regulations and changes in the political and economic conditions in the foreign countries in which the Company operates;

changes in accounting policies, rules and practices;

the other factors listed under Risk Factors in our Form 10-K, as amended, for the

fiscal year ended March 31, 2008 and other filings with the Securities and Exchange

Commission (the SEC).

All forward-looking statements are expressly qualified in their entirety by this cautionary

You are cautioned not to place undue reliance on any forward-looking statements, which

speak only as of the date of this report or the date of the document incorporated by reference into

We have no obligation, and expressly disclaim any obligation, to update, revise or

correct any of the forward-looking statements, whether as a result of new information, future

events or otherwise.

We have expressed our expectations, beliefs and projections in good faith and

we believe they have a reasonable basis.

However, we cannot assure you that our expectations,

beliefs or projections will result or be achieved or accomplished.

Company Filings

We make available through our internet website free of charge our annual report on Form 10-K,

quarterly reports on Form 10-Q, current reports on Form 8-K, amendments to such reports and other

filings made by us with the SEC, as soon as practicable after we electronically file such reports

and filings with the SEC.

Our website address is www.emersonradio.com .

The information

contained in this website is not incorporated by reference in this report.

changes in tax rules and regulations or interpretations;

changes in U.S.

and foreign trade regulations and tariffs, including potential increases of tariffs on goods imported into the U.S., and uncertainty regarding the same;

limited access to financing or increased cost of financing;

the effects of currency fluctuations between the U.S.

dollar and Chinese renminbi and increases in costs of production in China;

the other factors listed under “Risk Factors” in the Company’s Annual Report on Form 10-K, as amended, for the fiscal year ended March 31, 2023 and other filings with the SEC.

All forward-looking statements are expressly qualified in their entirety by this cautionary notice.

The reader is cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date of this report or the date of the document incorporated by reference into this report.

The Company has no obligation, and expressly disclaims any obligation, to update, revise or correct any of the forward-looking statements, whether as a result of new information, future events or otherwise.

The Company has expressed its expectations, beliefs and projections in good faith and it believes it has a reasonable basis for them.

However, the Company cannot assure the reader that its expectations, beliefs or projections will result or be achieved or accomplished.

Results of Operations

We operate in one segment, the consumer electronics segment, as presented in the following

Managements Discussion and Analysis.

The following table summarizes certain financial information for the three month periods ended

June 30, 2008 (fiscal 2009) and June 30, 2007 (fiscal 2008) (in thousands):

Three Months Ended

The following table summarizes certain financial information for the three and nine month periods ended December 31, 2023 (fiscal 2024) and December 31, 2022 (fiscal 2023) (in thousands):

Three Months Ended December 31,

Nine Months Ended December 31,

Net product sales

Licensing revenue

Royalty income

Cost of sales

Other operating costs and expenses

Selling, general and administrative costs

Non-cash compensation costs

Operating income (loss)

Selling, general and administrative expenses

Operating loss

Settlement of litigation

Interest income, net

Unrealized holding gains on trading securities

Income from governmental assistance programs

Income (loss) before income taxes

Provision for income taxes

Minority interest in loss of consolidated subsidiary

Net income (loss)

Net Revenues Net revenues for the first quarter of fiscal 2009 were $44.2 million as compared to

$52.7 million for the first quarter of fiscal 2008, a decrease of $8.5 million or 16.1%.

revenues are comprised of Emerson(R) branded product sales, themed product sales and licensing

Emerson(R) branded product sales are earned from the sale of products bearing the

Emerson(R) or HH Scott(R) brand name;

themed product sales represent products sold bearing a

certain theme or character;

and licensing revenues are derived from licensing the Emerson(R) and HH

Scott(R) brand names to licensees for a fee.

The major elements which contributed to the overall

decrease in net revenues were as follows:

Home appliances product sales increased $4.0 million, or 15.4%, to $30.0 million in the

first quarter of fiscal 2009 as compared to $26.0 million in the first quarter of fiscal

Home appliance product sales consist of microwave ovens, wine coolers, small

refrigerators, and toaster ovens;

Emerson(R) branded products sales, excluding home appliances products, were $11.4 million

in the first quarter of fiscal 2009 as compared to $22.7 million in the first quarter of

fiscal 2008, a decrease of $11.3 million, or 49.8%, primarily resulting from decreased sales

volumes in several audio product lines and the Ipod(R) compatible product category;

Themed product sales were $600,000 in the first quarter of fiscal 2009 compared to $2.2

million in the first quarter of fiscal 2008, a decrease of $1.6 million, or 72.7%, primarily

resulting from the discontinuance of Nickelodeon(R) themed products and a shift in the sales

volume and product mix of Mattel(R) themed products;

Licensing revenues increased approximately $54,000, or 3.2%, to $1.8 million in the first

quarter of fiscal 2009 as compared to $1.7 million in the first quarter of fiscal 2008,

primarily due to our video licensing arrangements;

Sales of a joint venture which was formed in the fourth quarter of fiscal 2008 for the

primary purpose of manufacturing, selling, distributing, and/or licensing audio and video

equipment for the home and/or office had sales of $421,000 in the first quarter of fiscal

In the three month periods ended June 30, 2008 and June 30, 2007, we charged fees of

$13,000 and $85,000, respectively, to Sansui Sales PTE, Ltd and Akai Sales PTE, Ltd, both of

which are related parties to us, for assistance in procuring their product from third-party

See Note 7 Related Party Transactions.

Cost of Sales In absolute terms, cost of sales decreased $7.2 million, or 15.9%, to $38.0 million

in the first quarter of fiscal 2009 as compared to $45.2 million in the first quarter of fiscal

Cost of sales, as a percentage of net revenues, was 86.0% and 85.9% in the first quarters of

fiscal 2009 and fiscal 2008, respectively.

Cost of sales as a percentage of sales revenues less

license revenues increased to 89.7% in the first quarter of fiscal 2009 from 88.8% in the first

quarter of fiscal 2008.

The decrease in cost of sales in absolute terms for the first quarter of

fiscal 2009 as compared to the first quarter of fiscal 2008 was primarily related to the decrease

in sales volume, warehousing costs, and royalty expense offset by an increase in costs of personnel

in Asia involved in quality assurance in production of our product, inventory overhead, and

inventory reserves.

The increase in cost of sales as a percentage of net revenues for the first

quarter of fiscal 2009 as compared to fiscal 2008 resulted from lower margins in themed product

categories as well as an increase in quality assurance costs.

In addition, a decrease in inventory

reserves in the first quarter of fiscal 2008 resulted primarily from the reduction of inventory

levels of a discontinued themed-product line and returned, substandard goods which are not sold to

retailers, which had been fully reserved in the preceding quarter.

Gross profit margins continue to be subject to competitive pressures arising from pricing

strategies associated with the categories of the consumer electronics market in which we compete.

Our products are generally placed in the low-to-medium priced category of the market, which has a

tendency to be highly competitive.

Other Operating Costs and Expenses As a percentage of net revenues, other operating costs and

expenses were 2.6% in the first quarter of fiscal 2009 and 3.4% in the first quarter of fiscal

In absolute terms, other operating costs and expenses decreased $665,000, or 37.0%, to $1.1

million for the first quarter of fiscal 2009 as compared to $1.8 million in the first quarter of

fiscal 2008 as a result of decreased service costs.

Selling, General and Administrative Expenses (S,G&A) S,G&A, as a percentage of net revenues,

were 11.2% in the first quarter of fiscal 2009 as compared to 9.4% in the first quarter of fiscal

S,G&A, in absolute terms, decreased $150,000, or 3.0%, to $4.8 million for the first quarter

of fiscal 2009 as compared to $5.0 million for the first quarter of fiscal 2008.

The decrease in

S,G&A in absolute terms between the first quarter of fiscal 2009 and first quarter of fiscal 2008

was primarily due to a decrease in variable selling expenses of $320,000 and advertising expenses

of $228,000 offset by an increase in rent expense of $165,000, legal fees of $132,000, employment

agency fees of $67,000, and consulting fees related to the Companys Sarbanes-Oxley section 404

implementation of $52,000.

Non Cash Compensation Non cash compensation relates to stock options expense associated with the

adoption of FAS 123(R) Share-Based Payment. For the first quarter of fiscal 2009, non-cash

compensation costs of $18,000 were recorded, as compared to $79,000 in non-cash compensation costs

recorded for the first quarter of fiscal 2008.

Interest Income, net Interest income, net, was $132,000 (0.3% of net revenues) in the first

quarter of fiscal 2009 as compared to $233,000 (0.4% of net revenues), including interest income on

a note receivable from a related party of $163,000, in the first quarter of fiscal 2008.

- Related Party Transactions. Interest income for the first quarter of fiscal 2009 was primarily

comprised of interest earned on the auction rate securities.

Interest income for the first quarter

of 2008 was earned on money market accounts.

Realized/Unrealized holding gains on trading securities During the fourth quarter of fiscal 2008,

we recorded unrealized holding losses of $1.95 million on our auction rate securities.

valuation was estimated by comparing current value based on projected cash flows discounted to the

present and taking into account yields of similar illiquid instruments and assumptions about the

extent of the failure of the auction process and the amount of discounts demanded in sales of

comparable securities.

In the first quarter of fiscal 2009, we recorded realized holding gains of

$231,000 on redemptions and unrealized holding gains of $31,000 after evaluating our investments in

these securities.

See note 11 Marketable Securities.

Provision for Income Taxes Our provision for income taxes, which primarily represents the

deferred tax charges associated with our profits in the United States, was $967,000 for the first

quarter of fiscal 2009, or 2.2% of net revenues, as compared to a provision of $379,000 for the

first quarter of fiscal 2008, or 0.7% of net revenues.

Net Income (Loss) As a result of the foregoing factors, our net (loss) was $268,000 for the first

quarter of fiscal 2009 as compared to net income of $442,000 (0.8% of net revenues) in the first

quarter of fiscal 2008.

Net product sales — Net product sales for the three month period ended December 31, 2023 were $2.6 million as compared to $1.7 million for the three month period ended December 31, 2022 , an increase of $0.9 million, or 52.5%.

The Company’s sales during the three month periods ended December 31, 2023 and December 31, 2022 were highly concentrated among the Company’s two largest customers – Wal-Mart and Amazon – comprising in the aggregate approximately 85% and 95%, respectively, of the Company’s total net product sales for such periods.

Net product sales for the nine month period ended December 31, 2023 were $6.7 million as compared to $4.3 million for the nine month period ended December 31, 2022 , an increase of $2.4 million, or 55.6%.

The Company’s sales during the nine month periods ended December 31, 2023 and December 31, 2022 were highly concentrated among the Company’s three largest customers – Wal-Mart, Amazon and Fred Meyer – comprising in the aggregate approximately 91% of the Company’s total net product sales for both periods.

Net product sales are comprised primarily of the sales of houseware and audio products which bear the Emerson® brand name.

Net product sales may be periodically impacted by adjustments made to the Company’s sales allowance and marketing support accrual to record unanticipated customer deductions from accounts receivable or to reduce the accrual by any amounts which were accrued in the past but not taken by customers through deductions from accounts receivable within a certain time period.

In the aggregate, these adjustments had the effect of increasing net product sales and operating income by approxim ately $3,000 and $10,000 for the three month periods ended December 31, 2023 and December 31, 2022 , respectively, and by approximately $9,000 and $15,000 for the nine month periods ended December 31, 2023 and December 31, 2022 , respectively.

The major elements which contributed to the overall increase in net product sales were as follows:

i) Houseware products:

Net sales increased $0.4 million, or 313.4%, to $0.6 million for the three month period ended December 31, 2023 as compared to $0.2 million for the three month pe riod ended December 31, 2022, driven by increased net sales of microwave ovens and refrigerators.

Net sales increased $0.9 million, or 89.9%, to $2.0 million for the nine month period ended December 31, 2023 as compared to $1.1 million for the nine month period ended December 31, 2022, driven by increased net sales of microwave ovens and refrigerators.

ii) Audio products:

Net sales increased $0.4 million, or 27.4%, to $2.0 million for the three month period ended December 31, 2023 as compared to $1.6 million for the three month period ended December 31, 2022, resulting from increased net sales of clock radios.

Net sales increased $1.4 million, or 44.4%, to $4.7 million for the nine month period ended December 31, 2023 as compared to $3.3 million for the nine month period ended December 31, 2022, resulting from increased net sales of clock radios.

Business operations — The Company expects to continue to expand its existing distribution channels and to develop and promote new products with retailers in the U.S.

The Company is also continuing to invest in products and marketing activities to expand its sales through internet and ecommerce channels.

These efforts require investments in appropriate human resources, media marketing and development of products in various categories in addition to the traditional home appliances and audio products on which the Company has historically focused.

The Company also is continuing its efforts to identify strategic courses of action related to its licensing activities, including seeking new licensing relationships.

The Company has engaged each of Leveraged Marketing Corporation of America and Global Licensing Services Pte Limited as an agent to assist in identifying and procuring potential licensees.

Emerson’s success is dependent on its ability to anticipate and respond to changing consumer demands and trends in a timely manner, as well as expanding into new markets and sourcing new products that are profitable to the Company.

Geo-political factors may also affect the Company’s operations and demand for the Company’s products, which are subject to customs requirements and to tariffs and quotas set by governments through mutual agreements and bilateral actions.

The Company expects that U.S.

tariffs on categories of products that the Company imports from China, and China’s retaliatory tariffs on certain goods imported from the United States, as well as modifications to international trade policy, will continue to affect its product costs going forward.

If no mitigation steps are taken, or the mitigation is unsuccessful, the combination of tariffs will result in significantly increased annualized costs to the Company as all of the Company’s products are currently manufactured by suppliers in China.

Although the Company is monitoring the trade and political environment and working to mitigate the possible effect of tariffs with its suppliers as well as its customers through pricing and sourcing strategies, the Company cannot be certain how its customers and competitors will react to the actions taken.

In addition, heightened tensions between the United States and China over Hong Kong and any resulting retaliatory policies may affect our operations in Hong Kong.

At this time, the Company is unable to quantify possible effects on its costs arising from the new tariffs, which are expected to increase the Company’s inventory costs and associated costs of sales as tariffs are incurred, and some costs may be passed through to the Company’s customers as product price increases in the future.

However, if the Company is unable to successfully pass through the additional costs or otherwise mitigate the effects of these tariffs, or if the higher prices reduce demand for the Company’s products, it will have a negative effect on the Company’s product sales and gross margins.

Starting in the fourth quarter of fiscal 2020, the global COVID-19 pandemic has presented significant challenges and impacted the Company’s business and operating results, and the operations and production capabilities of the Company’s suppliers in China.

The pandemic has directly and indirectly disrupted certain sales and supply chain activities.

Global component shortages, in particular semiconductor chips, arising from changes in consumer demand and reduced manufacturing capacity related to the COVID-19 pandemic may cause price fluctuations and longer lead times in the supply of these components.

Although the Company is seeking alternate suppliers for these components, developing alternate sources of supply will be time consuming, difficult and costly, and may require the re-tooling of products to accommodate components from different suppliers.

In addition to increasing cost trends, the Company’s suppliers are not equipped to hold meaningful amounts of inventory and could pause manufacturing, which could ultimately impact the Company’s ability to fulfill customer orders on a timely basis.

These impacts on the Company’s supply chain may continue to impact the Company’s ability to meet product demand, which could result in additional costs, customer dissatisfaction in the event of inventory shortages or may otherwise adversely impact the Company’s business and results of operations.

In light of the adverse macroeconomic conditions domestically and internationally, the Company has implemented certain cost-reduction actions intended to reduce expenditures.

However, the environment remains uncertain.

Demand for the Company’s products remains competitive and retailers continue to carefully manage inventory.

Accordingly, the current results and financial condition discussed herein may not be indicative of future operating results and trends.

For more information on risks associated with the Company’s operations, including tariffs, please see the risk factors within Part I, Item 1A, “Risk Factors” in the Company’s Annual Report on Form 10-K, as amended, for the year ended March 31, 2023.

Legal Proceedings — On April 19, 2022, the U.S.

Among other things, the District Court’s order included an injunction prohibiting Defendants’ distribution, manufacturing, and sales of EMERSON QUIET KOOL branded products or use of that trademark and directed the U.S.

The judgment also awards $6.5 million to the Company.

The Defendants, through a third party, made certain payments to the Company, including certain advances towards a portion of their liability.

Those amounts were previously reflected as advanced deposits in the Consolidated Balance Sheets.

The aggregate amount of the payments is $4.1 million, which has been reduced by approximately $784,000 for legal fees incurred in fiscal 2023 and approximately $216,000 for legal fees incurred in fiscal 2024, in pursuit of the advanced deposits.

Separately, on July 11, 2023, the U.S.

Court of Appeals for the Third Circuit affirmed the District Court's judgment against the Defendants.

On September 29, 2023, the District court granted the Company’s request for final judgement including approximately $3.16 million in legal fees and $700,000 in enhanced damages, along with the prospect of additional damages due to Defendants’ alleged contempt of court.

The Company is pursuing all available remedies against the Defendants and those acting in concert with them.

Due to the legal judgement having been affirmed as stated above, the Company has released the balance of the advanced deposits of approximately $3,100,000, to other income during the quarter ended September 30, 2023.

Licensing revenue — Licensing revenue for the three month period ended December 31, 2023 was $23,000 as compared to $123,000 for the three month period ended December 31, 2022 , a decrease of $100,000, or 81.0%.

Licensing revenue for the nine month period ended December 31, 2023 was $124,000 as compared to $271,000 for the nine month period ended December 31, 2022 , a decrease of $147,000, or 54.2%.

The decreases for the three and nine month periods ended December 31, 2023 were a result of an expiring license agreement on December 31, 2022.

Royalty income — Royalty income for the three month periods ended December 31, 2023 and December 31, 2022 were nil and $105,000, respectively.

Royalty income for the nine month periods ended December 31, 2023 and December 31, 2022 were nil and $700,000, respectively.

The royalty income in the three and nine month periods ended December 31, 2022 was derived from sell-off agreements made with customers of Emerson Quiet Kool, which did not repeat during the three and nine month periods ended December 31, 2023 .

Net revenues — Net revenues were $2.6 million for the three month period ended December 31, 2023 as compared to $1.9 million for the three month period ended December 31, 2022 , an increase of $0.7 million, or 35.7%.

The increase in net revenues can be attributed to the introduction of new models of the Company's products to the marketplace as well as increased demand from the Company's key customers.

Net revenues were $6.9 million for the nine month period ended December 31, 2023 as compared to $5.3 million for the nine month period ended December 31, 2022 , an increase of $1.6 million, or 29.5%.

The increase in net revenues can be attributed to the introduction of new models of the Company's products to the marketplace as well as increased demand from the Company's key customers.

Cost of sales — Cost of sales increased $0.8 million, or 57.5% to $2.1 million for the three month period ended December 31, 2023 as compared to $1.3 million for the three month period ended December 31, 2022 .

The increase in absolute terms for the three month period ended December 31, 2023 as compared to the three month period ended December 31, 2022 was primarily related to an increase in net product sales and by higher year-over-year gross cost of sales as a percentage of gross sales.

Cost of sales increased $2.1 million, or 59.3% to $5.7 million for the nine month period ended December 31, 2023 as compared to $3.6 million for the nine month period ended December 31, 2022 .

The increase in absolute terms for the nine month period ended December 31, 2023 as compared to the nine month period ended December 31, 2022 was primarily related to an increase in net product sales and by higher year-over-year gross cost of sales as a percentage of gross sales.

Selling, general and administrative expenses ( “ S,G&A ” ) — S,G&A was $1.2 million for the three month period ended December 31, 2023 as compared to $1.1 million for the three month period ended December 31, 2022 , an increase of $0.1 million or 14.4%.

S,G&A, as a percentage of net revenues, was 45.8% for the three month period ended December 31, 2023 as compared to 54.4% for the three month period ended December 31, 2022 .

Compensation costs increased by $69,000, legal fees increased by $68,000 and audit fees increased by $28,000 for the three month period ended December 31, 2023 as compared to the three month period ended December 31, 2022.

Compensation costs for the three month period ended December 31, 2023 were $558,000 as compared to $489,000 for the three month period ended December 31, 2022 .

Legal fees for the three month period ended December 31, 2023 were $236,000 as compared to $168,000 for the three month period ended December 31, 2022 .

Audit fees for the three month period ended December 31, 2023 were $53,000 as compared to $25,000 for the three month period ended December 31, 2022 .

S,G&A was $3.5 million for the nine month period ended December 31, 2023 as compared to $3.7 million for the nine month period ended December 31, 2022 , a decrease of $0.2 million or 6.0%.

S,G&A, as a percentage of net revenues, was 50.4% for the nine month period ended December 31, 2023 as compared to 69.5% for the nine month period ended December 31, 2022 .

The Company benefitted from a decrease in legal fees of $546,000, a decrease in insurance expense of $31,000 and a decrease in rent expense of $32,000 for the nine month period ended December 31, 2023 as compared to the nine month period ended December 31, 2022.

These reductions were offset by an increase in compensation costs of $156,000, additional advertising costs of $50,000, travel and entertainment fees of $21,000, auditing fees of $28,000 and bad debt expense of $73,000 for the nine month period ended December 31, 2023 .

as compared to the nine month period ended December 31, 2022 .

Legal fees for the nine month period ended December 31, 2023 were $461,000 as compared to $1,007,000 for the nine month period ended December 31, 2022 .

Insurance expense for the nine month period ended December 31, 2023 was $357,000 as compared to $388,000 for the nine month period ended December 31, 2022 .

Rent expense for the nine month period ended December 31, 2023 was $142,000 as compared to $174,000 for the nine month period ended December 31, 2022 .

Compensation costs for the nine month period ended December 31, 2023 were $1,680,000 as compared to $1,524,000 for the nine month period ended December 31, 2022 .

Settlement of litigation — Based on a judgement affirmation by the U.S.

Court of Appeals for the Third Circuit , the Company recorded income of $3.1 million, which was the remaining balance of the advanced deposits as of September 30, 2023.

See "Note 11 - Legal Proceedings".

Interest income, net — Interest income, net, was $289,000 for the three month period ended December 31, 2023 as compared to $235,000 for the three month period ended December 31, 2022 , an increase of $54,000.

The increase was primarily due to higher average interest rates earned on the Company’s short term investments.

Interest income, net, was $872,000 for the nine month period ended December 31, 2023 as compared to $424,000 for the nine month period ended December 31, 2022 , an increase of $448,000.

The increase was primarily due to higher average interest rates earned on the Company’s short term investments.

Income from governmental assistance programs — For the three month periods ended December 31, 2023 and December 31, 2022 , the Company recorded income of nil and approximately $4,000, respectively, under the ESS program.

See “Note 10 – Governmental Assistance Programs”.

For the nine month periods ended December 31, 2023 and December 31, 2022 , the Company recorded income of nil and approximately $34,000, respectively, under the ESS program.

See “Note 10 – Governmental Assistance Programs”.

(Benefit) provision for income taxes — For the three and nine month periods ended December 31, 2023 , the Company recorded an income benefit of $14,000 and income tax expense of $74,000, respectively.

For the quarter ended September 30, 2023, the Company estimated its income tax expense to be approximately $88,000 based on the income generated during that period.

That estimate has been reduced by $14,000 and is now estimated to be $74,000 for the nine months ended December 31, 2023.

T he Company under the adoption of ASU 2019-12 “Income Taxes (Topic 740) – Simplifying the Accounting for Income Taxes” incurred non-income based state taxes of nil for both of the three month periods ended December 31, 2023 and December 31, 2022 .

For the nine month periods ended December 31, 2023 and December 31, 2022 , the Company incurred non-income based state taxes of $8,650 and $10,950, respectively, which are now reported as S,G &A.

See “Note 5 – Income Taxes”.

Although the Company generated net income during the nine months ended December 31, 2023 , it has yet to demonstrate the ability to generate net income on a sustained basis in order to realize its deferred tax assets.

Therefore, the Company is obligated to record a 100% valuation allowance against the deferred tax assets.

Net (loss) income — As a result of the foregoing factors, the Company realized a net loss of $421,000 for the three month period ended December 31, 2023 as compared to a net loss of $241,000 for the three month period ended December 31, 2022.

The Company realized net income of $1,649,000 for the nine month period ended December 31, 2023 as compared to a net loss of $1,471,000 for the nine month period ended December 31, 2022.

Liquidity and Capital Resources

As of June 30, 2008, we had cash and cash equivalents of approximately $16.6 million, compared

to approximately $23.2 million at June 30, 2007.

Working capital decreased to $45.3 million at June

30, 2008 as compared to $67.1 million at June 30, 2007.

The decrease in cash and cash equivalents

of approximately $6.6 million was primarily due to investments in securities which have been

classified as long-term and property and equipment additions, partially offset by a change in the

amount of restricted cash which has been pledged to assure the availability of credit facilities as

described in the following paragraphs.

Operating cash flow provided by operating activities was approximately $604,000 for the three

months ended June 30, 2008, resulting from increases in amounts payable for purchasing our

products, which are settled primarily through the use of letters of credit but also on open

account, primarily offset by growth in accounts receivable on our direct import sales, which

represent sales under letter of credit arrangements, and the amount of restricted cash for balances

pledged to assure the availability of credit facilities.

Net cash provided by investing activities was $1.5 million for the three months ended June 30,

2008 and resulted primarily from partial calls on our auction rate securities offset by purchases

of showroom furniture and computer equipment for our US operations as well as tooling by a foreign

subsidiary related to sourcing of product.

Net cash used by financing activities was $18,000 for the three months ended June 30, 2008,

resulting from repayments of long-term borrowings.

On December 23, 2005, we entered into a $45.0 million Revolving Credit Agreement with Wachovia

This credit facility provides for revolving loans subject to individual maximums which, in

the aggregate, are not to exceed the lesser of $45.0 million or a Borrowing Base as defined in

the loan agreement.

The Borrowing Base amount is established by specified percentages of eligible

accounts receivables and inventories and bears interest ranging from Prime plus 0.00% to 0.50% or,

at our election, the London Interbank Offered Rate (LIBOR) plus 1.25% to 2.25% depending on

excess availability.

Pursuant to the loan agreement, we are restricted from, among other things,

paying certain cash dividends, and entering into certain transactions without the lenders prior

consent and are subject to certain leverage financial covenants.

Borrowings under the loan

agreement are secured by substantially all of our tangible assets.

At June 30, 2008, there were approximately $20.4 million of letters of credit outstanding

under this facility.

There were no borrowings outstanding at June 30, 2008 under this facility.

June 30, 2008, we were in compliance with the covenants on our credit facilities.

At June 30, 2008 the Company deposited $2.0 million with Wachovia, to secure on a dollar for

dollar basis, additional letter of credit availability.

As such, this amount has been classified on

the balance sheet as restricted cash.

As a result of Emerson electing to cancel its foreign bank facilities in December 2007, our

foreign subsidiaries maintain no credit facilities as of December 31, 2007.

At December 31, 2007, as a result of Emerson electing to cancel its foreign bank facilities,

the requirement to maintain pledged deposits with foreign banks for our foreign subsidiaries was

As such, $3.0 million in certificates of deposit held at these banks have been

Short-Term Liquidity.

Liquidity is impacted by seasonality in that Emerson generally records

the majority of its annual sales in the quarters ending September and December.

This requires

Emerson to maintain higher inventory levels during the quarters ending June and September,

therefore increasing the working capital needs during these periods.

Additionally, Emerson receives

the largest percentage of product returns in the quarter ending March.

The higher level of returns

during this period adversely impacts collection activity, and therefore liquidity.

months ended June 30, 2008, products representing approximately 36.5% of net revenues were imported

directly to Emersons customers.

This contributes significantly to Emersons liquidity in that this

inventory does not need to be financed.

Emersons principal existing sources of cash are generated from operations and borrowings available

under its revolving credit facilities.

As of June 30, 2008, Emerson had $24.6 million of borrowing

capacity available under its $45.0 million revolving credit facilities, as there were $20.4 million

of letters of credit outstanding, and no outstanding loans.

Emerson believes that its existing

sources of cash, including cash flows generated from operations, will be sufficient to support

existing operations over the next 12 months;

however, management may decide to raise additional

financing, which may include the issuance of equity securities, or the incurrence of additional

debt, in connection with existing operations or if we elect to pursue acquisitions.

The following summarizes obligations at June 30, 2008 for the periods shown (in thousands):

Payment due by period (1)

Capital lease obligations

Operating lease obligations related party

Operating lease obligations non-affiliate

Amounts in the above table do not include a reserve of approximately $149,000 related to

uncertain tax positions.

The Company is not able to reasonably estimate when, if ever, these

reserves would result in actual cash payments.

There were no material capital expenditure commitments and no substantial commitments for

purchase orders outside the normal purchase orders used to secure product as of June 30, 2008.

Other Events and Circumstances Pertaining to Liquidity

The Company entered into foreign exchange forward contracts (denominated in US and Hong Kong

dollar), based on economic and market conditions and solely for the purpose of speculative trading,

(See Note 10.

Financial Instruments and Item 4.b Changes in Internal Control Over Financial

Reporting ).

The contract terms are for fixed periods and at March 31, 2008, the Companys foreign

exchange forward contracts had expiration dates that ranged from one to two months, with notional

amounts of $10 million.

At each balance sheet date the Company accounts for its foreign exchange forward contracts as

a current asset with corresponding realized or unrealized gains and losses included in the income

Realized gains of $132,647 have been recorded as non-operating income in the three

months ended June 30, 2008.

Realized gains of $13, 835 were recorded in the three months ended June

At June 30, 2008, all foreign exchange forward contracts have expired and the Company has not

entered into any new contracts.

Critical Accounting Policies

For the three month period ended June 30, 2008, there were no significant changes to

accounting policies from those reported in the Annual Report on Form 10-K for the fiscal year ended

March 31, 2008.

Inflation, Foreign Currency, and Interest Rates

Neither inflation nor currency fluctuations had a significant effect on our results of

operations during the first quarter of fiscal 2008.

Our exposure to currency fluctuations has been

minimized by the use of U.S.

dollar denominated purchase orders.

We purchase virtually all of our

products from manufacturers located in China.

The interest on any borrowings under our credit facilities would be based on the prime and

As of December 31, 2023, the Company had cash and cash equivalents of approximately $3.6 million as compared to approximat ely $25.3 million at March 31, 2023 .

Cash and cash equivalents includes short term investments in deposits which were classified as cash equivalents of $2.7 million as of December 31, 2023 compared to $23.1 million of such deposits as of March 31, 2023 .

Working capital increased to $27.5 million at December 31, 2023 as compared to $26.4 million at March 31, 2023 .

The decrease in cash and cash equivalents of approximately $21.6 million was due to an increase in short term deposits of $18.5 million, a decrease in advanced deposits of $3.3 million, an increase in inventory of $1.9 million and a decrease in long-term federal taxes payable of $0.5 million partially offset by the net income generated during the period of $1.6 million, an increase in accounts payable and other current liabilities of $0.6 million, an increase in short-term federal income taxes payable of $0.2 million and an increase in long-term operating lease liabilities of $0.2 million.

Net cash used by operatin g activities was approximately $3.0 million for the nine month period ended December 31, 2023 , resulting from a decrease in advanced deposits of $3.3 million, an increase in inventory of $1.9 million and a decrease in federal taxes payable of $0.3 million partially offset by the net income generated during the period of $1.6 million, an increase in accounts payable and other current liabilities of $0.6 million, an increase in long-term operating lease liabilities of $0.2 million and an increase in right-of-use assets of $0.1 million.

Net cash used by investing activities was $18.6 million for the nine month period ended December 31, 2023 due to purchases of short-term investments of $18.5 million and additions to property and equipment of $0.1 million.

Net cash used by financing activities was nil f or the nine month period ended December 31, 2023.

Sources and Uses of Funds

The Company’s principal existing sources of cash are generated from operations and its existing short-term deposits.

The Company believes that its existing cash balance and sources of cash will be sufficient to support existing operations over the next 12 months.

Off-Balance Sheet Arrangements

As of December 31, 2023, the Company did not have any off-balance sheet arrangements as defined under the rules of the SEC.

Recently Issued Accounting Pronouncements

The following ASU was issued by the FASB which relate to or could relate to the Company as concerns the Company’s normal ongoing operations or the industry in which the Company operates.

Accounting Standards Update 2016-13 “ Financial Instruments – Credit Losses ” (Issued June 2016)

In June 2016, the FASB issued ASU 2016-13 “Financial Instruments - Credit Losses” to introduce new guidance for the accounting for credit losses on instruments within its scope.

ASU 2016-13 requires among other things, the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable supportable forecasts.

Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses.

In addition, ASU 2016-13 amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration.

ASU 2016-13 is effective for fiscal years and condensed periods beginning after December 15, 2022.

The adoption of ASU 2016-13 had no material impacts on the Company's financial statements.

Quantitative and Qualitative Disclosures About Market Risk.

There have been no significant changes from items disclosed in Form 10-K for the fiscal year

ended March 31, 2008.

Not applicable.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q/A

Item 1. Financial Statements