What changed in this filing

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Item 1. Financial Statements

2024-11-14 compared with 2024-08-14 · 173 added, 113 removed, 400 unchanged (42% of the section changed)

4 unchanged sentences

(In thousands, except per share data)

Three months ended June 30,

Three Months Ended September 30, Six Months Ended September 30,

Net revenues:

2 unchanged sentences

Licensing revenue

68 24 137 101

2,738 2,438 4,936 4,247

Costs and expenses:

Cost of sales

2,466 2,040 4,470 3,510

Selling, general and administrative expenses

1,389 1,064 2,805 2,262

Total cost of sales and SG&A

3,855 3,104 7,275 5,772

Operating loss

1 unchanged sentence

Other income:

Settlement of litigation

— 3,100 — 3,100

Interest income, net

Loss before income taxes

236 289 499 583

(Loss) income before income taxes

( 881 ) 2,723 ( 1,840 ) 2,158

Provision for income tax expense

Net (loss) income

( 881 ) 2,635 ( 1,843 ) 2,070

Basic loss per share

Basic (loss) income per share

$ ( 0.04 ) $ 0.13 $ ( 0.09 ) $ 0.10

Diluted loss per share

Diluted (loss) income per share

$ ( 0.04 ) $ 0.13 $ ( 0.09 ) $ 0.10

7 unchanged sentences

(In thousands except share data)

June 30, 2024

September 30, 2024

March 31, 2024

36 unchanged sentences

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

52,965,797 shares issued at June 30, 2024 and March 31, 2024, respectively;

21,042,652 shares outstanding at June 30, 2024 and March 31, 2024, respectively

52,965,797 shares issued at September 30, 2024 and March 31, 2024, respectively;

21,042,652 shares outstanding at September 30, 2024 and March 31, 2024, respectively

Additional paid-in capital

2 unchanged sentences

( 26,048 ) ( 24,205 )

Treasury stock, at cost ( 31,923,145 shares at June 30, 2024 and March 31, 2024, respectively)

Treasury stock, at cost ( 31,923,145 shares at September 30, 2024 and March 31, 2024, respectively)

( 33,201 ) ( 33,201 )

8 unchanged sentences

(In thousands)

Three months ended June 30,

Six Months Ended September 30,

(In thousands)

Cash Flows from Operating Activities:

Net (loss) income

$ ( 1,843 ) $ 2,070

6 unchanged sentences

Licensing receivable

825 ( 1,927 )

Prepaid purchases

1 unchanged sentence

Prepaid expenses and other current assets

( 136 ) ( 57 )

Accounts payable and other current liabilities

( 320 ) ( 61 )

Right of use assets-operating

( 313 ) ( 248 )

Right of use assets-finance

Short term lease liabilities

Long term lease liabilities

( 11 ) ( 37 )

Income taxes payable

( 531 ) ( 313 )

Advanced deposits

20 unchanged sentences

Supplemental disclosure of non-cash investing and financing activities:

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

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

9 unchanged sentences

Balance — March 31, 2024

3,677 $ 3,310 52,965,797 $ 529 $ 79,792 $ ( 24,205 ) $ ( 33,201 ) $ 26,225

— — — — — ( 962 ) — ( 962 )

Balance — June 30, 2024

3,677 $ 3,310 52,965,797 $ 529 $ 79,792 $ ( 25,167 ) $ ( 33,201 ) $ 25,263

Balance — September 30, 2024

Preferred Stock

1 unchanged sentence

Balance — March 31, 2023

3,677 $ 3,310 52,965,797 $ 529 $ 79,792 $ ( 24,971 ) $ ( 33,201 ) $ 25,459

— — — — — ( 565 ) — ( 565 )

Balance — June 30, 2023

3,677 $ 3,310 52,965,797 $ 529 $ 79,792 $ ( 25,536 ) $ ( 33,201 ) $ 24,894

Balance — September 30, 2023

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

6 unchanged sentences

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 condensed consolidated financial position as of June 30, 2024 and the results of operations for the three month periods ended June 30, 2024 and June 30, 2023 .

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 condensed consolidated financial position as of September 30, 2024 and the results of operations for the three and six month periods ended September 30, 2024 and September 30, 2023 .

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

4 unchanged sentences

Accordingly, these unaudited condensed consolidated financial statements should be read in conjunction with the condensed consolidated financial statements and notes thereto for the fiscal year ended March 31, 2024 (“fiscal 2024” ), included in the Company’s Annual Report on Form 10 -K for fiscal 2024.

The results of operations for the three month period ended June 30, 2024 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, 2025 (“fiscal 2025” ).

The results of operations for the three and six month periods ended September 30, 2024 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, 2025 (“fiscal 2025” ).

Recent Accounting Pronouncement

5 unchanged sentences

This update is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted.

Upon adoption, the guidance should be applied retrospectively to all prior periods presented in the condensed consolidated financial statements.

We do not expect the adoption of this guidance to have a material impact on our condensed consolidated financial statements.

The adoption of this guidance did not have any impact on the Company's segment reporting.

Segment Reporting

The Company operates as one reportable segment under Accounting Standards Codification "(ASC)" 280, Segment Reporting .

The chief operating decision maker regularly reviews the financial information of the Company at a consolidated level in determining how to allocate resources and in assessing performance.

Revenue Recognition

26 unchanged sentences

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.

As of June 30, 2024, the Company recorded deferred revenue of approximately $ 170,000 as compared to approximately $ 191,000 as of March 31, 2024 on its condensed consolidated balance sheets.

All of the deferred revenue for both periods presented are related to licensing revenue.

As of September 30, 2024, the Company recorded deferred revenue of approximately $ 149,000 as compared to approximately $ 191,000 as of March 31, 2024 on its condensed consolidated balance sheets.

As of September 30, 2023, the Company recorded deferred revenue of nil as compared to approximately $ 149,000 as of March 31, 2023 on its condensed consolidated balance sheets.

All of the deferred revenue for the periods presented are related to licensing revenue.

Disaggregation of Revenue

Three months ended June 30,

Three Months Ended September 30, Six Months Ended September 30,

Disaggregation of revenue (in 000's)

3 unchanged sentences

Licensing revenue

68 24 137 101

2,738 2,438 4,936 4,247

Net revenues by customers:

$ 1,190 $ 1,525 $ 2,038 $ 2,345

999 517 1,984 1,085

379 287 544 618

2,568 2,329 4,566 4,048

NOTE 2 — EARNINGS PER SHARE

1 unchanged sentence

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

Three Months Ended June 30,

Three Months Ended September 30,

Six Months Ended September 30,

Net (loss) income

$ ( 881 ) $ 2,635 $ ( 1,843 ) $ 2,070

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

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

21,042,652 21,042,652 21,042,652 21,042,652

Net loss per share:

Basic and diluted loss per share

Net (loss) income per share:

Basic and diluted (loss) income per share

$ ( 0.04 ) $ 0.13 $ ( 0.09 ) $ 0.10

NOTE 3 — SHAREHOLDERS ’ EQUITY

Outstanding capital stock at June 30, 2024 consisted of common stock and Series A preferred stock.

Outstanding capital stock at September 30, 2024 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 June 30, 2024 , the Company had no options, warrants or other potentially dilutive securities outstanding.

At September 30, 2024 , the Company had no options, warrants or other potentially dilutive securities outstanding.

NOTE 4 — INVENTORY

1 unchanged sentence

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

As of June 30, 2024 and March 31, 2024 , inventories consisted of the following (in thousands):

June 30, 2024

As of September 30, 2024 and March 31, 2024 , inventories consisted of the following (in thousands):

September 30, 2024

March 31, 2024

2 unchanged sentences

NOTE 5 — INCOME TAXES

At June 30, 2024 , the Company had $ 15.7 million of U.S.

At September 30, 2024 , the Company had $ 16.6 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 June 30, 2024 , the Company had approximately $ 15.8 million of U.S.

At September 30, 2024 , the Company had approximately $ 16.7 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 $ 272,000 for the three month period ended June 30, 2024 as compared to income of foreign subsidiaries before taxes of $ 302,000 for the three month period ended June 30, 2023 .

The Company analyzed the future reasonability of recognizing its deferred tax assets at June 30, 2024 .

The income of foreign subsidiaries before taxes was $ 249,000 for the three month period ended September 30, 2024 as compared to income of foreign subsidiaries before taxes of $ 296,000 for the three month period ended September 30, 2023 .

The income of foreign subsidiaries before taxes was $ 520,000 for the six month period ended September 30, 2024 as compared to income of foreign subsidiaries before taxes of $ 599,000 for the six month period ended September 30, 2023 .

The Company analyzed the future reasonability of recognizing its deferred tax assets at September 30, 2024 .

As a result, the Company concluded that a 100 % valuation allowance of approximately $ 4,837,000 would be recorded against the assets.

Although the Company generated a net operating loss, it recorded income tax expense of approximately $ 9,000 during the three month period ended June 30, 2024 , primarily resulting from state income taxes.

During the three month period ended June 30, 2023 , the Company recorded income tax expense of approximately $ 9,000 , primarily resulting from state income taxes.

Although the Company generated a net operating loss, it recorded income tax expense of approximately nil and $ 3,000 during the three and six month periods ended September 30, 2024 , respectively, primarily resulting from state income taxes.

During the three and six month periods ended September 30, 2023 , the Company generated net income and recorded income tax expense of approximately $ 88,000 and $ 88,000 , respectively, of which approximately $ 9,000 resulted 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 June 30, 2024 , the Company’s open tax years for examination for U.S.

As of September 30, 2024 , the Company’s open tax years for examination for U.S.

federal tax are 2017 - 2024, and for U.S.

2 unchanged sentences

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

As of June 30, 2024 , the Company is asserting under ASC 740 - 30 that all of the unremitted earnings of its foreign subsidiaries are indefinitely invested.

As of September 30, 2024 , 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;

2 unchanged sentences

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

As of June 30, 2024 and March 31, 2024 , the Company had a federal tax liability of approximately $ 1,202,000 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 June 30, 2024 and March 31, 2024, the Company’s short term portion was approximately $ 534,000 and the long term portion was approximately $ 668,000 .

As of September 30, 2024 and March 31, 2024 , the Company had a federal tax liability of approximately $ 668,000 and $ 1,202,000 , 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 September 30, 2024 and March 31, 2024, the Company’s short term portion was approximately $ 668,000 and $ 534,000 , respectively, and the long term portion was nil and approximately $ 668,000 , respectively.

The liability is payable over 8 years.

The first five installments were 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 June 30, 2024 , the Company has paid six of the eight installments.

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

As of September 30, 2024 , the Company has paid seven of the eight installments.

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

4 unchanged sentences

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 June 30, 2024 .

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

1 unchanged sentence

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

During the three month period ended June 30, 2024 , the Company was billed approximately $ 40,000 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 ("Chairman").

As of June 30, 2024 the Company owed approximately $ 1,000 to VACL related to these charges.

During the three month period ended June 30, 2023, the Company was billed approximately $ 40,000 for rental and utility fees from VACL, which is a company related to the Company's Chairman.

As of June 30, 2023 the Company owed approximately $ 800 to VACL related to these charges.

During the three and six month periods ended September 30, 2024 , the Company was billed approximately $ 36,000 and $ 76,000 , 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 ("Chairman").

As of September 30, 2024 the Company owed approximately $ 1,000 to VACL related to these charges.

During the three month and six month periods ended September 30, 2023, the Company was billed approximately $ 40,000 and $ 79,000 , respectively, for rental and utility fees from VACL, which is a company related to the Company's Chairman.

As of September 30, 2023 the Company owed approximately $ 1,000 to VACL related to these charges.

Charges for promotional items

During the three month period ended June 30, 2024 , the Company purchased approximately $ 30,000 of promotional items from The Whisky Capital Pte Ltd ("TWCPL"), which is a company related to the Company's Chairman.

As of June 30, 2024 the Company owed nil to TWCPL related to these charges.

During the three month period ended June 30, 2023, the Company had no transactions with TWCPL.

During the three and six month periods ended September 30, 2024 , the Company purchased nil and approximately $ 30,000 , respectively, of promotional items from The Whisky Capital Pte Ltd ("TWCPL"), which is a company related to the Company's Chairman.

As of September 30, 2024 the Company owed nil to TWCPL related to these charges.

During the three and six month periods ended September 30, 2023, the Company had no transactions with TWCPL.

NOTE 7 — SHORT TERM DEPOSITS AND INVESTMENTS

As of June 30, 2024 and March 31, 2024 , the Company held $ 2.2 million and $ 19.1 million, respectively, in term deposits.

As of September 30, 2024 and March 31, 2024 , the Company held nil and approximately $ 19.1 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 June 30, 2024 and March 31, 2024 , the Company held $ 16.0 million and nil, respectively, in short term investments which had maturity dates greater than 90 days.

As of September 30, 2024 and March 31, 2024 , the Company held approximately $ 16.3 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 June 30, 2024 , the Company’s three largest customers accounted for approximately 86 % of the Company’s net revenues, of which Amazon.com ("Amazon") accounted for approximately 38 %, Walmart Inc.

("Walmart") accounted for approximately 36 % and Grupo Comercial Chedraui SAB de CV ("Chedraui") accounted for approximately 12 %.

For the three month period ended September 30, 2024 , the Company’s three largest customers accounted for approximately 86 % of the Company’s net revenues, of which Walmart Inc.

("Walmart") accounted for approximately 42 %, Amazon.com ("Amazon") accounted for approximately 31 % and Fred Meyer accounted for approximately 13 %.

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

For the three month period ended June 30, 2023 , the Company’s three largest customers accounted for approximately 88 % of the Company’s net revenues, of which Walmart accounted for approximately 43 %, Amazon accounted for approximately 28 % and Fred Meyer accounted for approximately 17 %.

For the six month period ended September 30, 2024 , the Company’s three largest customers accounted for approximately 84 % of the Company’s net revenues, of which Walmart accounted for approximately 39 %, Amazon accounted for approximately 34 % and Fred Meyer accounted for approximately 11 %.

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

For the three month period ended September 30, 2023 , the Company’s three largest customers accounted for approximately 90 % of the Company’s net revenues, of which Walmart accounted for approximately 60 %, Amazon accounted for approximately 19 % and Fred Meyer accounted for approximately 11 %.

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

For the six month period ended September 30, 2023 , the Company’s three largest customers accounted for approximately 89 % of the Company’s net revenues, of which Walmart accounted for approximately 53 %, Amazon accounted for approximately 22 % and Fred Meyer accounted for approximately 14 %.

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 month period ended June 30, 2024 , the Company’s gross product sales included microwave ovens, which generated approximately 48 %, of the Company’s gross product sales and audio products, which generated approximately 48 % of the Company’s gross product sales.

For the three and six month periods ended September 30, 2024 , the Company’s gross product sales included microwave ovens, which generated approximately 43 % and 45 %, respectively, of the Company’s gross product sales and audio products, which generated approximately 55 % and 52 %, 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 month period ended June 30, 2023 , the Company’s gross product sales included microwave ovens, which generated approximately 39 % of the Company’s gross product sales and audio products, which generated approximately 60 % of the Company’s gross product sales.

For the three and six month periods ended September 30, 2023 , the Company’s gross product sales included microwave ovens, which generated approximately 27 % and 32 %, respectively, of the Company’s gross product sales and audio products, which generated approximately 70 % and 66 %, 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 50 %, 21 % and 20 %, respectively, as of June 30, 2024 .

As a percentage of the Company’s total trade accounts receivable, net of specific reserves, the Company’s top four customers accounted for approximately 42 %, 23 %, 16 % and 14 % respectively, as of September 30, 2024 .

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

6 unchanged sentences

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

as of June 30, 2024 and March 31, 2024 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 $ 2.5 million and approximately $ 19.6 million at June 30, 2024 and March 31, 2024 , respectively.

as of September 30, 2024 and March 31, 2024 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 $ 0.2 million and approximately $ 19.6 million at September 30, 2024 and March 31, 2024 , respectively.

Supplier Concentration

During the three month period ended June 30, 2024 , the Company procured 100 % of its products for resale from its four largest factory suppliers, of which approximately 33 % was supplied by its largest supplier and approximately 31 %, 21 % and 15 %, respectively, was supplied by the other three suppliers.

During the three month period ended June 30, 2023 , the Company procured 100 % of its products for resale from its three largest factory suppliers, of which approximately 57 % was supplied by its largest supplier and approximately 22 % and 21 %, respectively, was supplied by the other two suppliers.

No other suppliers accounted for greater than 10% for either three month periods ended June 30, 2024 or June 30, 2023 .

During the three month period ended September 30, 2024 , the Company procured 91 % of its products for resale from its four largest factory suppliers, of wh ich approximately 47 % was supplied by its largest supplier and approximately 16 %, 16 % and 12 %, respectively, was supplied by the other three suppliers.

During the three month period ended September 30, 2023 , the Company procured 80 % of its products for resale from its three largest factory suppliers, of which approximately 34 % was supplied by its largest supplier and approximately 31 % and 15 %, respectively, was supplied by the other two suppliers.

No other suppliers accounted for greater than 10% for either three month periods ended September 30, 2024 or September 30, 2023 .

During the six month period ended September 30, 2024 , the Company procured 100 % of its products for resale from its five largest factory suppliers, of which approximately 38 % was supplied by its largest supplier and approximately 19 %, 17 %, 16 % and 10 %, respectively, was supplied by the other three suppliers.

During the six month period ended September 30, 2023 , the Company procured 80 % of its products for resale from its three largest factory suppliers, of which approximately 39 % was supplied by its largest supplier and approximately 24 % and 17 %, respectively, was supplied by the other two suppliers.

No other suppliers accounted for greater than 10% for either six m onth periods ended September 30, 2024 or September 30, 2023 .

NOTE 9 — LEASES

1 unchanged sentence

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

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

These leases have remaining non-cancellable lease terms of thirty-five to fifty-seven 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 June 30, 2024 to indicate that a reassessment or re-measurement of the Company’s existing leases was required.

As of June 30, 2024 , the Company’s current operating lease liabilities and finance lease liabilities were $ 58,000 and $ 1,000 , respectively and its non-current operating lease liabilities and finance lease liabilities were $ 187,000 and $ 6,000 , respectively.

The Company did not identify any events or conditions during the quarter ended September 30, 2024 to indicate that a reassessment or re-measurement of the Company’s existing leases was required.

As of September 30, 2024 , the Company’s current operating lease liabilities and finance lease liabilities were $ 128,000 and $ 1,000 , respectively and its non-current operating lease liabilities and finance lease liabilities were $ 397,000 and $ 6,000 , 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 June 30, 2024 was $ 236,000 and $ 6,000 , respectively.

The net balance of the Company’s operating and finance lease right-of-use assets as of September 30, 2024 was $ 509,000 and $ 6,000 , respectively.

As disclosed in "Note 6 - Related Party Transactions", the Company's Hong Kong office space is being leased from VACL, which is a company related to the Company's Chairman.

As of June 30, 2024 , the current operating liability of this lease is approximately $ 25,000 and its non-current liability is nil.

Its right-of-use asset value is approximately $ 25,000 , as of June 30, 2024 .

During the quarter ended June 30, 2024 , the Company took possession of a new copier with a lease term of sixty-two months.

The right-of-use asset value of this finance lease is approximately $ 6,000 .

As of September 30, 2024 , the current operating liability of this lease is approximately $ 95,000 and its non-current liability is $ 211,000 .

Its right-of-use asset value is approximately $ 306,000 , as of September 30, 2024 .

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 June 30,

Three Months Ended September 30,

Six Months Ended September 30,

(in thousands)

Operating lease cost

$ 48 $ 52 $ 100 $ 89

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

2 unchanged sentences

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

Operating leases

313 248 313 248

Finance leases

1 unchanged sentence

Weighted average remaining lease term (in months)

As of June 30, 2024

As of June 30, 2023

As of September 30, 2024

As of September 30, 2023

Operating leases

5 unchanged sentences

10.50 % 7.50 %

As of June 30, 2024 the maturities of lease liabilities were as follows:

As of September 30, 2024 the maturities of lease liabilities were as follows:

(in thousands)

3 unchanged sentences

Imputed interest

( 150 ) ( 2 )

NOTE 10 — LEGAL PROCEEDINGS

55 unchanged sentences

Results of Operations

The following table summarizes certain financial information for the three month period ended June 30, 2024 (fiscal 2024) and June 30, 2023 (fiscal 2023) (in thousands):

Three Months Ended June 30,

The following table summarizes certain financial information for the three and six month periods ended September 30, 2024 (fiscal 2025) and September 30, 2023 (fiscal 2024) (in thousands):

Three Months Ended September 30,

Six Months Ended September 30,

Net product sales

3 unchanged sentences

Operating loss

Settlement of litigation

Interest income, net

Loss before income taxes

(Loss) income before income taxes

Provision for income taxes

Net product sales — Net product sales for the three month period ended June 30, 2024 were approximately $2.1 million as compared to approximately $1.7 million for the three month period ended June 30, 2023 , an increase of $0.4 million, or 22.9%.

The Company’s sales during the three month period ended June 30, 2024 were highly concentrated among its three largest customers – Amazon, Walmart and Chedraui – comprising in the aggregate approximately 89% of the Company’s total net product sales.

The Company’s sales during the three month period ended June 30, 2023 , were highly concentrated among its three largest customers – Walmart, Amazon and Fred Meyer – comprising in the aggregate approximately 92% of the Company’s total net product sales.

Net (loss) income

Net product sales — Net product sales for the three month period ended September 30, 2024 were approximately $2.7 million as compared to approximately $2.4 million for the three month period ended September 30, 2023 , an increase of approximately $0.3 million, or 10.6%.

The Company’s sales during the three month period ended September 30, 2024 were highly concentrated among its three largest customers –Walmart, Amazon, and Fred Meyer – comprising in the aggregate approximately 88% of the Company’s total net product sales.

The Company’s sales during the three month period ended September 30, 2023 , were highly concentrated among its three largest customers – Walmart, Amazon and Fred Meyer – comprising in the aggregate approximately 91% of the Company’s total net product sales.

Net product sales for the six month period ended September 30, 2024 were approximately $4.8 million as compared to approximately $4.1 million for the six month period ended September 30, 2023 , an increase of approximately $0.7 million, or 15.8%.

The Company’s sales during the six month period ended September 30, 2024 were highly concentrated among its three largest customers – Walmart, Amazon and Fred Meyer – comprising in the aggregate approximately 86% of the Company’s total net product sales.

The Company’s sales during the six month period ended September 30, 2023 , were highly concentrated among its three largest customers – Walmart, Amazon and Fred Meyer – comprising in the aggregate approximately 91% of the Company’s total net product sales.

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 $10,000 and $3,000 for the three month periods ended June 30, 2024 and June 30, 2023 , respectively.

In the aggregate, these adjustments had the effect of increasing net product sales and operating income by approxim ately $11,000 and $3,000 for the three month periods ended September 30, 2024 and September 30, 2023 , respectively, and by approximately $21,000 and $6,000 for the six month periods ended September 30, 2024 and September 30, 2023 , respectively.

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

i) Houseware products:

Net sales of houseware products increased approximately $0.4 million, or 62.3%, to approximately $1.1 million for the three month period ended June 30, 2024 as compared to approximately $0.6 million for the three month period ended June 30, 2023 , driven by increased net sales of newly introduced microwave ovens and refrigerators to the market.

Net sales of houseware products increased approximately $0.5 million, or 67.5%, to approximately $1.2 million for the three month period ended September 30, 2024 as compared to approximately $0.7 million for the three month period ended September 30, 2023 , driven by increased net sales of newly introduced microwave ovens and refrigerators to the market.

Net sales of houseware products increased approximately $0.9 million, or 65.0%, to approximately $2.3 million for the six month period ended September 30, 2024 as compared to approximately $1.4 million for the six month period ended September 30, 2023 , driven by increased net sales of newly introduced microwave ovens and refrigerators to the market.

ii) Audio products:

Net sales of audio products were essentially flat at approximately $1.0 million for the three month period ended June 30, 2024 as compared to approximately $1.0 million for the three month period ended June 30, 2023 .

Net sales of audio products decreased approximately $0.2 million, or 13.4%, to approximately $1.5 million for the three month period ended September 30, 2024 as compared to approximately $1.7 million for the three month period ended September 30, 2023 .

Net sales of audio products decreased approximately $0.2 million, or 9.5%, to $2.5 million for the six month period ended September 30, 2024 as compared to approximately $2.7 million for the six month period ended September 30, 2023 .

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 and Mexico.

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However, management believes, based on its examination of such matters, that the Company’s ultimate liability will not have a material adverse effect on the Company’s financial position, results of operations or cash flows.

Licensing revenue — Licensing revenue for the three month period ended June 30, 2024 was approximately $69,000 as compared to approximately $77,000 for the three month period ended June 30, 2023 , a decrease of approximately $8,000, or 10.4%.

The year-over-year decrease was the result of lost revenue from a terminated licensee in June 2023 of approximately $54,000, partially offset by the increase in revenue from a new licensee of approximately $25,000 and from an existing licensee of approximately $21,000.

Net revenues — Net revenues were approximately $2.2 million for the three month period ended June 30, 2024 as compared to approximately $1.8 million for the three month period ended June 30, 2023 , an increase of approximately $0.4 million, or 21.5%.

Licensing revenue — Licensing revenue for the three month period ended September 30, 2024 was approximately $68,000 as compared to approximately $24,000 for the three month period ended September 30, 2023 , an increase of approximately $44,000, or 183.3%.

The increase for the three month period ended September 30, 2024 , was the result of an annual escalation of guaranteed minimum royalties from an ongoing licensee and the revenue earned from a new licensee.

Licensing revenue for the six month period ended September 30, 2024 was approximately $137,000 as compared to approximately $101,000 for the six month period ended September 30, 2023 , an increase of approximately $36,000, or 35.6%.

The year-over-year increase was the result of an annual escalation of guaranteed minimum royalties from an ongoing licensee and the revenue earned from a new licensee partially offset by lost revenue from a terminated licensee in June 2023.

Net revenues — Net revenues were approximately $2.7 million for the three month period ended September 30, 2024 as compared to approximately $2.4 million for the three month period ended September 30, 2023 , an increase of approximately $0.3 million, or 12.3%.

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

Cost of sales — Cost of sales increased approximately $0.5 million, or 36.3% to approximately $2.0 million for the three month period ended June 30, 2024 as compared to approximately $1.5 million for the three month period ended June 30, 2023 .

The increase in absolute terms for the three month period ended June 30, 2024 as compared to the three month period ended June 30, 2023 was primarily related to an increase in net product sales, increased carrying costs of inventory and the product mix of sales in the current quarter.

Selling, general and administrative expenses ( “ S,G&A ” ) — S,G&A was approximately $1.4 million for the three month period ended June 30, 2024 as compared to approximately $1.2 million for the three month period ended June 30, 2023 , an increase of approximately $0.2 million or 18.2%.

S,G&A, as a percentage of net revenues, was approximately 64.4% for the three month period ended June 30, 2024 as compared to approximately 66.2% for the three month period ended June 30, 2023 .

Compensation costs increased by approximately $136,000, legal fees increased by approximately $71,000 and audit fees increased by approximately $42,000 for the three month period ended June 30, 2024 as compared to the three month period ended June 30, 2023 .

Compensation costs for the three month period ended June 30, 2024 were approximately $695,000 as compared to approximately $559,000 for the three month period ended June 30, 2023 .

Legal fees for the three month period ended June 30, 2024 were approximately $184,000 as compared to approximately $113,000 for the three month period ended June 30, 2023 .

Audit fees for the three month period ended June 30, 2024 were approximately $66,000 as compared to approximately $24,000 for the three month period ended June 30, 2023 .

Interest income, net — Interest income, net, was approximately $263,000 for the three month period ended June 30, 2024 as compared to approximately $294,000 for the three month period ended June 30, 2023 , a decrease of approximately $31,000.

Net revenues were approximately $4.9 million for the six month period ended September 30, 2024 as compared to approximately $4.2 million for the six month period ended September 30, 2023 , an increase of approximately $0.7 million, or 16.2%.

Cost of sales — Cost of sales increased approximately $0.4 million, or 20.9% to approximately $2.5 million for the three month period ended September 30, 2024 as compared to approximately $2.1 million for the three month period ended September 30, 2023 .

The increase in absolute terms for the three month period ended September 30, 2024 as compared to the three month period ended September 30, 2023 was primarily related to an increase in net product sales, increased carrying costs of inventory and the product mix of sales in the current quarter.

Cost of sales increased approximately $1.0 million, or 27.4% to approximately $4.5 million for the six month period ended September 30, 2024 as compared to approximately $3.5 million for the six month period ended September 30, 2023 .

The increase in absolute terms for the six month period ended September 30, 2024 as compared to the six month period ended September 30, 2023 was primarily related to an increase in net product sales, increased carrying costs of inventory and the product mix of sales in the current six month period.

Selling, general and administrative expenses ( “ S,G&A ” ) — S,G&A was approximately $1.4 million for the three month period ended September 30, 2024 as compared to approximately $1.1 million for the three month period ended September 30, 2023 , an increase of approximately $0.3 million or 30.6%.

S,G&A, as a percentage of net revenues, was approximately 50.7% for the three month period ended September 30, 2024 as compared to approximately 43.6% for the three month period ended September 30, 2023 .

The increase in S,G&A for the three month period ended September 30, 2024 as compared to the three month period ended September 30, 2023 was driven primarily by increased compensation costs of approximately $259,000, increased audit fees of approximately $29,000, and increased advertising expense of approximately $27,000, partially offset by a decrease in legal fees of approximately $57,000.

Compensation costs for the three month period ended September 30, 2024 were approximately $822,000 as compared to approximately $563,000 for the three month period ended September 30, 2023 .

Audit fees for the three month period ended September 30, 2024 were approximately $54,000 as compared to approximately $25,000 for the three month period ended September 30, 2023 .

Advertising expense for the three month period ended September 30, 2024 were approximately $45,000 as compared to approximately $18,000 for the three month period ended September 30, 2023 .

Legal fees for the three month period ended September 30, 2024 were approximately $55,000 as compared to approximately $112,000 for the three month period ended September 30, 2023 .

S,G&A was approximately $2.8 million for the six month period ended September 30, 2024 as compared to approximately $2.3 million for the six month period ended September 30, 2023 , an increase of approximately $0.5 million or 24.0%.

S,G&A, as a percentage of net revenues, was approximately 56.8% for the six month period ended September 30, 2024 as compared to approximately 53.3% for the six month period ended September 30, 2023 .

The increase in S,G&A for the six month period ended September 30, 2024 as compared to the six month period ended September 30, 2023 was driven primarily by increased compensation costs of approximately $395,000, increased audit fees of approximately $70,000, and increased advertising expense of approximately $26,000.

Compensation costs for the six month period ended September 30, 2024 were approximately $1,517,000 as compared to approximately $1,122,000 for the six month period ended September 30, 2023 .

Audit fees for the six month period ended September 30, 2024 were approximately $120,000 as compared to approximately $50,000 for the six month period ended September 30, 2023 .

Advertising expense for the six month period ended September 30, 2024 were approximately $73,000 as compared to approximately $47,000 for the six month period ended September 30, 2023 .

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

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

See "Note 10 - Legal Proceedings" in the Notes to the Consolidated Financial Statements.

Interest income, net — Interest income, net, was approximately $236,000 for the three month period ended September 30, 2024 as compared to approximately $289,000 for the three month period ended September 30, 2023 , a decrease of approximately $53,000.

The decrease was primarily due to lower levels of cash invested on the Company’s short term investments.

Provision for income taxes — For the three month period ended June 30, 2024 , the Company recorded income tax expense of approximately $3,000 as compared to nil for the three month period ended June 30, 2023 .

The 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 approximately $9,000 for both of the three month periods ended June 30, 2024 and June 30, 2023 , which are now reported as S,G &A.

Interest income, net, was approximately $499,000 for the six month period ended September 30, 2024 as compared to approximately $583,000 for the six month period ended September 30, 2023 , a decrease of approximately $84,000.

The decrease was primarily due to lower levels of cash invested on the Company’s short term investments.

Provision for income taxes — For the three month period ended September 30, 2024 , the Company recorded income tax expense of nil as compared to approximately $88,000 for the three month period ended September 30, 2023 .

For the six month period ended September 30, 2024 , the Company recorded income tax expense of approximately $3,000 as compared to $88,000 for the six month period ended September 30, 2023 .The 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 approximately $9,000 for both of the six month periods ended September 30, 2024 and September 30, 2023 , which are now reported as S,G&A.

See “Note 5 – Income Taxes”.

Although the Company generated net income during the three months ended June 30, 2024 , it has yet to demonstrate the ability to generate net income on a sustained basis in order to realize its deferred tax assets.

Although the Company generated a net loss during the three and six months ended September 30, 2024 , it is unable to realize an income tax benefit until the Company can demonstrate the ability to generate net income on a sustained basis.

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

Net loss — As a result of the foregoing factors, the Company realized a net loss of approximately $962,000 for the three month period ended June 30, 2024 as compared to a net loss of approximately $565,000 for the three month period ended June 30, 2023.

Net loss (income) — As a result of the foregoing factors, the Company realized a net loss of approximately $881,000 for the three month period ended September 30, 2024 as compared to net income of approximately $2,365,000 for the three month period ended September 30, 2023 .

As a result of the foregoing factors, the Company realized a net loss of approximately $1,843,000 for the six month period ended September 30, 2024 as compared to net income of approximately $2,070,000 for the six month period ended September 30, 2023 .

Liquidity and Capital Resources

As of June 30, 2024 , the Company had cash and cash equivalents of approximately $2.8 million as compared to approximately $19.9 million at March 31, 2024 .

Cash and cash equivalents includes short term investments in deposits which were classified as cash equivalents of approximately $2.2 million as of June 30, 2024 compared to approximately $19.1 million of such deposits as of March 31, 2024 .

Working capital decreased to approximately $25.5 million at June 30, 2024 as compared to approximately $26.6 million at March 31, 2024 .

The decrease in cash and cash equivalents of approximately $17.0 million was due to an increase in short term deposits of approximately $16.0 million, the net loss generated during the period of approximately $0.9 million, an increase in prepaid expenses and other current assets of approximately $0.4 million, an increase in accounts receivable of approximately $0.4 million, an increase in prepaid purchases of approximately $0.3 million and an increase in property and equipment of approximately $0.2 million, partially offset by a decrease in inventory of approximately $0.8 million and an increase in accounts payable and other current liabilities of approximately $0.4 million.

Net cash used by operating activities was approximately $0.8 million for the three month period ended June 30, 2024 , resulting from the loss generated during the period of approximately $0.9 million, an increase in prepaid and other current assets of approximately $0.4 million, an increase in accounts receivable of approximately $0.4 million, and an increase in prepaid purchases of approximately $0.3 million, partially offset by a decrease in inventory of approximately $0.8 million and an increase in accounts payable and other current liabilities of approximately $0.4 million.

Net cash used by investing activities was approximately $16.2 million for the three month period ended June 30, 2024 due to purchases of short-term investments of approximately $16.0 million and additions to property and equipment of approximately $0.2 million.

Net cash provided by financing activities was approximately $7,000 for the three month period ended June 30, 2024 due to a new copier lease.

As of September 30, 2024 , the Company had cash and cash equivalents of approximately $0.5 million as compared to approximately $19.9 million at March 31, 2024 .

Cash and cash equivalents includes short term investments in deposits which were classified as cash equivalents of nil as of September 30, 2024 compared to approximately $19.1 million of such deposits as of March 31, 2024 .

Working capital decreased to approximately $23.9 million at September 30, 2024 as compared to approximately $26.6 million at March 31, 2024 .

The decrease in cash and cash equivalents of approximately $19.4 million was due to an increase in short term deposits of approximately $16.3 million, the net loss generated during the period of approximately $1.8 million, an increase in accounts receivable of approximately $0.8 million, a decrease in long-term taxes payable of approximately $0.7 million, a decrease in accounts payable and other current liabilities of approximately $0.3 million, an increase in right of use assets of approximately $0.2 million, an increase in prepaid purchases of approximately $0.2 million and an increase in prepaid expenses and other current liabilities of approximately $0.1 million, partially offset by a decrease in inventory of approximately $0.8 million and an increase in long term operating lease liabilities of approximately $0.2 million.

Net cash used by operating activities was approximately $2.9 million for the six month period ended September 30, 2024 , resulting from the loss generated during the period of approximately $1.8 million, an increase in accounts receivable of approximately $0.8 million, a decrease in income taxes payable of approximately $0.5 million, a decrease in accounts payable and other current liabilities of $0.3 million, an increase in right of use assets of approximately $0.3 million and an increase in prepaid purchases of approximately $0.2 million, partially offset by a decrease in inventory of approximately $0.8 million and an increase in long term lease liabilities of approximately $0.2 million.

Net cash used by investing activities was approximately $16.5 million for the six month period ended September 30, 2024 due to purchases of short-term investments of approximately $16.3 million and additions to property and equipment of approximately $0.2 million.

Net cash provided by financing activities was approximately $7,000 for the six month period ended September 30, 2024 due to a new copier lease.

Sources and Uses of Funds

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Off-Balance Sheet Arrangements

As of June 30, 2024, the Company did not have any off-balance sheet arrangements as defined under the rules of the SEC.

As of September 30, 2024, the Company did not have any off-balance sheet arrangements as defined under the rules of the SEC.

Recent Accounting Pronouncement

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This update is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted.

Upon adoption, the guidance should be applied retrospectively to all prior periods presented in the condensed consolidated financial statements.

We do not expect the adoption of this guidance to have a material impact on our condensed consolidated financial statements.

The adoption of this guidance did not have any impact on the Company's segment reporting.

Quantitative and Qualitative Disclosures About Market Risk.

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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

Item 1. Financial Statements