What changed in this filing

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Item 1. Financial Statements

2025-08-14 compared with 2025-02-14 · 175 added, 206 removed, 396 unchanged (49% of the section changed)

4 unchanged sentences

(In thousands, except per share data)

Three Months Ended December 31, Nine Months Ended December 31,

Three Months Ended June 30,

Net revenues:

2 unchanged sentences

Licensing revenue

111 23 248 124

4,003 2,622 8,939 6,869

Costs and expenses:

Cost of sales

3,512 2,144 7,982 5,654

Selling, general and administrative expenses

1,224 1,202 4,029 3,464

Total cost of sales and SG&A

4,736 3,346 12,011 9,118

Operating loss

1 unchanged sentence

Other income:

Settlement of litigation

Interest income, net

206 289 705 872

(Loss) income before income taxes

( 527 ) ( 435 ) ( 2,367 ) 1,723

(Benefit) provision for income tax expense

Loss before income taxes

( 1,140 ) ( 959 )

Net (loss) income

Provision for income tax expense

( 1,140 ) ( 962 )

Basic (loss) income per share

Basic loss per share

$ ( 0.05 ) $ ( 0.05 )

Diluted (loss) income per share

Diluted loss per share

$ ( 0.05 ) $ ( 0.05 )

7 unchanged sentences

(In thousands except share data)

December 31, 2024

June 30, 2025

March 31, 2025

3 unchanged sentences

Short term investments

Accounts receivable, net of allowances for credit losses of $ 313,000 and $ 257,000 as of December 31, 2024 and March 31, 2024, respectively

13,885 14,868

Accounts receivable, net

Licensing receivable

21 unchanged sentences

Long-term finance lease liability

Income tax payable-deferred

Total Non-Current Liabilities

6 unchanged sentences

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

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

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

52,965,797 shares issued at June 30, 2025 and March 31, 2025, respectively;

21,042,652 shares outstanding at June 30, 2025 and March 31, 2025, respectively

Additional paid-in capital

2 unchanged sentences

( 30,076 ) ( 28,936 )

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

Treasury stock, at cost ( 31,923,145 shares at June 30, 2025 and March 31, 2025, respectively)

( 33,201 ) ( 33,201 )

8 unchanged sentences

(In thousands)

Nine Months Ended December 31,

Three Months Ended June 30,

(In thousands)

Cash Flows from Operating Activities:

Net (loss) income

$ ( 1,140 ) $ ( 962 )

4 unchanged sentences

Accounts receivable

Licensing receivable

1,796 ( 1,948 )

Prepaid purchases

( 119 ) ( 357 )

Prepaid expenses and other current assets

Accounts payable and other current liabilities

Right of use assets-operating

( 83 ) ( 377 )

Right of use assets-finance

Accounts payable and other current liabilities

Short term lease liabilities

Long term lease liabilities

Income taxes payable

( 40 ) ( 11 )

Advanced deposits

Income taxes payable

Deferred revenue

( 32 ) ( 21 )

Net cash (used) by operating activities

3 unchanged sentences

Purchases of short-term investments

( 16,277 ) ( 18,505 )

Additions to property and equipment

( 195 ) ( 107 )

Net cash (used) by investing activities

Net cash provided (used) by investing activities

983 ( 16,215 )

3 unchanged sentences

Net cash provided by financing activities

Net (decrease) in cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

469 ( 17,048 )

Cash and cash equivalents at beginning of the period

19,890 25,268

Cash and cash equivalents at end of the period

1 unchanged sentence

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

13 unchanged sentences

3,677 $ 3,310 52,965,797 $ 529 $ 79,792 $ ( 30,076 ) $ ( 33,201 ) $ 20,354

— — — — — ( 881 ) — ( 881 )

Balance — September 30, 2024

3,677 $ 3,310 52,965,797 $ 529 $ 79,792 $ ( 26,048 ) $ ( 33,201 ) $ 24,382

— — — — — ( 527 ) — ( 527 )

Balance — December 31, 2024

3,677 $ 3,310 52,965,797 $ 529 $ 79,792 $ ( 26,575 ) $ ( 33,201 ) $ 23,855

Preferred Stock

5 unchanged sentences

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

— — — — — 2,635 — 2,635

Balance — September 30, 2023

3,677 $ 3,310 52,965,797 $ 529 $ 79,792 $ ( 22,901 ) $ ( 33,201 ) $ 27,529

— — — — — ( 421 ) — ( 421 )

Balance — December 31, 2023

3,677 $ 3,310 52,965,797 $ 529 $ 79,792 $ ( 23,322 ) $ ( 33,201 ) $ 27,108

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

3 unchanged sentences

NOTE 1 — BACKGROUND AND BASIS OF PRESENTATION

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

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

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 condensed consolidated financial position as of December 31, 2024 and the results of operations for the three and nine month periods ended December 31, 2024 and December 31, 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.

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, 2025 and the results of operations for the three month periods ended June 30, 2025 and June 30, 2024 .

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

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

3 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, 2025 (“fiscal 2025 ”), included in the Company’s Annual Report on Form 10 -K for fiscal 2025.

The results of operations for the three and nine month periods ended December 31, 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 month period ended June 30, 2025 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, 2026 (“fiscal 2026 ”).

Recent Accounting Pronouncements

The following Accounting Standards Updates (“ASUs”) were 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 2023 - 07 Segment Reporting (Topic 280 ):

"Improvements to Reportable Segment Disclosures ” (Issued October 2023 )

In November 2023, the FASB issued ASU 2023 - 07, Segment Reporting (Topic 280 ):

"Improvements to Reportable Segment Disclosures" ("ASU 2023 - 07" ) to update reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses and information used to assess segment performance.

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

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

Accounting Standards Update 2024 - 03 Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220 - 40 ):

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The Company is currently evaluating the impact that the adoption of this ASU will have on its consolidated financial statements.

Accounting Standards Update 2023 - 09 Income Taxes (Topic 740 ):

"Improvements to Income Tax Disclosures" Income Statement Expenses " (Issued December 2023 )

In December 2023, the FASB issued ASU No.

2023 - 09, “Income Taxes (Topic 740 ):

Improvements to Income Tax Disclosures.” ASU2023 - 09 requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid.

ASU 2023 - 09 is effective for public entities with annual periods beginning after December 15, 2024, with early adoption permitted.

The Company is currently evaluating the impact of this guidance on its consolidated financial statements.

Segment Reporting

29 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 December 31, 2024 , the Company recorded deferred revenue of approximately $ 127,000 as compared to approximately $ 191,000 as of March 31, 2024 on its condensed consolidated balance sheets.

As of December 31, 2023 , the Company recorded deferred revenue of $ 212,000 as compared to approximately $ 149,000 as of March 31, 2023 on its condensed consolidated balance sheets.

As of June 30, 2025 , the Company recorded deferred revenue of approximately $ 64,000 as compared to approximately $ 96,000 as of March 31, 2025 on its condensed consolidated balance sheets.

As of June 30, 2024 , the Company recorded deferred revenue of $ 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 the periods presented are related to licensing revenue.

Disaggregation of Revenue

Three Months Ended December 31, Nine Months Ended December 31,

Three Months Ended June 30,

Disaggregation of revenue (in 000's)

3 unchanged sentences

Licensing revenue

Net revenues by customers:

Variety Wholesalers

Grupo Chedraui

Accounts Receivable, net

The Company extends credit based upon evaluations of a customer’s financial condition and provides for any anticipated credit losses in the Company’s financial statements based upon management’s estimates and ongoing reviews of recorded allowances.

The disclosure of the credit loss calculated is based on reasonable and supportable forecasts including historical, current and forecasted information.

Credit is extended for periods between 30 and 90 days, on a net basis.

If the financial condition of a customer deteriorates, resulting in an impairment of that customer’s ability to make payments, additional reserves may be required.

Conversely, reserves are reduced to reflect credit and collection improvements.

Receivables are written off once they are considered uncollectible.

The accounts receivable balance on a net basis was approximately $ 1,327,000 as of June 30, 2025 as compared to approximately $ 1,725,000 as of June 30, 2024 and approximately $ 1,189,000 as of June 30, 2023.

As of June 30, 2025, Fred Meyer and Variety Wholesalers Inc.

("Variety") each accounted for 31 % of the Company’s total trade accounts receivable, net of specific reserves.

As of March 31, 2025, Amazon.com ("Amazon") and Variety accounted for 59 % and 19 %, respectively, of the Company’s total trade accounts receivable, net of specific reserves.

No other customer accounted for more than 10% of the Company’s total trade accounts receivable, net of specific reserves, as of June 30, 2025 or March 31, 2025.

Accounts receivable roll-forward:

As of June 30,

Trade receivables

$ 2,443 $ 1,754 $ 1,215

Allowance for credit losses

( 1,116 ) ( 29 ) ( 26 )

Net revenues by customers:

Accounts receivable, net

1,327 1,725 1,189

Accounts receivables deemed uncollectible are charged against the allowance for credit losses when identified:

As of June 30,

Opening balance

$ ( 1,107 ) $ ( 25 )

Reserve adjustment

Allowance for credit losses

( 1,116 ) ( 29 )

2 unchanged sentences

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

Three Months Ended December 31,

Nine Months Ended December 31,

Net (loss) income

Three Months Ended June 30,

$ ( 1,140 ) $ ( 962 )

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

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

21,042,652 21,042,652

Net (loss) income per share:

Basic and diluted (loss) income per share

Net loss per share:

Basic and diluted loss per share

$ ( 0.05 ) $ ( 0.05 )

NOTE 3 — SHAREHOLDERS ’ EQUITY

Outstanding capital stock at December 31, 2024 consisted of common stock and Series A preferred stock.

Outstanding capital stock at June 30, 2025 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, 2024 , the Company had no options, warrants or other potentially dilutive securities outstanding.

At June 30, 2025 , 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 December 31, 2024 and March 31, 2024 , inventories consisted of the following (in thousands):

December 31, 2024

As of June 30, 2025 and March 31, 2025 , inventories consisted of the following (in thousands):

June 30, 2025

March 31, 2025

2 unchanged sentences

NOTE 5 — INCOME TAXES

At December 31, 2024 , the Com pany had $ 17.4 million of U.S.

At June 30, 2025 , the Com pany had approximately $ 20.2 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, 2024 , the Company had approximately $ 17.9 million of U.S.

At June 30, 2025 , the Company had approximately $ 22.1 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 Company analyzed the future reasonability of recognizing its deferred tax assets at December 31, 2024 .

The Company analyzed the future reasonability of recognizing its deferred tax assets at June 30, 2025 .

As a result, the Company concluded that a 100% valuation allowance of approximately $ 6,452,000 would be recorded against the assets.

The income of foreign subsidiaries before taxes was $ 218,000 for the three month period ended December 31, 2024 as compared to income of foreign subsidiaries before taxes of $ 293,000 for the three month period ended December 31, 2023 .

The income of foreign subsidiaries before taxes was $ 738,000 for the nine month period ended December 31, 2024 as compared to income of foreign subsidiaries before taxes of $ 892,000 for the nine month period ended December 31, 2023 .

Although the Company generated a net operating loss, it recorded income tax expense of approximately nil and $ 3,000 during the three and nine month periods ended December 31, 2024 , respectively, primarily resulting from state income taxes.

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

The income of foreign subsidiaries before taxes was $ 178,000 for the three month period ended June 30, 2025 as compared to income of foreign subsidiaries before taxes of $ 272,000 for the three month period ended June 30, 2024 .

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, 2025 , primarily resulting from state income taxes.

During the three month period ended June 30, 2024 , the Company generated a net operating loss and recorded income tax expense of approximately $ 9,000 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, 2024 , the Company’s open tax years for examination for U.S.

As of June 30, 2025 , 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 December 31, 2024 , the Company is asserting under ASC 740 - 30 that all of the unremitted earnings of its foreign subsidiaries are indefinitely invested.

As of June 30, 2025 , 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 December 31, 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 December 31, 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.

As of each of June 30, 2025 and March 31, 2025 , the Company had a federal tax liability of approximately $ 668,000 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 each of June 30, 2025 and March 31, 2025 , the Company’s short term portion was approximately $ 668,000 and the long term portion was nil .

The liability is payable over 8 years.

The first five installments were each e qual 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 December 31, 2024 , the Company has paid seven of the eight installments.

As of June 30, 2025 , 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 December 31, 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 and nine month periods ended December 31, 2024 , the Company was billed approximately $ 26,000 and $ 101,000 , 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 December 31, 2024 the Company owed approximately $ 1,000 to VACL related to these charges.

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 VACL, which is a company related to the Company's Chairman.

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

During the three month period ended June 30, 2025 , the Company was billed approximately $ 33,000 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, 2025 the Company owed approximately $ 1,000 to VACL related to these charges.

During the three month period ended June 30, 2024 , 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, 2024 the Company owed approximately $ 1,000 to VACL related to these charges.

Charges for promotional items

During the three and nine month periods ended December 31, 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 December 31, 2024 the Company owed nil to TWCPL related to these charges.

During the three and nine month periods ended December 31, 2023 , the Company had no transactions with TWCPL.

During the three month period ended June 30, 2025 , the Company purchased nil of promotional items from The Whisky Capital Pte Ltd ("TWCPL"), which is a company related to the Company's Chairman.

During the three month period ended June 30, 2024 , the Company purchased approximately $ 30,000 of promotional items from TWCPL.

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

NOTE 7 — SHORT TERM DEPOSITS AND INVESTMENTS

As of December 31, 2024 and March 31, 2024 , the Company held $ 50,000 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 December 31, 2024 and March 31, 2024 , the Company held approximately $ 15.8 million and nil, respecti vely, in short term investments which had maturity dates greater than 90 days.

As of June 30, 2025 and March 31, 2025 , the Company held approximately $ 1.0 million and approximately $ 0.9 million, respectively, in short term deposits.

These short term deposits had maturity dates of 90 days or less and are classified as cash equivalents.

As of June 30, 2025 and March 31, 2025 , the Company also held approximately $ 13.9 million and $ 14.9 million, respecti vely, in short term investments which had maturity dates greater than 90 days and are classified as short term investments.

Under ASC Topic 820 Fair Value Measurement, the carrying amounts of the Company’s financial instruments, such as cash, short term deposits and short term investments approximate fair values due to the short-term nature of these instruments and are classified under the fair value hierarchy of Level 1.

NOTE 8 — CONCENTRATION RISK

Customer Concentration

For the three month period ended December 31, 2024 , the Company’s three largest customers accounted for approximately 92 % of the Company’s net revenues, of which Amazon.com ("Amazon") accounted for approximately 43 %, Walmart Inc.

("Walmart") accounted for approximately 25 % and Big Lots Stores, Inc ("Big Lots") accounted for approximately 24 %.

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, 2024 , the Company’s three largest customers accounted for approximately 82 % of the Company’s net revenues, of which Amazon accounted for approximately 38 %, Walmart accounted for approximately 33 % and Big Lots 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 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 %.

For the three month period ended June 30, 2025 , the Company’s three largest customers accounted for approximately 65 % of the Company’s net revenues, of which Variety accounted for approximately 27 %, Fred Meyer accounted for approximately 26 % and Amazon accounted for approximately 12 %.

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 %.

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 accounted for approximately 38 %, Walmart accounted for approximately 36 % and Chedraui accounted for approximately 12 %.

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

1 unchanged sentence

Product Concentration

For the three and nine month periods ended December 31, 2024 , the Company’s gross product sales included microwave ovens, which generated approximately 53 % and 49 %, respectively, of the Company’s gross product sales and audio products, which generated approximately 46 % and 49 %, respectively, of the Company’s gross product sales.

For the three month period ended June 30, 2025 , the Company’s gross product sales included microwave ovens, which generated approximately 87 % of the Company’s gross product sales and audio products, which generated approximately 10 % 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, 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 gros s product sales.

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 %, respectively, of the Company’s gros s 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 52 %, 27 % and 10 % respectively, as of December 31, 2024 .

As a percentage of the Company’s total trade accounts receivable, net of specific reserves, the Company’s top two customers each accounted for approximately 31 %, as of June 30, 2025 .

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 34 %, 30 % and 25 %, respectively, as of March 31, 2024 .

As a percentage of the Company’s total trade accounts receivable, net of specific reserves, the Company’s top two customers accounted for approximately 59 % and 19 %, respectively, as of March 31, 2025 .

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.

The allowance for credit losses on the Company's total trade accounts receivable balances was approximately $ 1,116,000 as of June 30, 2025 and $ 1,107,000 as of March 31, 2025 .

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.

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

as of December 31, 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 $ 0.4 million and approximately $ 19.6 million at December 31, 2024 and March 31, 2024 , respectively.

as of June 30, 2025 and March 31, 2025 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 $ 1.4 million and approximately $ 0.9 million at June 30, 2025 and March 31, 2025 , respectively.

The Company also has short term deposits in foreign financial institutions which are not FDIC insured of approximately $ 13.9 million and $ 14.9 million as of June 30, 2025 and March 31, 2025 , respectively.

Supplier Concentration

During the three month period ended December 31, 2024 , the Company procured 94 % of its products for resale from its four largest factory suppliers, of which approximately 46 % was supplied by its largest supplier and approximately 22 %, 15 % and 11 %, respectively, was supplied by the other three suppliers.

During the three month period ended December 31, 2023 , the Company procured 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, was supplied by the other two suppliers.

No other suppliers accounted for greater than 10% for either the three month period ended December 31, 2024 or December 31, 2023 .

During the nine month period ended December 31, 2024 , the Company procured 94 % of its products for resale from its five largest factory suppliers, of which approximately 41 % was supplied by its largest supplier and approximately 19 %, 12 %, 11 % and 11 %, respectively, was supplied by the other four suppliers.

During the nine month period ended December 31, 2023 , the Company procured 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, was supplied by the other two suppliers.

No other suppliers accounted for greater than 10% for either the nine month period ended December 31, 2024 or December 31, 2023 .

During the three month period ended June 30, 2025 , the Company procured 100 % of its products for resale from its three largest factory suppliers, of which approximately 40 % was supplied by its largest supplier and approximately 40 %, and 20 %, respectively, was supplied by the other two suppliers.

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.

No other suppliers accounted for greater than 10% for either the three month period ended June 30, 2025 or June 30, 2024 .

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 thirty-two to fifty-four months.

These leases have remaining non-cancellable lease terms of twenty-six to forty-eight 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, 2024 to indicate that a reassessment or re-measurement of the Company’s existing leases was required.

As of December 31, 2024 , the Company’s current operating lease liabilities and finance lease liabilities were $ 132,000 and $ 1,000 , respectively and its non-current operating lease liabilities and finance lease liabilities were $ 360,000 and $ 5,000 , respectively.

The Company did not identify any events or conditions during the quarter ended June 30, 2025 to indicate that a reassessment or re-measurement of the Company’s existing leases was required.

As of June 30, 2025 , the Company’s current operating lease liabilities and finance lease liabilities were $ 139,000 and $ 1,000 , respectively and its non-current operating lease liabilities and finance lease liabilities were $ 281,000 and $ 5,000 , 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 December 31, 2024 was $ 476,000 and $ 6,000 , respectively.

The net balance of the Company’s operating and finance lease right-of-use assets as of June 30, 2025 was $ 406,000 and $ 5,000 , 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 December 31, 2024 , the current operating liability of this lease is approximately $ 97,000 and its non-current liability is $ 186,000 .

Its right-of-use asset value is approximately $ 283,000 , as of December 31, 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 December 31,

Nine Months Ended December 31,

(in thousands)

As of June 30, 2025 , the current operating liability of this lease is approximately $ 101,000 and its non-current liability is $ 132,000 .

Its right-of-use asset value is approximately $ 233,000 , as of June 30, 2025 .

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

Three Months Ended June 30,

(in thousands)

Operating lease cost

$ 45 $ 52 $ 145 $ 141

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

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Operating cash flows from operating leases

46 43 141 123

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

Operating leases

Finance leases

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Weighted average remaining lease term (in months)

As of December 31, 2024

As of December 31, 2023

As of June 30, 2025

As of June 30, 2024

Operating leases

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10.50 % 10.50 %

As of December 31, 2024 the maturities of lease liabilities were as follows:

As of June 30, 2025 the maturities of lease liabilities were as follows:

(in thousands)

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Finance Leases

2029 and thereafter

Total lease payments

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The defendants have filed separate bankruptcy petitions in the US Bankruptcy Court for the District of New Jersey, and there is no guarantee that those bankruptcy proceedings will not have any effect on the ability of the Company to collect the judgement.

In addition, in connection with those bankruptcy proceedings, the Chapter 7 trustee of Home Easy has filed a complaint seeking the return of the $ 4.1 million of advanced deposits previously paid to the Company and the outcome of such litigation remains uncertain.

The Company is not currently a party to any other legal proceedings other than litigation matters, in most cases involving ordinary and routine claims incidental to its business.

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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.

NOTE 11 — SUBSEQUENT EVENTS

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

NOTE 11 — SEGMENT INFORMATION

The Company currently operates as one segment which includes two revenue types, product sales and licensing revenue.

While the Company discloses product sales and licensing revenue separately, management does not consider these to be separate segments, as all Emerson branded product is sold though similar sales channels and to similar customers.

Management's determination for the allocation of resources is not analyzed by revenue streams, but as a single business unit.

The determination of a single business segment is consistent with the consolidated financial information provided to the Company's Chief Operating Decision Maker ("CODM").

The Company's CODMs are the Chief Executive Officer, Chief Operating Officer and Chief Financial Officer who review and evaluate consolidated net income for purposes of assessing performance, allocating resources, making operating decisions and for its planning and forecasting processes.

Segment expenses are provided to the CODM on the same basis as disclosed in the condensed Consolidated Statements of Operations.

The CODM does not evaluate performance nor does it allocate resources based on segment assets and therefore such information is not presented in the notes to the financial statements.

SUBSEQUENT EVENTS

As of the filing date of this Form

10 -Q, there were

no subsequent events identified to disclose.

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

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

The following discussion of the Company’s operations and financial condition should be read in conjunction with the unaudited condensed consolidated 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.

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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 amended (the “Exchange Act”).

This Quarterly Report on Form 10-Q 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”), which are subject to the "safe harbor" created by those sections.

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.

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,” or the negative or plural of those terms 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:

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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.

Except as required by law, 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.

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Results of Operations

The following table summarizes certain financial information for the three and nine month periods ended December 31, 2024 (fiscal 2025) and December 31, 2023 (fiscal 2024) (in thousands):

Three Months Ended December 31,

Nine Months Ended December 31,

The following table summarizes certain financial information for the three month period ended June 30, 2025 (fiscal 2026) and June 30, 2024 (fiscal 2025) (in thousands):

Three Months Ended June 30,

Net product sales

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Operating loss

Settlement of litigation

Interest income, net

(Loss) income before income taxes

(Benefit) provision for income taxes

Net (loss) income

Net product sales — Net product sales for the three month period ended December 31, 2024 were approximately $3.9 million as compared to approximately $2.6 million for the three month period ended December 31, 2023, an increase of approximately $1.3 million, or 49.8%.

The Company’s sales during the three month period ended December 31, 2024 were highly concentrated among its three largest customers – Amazon, Walmart and Big Lots – comprising in the aggregate approximately 95% of the Company’s total net product sales during the period.

The Company’s sales during the three month period ended December 31, 2023, were highly concentrated among its two largest customers – Walmart and Amazon – comprising in the aggregate approximately 85% of the Company’s total net product sales.

Net product sales for the nine month period ended December 31, 2024 were approximately $8.7 million as compared to approximately $6.7 million for the nine month period ended December 31, 2023, an increase of approximately $2.0 million, or 28.9%.

The Company’s sales during the nine month period ended December 31, 2024 were highly concentrated among its three largest customers – Amazon, Walmart and Big Lots – comprising in the aggregate approximately 84% of the Company’s total net product sales.

The Company’s sales during the nine month period ended December 31, 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.

Loss before income taxes

Provision for income taxes

Net product sales — Net product sales for the three month period ended June 30, 2025 were approximately $1.6 million as compared to approximately $2.1 million for the three month period ended June 30, 2024, a decrease of approximately $0.5 million, or 25.4%.

The Company’s sales during the three month period ended June 30, 2025 were highly concentrated among its three largest customers – Variety, Fred Meyer and Amazon – comprising in the aggregate approximately 68% of the Company’s total net product sales during the period.

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.

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 $11,000 and $3,000 for the three month periods ended December 31, 2024 and December 31, 2023, respectively, and by approximately $32,000 and $9,000 for the nine month periods ended December 31, 2024 and December 31, 2023, respectively.

In the aggregate, these adjustments had the effect of increasing net product sales and operating income by nil and approximately $10,000 for the three month periods ended June 30, 2025 and June 30, 2024, 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 $1.5 million, or 239.8%, to approximately $2.1 million for the three month period ended December 31, 2024 as compared to approximately $0.6 million for the three month period ended December 31, 2023, driven by increased net sales of newly introduced microwave ovens to the market.

Net sales of houseware products increased approximately $2.4 million, or 118.9%, to approximately $4.4 million for the nine month period ended December 31, 2024 as compared to approximately $2.0 million for the nine month period ended December 31, 2023, driven by increased net sales of newly introduced microwave ovens and refrigerators to the market.

Net sales of houseware products increased approximately $0.3 million, or 29.5%, to approximately $1.4 million for the three month period ended June 30, 2025 as compared to approximately $1.1 million for the three month period ended June 30, 2024, driven by increased net sales of newly introduced microwave ovens to the market.

ii) Audio products:

Net sales of audio products decreased approximately $0.2 million, or 9.9%, to approximately $1.8 million for the three month period ended December 31, 2024 as compared to approximately $2.0 million for the three month period ended December 31, 2023.

Net sales of audio products decreased approximately $0.5 million, or 9.7%, to $4.2 million for the nine month period ended December 31, 2024 as compared to approximately $4.7 million for the nine month period ended December 31, 2023.

Net sales of audio products decreased approximately $0.9 million, or 85.7%, to approximately $0.1 million for the three month period ended June 30, 2025 as compared to approximately $1.0 million for the three month period ended June 30, 2024, primarily due to a discontinued clock radio at Walmart.

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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The aggregate award to the Company also includes the $4.1 million of advanced deposits previously paid to the Company.

The $4.1 million of advanc ed deposits was reduced by approximately $1 million of incurred legal fees.

The $4.1 million of advanced deposits was reduced by approximately $1 million of incurred legal fees.

The remaining balance of $3.1 million was released by the Company to other income during the quarter ended September 30, 2023.

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In addition, in connection with those bankruptcy proceedings, the Chapter 7 trustee of Home Easy has filed a complaint seeking the return of the $4.1 million of advanced deposits previously paid to the Company and the outcome of such litigation remains uncertain.

The Company is not currently a party to any other legal proceedings other than litigation matters, in most cases involving ordinary and routine claims incidental to its business.

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Licensing revenue — Licensing revenue for the three month period ended December 31, 2024 was approximately $111,000 as compared to approximately $23,000 for the three month period ended December 31, 2023, an increase of approximately $88,000, or 382.6%.

The increase for the three month period ended December 31, 2024, was the result of one of the Company's licensees exceeding their annual guaranteed minimum royalties and the revenue earned from a new licensee.

Licensing revenue for the nine month period ended December 31, 2024 was approximately $248,000 as compared to approximately $124,000 for the nine month period ended December 31, 2023, an increase of approximately $124,000, or 100%.

The year-over-year increase was the result of one of its licensees exceeding their annual guaranteed minimum royalties 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 $4.0 million for the three month period ended December 31, 2024 as compared to approximately $2.6 million for the three month period ended December 31, 2023, an increase of approximately $1.4 million, or 52.7%.

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.

Net revenues were approximately $8.9 million for the nine month period ended December 31, 2024 as compared to approximately $6.9 million for the nine month period ended December 31, 2023, an increase of approximately $2.0 million, or 30.1%.

Cost of sales — Cost of sales increased approximately $1.4 million, or 63.8% to approximately $3.5 million for the three month period ended December 31, 2024 as compared to approximately $2.1 million for the three month period ended December 31, 2023.

The increase in absolute terms for the three month period ended December 31, 2024 as compared to the three month period ended December 31, 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 $2.3 million, or 41.2% to approximately $8.0 million for the nine month period ended December 31, 2024 as compared to approximately $5.7 million for the nine month period ended December 31, 2023.

The increase in absolute terms for the nine month period ende d December 31, 2024 as compared to the nine month period ended December 31, 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 nine month period.

Selling, general and administrative expenses ( “ S,G&A ” ) — S,G&A was approximately $1.2 million for both three month periods ended December 31, 2024 and December 31, 2023.

S,G&A, as a percentage of net revenues, was approximately 30.6% for the three month period ended December 31, 2024 as compared to approximately 45.8% for the three month period ended December 31, 2023.

The changes in S,G&A for the three month period ended December 31, 2024 as compared to the three month period ended December 31, 2023 was driven primarily by increased compensation costs of approximately $178,000, increased commission expense of approximately $49,000 and increases in trade expenses of approximately $35,000, partially offset by a decrease in legal fees of approximately $274,000.

Compensation costs for the three month period ended December 31, 2024 were approximately $737,000 as compared to approximately $558,000 for the three month period ended December 31, 2023.

Commission expense fees for the three month period ended December 31, 2024 were approximately $72,000 as compared to approximately $23,000 for the three month period ended December 31, 2023.

Trade expenses for the three month period ended December 31, 2024 were approximately $73,000 as compared to approximately $38,000 for the three month period ended December 31, 2023.

Legal fees for the three month period ended December 31, 2024 generated a benefit of approximately $37,000 as compared to expense of approximately $236,000 for the three month period ended December 31, 2023.

S,G&A was approximately $4.0 million for the nine month period ended December 31, 2024 as compared to approximately $3.5 million for the nine month period ended December 31, 2023, an increase of approximately $0.5 million or 16.3%.

S,G&A, as a percentage of net revenues, was approximately 45.1% for the nine month period ended December 31, 2024 as compared to approximately 50.4% for the nine month period ended December 31, 2023.

The increase in S,G&A for the nine month period ended December 31, 2024 as compared to the nine month period ended December 31, 2023 was driven primarily by increased compensation costs of approximately $573,000, increased trade expenses of $90,000, increased audit fees of approximately $73,000 and increased depreciation expense of approximately $41,000 partially offset by a decrease in legal fees of approximately $260,000.

Compensation costs for the nine month period ended December 31, 2024 were approximately $2,253,000 as compared to approximately $1,680,000 for the nine month period ended December 31, 2023.

Trade expenses for the nine month period ended December 31, 2024 were approximately $210,000 as compared to approximately $120,000 for the nine month period ended December 31, 2023.

Audit fees for the nine month period ended December 31, 2024 were approximately $176,000 as compared to approximately $103,000 for the nine month period ended December 31, 2023.

Depreciation expense for the nine month period ended December 31, 2024 were approximately $57,000 as compared to approximately $16,000 for the nine month period ended December 31, 2023.

Legal fees for the nine month period ended December 31, 2024 were approximately $201,000 as compared to approximately $461,000 for the nine month period ended December 31, 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 $206,000 for the three month period ended December 31, 2024 as compared to approximately $289,000 for the three month period ended December 31, 2023 , a decrease of approximately $83,000.

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

Interest income, net, was approximately $705,000 for the nine month period ended December 31, 2024 as compared to approximately $872,000 for the nine month period ended December 31, 2023 , a decrease of approximately $167,000.

Licensing revenue — Licensing revenue for the three month period ended June 30, 2025 was approximately $86,000 as compared to approximately $69,000 for the three month period ended June 30, 2024, an increase of approximately $17,000, or 24.6%.

The increase for the three month period ended June 30, 2025 was the result of increases of annual guaranteed minimum royalties of the Company's licensees.

Net revenues — Net revenues were approximately $1.7 million for the three month period ended June 30, 2025 as compared to approximately $2.2 million for the three month period ended June 30, 2024, a decrease of approximately $0.5 million, or 23.8%.

The decrease in net revenues can be attributed primarily to the discontinuation of a clock radio partially offset by the introduction of new models of the Company's houseware products to the marketplace.

Cost of sales — Cost of sales decreased approximately $0.3 million, or 17.0% to approximately $1.7 million for the three month period ended June 30, 2025 as compared to approximately $2.0 million for the three month period ended June 30, 2024.

The decrease in absolute terms for the three month period ended June 30, 2025 as compared to the three month period ended June 30, 2024 was primarily related to a decrease in net product sales partially offset by 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 $1.3 million for the three month period ended June 30, 2025 as compared to $1.4 million for the three month period ended June 30, 2024, a decrease of approximately $0.1 million or 6.8%.

S,G&A, as a percentage of net revenues, was approximately 78.8% for the three month period ended June 30, 2025 as compared to approximately 64.4% for the three month period ended June 30, 2024.

The changes in S,G&A for the three month period ended June 30, 2025 as compared to the three month period ended June 30, 2024 was driven primarily by a decrease in legal fees of approximately $141,000 and a decrease in travel and entertainment costs of approximately $42,000 partially offset by an increase in compensation costs of approximately $75,000 and an increase in advertising costs of approximately $27,000.

Legal fees for the three month period ended June 30, 2025 were approximately $43,000 as compared to approximately $184,000 for the three month period ended June 30, 2024.

Travel and entertainment costs for the three month period ended June 30, 2025 were approximately $11,000 as compared to approximately $53,000 for the three month ended June 30, 2024.

Compensation costs for the three month period ended June 30, 2025 were approximately $770,000 as compared to approximately $695,000 for the three month period ended June 30, 2024.

Advertising costs for the three month period ended June 30, 2025 were approximately $55,000 as compared to approximately $28,000 for the three month period ended June 30, 2024.

Interest income, net — Interest income, net, was approximately $169,000 for the three month period ended June 30, 2025 as compared to approximately $263,000 for the three month period ended June 30, 2024, a decrease of approximately $94,000.

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

(Benefit) provision for income taxes — For the three month period ended December 31, 2024, the Company recorded income tax expense of nil as compared to an income tax benefit of approximately $14,000 for the three month period ended December 31, 2023.

For the nine month period ended December 31, 2024, the Company recorded income tax expense of approximately $3,000 as compared to $74,000 for the nine month period ended December 31, 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 nine month periods ended December 31, 2024 and December 31, 2023, which are now reported as S,G&A.

Provision for income taxes — For the three month period ended June 30, 2025, the Company recorded income tax expense of nil as compared to $3,000 for the three month period ended June 30, 2024.

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 each of the three month periods ended June 30, 2025 and June 30, 2024, which are now reported as S,G&A.

See “Note 5 – Income Taxes”.

Although the Company generated a net loss during the three and nine months ended December 31, 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.

Although the Company generated a net loss during the three months ended June 30, 2025 , 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 (income) — As a result of the foregoing factors, the Company realized a net loss of approximately $527,000 for the three month period ended December 31, 2024 as compared to a net loss of approximately $421,000 for the three month period ended December 31, 2023.

As a result of the foregoing factors, the Company realized a net loss of approximately $2,370,000 for the nine month period ended December 31, 2024 as compared to net income of approximately $1,649,000 for the nine month period ended December 31, 2023.

Net loss — As a result of the foregoing factors, the Company realized a net loss of approximately $1,140,000 for the three month period ended June 30, 2025 as compared to a net loss of approximately $962,000 for the three month period ended June 30, 2024.

Liquidity and Capital Resources

As of December 31, 2024, the Company had cash and cash equivalents of approximately $0.7 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 $0.1 million as of December 31, 2024 compared to approximately $19.1 million of such deposits as of March 31, 2024.

Working capital decreased to approximately $23.4 million at December 31, 2024 as compared to approximately $26.6 million at March 31, 2024.

The decrease in cash and cash equivalents of approximately $19.2 million was due to an increase in short term deposits of approximately $15.7 million, the net loss generated during the period of approximately $2.4 million, an increase in accounts receivable of approximately $2.2 million, a decrease in long-term taxes payable of approximately $0.7 million, a decrease in right of use assets of approximately $0.2 million and an increase in property and equipment of approximately $0.1 million, partially offset by a decrease in inventory of approxima tely $1.8 million, an increase in long term operating lease liabilities of approximately $0.2 million and an increase in short-term taxes payable of approximately $0.1 million.

Net cash used by operating activities was approxim ately $3.3 million for the nine month period ended December 31, 2024, resulting from the loss generated during the period of approximately $2.4 million, an increase in accounts receivable of approximately $2.2 million, a decrease in income taxes payable of approximately $0.5 million and an increase in right of use assets of approximately $0.3 million, partially offset by a decrease in inventory of approximately $1.8 million, an increase in long term lease liabilities of approximately $0.2 million and an increase in accounts payab le and other current liabilities of approximately $0.1 million.

Net cash used by investing activities was approximately $16.0 million for the nine month period ended December 31, 2024 due to net purchases of short-term investments of approximately $15.8 million and additions to property and equipment of approximately $0.2 million.

Net cash provided by financing activities was approximately $6,000 for the nine month period ended December 31, 2024 due to a new copier lease.

As of June 30, 2025, the Company had cash and cash equivalents of approximately $1.7 million as compared to approximately $1.2 million at March 31, 2025.

Cash and cash equivalents includes short term investments in deposits which were classified as cash equivalents of approximately $1.0 million as of June 30, 2025 compared to approximately $0.9 million of such deposits as of March 31, 2025.

Working capital decreased to approximately $20.0 million at June 30, 2025 as compared to approximately $21.1 million at March 31, 2025.

The increase in cash and cash equivalents of approximately $0.5 million was due to a decrease in short term deposits of approximately $1.0 million, an increase in accounts payable and current liabilities of approximately $0.9 million and a decrease in accounts receivable of approximately $0.2 million, partially offset by the net loss generated during the period of approximately $1.1 million, an increase in inventory of approximately $0.3 million, an increase in prepaid purchases of approximately $0.1 million and an increase in prepaid expenses and other current assets of approximately $0.1 million.

Net cash used by operating activities was approxim ately $0.5 million for the three month period ended June 30, 2025, resulting from the loss generated during the period of approximately $1.1 million, an increase in inventory of approximately $0.3 million, an increase in prepaid purchases of approximately $0.1 million and an increase in prepaid expenses and other current assets of approximately $0.1 million, partially offset by an increase in accounts payable and other current liabilities of approximately $0.9 million and a decrease in accounts receivable of approximately $0.2 million.

Net cash provided by investing activ ities was approximately $983,000 for t he three month period ended June 30, 2025 due to redemptions of short-term investments.

Net cash provided by financing ac tivities was nil for the three month period ended June 30, 2025 .

Sources and Uses of Funds

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Off-Balance Sheet Arrangements

As of December 31, 2024, the Company did not have any off-balance sheet arrangements as defined under the rules of the SEC.

As of June 30, 2025, the Company did not have any off-balance sheet arrangements as defined under the rules of the SEC.

Recent Accounting Pronouncements

The following ASUs were 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 2023-07 Segment Reporting (Topic 280):

"Improvements to Reportable Segment Disclosures ” (Issued October 2023)

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

"Improvements to Reportable Segment Disclosures" ("ASU 2023-07") to update reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses and information used to assess segment performance.

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

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

Accounting Standards Update 2024-03 Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40):

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The Company is currently evaluating the impact that the adoption of this ASU will have on its consolidated financial statements.

Accounting Standards Update 2023-09 Income Taxes (Topic 740):

"Improvements to Income Tax Disclosures" Income Statement Expenses " (Issued December 2023)

In December 2023, the FASB issued ASU No.

2023-09, “Income Taxes (Topic 740):

Improvements to Income Tax Disclosures.” ASU2023-09 requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid.

ASU 2023-09 is effective for public entities with annual periods beginning after December 15, 2024, with early adoption permitted.

The Company is currently evaluating the impact of this guidance on its consolidated financial statements.

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