EMERSON RADIO CORP 10-K

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Index to Consolidated Financial Statements Page No. Report of Independent Registered Public Accounting Firm (Grassi & Co., CPAs, P.C., NY PCAOB firm ID 606) 28 Consolidated Statements of Operations for the years ended March 31, 2026 and 2025 29 Consolidated Balance Sheets as of March 31, 2026 and 2025 30 Consolidated Statements of Changes in Shareholders’ Equity for the years ended March 31, 2026 and 2025 31 Consolidated Statements of Cash Flows for the years ended March 31, 2026 and 2025 32 Notes to Consolidated Financial Statements 33 27 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To: the Board of Directors and Stockholders of Emerson Radio Corp. and Subsidiaries Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Emerson Radio Corp. and Subsidiaries (the “Company”) as of March 31, 2026 and 2025, and the related consolidated statements of operations, changes in stockholders' equity, and cash flows for each of the two years in the period ended March 31, 2026 and March 31, 2025, and the related notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2026, and the results of their operations and its cash flows for each of the two years in the period ended March 31, 2026, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical audit matters The critical audit matters communicated are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved are especially challenging, subjective, or complex judgements. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements. We determined that there are no critical audit matters. /s/ GRASSI & CO., CPAs, P.C. We have served as the Company’s auditor since 2024. Jericho, New York June 26, 2026 28 Table of Contents Table of Contents EMERSON RADIO CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS For The Years Ended March 31, 2026 and 2025 (In thousands, except per share data) 2026 2025 Net revenues: Net product sales $ 5,924 $ 10,449 Licensing revenue 386 336 Net revenues 6,310 10,785 Costs and expenses: Cost of sales 6,216 9,884 Selling, general and administrative expenses 4,964 6,516 Total cost of sales and SG&A 11,180 16,400 Operating loss ( 4,870 ) ( 5,615 ) Other income: Interest income, net 570 887 (Loss) before income taxes ( 4,300 ) ( 4,728 ) Provision for income tax expense — 3 Net (loss) $ ( 4,300 ) $ ( 4,731 ) Basic (loss) per share $ ( 0.20 ) $ ( 0.22 ) Diluted (loss) per share $ ( 0.20 ) $ ( 0.22 ) Weighted average shares outstanding Basic 21,042,652 21,042,652 Diluted 21,042,652 21,042,652 The accompanying notes are an integral part of the consolidated financial statements. 29 Table of Contents EMERSON RADIO CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS As of March 31, 2026 and 2025 (In thousands) March 31, 2026 March 31, 2025 ASSETS Current Assets: Cash and cash equivalents $ 9,194 $ 1,186 Short term investments 3,138 14,868 Accounts receivable, net 1,293 1,499 Licensing receivable 106 42 Inventory 4,128 4,909 Prepaid purchases 74 43 Prepaid expenses and other current assets 194 247 Total Current Assets 18,127 22,794 Non-Current Assets: Property and equipment, net 129 211 Right-of-use asset-operating leases 300 443 Right-of-use asset-finance leases 4 6 Other assets 76 76 Total Non-Current Assets 509 736 Total Assets $ 18,636 $ 23,530 LIABILITIES AND SHAREHOLDERS’ EQUITY Current Liabilities: Accounts payable and other current liabilities 1,111 808 Due to affiliate 1 1 Short-term operating lease liability 162 136 Short-term finance lease liability 1 1 Income tax payable, current portion 5 668 Deferred revenue — 96 Total Current Liabilities 1,280 1,710 Non-Current Liabilities: Long-term operating lease liability 158 321 Long-term finance lease liability 4 5 Total Non-Current Liabilities 162 326 Total Liabilities $ 1,442 $ 2,036 Shareholders’ Equity: Series A Preferred shares — 10,000,000 shares authorized; 3,677 shares issued and outstanding; liquidation preference of $ 3,677,000 3,310 3,310 Common shares — $ 0.01 par value, 75,000,000 shares authorized; 52,965,797 shares issued at March 31, 2026 and 2025, respectively; 21,042,652 shares outstanding at March 31, 2026 and 2025, respectively 529 529 Additional paid-in capital 79,792 79,792 Accumulated deficit ( 33,236 ) ( 28,936 ) Treasury stock, at cost ( 31,923,145 shares at March 31, 2026 and 2025, respectively) ( 33,201 ) ( 33,201 ) Total Shareholders’ Equity 17,194 21,494 Total Liabilities and Shareholders’ Equity $ 18,636 $ 23,530 The accompanying notes are an integral part of the consolidated financial statements. 30 Table of Contents EMERSON RADIO CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS ’ EQUITY For The Years Ended March 31, 2026 and 2025 (In thousands) Preferred Stock Common Stock Additional Total Number Preferred Number Par Paid-In Accumulated Treasury Shareholders’ of Shares Value of Shares Value Capital Deficit Stock Equity Balance — March 31, 2024 3,677 $ 3,310 52,965,797 $ 529 $ 79,792 $ ( 24,205 ) $ ( 33,201 ) $ 26,225 Net income — — — — — ( 4,731 ) — ( 4,731 ) Balance — March 31, 2025 3,677 $ 3,310 52,965,797 $ 529 $ 79,792 $ ( 28,936 ) $ ( 33,201 ) $ 21,494 Net loss — — — — — ( 4,300 ) — ( 4,300 ) Balance — March 31, 2026 3,677 $ 3,310 52,965,797 $ 529 $ 79,792 $ ( 33,236 ) $ ( 33,201 ) $ 17,194 The accompanying notes are an integral part of the consolidated financial statements 31 Table of Contents EMERSON RADIO CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For The Years Ended March 31, 2026 and 2025 2026 2025 (In thousands) Cash Flows from Operating Activities: Net (loss) $ ( 4,300 ) $ ( 4,731 ) Adjustments to reconcile net loss to net cash (used in) operating activities: Non-cash lease expense 146 152 Depreciation and amortization 82 79 Non-cash reserve charges ( 1,100 ) 1,106 Changes in assets and liabilities: Accounts receivable 1,306 ( 1,262 ) Licensing receivable ( 64 ) ( 5 ) Inventory 781 2,044 Prepaid purchases ( 31 ) 64 Prepaid expenses and other current assets 53 27 Other assets — 8 Accounts payable and other current liabilities 303 ( 350 ) Right of use assets-operating — ( 313 ) Right of use assets-finance — ( 6 ) Short term lease liabilities 26 43 Long term lease liabilities ( 163 ) 123 Income taxes payable ( 663 ) ( 531 ) Deferred revenue ( 96 ) ( 95 ) Net cash (used in) operating activities ( 3,720 ) ( 3,647 ) Cash Flows From Investing Activities: Proceeds from sale of short-term investments 20,809 1,409 Purchases of short-term investments ( 9,080 ) ( 16,277 ) Additions to property and equipment — ( 195 ) Net cash provided by (used in) investing activities 11,729 ( 15,063 ) Cash Flows from Financing Activities: Short term finance liability — 1 Long term finance liability ( 1 ) 5 Net cash (used in) provided by financing activities ( 1 ) 6 Net increase (decrease) in cash and cash equivalents 8,008 ( 18,704 ) Cash and cash equivalents at beginning of the year 1,186 19,890 Cash and cash equivalents at end of the year $ 9,194 $ 1,186 Supplemental disclosure of non-cash investing and financing activities: Right-of-use assets obtained in exchange for new operating lease liabilities $ — $ 313 Right-of-use assets obtained in exchange for new finance lease liabilities $ — $ 6 Supplemental disclosures: Cash paid for: Interest $ 15 $ 9 Income taxes $ 676 $ 535 The accompanying notes are an integral part of the consolidated financial statements 32 Table of Contents EMERSON RADIO CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 — SIGNIFICANT ACCOUNTING POLICIES: Description of the Business The consolidated financial statements include the accounts of Emerson Radio Corp. (“Emerson”, consolidated — the “Company”), and its subsidiaries. The Company designs, sources, imports and markets a variety of houseware and consumer electronic products, and licenses the Emerson trademark for a variety of products domestically and internationally. Basis of Presentation and Principals of Consolidation It is the Company’s policy to prepare its consolidated financial statements in conformity with accounting principles generally accepted in the United States (“US GAAP”). The consolidated financial statements include the accounts of the Company and its wholly-owned or controlled subsidiaries. All significant intercompany accounts and transactions have been eliminated in the consolidation. Use of Estimates The preparation of the Company's financial statements requires management to make estimates and judgements which affect the reported amounts of assets, liabilities, revenues and expenses. Management considers certain accounting policies related to inventory, trade accounts receivables, impairment of long-lived assets, valuation of deferred tax assets, sales return reserves and sales allowance accruals to be critical policies due to the estimation processes involved in each. Actual results could differ from those estimates. Cash and Cash Equivalents Highly liquid investments with original maturities of 90 days or less at the time of purchase are considered to be cash equivalents. Fair Values of Financial Instruments The carrying amounts for cash and cash equivalents, trade accounts receivable, accounts payable and accrued liabilities approximate fair value due to the short-term maturity of these financial instruments. Long-Lived Assets The C ompany’s long-lived assets include property and equipment and right of use assets. At March 31, 2026 , the Company had approximately $ 129,000 of property and equipment, net of accumulated depreciation. At March 31, 2026 , the Company's right of use assets were approximately $ 304,000 . The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable in accordance with ASC Topics 350 “Intangibles” and 360 “Property, Plant and Equipment”. The recoverability of assets held and used is measured by a comparison of the carrying amount of the asset to the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. Future events could cause the Company to conclude that impairment indicators exist and that long-lived as sets may be impaired. If impairment is deemed to exist, the asset will be written down to fair value. Any such impairment loss could have a material adverse impact on the Company’s financial condition and results of operations. Property and Equipment Property and equipment are carried at cost, less accumulated depreciation and amortization. Depreciation is computed using the straight-line method over the estimated useful lives of the assets being depreciated. The cost of maintenance and repairs is charged to expense as incurred. Significant renewals and betterments are capitalized and depreciated over the remaining estimated useful lives of the related assets. At time of disposal, the cost and related accumulated depreciation are removed from the Company’s records and the difference between net carrying value of the asset and the sale proceeds is recorded as a gain or loss. 33 Table of Contents Depreciation of property and equipment is provided by the straight-line method as follows: • Computer, Equipment and Software Three years to seven years • Furniture and Fixtures Seven years • Molds Three years Revenue Recognition Distribution of products Revenue recognition : Sales to customers and related cost of sales are primarily recognized at the point in time when control of goods transfers to the customer. The Company recognizes revenues at the time title passes to the customer as this is when the Company satisfies its performance obligation under the contracts with its customers. Under the Direct Import Program, title passes in the country of origin. Under the Domestic Program, title passes primarily at the time of shipment. Estimates for future expected returns are based upon historical return rates and netted against revenues. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring goods. Revenue is recorded net of customer discounts, promotional allowances, volume rebates and similar charges. When the Company offers the right to return product, historical experience is utilized to establish a liability for the estimate of expected returns. Sales and other tax amounts collected from customers for remittance to governmental authorities are excluded from revenue. Management must make estimates of potential future product returns related to current period product revenue. Management analyzes historical returns, current economic trends and changes in customer demand for the Company’s products when evaluating the adequacy of the reserve for sales returns. Management judgments and estimates must be made and used in connection with establishing the sales return reserves in any accounting period. Additional reserves may be required if actual sales returns increase above the historical return rates. Conversely, the sales return reserve could be decreased if the actual return rates are less than the historical return rates, which were used to establish the reserve. The Company adopted ASC topic 606, "Revenue from Contracts with Customers" ("ASC 606" ). Sales allowances, marketing support programs, promotions and other volume-based incentives which are provided to retailers and distributors are accounted for on an accrual basis as a reduction to net revenues in the period in which the related sales are recognized. Prior to the adoption of ASC 606, the Company followed the provisions of ASC topic 605, "Revenue Recognition" ("ASC 605" ). The adoption of ASC 606 did not have a material impact on revenue recognition as compared to revenue recognition provided under ASC 605. If additiona l marketing support programs, promotions and other volume-based incentives are required to promote the Company’s products subsequent to the initial sale, then additional reserves may be required and are accrued for when such support is offered. The Company offers limited warranties for its consumer electronics, comparable to those offered to consumers by the Company’s competitors in the United States. Such warranties typically consist of a one year period for microwaves and a 90 day period for audio products, under which the Company pays for labor and parts, or offers a new or similar unit in exchange for a non-performing unit. Licensing The Company grants licenses for the right to access the Company’s intellectual property, specifically the Company’s trademarks, for a stated term for the manufacture and/or sale of consumer electronics and other products under agreements which require payment of either (i) a non-refundable minimum guaranteed royalty or, (ii) the greater of the actual royalties due (based on a contractual calculation, normally comprised of actual product sales by the licensee multiplied by a stated royalty rate, or “Sales Royalties”) or a minimum guaranteed royalty amount. In the case of (i), such amounts are recognized as revenue on a straight-line basis over the term of the license agreement. In the case of (ii), Sales Royalties in excess of guaranteed minimums are accounted for as variable fees and are not recognized as revenue until the Company has ascertained that the licensee’s sales of products have exceeded the guaranteed minimum. In effect, the Company recognizes the greater of Sales Royalties earned to date or the over-time amount of minimum guaranteed royalties to date. In the case where a royalty is paid to the Company in advance, the royalty payment is initially recorded as deferred revenue on the consolidated balance sheets and recognized as revenue as the royalties are deemed to be earned according to the principles outlined above. As of March 31, 2026, the Company recorded deferred revenue of nil as compared to approximately $ 96,000 as of March 31, 2025 and 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 Disaggregation of revenue (in 000's) 2026 2025 Net revenues by type: Net product sales $ 5,924 $ 10,449 Licensing revenue 386 336 Total: 6,310 10,785 Net revenues by customers: (over 10%) Amazon.com $ 2,656 $ 4,156 Fred Meyer 839 — Walmart — 3,322 Total: $ 3,495 $ 7,478 34 Table of Contents Inventory Inventory is valued at the lower of cost or net realizable value. Cost is determined using the first -in, first -out basis and includes inventory purchase costs and allocated overhead. The Company records valuation adjustments for the excess cost of inventory over the estimated net realizable value. Valuation adjustments for slow-moving and obsolete inventory are calculated on an individual product basis based on physical inspection of the product in connection with a physical inventory, review of slow-moving products, forecasted sales, and consideration of active marketing programs. 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. Credit is extended for periods between 30 and 150 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 $ 1,293,000 as of March 31, 2026 as compared to approximately $ 1,499,000 as of March 31, 2025 and approximately $ 1,343,000 as of March 31, 2024. The allowance for credit losses decreased approximately $ 1,100,000 for the year ended March 31, 2026 and increased by $ 1,082,000 for the year ended March 31, 2025 . As of March 31, 2026 , Amazon and Fred Meyer accounted for 64 % and 20 %, respectively, of the Company’s total trade accounts receivable, net of specific reserves. As of March 31, 2025 , Amazon and Variety Wholesalers accounted for approximately 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 speci fic reserves, as of March 31, 2026 or March 31, 2025 . Accounts receivable roll-forward: As of March 31, 2026 2025 2024 Trade receivables $ 1,300 $ 2,606 $ 1,368 Allowance for credit losses ( 7 ) ( 1,107 ) ( 25 ) Accounts receivable, net $ 1,293 $ 1,499 $ 1,343 Accounts receivables deemed uncollectible are charged against the allowance for credit losses when identified: As of March 31, 2026 2025 Opening balance $ ( 1,107 ) $ ( 25 ) Reserve adjustment 1,100 ( 1,082 ) Allowance for credit losses $ ( 7 ) $ ( 1,107 ) Cost of Sales Cost of sales includes actual product cost, quality control costs, duty, buying costs, the cost of transportation to the Company’s third party logistics providers’ warehouse from its manufacturers and warehousing costs. Selling, General and Administrative Expenses Selling, general and administrative expenses include all operating costs of the Company that are not directly related to the cost of procuring product or costs not included in other operating costs and expenses. Sales Return Reserves Management must make estimates of potential future product returns related to current period product revenue. Management analyzes historical returns, current economic trends and changes in customer demand for the Company’s products when evaluating the adequacy of the reserve for sales returns. Management judgments and estimates must be made and used in connection with establishing the sales return reserves in any accounting period. Additional reserves may be required if actual sales returns increase above the historical return rates. Conversely, the sales return reserve could be decreased if the actual return rates are less than the historical return rates, which were used to establish the reserve. At March 31, 2026 the sales return reserve balance was approximately $ 57,000 as compared to approximately $ 70,000 as of March 31, 2025 , a decrease of $ 13,000 during fiscal 2026 . At March 31, 2025 , the sales return reserve balance was approximately $ 70,000 as compared to approximately $ 67,000 as of March 31, 2024 , an increase of $ 3,000 during fiscal 2025 . Foreign Currency The assets and liabilities of foreign subsidiaries, whose functional currencies are other than the United States Dollar, have been translated at current exchange rates, and related revenues and expenses have been translated at average rates of exchange in effect during the year. Related translation adjustments are reported as a separate component of shareholders’ equity. Losses and gains resulting from foreign currency transactions are included in the results of operations. The Company generally does not enter into foreign currency exchange contracts to hedge its exposures related to foreign currency fluctuations and there were no foreign exchange forward contracts held by the Company at March 31, 2026 or March 31, 2025 . Advertising Expenses Advertising expenses are charged against earnings as incurred and are included in selling, general and administrative expenses. The Company incurred approximately $ 234,000 of advertising expenses during fiscal 2026 and approximately $ 165,000 during fisc al 2025 . Sales Allowance and Marketing Support Expenses Sales allowances, marketing support programs, promotions and other volume-based incentives which are provided to retailers and distributors are accounted for on an accrual basis as a reduction to net revenues in the period in which the related sales are recognized in accordance with ASC 606. 35 Table of Contents At the time of sale, the Company reduces recognized gross revenue by allowances to cover, in addition to estimated sales returns as required by ASC 606, (i) sales incentives offered to customers that meet the criteria for accrual and (ii) an estimated amount to recognize additional non-offered deductions it anticipates and can reasonably estimate will be taken by customers which it does not expect to recover. Accruals for the estimated amount of future non-offered deductions are required to be made as contra-revenue items because that percentage of shipped revenue fails to meet the collectability criteria within ASC 606. If additional marketing support programs, promotions and other volume-based incentives are required to promote the Company’s products subsequent to the initial sale, then additional reserves may be required and are accrued for when such support is offered. The sales and marketing support accrual activity for fiscal 2026 and fiscal 2025 was as follows (in thousands): Balance at March 31, 2024 $ 153 additions 864 usages ( 805 ) adjustments ( 38 ) Balance at March 31, 2025 $ 174 additions 580 usages ( 717 ) adjustments 146 Balance at March 31, 2026 $ 183 Interest income, net The Company records interest income as earned and interest expense as incurred. The net interest income for fiscal 2026 and 2025 consists of: 2026 2025 (In thousands) Interest expense $ ( 15 ) $ ( 9 ) Interest income 585 896 Interest income, net $ 570 $ 887 Income Taxes Deferred income taxes are recorded to account for the tax effects of differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred tax assets have been recorded net of an appropriate valuation allowance, to the extent management believes it is more likely than not that such assets will be realized. (See Note 5 “Income Taxes.”) Any tax penalties are recorded as part of selling, general and administrative expenses and any interest to which the Company is subject, is recorded as a part of income tax expense. Penalties and interest incurred during fiscal 2026 and fiscal 2025 were both nil . Earnings Per Common Share Earnings per common share are based upon the weighted average number of common and common equivalent shares outstanding. Outstanding stock options and warrants are treated as common stock equivalents when dilution results from their assumed exercise. As of March 31, 2026 and March 31, 2025 , the Company had no outstanding options or warrants. 36 Table of Contents Recently Adopted Accounting Pronouncements Accounting Standards Update 2025 - 05 Financial Instruments — Credit Losses (Topic 326 ): Measurement of Credit Losses for Accounts Receivable and Contract Assets In July 2025, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2025 - 05, which provides ( 1 ) all entities with a practical expedient and ( 2 ) entities other than public business entities with an accounting policy election when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under Topic 606, Revenue from Contracts with Customers. The practical expedient allows an entity to assume that, when estimating expected credit losses, current conditions as of the balance sheet date remain unchanged for the remaining life of the asset. The accounting policy election permits nonpublic entities that elect the practical expedient to also consider collection activity occurring after the balance sheet date when estimating expected credit losses. The standard is effective for fiscal years beginning after December 15, 2025, and for interim periods within those annual reporting periods. Early adoption is permitted. The Company has adopted ASU 2025 - 05 for the three and nine month periods ended December 31, 2025. The adoption did not have a material impact on its financial condition, results of operations or cash flows. 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 adopted ASU 2023 - 09 on a prospective basis effective March 31, 2026. Accordingly, the enhanced income tax disclosures are presented beginning in fiscal 2026 and prior disclosures have not been recast. The adoption of this guidance did not have an impact on the Company's consolidated results of operations, financial condition or cash flows, as the amendments relate solely to disclosure requirements. 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 2024 - 03 Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220 - 40 ): "Disaggregation of Income Statement Expenses " (Issued November 2024 ) In November 2024, the FASB issued ASU No. 2024 - 03 “Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220 - 40 ): Disaggregation of Income Statement Expenses.” This ASU requires public business entities to disclose, for interim and annual reporting periods, additional information about certain income statement expense categories. The requirements are effective for fiscal years beginning after December 15, 2026, and for interim periods beginning after December 15, 2027. Entities are permitted to apply either the prospective or retrospective transition methods. The Company is currently evaluating the impact that the adoption of this ASU will have on its consolidated financial statements. NOTE 2 — INVENTORIES: Inventories are stated at the lower of cost or net realizable value. Cost is determined using the first -in, first -out method. As of March 31, 2026 and March 31, 2025 , inventories consisted exclusively of purchased finished goods. As of March 31, 2026 , inventory was valued at approximately $ 4,128,000 which included a valuation reserve of approximately $ 343,000 . As of March 31, 2025 , inventory was valued at approximately $ 4,909,000 which included a valuation reserve of approximately $ 354,000 . NOTE 3 — RELATED PARTY TRANSACTIONS: From time to time, Emerson engages in business transactions with its controlling shareholder, Nimble, formerly known as The Grande Holdings Limited, and one or more of Nimble’s direct and indirect subsidiaries, or with entities related to the Company’s Chairman of the Board. Set forth below is a summary of such transactions. Controlling Shareholder S&T International Distribution Limited (“S&T”), which is a wholly owned subsidiary of Grande N.A.K.S. Ltd. ("N.A.K.S"), 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 March 31, 2026 . Accordingly, the Company is a “controlled company” as defined in Section 801 (a) of the Company Guide. Related Party Transactions Charges of rental and utility fees on office space in Hong Kong D uring fiscal 2026 and fiscal 2025 , the Company was billed approximately $ 130,000 and $ 138,000 , 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. The Company owed $ 802 to VACL related to rental charges as of March 31, 2026 and $ 819 as of March 31, 2025 . During fiscal 2026 and fiscal 2025 , the Company was billed nil and approximately $ 385 , respectively, for its share of installation charges related to an air conditioning system, and purchase of protective materials for coronavirus from Vigers Strategic Services Ltd (“VSSL”), which is a company related to the Company’s Chairman of the Board. Vigers Strategic Services Ltd was formerly known as Lafe Strategic Services Ltd. The Company owed nil to VSSL related to these charges at March 31, 2026 and March 31, 2025 . Charges for promotional items During fiscal 2026 and 2025 , the Company purchased nil and approximately $ 30,000 , resp ectively, of promotional items from The Whisky Capital Pte Ltd ("TWCPL"), which is a company related to the Company's Chairman. The Company owed nil to TWCPL related to these charges as at March 31, 2026 and March 31, 2025 . 37 Table of Contents NOTE 4 — PROPERTY AND EQUIPMENT: As of March 31, 2026 and 2025 , property and equipment is comprised of the following: 2026 2025 (In thousands) Computer equipment and software $ 180 $ 190 Furniture and fixtures 10 10 Autos 163 163 Molds 130 130 483 493 Less accumulated depreciation and amortization ( 354 ) ( 282 ) Total property and equipment $ 129 $ 211 Depreciation of property and equipment amounted to approximately $ 83,000 and $ 78,000 for the twelve months ended March 31, 2026 and 2025 , respectively. During fiscal 2026 and 2025 , the Company disposed of fully depreciated computer equipment of approximately $ 10,000 with no gain or loss on the disposal. NOTE 5 — INCOME TAXES: The Company accounts for uncertain tax positions in accordance with the provisions of ASC Topic 740, "Accounting for Income Taxes" ("ASC 740" ). When uncertain tax positions exist, the Company will recognize the tax benefit of tax positions to the extent that the benefit will more likely than not be realized. The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances. As of March 31, 2026 , the Company does not believe it has any uncertain tax positions. Income taxes are recorded in accordance with ASC 740, which provides for deferred taxes using an asset and liability approach. The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. The Company determines its deferred tax assets and liabilities based on differences between financial reporting and tax bases of assets and liabilities, which are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Valuation allowances are provided, if based upon the weight of available evidence, it is more likely than not some or all of the deferred tax assets will not be realized. As of March 31, 2026 , the Company had available net operating loss carryforwards to reduce federal and state income taxes of approximately $ 24.4 million and $ 25.5 million respectively. If not utilized, these carryforwards begin to expire in 2036 . Of the federal net operating loss carryforwards at March 31, 2026 , $ 24.4 million can be carried forward indefinitely. As of March 31, 2025, the Company had $ 2.2 million of foreign net operating loss carryforwards which do not expire. Utilization of the net operating loss and tax credit carryforwards may be subject to a substantial annual limitation due to ownership change limitations that have occurred previously or that could occur in the future, as provided by Section 382 of the Internal Revenue Code of 1986, as amended, or the Code, or Section 382, as well as similar state provisions and other provisions of the Code. Ownership changes may limit the amount of net operating losses and tax credit carryforwards that can be utilized annually to offset future taxable income and tax, respectively. In general, an ownership change, as defined by Section 382, occurs when there is greater than 50% change in the ownership of stock among certain 5% shareholders over a three -year period. The Company is taxed as a C corporation for federal income tax purposes. Income taxes for the Company are recorded in accordance with ASC 740, which provides for deferred taxes using an asset and liability approach. Income taxes have been calculated on a separate tax return basis. The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, the Company determined deferred tax assets and liabilities on the basis of the differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. The Company recognized deferred tax assets to the extent that it believes that these assets are more likely than not to be realized. In making such a determination, the Company considers all positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and results of recent operations. If the Company determines that it would be able realize its deferred tax assets in the future in excess of their net recorded amount, it would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. The Company records uncertain tax positions in accordance with ASC 740 on the basis of a two -step process in which ( 1 ) it determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and ( 2 ) for those tax positions that meet the more-likely-than- not threshold, the Company recognizes the largest amount of tax benefit that is more than 50% likely to be realized upon ultimate settlement with the related tax authority. The Company recognizes interest and penalties related to unrecognized tax benefits on the income tax expense line in the accompanying consolidated statement of operations. As of March 31,2026, there were no interest or penalties to be accrued for. 38 Table of Contents Improvements to income tax disclosures In December 2023, the financial, the FASB issued ASU 2023 - 09, Income Taxes (Topic 740 ) - Improvements to Income Tax Disclosures. The ASU enhances the transparency and decision usefulness of income tax disclosures by requiring additional disaggregation of information related to the effective tax rate reconciliation, income taxes paid and income tax expense and pretax income by jurisdiction. The Company adopted ASU 2023 - 09 on a prospective basis effective March 31,2026. Accordingly, the enhanced income tax disclosures are presented beginning in fiscal year 2026 and prior period disclosures have not been recast. The adoption of this guidance did not have an impact on the Company's consolidated results of operations, financial position or cash flows, as the amendments relate solely to disclosure requirements. The Company’s provision for income tax expense for fiscal 2026 and fiscal 2025 was as follows: The income/(loss) from operations before tax expense (benefit) consisted of the following for the years ended March 31, 2026 and 2025: 2026 2025 (In thousands) Pre-tax (loss)/income Domestic $ ( 4,964 ) $ ( 5,653 ) Foreign 664 925 Total pre-tax (loss)/income $ ( 4,300 ) $ ( 4,728 ) The income tax provision consisted of the following for the years ended March 31, 2026 and 2025. 2026 2025 (In thousands) Current: U.S. Federal $ — $ 3 U.S. State and local — — Foreign — — Total Current Expense — 3 Deferred: U.S. Federal — — U.S. State and local — — Foreign — — Total Deferred Expense — — Provision for income tax expense $ — $ 3 The Company adopted ASU 2019 - 12 (Topic 740 ) Simplifying the Accounting for Income Taxes during fiscal 2025 . In the table above, the inco me tax expense of $ 11,000 in fiscal 2026 and $ 8,000 in fis cal 2025 , was removed as it represented non-income based taxes. 39 Table of Contents The Company files a consolidated federal return and certain state and local income tax returns. The difference between the effective rate reflected in the provision for income taxes and the amounts determined by applying th e statutory federal rate of 21 % to earnings before income ta xes for fiscal 2026 and fiscal 2025 is analyzed below: A reconciliation of the provision for income to the amount computed by applying the 21% statutory U.S federal income tax rate to income before income taxes after the adoption of ASU 2023-09 as follows: As of March 31, 2026 (In thousands) (percentage) U.S. Federal Statutory Tax Rate $ ( 901 ) 20.9 % State and Local Income Taxes, Net of Federal Income Tax Effect — 0.0 % Foreign Tax Effects Hong Kong Foreign rate differential ( 84 ) 2.0 % Interest Income ( 47 ) 1.1 % Other ( 12 ) 0.3 % Change in valuation allowance 5 ( 0.1 )% Effect of Cross-Border Tax Laws Global intangible low-taxed income (GILTI) 8 ( 0.2 )% SubPart F 121 ( 2.8 )% Changes in Valuation Allowances 910 ( 21.2 )% Nontaxable or Nondeductible Items Other — 0.0 % Effective Income Tax $ — 0.0 % As previously disclosed for the years ended March 31, 2025 prior to the adoption of ASU 2023-09, the following is a reconciliation of the difference between the effective income tax rate and federal statutory rate: As of March 31, 2025 (In thousands) (percentage) Statutory provision $ ( 991 ) 20.9 % Foreign subsidiary ( 118 ) 3.0 % State taxes ( 293 ) 7.0 % Permanent differences 124 ( 3.0 )% Adjustment to prior year taxes ( 355 ) 8.0 % Valuation allowance 1,636 ( 34.6 )% Provision for income tax expense $ 3 0.0 % As of March 31, 2026 and March 31, 2025 , the principal components of the Company's deferred tax assets are as follows: 2026 2025 (In thousands) Deferred tax assets: Accounts receivable reserves $ 22 $ 327 Inventory 189 175 Accruals 12 10 Net operating loss and credit carry forwards 7,089 5,649 Total deferred tax assets: 7,312 6,161 Valuation allowance ( 7,312 ) ( 6,161 ) Net deferred tax assets: $ — $ — 40 Table of Contents ASC 740 requires a valuation allowance to reduce the deferred tax assets reported if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. After consideration of all of the evidence, both positive and negative, the Company has recorded a full valuation allowance against its deferred tax assets at March 31, 2026 and 2025, as the Company's management has determined that it is more likely than not that these assets will not be realized. The increase in the valuation allowance relates to the net loss incurred by the Company. The Company has $ 24.4 million of U.S. federal net operating loss carry forwards (“NOLs”) and $ 25.5 million of state NOLs a s of March 31, 2026 as follows: Federal NOL's State NOL's Loss Year (Fiscal) Included in DTA (in millions) Included in DTA (in millions) Expiration Year (Fiscal) 2016 $ — $ 0.6 State 2036 2017 $ — $ 0.8 State 2037 2018 $ — $ 2.6 State 2038 2019 $ 1.9 $ 2.7 Federal indefinite/State 2039 2020 $ 3.7 $ 3.0 Federal indefinite/State 2040 2021 $ 4.0 $ 3.2 Federal indefinite/State 2041 2022 $ 3.4 $ 2.9 Federal indefinite/State 2042 2024 $ 2.4 $ 2.1 Federal indefinite/State 2044 2025 $ 3.7 $ 3.2 Federal indefinite/State 2045 2026 $ 5.3 $ 4.4 Federal indefinite/State 2046 Total $ 24.4 $ 25.5 The tax benefits related to these state NOLs 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 March 31, 2026 . As a result, the Company concluded that a valuation allowance of approxima tely $ 7,312,000 would be rec orded against the assets. The net operating loss and tax credit carryforwards are subject to review and possible adjustment by the Internal Revenue Service and state taxing authorities. Net operating loss and tax credit carryforwards may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant stockholders over a three year period in excess of 50%, as defined under Sections 382 and 383 of the Internal Revenue Code, respectively, as well as similar state provisions and other provisions within the Internal Revenue Code. This could limit the amount of tax attribute s that can be utilized annually to offset future taxable income or tax liabilities. The amount of the annual limitation is determined based on the value of the Company immediately prior to the ownership change. Subsequent ownership changes may further affect the limitation in future years. Interest and penalty charges, if any, related to unrecognized tax benefits will be classified as income tax expense in the accompanying statements of operations and comprehensive loss. As of March 31, 2026 and 2025, the Company had no accrued interest or penalties related to uncertain tax positions. The Company is subject to examination and assessment by tax authorities in numerous jurisdictions. As of March 31, 2026 , the Company’s open tax years for examination for U.S. federal tax are tax years ending March 31, 2022 and forward. The Company is not currently under examination by the Internal Revenue Service or any other jurisdictions for any tax years. As of March 31, 2026 the Company is asserting under ASC 740 - 30 that all of the unremitted earnings of its foreign subsidiaries are indefinitely invested. The Company evaluates this assertion each period based on a number of factors, including the operating plans, budgets, and forecasts for both the Company and its foreign subsidiaries; the long-term and short-term financial requirements in the U.S. and in each foreign jurisdiction; and the tax consequences of any decision to repatriate earnings of foreign subsidiaries to the U.S. The One Big Beautiful Bill ("OBBB") and the Tax Cut and Job Act (“TCJA”) establishes new tax rules designed to tax U.S. companies on global intangible low-taxed income (GILTI) earned by foreign subsidiaries. The Company has evaluated this provision of the OBBB and the TCJA and the application of ASC 740 and its impact is reflected in the financial statements as of March 31, 2026 . NOTE 6 — COMMITMENTS AND CONTINGENCIES: The Company’s ERP software provider is subscription based with annual commitments as follows (in thousands). Fiscal Years Amount 2027 $ 60 2028 40 Total $ 100 41 Table of Contents Rent expense resulting from leases with non-affiliated companies were approximately $ 67,000 and $ 64,000 for fiscal 2026 and fiscal 2025 , respectively. Letters of Credit: The Company utilizes the services of one of its banks to issue secured letters of credit on behalf of the Company, as needed, on a 100% cash collateralized basis. At March 31, 2026 and March 31, 2025 , the Company had no letters of credit outstanding. Capital Expenditure: As of March 31, 2026 and March 31, 2025 , there were no capital expenditures or other commitments other than the normal purchase orders used to secure product. Employee Benefit Plan: The Company currently sponsors a defined contribution 401 (k) retirement plan which is subject to the provisions of the Employee Retirement Income Security Act. The Company matches a percentage of the participants’ contributions up to a specified amount. These contributions to the plan for fiscal 2026 and 2025 were approximately $ 14,000 and $ 19,000 , respectively, and were charged against earnings for the periods presented. NOTE 7 — SHAREHOLDERS ’ EQUITY: Common Shares: Authorized common shares total 75,000,000 with a par value $ 0.01 per share, of which 21,042,652 were outstanding as of March 31, 2026 and March 31, 2025 . Shares held in treasury at March 31, 2026 and March 31, 2025 were 31,923,145 . Series A Preferred Stock: The Company has issued and outstanding 3,677 shares of Series A Preferred Stock, $.01 par value (“Preferred Stock”), with a face value of $ 3,677,000 , which had no determinable market value as of March 31, 2026 . The Preferred Stock is non-voting, has no dividend preferences and has not been convertible since March 31, 2002; however, it retains a liquidation preference. NOTE 8 — SHORT TERM DEPOSITS AND INVESTMENTS: The Company held approximately $ 9.1 million in short term deposits as of March 31, 2026 and approximately $ 0.9 million in short term deposits as of March 31, 2025 . These short term deposits have maturity dates of 90 days or less and are classified as cash equivalents. The Company also held short-term investments in deposits totaling approximately $ 3.1 million at March 31, 2026 as compared to approximately $ 14.9 million at March 31, 2025 . These short-term investments in deposits have maturity dates greater than 90 days and are classified as short-term investments. Under ASC Topic 820 Fair Value Measurement, t he 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 9 — NET INCOME (LOSS) PER SHARE: The following table sets forth the computation of basic and diluted income (loss) per share for the years ended March 31, 2026 and March 31, 2025 : Twelve Months Ended March 31, 2026 2025 Numerator: Net (loss) $ ( 4,300 ) $ ( 4,731 ) Denominator: Denominator for basic and diluted loss per share — weighted average shares 21,042,652 21,042,652 Net (loss) per share: Basic and diluted (loss) per share $ ( 0.20 ) $ ( 0.22 ) For the years ended March 31, 2026 and March 31, 2025 , there were no outstanding instruments which were potentially dilutive. 42 Table of Contents NOTE 10 — LICENSE AGREEMENTS: During fiscal 2026 and 2025 , the Company was party to two license agreements. These agreements allow the licensee to access the Company’s trademarks for the manufacture and/or the sale of consumer electr onics and other products. The license agreements (i) allow the licensee to use the Company’s trademarks for a specific product category, or for sales within specific geographic areas, or for sales to a specific customer base, or any combination of the above, or any other category that might be defined in the applicable license agreement and (ii) may be subject to renewal at the initial expiration of the applicable license agreement and are governed by the laws of the United States. The Company recorded licensing revenues of app roximately $ 386,000 in fiscal 2026 and $ 336,000 in fiscal 2025 under the l icense agreements. NOTE 11 — LEGAL PROCEEDINGS: On October 10, 2023, the US District Court for the District of Delaware granted final judgment in favor of the Company in its trademark infringement lawsuit against air conditioning and heating products provider Emerson Quiet Kool and wholesaler Home Easy (the “defendants”). Among other things, the court order issues an injunction and directs the US Patent and Tr ademark Office to cancel the d efendants’ existing and proposed " E merson Q uiet K ool " trademark s and prohibit s d efendants from register ing or applying to register, or using t he same mark or any other mark or name containing the word "Emerson" going forward . The total j udgment awarded to the Company has increased from approximately $ 6.5 million to approximately $ 10.4 million, inclusive of disgorgement of wrongful profits, attorney's fees and enhanced damages. 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 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. Like any judgement, there is no guarantee that the Company will be able to collect the entire judgement or if it is able to collect, how soon it will be able to do so. 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. Management cannot estimate with certainty the Company’s ultimate legal and financial liability with respect to such pending litigation matters. 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 12 — RISKS AND UNCERTAINTIES: Customer Concentration For fiscal 2026 , the Company’s two largest customers accounted for approximately 55 % of the Company’s net revenues, with Amazon accounting for 42 % and Fred Meyer accounting for 13 %. For fiscal 2025 , the Company’s two largest customers accounted for approximately 70 % of the Company’s net revenues with Amazon accounting for 39 % and Walmart accounting for 31 %. No other customer accounted for more than 10% of net revenues in either period. Product Concentration For fiscal 2026 , the Company’s gross product sales included microwave ovens, which generated approximately 69 %, and audio products, which generated approximately 25 % of the Company's gross product sales. For fiscal 2025 , the Company’s gross product sales included microwave ovens, which generated approximately 51 %, and audio products, which generated approximately 47 % of the Company's gross product sales. As a result of this dependence, a significant decline in pricing of, or market acceptance of these product types and categories, either in general or specifically as marketed by the Company, would have a material adverse effect on the Company’s business, financial condition and results of operations. Because the market for these product types and categories is characterized by periodic new product introductions, the Company’s future financial performance will depend, in part, on the successful and timely development and customer acceptance of new and enhanced versions of these product types and other products distributed by the Company. There can be no assurance that the Company will continue to be successful in marketing these products types within these categories or any other new or enhanced products. 43 Table of Contents Concentrations of Credit Risk As a percent of the Company’s total trade accounts receivable, net of specific reserves, Amazon and Fred Meyer accounted for 64 % and 20 %, respectively, as of March 31, 2026 . As a percent of the Company’s total trade accounts receivable, net of specific reserves, Amazon and Variety Wholesalers accounted for 59 % and 19 %, respectively, as of March 31, 2025 . No other customer accounted for more than 10% of the Company’s total trade accounts receivable, net of specific reserves, as of March 31, 2026 or March 31, 2025 . 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 $ 7,000 at March 31, 2026 and $ 1,107,000 at March 31, 2025 . Due to the high concentration of the Company’s net trade accounts receivables among just two or three customers, any significant failure by one of these customers to pay the Company their outstanding balances would result in a material adverse effect on the Company’s business, financial condition and results of operations. The Company maintains its cash accounts with major U.S. and foreign financial institutions. The Company’s cash and restricted cash balances on deposit in the U.S. as of March 31, 2026 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 $ 9.1 million and approximately $ 0.9 million at March 31, 2026 and March 31, 2025 , respectively. The Company also has short term deposits in foreign financial institutions which are not FDIC insured of approximately of $ 3.1 million. These short term deposits have maturity dates over 90 days and are classified as short term investments on the Company's Consolidated Balance Sheets. Supplier Concentration During fiscal 2026 and 2025 , the Company procured approximately 96 % and 95 %, respectively, of its products for resale from its four largest factory suppliers. Approximately 49 % of these products were procured from its largest supplier in fiscal 2026 and approximately 37 % in fiscal 2025 . See the Supplier table under the heading "Design and Manufacturing " in this Form 10 -K, for further details. No assurance can be given that ample supply of product would be available at current prices and on current credit terms. This is if the Company were required to seek alternative sources of supply, without adequate notice by a supplier or a reasonable opportunity to seek alternate production facilities and component parts. Any resulting significant shortage of product supply would have a material adverse effect on the Company’s business, financial condition and results of operation. Third Party Representatives In fiscal 2026 , the Company utilized six sales representative organizations, two of which were responsible for approximately 68 % of the Company's net revenues, including one which represented approximately 43 % and another which represented approximately 25 % of its net revenues. In fiscal 2025 , the Company utilized five sales representative organizations, two of which were responsible for approximately 48 % of the Company's net revenues, including one which represented approximately 38 % and another which represented approximately 10 % of its net revenues. No other sales representative organization accounted for more than 10% of the Company's net revenues in fiscal 2026 or fiscal 2025 . The loss or reduction of product sales made through third party representative organizations could have a material adverse effect on the Company's business and results of operations. Finding replacement organizations could be a time consuming process during which the Company's revenues could be negatively impacted.  NOTE 13 — GEOGRAPHIC INFORMATION: Net revenues and long-lived assets of the Company for the fiscal years ended March 31, 2026 and March 31, 2025 are summarized below by geographic area (in thousands). Net revenues are attributed to geographic area based on the location of the customer. Year Ended March 31, 2026 U.S. Foreign Consolidated Net revenues $ 6,310 $ — $ 6,310 Long-lived assets $ 183 $ 326 $ 509 Year Ended March 31, 2025 U.S. Foreign Consolidated Net revenues $ 10,458 $ 327 $ 10,785 Long-lived assets $ 272 $ 464 $ 736 44 Table of Contents NOTE 14 — LEASES The Company leases office space in the U.S. and in Hong Kong as well as a copier in the U.S. These leases have remaining non-cancellable lease terms of seventeen to thirty-nine 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 fiscal 2026 to indicate that a reassessment or re-measurement of the Company’s existing leases was required. There were also no impairment indicators identified during fiscal 2026 that required an impairment test for the Company’s right-of-use assets or other long-lived assets in accordance with ASC 360 - 10, "Impairment and Disposal of Long-Lived Assets”. As of March 31, 2026 , the Company’s current operating and finance lease liabilities were approximately $ 162,000 and $ 1,400 , respectively, and its non-current operating and finance lease liabilities were approximately $ 158,000 and $ 3,700 , 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 March 31, 2026 were approximately $ 300,000 and $ 4,300 , respectively. As disclosed in "Note 3 - Related Party Transactions", the Company's office space in Hong Kong is being leased from VACL, which is a company related to the Company’s Chairman of the Board. As of March 31, 2026 , the current operating liability of this lease is approximately $ 110,000 and its non-current liability is approximately $ 49,000 . Its right-of-use asset value is approximately $ 159,000 , as of March 31, 2026 . As of March 31, 2026 , the Company's office space in the United States has a current operating liability of approximately $ 52,000 and its non-current liability is approximately $ 109,000 . The right-of-use asset value of this operating lease is approximately $ 141,000 , March 31, 2026 . The components of lease costs, which were included in operating expenses in the Company’s condensed consolidated statements of operations, were as follows: Year Ended March 31, 2026 2025 (in thousands) Lease cost Operating lease cost $ 185 $ 191 The supplemental cash flow information related to leases are as follows: Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases 175 187 Right-of-use assets obtained in exchange for lease obligations: Operating leases — 313 Finance leases — 6 45 Table of Contents Information relating to the lease term and discount rate are as follows: Weighted average remaining lease term (in months) As of March 31, 2026 As of March 31, 2025 Operating leases 24.8 35.6 Finance leases 38.2 50.2 Weighted average discount rate Operating leases 10.37 % 10.39 % Finance leases 10.50 % 10.50 % As of March 31, 2026 the maturities of lease liabilities were as follows: (in thousands) Operating Leases Finance Leases 2027 $ 186 $ 2 2028 118 2 2029 51 1 2030 — — 2031 — — Thereafter — — Total lease payments $ 355 $ 5 Less: Imputed interest ( 35 ) — Total $ 320 $ 5 NOTE 15 — SUBSEQUENT EVENTS As of the date of this filing, there were no subsequent events to disclose. NOTE 16 — 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. 46 Table of Contents Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.