What changed in this filing

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Item 1. Financial Statements

2026-08-14 compared with 2026-02-17 · 157 added, 220 removed, 397 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,

For the Three Months Ended

Net revenues:

Net product sales

$ 929 $ 1,589

Licensing revenue

4 unchanged sentences

Operating loss

( 686 ) ( 1,309 )

Other income:

1 unchanged sentence

(Loss) before income taxes

( 566 ) ( 1,140 )

Provision for income tax expense

$ ( 566 ) $ ( 1,140 )

Basic (loss) per share

$ ( 0.03 ) $ ( 0.05 )

Diluted (loss) per share

$ ( 0.03 ) $ ( 0.05 )

Weighted average shares outstanding

21,042,652 21,042,652

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

3 unchanged sentences

(In thousands except share data)

December 31, 2025

June 30, 2026

March 31, 2026

22 unchanged sentences

Income tax payable, current portion

Deferred revenue

Total Current Liabilities

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

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

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

52,965,797 shares issued at June 30, 2026 and March 31, 2026, respectively;

21,042,652 shares outstanding at June 30, 2026 and March 31, 2026, respectively

Additional paid-in capital

2 unchanged sentences

( 33,802 ) ( 33,236 )

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

Treasury stock, at cost ( 31,923,145 shares at June 30, 2026 and March 31, 2026, respectively)

( 33,201 ) ( 33,201 )

8 unchanged sentences

(In thousands)

Nine Months Ended December 31,

Three Months Ended June 30,

(In thousands)

4 unchanged sentences

Depreciation and amortization

Non-cash reserve charges

( 120 ) ( 48 )

Changes in assets and liabilities:

Accounts receivable

Licensing receivable

Prepaid purchases

( 758 ) ( 318 )

Prepaid purchases

Prepaid expenses and other current assets

( 95 ) ( 83 )

Accounts payable and other current liabilities

Right of use assets-operating

Right of use assets-finance

Short term lease liabilities

Long term lease liabilities

Income taxes payable

( 43 ) ( 40 )

Income taxes payable

Deferred revenue

( 96 ) ( 64 )

Net cash (used in) operating activities

3 unchanged sentences

Purchases of short-term investments

( 9,080 ) ( 16,277 )

Additions to property and equipment

Net cash provided by (used in) investing activities

Net cash (used in) provided by investing activities

( 3,029 ) 983

Cash Flows from Financing Activities:

Short term finance liability

Long term finance liability

Net cash (used in) provided by financing activities

Net increase (decrease) in cash and cash equivalents

Net cash (used in) financing activities

Net (decrease) increase in cash and cash equivalents

( 3,884 ) 469

2 unchanged sentences

$ 5,310 $ 1,655

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

Supplemental disclosures:

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Balance — March 31, 2026

3,677 $ 3,310 52,965,797 $ 529 $ 79,792 $ ( 33,236 ) $ ( 33,201 ) $ 17,194

— — — — — ( 566 ) — ( 566 )

Balance — June 30, 2026

Balance — September 30, 2025

Balance — December 31, 2025

3,677 $ 3,310 52,965,797 $ 529 $ 79,792 $ ( 33,802 ) $ ( 33,201 ) $ 16,628

Preferred Stock

1 unchanged sentence

Balance — March 31, 2025

3,677 $ 3,310 52,965,797 $ 529 $ 79,792 $ ( 28,936 ) $ ( 33,201 ) $ 21,494

— — — — — ( 1,140 ) — ( 1,140 )

Balance — June 30, 2025

Balance — September 30, 2024

Balance — December 31, 2024

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

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

2 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 — BACKGROUND AND BASIS OF PRESENTATION

NOTE 1 — SIGNIFICANT ACCOUNTING POLICIES

Nature of Business

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

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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, 2025 and the results of operations for the three and nine month periods ended December 31, 2025 and December 31, 2024 .

Basis of Presentation

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, 2026 and the results of operations for the three month periods ended June 30, 2026 and June 30, 2025 .

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.

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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, 2026 (“fiscal 2026 ”), included in the Company’s Annual Report on Form 10 -K for fiscal 2026 .

The results of operations for the three and nine month periods ended December 31, 2025 are not necessarily indicative of the results of operations that may be expected for any other condensed interim period or for the full year ending March 31, 2026 .

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 FASB issued 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.

The results of operations for the three month period ended June 30, 2026 are not necessarily indicative of the results of operations that may be expected for any other condensed interim period or for the full year ending March 31, 2027 .

Tariff R ecovery

On February 20, 2026, the U.S.

Supreme Court ruled that tariffs imposed under the International Emergency Economic Powers Act ("IEEPA") were unlawful.

Following the launch of U.S.

Customs and Border Protection’s Consolidated Administration and Processing of Entries (“CAPE”) process, the Company submitted claims seeking approximately $ 568,000 of refunds of previously paid IEEPA tariffs through the CAPE system.

The Company has elected to apply a gain contingency model in accordance with ASC 450 - 30, “ Gain Contingencies ” to account for recoveries of previously paid IEEPA tariffs.

Under this model, a gain contingency is not recognized in the financial statements until the gain is realized or realizable.

Any recovery, when recognized, is reflected as a reduction of cost of goods sold for amounts related to goods already sold, or as a reduction of inventory to the extent the related goods remain on hand.

During three month period ended June 30, 2026 , the Company received refund payments from U.S.

Customs and Border Protection totaling approximately $ 568,000 , including interest, in connection with various adjudicated claims, and the related recovery has been recognized.

The Company recorded approximately $ 548,000 of the recovery as a reduction of cost of goods sold and approximately $ 20,000 in interest income within our condensed consolidated statement of operations.

Recent Accounting Pronouncements

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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.” ASU 2023 - 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

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Revenue Recognition

Distribution of Products

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

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

As of December 31, 2024 , the Company recorded deferred revenue of approximately $ 128,000 as compared to approximately $ 191,000 as of March 31, 2024 on its condensed consolidated balance sheets.

As of June 30, 2026 and March 31, 2026 , the Company had no deferred revenue recorded 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.

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,

Disaggregation of revenue (in 000's)

Three Months Ended June 30,

Disaggregation of revenue (in thousands)

Net revenues by type:

2 unchanged sentences

Licensing revenue

87 111 261 248

1,891 4,003 4,781 8,939

Net revenues by customers:

$ 1,023 $ 1,714 $ 1,903 $ 3,406

— 1,013 — 2,945

Walmart 111 —

Variety Wholesalers — 455

$ 604 $ 1,088

5 unchanged sentences

Receivables are written off once they are considered uncollectible.

The accounts receivable balance on a net basis was approximately $ 1,456,000 as of December 31, 2025 as compared to approximately $ 1,499,000 as of March 31, 2025 and approximately $ 1,343,000 as of March 31, 2024 .

As of December 31, 2025 , Amazon.com ("Amazon") accounted for approximately 69 % and Bi-Mart ("Bi-Mart") accounted for approximately 12 % of the Company’s total trade accounts receivable, net of specific reserves.

As of March 31, 2025 , Amazon accounted for approximately 59 % and Variety Wholesalers Inc.

("Variety") accounted for approximately 19 % 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 December 31, 2025 or March 31, 2025 .

The accounts receivable balance on a net basis was approximately $ 927,000 as of June 30, 2026 as compared to approximately $ 1,293,000 as of March 31, 2026 and approximately $ 1,499,000 as of March 31, 2025 .

As of June 30, 2026 , Amazon.com ("Amazon") accounted for approximately 46 % and Fred Meyer Inc.

("Fred Meyer") accounted for approximately 40 % of the Company’s total trade accounts receivable, net of specific reserves.

As of March 31, 2026 , Amazon accounted for approximately 64 % and Fred Meyer accounted for approximately 20 % 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, 2026 or March 31, 2026 .

Accounts receivable roll-forward:

As of December 31, As of March 31, As of March 31,

As of June 30, As of March 31, As of March 31,

Trade receivables

5 unchanged sentences

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

As of December 31,

As of June 30,

Opening balance

6 unchanged sentences

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

Three Months Ended December 31,

Nine Months Ended December 31,

Three Months Ended June 30,

$ ( 566 ) $ ( 1,140 )

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

$ ( 0.03 ) $ ( 0.05 )

NOTE 3 — SHAREHOLDERS ’ EQUITY

Outstanding capital stock at December 31, 2025 consisted of common stock and Series A preferred stock.

Outstanding capital stock at June 30, 2026 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, 2025 , the Company had no options, warrants or other potentially dilutive securities outstanding.

At June 30, 2026 , 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, 2025 and March 31, 2025 , inventories consisted of the following (in thousands):

December 31, 2025

As of June 30, 2026 and March 31, 2026 , inventories consisted of the following (in thousands):

June 30, 2026

March 31, 2026

Finished goods

$ 4,885 $ 4,128

NOTE 5 — INCOME TAXES

As of December 31, 2025 , the Com pany had approximately $ 22.2 million of U.S.

As of June 30, 2026 , the Com pany had appro ximately $ 24.9 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, 2025 , the Company had approximately $ 23.9 million of U.S.

At June 30, 2026 , the Company had approximately $ 25.9 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, 2025 .

The Company analyzed the future reasonability of recognizing its deferred tax assets at June 30, 2026 .

As a result, the Company concluded that a 100% valuation allowance of approximately $ 7,463,000 would be recorded against the assets.

The income of foreign subsidiaries before taxes was approximately $ 141,000 for the three month period ended December 31, 2025 as compared to income of foreign subsidiaries before taxes of approximately $ 218,000 for the three month period ended December 31, 2024 .

The income of foreign subsidiaries before taxes was approximately $ 485,000 for the nine month period ended December 31, 2025 as compared to income of foreign subsidiaries before taxes of approximately $ 738,000 for the nine month period ended December 31, 2024 .

The Company generated a net operating loss and recorded income tax expense of nil during the three and nine month periods ended December 31, 2025 .

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

The Company after adoption of ASU 2019 - 12 “Income Taxes (Topic 740 ) – Simplifying the Accounting for Income Taxes” during fiscal 2022, incurred non-income based state taxes of approximately $ 9,000 for both of the nine month periods ended December 31, 2025 and December 31, 2024, which are now reported within selling, general and administrative expenses.

The income of foreign subsidiaries before taxes was approximately $ 114,000 for the three month period ended June 30, 2026 as compared to income of foreign subsidiaries before taxes of approximately $ 178,000 for the three month period ended June 30, 2025 .

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

As of December 31, 2025 , the Company’s open tax years for examination for U.S.

As of June 30, 2026 , the Company’s open tax years for examination for U.S.

federal tax are 2018 - 2025, and for U.S.

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

As of December 31, 2025 , 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, 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;

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

As of December 31, 2025 and March 31, 2025 , the Company had a federal tax liability of nil and approximately $ 668,000 , 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.

As of December 31, 2025 and March 31, 2025 , the Company’s short term portion was nil and approximately $ 668,000 , respectively.

As of each of December 31, 2025 and March 31, 2025 , the Company's long term portion was nil .

The liability was 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 was equal to 25 % of the liability.

T he Company paid its eighth and final installment in July 2025.

NOTE 6 — RELATED PARTY TRANSACTIONS

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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, 2025 .

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

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

During the three and nine month periods ended December 31, 2025 , the Company was billed approximately $ 33,000 and $ 98,000 , 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, 2025 the Company owed approximately $ 1,000 to VACL related to these charges.

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

As of December 31, 2024 the Company owed approximately $ 1,000 to VACL related to these charges.

Charges for promotional items

During each of the three and nine month periods ended December 31, 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 and nine month periods ended December 31, 2024 , the Company purchased nil and approximately $ 30,000 , respectively, of promotional items from TWCPL.

As of December 31, 2024 , the Company owed nil to TWCPL.

During the three month period ended June 30, 2026 , the Company was billed approximately $ 32,000 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, 2026 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 VACL, which is a company related to the Company's Chairman.

As of June 30, 2025 the Company owed approximately $ 1,000 to VACL related to these charges.

NOTE 7 — SHORT TERM DEPOSITS AND INVESTMENTS

As of December 31, 2025 and March 31, 2025 , the Company held approximately $ 3.8 million and approximately $ 0.9 million, respectively, in short term deposits.

As of June 30, 2026 and March 31, 2026 , the Company held approxi mately $ 4.5 million and approximately $ 9.1 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 December 31, 2025 and March 31, 2025 , the Company also held approximately $ 9.1 million and approximately $ 14.9 million, respecti vely, in short term investments which had maturity dates greater than 90 days and are classified as short term investments.

As of June 30, 2026 and March 31, 2026 , the Company also held approximately $ 6.2 million and approximately $ 3.1 million, respectively, 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.

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Customer Concentration

For the three month period ended December 31, 2025 , the Company’s two largest customers accounted for approximately 69 % of the Company’s net revenues, of which Amazon accounted for approximately 54 % and Bi-Mart accounted for approximately 15 %.

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

For the nine months ended December 31, 2025 , the Company’s two largest customers accounted for approximately 50 % of the Company’s net revenues, of which Amazon accounted for approximately 39 % and Fred Meyer accounted for approximately 11 %.

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

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

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

("Big Lots") accounted for approximately 24 %.

For the three month period ended June 30, 2026 , the Company’s two largest customers accounted for approximately 57 % of the Company’s net revenues, of which Amazon accounted for approximately 47 % and Walmart accounted for approximately 10 %.

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

For the nine months 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 %.

For the three months ended June 30, 2025 , the Company’s three largest customers accounted for approximately 65 % of the Company’s net revenues, of which Variety Wholesalers Inc.

("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.

1 unchanged sentence

Product Concentration

For the three and nine month periods ended December 31, 2025 , the Company’s gross product sales included microwave ovens, which generated approximately 59 % and 69 %, respectively, of the Company’s gross product sales and audio products, which generated approximately 37 % and 25 %, respectively, of the Company’s gross product sales.

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

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.

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

For the three month period ended June 30, 2026 , the Company’s gross product sales i ncluded microwave ovens, which generated approximately 55 % of the Company’s gross product sales and audio products, which generated approximately 28 % of the Company’s gross product sales.

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

For the three month period ended June 30, 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 gr eater than 10% of the Company's gross product sales during the period.

Concentrations of Credit Risk

As of December 31, 2025 , the Company’s top two customers accounted for approximately 69 % and 12 %, respectively, of the Company's total trade accounts receivable, net of specific reserves.

As of June 30, 2026 , the Company’s top two customers accounted for approximately 46 % and 40 %, respectively, of the Company's total trade accounts receivable, net of specific reserves.

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

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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 $ 954,000 as of December 31, 2025 and approximately $ 1,107,000 as of March 31, 2025 .

The allowance for credit losses on the Company's total trade accounts receivable balances was approximately $ 3,000 as of June 30, 2026 and approximately $ 7,000 as of March 31, 2026 .

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, 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 $ 3.9 million and approximately $ 0.9 million at December 31, 2025 and March 31, 2025 , respectively.

The Company also has short term deposits in foreign financial institutions which are not FDIC insured of approximately $ 9.1 million and approximately $ 14.9 million as of December 31, 2025 and March 31, 2025 , respectively.

as of June 30, 2026 and March 31, 2026 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 and cash equivalents balances in excess of these FDIC-insured limits were approximately $ 5.1 million and approximately $ 9.1 million at June 30, 2026 and March 31, 2026 , respectively.

The Company also has short term deposits in foreign financial institutions which are not FDIC insured of approximately $ 6.2 million and approximately $ 3.1 million as of June 30, 2026 and March 31, 2026 , respectively.

Supplier Concentration

During the three month period ended December 31, 2025 , the Company procured 100 % of its products for resale from its four largest factory suppliers, of which approximately 34 % was supplied by its largest supplier and approximately 25 %, 23 % and 18 %, respectively, was supplied by the other three suppliers.

During the three month period ended December 31, 2024 , the Company procured approximately 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.

No other suppliers accounted for greater than 10% for either the three month period ended December 31, 2025 or December 31, 2024 .

During the nine month period ended December 31, 2025 , the Company procured approximately 88 % of its products for resale from its three largest factory suppliers, of which approximately 35 % was supplied by its largest supplier and approximately 28 %, and 25 %, respectively, was supplied by the other two suppliers.

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.

No other suppliers accounted for greater than 10% for either the nine month period ended December 31, 2025 or December 31, 2024 .

During the three month period ended June 30, 2026 , the Company procured 94 % of its products for resale from its three largest factory suppliers, of which approximately 43 % was supplied by its largest supplier and approximately 35 % and 16 %, respectively, was supplied by the other two suppliers.

During the three month period ended June 30, 2025 , the Company procured approximately 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 tw o suppliers.

No other suppliers accounted for greater than 10% for either the three month period ended June 30, 2026 or June 30, 2025 .

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 twenty to forty-two months.

These l eases have remaining non-cancellable lease terms of 14 to 36 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, 2025 to indicate that a reassessment or re-measurement of the Company’s existing leases was required.

As of December 31, 2025 , the Company’s current operating lease liabilities and finance lease liabilities were $ 158,000 and $ 1,000 , respectively and its non-current operating lease liabilities and finance lease liabilities were $ 201,000 and $ 4,000 , respectively.

The Company did not identify any events or conditions during the quarter ended June 30, 2026 to indicate that a reassessment or re-measurement of the Company’s existing leases was required.

As of June 30, 2026 , the Company’s current operating lease liabilities and finance lease liabilities were approximately $ 167,000 and $ 1,000 , respectively and its non-current operating lease liabilities and finance lease liabilities were approximately $ 115,000 and $ 3,000 , 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, 2025 was $ 338,000 and $ 5,000 , respectively.

The net balance of the Company’s operating and finance lease right-of-use assets as of June 30, 2026 was approximately $ 263,000 and $ 4,000 , 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, 2025 , the current operating liability of this lease is approximately $ 108,000 and its non-current liability is $ 78,000 .

Its right-of-use asset value is approximately $ 186,000 , as of December 31, 2025 .

As of June 30, 2026 , the current operating liability of this lease is approximately $ 113,000 and its non-current liability is approximately $ 20,000 .

Its right-of-use asset value is approximately $ 133,000 , as of June 30, 2026 .

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 December 31,

Nine Months Ended December 31,

(in thousands)

Three Months Ended June 30,

(in thousands)

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Weighted average remaining lease term (in months)

As of December 31, 2025

As of December 31, 2024

As of June 30, 2026

As of June 30, 2025

Operating leases

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Operating leases

10.36 % 10.38 %

Finance leases

As of December 31, 2025 the maturities of lease liabilities were as follows:

10.50 % 10.50 %

As of June 30, 2026 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 Company’s ability to resist price increases from its suppliers or pass through such increases to its customers;

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

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

changes in consumer spending for retail products, such as the Company’s products;

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

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

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

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

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

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

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the effects of competition;

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

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

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

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changes in U.S.

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

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

limited access to financing or increased cost of financing;

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

the other factors listed under “Risk Factors” in the Company’s Annual Report on Form 10-K, as amended, for the fiscal year ended March 31, 2025 and other filings with the SEC.

the other factors listed under “Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2026 and other filings with the Securities and Exchange Commission ("SEC").

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

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Results of Operations

The following table summarizes certain financial information for the three and nine month periods ended December 31, 2025 and December 31, 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, 2026 and June 30, 2025 (in thousands):

Three Months Ended June 30,

Net product sales

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Provision for income taxes

Net product sales — Net product sales for the three month period ended December 31, 2025 were approximately $1.8 million as compared to approximately $3.9 million for the three month period ended December 31, 2024, a decrease of approximately $2.1 million, or 53.6%.

The Company’s net product sales during the three month period ended December 31, 2025 were highly concentrated among its three largest customers – Amazon, Bi-Mart and Walmart – comprising in the aggregate approximately 82% of the Company’s total net product sales during the period.

The Company’s net product 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.

Net product sales for the nine month period ended December 31, 2025 were approximately $4.5 million as compared to approximately $8.7 million for the nine month period ended December 31, 2024, a decrease of approximately $4.2 million, or 48.0%.

The Company’s sales during the nine month period ended December 31, 2025 were highly concentrated among its three largest customers – Amazon, Fred Meyer and Variety – comprising in the aggregate approximately 64% of the Company’s total net product sales during the period.

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 during the period.

Net product sales — Net product sales for the three month period ended June 30, 2026 were approximately $0.9 million as compared to approximately $1.6 million for the three month period ended June 30, 2025 , a decrease of approximately $0.7 million, or 41.5%.

The Company’s net product sales during the three month period ended June 30, 2026 were highly concentrated among its two largest customers – Amazon and Walmart – comprising in the aggregate approximately 65% of the Company’s total net product sales during the period.

The Company’s net product 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.

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 approximately $1,000 and approximately $11,000 for the three month periods ended December 31, 2025 and December 31, 2024, respectively, and by nil and approximately $32,000 for the nine month periods ended December 31, 2025 and December 31, 2024, respectively.

In the aggregate, these adjustments had the effect of increasing net product sales and operating income by nil for each of the three month periods ended June 30, 2026 and June 30, 2025 .

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

i) Houseware products:

Net sales of houseware products decreased approximately $1.0 million, or 46.9%, to approximately $1.1 million for the three month period ended December 31, 2025 as compared to approximately $2.1 million for the three month period ended December 31, 2024, driven by decreased net sales of microwave ovens.

Certain of the Company's key customers refuse to accept price increases from recently imposed tariffs, which negatively impacted net sales during the quarter ended December 31, 2025.

Net sales of houseware products decreased $ 1.1 million, or 24.3%, to approximately $3.3 million for the nine month period ended December 31, 2025 as compared to approximately $4.4 million for the nine month period ended December 31, 2024, driven by decreased net sales of microwave ovens and compact refrigerators.

Net sales of houseware products decreased approximately $0.8 million, or 54.6%, to approximately $0.6 million for the three month period ended June 30, 2026 as compared to approximately $1.4 million for the three month period ended June 30, 2025 , driven by decreased net sales of microwave ovens.

Certain of the Company's key customers refuse to accept price increases from imposed tariffs, which negatively impacted net sales during the quarter ended June 30, 2026 .

ii) Audio products:

Net sales of audio products decreased approximately $1.1 million, or 61.7%, to approximately $0.7 million for the three month period ended December 31, 2025 as compared to approximately $1.8 million for the three month period ended December 31, 2024, primarily due to a discontinued clock radio at Walmart.

Net sales of audio products decreased approximately $3.1 million, or 72.6%, to approximately $1.1 million for the nine month period ended December 31, 2025 as compared to approximately $4.2 million for the nine month period ended December 31, 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.

Net sales of audio products increased approximately $0.1 million, or 85.9%, to approximately $0.2 million for the three month period ended June 30, 2026 as compared to approximately $0.1 million for the three month period ended June 30, 2025 .

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, Canada and Mexico.

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

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

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

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

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

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

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

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

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

If the Company's mitigation efforts are unsuccessful, the impact of tariffs will result in significantly increased annualized costs to the Company as all of the Company’s products are currently manufactured by suppliers in China.

If the Company's mitigation efforts are unsuccessful, the combination of tariffs will result in significantly increased annualized costs to the Company as all of the Company's products are currently manufactured by suppliers in China.

Although the Company is monitoring the trade and political environment and working to mitigate the possible effects of tariffs with its suppliers as well as its customers through pricing and sourcing strategies, certain of the Company's key customers have refused to accept price increases from imposed tariffs and the Company cannot be certain how other customers and competitors will react to any future actions that may be taken.

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

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

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

At this time the Company is unable to quantify effects on its costs arising from the existing or potential new tariffs, which are expected to increase the Company’s inventory costs and associated costs of sales as tariffs are incur red.

Although some costs may be passed through to the Company’s customers as product price increases in the future, if the Company is unable to successfully pass through the additional costs or otherwise mitigate the effects of these tariffs, or if the higher prices reduce demand for the Company’s products, it will have a negative effect on the Company’s product sales and gross margins.

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

However, the economic environment remains uncertain.

Demand for the Company’s products remains competitive and requires the Company to continue carefully managing inventory.

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

However, the economic environment remains uncertain and demand for the Company’s products remains competitive and requires actions to continue carefully managing inventory.

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

For more information on risks associated with the Company’s operations, please see the risk factors within Part I, Item 1A, “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended March 31, 2026 .

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

Licensing revenue — Licensing revenue for the three month period ended December 31, 2025 was approximately $87,000 as compared to approximately $111,000 for the three month period ended December 31, 2024, a decrease of approximately $24,000, or 21.6%.

The decrease can be attributed to one of the Company's licensees exceeding its annual guaranteed minimum royalties for the three month period ended December 31, 2024 which did not repeat for the three month period ended December 31, 2025.

Licensing revenue for the nine month period ended December 31, 2025 was approximately $261,000 as compared to approximately $248,000 for the nine month period ended December 31, 2024, an increase of approximately $13,000, or 5.2%.

The increase for the nine month period ended December 31, 2025 was the result of increases of annual guaranteed minimum royalties of the Company's licensees.

Net revenues — Net revenues were approximately $1.9 million for the three month period ended December 31, 2025 as compared to approximately $4.0 million for the three month period ended December 31, 2024, a decrease of approximately $2.1 million, or 53.6%.

The decrease in net revenues can be attributed primarily to the discontinuation of a clock radio at Walmart.

Net revenues were approximately $4.8 million for the nine month period ended December 31, 2025 as compared to approximately $8.9 million for the nine month period ended December 31, 2024, a decrease of approximately $4.1 million, or 46.5%.

The decrease in net revenues can be attributed primarily to the discontinuation of a clock radio at Walmart.

Cost of sales — Cost of sales decreased approximately $1.8 million, or 52.0%, to approximately $1.7 million for the three month period ended December 31, 2025 as compared to approximately $3.5 million for the three month period ended December 31, 2024.

The decrease in absolute terms for the three month period ended December 31, 2025 as compared to the three month period ended December 31, 2024 was primarily related to the discontinuation of a clock radio at Walmart and the negative impact of tariffs on the Company's microwave product line.

Cost of sales decreased approximately $3.4 million, or 42.8%, to approximately $4.6 million for the nine month period ended December 31, 2025 as compared to approximately $8.0 million for the nine month period ended December 31, 2024.

The decrease in absolute terms for the nine month period ended December 31, 2025 as compared to the nine month period ended December 31, 2024 was primarily related to the discontinuation of a clock radio at Walmart and the negative impact of tariffs on the Company's microwave product line.

Selling, general and administrative expenses ( “ S,G&A ” ) — S,G&A was approximately $1.0 million for the three month period ended December 31, 2025 as compared to $1.2 million for the three month period ended December 31, 2024, a decrease of approximately $0.2 million or 15.7%.

S,G&A, as a percentage of net revenues, was approximately 54.6% for the three month period ended December 31, 2025 as compared to approximately 30.6% for the three month period ended December 31, 2024.

The decrease in S,G&A for the three month period ended December 31, 2025 as compared to the three month period ended December 31, 2024 was primarily driven by a decrease in compensation costs of approximately $168,000 and an increase in bad debt recoveries of approximately $164,000, partially offset by an increase in legal fees of approximately $160,000.

Compensation costs for the three month period ended December 31, 2025 were approximately $568,000 as compared to approximately $736,000 for the three month period ended December 31, 2024.

Bad debt recoveries for the three month period ended December 31, 2025 were approximately $164,000 as compared to nil for the three month period ended December 31, 2024.

Legal fees for the three month period ended December 31, 2025 were approximately $123,000 as compared to approximately $37,000 of legal fee recoveries for the three month period ended December 31, 2024.

S,G&A was approximately $3.5 million for the nine month period ended December 31, 2025 as compared to approximately $4.0 million for the nine month period ended December 31, 2024, a decrease of approximately $0.5 million or 11.9%.

S,G&A, as a percentage of net revenues, was approximately 74.2% for the nine month period ended December 31, 2025 as compared to approximately 45.1% for the nine month period ended December 31, 2024.

The decrease in S,G&A for the nine month period ended December 31, 2025 as compared to the nine month period ended December 31, 2024 was primarily driven by a decrease in compensation costs of approximately $271,000, an increase in bad debt recoveries of approximately $164,000 and a decrease in travel and entertainment costs of approximately $42,000.

Compensation costs for the nine month period ended December 31, 2025 were approximately $1,983,000 as compared to approximately $2,254,000 for the nine month period ended December 31, 2024.

Bad debt recoveries for the nine month period ended December 31, 2025 were approximately $164,000 as compared to nil for the nine month period ended December 31, 2024.

Travel and entertainment costs for the nine month period ended December 31, 2025 were approximately $40,000 as compared to approximately $82,000 for the nine month period ended December 31, 2024.

Interest income, net — Interest income, net, was approximately $132,000 for the three month period ended December 31, 2025 as compared to approximately $206,000 for the three month period ended December 31, 2024, a decrease of approximately $74,000.

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

Interest income, net, was approximately $454,000 for the nine month period ended December 31, 2025 as compared to approximately $705,000 for the nine month period ended December 31, 2024, a decrease of approximately $251,000.

Licensing revenue — Licensing revenue for the three month period ended June 30, 2026 was approximately $125,000 as compared to approximately $86,000 for the three month period ended June 30, 2025 , an increase of approximately $39,000, or 45.4%.

The increase was primarily due to the escalation in annual minimum royalties of one of the Company's licensees.

Net revenues — Net revenues were approximately $1.1 million for the three month period ended June 30, 2026 as compared to approximately $1.7 million for the three month period ended June 30, 2025 , a decrease of approximately $0.6 million, or 37.1%.

The decrease in net revenues can be attributed primarily to the refusal by certain of the Company's key customers to accept price increases from imposed tariffs.

Cost of sales — Cost of sales decreased approximately $1.2 million, or 67.9%, to approximately $0.5 million for the three month period ended June 30, 2026 as compared to approximately $1.7 million for the three month period ended June 30, 2025 .

The decrease in absolute terms for the three month period ended June 30, 2026 as compared to the three month period ended June 30, 2025 was primarily related to the reduction in net sales of approximately $660,000 and a one-time tariff refund of approximately $548,000.

Selling, general and administrative expenses ( “ S,G&A ” ) — S,G&A was approximately $1.2 million for the three month period ended June 30, 2026 as compared to $1.3 million for the three month period ended June 30, 2025 , a decrease of approximately $0.1 million or 8.6%.

S,G&A, as a percentage of net revenues, was approximately 114.4% for the three month period ended June 30, 2026 as compared to approximately 78.8% for the three month period ended June 30, 2025 .

The decrease in S,G&A for the three month period ended June 30, 2026 as compared to the three month period ended June 30, 2025 was primarily driven by a decrease in compensation costs of approximately $138,000 and a decrease in bad debt expense of approximately $23,000, partially offset by an increase in legal fees of approximately $55,000.

Compensation costs for the three month period ended June 30, 2026 were approximately $632,000 as compared to approximately $770,000 for the three month period ended June 30, 2025 .

Bad debt recoveries for the three month period ended June 30, 2026 were approximately $16,000 as compared to bad debt expense of approximately $7,000 for the three month period ended June 30, 2025 .

Legal fees for the three month period ended June 30, 2026 were approximately $98,000 as compared to approximately $43,000 of legal fees for the three month period ended June 30, 2025 .

Interest income, net — For the three month period ended June 30, 2026 , interest income, net, was approximately $120,000, which included approximately $20,000 of interest from the IEEPA tariff recovery, as compa red to approximately $169,000 for the three month period ended June 30, 2025 , a decrease of approximately $49,000.

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

Provision for income taxes — For both three month periods ended December 31, 2025 and December 31, 2024, the Company recorded income tax expense of nil.

For the nine month period ended December 31, 2025, the Company recorded income tax expense of nil as compared to approximately $3,000 for the nine month period ended December 31, 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 nine month periods ended December 31, 2025 and December 31, 2024, which are now reported as S,G&A.

Provision for income taxes — The Company recorded income tax expense of nil for each of the three month periods ended June 30, 2026 and June 30, 2025 .

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, 2026 and June 30, 2025 , 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, 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.

Although the Company generated a net loss during the three months ended June 30, 2026 , it is unable to realize an income tax benefit until the Company can demonstrate the ability to generate net income on a sustained basis.

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

Net loss — As a result of the foregoing factors, the Company realized a net loss of approximately $694,000 for the three month period ended December 31, 2025 as compared to a net loss of approximately $527,000 for the three month period ended December 31, 2024.

As a result of the foregoing factors, the Company realized a net loss of approximately $2,877,000 for the nine month period ended December 31, 2025 as compared to a net loss of approximately $2,370,000 for the nine month period ended December 31, 2024.

Net loss — As a result of the foregoing factors, the Company realized a net loss of approximately $566,000 for the three month period ended June 30, 2026 as compared to a net loss of approximately $1,140,000 for the three month period ended June 30, 2025 .

Liquidity and Capital Resources

As of December 31, 2025, the Company had cash and cash equivalents of approximately $4.2 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 $3.8 million as of December 31, 2025 compared to approximately $0.9 million of such deposits as of March 31, 2025.

Working capital decreased to approximately $18.3 million at December 31, 2025 as compared to approximately $21.1 million at March 31, 2025.

The increase in cash and cash equivalents of approximately $3.0 million was due to the decrease in short term investments of approximately $5.8 million, the decrease in inventory of approximately $0.5 million and the increase in accounts payable and other current liabilities of approximately $0.3 million, partially offset by the net loss generated during the period of approximately $2.9 million and the decrease in income tax payable of approximately $0.7 million.

Net cash used by operating activities was approximately $2.8 million for the nine month period ended December 31, 2025, resulting from the loss generated during the period of approximately $2.9 million and a decrease in income tax payable of approximately $0.7 million, partially offset by a decrease in inventory of approximately $0.5 million and an increase in accounts payable and other current liabilities of approximately $0.3 million.

Net cash provided by investing activ ities was approximately $5.8 million for t he nine month period ended December 31, 2025 due to redemptions of short-term investments.

Net cash used by financing ac tivities was approximately $1,000 for the nine month period ended December 31, 2025 .

As of June 30, 2026 , the Company had cash and cash equivalents of approximately $5.3 million as compared to approximately $9.2 million at March 31, 2026 .

Cash and cash equivalents includes short term deposits of approximately $4.5 million as of June 30, 2026 compared to approximately $9.1 million as of March 31, 2026 .

Working capital decreased to approximately $16.3 million at June 30, 2026 as compared to approximately $16.8 million at March 31, 2026 .

The decrease in cash and cash equivalents of approximately $3.9 million was due to the increase in short term investments of approximately $3.0 million, the increase in inventory of approximately $0.8 million and the net loss generated during the period of approximately $0.6 million, partially offset by the decrease in accounts receivable of approximately $0.4 million and an increase in accounts payable and other current liabilities of approximately $0.1 million.

Net cash used by operating activities was approximately $0.9 million for the three month period ended June 30, 2026 , resulting from an increase in inventory of approximately $0.8 million, the loss generated during the period of approximately $0.6 million and an increase in prepaid expenses and other current assets of approximately $0.1 million, partially offset by a decrease in accounts receivable of approximately $0.5 million and an increase in accounts payable and other current liabilities of approximately $0.1 million.

Net cash used by investing activities was approximately $3.0 million for the three month period ended June 30, 2026 due to purchases of short-term investments of approximately $4.0 million, partially offset by redemptions of short-term investments of approximately $1.0 million.

Net cash used by financing activities was approximately $1,000 for the three month period ended June 30, 2026 .

Sources and Uses of Funds

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Off-Balance Sheet Arrangements

As of December 31, 2025, the Company did not have any off-balance sheet arrangements as defined under the rules of the SEC.

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 FASB issued 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 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.

As of June 30, 2026, the Company did not have any off-balance sheet arrangements as defined under the rules of the SEC.

Recent Accounting Pronouncements

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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