What changed in this filing

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Item 1. Financial Statements

2022-08-15 compared with 2022-02-14 · 77 added, 93 removed, 227 unchanged (43% of the section changed)

4 unchanged sentences

(In thousands, except per share data)

Three Months Ended December 31,

Nine Months Ended December 31,

Three Months Ended June 30,

Net revenues:

6 unchanged sentences

Other (loss) income:

Loss on settlement of litigation

Interest income, net

10 unchanged sentences

(In thousands except share data)

December 31, 2021

June 30, 2022

March 31, 2022

1 unchanged sentence

Cash and cash equivalents

Short term investments

Accounts receivable, net

10 unchanged sentences

Accounts payable and other current liabilities

Paycheck Protection Program loan

Due to affiliate

Short-term operating lease liability

15 unchanged sentences

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

shares issued at December 31, 2021 and March 31, 2021, respectively;

shares outstanding at December 31, 2021 and March 31, 2021, respectively

shares issued at June 30, 2022 and March 31, 2022, respectively;

shares outstanding at June 30, 2022 and March 31, 2022, respectively

Additional paid-in capital

Accumulated deficit

Treasury stock, at cost ( 31,923,145 shares at December 31, 2021

Treasury stock, at cost ( 31,923,145 shares at June 30, 2022

and March 31, 2022, respectively)

6 unchanged sentences

(In thousands)

Nine Months Ended December 31,

Three Months Ended June 30,

(In thousands)

1 unchanged sentence

Adjustments to reconcile net loss to net cash (used) by operating

Loan forgiveness from Paycheck Protection Program

Amortization of right-of-use assets

Depreciation and amortization

Asset allowances and reserves

Asset valuation allowances

Changes in assets and liabilities:

3 unchanged sentences

Accounts payable and other current liabilities

Right of use assets-operating

Short term lease liabilities

1 unchanged sentence

Due to affiliate

Income taxes payable

Deferred revenue

3 unchanged sentences

Purchases of short-term investments

Additions to property and equipment

Net cash provided by investing activities

Cash Flows from Financing Activities:

Proceeds from Paycheck Protection Program loan

Net cash provided by financing activities

Net increase in cash and cash equivalents

Net decrease in cash and cash equivalents

Cash and cash equivalents at beginning of the year

9 unchanged sentences

Balance — March 31, 2022

Balance — December 31, 2021

Balance — June 30, 2022

Shareholders’

Balance — March 31, 2021

Balance — December 31, 2020

Balance — June 30, 2021

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

6 unchanged sentences

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

The unaudited interim consolidated financial statements reflect all normal and recurring adjustments that are, in the opinion of management, necessary to present a fair statement of the Company’s consolidated financial position as of December 31, 2021 and the results of operations for the three and nine month periods ended December 31, 2021 and December 31, 2020.

The unaudited interim consolidated financial statements reflect all normal and recurring adjustments that are, in the opinion of management, necessary to present a fair statement of the Company’s consolidated financial position as of June 30, 2022 and the results of operations for the three month periods ended June 30, 2022 and June 30, 2021.

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

4 unchanged sentences

Accordingly, these unaudited interim consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the fiscal year ended March 31, 2022 (“fiscal 2022”), included in the Company’s Annual Report on Form 10-K, as amended, for fiscal 2022.

The results of operations for the three and nine month periods ended December 31, 2021 are not necessarily indicative of the results of operations that may be expected for any other interim period or for the full year ending March 31, 2022 (“fiscal 2022”).

The results of operations for the three month period ended June 30, 2022 are not necessarily indicative of the results of operations that may be expected for any other interim period or for the full year ending March 31, 2023 (“fiscal 2023”).

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

13 unchanged sentences

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

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

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

Early adoption is permitted.

2 unchanged sentences

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

Under the Direct Import Program, title passes in the country of origin.

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

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

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

9 unchanged sentences

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

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

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

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

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

4 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,

Denominator for basic and diluted loss per share —

3 unchanged sentences

NOTE 3 — SHAREHOLDERS’ EQUITY

Outstanding capital stock at December 31, 2021 consisted of common stock and Series A preferred stock.

Outstanding capital stock at June 30, 2022 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, 2021, the Company had no options, warrants or other potentially dilutive securities outstanding.

At June 30, 2022, 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, 2021 and March 31, 2021, inventories consisted of the following (in thousands):

December 31, 2021

As of June 30, 2022 and March 31, 2022, inventories consisted of the following (in thousands):

June 30, 2022

March 31, 2022

1 unchanged sentence

NOTE 5 — INCOME TAXES

At December 31, 2021, the Company had $ 13.2 million of U.S.

At June 30, 2022, the Company had $ 15.3 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, 2021, the Company had approximately $ 16.3 million of U.S.

At June 30, 2022, the Company had approximately $ 18.1 million of U.S.

state NOL carry forwards.

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

The income of foreign subsidiaries before taxes was $ 19,000 for the three month period ended December 31, 2021 as compared to income before taxes of $ 103,000 for the three month period ended December 31, 2020.

The income of foreign subsidiaries before taxes was $ 71,000 for the nine month period ended December 31, 2021 as compared to income before taxes of $ 103,000 for the nine month period ended December 31, 2020.

The Company analyzed the future reasonability of recognizing its deferred tax assets at December 31, 2021.

As a result, the Company concluded that a 100 % valuation allowance of approximately $ 4,152,000 would be recorded against the assets.

During the three month periods ended December 31, 2021 and December 31, 2020, the Company recorded income tax expense of nil and $ 9,900 , respectively, primarily resulting from state income taxes.

During the nine month periods ended December 31, 2021 and December 31, 2020, the Company recorded income tax expense of approximately $ 11,000 and $ 15,200 respectively, primarily resulting from state income taxes.

The income of foreign subsidiaries before taxes was $ 83,000 for the three month period ended June 30, 2022 as compared to income of foreign subsidiaries before taxes of $ 18,000 for the three month period ended June 30, 2021.

The Company analyzed the future reasonability of recognizing its deferred tax assets at June 30, 2022.

As a result, the Company concluded that a 100 % valuation allowance of $ 4,658,000 would be recorded against the assets .

Although the Company generated a net operating loss, it recorded income tax expense of approximately $ 11,000 during the three month period ended June 30, 2022, primarily resulting from state income taxes.

During the three month period ended June 30, 2021, the Company recorded income tax expense of $ 11,000 .

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

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

As of December 31, 2021, the Company’s open tax years for examination for U.S.

As of June 30, 2022, the Company’s open tax years for examination for U.S.

federal tax are 2016 - 2021 , and for U.S.

2 unchanged sentences

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

As of December 31, 2021 the Company is asserting under ASC 740-30 that all of the unremitted earnings of its foreign subsidiaries are indefinitely invested.

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

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

and in each foreign jurisdiction;

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

As of December 31, 2021, the Company had a federal tax liability of approximately $ 1,808,000 related to the repatriation of the Company’s undistributed earnings of its foreign subsidiaries as required by the Tax Cuts and Jobs Act of 2017 (the “Tax Act”) .

As of December 31, 2021, the Company’s short term portion was approximately $ 195,000 and the long term portion was approximately $ 1,613,000 .

As of March 31, 2021, the Company had a federal tax liability of approximately $ 2,031,000 related to the repatriation of the Company’s undistributed earnings of its foreign subsidiaries as required by the Tax Act .

As of March 31, 2021 the Company’s short term portion was approximately $ 195,000 and the long term portion was approximately $ 1,836,000 .

As of June 30, 2022 and March 31, 2022, the Company had a federal tax liability of approximately $ 1,808,000 related to the repatriation of the Company’s undistributed earnings of its foreign subsidiaries as required by the Tax Cuts and Jobs Act of 2017 (the “Tax Act”) .

As of June 30, 2022, the Company’s short term portion was approximately $ 205,000 and the long term portion was approximately $ 1,603,000 .

The liability is payable over 8 years.

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

As of December 31, 2021, the Company has made four of the eight installments.

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

As of June 30, 2022, the Company has paid four of the eight installments.

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

NOTE 6 — RELATED PARTY TRANSACTIONS

3 unchanged sentences

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

Ltd., which is a wholly owned subsidiary of Nimble, collectively have, based on a Schedule 13D/A filed with the SEC on February 15, 2019, the shared power to vote and direct the disposition of 15,243,283 shares, or approximately 72.4 %, of the Company’s outstanding common stock as of December 31, 2021.

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

1 unchanged sentence

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

During the three and nine month periods ended December 31, 2021, the Company was billed approximately $ 40,000 and $ 126,000 , 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.

As of December 31, 2021 the Company owed approximately $ 800 to VACL related to these charges.

During the three and nine month periods ended December 31, 2021, the Company was billed approximately $ 600 and $ 2,000 , respectively, for purchases of personal protection equipment 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.

As of December 31, 2021 the Company owed nil to VSSL related to these charges.

During the three month period ended June 30, 2022, the Company was billed approximately $ 40,000 for rental and utility fees from Vigers Appraisal and Consulting Ltd (“VACL”), which is a company related to the Company’s Chairman of the Board.

As of June 30, 2022 the Company owed nil to VACL related to these charges.

During the three month period ended June 30, 2022, the Company was billed approximately $ 400 for purchases of personal protection equipment from Vigers Strategic Services Ltd (“VSSL”), which is a company related to the Company’s Chairman of the Board.

VSSL was formerly known as Lafe Strategic Services Ltd.

As of June 30, 2022 the Company owed nil to VSSL related to these charges.

NOTE 7 — SHORT TERM INVESTMENTS

At December 31, 2021 and March 31, 2021, the Company held short term investments in deposits totaling nil and $ 25.0 million, respectively.

The Company held $ 22.0 million in deposits which were classified as cash equivalents as of December 31, 2021 and $ 1.0 million of such deposits as of March 31, 2021.

At both June 30, 2022 and March 31, 2022, the Company held short term investments in deposits totaling nil .

The Company held $ 21.1 million in deposits which were classified as cash equivalents as of June 30, 2022 and $ 22.0 million of such deposits as of March 31, 2022.

NOTE 8 — CONCENTRATION RISK

Customer Concentration

For the three month period ended December 31, 2021, the Company’s three largest customers accounted for approximately 92 % of the Company’s net revenues, of which Amazon accounted for 50 %, Walmart accounted for 37 % and Fred Meyer accounted for 5 %.

For the nine month period ended December 31, 2021, the Company’s three largest customers accounted for approximately 88 % of the Company’s net revenues, of which Walmart accounted for 37 %, Amazon accounted for 36 % and Fred Meyer accounted for 15 %.

For the three month period ended December 31, 2020, the Company’s three largest customers accounted for approximately 88 % of the Company’s net revenues, of which Walmart accounted for 42 %, Amazon accounted for 39 % and Fred Meyer accounted for 7 %.

For the nine month period ended December 31, 2020, the Company’s three largest customers accounted for approximately 81 % of the Company’s net revenues, of which Walmart accounted for 39 %, Amazon accounted for 29 % and Fred Meyer accounted for 13 %.

For the three month period ended June 30, 2022, the Company’s three largest customers accounted for approximately 73 % of the Company’s net revenues, of which Walmart accounted for 42 %, Fred Meyer accounted for 19 % and Amazon accounted for 12 %.

For the three month period ended June 30, 2021, the Company’s three largest customers accounted for approximately 82 % of the Company’s net revenues, of which Walmart accounted for 44 %, Fred Meyer accounted for 24 % and Amazon accounted for 14 %.

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

Product Concentration

For the three and nine month periods ended December 31, 2021, the Company’s gross product sales were comprised of two product types within two categories — housewares products and audio products, of which microwave ovens generated approximately 10 % and 24 %, respectively, of the Company’s gross product sales.

Audio products generated approximately 89 % and 76 %, respectively, of the Company’s gross product sales.

For the three and nine month periods ended December 31, 2020, the Company’s gross product sales were comprised of the same two product types within two categories — housewares products and audio products, of which microwave ovens generated approximately 25 % and 36 %, respectively, of the Company’s gross product sales.

Audio products generated approximately 73 % and 62 %, respectively, of the Company’s gross product sales.

For the three month period ended June 30, 2022, the Company’s gross product sales were comprised of two product types within two categories — housewares products and audio products, of which microwave ovens generated approximately 42 % of the Company’s gross product sales.

Audio products generated approximately 57 % of the Company’s gross product sales.

For the three month period ended June 30, 2021, the Company’s gross product sales were comprised of the same two product types within two categories — housewares products and audio products, of which microwave ovens generated approximately 39 % of the Company’s gross product sales.

Audio products generated approximately 60 % of the Company’s gross product sales.

Concentrations of Credit Risk

As a percent of the Company’s total trade accounts receivable, net of specific reserves, the Company’s top two customers accounted for 56 % and 27 % as of December 31, 2021, respectively.

As a percent of the Company’s total trade accounts receivable, net of specific reserves, the Company’s top two customers accounted for 69 % and 28 % as of March 31, 2021, respectively.

As a percent of the Company’s total trade accounts receivable, net of specific reserves, the Company’s top two customers accounted for 47 % and 21 % as of June 30, 2022, respectively.

As a percent of the Company’s total trade accounts receivable, net of specific reserves, the Company’s top three customers accounted for 69 %, 17 % and 11 % as of March 31, 2022, respectively.

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.

3 unchanged sentences

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

as of December 31, 2021 and March 31, 2021 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 $ 24.5 million and approximately $ 5.0 million at December 31, 2021 and March 31, 2021, respectively.

as of June 30, 2022 and March 31, 2022 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 $ 24.7 million and approximately $ 25.3 million at June 30, 2022 and March 31, 2022, respectively.

Supplier Concentration

During the three and nine month periods ended December 31, 2021, the Company procured 100 % of its products for resale from its two largest factory suppliers, of which 81 % and 83 %, respectively, was supplied by its largest supplier.

During the three and nine month periods ended December 31, 2020, the Company procured 95 % and 98 % of its products for resale from its two largest factory suppliers, of which 57 % and 58 %, respectively, was supplied by its largest supplier.

During the three month period ended June 30, 2022, the Company procured 100 % of its products for resale from its two largest factory suppliers, of which 76 % was supplied by its largest supplier.

During the three month period ended June 30, 2021, the Company procured 100 % of its products for resale from its two largest factory suppliers, of which 83 % was supplied by its largest supplier.

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 thirteen months to three years .

These leases have remaining non-cancellable lease terms of seven months to three years .

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, 2021 to indicate that a reassessment or re-measurement of the Company’s existing leases was required.

There were also no impairment indicators identified during the quarter ended December 31, 2021 that required an impairment test for the Company’s right-of-use assets or other long-lived assets in accordance with ASC 360-10.

As of December 31, 2021, the Company’s current operating and finance lease liabilities were $ 225,000 and $ 1,000 , respectively and its non-current operating and finance lease liabilities were $ 244,000 and $ 2,000 , respectively.

The Company did not identify any events or conditions during the quarter ended June 30, 2022 to indicate that a reassessment or re-measurement of the Company’s existing leases was required.

There were also no impairment indicators identified during the quarter ended June 30, 2022 that required an impairment test for the Company’s right-of-use assets or other long-lived assets in accordance with ASC topic 360-10, “Impairment and Disposal of Long-Lived Assets”.

As of June 30, 2022, the Company’s current operating and finance lease liabilities were $ 189,000 and $ 1,000 , respectively and its non-current operating and finance lease liabilities were $ 167,000 and $ 1,000 , 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, 2021 was $ 455,000 and $ 3,000 , respectively.

The net balance of the Company’s operating and finance lease right-of-use assets as of June 30, 2022 was $ 350,000 and $ 2,000 , respectively.

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

Three Months Ended December 31,

Nine Months Ended December 31,

(in thousands)

Three Months Ended June 30,

(in thousands)

15 unchanged sentences

Weighted average remaining lease term (in months)

As of December 31, 2021

As of December 31, 2020

As of June 30, 2022

As of June 30, 2021

Operating leases

3 unchanged sentences

Finance leases

As of December 31, 2021 the maturities of lease liabilities were as follows:

As of June 30, 2022 the maturities of lease liabilities were as follows:

(in thousands)

3 unchanged sentences

Imputed interest

NOTE 10 — PAYCHECK PROTECTION PROGRAM AND EMPLOYMENT SUPPORT SCHEME

On July 5, 2021, the Company’s Paycheck Protection Program (”PPP”) loan of approximately $ 204,400 plus accrued interest of $ 2,400 was forgiven by the Small Business Administration.

The Company recorded the impact of its PPP loan forgiveness as other income during the quarter ended September 30, 2021.

During the three months ended December 31, 2021 and December 31, 2020, the Company’s Hong Kong subsidiary recorded nil and $ 28,000 , respectively, under the governmental program called the Employment Support Scheme (“ESS”).

During the nine months ended December 31, 2021 and December 31, 2020, the Company’s Hong Kong subsidiary recorded nil and $ 83,000 , respectively, under the ESS program.

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

NOTE 11 — SUBSEQUENT EVENT

On January 3, 2022, a legal settlement was entered into between the Company and one of its former directors that resolved certain disputes, including certain claims against the former director and an indemnification claim made by the former director.

The amount of the settlement was $ 450,000 and is presented separately in the Consolidated Statements of Operations as a loss on settlement of litigation for the three and nine month periods ended December 31, 2021.

NOTE 10 — GOVERNMENTAL ASSISTANCE PROGRAMS

During the three month periods ended June 30, 2022 and June 30, 2021, the Company’s Hong Kong subsidiary recorded $ 22,000 and nil, respectively, under the governmental program called the Employment Support Scheme (“ESS”).

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

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

NOTE 11 — LEGAL PROCEEDINGS

On April 19, 2022, the US District Court for the District of Delaware granted judgment in favor of the Company in its trademark infringement lawsuit against air conditioning and heating products provider Emerson Quiet Kool and wholesaler Home Easy (the “defendants”).

Among other things, the court order issues an injunction and directs the US Patent and Trademark Office to cancel the defendants’ existing and proposed “Emerson Quiet Kool” trademarks and prohibits defendants from registering or applying to register the same mark or any other mark or name containing the word “Emerson” going forward.

The judgment also awards $ 6.5 million to the Company.

Like any judgment, there is no guarantee that the Company will be able to collect the judgment or, if it is able to collect, how soon it will be able to do so.

The Company is pursuing various post-judgment motions against defendants.

The defendants have filed a notice of appeal of the judgment.

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