msn20241231_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2024

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-07731

EMERSON RADIO CORP.

(Exact name of registrant as specified in its charter)

Delaware	22-3285224
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

959 Route 46 East, Suite 210, Parsippany, NJ	07054
(Address of principal executive offices)	(Zip code)

(973) 428-2000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common Stock, par value $.01 per share	MSN	NYSE American

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated filer	☒	Smaller reporting company	☒

		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

Indicate the number of shares outstanding of common stock as of February 14, 2025: 21,042,652.

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TABLE OF CONTENTS

PART I — FINANCIAL INFORMATION
Item 1. Financial Statements	3
Condensed Consolidated Statements of Operations for the three and nine months ended December 31, 2024, and 2023 (unaudited)	3
Condensed Consolidated Balance Sheets as of December 31, 2024 (unaudited), and March 31, 2024	4
Condensed Consolidated Statements of Cash Flow for the nine months ended December 31, 2024 and 2023 (unaudited)	5
Condensed Consolidated Statements of Shareholders' Equity for the three and nine months ended December 31, 2024 and 2023 (unaudited)	6
Notes to the Condensed Consolidated Financial Statements	7
Item 2. Management’s Discussion and Analysis of Results of Operations and Financial Condition	14
Item 3. Quantitative and Qualitative Disclosures About Market Risk	19
Item 4. Controls and Procedures	19
PART II — OTHER INFORMATION	20
Item 1. Legal Proceedings	20
Item 1A. Risk Factors	20
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	22
Item 3. Defaults Upon Senior Securities	22
Item 4. Mine Safety Disclosure	22
Item 5. Other Information	22
Item 6. Exhibits	22
SIGNATURES	23

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PART I — FINANCIAL INFORMATION

Item 1. Financial Statements.

EMERSON RADIO CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per share data)

	*Three Months Ended December 31,*						*Nine Months Ended December 31,*
	*2024*			*2023*			*2024*			*2023*

Net revenues:
Net product sales	$	3,892		$	2,599		$	8,691		$	6,745
Licensing revenue		111			23			248			124
Net revenues		4,003			2,622			8,939			6,869
Costs and expenses:
Cost of sales		3,512			2,144			7,982			5,654
Selling, general and administrative expenses		1,224			1,202			4,029			3,464
Total cost of sales and SG&A		4,736			3,346			12,011			9,118
Operating loss		(733	)		(724	)		(3,072	)		(2,249	)
Other income:
Settlement of litigation		—			—			—			3,100
Interest income, net		206			289			705			872
(Loss) income before income taxes		(527	)		(435	)		(2,367	)		1,723
(Benefit) provision for income tax expense		—			(14	)		3			74
Net (loss) income		(527	)		(421	)		(2,370	)		1,649
Basic (loss) income per share	$	(0.03	)	$	(0.02	)	$	(0.11	)	$	0.08
Diluted (loss) income per share	$	(0.03	)	$	(0.02	)	$	(0.11	)	$	0.08
Weighted average shares outstanding
Basic		21,042,652			21,042,652			21,042,652			21,042,652
Diluted		21,042,652			21,042,652			21,042,652			21,042,652

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

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EMERSON RADIO CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands except share data)

	*December 31, 2024*			*March 31, 2024*
	(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	689		$	19,890
Short term investments		15,756			—
Accounts receivable, net of allowances for credit losses of $313,000 and $257,000 as of December 31, 2024 and March 31, 2024, respectively		3,512			1,343
Licensing receivable		29			37
Inventory		5,157			6,953
Prepaid purchases		139			107
Prepaid expenses and other current assets		281			274
Total Current Assets		25,563			28,604
Non-Current Assets:
Property and equipment, net		232			95
Right-of-use asset-operating leases		476			282
Right-of-use asset-finance leases		6			—
Other assets		77			84
Total Non-Current Assets		791			461
Total Assets	$	26,354		$	29,065
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable and other current liabilities		1,205			1,158
Due to affiliate		1			1
Short-term operating lease liability		132			93
Short-term finance lease liability		1			—
Income tax payable, current portion		668			531
Deferred revenue		127			191
Total Current Liabilities		2,134			1,974
Non-Current Liabilities:
Long-term operating lease liability		360			198
Long-term finance lease liability		5			—
Income tax payable-deferred		—			668
Total Non-Current Liabilities		365			866
Total Liabilities	$	2,499		$	2,840
Shareholders’ Equity:
Series A Preferred shares — 10,000,000 shares authorized; 3,677 shares issued and outstanding; liquidation preference of $3,677,000		3,310			3,310
Common shares — $0.01 par value, 75,000,000 shares authorized; 52,965,797 shares issued at December 31, 2024 and March 31, 2024, respectively; 21,042,652 shares outstanding at December 31, 2024 and March 31, 2024, respectively		529			529
Additional paid-in capital		79,792			79,792
Accumulated deficit		(26,575	)		(24,205	)
Treasury stock, at cost (31,923,145 shares at December 31, 2024 and March 31, 2024, respectively)		(33,201	)		(33,201	)
Total Shareholders’ Equity		23,855			26,225
Total Liabilities and Shareholders’ Equity	$	26,354		$	29,065

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

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EMERSON RADIO CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

	*Nine Months Ended December 31,*
	*2024*			*2023*
	(In thousands)
Cash Flows from Operating Activities:
Net (loss) income	$	(2,370	)	$	1,649
Adjustments to reconcile net loss to net cash (used) by operating activities:
Non-cash lease expense		119			121
Depreciation and amortization		58			17
Changes in assets and liabilities:
Accounts receivable		(2,169	)		78
Licensing receivable		8			17
Inventory		1,796			(1,948	)
Prepaid purchases		(32	)		110
Prepaid expenses and other current assets		(7	)		(7	)
Other assets		7			(10	)
Accounts payable and other current liabilities		47			646
Right of use assets-operating		(313	)		(248	)
Right of use assets-finance		(6	)		—
Short term lease liabilities		39			(11	)
Long term lease liabilities		162			146
Income taxes payable		(531	)		(326	)
Advanced deposits		—			(3,316	)
Deferred revenue		(64	)		63
Net cash (used) by operating activities		(3,256	)		(3,019	)
Cash Flows From Investing Activities:
Proceeds from sale of short-term investments		521			—
Purchases of short-term investments		(16,277	)		(18,505	)
Additions to property and equipment		(195	)		(107	)
Net cash (used) by investing activities		(15,951	)		(18,612	)
Cash Flows from Financing Activities:
Short term finance liability		1			—
Long term finance liability		5			—
Net cash provided by financing activities		6			—
Net (decrease) in cash and cash equivalents		(19,201	)		(21,631	)
Cash and cash equivalents at beginning of the period		19,890			25,268
Cash and cash equivalents at end of the period	$	689		$	3,637
Supplemental disclosure of non-cash investing and financing activities:
Right-of-use assets obtained in exchange for new operating lease liabilities	$	313			248
Right-of-use assets obtained in exchange for new finance lease liabilities	$	6			—
Supplemental disclosures:
Cash paid for:
Interest	$	6		$	4
Income taxes	$	535		$	401

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

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EMERSON RADIO CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited)

(In thousands)

	*Preferred Stock*				*Common Stock*				*Additional*								*Total*
	*Number*		*Preferred*		*Number*		*Par*		*Paid-In*		*Accumulated*			*Treasury*			*Shareholders’*
	*of Shares*		*Value*		*of Shares*		*Value*		*Capital*		*Deficit*			*Stock*			*Equity*
Balance — March 31, 2024		3,677	$	3,310		52,965,797	$	529	$	79,792	$	(24,205	)	$	(33,201	)	$	26,225
Net loss		—		—		—		—		—		(962	)		—			(962	)
Balance — June 30, 2024		3,677	$	3,310		52,965,797	$	529	$	79,792	$	(25,167	)	$	(33,201	)	$	25,263
Net loss		—		—		—		—		—		(881	)		—			(881	)
Balance — September 30, 2024		3,677	$	3,310		52,965,797	$	529	$	79,792	$	(26,048	)	$	(33,201	)	$	24,382
Net loss		—		—		—		—		—		(527	)		—			(527	)
Balance — December 31, 2024		3,677	$	3,310		52,965,797	$	529	$	79,792	$	(26,575	)	$	(33,201	)	$	23,855

	*Preferred Stock*				*Common Stock*				*Additional*								*Total*
	*Number*		*Preferred*		*Number*		*Par*		*Paid-In*		*Accumulated*			*Treasury*			*Shareholders’*
	*of Shares*		*Value*		*of Shares*		*Value*		*Capital*		*Deficit*			*Stock*			*Equity*
Balance — March 31, 2023		3,677	$	3,310		52,965,797	$	529	$	79,792	$	(24,971	)	$	(33,201	)	$	25,459
Net loss		—		—		—		—		—		(565	)		—			(565	)
Balance — June 30, 2023		3,677	$	3,310		52,965,797	$	529	$	79,792	$	(25,536	)	$	(33,201	)	$	24,894
Net income		—		—		—		—		—		2,635			—			2,635
Balance — September 30, 2023		3,677	$	3,310		52,965,797	$	529	$	79,792	$	(22,901	)	$	(33,201	)	$	27,529
Net loss		—		—		—		—		—		(421	)		—			(421	)
Balance — December 31, 2023		3,677	$	3,310		52,965,797	$	529	$	79,792	$	(23,322	)	$	(33,201	)	$	27,108

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

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EMERSON RADIO CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 — BACKGROUND AND BASIS OF PRESENTATION

The condensed consolidated financial statements include the accounts of Emerson Radio Corp. and its subsidiaries (“Emerson” or the “Company”). The Company designs, sources, imports and markets certain houseware and consumer electronic products, and licenses the Company’s trademarks for a variety of products.

The unaudited condensed consolidated financial statements reflect all normal and recurring adjustments that are, in the opinion of management, necessary to present a fair statement of the Company’s condensed consolidated financial position as of December 31, 2024 and the results of operations for the three and nine month periods ended December 31, 2024 and December 31, 2023. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary in order to make the condensed consolidated financial statements not misleading have been included. All significant intercompany accounts and transactions have been eliminated in consolidation. The preparation of the unaudited condensed consolidated financial statements requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes; actual results could materially differ from those estimates. The unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") and accordingly do not include all of the disclosures normally made in the Company’s annual condensed consolidated financial statements. Accordingly, these unaudited condensed consolidated financial statements should be read in conjunction with the condensed consolidated financial statements and notes thereto for the fiscal year ended March 31, 2024 (“fiscal 2024”), included in the Company’s Annual Report on Form 10-K for fiscal 2024.

The results of operations for the three and nine month periods ended December 31, 2024 are not necessarily indicative of the results of operations that may be expected for any other condensed period or for the full year ending March 31, 2025 (“fiscal 2025”).

Recent Accounting Pronouncements

The following Accounting Standards Updates (“ASUs”) were issued by the Financial Accounting Standards Board (“FASB”) which relate to or could relate to the Company as concerns the Company’s normal ongoing operations or the industry in which the Company operates.

Accounting Standards Update 2023-07 Segment Reporting (Topic 280): "Improvements to Reportable Segment Disclosures” (Issued October 2023)

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): "Improvements to Reportable Segment Disclosures" ("ASU 2023-07") to update reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses and information used to assess segment performance. This update is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The adoption of this guidance did not have any impact on the Company's segment reporting.

Accounting Standards Update 2024-03 Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): "Disaggregation of Income Statement Expenses” (Issued November 2024)

In November 2024, the FASB issued ASU No. 2024-03 “Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses.” This ASU requires public business entities to disclose, for interim and annual reporting periods, additional information about certain income statement expense categories. The requirements are effective for fiscal years beginning after December 15, 2026, and for interim periods beginning after December 15, 2027. Entities are permitted to apply either the prospective or retrospective transition methods. The Company is currently evaluating the impact that the adoption of this ASU will have on its consolidated financial statements.

Segment Reporting

The Company operates as one reportable segment under Accounting Standards Codification "(ASC)" 280, Segment Reporting. The chief operating decision maker regularly reviews the financial information of the Company at a consolidated level in determining how to allocate resources and in assessing performance.

Revenue Recognition

Sales to customers and related cost of sales are primarily recognized at the point in time when control of goods transfers to the customer. The Company recognizes revenue at the time title passes to the customer as this is when the Company satisfies its performance obligation under the contracts with its customers. 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. Estimates for future expected returns are based upon historical return rates and netted against revenues.

Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring goods. Revenue is recorded net of customer discounts, promotional allowances, volume rebates and similar charges. When the Company offers the right to return product, historical experience is utilized to establish a liability for the estimate of expected returns. Sales and other tax amounts collected from customers for remittance to governmental authorities are excluded from revenue.

Management must make estimates of potential future product returns related to current period product revenue. Management analyzes historical returns, current economic trends and changes in customer demand for the Company’s products when evaluating the adequacy of the reserve for sales returns. Management judgments and estimates must be made and used in connection with establishing the sales return reserves in any accounting period. Additional reserves may be required if actual sales returns increase above the historical return rates. Conversely, the sales return reserve could be decreased if the actual return rates are less than the historical return rates, which were used to establish the reserve.

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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.

The Company offers limited warranties for its consumer electronics, comparable to those offered to consumers by the Company’s competitors in the United States. Such warranties typically consist of a one year period for microwaves and refrigerators and a 90 day period for audio products, under which the Company pays for labor and parts, or offers a new or similar unit in exchange for a non-performing unit. The Company estimates its warranty reserve based on sales and its historical warranty claim rates.

Licensing: In addition to the distribution of products, the Company grants licenses for the right to access the Company’s intellectual property, specifically the Company’s trademarks, for a stated term for the manufacture and/or sale of consumer electronics and other products under agreements which require payment of either (i) a non-refundable minimum guaranteed royalty or, (ii) the greater of (a) the actual royalties due (based on a contractual calculation, normally comprised of actual product sales by the licensee multiplied by a stated royalty rate, or “Sales Royalties”) or (b) a minimum guaranteed royalty amount. In the case of the foregoing clause (i), such amounts are recognized as revenue on a straight-line basis over the term of the license agreement. In the case of the foregoing clause (ii), Sales Royalties in excess of guaranteed minimums are accounted for as variable fees and are not recognized as revenue until the Company has ascertained that the licensee’s sales of products have exceeded the guaranteed minimum. In effect, the Company recognizes the greater of Sales Royalties earned to date or the straight-line amount of minimum guaranteed royalties to date. In the case where a royalty is paid to the Company in advance, the royalty payment is initially recorded as a liability and recognized as revenue as the royalties are deemed to be earned according to the principles outlined above. As of December 31, 2024, the Company recorded deferred revenue of approximately $127,000 as compared to approximately $191,000 as of March 31, 2024 on its condensed consolidated balance sheets. As of December 31, 2023, the Company recorded deferred revenue of $212,000 as compared to approximately $149,000 as of March 31, 2023 on its condensed consolidated balance sheets. 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)	*2024*		*2023*		*2024*		*2023*

Net revenues by type:
Net product sales	$	3,892	$	2,599	$	8,691	$	6,745
Licensing revenue		111		23		248		124
Total:		4,003		2,622		8,939		6,869

Net revenues by customers: (over 10%)
Amazon.com	$	1,714	$	509	$	3,406	$	1,458
Walmart		1,013		1,692		2,945		3,951
Big Lots		957		—		957		—
Fred Meyer		—		—		—		718
Total:		3,684		2,201		7,308		6,127

NOTE 2— EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share amounts). Weighted average shares includes the impact of shares held in treasury.

	*Three Months Ended December 31,*						*Nine Months Ended December 31,*
	*2024*			*2023*			*2024*			*2023*

Numerator:
Net (loss) income	$	(527	)	$	(421	)	$	(2,370	)	$	1,649
Denominator:
Denominator for basic and diluted loss/income per share — weighted average shares		21,042,652			21,042,652			21,042,652			21,042,652
Net (loss) income per share:
Basic and diluted (loss) income per share	$	(0.03	)	$	(0.02	)	$	(0.11	)	$	0.08

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NOTE 3 — SHAREHOLDERS’ EQUITY

Outstanding capital stock at December 31, 2024 consisted of common stock and Series A preferred stock. The Series A preferred stock is non-voting, has no dividend preferences and has not been convertible since March 31, 2002; however, it retains a liquidation preference.

At December 31, 2024, the Company had no options, warrants or other potentially dilutive securities outstanding.

NOTE 4 — INVENTORY

Inventories, which consist primarily of finished goods, are stated at the lower of cost or net realizable value. Cost is determined using the first-in, first-out method. As of December 31, 2024 and March 31, 2024, inventories consisted of the following (in thousands):

		*December 31, 2024*				*March 31, 2024*
Finished goods		$	5,157			$	6,953

NOTE 5 — INCOME TAXES

At December 31, 2024, the Company had $17.4 million of U.S. federal net operating loss (“NOL”) carry forwards. These losses do not expire but are limited to utilization of 80% of taxable income in any one year. At December 31, 2024, the Company had approximately $17.9 million of U.S. state NOL carry forwards. The tax benefits related to these state NOL carry forwards and future deductible temporary differences are recorded to the extent management believes it is more likely than not that such benefits will be realized.

The Company analyzed the future reasonability of recognizing its deferred tax assets at December 31, 2024. As a result, the Company concluded that a 100% valuation allowance of approximately $4,975,000 would be recorded against the assets.

The income of foreign subsidiaries before taxes was $218,000 for the three month period ended December 31, 2024 as compared to income of foreign subsidiaries before taxes of $293,000 for the three month period ended December 31, 2023. The income of foreign subsidiaries before taxes was $738,000 for the nine month period ended December 31, 2024 as compared to income of foreign subsidiaries before taxes of $892,000 for the nine month period ended December 31, 2023.

Although the Company generated a net operating loss, it recorded income tax expense of approximately nil and $3,000 during the three and nine month periods ended December 31, 2024, respectively, primarily resulting from state income taxes. During the three and nine month periods ended December 31, 2023, the Company generated net income and recorded an income tax benefit of approximately $14,000 and income tax expense of approximately $74,000, respectively. After the adoption of ASU 2019-12 “Income Taxes (Topic 740) – Simplifying the Accounting for Income Taxes” during fiscal 2022, these non-income based state taxes are now reported within selling, general and administrative expenses.

The Company is subject to examination and assessment by tax authorities in numerous jurisdictions. As of December 31, 2024, the Company’s open tax years for examination for U.S. federal tax are 2017-2024, and for U.S. states’ tax are 2015-2024. Based on the outcome of tax examinations or due to the expiration of statutes of limitations, it is reasonably possible that the unrecognized tax benefits related to uncertain tax positions taken in previously filed returns may be different from the liabilities that have been recorded for these unrecognized tax benefits. As a result, the Company may be subject to additional tax expense.

As of December 31, 2024, the Company is asserting under ASC 740-30 that all of the unremitted earnings of its foreign subsidiaries are indefinitely invested. 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, 2024 and March 31, 2024, the Company had a federal tax liability of approximately $668,000 and $1,202,000, respectively, related to the repatriation of the Company’s undistributed earnings of its foreign subsidiaries as required by the Tax Cuts and Jobs Act of 2017 (the “Tax Act”). As of December 31, 2024 and March 31, 2024, the Company’s short term portion was approximately $668,000 and $534,000, respectively, and the long term portion was nil and approximately $668,000, respectively.

The liability is payable over 8 years. The first five installments were each equal to 8%, the sixth was equal to 15%, the seventh was equal to 20% and the final installment is equal to 25% of the liability. As of December 31, 2024, the Company has paid seven of the eight installments. Each installment must be remitted on or before July 15^th of the year in which such installment is due.

NOTE 6 — RELATED PARTY TRANSACTIONS

From time to time, Emerson engages in business transactions with its controlling shareholder, Nimble Holdings Company Limited (“Nimble”), formerly known as The Grande Holdings Limited (“Grande”), and one or more of Nimble’s direct and indirect subsidiaries, or with entities related to the Company’s Chief Executive Officer. Set forth below is a summary of such transactions.

Controlling Shareholder

S&T International Distribution Limited (“S&T”), which is a wholly owned subsidiary of Grande N.A.K.S. Ltd., which is a wholly owned subsidiary of Nimble, collectively have, based on a Schedule 13D/A filed with the SEC on February 15, 2019, the shared power to vote and direct the disposition of 15,243,283 shares, or approximately 72.4%, of the Company’s outstanding common stock as of December 31, 2024. Accordingly, the Company is a “controlled company” as defined in Section 801(a) of the NYSE American Company Guide.

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Related Party Transactions

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

During the three and nine month periods ended December 31, 2024, the Company was billed approximately $26,000 and $101,000, respectively, for rental and utility fees from Vigers Appraisal and Consulting Ltd (“VACL”), which is a company related to the Company’s Chairman of the Board of Directors ("Chairman"). As of December 31, 2024 the Company owed approximately $1,000 to VACL related to these charges. During the three and nine month periods ended December 31, 2023, the Company was billed approximately $40,000 and $119,000, respectively, for rental and utility fees from VACL, which is a company related to the Company's Chairman. As of December 31, 2023 the Company owed approximately $1,000 to VACL related to these charges.

Charges for promotional items

During the three and nine month periods ended December 31, 2024, the Company purchased nil and approximately $30,000, respectively, of promotional items from The Whisky Capital Pte Ltd ("TWCPL"), which is a company related to the Company's Chairman. As of December 31, 2024 the Company owed nil to TWCPL related to these charges. During the three and nine month periods ended December 31, 2023, the Company had no transactions with TWCPL.

NOTE 7 — SHORT TERM DEPOSITS AND INVESTMENTS

As of December 31, 2024 and March 31, 2024, the Company held $50,000 and approximately $19.1 million, respectively, in term deposits. Such term deposits had maturity dates of 90 days or less and, as a result, were classified as cash equivalents. As of December 31, 2024 and March 31, 2024, the Company held approximately $15.8 million and nil, respectively, in short term investments which had maturity dates greater than 90 days.

NOTE 8 — CONCENTRATION RISK

Customer Concentration

For the three month period ended December 31, 2024, the Company’s three largest customers accounted for approximately 92% of the Company’s net revenues, of which Amazon.com ("Amazon") accounted for approximately 43%, Walmart Inc. ("Walmart") accounted for approximately 25% and Big Lots Stores, Inc ("Big Lots") accounted for approximately 24%. No other customer accounted for greater than 10% of the Company's net revenues during the period.

For the nine month period ended December 31, 2024, the Company’s three largest customers accounted for approximately 82% of the Company’s net revenues, of which Amazon accounted for approximately 38%, Walmart accounted for approximately 33% and Big Lots accounted for approximately 11%. No other customer accounted for greater than 10% of the Company's net revenues during the period.

For the three month period ended December 31, 2023, the Company’s two largest customers accounted for approximately 84% of the Company’s net revenues, of which Walmart accounted for approximately 65% and Amazon accounted for approximately 19%. No other customer accounted for greater than 10% of the Company's net revenues during the period.

For the nine month period ended December 31, 2023, the Company’s three largest customers accounted for approximately 89% of the Company’s net revenues, of which Walmart accounted for approximately 58%, Amazon accounted for approximately 21% and Fred Meyer accounted for approximately 10%. No other customer accounted for greater than 10% of the Company's net revenues during the period.

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

Product Concentration

For the three 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 period.

For the three and nine month periods ended December 31, 2023, the Company’s gross product sales included microwave ovens, which generated approximately 22% and 28%, respectively, of the Company’s gross product sales and audio products, which generated approximately 76% and 70%, respectively, of the Company’s gross product sales. No other products accounted for greater than 10% of the Company's gross product sales during the period.

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Concentrations of Credit Risk

As a percentage of the Company’s total trade accounts receivable, net of specific reserves, the Company’s top three customers accounted for approximately 52%, 27% and 10% respectively, as of December 31, 2024. No other customers accounted for greater than 10% of the Company's total trade accounts receivable, net of specific reserves, as of such date. As a percentage of the Company’s total trade accounts receivable, net of specific reserves, the Company’s top three customers accounted for approximately 34%, 30% and 25%, respectively, as of March 31, 2024. No other customers accounted for greater than 10% of the Company's total trade accounts receivable, net of specific reserves, as of such date. The Company periodically performs credit evaluations of its customers but generally does not require collateral, and the Company provides for any anticipated credit losses in the financial statements based upon management’s estimates and ongoing reviews of recorded allowances. 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.

The Company maintains its cash accounts with major U.S. and foreign financial institutions. The Company’s cash balances on deposit in the U.S. as of December 31, 2024 and March 31, 2024 were insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000 per qualifying bank account in accordance with FDIC rules. The Company’s cash, cash equivalents and restricted cash balances in excess of these FDIC-insured limits were approximately $0.4 million and approximately $19.6 million at December 31, 2024 and March 31, 2024, respectively.

Supplier Concentration

During the three month period ended December 31, 2024, the Company procured 94% of its products for resale from its four largest factory suppliers, of which approximately 46% was supplied by its largest supplier and approximately 22%, 15% and 11%, respectively, was supplied by the other three suppliers. During the three month period ended December 31, 2023, the Company procured 86% of its products for resale from its three largest factory suppliers, of which approximately 37% was supplied by its largest supplier and approximately 28% and 21%, respectively, was supplied by the other two suppliers. No other suppliers accounted for greater than 10% for either the three month period ended December 31, 2024 or December 31, 2023.

During the nine month period ended December 31, 2024, the Company procured 94% of its products for resale from its five largest factory suppliers, of which approximately 41% was supplied by its largest supplier and approximately 19%, 12%, 11% and 11%, respectively, was supplied by the other four suppliers. During the nine month period ended December 31, 2023, the Company procured 93% of its products for resale from its four largest factory suppliers, of which approximately 29% was supplied by its largest supplier and approximately 26%, 23% and 15%, respectively, was supplied by the other two suppliers. No other suppliers accounted for greater than 10% for either the nine month period ended December 31, 2024 or December 31, 2023.

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NOTE 9 — LEASES

The Company leases office space in the U.S. and in Hong Kong as well as a copier in the U.S. These leases have remaining non-cancellable lease terms of thirty-two to fifty-four months. The Company has elected not to separate lease and non-lease components for all leased assets. The Company did not identify any events or conditions during the quarter ended December 31, 2024 to indicate that a reassessment or re-measurement of the Company’s existing leases was required.

As of December 31, 2024, the Company’s current operating lease liabilities and finance lease liabilities were $132,000 and $1,000, respectively and its non-current operating lease liabilities and finance lease liabilities were $360,000 and $5,000, respectively. The Company’s operating and finance lease right-of-use asset balances are presented in non-current assets. The net balance of the Company’s operating and finance lease right-of-use assets as of December 31, 2024 was $476,000 and $6,000, respectively.

As disclosed in "Note 6 - Related Party Transactions", the Company's Hong Kong office space is being leased from VACL, which is a company related to the Company's Chairman. As of December 31, 2024, the current operating liability of this lease is approximately $97,000 and its non-current liability is $186,000. Its right-of-use asset value is approximately $283,000, as of December 31, 2024.

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

	*Three Months Ended December 31,*				*Nine Months Ended December 31,*
	*2024*		*2023*		*2024*		*2023*
	(in thousands)				(in thousands)
Lease cost
Operating lease cost	$	45	$	52	$	145	$	141

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

Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases		46		43		141		123

Right-of-use assets obtained in exchange for lease obligations:
Operating leases		—		—		313		248
Finance leases		—		—		6		—

Information relating to the lease term and discount rate are as follows:

Weighted average remaining lease term (in months)	*As of December 31, 2024*			*As of December 31, 2023*
Operating leases		38.4			44.7
Finance leases		53.2			5.2

Weighted average discount rate
Operating leases		10.39	%		9.58	%
Finance leases		10.50	%		7.50	%

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

(in thousands)	*Operating Leases*			*Finance Leases*

2025	$	46		$	1
2026		175			2
2027		187			2
2028		118			2
2029		52			1
Thereafter		—			—
Total lease payments	$	578		$	8
Less: Imputed interest		(86	)		(2	)
Total	$	492		$	6

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NOTE 10 —LEGAL PROCEEDINGS

On October 10, 2023, the US District Court for the District of Delaware granted final judgment in favor of the Company in its trademark infringement lawsuit against air conditioning and heating products provider Emerson Quiet Kool and wholesaler Home Easy (the “defendants”). Among other things, the court order issues an injunction and directs the US Patent and Trademark Office to cancel the defendants’ existing and proposed "Emerson Quiet Kool" trademarks and prohibits defendants from registering or applying to register, or using the same mark or any other mark or name containing the word "Emerson" going forward. The total judgment awarded to the Company has increased from approximately $6.5 million to approximately $10.4 million, inclusive of disgorgement of wrongful profits, attorney's fees and enhanced damages. The aggregate award to the Company also includes the $4.1 million of advanced deposits previously paid to the Company. The $4.1 million of advanced deposits was reduced by approximately $1 million of incurred legal fees. The remaining balance of $3.1 million was released by the Company to other income during the quarter ended September 30, 2023. Like any judgement, there is no guarantee that the Company will be able to collect the entire judgement or if it is able to collect, how soon it will be able to do so. The defendants have filed separate bankruptcy petitions in the US Bankruptcy Court for the District of New Jersey, and there is no guarantee that those bankruptcy proceedings will not have any effect on the ability of the Company to collect the judgement. The Company is not currently a party to any other legal proceedings other than litigation matters, in most cases involving ordinary and routine claims incidental to its business. Management cannot estimate with certainty the Company’s ultimate legal and financial liability with respect to such pending litigation matters. However, management believes, based on its examination of such matters, that the Company’s ultimate liability will not have a material adverse effect on the Company’s financial position, results of operations or cash flows.

NOTE 11— SUBSEQUENT EVENTS

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

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Item 2. Management’s Discussion and Analysis of Results of Operations and Financial Condition.

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

In the following discussions, most percentages and dollar amounts have been rounded to aid presentation. Accordingly, all amounts are approximations.

Forward-Looking Information

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Forward-looking statements include statements with respect to the Company’s beliefs, plans, objectives, goals, expectations, anticipations, assumptions, estimates, intentions, and future performance, and involve known and unknown risks, uncertainties and other factors, which may be beyond the Company’s control, and which may cause the Company’s actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements.

All statements other than statements of historical fact are statements that could be forward-looking statements. The reader can identify these forward-looking statements through the Company’s use of words such as “may,” “will,” “can,” “anticipate,” “assume,” “should,” “indicate,” “would,” “believe,” “contemplate,” “expect,” “seek,” “estimate,” “continue,” “plan,” “project,” “predict,” “could,” “intend,” “target,” “potential,” and other similar words and expressions of the future. These forward-looking statements may not be realized due to a variety of factors, including, without limitation:

●

the Company’s ability to generate sufficient revenue to achieve and maintain profitability;

●

the Company’s ability to obtain new customers and retain key existing customers, including the Company’s ability to maintain purchase volumes of the Company’s products by its key customers;

●

the Company’s ability to obtain new licensees and distribution relationships and maintain relationships with its existing licensees and distributors;

●

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 such internal controls;

●

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

●

the Company’s ability to anticipate market trends, enhance existing products or achieve market acceptance of new products;

●

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 and raw materials;

●

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

●

increases in shipping costs for the Company’s products or other service issues with the Company’s third-party shippers;

●

the Company’s dependence on a third party logistics provider for the storage and distribution of its products in the United States;

●

the ability of third party sales representatives to adequately promote, market and sell the Company’s products;

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the Company’s ability to maintain, protect and enhance its intellectual property;

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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;

●

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

●

changes in foreign laws and regulations and changes in the political and economic conditions in the foreign countries in which the Company operates;

●

changes in accounting policies, rules and practices;

●

changes in tax rules and regulations or interpretations;

●

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;

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●

limited access to financing or increased cost of financing;

●

the effects of currency fluctuations between the U.S. dollar and Chinese renminbi and increases in costs of production in China; and

●

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, 2024 and other filings with the SEC.

All forward-looking statements are expressly qualified in their entirety by this cautionary notice. The reader is cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date of this report or the date of the document incorporated by reference into this report. The Company has no obligation, and expressly disclaims any obligation, to update, revise or correct any of the forward-looking statements, whether as a result of new information, future events or otherwise. The Company has expressed its expectations, beliefs and projections in good faith and it believes it has a reasonable basis for them. However, the Company cannot assure the reader that its expectations, beliefs or projections will result or be achieved or accomplished.

Results of Operations

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

	Three Months Ended December 31,						Nine Months Ended December 31,
	2024			2023			2024			2023
Net product sales	$	3,892		$	2,599		$	8,691		$	6,745
Licensing revenue		111			23			248			124
Net revenues		4,003			2,622			8,939			6,869
Cost of sales		3,512			2,144			7,982			5,654
Selling, general and administrative expenses		1,224			1,202			4,029			3,464
Operating loss		(733	)		(724	)		(3,072	)		(2,249	)
Settlement of litigation		—			—			—			3,100
Interest income, net		206			289			705			872
(Loss) income before income taxes		(527	)		(435	)		(2,367	)		1,723
(Benefit) provision for income taxes		—			(14	)		3			74
Net (loss) income	$	(527	)	$	(421	)	$	(2,370	)	$	1,649

Net product sales — Net product sales for the three month period ended December 31, 2024 were approximately $3.9 million as compared to approximately $2.6 million for the three month period ended December 31, 2023, an increase of approximately $1.3 million, or 49.8%. The Company’s sales during the three month period ended December 31, 2024 were highly concentrated among its three largest customers – Amazon, Walmart and Big

SEC Form 10-Q filed by Emerson Radio Corporation