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. ~~(Check one):~~

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 11,~~August 15, 2022: 21,042,652.

	Three Months Ended December 31,						Nine Months Ended December 31,						Three Months Ended June 30,
	2021			2020			2021			2020			2022			2021

Net revenues:
Net product sales	$	2,509		$	2,273		$	6,290		$	5,718		$	1,004		$	1,987
Licensing revenue		65			60			195			180			70			65
Net revenues		2,574			2,333			6,485			5,898			1,074			2,052
Costs and expenses:
Cost of sales		1,826			1,754			4,786			4,519			879			1,609
Selling, general and administrative expenses		1,469			1,560			4,196			4,601			1,344			1,375
		3,295			3,314			8,982			9,120			2,223			2,984
Operating loss		(721	)		(981	)		(2,497	)		(3,222	)		(1,149	)		(932	)
Other (loss) income:
Loss on settlement of litigation		(450	)		—			(450	)		—
Interest income, net		7			18			40			128			50			17
Income from governmental assistance programs		—			28			207			83			22			—
Loss before income taxes		(1,164	)		(935	)		(2,700	)		(3,011	)		(1,077	)		(915	)
Provision for income tax expense		—			10			11			15			—			—
Net loss		(1,164	)		(945	)		(2,711	)		(3,026	)		(1,077	)		(915	)
Basic loss per share	$	(0.06	)	$	(0.04	)	$	(0.13	)	$	(0.14	)	$	(0.05	)	$	(0.04	)
Diluted loss per share	$	(0.06	)	$	(0.04	)	$	(0.13	)	$	(0.14	)	$	(0.05	)	$	(0.04	)
Weighted average shares outstanding
Basic		21,043			21,043			21,043			21,043			21,043			21,043
Diluted		21,043			21,043			21,043			21,043			21,043			21,043

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

	December 31, 2021			March 31, 2021			June 30, 2022			March 31, 2022

ASSETS
Current Assets:
Cash and cash equivalents	$	24,744		$	5,245		$	24,908		$	25,576
Short term investments		—			25,045
Accounts receivable, net		2,619			691			561			1,294
Inventory		2,574			1,961			2,433			2,112
Prepaid purchases		287			361			281			141
Prepaid expenses and other current assets		383			289			268			390
Total Current Assets		30,607			33,592			28,451			29,513
Non-Current Assets:
Property and equipment, net		2			—			2			2
Right-of-use asset-operating leases		455			213			350			403
Right-of-use asset-finance leases		3			3			2			2
Other assets		90			94			90			90
Total Non-Current Assets		550			310			444			497
Total Assets	$	31,157		$	33,902		$	28,895		$	30,010
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable and other current liabilities		1,142			788			847			758
Paycheck Protection Program loan		—			204
Due to affiliate		1			1
Short-term operating lease liability		225			152			189			211
Short-term finance lease liability		1			1			1			1
Income tax payable, current portion		195			195			205			195
Deferred revenue		—			195			140			210
Total Current Liabilities		1,564			1,536			1,382			1,375
Non-Current Liabilities:
Long-term operating lease liability		244			82			167			201
Long-term finance lease liability		2			3			1			2
Income tax payable		1,613			1,836			1,603			1,613
Total Non-Current Liabilities		1,859			1,921			1,771			1,816
Total Liabilities	$	3,423		$	3,457		$	3,153		$	3,191
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			3,310			3,310
Common shares — $0.01 par value, 75,000,000 shares authorized; 52,965,797 shares issued at December 31, 2021 and March 31, 2021, respectively; 21,042,652 shares outstanding at December 31, 2021 and March 31, 2021, respectively		529			529
Common shares — $0.01 par value, 75,000,000 shares authorized; 52,965,797 shares issued at June 30, 2022 and March 31, 2022, respectively; 21,042,652 shares outstanding at June 30, 2022 and March 31, 2022, respectively								529			529
Additional paid-in capital		79,792			79,792			79,792			79,792
Accumulated deficit		(22,696	)		(19,985	)		(24,688	)		(23,611	)
Treasury stock, at cost (31,923,145 shares at December 31, 2021 and March 31, 2021, respectively)		(33,201	)		(33,201	)
Treasury stock, at cost (31,923,145 shares at June 30, 2022 and March 31, 2022, respectively)								(33,201	)		(33,201	)
Total Shareholders’ Equity		27,734			30,445			25,742			26,819
Total Liabilities and Shareholders’ Equity	$	31,157		$	33,902		$	28,895		$	30,010

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

	Nine Months Ended December 31,						Three Months Ended June 30,
	2021			2020			2022			2021
	(In thousands)						(In thousands)
Cash Flows from Operating Activities:
Net (loss)	$	(2,711	)	$	(3,026	)	$	(1,077	)	$	(915	)
Adjustments to reconcile net loss to net cash (used) by operating activities:
Loan forgiveness from Paycheck Protection Program		(207	)		—
Amortization of right-of-use assets		164			171			53			60
Depreciation and amortization		—			2
Asset allowances and reserves		149			13
Asset valuation allowances								(35	)		12
Changes in assets and liabilities:
Accounts receivable		(2,077	)		(994	)		768			(410	)
Inventory		(613	)		42			(321	)		(16	)
Prepaid purchases		74			(259	)		(140	)		(380	)
Prepaid expenses and other current assets		(94	)		(57	)		122			8
Other assets		4			—
Accounts payable and other current liabilities		354			336			89			(41	)
Right of use assets-operating		(403	)		—
Short term lease liabilities		73			(50	)		(22	)		(39	)
Long term lease liabilities		161			(130	)		(35	)		(26	)
Due to affiliate		—			1			—			1
Income taxes payable		(223	)		(197	)
Deferred revenue		(195	)		80			(70	)		(65	)
Net cash (used) by operating activities		(5,544	)		(4,068	)		(668	)		(1,811	)
Cash Flows From Investing Activities:
Proceeds from sale of short-term investments		25,045			28,101			—			984
Purchases of short-term investments		—			—			—			—
Additions to property and equipment		(2	)		—
Net cash provided by investing activities		25,043			28,101			—			984
Cash Flows from Financing Activities:
Proceeds from Paycheck Protection Program loan		—			204
								—			—
Net cash provided by financing activities		—			204			—			—
Net increase in cash and cash equivalents		19,499			24,237
Net decrease in cash and cash equivalents								(668	)		(827	)
Cash and cash equivalents at beginning of the year		5,245			6,276			25,576			5,245
Cash and cash equivalents at end of the year	$	24,744		$	30,513		$	24,908		$	4,418
Supplemental disclosures:
Cash paid for:
Interest	$	8		$	6		$	3		$	1
Income taxes	$	222		$	197		$	—		$	—

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

Common Stock

Additional

Total

Preferred

Number

Par

Paid-In

Accumulated

Treasury

Shareholders’

Stock

of Shares

Value

Capital

Deficit

Stock

Equity

Balance — March 31, 2021

$
3,310

52,965,797

$
529

$
79,792

$
(19,985
)

$
(33,201
)

$
30,445

Net loss

—

—

—

—

(2,711
)

—

(2,711
)
Balance — December 31, 2021

$
3,310

52,965,797

$
529

$
79,792

$
(22,696
)

$
(33,201
)

$
27,734

			Common Stock				Additional								Total
	Preferred		Number		Par		Paid-In		Accumulated			Treasury			Shareholders’
	Stock		of Shares		Value		Capital		Deficit			Stock			Equity
Balance — March 31, 2022	$	3,310		52,965,797	$	529	$	79,792	$	(23,611	)	$	(33,201	)	$	26,819
Net loss		—		—		—		—		(1,077	)		—			(1,077	)
Balance — June 30, 2022	$	3,310		52,965,797	$	529	$	79,792	$	(24,688	)	$	(33,201	)	$	25,742

				Common Stock				Additional								Total						Common Stock				Additional								Total
		Preferred		Number		Par		Paid-In		Accumulated			Treasury			Shareholders’				Preferred		Number		Par		Paid-In		Accumulated			Treasury			Shareholders’
		Stock		of Shares		Value		Capital		Deficit			Stock			Equity				Stock		of Shares		Value		Capital		Deficit			Stock			Equity
Balance — March 31, 2020		$	3,310		52,965,797	$	529	$	79,792	$	(16,009	)	$	(33,201	)	$	34,421
Balance — March 31, 2021																				$	3,310		52,965,797	$	529	$	79,792	$	(19,985	)	$	(33,201	)	$	30,445
Net loss			—		—		—		—		(3,026	)		—			(3,026	)			—		—		—		—		(915	)		—			(915	)
Balance — December 31, 2020		$	3,310		52,965,797	$	529	$	79,792	$	(19,035	)	$	(33,201	)	$	31,395
Balance — June 30, 2021																				$	3,310		52,965,797	$	529	$	79,792	$	(20,900	)	$	(33,201	)	$	29,530
The accompanying notes are an integral part of the consolidated financial statements.	The accompanying notes are an integral part of the consolidated financial statements.																		The accompanying notes are an integral part of the consolidated financial statements.

The 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 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~~June 30, 2022 and the results of operations for the three ~~and nine~~ month periods ended ~~December 31, 2021~~June 30, 2022 and ~~December 31, 2020.~~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. All significant intercompany accounts and transactions have been eliminated in consolidation. The preparation of the unaudited interim 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 interim consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) and accordingly do not include all of the disclosures normally made in the Company’s annual consolidated financial statements. 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, ~~2021~~2022 (“fiscal ~~2021”~~2022”), included in the Company’s ~~annual report~~Annual Report on Form 10-K, as amended, for fiscal ~~2021.~~2022.

The results of operations for the three ~~and nine~~ month ~~periods~~period ended ~~December 31, 2021~~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, ~~2022~~2023 (“fiscal ~~2022”~~2023”).

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

Accounting Standards Update 2019-12 “Income Taxes (Topic 740) – Simplifying the Accounting for Income Taxes” (Issued December 2019)

In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740) - Simplifying the Accounting for Income Taxes,” which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020. This standard took effect in the first quarter (June 2021) of the Company’s fiscal year ending March 31, 2022. The adoption of ASU 2019-12 had no material impact on the Company’s consolidated financial statements and related disclosures.

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 2016-13 “Financial Instruments – Credit Losses” (Issued June 2016)

In June 2016, the FASB issued ASU 2016-13 “Financial Instruments - Credit Losses” to introduce new guidance for the accounting for credit losses on instruments within its scope. ASU 2016-13 requires among other things, the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable supportable forecasts. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. 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~~periods beginning after December 15, 2022. Early adoption is permitted. The Company does not expect these amendments to have a material impact on its financial statements.

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. 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.~~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.

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 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 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,						Three Months Ended June 30,
	2021			2020			2021			2020			2022			2021

Numerator:
Net loss	$	(1,164	)	$	(945	)	$	(2,711	)	$	(3,026	)	$	(1,077	)	$	(915	)
Denominator:
Denominator for basic and diluted loss per share — weighted average shares		21,043			21,043			21,043			21,043			21,043			21,043
Net loss per share:
Basic and diluted loss per share	$	(0.06	)	$	(0.04	)	$	(0.13	)	$	(0.14	)	$	(0.05	)	$	(0.04	)

Outstanding capital stock at ~~December 31, 2021~~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,~~June 30, 2022, the Company had 0 options, warrants or other potentially dilutive securities outstanding.

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

At ~~December 31, 2021,~~June 30, 2022, the Company had ~~$13.2~~$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,~~June 30, 2022, the Company had approximately ~~$16.3~~$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~~$83,000 for the three month period ended ~~December 31, 2021~~June 30, 2022 as compared to income of foreign subsidiaries before taxes of ~~$103,000~~$18,000 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.June 30, 2021.

The Company analyzed the future reasonability of recognizing its deferred tax assets at ~~December 31, 2021.~~June 30, 2022. As a result, the Company concluded that a 100% valuation allowance of ~~approximately $4,152,000~~$4,658,000 would be recorded against the ~~assets.~~assets.

~~During the three month periods ended December 31, 2021 and December 31, 2020,~~Although the Company generated a net operating loss, it recorded income tax expense of ~~nil~~ ~~and $9,900, respectively,~~approximately $11,000 during the three month period ended June 30, 2022, primarily resulting from state income taxes. During the ~~nine~~three month ~~periods~~period ended ~~December 31,~~June 30, 2021, ~~and December 31, 2020,~~ the Company recorded income tax expense of ~~approximately $11,000~~$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 ~~$15,200 respectively, primarily resulting from state income taxes.~~ administrative expenses.

The Company is subject to examination and assessment by tax authorities in numerous jurisdictions. As of ~~December 31, 2021,~~June 30, 2022, the Company’s open tax years for examination for U.S. federal tax are 2016-2021, and for U.S. states’ tax are 2015-2021. 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~~June 30, 2022 and March 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,~~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 ~~December 31, 2021,~~June 30, 2022, the Company’s short term portion was approximately ~~$195,000~~$205,000 and the long term portion was approximately ~~$1,613,000.~~$1,603,000.

~~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.~~

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,~~June 30, 2022, the Company has ~~made~~paid 4 of the 8 installments. Each installment ~~is due~~must be remitted on or before July 15^th of the year in which such installment is due.

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 Chairman of the Board. Set forth below is a summary of such transactions.

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.~~June 30, 2022. Accordingly, the Company is a “controlled company” as defined in Section 801(a) of the NYSE American Company Guide.

During the three ~~and nine~~ month ~~periods~~period ended ~~December 31, 2021,~~June 30, 2022, 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~~June 30, 2022 the Company owed ~~approximately $800~~nil to VACL related to these charges.

During the three ~~and nine~~ month ~~periods~~period ended ~~December 31, 2021,~~June 30, 2022, the Company was billed approximately ~~$600 and $2,000, respectively,~~$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. ~~Vigers Strategic Services Ltd~~VSSL was formerly known as Lafe Strategic Services Ltd. As of ~~December 31, 2021~~June 30, 2022 the Company owed nil to VSSL related to these charges.

At ~~December 31, 2021~~both June 30, 2022 and March 31, ~~2021,~~2022, the Company held short term investments in deposits totaling nil ~~and $25.0 million, respectively.~~. The Company held ~~$22.0~~$21.1 million in deposits which were classified as cash equivalents as of ~~December 31, 2021~~June 30, 2022 and ~~$1.0~~$22.0 million of such deposits as of March 31, ~~2021.~~2022.

For the three month period ended ~~December 31, 2021,~~June 30, 2022, 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%~~73% of the Company’s net revenues, of which Walmart accounted for 42%, ~~Amazon accounted for 39% and~~ Fred Meyer accounted for 7%19% and Amazon accounted for 12%.

For the ~~nine~~three month period ended ~~December 31, 2020,~~June 30, 2021, the Company’s three largest customers accounted for approximately ~~81%~~82% of the Company’s net revenues, of which Walmart accounted for ~~39%~~44%, ~~Amazon accounted for 29% and~~ Fred Meyer accounted for ~~13%~~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.

For the three ~~and nine~~ month ~~periods~~period ended ~~December 31, 2021,~~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 ~~10% and 24%, respectively,~~42% of the Company’s gross product sales. Audio products generated approximately ~~89% and 76%, respectively,~~57% of the Company’s gross product sales.

For the three ~~and nine~~ month ~~periods~~period ended ~~December 31, 2020,~~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 ~~25% and 36%, respectively,~~39% of the Company’s gross product sales. Audio products generated approximately ~~73% and 62%, respectively,~~60% of the Company’s gross product sales.

As a percent of the Company’s total trade accounts receivable, net of specific reserves, the Company’s top two customers accounted for ~~56%~~47% and ~~27%~~21% as of ~~December 31, 2021,~~June 30, 2022, respectively. As a percent of the Company’s total trade accounts receivable, net of specific reserves, the Company’s top ~~two~~three customers accounted for 69%, 17% and ~~28%~~11% as of March 31, ~~2021,~~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. 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 and restricted cash balances on deposit in the U.S. as of ~~December 31, 2021~~June 30, 2022 and March 31, ~~2021~~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 ~~$24.5~~$24.7 million and approximately ~~$5.0~~$25.3 million at ~~December 31, 2021~~June 30, 2022 and March 31, ~~2021,~~2022, respectively.

During the three ~~and nine~~ month ~~periods~~period ended ~~December 31,~~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 ~~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.

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 ~~thirteen~~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~~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 ~~December 31, 2021~~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 ~~360-10.~~topic 360-10, “Impairment and Disposal of Long-Lived Assets”.

As of ~~December 31, 2021,~~June 30, 2022, the Company’s current operating and finance lease liabilities were ~~$225,000~~$189,000 and $1,000, respectively and its non-current operating and finance lease liabilities were ~~$244,000~~$167,000 and ~~$2,000,~~$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~~June 30, 2022 was ~~$455,000~~$350,000 and ~~$3,000,~~$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,				Three Months Ended June 30,
	2021		2020		2021		2020		2022		2021
	(in thousands)				(in thousands)				(in thousands)
Lease cost
Operating lease cost	$	64	$	64	$	191	$	191	$	63	$	64
Finance lease cost		0		0		0		0		0		0
Amortization of right-of-use assets		0		0		0		0		0		0
Interest on lease liabilities		0		0		0		0		0		0
Variable lease costs		0		0		0		0		0		0
Total lease cost		64		64		191		191		63		64

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		63		67		194		200		63		67
Operating cash flows from finance leases		0		0		0		0		0		0
Financing cash flows from finance leases		0		0		0		0		0		0

Right-of-use assets obtained in exchange for lease obligations:
Operating leases		403		0		403		0		0		0
Finance leases		0		0		0		0		0		0

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

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		27.3			19.0			22.5			16.9
Finance leases		29.2			41.2			23.2			35.2

Weighted average discount rate
Operating leases		7.50	%		7.50	%		7.50	%		7.50	%
Finance leases		7.50	%		7.50	%		7.50	%		7.50	%

NOTE 10 — ~~PAYCHECK PROTECTION PROGRAM AND EMPLOYMENT SUPPORT SCHEME~~GOVERNMENTAL ASSISTANCE PROGRAMS

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~~month periods ended ~~December 31,~~June 30, 2022 and June 30, 2021, ~~and December 31, 2020,~~ the Company’s Hong Kong subsidiary recorded ~~nil~~$22,000 and ~~$28,000,~~nil, respectively, under the governmental program called the Employment Support Scheme (“ESS”). ~~During~~The proceeds must be used for payroll expenses and the ~~nine months ended December 31, 2021 and December 31, 2020,~~ Company may be subject to government-appointed random reviews to verify the ~~Company’s Hong Kong subsidiary recorded nil and $83,000, respectively, under~~information submitted by the ~~ESS program.~~applicant.

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.

On ~~January 3,~~April 19, 2022, ~~a legal settlement was entered into between~~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 ~~one~~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 ~~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~~appeal 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.~~

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 Financial Statements and notes thereto included elsewhere in this Quarterly Report.

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

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.~~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:

Furthermore, the situation surrounding the COVID-19 pandemic remains fluid and the potential for a material impact on the Company’s results of operations and financial condition increases the longer the COVID-19 pandemic affects activity levels in the United States and globally. For this reason, the Company cannot reasonably estimate with any degree of certainty the future impact COVID-19 may have on its business, results of operations or financial position. The extent of any impact will depend on future developments, including the duration of the outbreak, duration of the measures taken to control the spread, the effectiveness of actions taken to contain and treat the disease, and demand for the Company’s products.

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.

The following table summarizes certain financial information for the three ~~and nine~~ month periods ended ~~December 31,~~June 30, 2022 (fiscal 2023) and June 30, 2021 (fiscal 2022) ~~and December 31, 2020 (fiscal 2021)~~ (in thousands):

	Three Months Ended December 31,						Nine Months Ended December 31,						Three Months Ended June 30,
	2021			2020			2021			2020			2022			2021
Net product sales	$	2,509		$	2,273		$	6,290		$	5,718		$	1,004		$	1,987
Licensing revenue		65			60			195			180			70			65
Net revenues		2,574			2,333			6,485			5,898			1,074			2,052
Cost of sales		1,826			1,754			4,786			4,519			879			1,609
Selling, general and administrative expenses		1,469			1,560			4,196			4,601			1,344			1,375
Operating loss		(721	)		(981	)		(2,497	)		(3,222	)		(1,149	)		(932	)
Loss on settlement of litigation		(450	)		-			(450	)		-
Interest income, net		7			18			40			128			50			17
Income from governmental assistance programs		-			28			207			83			22			-
Loss before income taxes		(1,164	)		(935	)		(2,700	)		(3,011	)		(1,077	)		(915	)
Provision for income taxes		-			10			11			15			-			-
Net loss	$	(1,164	)	$	(945	)	$	(2,711	)	$	(3,026	)	$	(1,077	)	$	(915	)

Net product sales — Net product sales for the three month period ended ~~December 31, 2021~~June 30, 2022 were ~~$2.5~~$1.0 million as compared to ~~$2.3~~$2.0 million for the three month period ended ~~December 31, 2020~~June 30, 2021, ~~an increase~~a decrease of ~~$0.2~~$1.0 million, or ~~10.4%~~49.5%. The Company’s sales during the three month periods ended ~~December 31,~~June 30, 2022 and June 30, 2021 ~~and December 31, 2020~~ were highly concentrated among the Company’s three largest customers – Wal-Mart, ~~Amazon~~Fred Meyer and ~~Fred Meyer~~Amazon – comprising in the aggregate approximately ~~94%~~78% and ~~90%~~84%, respectively, of the Company’s total net product sales.

Net product sales ~~for the~~ ~~nine month period~~ ~~ended December 31, 2021 were $6.3 million as compared to $5.7 million for the~~ ~~nine month period~~ ended December 31, 2020, an increase of $0.6 million, or 10.0%. The Company’s sales during such periods were highly concentrated among the Company’s three largest customers – Wal-Mart, Amazon and Fred Meyer – comprising ~~in the aggregate~~ ~~approximately 91% and 83%, respectively,~~are comprised primarily of the ~~Company’s total net product sales.~~

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~~no effect ~~of increasing~~on net product sales and operating income ~~by approximately $6,000 and $3,000~~ for either of the three month periods ended ~~December 31, 2021~~June 30, 2022 and ~~December 31, 2020, respectively,~~ ~~and approximately $12,000 and $46,000 for the nine month periods ended December 31, 2021 and December 31, 2020, respectively. Net product sales are comprised primarily of the sales of houseware and audio products which bear the Emerson~~^® ~~brand name.~~June 30, 2021. The major elements which contributed to the overall ~~increase~~decrease in net product sales were as follows:

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. The Company is also continuing to invest in products and marketing activities to expand its sales through internet and ecommerce channels. These efforts require investments in appropriate human resources, media marketing and development of products in various categories in addition to the traditional home appliances and audio products on which the Company has historically focused. 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 ~~LMCA~~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. The Company expects that current and proposed U.S. 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. If no mitigation steps are taken, or the mitigation is 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 effect 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. 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.

Starting in the fourth quarter of fiscal 2020, the global COVID-19 pandemic has presented significant challenges and impacted the Company’s business and operating results, and the operations and production capabilities of the Company’s suppliers in China and the distribution capabilities of the Company’s third party logistics provider, including as a result of quarantine or closure. The pandemic has directly and indirectly disrupted certain sales and supply chain activities and affected the Company’s ability to address those challenges. Although the Company has since experienced increased demand in certain of its product categories and favorable impacts on its online channels as a result of the COVID-19 pandemic, the Company expects that the pandemic will continue to impact its business and operations over the coming quarters, including with respect to the magnitude and timing of orders by retailers, resellers, distributors and consumers. Additionally, surges in demand and shifts in shopping patterns related to the COVID-19 pandemic have strained the global freight network and availability of shipping containers, which has been further exacerbated by COVID-19 outbreaks and protocols at many port locations, resulting in carrier-imposed capacity restrictions, carrier delays and longer lead times, including shipment receiving and unloading backlogs at many U.S. ports. As a result, the Company’s shipping costs have recently increased by several multiples compared to fiscal 2021 averages. Global component shortages, in particular semiconductor chips, arising from these changes in consumer demand and reduced manufacturing capacity related to the COVID-19 pandemic have also caused and are likely to continue to result in significant price fluctuations and long lead times in the supply of these components. Although the Company is seeking alternate suppliers for these components, developing alternate sources of supply will be time consuming, difficult and costly, and may require the re-tooling of products to accommodate components from different suppliers. In addition to increasing cost trends, the Company’s suppliers are not equipped to hold meaningful amounts of inventory and if shipping container capacity remains limited or unavailable, they could pause manufacturing, which could ultimately impact the Company’s

ability to fulfill customer orders on a timely basis. These impacts on the Company’s supply chain have and may continue to impact the Company’s ability to meet product demand, which could result in additional costs, customer dissatisfaction in the event of inventory shortages or may otherwise adversely impact the Company’s business and results of operations.

In light of the adverse effects of the COVID-19 pandemic on macroeconomic conditions domestically and internationally, along with the uncertainty associated with a potential recovery, the Company has implemented certain cost-reduction actions intended to reduce expenditures in light of the effects of the COVID-19 pandemic to the business. However, the environment remains highly uncertain and demand for the Company’s products remains difficult to assess due to many factors including the pace of economic recovery around the world, the status of various government stimulus programs, competitive intensity and retailer actions to continue carefully managing inventory. As a result, the Company is unable at this time to predict the full impact of the COVID-19 pandemic on its operations and financial results, and, depending on the magnitude and duration of the pandemic, including the further spread and severity of COVID-19 cases in areas in which the Company operates and the availability and distribution of effective vaccines, such

impact may be material. 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, including tariffs, please see the risk factors within Part I, Item 1A, “Risk Factors” in the Company’s Annual Report on Form 10-K, as amended, for the year ended March 31, ~~2021.~~2022.

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.

Licensing revenue — Licensing revenue for the three month period ended ~~December 31, 2021~~June 30, 2022 was ~~$65,000~~$70,000 as compared to ~~$60,000~~$65,000 for the three month period ended ~~December 31, 2020~~June 30, 2021, an increase of $5,000, or ~~8.3%~~7.7%. The year-over-year increase can be attributed to the escalation in the annual minimum royalty earned by the Company from its licensee.

Licensing revenue for the nine month period ended December 31, 2021 was $195,000 as compared to $180,000 for the nine month period ended December 31, 2020, an increase of $15,000, or 8.3%. The year-over-year increase can be attributed to the escalation in the annual minimum royalty earned by the Company from its licensee.

Net revenues — ~~As a result of the foregoing factors, the Company’s net~~Net revenues were ~~$2.6~~$1.1 million for the three month period ended ~~December 31, 2021~~June 30, 2022 as compared to ~~$2.3~~$2.1 million for the three month period ended ~~December 31, 2020~~June 30, 2021, ~~an increase~~a decrease of ~~$0.3~~$1.0 million, or ~~10.3%,~~ ~~and $6.5 million for the nine month period ended December 31, 2021 as compared to $5.9 million for the nine month period ended December 31, 2020, an increase of $0.6 million, or 10.0%~~47.7%.

Cost of sales — In absolute terms, cost of sales ~~increased $0.1~~decreased $0.7 million, or ~~4.1%~~45.4%, to ~~$1.8~~$0.9 million for the three month period ended ~~December 31, 2021~~June 30, 2022 as compared to ~~$1.7~~$1.6 million for the three month period ended ~~December 31, 2020~~June 30, 2021. The ~~increase~~decrease in absolute terms for the three month period ended ~~December 31, 2021~~June 30, 2022 as compared to the three month period ended ~~December 31, 2020~~June 30, 2021 was primarily related to ~~an increase~~a decrease in net product sales partially offset by ~~lower~~higher year-over-year gross cost of sales as a percentage of gross sales.

In absolute terms, cost of sales increased $0.3 million, or 5.9%, to $4.8 million for the nine month period ended December 31, 2021 as compared to $4.5 million for the nine month period ended December 31, 2020. The increase in absolute terms for the nine month period ended December 31, 2021 as compared to the nine month period ended December 31, 2020 was primarily related to an increase in net product sales partially offset by lower year-over-year gross cost of sales as a percentage of gross sales.

The Company purchases the products it sells from a limited number of factory suppliers. ~~For~~In each of the three month periods ended ~~December 31, 2021~~June 30, 2022 and ~~December 31, 2020,~~June 30, 2021, the Company purchased 100% ~~and 95%, respectively, from~~of its ~~two largest suppliers. For the nine month periods ended December 31, 2021 and December 31, 2020, the Company purchased 100% and 98%, respectively,~~products from its two largest suppliers.

Selling, general and administrative expenses (“S,G&A”) — S,G&A, in absolute terms, was ~~$1.5~~$1.34 million for the three month period ended ~~December 31, 2021~~June 30, 2022 as compared to ~~$1.6~~$1.37 million for three month period ended ~~December 31, 2020~~June 30, 2021, ~~a decrease of $0.1 million~~essentially flat or ~~5.8%~~2.3%. S,G&A, as a percentage of net revenues, was ~~57.1%~~125.1% for the three month period ended ~~December 31, 2021~~June 30, 2022 as compared to ~~66.9%~~67.0% for the three month period ended ~~December 31, 2020~~June 30, 2021. The decrease in S,G&A was primarily attributed to a decrease in compensation costs of approximately ~~$113,000.~~$124,000, a decrease in director’s fees of $32,000 and a decrease in bad debt expense of $22,000 partially offset by an increase in legal fees of $158,000. Compensation costs for the three month period ended ~~December 31, 2021~~June 30, 2022 were ~~$531,000~~$508,000 as compared to ~~$644,000~~$632,000 for the three month period ended ~~December 31, 2020~~June 30, 2021.

S,G&A, in absolute terms, was $4.2 million for the nine month period ended December 31, 2021 as compared to $4.6 million for the nine month period ended December 31, 2020, a decrease of $0.4 million, or 8.8%. S,G&A, as a percentage of net revenues, was 64.7% for the nine month period ended December 31, 2021 as compared to 78.0% for the nine month period ended December 31, 2020. The decrease in S,G&A was primarily attributed to a decrease in legal fees of approximately $245,000 and a decrease in compensation costs of approximately $126,000. Legal fees for the nine month period ended December 31, 2021 were approximately $1,100,000 as compared to approximately $1,345,000 for the nine month period ended December 31, 2020. The majority of the decrease in legal fees concerned the protection of the Emerson® trademark. Compensation costs for the nine month period ended December 31, 2021 were approximately $1,770,000 as compared to approximately $1,896,000 for the nine month period ended December 31, 2020. The majority of the decrease in compensation costs were due to headcount reductions.

~~Loss on settlement of litigation~~ ~~— During~~ the three month period ended ~~December 31,~~June 30, 2022 were $431,000 as compared to $273,000 for the three month period ended June 30, 2021 ~~a settlement agreement between~~. Director’s fees for the ~~Company and one of its former directors was entered into regarding an indemnification claim. The amount of~~three month period ended June 30, 2022 were $33,000 as compared to $65,000 for the ~~settlement was $450,000. See “Note 11 – Subsequent Event”~~three month period ended June 30, 2021.

Interest income, net — Interest income, net, was ~~$7,000~~$50,000 for the three month period ended ~~December 31, 2021~~June 30, 2022 as compared to ~~$18,000~~$17,000 for the three month period ended ~~December 31, 2020~~June 30, 2021, ~~a decrease~~an increase of ~~$11,000.~~$33,000. The ~~decrease~~increase was primarily due to ~~lower~~higher average interest rates earned on the Company’s short term investments.

Interest income, net, was $40,000 for the nine month period ended December 31, 2021 as compared to $128,000 for the nine month period ended December 31, 2020, a decrease of $88,000. The decrease was primarily due to lower average interest rates earned on the Company’s short term investments.

Income from governmental assistance programs — For the three ~~and nine~~ month ~~periods~~period ended ~~December 31,~~June 30, 2022, the Company recorded income of approximately $22,000 under the ESS program. For the three month period ended June 30, 2021, the Company recorded income of ~~approximately~~ nil and $207,000, respectively, related to its PPP loan forgiveness. For the three and nine month periods ended December 31, 2020, the Company recorded income of approximately $28,000 and $83,000, respectively, related to assistance received from the Hong Kong government under the ESS program. See “Note 10 ~~- Paycheck Protection Program and Employment Support Scheme”~~– Governmental Assistance Programs”.

Provision (benefit) for income taxes — For the three month ~~period~~periods ended ~~December 31,~~June 30, 2022 and June 30, 2021, the Company recorded income tax expense of ~~nil~~nil. Under ASU 2019-12 “Income Taxes (Topic 740) – Simplifying the Accounting for Income Taxes” the Company incurred $10,950 of non-income based state taxes for both periods, which are now reported as ~~compared to income tax expense of $9,900 for the~~S,G &A. ~~three month period ended December 31, 2020~~. See “Note 5 – Income Taxes”.

~~For the nine month period ended December 31, 2021, the Company recorded income tax expense of $11,000 as compared to income tax expense of $15,200 for the nine month period ended December 31, 2020.~~

Although the Company generated net losses during fiscal ~~2022~~2023 and fiscal ~~2021,~~2022, it was unable to realize an income tax benefit due to valuation allowances recorded against its deferred tax assets.

Net (loss) — As a result of the foregoing factors, the Company realized a net loss of ~~$1,164,000~~$1,077,000 for the three month period ended ~~December 31, 2021~~June 30, 2022 as compared to a net loss of ~~$945,000~~$915,000 for the three month period ended ~~December 31, 2020~~June 30, 2021.

~~For the nine month period ended December 31, 2021, the Company realized a net loss of $2,711,000 as compared to a net loss of $3,026,000 for the nine month period ended December 31, 2020.~~

As of ~~December 31, 2021,~~June 30, 2022, the Company had cash and cash equivalents of approximately ~~$24.7~~$24.9 million as compared to approximately ~~$5.2~~$25.6 million at March 31, ~~2021.~~2022. Cash and cash equivalents includes short term investments in deposits which were classified as cash

equivalents of $21.1 million as of June 30, 2022 compared to $22.0 million of such deposits as of March 31, 2022. Working capital decreased to ~~$29.0~~$27.1 million at ~~December 31, 2021~~June 30, 2022 as compared to ~~$32.1~~$28.1 million at March 31, ~~2021.~~2022. The ~~increase~~decrease in cash and cash equivalents of approximately ~~$19.5~~$0.7 million was due to the decrease in short term investments of $25.0 million, an increase of $0.4 million in accounts payable and other current liabilities and the increase in long term lease liabilities of $0.2 million offset by the net loss generated during the period of ~~$2.7 million, an increase in accounts receivable of $1.9~~$1.1 million, an increase in inventory of ~~$0.6~~$0.3 million, an increase in ~~right~~prepaid purchases of ~~use assets of $0.2~~$0.1 million ~~a decrease in federal taxes payable of $0.2 million, a decrease in PPP loan payable of $0.2 million,~~and a decrease in deferred revenue of ~~$0.2~~$0.1 million ~~and an increase~~partially offset by a decrease in accounts receivable of $0.7 million, a decrease in prepaid expenses and other current assets of $0.1 million and an increase in accounts payable and other current liabilities of $0.1 million.

Net cash used by operating activities was approximately ~~$5.5~~$0.7 million for the ~~nine~~three month period ended ~~December 31, 2021,~~June 30, 2022, resulting from a ~~$2.7~~$1.1 million net loss generated during the period, an increase in ~~accounts receivable~~inventory of ~~$2.1~~$0.3 million, an increase in ~~inventory~~prepaid purchases of ~~$0.6~~$0.1 million ~~an increase~~and a decrease in ~~right~~deferred revenue of ~~use assets~~$0.1 million partially offset by a decrease in accounts receivable of ~~$0.4~~$0.7 million, a decrease in ~~federal taxes payable~~prepaid expenses and other current assets of ~~$0.2~~$0.1 million ~~the impact of the PPP loan forgiveness of $0.2 million partially offset by~~and an increase in accounts payable and other current liabilities of ~~$0.4 million, an increase in long-term lease liabilities of $0.2 million and a decrease in prepaid purchases of~~ $0.1 million.

Net cash provided by investing activities was ~~approximately $25.0 million~~nil for the ~~nine~~three month period ended ~~December 31, 2021 due to a decrease in short term deposits.~~June 30, 2022.

Net cash used by financing activities was nil for the ~~nine~~three month period ended ~~December 31, 2021.~~June 30, 2022.

The Company’s principal existing sources of cash are generated from operations and its existing short-term investments. The Company believes that its existing cash balance and sources of cash will be sufficient to support existing operations over the next 12 months.

In April and May of 2020, the Company applied for and received aggregate loan proceeds of approximately $0.2 million under the PPP. The PPP loan accrued interest at 1% and matures two years from the date of issuance, with a deferral of payments for the first six months. The Company used all of the PPP loan proceeds for qualifying expenses in accordance with terms of the CARES Act and applied for forgiveness of the loan to the extent applicable. On July 5, 2021, the Company’s PPP loan was completely forgiven by the Small Business Administration. See Note 10 of the Notes to the Interim Consolidated Financial Statements.

As of ~~December 31, 2021,~~June 30, 2022, the Company did not have any off-balance sheet arrangements as defined under the rules of the SEC.

Accounting Standards Update 2019-12 “Income Taxes (Topic 740) – Simplifying the Accounting for Income Taxes” (Issued December 2019)

The following ASUs were issued by the FASB which relate to or could relate to the Company as concerns the Company’s normal ongoing operations or the industry in which the Company operates.

Accounting Standards Update 2016-13 “Financial Instruments – Credit Losses” (Issued June 2016)

In June 2016, the FASB issued ASU 2016-13 “Financial Instruments - Credit Losses” to introduce new guidance for the accounting for credit losses on instruments within its scope. ASU 2016-13 requires among other things, the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable supportable forecasts. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. 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 periods beginning after December 15, 2022. Early adoption is permitted. The Company does not expect these amendments to have a material impact on its financial statements.

The Company maintains disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d — 15(e) under the ~~Securities~~ Exchange ~~Act of 1934, as amended (the “Exchange Act”))~~Act) that are designed to ensure that information required to be disclosed in its Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including the Company’s Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Due to the inherent limitations of control systems, not all misstatements may be detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. Our controls and procedures can only provide reasonable, not absolute, assurance that the above objectives have been met.

The Company’s management, with the participation of our Chief Executive Officer and Chief Financial Officer, concluded that disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), as of ~~December 31, 2021,~~June 30, 2022, are effective to provide reasonable assurance that information required to be disclosed in the reports that the Company files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to management, including the Company’s principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

There have been no changes in the Company’s internal control over financial reporting that occurred during the fiscal quarter ended ~~December 31, 2021~~June 30, 2022 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

The Company is not currently a party to any 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 any 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.

There have been no material changes to the risk factors contained in Part I, Item 1A, “Risk Factors” in the Company’s Annual Report on Form 10-K, as amended, for the year ended March 31, ~~2021.~~2022.

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

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

35 Waterview Blvd., Suite 140, Parsippany, NJ		07054
(Address of principal executive offices)		(Zip code)


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

PART I — FINANCIAL INFORMATION
Item 1. Financial Statements		3
Item 2. Management’s Discussion and Analysis of Results of Operations and Financial Condition		14
Item 3. Quantitative and Qualitative Disclosures About Market Risk		1918
Item 4. Controls and Procedures		19
PART II — OTHER INFORMATION
Item 1. Legal Proceedings		2120
Item 1A. Risk Factors		2120
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		2120
Item 3. Defaults Upon Senior Securities		2120
Item 4. Mine Safety Disclosure		2120
Item 5. Other Information		2120
Item 6. Exhibits		2120
SIGNATURES		2221

As of June 30, 2022 the maturities of lease liabilities were as follows:
(in thousands)	Operating Leases			Finance Leases

2023	$	170		$	1
2024		149			1
2025		62			1
2026		—			—
Thereafter		—			—
Total lease payments	$	381		$	3
Less: Imputed interest		(25	)		(1	)
Total	$	356		$	2


31.1		Certification of the Company’s Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

31.2		Certification of the Company’s Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

32		Certification of the Company’s Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**

101.INS		Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.*

101.SCH		Inline XBRL Taxonomy Extension Schema Document.*

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document.*

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document.*

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document.*

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document.*

104		Cover Page Interactive Data File (embedded within the Inline XBRL document)


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


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

As of December 31, 2021 the maturities of lease liabilities were as follows:
(in thousands)	Operating Leases			Finance Leases

2022	$	63		$	1
2023		233			1
2024		149			1
2025		63			1
Thereafter		—			—
Total lease payments	$	508		$	4
Less: Imputed interest		(39	)		(1	)
Total	$	469		$	3

				EMERSON RADIO CORP.
				(Registrant)

				/s/ Christopher W. Ho
Date: ~~February 14,~~August 15, 2022				Christopher W. Ho
				Chief Executive Officer (Principal Executive Officer)

				/s/ Richard Li
Date: ~~February 14,~~August 15, 2022				Richard Li
				Chief Financial Officer (Principal Financial and Accounting Officer)

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company