EMERSON RADIO CORP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE1 — BACKGROUND AND BASIS OF PRESENTATION

The unaudited 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, 2025* and the results of operations for thethree andnine month periods ended* December 31, 2025and December 31, 2024*. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary in order to make the unaudited condensed consolidated financial statementsnot 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 donot 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, 2025* (“fiscal2025”), included in the Company’s Annual Report on Form10-K for fiscal2025.

The results of operations for thethree andnine month periods ended* December 31, 2025* arenot necessarily indicative of the results of operations that* maybe expected for any other condensed interim period or for the full year ending March 31, 2026*.

Recently Adopted Accounting Pronouncements

Accounting Standards Update2025-05 Financial Instruments—Credit Losses (Topic326*): Measurement of Credit Losses for Accounts Receivable and Contract Assets***

In* July 2025,the FASB issued ASU2025*-05, which provides (1) all entities with a practical expedient and (2) entities other than public business entities with an accounting policy election when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under Topic606, Revenue from Contracts with Customers. The practical expedient allows an entity to assume that, when estimating expected credit losses, current conditions as of the balance sheet date remain unchanged for the remaining life of the asset. The accounting policy election permits nonpublic entities that elect the practical expedient to also consider collection activity occurring after the balance sheet date when estimating expected credit losses. The standard is effective for fiscal years beginning after* December 15, 2025,and for interim periods within those annual reporting periods. Early adoption is permitted. The Company has adopted ASU2025*-05 for thethree andnine month periods ended* December 31, 2025.The adoption didnot* have a material impact on its financial condition, results of operations or cash flows.

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 Update2024-03 Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures***(Subtopic220-40): "Disaggregation of Income Statement Expenses**”** (Issued* November2024*)*

In* November 2024,the FASB issued ASUNo.* 2024-03 “Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic220-40): 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.

Accounting Standards Update2023-09* Income Taxes (Topic740): "Improvements to Income Tax Disclosures" Income Statement Expenses"(Issued* December* 2023)*

In* December 2023,the FASB issued ASUNo.* 2023-09, “Income Taxes (Topic740): Improvements to Income Tax Disclosures.” ASU2023-09 requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. ASU2023-09 is effective for public entities with annual periods beginning after* December 15, 2024,*with early adoption permitted. The Company is currently evaluating the impact of this guidance on its consolidated financial statements.

Segment Reporting

The Company operates asone 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 topic606, “Revenue from Contracts with Customers” (“ASC606”).

At the time of sale, the Company reduces recognized gross revenue by allowances to cover, in addition to estimated sales returns as required by ASC606, (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 doesnot 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 ASC606.

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 aone 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 arenot 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, 2025*, the Company recorded deferred revenue ofnil as compared to approximately $96,000 as of* March 31, 2025* on its condensed consolidated balance sheets. As of* December 31, 2024*, the Company recorded deferred revenue of approximately $128,000 as compared to approximately $191,000 as of* March 31, 2024* on its condensed consolidated balance sheets. All of the deferred revenue for the periods presented are related to licensing revenue.

Disaggregation of Revenue

Accounts Receivable, net

The Company extends credit based upon evaluations of a customer’s financial condition and provides for any anticipated credit losses in the Company’s financial statements based upon management’s estimates and ongoing reviews of recorded allowances. Credit is extended for periods between30 and150 days, on a net basis. If the financial condition of a customer deteriorates, resulting in an impairment of that customer’s ability to make payments, additional reserves* maybe required. Conversely, reserves are reduced to reflect credit and collection improvements. Receivables are written off once they are considered uncollectible. The accounts receivable balance on a net basis was approximately $1,456,000 as of December 31, 2025* as compared to approximately $1,499,000 as of* March 31, 2025* and approximately $1,343,000 as of* March 31, 2024*. As of* December 31, 2025*, Amazon.com ("Amazon") accounted for approximately 69% and Bi-Mart ("Bi-Mart") accounted for approximately 12% of the Company’s total trade accounts receivable, net of specific reserves. As of* March 31, 2025*, Amazon accounted for approximately 59% and Variety Wholesalers Inc. ("Variety") accounted for approximately 19% of the Company’s total trade accounts receivable, net of specific reserves.No other customer accounted for more than10% of the Company’s total trade accounts receivable, net of specific reserves, as of* December 31, 2025* or* March 31, 2025*.

Accounts receivable roll-forward:

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

NOTE2 — 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.

NOTE3 — SHAREHOLDERS’** EQUITY**

Outstanding capital stock at* December 31, 2025* consisted of common stock and Series A preferred stock. The Series A preferred stock is non-voting, hasno dividend preferences and hasnot been convertible since* March**31,* 2002; however, it retains a liquidation preference.

At* December 31, 2025*, the Company hadno options, warrants or other potentially dilutive securities outstanding.

NOTE4 — INVENTORY

Inventories, which consist primarily of finished goods, are stated at the lower of cost or net realizable value. Cost is determined using thefirst-in,first-out method. As of* December 31, 2025* and* March 31, 2025*, inventories consisted of the following (in thousands):

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NOTE5 — INCOME TAXES

As of* December 31, 2025*, the Company had approximately $22.2 million of U.S. federal net operating loss (“NOL”) carry forwards. These losses donot expire but are limited to utilization of 80% of taxable income in anyone year. At* December 31, 2025*, the Company had approximately $23.9 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 thannot that such benefits will be realized.

The Company analyzed the future reasonability of recognizing its deferred tax assets at* December 31, 2025*. As a result, the Company concluded that a100% valuation allowance of approximately $6,927,000 would be recorded against the assets.

The income of foreign subsidiaries before taxes was approximately $141,000 for thethree month period ended* December 31, 2025* as compared to income of foreign subsidiaries before taxes of approximately $218,000 for thethree month period ended* December 31, 2024*. The income of foreign subsidiaries before taxes was approximately $485,000 for thenine month period ended* December 31, 2025* as compared to income of foreign subsidiaries before taxes of approximately $738,000 for thenine month period ended* December 31, 2024*.

The Company generated a net operating loss and recorded income tax expense ofnil during thethree andnine month periods ended* December 31, 2025*. During thethree andnine month periods ended* December 31, 2024*, the Company generated a net operating loss and recorded income tax expense ofnil and approximately $3,000, respectively, primarily resulting from state income taxes. The Company after adoption of ASU2019-12 “Income Taxes (Topic740) – Simplifying the Accounting for Income Taxes”** *during fiscal2022, incurred non-income based state taxes of approximately $9,000 for both of thenine month periods ended December 31, 2025and December 31, 2024,*which 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, 2025*, the Company’s open tax years for examination for U.S. federal tax are 2017-2025, and for U.S. states’ tax are 2015-2025. 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* maybe 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, 2025*, the Company is asserting under ASC740-30 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, 2025* and* March 31, 2025*, the Company had a federal tax liability ofnil and approximately $668,000, respectively, related to the repatriation of the Company’s undistributed earnings of its foreign subsidiaries as required by the Tax Cuts and Jobs Act of2017. As of* December 31, 2025* and* March 31, 2025*, the Company’s short term portion wasnil and approximately $668,000, respectively. As of each of* December 31, 2025* and* March 31, 2025*, the Company's long term portion wasnil.

The liability was payable over 8 years. Thefirst five installments were each equal to 8%, thesixth was equal to 15%, theseventh was equal to 20% and the final installment was equal to 25% of the liability. The Company paid itseighth and final installment in* July 2025.*

NOTE6 — 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”), andone 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 Schedule13D/A filed with the SEC on* February 15, 2019,the shared power to vote and direct the disposition of 15,243,283 shares, or approximately 72.4%, of the Company’s outstanding common stock as of December 31, 2025*. Accordingly, the Company is a “controlled company” as defined in Section801(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 thethree andnine month periods ended* December 31, 2025*, the Company was billed approximately $33,000 and $98,000, respectively, for rental and utility fees from Vigers Appraisal and Consulting Ltd (“VACL”), which is a company related to the Company’s Chairman of the Board of Directors ("Chairman"). As of* December 31, 2025* the Company owed approximately $1,000 to VACL related to these charges. During thethree andnine month periods ended* December 31, 2024*, the Company was billed approximately $26,000 and $101,000, respectively, for rental and utility fees from VACL, which is a company related to the Company's Chairman. As of* December 31, 2024* the Company owed approximately $1,000 to VACL related to these charges.

Charges for promotional items

During each of thethree andnine month periods ended* December 31, 2025*, the Company purchasednil of promotional items from The Whisky Capital Pte Ltd ("TWCPL"), which is a company related to the Company's Chairman. During thethree andnine month periods ended* December 31, 2024*, the Company purchasednil and approximately $30,000, respectively, of promotional items from TWCPL. As of* December 31, 2024*, the Company owednil to TWCPL.

NOTE7 — SHORT TERM DEPOSITS AND INVESTMENTS

As of* December 31, 2025* and* March 31, 2025*, the Company held approximately $3.8 million and approximately $0.9 million, respectively, in short term deposits. These short term deposits had maturity dates of90 days or less and are classified as cash equivalents.

As of* December 31, 2025* and* March 31, 2025*, the Company also held approximately $9.1 million and approximately $14.9 million, respecti vely, in short term investments which had maturity dates greater than90 days and are classified as short term investments.

Under ASC Topic820 Fair Value Measurement, the carrying amounts of the Company’s financial instruments, such as cash, short term deposits and short term investments approximate fair values due to the short-term nature of these instruments and are classified under the fair value hierarchy of Level1.

NOTE8 — CONCENTRATION RISK

Customer Concentration

For thethree month period ended* December 31, 2025*, the Company’stwo largest customers accounted for approximately 69% of the Company’s net revenues, of which Amazon accounted for approximately 54% and Bi-Mart accounted for approximately 15%.No other customer accounted for greater than10% of the Company's net revenues during the period.

For thenine months ended* December 31, 2025*, the Company’stwo largest customers accounted for approximately 50% of the Company’s net revenues, of which Amazon accounted for approximately 39% and Fred Meyer accounted for approximately 11%.No other customer accounted for greater than10% of the Company's net revenues during the period.

For thethree month period ended* December 31, 2024*, the Company’sthree largest customers accounted for approximately 92% of the Company’s net revenues, of which Amazon accounted for approximately 43%, Walmart Inc. ("Walmart") accounted for approximately 25% and Big Lots Stores, Inc. ("Big Lots") accounted for approximately 24%.No other customer accounted for greater than10% of the Company's net revenues during the period.

For thenine months ended* December 31, 2024*, the Company’sthree 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 than10% 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.

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Product Concentration

For thethree andnine month periods ended* December 31, 2025*, the Company’s gross product sales included microwave ovens, which generated approximately 59% and 69%, respectively, of the Company’s gross product sales and audio products, which generated approximately 37% and 25%, respectively, of the Company’s gross product sales.No other products accounted for greater than10% of the Company's gross product sales during the respective periods.

For thethree andnine 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 than10% of the Company's gross product sales during the respective periods.

Concentrations of Credit Risk

As of* December 31, 2025*, the Company’s toptwo customers accounted for approximately 69% and 12%, respectively, of the Company's total trade accounts receivable, net of specific reserves.No other customers accounted for greater than10% of the Company's total trade accounts receivable, net of specific reserves, as of such date. As of* March 31, 2025*, the Company's toptwo customer's accounted for approximately 59% and 19%, respectively, of the Company's total trade accounts receivable, net of specific reserves.No other customers accounted for greater than10% 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 doesnot require collateral, and the Company provides for any anticipated credit losses in the financial statements based upon management’s estimates and ongoing reviews of recorded allowances. The allowance for credit losses on the Company's total trade accounts receivable balances was approximately $954,000 as of* December 31, 2025* and approximately $1,107,000 as of* March 31, 2025*. Due to the high concentration of the Company’s net trade accounts receivables among justtwo customers, any significant failure byone 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, 2025* and* March 31, 2025* were insured by the Federal Deposit Insurance Corporation (“FDIC”) up to*$250,000* per qualifying bank account in accordance with FDIC rules. The Company’s cash, cash equivalents and restricted cash balances in excess of these FDIC-insured limits were approximately $3.9 million and approximately $0.9 million at* December 31, 2025* and* March 31, 2025*, respectively. The Company also has short term deposits in foreign financial institutions which arenot FDIC insured of approximately $9.1 million and approximately $14.9 million as of* December 31, 2025* and* March 31, 2025*, respectively.

Supplier Concentration

During thethree month period ended* December 31, 2025*, the Company procured 100% of its products for resale from itsfour largest factory suppliers, of which approximately 34% was supplied by its largest supplier and approximately 25%,23% and 18%, respectively, was supplied by the otherthree suppliers. During thethree month period ended* December 31, 2024*, the Company procured approximately 94% of its products for resale from itsfour largest factory suppliers, of which approximately 46% was supplied by its largest supplier and approximately 22%,15% and 11%, respectively, was supplied by the otherthree suppliers.No other suppliers accounted for greater than10% for either thethree month period ended* December 31, 2025* or* December 31, 2024*.

During thenine month period ended* December 31, 2025*, the Company procured approximately 88% of its products for resale from itsthree largest factory suppliers, of which approximately 35% was supplied by its largest supplier and approximately 28%, and 25%, respectively, was supplied by the othertwo suppliers. During thenine month period ended* December 31, 2024*, the Company procured 94% of its products for resale from itsfive 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 otherfour suppliers.No other suppliers accounted for greater than10% for either thenine month period ended* December 31, 2025* or* December 31, 2024*.

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NOTE9 — 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 oftwenty toforty-two months. The Company has electednot to separate lease and non-lease components for all leased assets. The Company didnot identify any events or conditions during the quarter ended* December 31, 2025* to indicate that a reassessment or re-measurement of the Company’s existing leases was required.

As of* December 31, 2025*, the Company’s current operating lease liabilities and finance lease liabilities were $158,000 and $1,000, respectively and its non-current operating lease liabilities and finance lease liabilities were $201,000 and $4,000, respectively. The Company’s operating and finance lease right-of-use asset balances are presented in non-current assets. The net balance of the Company’s operating and finance lease right-of-use assets as of* December 31, 2025* was $338,000 and $5,000, respectively.

As disclosed in "Note6 - Related Party Transactions", the Company's Hong Kong office space is being leased from VACL, which is a company related to the Company's Chairman. As of* December 31, 2025*, the current operating liability of this lease is approximately $108,000 and its non-current liability is $78,000. Its right-of-use asset value is approximately $186,000, as of* December 31, 2025*.

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

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

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

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**NOTE10 **—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 isno* 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 isno guarantee that those bankruptcy proceedings willnot have any effect on the ability of the Company to collect the judgement. In addition, in connection with those bankruptcy proceedings, the Chapter7 trustee of Home Easy has filed a complaint seeking the return of the $4.1 million of advanced deposits previously paid to the Company and the outcome of such litigation remains uncertain. The Company isnot 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 willnot have a material adverse effect on the Company’s financial position, results of operations or cash flows.

NOTE11 — SEGMENT INFORMATION

The Company currently operates asone segment which includestwo revenue types, product sales and licensing revenue. While the Company discloses product sales and licensing revenue separately, management doesnot consider these to be separate segments, as all Emerson branded product is sold though similar sales channels and to similar customers. Management's determination for the allocation of resources isnot analyzed by revenue streams, but as a single business unit. The determination of a single business segment is consistent with the consolidated financial information provided to the Company's Chief Operating Decision Maker ("CODM"). The Company's CODMs are the Chief Executive Officer, Chief Operating Officer and Chief Financial Officer who review and evaluate consolidated net income for purposes of assessing performance, allocating resources, making operating decisions and for its planning and forecasting processes. Segment expenses are provided to the CODM on the same basis as disclosed in the condensed Consolidated Statements of Operations. The CODM doesnot evaluate performance nor does it allocate resources based on segment assets and therefore such information isnot presented in the notes to the financial statements.

NOTE12 — SUBSEQUENT EVENTS

As of the filing date of this Form10-Q, there wereno subsequent events identified to disclose.

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