EMERSON RADIO CORP

Previous wording

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

Current wording

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

Previous wording

Net product sales — Net product sales for the three month period ended December 31, 2025 were approximately $1.8 million as compared to approximately $3.9 million for the three month period ended December 31, 2024, a decrease of approximately $2.1 million, or 53.6%. The Company’s net product sales during the three month period ended December 31, 2025 were highly concentrated among its three largest customers – Amazon, Bi-Mart and Walmart – comprising in the aggregate approximately 82% of the Company’s total net product sales during the period. The Company’s net product sales during the three month period ended December 31, 2024, were highly concentrated among its three largest customers – Amazon, Walmart and Big Lots – comprising in the aggregate approximately 95% of the Company’s total net product sales during the period.

Current wording

Net product sales — Net product sales for the three month period ended June 30, 2026 were approximately $0.9 million as compared to approximately $1.6 million for the three month period ended June 30, 2025, a decrease of approximately $0.7 million, or 41.5%. The Company’s net product sales during the three month period ended June 30, 2026 were highly concentrated among its two largest customers – Amazon and Walmart – comprising in the aggregate approximately 65% of the Company’s total net product sales during the period. The Company’s net product sales during the three month period ended June 30, 2025, were highly concentrated among its three largest customers – Variety, Fred Meyer and Amazon – comprising in the aggregate approximately 68% of the Company’s total net product sales during the period.

Previous wording

Net product sales are comprised primarily of the sales of houseware and audio products which bear the Emerson® brand name. Net product sales may be periodically impacted by adjustments made to the Company’s sales allowance and marketing support accrual to record unanticipated customer deductions from accounts receivable or to reduce the accrual by any amounts which were accrued in the past but not taken by customers through deductions from accounts receivable within a certain time period. In the aggregate, these adjustments had the effect of increasing net product sales and operating income by approximately $1,000 and approximately $11,000 forthe three month periods ended December 31, 2025 and December 31, 2024, respectively, and by nil and approximately $32,000 for the nine month periods ended December 31, 2025 and December 31, 2024, respectively. The major elements which contributed to the overall decrease in net product sales were as follows:

Current wording

Net product sales are comprised primarily of the sales of houseware and audio products which bear the Emerson® brand name. Net product sales may be periodically impacted by adjustments made to the Company’s sales allowance and marketing support accrual to record unanticipated customer deductions from accounts receivable or to reduce the accrual by any amounts which were accrued in the past but not taken by customers through deductions from accounts receivable within a certain time period. In the aggregate, these adjustments had the effect of increasing net product sales and operating income by nilfor each ofthe three month periods ended June 30, 2026 and June 30, 2025. The major elements which contributed to the overall decrease in net product sales were as follows:

Previous wording

i)Houseware products: Net sales of houseware products decreased approximately $1.0 million, or 46.9%, to approximately $1.1 million for the three month period ended December 31, 2025 as compared to approximately $2.1 million for the three month period ended December 31, 2024, driven by decreased net sales of microwave ovens. Certain of the Company's key customers refuse to accept price increases from recently imposed tariffs, which negatively impacted net sales during the quarter ended December 31, 2025. Net sales of houseware products decreased $ 1.1 million, or 24.3%, to approximately $3.3 million for the nine month period ended December 31, 2025 as compared to approximately $4.4 million for the nine month period ended December 31, 2024, driven by decreased net sales of microwave ovens and compact refrigerators.

Current wording

i)Houseware products: Net sales of houseware products decreased approximately $0.8 million, or 54.6%, to approximately $0.6 million for the three month period ended June 30, 2026 as compared to approximately $1.4 million for the three month period ended June 30, 2025, driven by decreased net sales of microwave ovens. Certain of the Company's key customers refuse to accept price increases from imposed tariffs, which negatively impacted net sales during the quarter ended June 30, 2026.

Previous wording

Business operations — The Company expects to continue to expand its existing distribution channels and to develop and promote new products with retailers in the U.S and Mexico. 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 each of Leveraged Marketing Corporation of America and Global Licensing Services Pte Limited as an agent to assist in identifying and procuring potential licensees.

Current wording

Business operations — The Company expects to continue to expand its existing distribution channels and to develop and promote new products with retailers in the U.S, Canada and Mexico. The Company is also continuing to invest in products and marketing activities to expand its sales through internet and ecommerce channels. 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 each of Leveraged Marketing Corporation of America and Global Licensing Services Pte Limited as an agent to assist in identifying and procuring potential licensees.

Previous wording

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 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. Although the Company is monitoring the trade and political environment and working to mitigate the effects of tariffs with its suppliers as well as its customers through pricing and sourcing strategies, the Company cannot be certain how its customers and competitors will react to the actions taken. If the Company's mitigation efforts are unsuccessful, the impact of tariffs will result in significantly increased annualized costs to the Company as all of the Company’s products are currently manufactured by suppliers in China. 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.

Current wording

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 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 the Company's mitigation efforts are unsuccessful, the combination of tariffs will result in significantly increased annualized costs to the Company as all of the Company's products are currently manufactured by suppliers in China. Although the Company is monitoring the trade and political environment and working to mitigate the possible effects of tariffs with its suppliers as well as its customers through pricing and sourcing strategies, certain of the Company's key customers have refused to accept price increases from imposed tariffs and the Company cannot be certain how other customers and competitors will react to any future actions that may be taken. In addition, heightened tensions between the United States and China over Hong Kong and any resulting retaliatory policies may affect our operations in Hong Kong. At this time the Company is unable to quantify effects on its costs arising from the existing or potential new tariffs, which are expected to increase the Company’s inventory costs and associated costs of sales as tariffs are incurred. Although some costs may be passed through to the Company’s customers as product price increases in the future, if the Company is unable to successfully pass through the additional costs or otherwise mitigate the effects of these tariffs, or if the higher prices reduce demand for the Company’s products, it will have a negative effect on the Company’s product sales and gross margins.

Previous wording

In light of the adverse macroeconomic conditions domestically and internationally, the Company has implemented certain cost-reduction actions intended to reduce expenditures. However, the economic environment remains uncertain. Demand for the Company’s products remains competitive and requires the Company to continue carefully managing inventory. Accordingly, our current results and financial condition discussed herein may not be indicative of our future operating results and trends.

Current wording

In light of the adverse macroeconomic conditions domestically and internationally, the Company has implemented certain cost-reduction actions intended to reduce expenditures. However, the economic environment remains uncertain and demand for the Company’s products remains competitive and requires actions to continue carefully managing inventory. Accordingly, current results and financial condition discussed herein may not be indicative of future operating results and trends.

Previous wording

Licensing revenue for the nine month period ended December 31, 2025 was approximately $261,000 as compared to approximately $248,000 for the nine month period ended December 31, 2024, an increase of approximately $13,000, or 5.2%. The increase for the nine month period ended December 31, 2025 was the result of increases of annual guaranteed minimum royalties of the Company's licensees.

Current wording

Licensing revenue — Licensing revenue for the three month period ended June 30, 2026 was approximately $125,000 as compared to approximately $86,000 for the three month period ended June 30, 2025, an increase of approximately $39,000, or 45.4%. The increase was primarily due to the escalation in annual minimum royalties of one of the Company's licensees.

Previous wording

Net revenues — Net revenues were approximately $1.9 million for the three month period ended December 31, 2025 as compared to approximately $4.0 million for the three month period ended December 31, 2024, a decrease of approximately $2.1 million, or 53.6%. The decrease in net revenues can be attributed primarily to the discontinuation of a clock radio at Walmart.

Current wording

Net revenues — Net revenues were approximately $1.1 million for the three month period ended June 30, 2026 as compared to approximately $1.7 million for the three month period ended June 30, 2025, a decrease of approximately $0.6 million, or 37.1%. The decrease in net revenues can be attributed primarily to the refusal by certain of the Company's key customers to accept price increases from imposed tariffs.

Previous wording

Cost of sales — Cost of sales decreased approximately $1.8 million, or 52.0%, to approximately $1.7 million for the three month period ended December 31, 2025 as compared to approximately $3.5 million for the three month period ended December 31, 2024. The decrease in absolute terms for the three month period ended December 31, 2025 as compared to the three month period ended December 31, 2024 was primarily related to the discontinuation of a clock radio at Walmart and the negative impact of tariffs on the Company's microwave product line.

Current wording

Cost of sales — Cost of sales decreased approximately $1.2 million, or 67.9%, to approximately $0.5 million for the three month period ended June 30, 2026 as compared to approximately $1.7 million for the three month period ended June 30, 2025. The decrease in absolute terms for the three month period ended June 30, 2026 as compared to the three month period ended June 30, 2025 was primarily related to the reduction in net sales of approximately $660,000 and a one-time tariff refund of approximately $548,000.

Previous wording

Selling, general and administrative expenses (“S,G&A”) — S,G&A was approximately $1.0 million for the three month period ended December 31, 2025 as compared to $1.2 million for the three month period ended December 31, 2024, a decrease of approximately $0.2 million or 15.7%. S,G&A, as a percentage of net revenues, was approximately 54.6% for the three month period ended December 31, 2025 as compared to approximately 30.6% for the three month period ended December 31, 2024. The decrease in S,G&A for the three month period ended December 31, 2025 as compared to the three month period ended December 31, 2024 was primarily driven by a decrease in compensation costs of approximately $168,000 and an increase in bad debt recoveries of approximately $164,000, partially offset by an increase in legal fees of approximately $160,000. Compensation costs for the three month period ended December 31, 2025 were approximately $568,000 as compared to approximately $736,000 for the three month period ended December 31, 2024. Bad debt recoveries for the three month period ended December 31, 2025 were approximately $164,000 as compared to nil for the three month period ended December 31, 2024. Legal fees for the three month period ended December 31, 2025 were approximately $123,000 as compared to approximately $37,000 of legal fee recoveries for the three month period ended December 31, 2024.

Current wording

Selling, general and administrative expenses (“S,G&A”) — S,G&A was approximately $1.2 million for the three month period ended June 30, 2026 as compared to $1.3 million for the three month period ended June 30, 2025, a decrease of approximately $0.1 million or 8.6%. S,G&A, as a percentage of net revenues, was approximately 114.4% for the three month period ended June 30, 2026 as compared to approximately 78.8% for the three month period ended June 30, 2025. The decrease in S,G&A for the three month period ended June 30, 2026 as compared to the three month period ended June 30, 2025 was primarily driven by a decrease in compensation costs of approximately $138,000 and a decrease in bad debt expense of approximately $23,000, partially offset by an increase in legal fees of approximately $55,000. Compensation costs for the three month period ended June 30, 2026 were approximately $632,000 as compared to approximately $770,000 for the three month period ended June 30, 2025. Bad debt recoveries for the three month period ended June 30, 2026 were approximately $16,000 as compared to bad debt expense of approximately $7,000 for the three month period ended June 30, 2025. Legal fees for the three month period ended June 30, 2026 were approximately $98,000 as compared to approximately $43,000 of legal fees for the three month period ended June 30, 2025.

Previous wording

Interest income, net — Interest income, net, was approximately $132,000 for the three month period ended December 31, 2025 as compared to approximately $206,000 for the three month period ended December 31, 2024, a decrease of approximately $74,000. The decrease was primarily due to lower levels of cash invested on the Company’s short term investments.

Current wording

Interest income, net — For the three month period ended June 30, 2026, interest income, net, was approximately $120,000, which included approximately $20,000 of interest from the IEEPA tariff recovery, as compared to approximately $169,000 for the three month period ended June 30, 2025, a decrease of approximately $49,000. The decrease was primarily due to lower levels of cash invested on the Company’s short term investments.

Previous wording

Provision for income taxes — For both three month periods ended December 31, 2025 and December 31, 2024, the Company recorded income tax expense of nil. For the nine month period ended December 31, 2025, the Company recorded income tax expense of nil as compared to approximately $3,000 for the nine month period ended December 31, 2024. The Company under the adoption of ASU 2019-12 “Income Taxes (Topic 740) – Simplifying the Accounting for Income Taxes” incurred non-income based state taxes of approximately $9,000 for each of the nine month periods ended December 31, 2025 and December 31, 2024, which are now reported as S,G&A. See “Note 5 – Income Taxes”.

Current wording

Provision for income taxes — The Company recorded income tax expense of nil for each of the three month periods ended June 30, 2026 and June 30, 2025. The Company under the adoption of ASU 2019-12 “Income Taxes (Topic 740) – Simplifying the Accounting for Income Taxes” incurred non-income based state taxes of approximately $9,000 for each of thethree month periods ended June 30, 2026 and June 30, 2025, which are now reported as S,G&A. See “Note 5 – Income Taxes”.

Previous wording

Although the Company generated a net loss during the three and nine months ended December 31, 2025, it is unable to realize an income tax benefit until the Company can demonstrate the ability to generate net income on a sustained basis. Therefore, the Company is obligated to record a 100% valuation allowance against the deferred tax assets.

Current wording

Although the Company generated a net loss during thethree months ended June 30, 2026, it is unable to realize an income tax benefit until the Company can demonstrate the ability to generate net income on a sustained basis. Therefore, the Company is obligated to record a 100% valuation allowance against the deferred tax assets.

Previous wording

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

Current wording

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

Previous wording

As of December 31, 2025, the Company had cash and cash equivalents of approximately $4.2 million as compared to approximately $1.2 million at March 31, 2025. Cash and cash equivalents includes short term investments in deposits which were classified as cash equivalents of approximately $3.8 million as of December 31, 2025 compared to approximately $0.9 million of such deposits as of March 31, 2025. Working capital decreased to approximately $18.3 million at December 31, 2025 as compared to approximately $21.1 million at March 31, 2025. The increase in cash and cash equivalents of approximately $3.0 million was due to the decrease in short term investments of approximately $5.8 million, the decrease in inventory of approximately $0.5 million and the increase in accounts payable and other current liabilities of approximately $0.3 million, partially offset by the net loss generated during the period of approximately $2.9 million and the decrease in income tax payable of approximately $0.7 million.

Current wording

As of June 30, 2026, the Company had cash and cash equivalents of approximately $5.3 million as compared to approximately $9.2 million at March 31, 2026. Cash and cash equivalents includes short term deposits of approximately $4.5 million as of June 30, 2026 compared to approximately $9.1 million as of March 31, 2026. Working capital decreased to approximately $16.3 million at June 30, 2026 as compared to approximately $16.8 million at March 31, 2026. The decrease in cash and cash equivalents of approximately $3.9 million was due to the increase in short term investments of approximately $3.0 million, the increase in inventory of approximately $0.8 million and the net loss generated during the period of approximately $0.6 million, partially offset by the decrease in accounts receivable of approximately $0.4 million and an increase in accounts payable and other current liabilities of approximately $0.1 million.

Previous wording

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

Current wording

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

Previous wording

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

Current wording

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

Previous wording

Net cash used by financing activities was approximately $1,000 for thenine month period ended December 31, 2025.

Current wording

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