EMERSON RADIO CORP - Quarter Report: 2014 September (Form 10-Q)

EMERSON RADIO CORP - Quarter Report: 2014 September (Form 10-Q)

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Form 10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2014

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

For the transition period from to

Commission file number 001-07731

EMERSON RADIO CORP.

(Exact name of registrant as specified in its charter)


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

3 University Plaza, Suite 405, Hackensack, NJ		07601
(Address of principal executive offices)		(Zip code)

(973) 428-2000

(Registrant’s telephone number, including area code)

(Former name, former address, and former fiscal year, if changed since last report)

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. x Yes ¨ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every interactive data file required to be submitted and posted 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 and post such files). x Yes ¨ No

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

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

Indicate the number of shares outstanding of common stock as of November 14, 2014: 27,129,832.

TABLE OF CONTENTS


PART I — FINANCIAL INFORMATION

Item 1. Financial Statements			3

Item 2. Management’s Discussion and Analysis of Results of Operations and Financial Condition			13

Item 3. Quantitative and Qualitative Disclosures About Market Risk			18

Item 4. Controls and Procedures			18

PART II — OTHER INFORMATION

Item 1. Legal Proceedings			19

Item 1A. Risk Factors			19

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			19

Item 3. Defaults Upon Senior Securities			19

Item 4. Mine Safety Disclosure			19

Item 5. Other Information			19

Item 6. Exhibits			20

SIGNATURES			21

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements.

EMERSON RADIO CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except earnings per share data)


	Three Months Ended September 30					Six Months Ended September 30
	2014		2013			2014		2013
Net Revenues:
Net product sales	$	12,862	$	17,258		$	37,704	$	40,739
Licensing revenue		1,385		1,080			2,486		2,251

Net revenues		14,247		18,338			40,190		42,990
Costs and expenses:
Cost of sales		11,785		15,635			34,194		36,619
Other operating costs and expenses		127		171			444		322
Selling, general and administrative expenses		2,305		2,325			4,731		4,513

		14,217		18,131			39,369		41,454
Operating income		30		207			821		1,536
Other income:
Interest income, net		44		121			109		343

Income before income taxes		74		328			930		1,879
Provision (benefit) for income taxes		27		(60	)		232		122

Net income	$	47	$	388		$	698	$	1,757

Net income per share:
Basic	$	.00	$	.01		$	.03	$	.06
Diluted	$	.00	$	.01		$	.03	$	.06
Weighted average shares outstanding:
Basic		27,130		27,130			27,130		27,130
Diluted		27,130		27,130			27,130		27,130

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

EMERSON RADIO CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

(In Thousands)


	Three Months Ended				Six Months Ended
	September 30				September 30
	2014		2013		2014		2013
Net income	$	47	$	388	$	698	$	1,757
Other comprehensive income, net of tax		—		—		—		—

Comprehensive income	$	47	$	388	$	698	$	1,757

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

EMERSON RADIO CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands except share data)


	September 30, 2014			March 31, 2014
ASSETS
Current Assets:
Cash and cash equivalents	$	26,757		$	26,328
Restricted cash		500			—
Short term investments		15,000			32,194
Trade accounts receivable, net		6,130			4,354
Royalties and other receivables		951			3,865
Inventory		5,679			5,438
Prepaid purchases		1,660			2,047
Prepaid expenses and other current assets		1,557			1,604
Deferred tax assets		929			1,394

Total Current Assets		59,163			77,224
Property, plant and equipment, net		112			142
Deferred tax assets		2,058			1,753
Other assets		87			130

Total Non-current Assets		2,257			2,025

Total Assets	$	61,420		$	79,249

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable and other current liabilities		3,915			3,951
Due to affiliates		500			—

Total Current Liabilities		4,415			3,951

Total Liabilities		4,415			3,951
Shareholders’ equity:
Preferred shares -$.01 par value, 10,000,000 shares authorized at September 30, 2014 and March 31, 2014, respectively; 3,677 shares issued and outstanding at September 30, 2014 and March 31, 2014, respectively; liquidation preference of $3,677,000 at September 30, 2014 and March 31, 2014, respectively		3,310			3,310
Common shares — $.01 par value, 75,000,000 shares authorized, 52,965,797 shares issued at September 30, 2014 and March 31, 2014, respectively; 27,129,832 shares outstanding at September 30, 2014 and March 31, 2014, respectively		529			529
Additional paid-in capital		79,794			98,785
Accumulated deficit		(2,404	)		(3,102	)
Treasury stock, at cost, 25,835,965 shares		(24,224	)		(24,224	)

Total Shareholders’ Equity		57,005			75,298

Total Liabilities and Shareholders’ Equity	$	61,420		$	79,249

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

EMERSON RADIO CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)


	Six Months Ended September 30
	2014			2013
Cash Flows from Operating Activities:
Net income	$	698		$	1,757
Adjustments to reconcile net income to net cash used by operating activities:
Depreciation and amortization		30			52
Changes in assets and liabilities:
Accounts receivable		(2,201	)		2,989
Royalties and other receivables		2,914			738
Due from affiliates		500			1
Inventories		(241	)		(3,845	)
Prepaid purchases		387			(1,002	)
Prepaid expenses and other current assets		47			42
Deferred tax assets and liabilities		160			120
Other assets		43			61
Accounts payable and other current liabilities		(36	)		671
Asset allowances, reserves and other		425			(357	)
Interest and income taxes payable		—			(570	)

Net cash provided by operating activities		2,726			657

Cash Flows from Investing Activities:
Short term investment		17,194			30,080
Restricted cash		(500	)		(3	)
Additions to property and equipment		—			(23	)

Net cash provided by investing activities		16,694			30,054

Cash Flows from Financing Activities:
Dividend paid		(18,991	)		—
Net decrease in long-term capital lease obligations		—			(15	)

Net cash used by financing activities		(18,991	)		(15	)

Net increase in cash and cash equivalents		429			30,696
Cash and cash equivalents at beginning of period		26,328			21,412

Cash and cash equivalents at end of period	$	26,757		$	52,108

Cash paid during the period for:
Interest	$	—		$	6
Income taxes	$	55		$	573

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

EMERSON RADIO CORP. AND SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 — BACKGROUND AND BASIS OF PRESENTATION

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

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 September 30, 2014 and the results of operations for the three and six month periods ended September 30, 2014 and September 30, 2013. 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 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, 2014 (“fiscal 2014”), included in the Company’s annual report on Form 10-K, as amended, for fiscal 2014.

The results of operations for the three and six month periods ended September 30, 2014 are not necessarily indicative of the results of operations that may be expected for any other interim periods or for the full year ended March 31, 2015 (“fiscal 2015”).

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

Unless otherwise disclosed in the notes to these financial statements, the estimated fair value of the financial assets and liabilities approximates the carrying value.

Subsequent events have been evaluated through November 14, 2014.

Sales Allowance and Marketing Support Expenses

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 605, “Revenue Recognition”, subtopic 50 “Customer Payments and Incentives” and Securities and Exchange Commission Staff Accounting Bulletins 101 “Revenue Recognition in Financial Statements,” and 104 “Revenue Recognition, corrected copy” (“SAB’s 101 and 104”).

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 topic 605, “Revenue Recognition”, subtopic 15 “Products”, (i) sales incentives offered to customers that meet the criteria for accrual under ASC topic 605, subtopic 50 and (ii) under SAB’s 101 and 104, 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 SAB 104’s and 101’s four revenue recognition criteria, all of which are required to be met in order to recognize revenue.

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.

NOTE 2 — NET EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share amounts):


	Three months ended September 30,				Six months ended September 30,
	2014		2013		2014		2013
Numerator:
Net income	$	47	$	388	$	698	$	1,757

Denominator:
Denominator for basic earnings per share — weighted average shares		27,130		27,130		27,130		27,130
Effect of dilutive securities on denominator: Options (computed using the treasury stock method)		—		—		—		—

Denominator for diluted earnings per share — weighted average shares and assumed conversions		27,130		27,130		27,130		27,130

Basic and diluted earnings per share	$	.00	$	.01	$	.03	$	.21

NOTE 3 — SHAREHOLDERS’ EQUITY

Outstanding capital stock at September 30, 2014 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 September 30, 2014, the Company had no options, warrants or other potentially dilutive securities outstanding.

September 30, 2014 Extraordinary Cash Dividend

On August 21, 2014, the Special Committee of the Board of Directors of Emerson Radio Corp. (the “Company”) declared an extraordinary cash dividend of $0.70 per common share payable on September 30, 2014 to shareholders of record of the Company at the close of trading on September 12, 2014 and as a result, the Company paid out a net amount to stockholders of approximately $18.5 million on September 30, 2014.

NOTE 4 — INVENTORY

Inventories are stated at the lower of cost or market. Cost is determined using the first-in, first-out method. As of September 30, 2014 and March 31, 2014, inventories consisted of the following (in thousands):


	September 30, 2014		March 31, 2014
Finished goods	$	5,679	$	5,438

NOTE 5 — INCOME TAXES

Income Tax Issues Concerning Overseas Income

On April 15, 2013 and June 5, 2013, the Company received correspondence from the IRS including a (i) Form 5701 and Form 886-A regarding Adjusted Sales Income (collectively referred to as “NOPA 1”) and (ii) Form 5701 and Form 886-A regarding Adjusted Subpart F-Foreign Base Company Sales Income (collectively referred to as “NOPA 2”).

With respect to NOPA 1, the IRS is (i) challenging the position of the Company with respect to the way the Company’s controlled foreign corporation in Macao (the “Macao CFC”) recorded its product sales during Fiscal 2010 and Fiscal 2011 and (ii) asserting that an upward adjustment to the Company’s Fiscal 2010 and Fiscal 2011 taxable income of $4,981,520 and $5,680,182, respectively, is required.

With respect to NOPA 2, the IRS is challenging the position of the Company with respect to the fact that the Company considered the service fee paid by the Company to the Macao CFC to be non-taxable in the US. The IRS has taken the position that the service fee paid to the Macao CFC by the Company constitutes foreign base company sales income (“FBCSI”). The IRS asserts that the service fee earned by the Macao CFC in connection with its sale of products to the Company should be taxable to the Company as FBCSI. As a result, the IRS determined that an upward adjustment to the Company’s Fiscal 2010 and Fiscal 2011 taxable income of $1,553,984 and $1,143,162, respectively, is required.

The Company has evaluated the determinations made by the IRS as set forth in each of NOPA 1 and NOPA 2 in order to decide (a) how it will proceed and (b) the potential impact on the Company’s financial condition and operations. Furthermore, although NOPA 1 and NOPA 2 represent potential adjustments to Fiscal 2010 and Fiscal 2011 only, the Company believes it is likely that the IRS will take the position that the same type of adjustments should be made for each of the Company’s subsequent fiscal years. The assessment and payment of such additional taxes, penalties and interest would have a material adverse effect on the Company’s financial condition and results of operations.

With respect to NOPA 1, the Company is disputing the proposed adjustment with the IRS. In the event that the Company is not successful in its dispute, the Company estimates that it could be liable for a maximum in taxes, penalties and interest of approximately $14.9 million pertaining to NOPA 1, in the aggregate, for its Fiscal 2010 through Fiscal 2014 years. However, because the Company’s current assessment is that its appeal of NOPA 1 is more likely than not to be successful, the Company has not recorded any liability to its September 30, 2014 or March 31, 2014 balance sheets related to NOPA 1.

With respect to NOPA 2, the Company agrees in principle with the IRS’ position that the service fee paid to the Macao CFC by the Company would be treated as FBCSI and taxable to the Company but the Company does not agree with the adjustment to the Company’s taxable income as calculated by the IRS. However, the Company has estimated as approximately $1.3 million the amount of taxes, penalties and interest for which it would be liable for, in the aggregate, for its Fiscal 2010 through Fiscal 2014 years and its six months ending September 30, 2014 using the adjustments to taxable income as proposed by the IRS, and has recorded such amount to its financial statements beginning in Fiscal 2013.

Other

At September 30, 2014, the Company had approximately $3.3 million of U.S. federal net operating loss carry forwards and some U.S. state net operating loss carry forwards included in net deferred tax assets that are available to offset future taxable income and can be carried forward for 20 years. Although realization is not assured, management believes it is more likely than not that all of the net deferred tax assets will be realized through tax planning strategies available in future periods and through future profitable operating results. The amount of the deferred tax asset considered realizable could be reduced or eliminated if certain tax planning strategies are not successfully executed or estimates of future taxable income during the carry forward period are reduced. If management determines that the Company would not be able to realize all or part of the net deferred tax asset in the future, an adjustment to the deferred tax asset would be charged to income in the period such determination was made.

The Company’s effective tax rate differs from the federal statutory rate primarily due to expenses that are not deductible for federal income tax purposes, income and losses incurred in foreign jurisdictions and taxed at locally applicable tax rates, and state income taxes.

The Company is subject to examination and assessment by tax authorities in numerous jurisdictions. A summary of the Company’s open tax years is as follows as of September 30, 2014:


Jurisdiction	Open tax years
U.S. federal		2009-2013
States		2009-2013

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.

NOTE 6 — RELATED PARTY TRANSACTIONS

From time to time, Emerson has engaged in business transactions with its controlling shareholder, The Grande Holdings Limited (In Liquidation) (“Grande”), and one or more of Grande’s direct and indirect subsidiaries. Set forth below is a summary of such transactions.

Controlling Shareholder

Grande has, together with S&T International Distribution Limited (“S&T”), a subsidiary of Grande, and Grande N.A.K.S. Ltd., a subsidiary of Grande (together with Grande, the “Reporting Persons”), filed, on July 9, 2014, a Schedule 13D/A with the Securities and Exchange Commission (“SEC”) stating that, as of the filing date, the Reporting Persons had the shared power to vote and direct the disposition of 15,243,283 shares, or approximately 56.2%, of the outstanding common stock of Emerson. As the Reporting Persons, and by extension Grande (as their ultimate parent) have control of a majority of the outstanding shares of common stock of Emerson, Emerson is a Controlled company, as defined in Section 801(a) of the NYSE MKT Rules.

On May 31, 2011, upon application of a major creditor, the High Court of Hong Kong appointed Fok Hei Yu (who is also known by the anglicized name Vincent Fok), formerly a director and the Chairman of the Board of the Company, and Roderick John Sutton, both of FTI Consulting (Hong Kong) Limited (“FTI”), as Joint and Several Provisional Liquidators over Grande. Accordingly, since May 31, 2011, Mr. Fok and Mr. Sutton have had the ability to exercise control over Grande or the power to direct the voting and disposition of the 15,243,283 shares beneficially owned by Grande. At the Company’s 2014 Annual Meeting of Stockholders held on October 8, 2014, Mr. John Batchelor, also of FTI, and a director of S&T and Grande N.A.K.S. Ltd., was elected a director of the Company and its Chairman of the Board. In addition, on March 20, 2013, the Provisional Liquidators provided to Emerson a written statement that they are obligated to liquidate the 15,243,283 shares in the Company beneficially owned by Grande. However, in February 2014, the Provisional Liquidators for and on behalf of Grande issued a public announcement that Grande, among other things, had been in discussions with different investors to pursue a restructuring plan and the resumption of trading of Grande’s shares on the Hong Kong Stock Exchange (“HKSE”). In addition, in May 2014, the Provisional Liquidators for and on behalf of Grande issued a public announcement (the “Grande Public Announcement”), disclosing that on May 2, 2014, Grande, the Provisional Liquidators and a creditor of Grande entered into an agreement to implement a restructuring proposal (the “Grande Restructuring Proposal”) submitted by a creditor of Grande. Based on information contained within the Grande Public Announcement, if this Grande Restructuring Proposal is implemented, Mr. Christopher Ho, who served as the Company’s Chairman of the Board until November 2013 and is currently a director of Grande, and his associates would continue to have a majority interest in Grande. As disclosed in the Schedule 13D/A filed by the Reporting Persons on May 22, 2014, the Grande Restructuring Proposal includes a plan to re-list Grande on the HKSE and provides that many assets of Grande, including its shares of Emerson, would remain part of Grande. According to the Grande Public Announcement, the Grande Restructuring Plan will require approvals, consents and sanctions of the HKSE, courts in Hong Kong and Bermuda, and the creditors and shareholders of Grande. In addition, on June 11, 2014, Grande announced that it had received a summons issued by a creditor of Grande seeking the removal of the Provisional Liquidators.

It is not possible at this time to predict whether the Grande Restructuring Proposal will receive all necessary approvals, nor can there be any assurances regarding the timing, terms or effects of implementing this restructuring proposal or if the Provisional Liquidator(s) will be removed. However, even though the Provisional Liquidators continue to maintain the ability to exercise the power to direct the voting and disposition of shares, as long as the Provisional Liquidators are pursuing the restructuring proposal that would result in Grande retaining beneficial ownership of the 15,243,283 shares of Emerson common stock, the Provisional Liquidators may not be actively seeking to liquidate those shares. If the Grande Restructuring Proposal is completed as described within the Grande Public Announcement, it is expected that the 15,243,283 shares of Emerson common stock held of record by Grande’s subsidiary, S&T, would remain with S&T and that Grande would once again have the power to direct the voting and disposition of this 56.2% controlling interest in Emerson common stock. It is not possible at this time to predict what impact the removal of the Provisional Liquidators would have on the Grande Restructuring Proposal or Emerson and Emerson cannot predict nor provide any assurances regarding the possible effects on the Company, its shareholders, the trading price of its common stock or any other consequences that could result if the Grande Restructuring Proposal is approved and Grande again has the power to control Emerson.

Related Party Transactions

Rented Office Space in Hong Kong

Transactions with Brighton Marketing Limited, a subsidiary of Grande

Until May 2013, at which time these charges ceased, the Company was billed for service charges from Brighton Marketing Limited, a subsidiary of Grande, in connection with the Company’s rented office space in Hong Kong. These charges totaled approximately $1,000 for the six month period ended September 30, 2013. Emerson owed Brighton Marketing Limited nil at September 30, 2013 and March 31, 2014 pertaining to these charges.

Transactions with The Grande Properties Management Limited, a related party to Christopher Ho, the former Chairman of the Board of Directors of the Company

The Company is charged for service charges from The Grande Properties Management Limited, a related party to Christopher Ho, the former Chairman of the Board of Directors of the Company, in connection with the Company’s rented office space in Hong Kong. Mr. Ho did not stand for re-election to serve as a director of the Company at the Company’s 2013 Annual Meeting of Stockholders held on November 7, 2013. Accordingly, Mr. Ho is no longer a director of the Company or a related party to the Company after November 7, 2013, and, consequently, such service charges from The Grande Properties Management Limited, are not considered Related Party Transactions after November 7, 2013.

These charges totaled approximately $4,000 for the three month period ended September 30, 2013 and approximately $8,000 for the six months ended September 30, 2013. The Company owed nil to The Grande Properties Management Limited related to these charges at September 30, 2013.

Transactions with Lafe Strategic Services Limited, a related party to Christopher Ho, the former Chairman of the Board of Directors of the Company

Beginning July 3, 2012, the Company entered into a rental agreement with Lafe Strategic Services Limited (“Lafe”), which is a related party to Mr. Ho, whereby the Company was leasing out excess space within its rented office space in Hong Kong to Lafe. The rental agreement was on a month-by-month basis, cancellable by either the Company or Lafe on one month’s written notice. The agreement was cancelled by Lafe effective April 1, 2013 at which time Lafe owed Emerson nil in rental payable from the arrangement. Emerson returned the approximately $6,000 to Lafe in July 2013 that Emerson had been holding as a security deposit in accordance with the terms of the agreement.

Consulting Services Provided to Emerson by one of its Directors

Until such agreement was cancelled by the Company effective November 7, 2013, Mr. Eduard Will, a former director of Emerson, was paid consulting fees by the Company for work performed by Mr. Will related to a lawsuit that the Company settled in December 2013, and merger and acquisition research. Mr. Will was not re-elected to serve as a director of the Company at the Company’s 2013 Annual Meeting of Stockholders held on November 7, 2013. Accordingly, Mr. Will is no longer a director of the Company or a related party to the Company after November 7, 2013.

During the three months ended September 30, 2013, Emerson paid consulting fees of approximately $29,000 to Mr. Will for such work performed by Mr. Will. During the six months ended September 30, 2013, Emerson paid consulting fees of approximately $58,000 to Mr. Will for such work performed by Mr. Will

At September 30, 2013, the Company owed Mr. Will nil related to these activities.

Dividend-Related Issues with S&T

On March 2, 2010, the Board declared an extraordinary dividend of $1.10 per common share which was paid on March 24, 2010. In connection with the Company’s determination as to the taxability of the dividend, the Board relied upon information and research provided to it by the Company’s tax advisors and, in reliance on the “stock-for-debt” exception in the Internal Revenue Code Sections 108(e)(8) and (e)(10), concluded that 4.9% of such dividend paid was taxable to the recipients.

In August 2012, the Company received a Form 886-A from the IRS which challenges the Company’s conclusions and determines that the Company does not qualify for the above-referenced exception. Accordingly, the IRS has concluded that 100% of the dividend paid was taxable to the recipients. The Company is defending its position and calculations and is contesting the position asserted by the IRS. The Company prepared and, on October 25, 2012, delivered its rebuttal to the IRS contesting the IRS determination. There can be no assurance that the Company will be successful in defending its position.

In the event that the Company is not successful in establishing with the IRS that the Company’s calculations were correct, then the shareholders who received the dividend likely will be subject to and liable for an assessment of additional taxes due. Moreover, the Company may be contingently liable for taxes due by certain of its shareholders resulting from the dividend paid by the Company.

Initially, the Company withheld from the dividend paid to foreign shareholders an amount equal to the tax liability associated with such dividend. On April 7, 2010, upon a request made to the Company by its foreign controlling shareholder, S&T, the Company entered into an agreement with S&T (the “Agreement”), whereby the Company returned to S&T on April 7, 2010 that portion of the funds withheld for taxes from the dividend paid on March 24, 2010 to S&T, which the Company believes is not subject to U.S. tax based on the Company’s good-faith estimate of its accumulated earnings and profits. The Agreement includes provisions pursuant to which S&T agreed to indemnify the Company for any liability imposed on it as a result of the Company’s agreement not to withhold such funds for S&T’s possible tax liability and a pledge of stock as collateral. The Company continues to assert that such dividend is largely not subject to U.S. tax based on the Company’s good-faith estimate of its accumulated earnings and profits. In addition, the Company also continues to assert that this transaction results in an off-balance sheet arrangement and a possible contingent tax liability of the Company, which, if recognized, would be offset by the calling by the Company on S&T of the indemnification provisions of the Agreement.

In February 2011, upon the request of S&T to the Company, the Company and S&T agreed that the collateral pledged as a part of the Agreement would no longer be required and such collateral was returned by the Company to S&T in March 2011 and the Agreement was amended and restated to remove the collateral requirement but retain the indemnification provisions. The Agreement, as amended (the “Amended Agreement”), remains in effect as of today.

In September 2014, the Company and S&T agreed that the Company would withhold $0.5 million in cash, to be pledged as collateral against the Amended Agreement, from the dividend paid to S&T on September 30, 2014 along with such dividend paid on that date to all common stockholders. The Company did make the withholding as described and thus holds, as of September 30, 2014, $0.5 million in cash collateral from S&T against the Amended Agreement. In the event that (i) the Company is not successful in establishing with the IRS that the Company’s calculations were correct and (ii) S&T is unable or unwilling to pay the additional taxes due or indemnify the Company under the terms of the Amended Agreement, the Company may be liable to pay such additional taxes, which, together with penalties and interest, are currently estimated by the Company to be approximately $4.7 million as of September 30, 2014, $0.5 million of which is collateralized in cash held by the Company as of September 30, 2014 as described above. Any such liability, should it be required to be recognized by the Company, would likely have a material adverse effect on the Company’s results of operations in the period recognized. S&T is a subsidiary of Grande, which is currently in liquidation (as described above under “Controlling Shareholder”). Therefore, the ability of the Company to enforce its rights to indemnification under the Amended Agreement and to collect from S&T any additional taxes, interest and penalties due may be severely impaired.

Other

Until such shared usage stopped, effective on January 1, 2014, the Company formerly charged Vigers Appraisal & Consulting Ltd. (“Vigers”), a related party of Christopher Ho, the former Chairman of the Board of Directors of the Company, for usage of telephone and data lines maintained by Emerson. Mr. Ho did not stand for re-election to serve as a director of the Company at the Company’s 2013 Annual Meeting of Stockholders held on November 7, 2013. Accordingly, Mr. Ho is no longer a director of the Company or a related party to the Company after November 7, 2013, and, consequently, such service charges from the Company to Vigers are not considered Related Party Transactions after November 7, 2013.

During the three and six months ended September 30, 2013, Emerson invoiced Vigers approximately $1,000 and $2,000 under this arrangement. Vigers owed Emerson nil at September 30, 2013 related to this activity.

NOTE 7 — BORROWINGS

Short-term Borrowings

Letters of Credit — The Company uses Hang Seng Bank to issue letters of credit on behalf of the Company, as needed, on a 100% cash collateralized basis. At September 30, 2014, the Company had no outstanding letters of credit. In the event that the Company does have outstanding letters of credit with Hang Seng Bank, a like amount of cash is posted by the Company as collateral against such outstanding letters of credit, and is classified by the Company as Restricted Cash on the balance sheet.

Long-term Borrowings

At September 30, 2014 and March 31, 2014, the Company had no borrowings.

NOTE 8 — LEGAL PROCEEDINGS

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 our 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 our examination of such matters, that the Company’s ultimate liability will not have a material adverse effect on the Company’s financial position, results of operations or cash flows.

NOTE 9 — SHORT TERM INVESTMENTS

At September 30, 2014 and March 31, 2014, the Company held short term investments totaling $15.0 million and $32.2 million, respectively. The investments as of September 30, 2014 of $15.0 million are invested in certificates of deposit with durations in excess of three months, all of which mature on October 31, 2014.

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.

Forward-Looking Information

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

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

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

•

the impact, if any, on the Company’s business, financial condition and results of operation arising from the appointment of the Provisional Liquidators over Grande and the restructuring process for Grande;

•

the decline in, and any further deterioration of, consumer spending for retail products, such as the Company’s products;

•

the Company’s inability to resist price increases from its suppliers or pass through such increases to its customers;

•

the loss of any of the Company’s key customers or reduction in the purchase of the Company’s products by any such customers;

•

conflicts of interest that exist based on the Company’s relationship with Grande;

•

the Company’s inability to maintain effective internal controls or the failure by its personnel to comply with such internal controls;

•

the Company’s inability to maintain its relationships with its licensees and distributors, renew existing licenses, or the failure to obtain new licensees or distribution relationships on favorable terms;

•

cash generated by operating activities represents the Company’s principal source of funding and therefore the Company depends on its ability to successfully manage its operating cash flows to fund its operations;

•

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

•

the Company’s dependence on a limited number of suppliers for its components and raw materials;

•

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

•

changes in consumer spending and economic conditions;

•

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

•

the Company’s inability to protect its intellectual property;

•

the effects of competition;

•

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

•

changes in accounting policies, rules and practices;

•

limited access to financing or increased cost of financing;

•

the effects of the continuing appreciation of the renminbi and increases in costs of production in China and;

•

the other factors listed under “Risk Factors” in the Company’s Form 10-K, as amended, for the fiscal year ended March 31, 2014 and other filings with the Securities and Exchange Commission (the “SEC”).

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

Results of Operations

The following table summarizes certain financial information for the three and six month periods ended September 30, 2014 (fiscal 2015) and September 30, 2013 (fiscal 2014) (in thousands):


	Three months ended September 30					Six months ended September 30
	2014		2013			2014		2013
Net product sales	$	12,862	$	17,258		$	37,704	$	40,739
Licensing revenue		1,385		1,080			2,486		2,251

Net revenues		14,247		18,338			40,190		42,990
Cost of sales		11,785		15,635			34,194		36,619
Other operating costs and expenses		127		171			444		322
Selling, general and administrative expenses		2,305		2,325			4,731		4,513

Operating income		30		207			821		1,536
Interest income, net		44		121			109		343

Income before income taxes		74		328			930		1,879
Provision (benefit) for income taxes		27		(60	)		232		122

Net (loss) income	$	47	$	388		$	698	$	1,757

Net product sales — Net product sales for the second quarter of fiscal 2015 were $12.9 million as compared to $17.3 million for the second quarter of fiscal 2014, a decrease of $4.4 million or 25.5%. For the six month period of fiscal 2015, net product sales were $37.7 million as compared to $40.7 million for the six month period of fiscal 2014, a decrease of $3.0 million or 7.5%. The Company’s sales during the six month periods of fiscal 2015 and fiscal 2014 were highly concentrated among the Company’s two largest customers, as to which gross product sales comprised approximately 88.5% and 89.7%, respectively, of the Company’s total gross product sales. 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 $0.1 million and $0.1 million for the second quarters of fiscal 2015 and fiscal 2014, respectively, and approximately $0.1 million and $0.2 million for the six month periods of fiscal 2015 and fiscal 2014, respectively.

Net product sales are comprised primarily of the sales of houseware and audio products which bear the Emerson^® brand name. The major elements which contributed to the overall decrease in net product sales were as follows:

Houseware product net sales decreased $4.8 million, or 28.6%, to $11.9 million in the second quarter of fiscal 2015 as compared to $16.7 million in the second quarter of fiscal 2014, principally driven by a decrease in sales of microwave ovens, wine coolers and compact refrigerators. For the six month period of fiscal 2015, houseware products net sales were $36.1 million, a decrease of $2.9 million or 7.4%, from $39.0 million for the six month period of fiscal 2014, principally driven by a decrease in sales of compact refrigerators and wine coolers, partially offset by an increase in sales of microwave ovens.

ii)

Audio product net sales were $1.0 million in the second quarter of fiscal 2015 as compared to $0.6 million in the second quarter of fiscal 2014, an increase of $0.4 million, or 64.7%, resulting from increased sales of the Company’s portable audio and clock radio product offerings. For the six month period of fiscal 2015, audio product net sales were $1.6 million, a decrease of $0.2 million, or 8.2%, from $1.8 million in the six month period of fiscal 2014, resulting from decreased net sales of the Company’s portable audio and clock radio product offerings.

Licensing revenue — Licensing revenue in the second quarter of fiscal 2015 was $1.4 million compared to $1.1 million in the second quarter of fiscal 2014, an increase of $0.3 million or 28.2%. Licensing revenue for the six month period of fiscal 2015 was $2.5 million as compared to $2.3 million for the six month period of fiscal 2014, an increase of $0.2 million or 10.4%. The increase for both the second quarter and six month periods of fiscal 2015 was due to higher sales by the Company’s licensees of Emerson^® branded products.

The Company’s largest license agreement is with Funai Corporation, Inc. (“Funai”), which accounted for approximately 68% and 75% of the Company’s total licensing revenue for the second quarter and six month period of fiscal 2015, respectively, and approximately 87% and 83% of the Company’s total licensing revenue for the second quarter and six month period of fiscal 2014. The license agreement was amended in November 2013 to extend the term until March 31, 2018. The agreement provides that Funai will manufacture, market, sell and distribute specified products bearing the Emerson^® trademark to customers in the U.S. and Canadian markets. Under the terms of the agreement, the Company receives non-refundable minimum annual royalty payments of $3.75 million each calendar year and a license fee on sales of product subject to the agreement in excess of the minimum annual royalties. During the second quarter of fiscal 2015 and fiscal 2014, licensing revenues of approximately $0.9 million and approximately $1.4 million, respectively, were earned under this agreement. During the six month period of fiscal 2015 and fiscal 2014, licensing revenues of approximately $1.9 million and approximately $2.3 million, respectively, were earned under this agreement.

Net revenues — As a result of the foregoing factors, the Company’s net revenues were $14.2 million in the second quarter of fiscal 2015 as compared to $18.3 million in the second quarter of fiscal 2014, a decrease of $4.1 million, or 22.3%, and $40.2 million in the six month period of fiscal 2015 as compared to $43.0 million in the six month period of fiscal 2014, a decrease of $2.8 million, or 6.5%.

Cost of Sales — In absolute terms, cost of sales decreased $3.8 million, or 24.6%, to $11.8 million in the second quarter of fiscal 2015 as compared to $15.6 million in the second quarter of fiscal 2014. Cost of sales, as a percentage of net product sales was 91.6% in the second quarter of fiscal 2015 as compared to 90.6% in the second quarter of fiscal 2014. The decrease in absolute terms for the second quarter of fiscal 2015 as compared to the second quarter of fiscal 2014 was primarily related to the reduced net product sales and a $0.6 million reversal of reserves no longer required, partly offset by slightly higher year-over-year gross cost of sales as a percentage of gross sales.

In absolute terms, cost of sales decreased $2.4 million, or 6.6%, to $34.2 million in the six month period of fiscal 2015 as compared to $36.6 million in the six month period of fiscal 2014. Cost of sales, as a percentage of net product sales was 90.7% in the six month period of fiscal 2015 as compared to 89.9% in the six month period of fiscal 2014. The decrease in absolute terms for the six month period of fiscal 2015 as compared to the six month period of fiscal 2014 was primarily related to the reduced net product sales and a $0.6 million reversal of reserves no longer required, partly offset by higher 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 the second quarter of fiscal 2015 and fiscal 2014, the Company purchased 77% and 78%, respectively, from its two largest suppliers. For the six month period of fiscal 2015 and fiscal 2014, the Company purchased 90% and 76%, respectively, from its two largest suppliers.

Other Operating Costs and Expenses — Other operating costs and expenses as a percentage of net product sales were 1.0% for both the second quarter of fiscal 2015 and fiscal 2014. In absolute terms, other operating costs and expenses decreased $0.1 million, or 25.7%, to $0.1 million for the second quarter of fiscal 2015 as compared to $0.2 million in the second quarter of fiscal 2014 as a result of lower warranty and returns processing costs. For the six month period of fiscal 2015, other operating costs were 1.2% of net revenues as compared to 0.8% of net revenues for the six month period of fiscal 2014. In absolute terms, other operating costs and expenses increased $0.1 million, or 37.9%, to $0.4 million for the six month period of fiscal 2015 as compared to $0.3 million for the six month period of fiscal 2014 resulting from higher returns processing costs.

Selling, General and Administrative Expenses (“S,G&A”) — S,G&A, as a percentage of net revenues, was 16.2% in the second quarter of fiscal 2015 as compared to 12.7% in the second quarter of fiscal 2014. S,G&A, in absolute terms, was $2.3 million for both the second quarter of fiscal 2015 and fiscal 2014. For the six month period of fiscal 2015, S,G&A was 11.8% of net revenues as compared to 10.5% for the six month period of fiscal 2014. In absolute terms, S,G&A increased $0.2 million, or 4.8%, to $4.7 million for the six month period of fiscal 2015 as compared to $4.5 million in the six month period of fiscal 2014.

Analysis of S,G&A

The second quarter of fiscal 2015 S,G&A included approximately $0.6 million in legal and advisory fees pertaining to work performed for the Special Committee of the Company’s Board of Directors and approximately $0.1 million in tax advisory fees related to the audit of the Company’s tax returns by the IRS, as mentioned elsewhere within this Quarterly Report on Form 10-Q.

The second quarter of fiscal 2014 S,G&A included approximately $0.4 million in legal fees related to a lawsuit that the Company was defending against which it settled in December 2013.

Excluding the aforementioned items, second quarter fiscal 2015 S, G&A was $1.6 million and second quarter fiscal 2014 S,G&A was $1.9 million, a decrease of $0.3 million, or 15.8%, primarily due to lower year-over-year personnel costs and legal fees.

The six month period of fiscal 2015 S,G&A included approximately $1.2 million in legal and advisory fees pertaining to work performed for the Special Committee of the Company’s Board of Directors and approximately $0.1 million in tax advisory fees related to the audit of the Company’s tax returns by the IRS, as mentioned elsewhere within this Quarterly Report on Form 10-Q.

The six month period of fiscal 2014 S,G&A included approximately $0.7 million in legal fees related to a lawsuit that the Company was defending against which it settled in December 2013, and approximately $0.2 million in tax advisory fees related to the audit of the Company’s tax returns by the IRS, as mentioned elsewhere within this Quarterly Report on Form 10-Q, partly offset by a $0.2 million gain on an insurance settlement.

Excluding the aforementioned items, the six month period of fiscal 2015 S, G&A was $3.4 million and the six month period of fiscal 2014 S,G&A was $3.6 million, a decrease of $0.2 million, or 5.6%, primarily due to lower year-over-year personnel costs.

Interest income (expense), net — Interest income, net, was $44,000 in the second quarter of fiscal 2015 as compared to $121,000 in the second quarter of fiscal 2014, a decrease of $77,000. Interest income, net, was $109,000 in the six month period of fiscal 2015 as compared to $343,000 in the six month period of fiscal 2014, a decrease of $234,000. The decrease in interest income for both periods was due to a reduction of investments in Certificates of Deposit.

Provision (benefit) for Income Taxes — In the second quarter and six month period of fiscal 2015, the Company recorded income tax expense of $27,000 and $232,000, respectively, as compared to an income tax benefit of $60,000 and income tax expense of $0.1 million, respectively, in the second quarter and six month period of fiscal 2014.

Net income — As a result of the foregoing factors, the Company realized net income of $0.1 million in the second quarter of fiscal 2015 as compared to $0.4 million in the second quarter of fiscal 2014, a decrease of $0.3 million, or 87.9%. For the six month period of fiscal 2015, the Company realized net income of $0.7 million as compared to $1.8 million in the six month period of fiscal 2014, a decrease of $1.1 million, or 60.3%.

Liquidity and Capital Resources

General

As of September 30, 2014, the Company had cash and cash equivalents of approximately $26.8 million, as compared to approximately $52.1 million at September 30, 2013, and as of September 30, 2014, the Company had $0.5 million in restricted cash. The restricted cash is the $0.5 million cash withheld from S&T from the dividend paid to S&T on September 30, 2014 along with such dividend paid on that date to all common stockholders, and which is pledged to the Company by S&T as collateral against the Amended Agreement between the Company and S&T as referred to in Note 6 “Related Party Transactions” above. Working capital decreased to $54.7 million at September 30, 2014 as compared to $74.4 million at September 30, 2013. The decrease in cash and cash equivalents of approximately $25.3 million was primarily due to the net payment to stockholders of $18.5 million for the $0.70 per common share extraordinary dividend paid out on September 30, 2014, a decrease in accounts payable, an increase in accounts receivable, an increase in royalties and other receivables, a decrease in income taxes payable, an increase in prepaid expenses, an increase in deferred tax assets and an increase in restricted cash partly offset by a decrease in inventory and an increase in due to affiliates.

Cash flow provided by operating activities was $2.7 million for the six months ended September 30, 2014, resulting primarily from a decrease in royalties and other receivables, the net income generated during the period, an increase in due to affiliates and a decrease in prepaid purchases partially offset by an increase in accounts receivable and inventory.

Net cash provided by investing activities was $16.7 million for the six months ended September 30, 2014, primarily due to redemptions of short term investments in certificates of deposit partially offset by an increase in restricted cash.

Net cash used by financing activities was $19.0 million for the six months ended September 30, 2014, resulting from the net payment to stockholders of $18.5 million for the $0.70 per common share extraordinary dividend paid out on September 30, 2014.

Other Events and Circumstances Pertaining to Liquidity

Income Tax Issues Concerning Overseas Income

Potential Income Tax Issues Concerning the Extraordinary Dividend Paid by the Company in March 2010

Credit Arrangements

Letters of Credit — The Company utilizes Hang Seng Bank to issue letters of credit on behalf of the Company, as needed, on a 100% cash collateralized basis. At September 30, 2014, the Company had no outstanding letters of credit. In the event that the Company does have outstanding letters of credit with Hang Seng Bank, a like amount of cash is posted by the Company as collateral against such outstanding letters of credit, and is classified by the Company as Restricted Cash on the balance sheet.

Short-term Liquidity

For the three and six months ended September 30, 2014, products representing approximately 40% and 58%, respectively, of net sales were imported directly to the Company’s customers. The direct importation of product by the Company to its customers significantly benefits the Company’s liquidity because this inventory does not need to be financed by the Company.

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

Recently Issued Accounting Pronouncements

There were no Accounting Standards Updates (“ASUs”) issued by the Financial Accounting Standards Board during the three months ended September 30, 2014 or during the interim period between September 30, 2014 and November 14, 2014 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:

Inflation, Foreign Currency, and Interest Rates

The Company’s exposure to currency fluctuations has been minimized by the use of U.S. dollar denominated purchase orders. The Company purchases virtually all of its products from manufacturers located in China.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

Item 4. Controls and Procedures.

(a)

Disclosure controls and procedures

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”)) that are designed to ensure that information required to be disclosed in its Exchange Act reports are recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’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. 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 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 September 30, 2014, are effective to reasonably ensure 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 Securities and Exchange Commission’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.

(b) Changes in Internal Controls Over Financial Reporting

There have been no changes in the Company’s internal control over financial reporting that occurred during the fiscal quarter ended September 30, 2014 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

Item 1A. Risk Factors.

There were no material changes in any risk factors previously disclosed in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on June 25, 2014.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None

Item 3. Defaults Upon Senior Securities.

(a) None

(b) None

Item 4. Mine Safety Disclosure.

Not applicable.

Item 5. Other Information.

None

Item 6. Exhibits.


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.**

101.1+		XBRL Instance Document.

101.2+		XBRL Taxonomy Extension Schema Document.

101.3+		XBRL Taxonomy Extension Calculation Linkbase Document.

101.4+		XBRL Taxonomy Extension Definition Linkbase Document.

101.5+		XBRL Taxonomy Extension Label Linkbase Document.

101.6+		XBRL Taxonomy Extension Presentation Linkbase Document.

*	filed herewith

**	furnished herewith

SIGNATURES

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.


		EMERSON RADIO CORP. (Registrant)

		/s/ Duncan Hon
Date: November 14, 2014		Duncan Hon
		Chief Executive Officer (Principal Executive Officer)

		/s/ Andrew L. Davis
Date: November 14, 2014		Andrew L. Davis
		Chief Financial Officer (Principal Financial and Accounting Officer)

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