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 (the "Exchange Act").





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



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

? the Company's ability to generate sufficient revenue to achieve and maintain


    profitability;




  ? the Company's ability to obtain new customers and retain key existing

customers, including the Company's ability to maintain purchase volumes of the


    Company's products by its key customers;

? the Company's ability to obtain new licensees and distribution relationships

and maintain relationships with its existing licensees and distributors;

? the Company's ability to resist price increases from its suppliers or pass


    through such increases to its customers;




  ? changes in consumer spending for retail products, such as the Company's
    products, and in consumer practices, including sales over the Internet;

? the Company's ability to maintain effective internal controls or compliance by


    its personnel with such internal controls;

? the Company's ability to successfully manage its operating cash flows to fund


    its operations;

? the Company's ability to anticipate market trends, enhance existing products


    or achieve market acceptance of new products;

? the Company's ability to accurately forecast consumer demand and adequately


    manage inventory;

? the Company's dependence on a limited number of suppliers for its components


    and raw materials;

? the Company's dependence on third party manufacturers to manufacture and


    deliver its products;

? increases in shipping costs for the Company's products or other service issues


    with the Company's third-party shippers;

? the Company's dependence on a third party logistics provider for the storage


    and distribution of its products in the United States;

? the ability of third party sales representatives to adequately promote, market


    and sell the Company's products;




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




  ? the effects of competition;




  ? the Company's ability to distribute its products in a timely fashion,

including as a result of labor disputes and public health threats and social


    unrest;

? evolving cybersecurity threats to the Company's information technology systems


    or those of its customers or suppliers;




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? changes in foreign laws and regulations and changes in the political and

economic conditions in the foreign countries in which the Company operates;






  ? changes in accounting policies, rules and practices;




  ? changes in tax rules and regulations or interpretations;

? changes in U.S. and foreign trade regulations and tariffs, including potential


    increases of tariffs on goods imported into the U.S., and uncertainty
    regarding the same;




  ? limited access to financing or increased cost of financing;

? the effects of currency fluctuations between the U.S. dollar and Chinese

renminbi relative to the dollar and increases in costs of production in China;


    and

? the other factors listed under "Risk Factors" in the Company's Annual Report

on Form 10-K, as amended, for the fiscal year ended March 31, 2022 and other


    filings with the SEC.




Furthermore, the situation surrounding the COVID-19 pandemic remains fluid. The
extent of any impact on the Company's business, results of operations or
financial position will depend on future developments, including the duration of
the outbreak, duration of the measures taken to control the spread, the
effectiveness of actions taken to contain and treat the disease, and demand for
the Company's products.



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



Results of Operations



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



                                             Three Months Ended December 31,             Nine Months Ended December 31,
                                             2022                     2021                 2022                  2021
Net product sales                       $         1,704         $           2,509     $         4,335       $         6,290
Licensing revenue                                   228                        65                 971                   195
Net revenues                                      1,932                     2,574               5,306                 6,485
Cost of sales                                     1,361                     1,826               3,549                 4,786
Selling, general and administrative
expenses                                          1,051                     1,469               3,686                 4,207
Operating loss                                     (480 )                    (721 )            (1,929 )              (2,508 )
Loss on settlement of litigation                      -                      (450 )                 -                  (450 )
Interest income, net                                235                         7                 424                    40
Income from governmental assistance
programs                                              4                         -                  34                   207
Loss before income taxes                           (241 )                  (1,164 )            (1,471 )              (2,711 )
Provision for income taxes                            -                         -                   -                     -
Net loss                                $          (241 )       $          (1,164 )   $        (1,471 )     $        (2,711 )




Net product sales - Net product sales for the three month period ended December
31, 2022 were $1.7 million as compared to $2.5 million for the three month
period ended December 31, 2021, a decrease of  $0.8 million, or 32.1%. The
Company's sales during the three month periods ended December 31, 2022
and December 31, 2021 were highly concentrated among the Company's three largest
customers - Wal-Mart, Amazon  and Fred Meyer - comprising in the aggregate
approximately 99% and 94%, respectively, of the Company's total net product
sales for such periods.



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Net product sales for the nine month period ended December 31, 2022 were
$4.3 million as compared to $6.3 million for the nine month period ended
December 31, 2021, a decrease of $2.0 million, or 31.1%. The Company's sales
during the nine month periods ended December 31, 2022 and December 31, 2021 were
highly concentrated among the Company's three largest customers - Wal-Mart, Fred
Meyer and Amazon - comprising in the aggregate approximately 91% and 91%,
respectively, of the Company's total net product sales for such periods.



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
$10,000 and $6,000 for the three month periods ended December 31, 2022 and
December 31, 2021, respectively, and by approximately $16,000 and nil for the
nine month periods ended December 31, 2022 and December 31, 2021, respectively.
The major elements which contributed to the overall decrease in net product
sales were as follows:



i)  Houseware products:Net sales decreased $0.1 million, or 43.9%, to $0.2
million for the three month period ended December 31, 2022 as compared to
$0.3 million for the three month period ended December 31, 2021, driven by
reduced demand for microwave ovens. For the nine month period ended December 31,
2022, houseware net product sales were $1.1 million, a decrease of $0.4 million,
or 29.6%, from $1.5 million for the nine month period ended December 31, 2021,
driven by a decrease in year-over-year sales of microwave ovens.



ii)     Audio products: Net sales decreased $0.7 million, or 30.7%, to
$1.5 million for the three month period ended December 31, 2022 as compared to
$2.2 million for the three month period ended December 31, 2021, resulting from
decreased net sales of clock radios. For the nine month period ended December
31, 2022, audio net product sales were $3.3 million, a decrease of $1.5 million
or 31.6%, from to $4.8 million for the nine month period ended December 31,
2021, driven by a decrease in year-over-year sales of clock radios.



Business operations - The Company expects to continue to expand its existing
distribution channels and to develop and promote new products with retailers in
the U.S. The Company is also continuing to invest in products and marketing
activities to expand its sales through internet and ecommerce channels. These
efforts require investments in appropriate human resources, media marketing and
development of products in various categories in addition to the traditional
home appliances and audio products on which the Company has historically
focused. The Company also is continuing its efforts to identify strategic
courses of action related to its licensing activities, including seeking new
licensing relationships. The Company has engaged each of Leveraged Marketing
Corporation of America and Global Licensing Services Pte Limited as an agent to
assist in identifying and procuring potential licensees.



Emerson's success is dependent on its ability to anticipate and respond to
changing consumer demands and trends in a timely manner, as well as expanding
into new markets and sourcing new products that are profitable to the Company.
Geo-political factors may also affect the Company's operations and demand for
the Company's products, which are subject to customs requirements and to tariffs
and quotas set by governments through mutual agreements and bilateral actions.
The Company expects that current and proposed U.S. tariffs on categories of
products that the Company imports from China, and China's retaliatory tariffs on
certain goods imported from the United States, as well as modifications to
international trade policy, will continue to affect its product costs going
forward. If no mitigation steps are taken, or the mitigation is unsuccessful,
the combination of tariffs will result in significantly increased annualized
costs to the Company as all of the Company's products are currently manufactured
by suppliers in China. Although the Company is monitoring the trade and
political environment and working to mitigate the possible effect of tariffs
with its suppliers as well as its customers through pricing and sourcing
strategies, the Company cannot be certain how its customers and competitors will
react to the actions taken. In addition, heightened tensions between the United
States and China over Hong Kong and any resulting retaliatory policies may
affect our operations in Hong Kong. At this time the Company is unable to
quantify possible effects on its costs arising from the new tariffs, which are
expected to increase the Company's inventory costs and associated costs of sales
as tariffs are incurred, and some costs may be passed through to the Company's
customers as product price increases in the future. However, if the Company is
unable to successfully pass through the additional costs or otherwise mitigate
the effects of these tariffs, or if the higher prices reduce demand for the
Company's products, it will have a negative effect on the Company's product
sales and gross margins.



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



In light of the adverse macroeconomic conditions domestically and
internationally, the Company has implemented certain cost-reduction actions
intended to reduce expenditures. However, the environment remains highly
uncertain and demand for the Company's products remains difficult to assess due
to many factors including the pace of economic recovery around the world, the
status of various government stimulus programs, competitive intensity and
retailer actions to continue carefully managing inventory. Accordingly, current
results and financial condition discussed herein may not be indicative of future
operating results and trends.



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For more information on risks associated with the Company's operations,
including tariffs, please see the risk factors within Part I, Item 1A, "Risk
Factors" in the Company's Annual Report on Form 10-K, as amended, for the year
ended March 31, 2022.



Legal Proceedings - On April 19, 2022, the US District Court for the District of
Delaware granted judgment in favor of the Company in its trademark infringement
lawsuit against air conditioning and heating products provider Emerson Quiet
Kool and wholesaler Home Easy (the "defendants"). Among other things, the court
order issues an injunction and directs the US Patent and Trademark Office to
cancel the defendants' existing and proposed "Emerson Quiet Kool" trademarks and
prohibits defendants from registering or applying to register the same mark or
any other mark or name containing the word "Emerson" going forward. The judgment
also awards $6.5 million to the Company. The defendants have to date
conditionally made payments, including certain advances and a portion of their
liability, which are reflected as advanced deposits in the Consolidated Balance
Sheets, in connection with ongoing negotiations among the parties. There is no
guarantee that the Company will be able to collect the entire judgment or that a
negotiated resolution regarding these matters will ever be agreed among the
parties or, if agreed, how soon the parties will be able to do so.



Licensing revenue - Licensing revenue for the three month period ended December
31, 2022 was $228,000 as compared to $65,000 for the three month period ended
December 31, 2021, an increase of $163,000, or 251.4%. Licensing revenue for the
nine month period ended December 31, 2022 was $971,000 as compared to $195,000
for the nine month period ended December 31, 2021, an increase of $776,000 or
398.0%. For the three and nine month periods ended December 31, 2022 the Company
recorded $105,000 and $700,000, respectively, in royalty income derived from
sell-off agreements made with customers of Emerson Quiet Kool. Also contributing
were year-over-year increases attributed to the signing of new licensing
agreements as well as an escalation in the annual minimum royalty earned by the
Company from one of its existing licensees.



Net revenues - Net revenues were $1.9 million for the three month period
ended December 31, 2022 as compared to $2.6 million for the three month period
ended December 31, 2021, a decrease of $0.7 million, or 24.9% and $5.3 million
for the nine month period ended December 31, 2022 as compared to $6.5 million
for the nine month period ended December 31, 2021 , a decrease of $1.2 million,
or 18.2%.



Cost of sales - Cost of sales decreased $0.5 million, or 25.5% to $1.3 million
for the three month period ended December 31, 2022 as compared to $1.8 million
for the three month period ended December 31, 2021. The decrease in absolute
terms for the three month period ended December 31, 2022 as compared to the
three month period ended December 31, 2021 was primarily related to a decrease
in net product sales partially offset by higher year-over-year gross cost of
sales as a percentage of gross sales.



Cost of sales decreased $1.2 million, or 25.9% to $3.6 million for the nine
month period ended December 31, 2022 as compared to $4.8 million for the nine
month period ended December 31, 2021. The decrease in absolute terms for the
nine month period ended December 31, 2022 as compared to the three month period
ended December 31, 2021 was primarily related to a decrease in net product sales
partially 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. In each of the three and nine month periods ended December 31, 2022
and December 31, 2021, the Company purchased 100% of its products from its
three largest suppliers.



Selling, general and administrative expenses ("S,G&A") - S,G&A was $1.1 million
for the three month period ended December 31, 2022 as compared to $1.5 million
for the three month period ended December 31, 2021, a
decrease of $0.4 million or 28.5%. S,G&A, as a percentage of net revenues, was
54.4% for the three month period ended December 31, 2022 as compared to 57.1%
for the three month period ended December 31, 2021. The decrease in S,G&A was
primarily attributable to a decrease in legal fees of $333,000, a decrease in
compensation costs of $42,000, a decrease in insurance expense of $43,000 and a
decrease in director's fees of $15,000. Legal fees for the three month period
ended December 31, 2022 were $169,000 as compared to $502,000 for the three
month period ended December 31, 2021. Compensation costs for the three month
period ended December 31, 2022 were $489,000 as compared to $531,000 for the
three month period ended December 31, 2021. Insurance expense for the three
month period ended December 31, 2022 was $111,000 as compared to $154,000 for
the three month period ended December 31, 2021. Director's fees for the three
month period ended December 31, 2022 were $33,000 as compared to $48,000 for the
three month period ended December 31, 2021.



S,G&A was $3.7 million for the nine month period ended December 31, 2022 as
compared to $4.2 million for the nine month period ended December 31, 2021, a
decrease of $0.5 million or 12.4%. S,G&A, as a percentage of net revenues, was
69.5% for the nine month period ended December 31, 2022 as compared to 64.9% for
the nine month period ended December 31, 2021. The decrease in S,G&A was
primarily attributable to a decrease in compensation costs of $247,000, a
decrease in legal fees of $93,000, a decrease in insurance expense of $71,000, a
decrease in director's fees of $63,000, a decrease in commission expense of
$30,000 and a decrease in bad debt expense of $25,000. Compensation costs for
the nine month period ended December 31, 2022 were $1,524,000 as compared to
$1,771,000 for the nine month period ended December 31, 2021. Legal fees for the
nine month period ended December 31, 2022 were $1,007,000 as compared to
$1,100,000 for the nine month period ended December 31, 2021. Insurance expense
for the nine month period ended December 31, 2022 was $388,000 as compared to
$459,000 for the nine month period ended December 31, 2021. Director's fees for
the nine month period ended December 31, 2022 were $97,000 as compared to
$160,000 for the nine month period ended December 31, 2021. Commission expense
for the nine month period ended December 31, 2022 was $33,000 as compared to
$63,000 for the nine month period ended December 31, 2021. Bad debt expense for
the nine month period ended December 31, 2022 was $2,000 as compared to $27,000
for the nine month period ended December 31, 2021.



Interest income, net - Interest income, net, was $235,000 for the three month
period ended December 31, 2022 as compared to $7,000 for the three month period
ended December 31, 2021, an increase of $228,000. The increase was primarily due
to higher average interest rates earned on the Company's short term investments.



Interest income, net, was $424,000 for the nine month period ended December 31,
2022 as compared to $40,000 for the nine month period ended December 31, 2021,
an increase of $384,000. The increase was primarily due to higher average
interest rates earned on the Company's short term investments.



Income from governmental assistance programs - For the three month period ended
December 31, 2022, the Company recorded income of approximately $4,000 under the
ESS program. See "Note 10 - Governmental Assistance Programs".



For the nine month period ended December 31, 2022, the Company recorded income
of approximately $34,000 under the ESS program. For the nine month period ended
December 31, 2021, the Company recorded income of $207,000 as loan forgiveness
in respect of its PPP loan. See "Note 10 - Governmental Assistance Programs".



Provision (benefit) for income taxes - For both of the three month periods ended
December 31, 2022 and December 31, 2021, the Company recorded income tax expense
of nil. For both of the nine month periods ended December 31, 2022 and December
31, 2021, the Company under the adoption of ASU 2019-12 "Income Taxes (Topic
740) - Simplifying the Accounting for Income Taxes" incurred $10,950 of
non-income based state taxes, which are now reported as S,G &A. See "Note 5 -
Income Taxes".



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



Net (loss) - As a result of the foregoing factors, the Company realized a net
loss of $241,000 for the three month period ended December 31, 2022 as compared
to a net loss of $1,164,000 for the three month period ended December 31, 2021.



For the nine month period ended December 31, 2022, the Company realized a net
loss of $1,471,000 as compared to a net loss of $2,711,000 for the nine month
period ended December 31, 2021.



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Liquidity and Capital Resources





As of December 31, 2022, the Company had cash and cash equivalents of
approximately $27.3 million as compared to approximately $25.6 million at March
31, 2022. Cash and cash equivalents includes short term investments in deposits
which were classified as cash equivalents of $25.5 million as of December 31,
2022 compared to $22.0 million of such deposits as of March 31, 2022. Working
capital decreased to $26.3 million at December 31, 2022 as compared to $28.1
million at March 31, 2022. The increase in cash and cash equivalents of
approximately $1.7 million was due to an increase in advanced deposits of $4.1
million (representing conditional payments received in connection with ongoing
settlement negotiations) and a decrease in accounts receivable of $0.4 million
partially offset by the net loss generated during the period of $1.5 million, an
increase in prepaid purchases of $0.5 million, a decrease in accounts payable
and other current liabilities of $0.2 million, an increase in inventory of $0.2
million and a decrease in federal taxes payable of $0.2 million and an increase
in licensing receivables of $0.2 million.



Cash Flows



Net cash provided by operating activities was approximately $1.7 million for the
nine month period ended December 31, 20221, resulting from an increase in
advanced deposits of $4.1 million and a decrease in accounts receivable of
$0.3 million and a decrease in prepaid expenses and other current assets of $0.1
million partially offset by the $1.5 million net loss generated during the
period, an increase in prepaid purchases of $0.5 million, a decrease in accounts
payable and other current liabilities of $0.2 million, an increase in inventory
of $0.2 million, a decrease in federal taxes payable of $0.2 million and an
increase in licensing receivables of $0.2 million.

Net cash used by investing activities was nil for the nine month period ended December 31, 2022.

Net cash used by financing activities was nil for the nine month period ended December 31, 2022.





Sources and Uses of Funds



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

Off-Balance Sheet Arrangements

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

Recently Adopted Accounting Pronouncements

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





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

Recently Issued Accounting Pronouncements





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

Accounting Standards Update 2016-13 "Financial Instruments - Credit Losses" (Issued June 2016)





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



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