Related Party Transactions

3 Months Ended

Jun. 30, 2011

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

NOTE 7 — RELATED PARTY TRANSACTIONS

From time to time, Emerson engages in business transactions with its controlling shareholder, The Grande Holdings Limited (Provisional Liquidators Appointed) and its direct and indirect subsidiaries. Set forth below is a summary of such transactions.

Majority Shareholder

Grande’s Ownership Interest in Emerson. The Grande Holdings Limited (Provisional Liquidators Appointed) (“Grande”), a Bermuda corporation, has advised the Company that, as of June 30, 2011, one of its indirect subsidiaries held beneficially 15,243,283 shares or approximately 56.2% of the outstanding common stock of Emerson. That number of shares includes 3,389,401 shares (the “Pledged Shares”), which, according to public filings made by Deutsche Bank AG (“Deutsche Bank”) in March 2010 had previously been pledged to Deutsche Bank to secure indebtedness owed to it. In February 2011, Deutsche Bank filed a Schedule 13G with the Securities and Exchange Commission stating that Deutsche Bank had sole voting and sole dispositive power over the Pledged Shares (which represent approximately 12.5% of the Company’s outstanding common stock). The Company believes that both Grande and Deutsche Bank have claimed beneficial ownership of the Pledged Shares. As of August 15, 2011, the Company has not been able to verify independently the beneficial ownership of the Pledged Shares.

Related Party Transactions

Leases and Other Real Estate Transactions.

Rented Space in Hong Kong

Effective January 1, 2010, Emerson entered into a lease agreement with Lafe Properties (Hong Kong) Limited (“Lafe”), a related party of Grande at that time, pursuant to which Emerson rented 36,540 square feet from Lafe for the purpose of housing its Hong Kong based office personnel and for its use to refurbish certain returned products. This lease agreement expired on December 31, 2010 and was renewed for a one year period on substantially the same terms during December 2010, and therefore now expires on December 31, 2011. On December 31, 2010, Lafe was sold by its immediate holding company to an independent third party. As such, the Company is no longer considering Lafe to be a related party to the Company beginning December 31, 2010.

Related service charges associated with this lease agreement that the Company continues to procure from Brighton Marketing Limited, a subsidiary of Grande, and The Grande Properties Management Limited, a related party of Grande, totaled approximately $39,000 for the three month period ended June 30, 2011. Emerson owed Brighton Marketing Limited approximately $1,100 pertaining to these charges at June 30, 2011.

For the three month period ended June 30, 2010, Emerson’s rent expense and related service charges associated with this lease agreement totaled approximately $165,000 and Emerson owed an amount of approximately $3,000 to a related party of Grande pertaining to these charges at June 30, 2010. In addition, at June 30, 2010, Lafe held a security deposit of approximately $113,000 that Emerson had paid to Lafe on the leased property, which was reclassified by Emerson to third party rental deposit in December 2010.

Rented Space in the People’s Republic of China

In December 2008, Emerson signed a lease agreement with Akai Electric (China) Co., Ltd. (“Akai China”), a subsidiary of Grande prior to its disposal on December 24, 2010, concerning the rental of office space, office equipment, and lab equipment for Emerson’s quality assurance personnel in Zhongshan, People’s Republic of China. The lease term began in July 2007 and ended by its terms in June 2009, at which time the agreement renewed automatically on a month-by-month basis unless canceled by either party. The agreement was cancelled in May 2011.

On December 24, 2010, Grande announced that it sold Capetronic Group Ltd. (“Capetronic”) to a purchaser who, along with its beneficial owner, are third parties independent of Grande and its connected persons, as defined in the Listing Rules to the best of Grande’s and its directors’ knowledge, information and belief, having made all reasonable enquiries (the “Sale”). As Akai China was a subsidiary of Capetronic at the time of the Sale, and was disposed of along with Capetronic by Grande, the Company is no longer considering Akai China to be a related party to the Company beginning December 24, 2010.

For the three month period ended June 30, 2010, Emerson’s rent expense associated with this lease agreement totaled approximately $28,000 and Emerson owed nil to Akai China related to this agreement at June 30, 2010. In addition, at June 30, 2010, Akai China held a security deposit of approximately $31,600 that Emerson had paid to Akai China on the leased property, which was reclassified by Emerson to third party rental deposit in December 2010.

Other.

During the three months ended June 30, 2011 and June 30, 2010, respectively, Emerson paid consulting fees and related expense reimbursements of approximately $6,000 and approximately $34,000, respectively, to Mr. Eduard Will, a director of Emerson, for work performed by Mr. Will related to a shareholder derivative lawsuit that the Company settled in January 2011. In May 2010, Emerson signed an agreement with Mr. Will, which formalized the arrangement and committed Emerson to paying a consulting fee of a minimum of $12,500 per quarter to Mr. Will relating to this lawsuit.

In May 2011, Emerson paid a travel advance of $15,500 to Mr. Will for anticipated Emerson-related business travel to occur in a future period, which had not yet occurred as of June 30, 2011 and is therefore classified by Emerson as a receivable from Mr. Will at that date.

During the three months ended June 30, 2011 and June 30, 2010, Akai Sales Pte Ltd. (“Akai Sales”), a subsidiary of Grande, invoiced Emerson nil and approximately $7,300 for travel expenses and courier fees. Including earlier invoices related to similar charges paid for by Akai Sales on Emerson’s behalf, Emerson owed Akai Sales approximately $33,000 at June 30, 2010 as a result of these invoices. At June 30, 2011, Emerson owed Akai Sales nil.

During the three months ended June 30, 2011 and June 30, 2010, Emerson invoiced Vigers Property Management Services (HK) Ltd. and Vigers Appraisal & Consulting Ltd. (together “Vigers”), related parties of Grande, in the aggregate, approximately $1,000 and $2,000, respectively, for usage of telephone and data lines maintained by Emerson. Vigers owed Emerson approximately $1,000 and nil at June 30, 2011 and June 30, 2010, respectively, related to this activity.

On April 7, 2010, upon a request made to the Company by its foreign controlling stockholder, S&T, the Company entered into an agreement with S&T International Distribution Limited ("S&T"), whereby the Company returned to S&T on April 7, 2010 that portion of the taxes that the Company had withheld 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”). The Company believes this transaction results in an off-balance sheet arrangement, which is comprised of 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. Per the terms of the Agreement, Emerson invoiced S&T in June 2010 approximately $42,000 for reimbursement of legal fees incurred by Emerson with regard to the Agreement and approximately $33,000 as a transaction fee for having entered into the Agreement. At June 30, 2010, S&T owed these fees, totaling $75,000, to Emerson. In January 2011, Emerson agreed, upon the request of S&T, to waive approximately $5,000 of the legal charges that had been invoiced to S&T in June 2010. S&T paid the full amount owed to Emerson of approximately $70,000 in February 2011 and consequently owed Emerson nil at June 30, 2010.