Related Party Transactions

9 Months Ended

Dec. 31, 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) (“Grande”), and one or more of Grande’s direct and indirect subsidiaries. Set forth below is a summary of such transactions.

Majority Shareholder

Grande’s Ownership Interest in Emerson. Grande, a Bermuda corporation, has advised the Company that, as of December 31, 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). In January 2012, Deutsche Bank filed a Form 4 with the Securities and Exchange Commission stating that Deutsche Bank had disposed of 9,322 of the Pledged Shares and that Deutsche Bank had sole voting and sole dispositive power over 3,380,079 shares of the Company’s common stock (the “Pledged Shares, as Revised”). The Company believes that both Grande and Deutsche Bank have claimed beneficial ownership of the Pledged Shares, as Revised. As of February 14, 2012, the Company has not been able to verify independently the beneficial ownership of the Pledged Shares, as Revised.

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 expired on December 31, 2011. On December 31, 2010, Lafe was sold by its immediate holding company to an independent third party, and, as such, the Company no longer considers 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, The Grande Properties Management Limited, a related party of Grande, and The Grande Group (HK) Ltd., a related party of Grande, totaled approximately $14,000 and $71,000 for the three and nine months ended December 31, 2011, respectively. Emerson owed Brighton Marketing Limited approximately $1,000 and $1,700 pertaining to these charges at December 31, 2011 and March 31, 2011, respectively.

For the three and nine months ended December 31, 2010, Emerson’s rent expense and related service charges associated with this lease agreement totaled approximately $172,000 and $519,000, respectively.

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, and 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 and nine months ended December 31, 2010, Emerson’s rent expense associated with this lease agreement totaled approximately $29,000 and $85,000, respectively.

Other.

During the three and nine months ended December 31, 2011, Emerson paid consulting fees of approximately $20,000 and $33,000, respectively, to Mr. Eduard Will, a director of Emerson, for work performed by Mr. Will related to strategy for the Kayne Litigation as more fully described in Note 9 — “Legal Proceedings — Kayne Litigation”, merger and acquisition research, as well as work related to the strategy for a shareholder derivative lawsuit that the Company settled in January 2011. In addition, during the three and nine months ended December 31, 2011, Emerson paid expense reimbursements and advances of nil and approximately $18,000, respectively, to Mr. Eduard Will, related to this consulting work and his service as a director of Emerson. At December 31, 2011, Mr. Will owed the Company approximately $1,000 in the form of unused travel advances previously paid to him for which the travel had not yet occurred.

During the three and nine months ended December 31, 2010, Emerson paid consulting fees of approximately $25,000 and $85,000, respectively, to Mr. Will for work performed by Mr. Will related to strategy for a shareholder derivative lawsuit that the Company settled in January 2011. In addition, during the three and nine months ended December 31, 2010, Emerson paid expense reimbursements and advances of approximately $1,000 and $23,000, respectively, to Mr. Will, related to this consulting work and his service as a director of Emerson.

During the three and nine months ended December 31, 2010, Akai Sales Pte Ltd. (“Akai Sales”), a subsidiary of Grande, invoiced Emerson nil and approximately $7,300 for travel expenses and courier fees which Akai Sales paid on Emerson’s behalf. At both December 31, 2010 and March 31, 2010, Emerson owed Akai Sales nil.

During the three and nine months ended December 31, 2011, Emerson invoiced Vigers Appraisal & Consulting Ltd. (“Vigers”), a related party of Grande, approximately $1,000 and $3,000, respectively, for office rental and usage of telephone and data lines maintained by Emerson. Vigers owed Emerson nil at December 31, 2011 related to this activity. During the three and nine months ended December 31, 2010, Emerson invoiced Vigers approximately $1,000 and $4,000, respectively, for the same type of activity. Vigers owed Emerson nil at March 31, 2011 related to this activity.

On April 7, 2010, upon a request made to the Company by its foreign controlling stockholder, S&T International Distribution Limited (“S&T”), a subsidiary of Grande, the Company entered into an agreement with 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. 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.