--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
                       SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549

                                FORM 10-K405/A
                                AMENDMENT NO. 2

      [x]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
              THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]

                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998

                                       OR

      [ ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
             THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

              FOR THE TRANSITION PERIOD FROM ________ TO ________

                        COMMISSION FILE NUMBER: 0-20406

                           EZCONY INTERAMERICA INC.
            ------------------------------------------------------
            (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

              BRITISH VIRGIN ISLANDS                 NOT APPLICABLE
------------------------------------------------- --------------------
         (STATE OR OTHER JURISDICTION OF            (I.R.S. EMPLOYER
         INCORPORATION OR ORGANIZATION)            IDENTIFICATION NO.)

               CRAIGMUIR CHAMBERS
                  P.O. BOX 71
    ROAD TOWN, TORTOLA, BRITISH VIRGIN ISLANDS            NONE
------------------------------------------------- --------------------
      (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)         (ZIP CODE)

       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (507) 441-6566

        SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE

          SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:

                           COMMON STOCK, NO PAR VALUE
                           --------------------------
                                (TITLE OF CLASS)

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. Yes  X   No ___

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [ ]

The aggregate market value of the Common Stock held by non-affiliates of the
registrant as of March 29, 1999 was approximately $86,292 based on the $.125
closing sale price for the Common Stock quoted on OTC Bullentin Board on such
date. For purposes of this computation, all executive officers and directors of
the registrant have been deemed to be affiliates. Such determination should not
be deemed to be an admission that such directors and officers are, in fact,
affiliates of the registrant.

The number of shares of Common Stock of the registrant outstanding as of March
20, 1999 was 4,510,000.

                      DOCUMENTS INCORPORATED BY REFERENCE

                                     None
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
                                        
<PAGE>
   
<TABLE>
<CAPTION>
                            EZCONY INTERAMERICA INC.

                               TABLE OF CONTENTS

                                                                                            PAGE
                                                                                           -----
<S>          <C>                                                                           <C>
                                           PART I
Item 1.      Business ..................................................................     1
Item 2.      Properties ................................................................     4
Item 3.      Legal Proceedings .........................................................     4
Item 4.      Submission of Matters to a Vote of Security Holders .......................     4

                                          PART II
Item 5.      Market for Registrant's Common Stock Equity
             and Related Stockholder Matters ...........................................     5
Item 6.      Selected Financial Data ...................................................     6
Item 7.      Management's Discussion and Analysis of Financial Condition
             and Results of Operations .................................................     7
Item 8.      Financial Statements and Supplementary Data ...............................    11
Item 9.      Changes in and Disagreements with Accountants on
             Accounting and Financial Disclosures ......................................    30

                                          PART III
Item 10.     Directors and Executive Officers of the Registrant ........................    30
Item 11.     Executive Compensation ....................................................    32
Item 12.     Security Ownership of Certain Beneficial Owners and Management ............    35
Item 13.     Certain Relationships and Related Transactions ............................    35

                                          PART IV
Item 14.     Exhibits, Financial Statement Schedules, and Reports on Form 8-K ..........    36
</TABLE>
    
<PAGE>

                                    PART I

ITEM 1. BUSINESS

GENERAL

Ezcony Interamerica Inc. ("Ezcony" or the "Company") is a leading distributor
to Latin America of major brand name consumer electronics, including but not
limited to, Sony, Pioneer, AIWA, Samsung, Sharp, Motorola, Brother and Philips.
See "Major Brand Name Products."

The Company's consumer electronics products are sold principally to other
wholesalers and distributors as well as directly to retail chains. The Company
believes that it is one of the largest independent distributors of Sony and
Pioneer products to Latin America.

MARKET OVERVIEW

Since the Company began operations in 1982, the principal Latin American
markets for its products have varied significantly. The largest Latin American
markets for the Company's products in 1998 were Colombia, Venezuela, Paraguay,
and Ecuador.

The following table illustrates, for the periods presented, the changes in the
principal Latin American markets for the Company's products by sales volume (in
thousands) and percentage of total net sales from continuing operations. A
portion of the Company's sales were made through distributors and exporters
located in the United States, however, this means of distribution has been
substantially eliminated as of the end of fiscal 1998.

<TABLE>
<CAPTION>
                               1998                      1997                      1996
                      -----------------------   -----------------------   -----------------------
                         AMOUNT         %          AMOUNT         %          AMOUNT         %
                      -----------   ---------   -----------   ---------   -----------   ---------
<S>                    <C>              <C>      <C>              <C>      <C>              <C>
Colombia ..........    $  29,000         27      $  52,996         33      $  28,421         26
Venezuela .........       18,120         17         12,099          8          1,922          2
Paraguay ..........       15,728         14         28,486         18         22,552         21
Ecuador ...........        8,015          7         12,401          8         10,816         10
Others ............       38,067         35         52,841         33         45,035         41
                       ---------        ---      ---------        ---      ---------        ---
  Total ...........    $ 108,930        100%     $ 158,823        100%     $ 108,746        100%
                       =========        ===      =========        ===      =========        ===
</TABLE>

For a variety of political and economic reasons, the importation of
non-essential items such as consumer electronics has been restricted or
prohibited from time to time by many Latin American countries through exchange
controls, import quotas and restrictions, tariffs and other means. Changes in
the trade policies of Latin American countries affect both the market for the
Company's products as well as the Company's ability to sell its products.
Future political and economic changes in particular Latin American countries,
including changes in exchange rates, import duties or quotas, imposition or
lifting of exchange controls and other import restrictions, are likely to
result in changes in the importance to the Company of particular countries.

As described above, the Company does a substantial amount of business in Latin
America and it believes it is in compliance with all applicable governmental
regulations. There are significant "country risks" which arise in connection
with this business, including those associated with the receipt of payment for
goods sold. Colombia, which represents a significant market for the Company, is
a country in which the United States Government has taken a particular interest
in monitoring the flow of funds, especially those involving "structured
payments," e.g., payment practices using a repetitive high volume of cash or
financial instruments in "round" amounts.

                                       1
<PAGE>

The Company experienced a loss as a result of a forfeiture dispute that arose
with the United States Government over certain structured payments received in
early 1998; the resolution of this matter was "recognized" for financial
purposes, in fiscal 1997. The Company has discontinued accepting this form of
payment in connection with its Colombian receivables. The Company does not
believe that this change in payment policy will materially or adversely affect
its business; however, there can be no assurance that other, similar forms of
payment will not be challenged by the United States Government, or that the
business done in Colombia by the Company will not be materially affected by
this governmental scrutiny.

The Company believes that the consumer electronics markets in Latin America
differ from similar markets in the United States. First, the Company believes
that in Latin America independent regional distributors are usually the
principal means of distribution of consumer electronics, unlike in the United
States where direct sales by manufacturers are more typical. Although most
major consumer electronics manufacturers have single-country distributors,
operating subsidiaries or joint ventures in the major Latin American countries,
independent regional distributors such as Ezcony still represent the
predominant channel for consumer electronic sales in Latin America. The Company
expects that over a period of time this means of distribution may well evolve
into a system more like that in the United States. Second, the Company believes
that state-of-the-art technology, while an important factor in marketing
consumer electronics in the United States, is less important in Latin America
where consumers generally are willing to purchase less advanced products for
longer periods of time. Finally, Latin American markets for consumer
electronics generally are less developed than in the United States. For
example, products such as televisions and radios have reached relatively low
consumer penetration levels in Latin America compared to that of the United
States.

MAJOR BRAND NAME PRODUCTS

Ezcony distributes a wide range of major brand name consumer electronics,
including televisions, video cassette recorders, cellular products, automobile
audio equipment, personal portable stereos, home audio equipment, camcorders
and appliances. In 1998, sales of Sony, Pioneer, Samsung, and AIWA products
accounted for approximately 31%, 30%, 17% and 11%, respectively, of the
Company's total net sales.

Ezcony purchases most of its major brand name consumer electronics directly
from manufacturers. As is customary with independent distributors of consumer
electronics in Latin America, Ezcony has no written distributorship agreement
or arrangement with any manufacturer. The Company has a continuing relationship
with Sony for over 15 years. The Company has not experienced difficulty in
obtaining a satisfactory supply of marketable consumer electronics from Sony,
Pioneer, Samsung, and AIWA without having written distributorship or other
agreements. From time to time, the Company has purchased major brand name
consumer electronics from other sources, including other wholesalers and
distributors.

Most of the purchases of Sony and Pioneer products, are supplied from inventory
of these manufacturers located at their respective warehouses in the Colon
Panama Free Zone. This method of supply allows the Company to limit the amount
of inventory that it must keep on hand, the related inventory holding costs and
to reduce the lead time on the placement of orders for products. Sony, Pioneer
and Samsung extend the Company credit for its purchases; during 1998 AIWA
required the Company to pay cash for shipment of products which were purchased
directly from the Far East. At December 31, 1998, the Company's trade accounts
payable to Sony, Pioneer and Samsung were approximately $3.7 million, $1.6
million and $456,000, respectively.

Sales of Sony products accounted for approximately 31%, 33% and 37% of the
Company's major brand name product sales in 1998, 1997, and 1996, respectively.
Sales of Pioneer products accounted for approximately 30%, 34% and 36% of the
Company's major brand name products sales in 1998, 1997, and 1996,
respectively. Sales of Samsung products represented 17% and 9% of the Company's
major brand

                                       2
<PAGE>

name products sales in 1998 and 1997 and was not part of the Company's major
brand name products in 1996. Sales of AIWA products accounted for approximately
11%, 12% and 14% of the Company's major brand name product sales in 1998, 1997
and 1996, respectively.

DISCONTINUED OPERATIONS

In August 1997, the Company's Board of Directors approved a plan to sell or
liquidate its noncore business subsidiary, New World Interactive, Inc. ("New
World Interactive") as part of an overall restructuring program designed to
focus the Company's resources on its core business, the distribution of
consumer electronics. New World Interactive ceased all operations December 31,
1997; in this regard, during 1998 New World Interactive returned inventory to
vendors valued at approximately $50,000, and resolved a pending legal action
against it. The Company anticipates no further corporate action in this regard;
however, there can be no assurance that additional obligations of New World
Interactive will not be asserted against it.

In the third quarter of 1998, the Company decided to restructure its operations
by closing the facility in the United States and transferring the operations to
the Colon Free Zone, Panama, facilities. The Company recorded restructuring
charges totaling $250,759 to recognize severance and benefits for employees to
be terminated ($45,000), lease obligations ranging from a minimum of $20,800 to
a maximum of $137,259, legal fees ($17,500), and a provision for asset
impairment ($51,000).

SALES AND DISTRIBUTION

Ezcony sells its products primarily to wholesalers and distributors for re-sale
in Latin America. In addition, the Company sells directly to several Latin
American retail chains. Ezcony has a direct sales staff, which regularly calls
on and visits customers and prospective customers and assists the Company in
evaluating market conditions and customers' creditworthiness in their assigned
market areas.

In certain countries sales are made to a small number of customers, while in
other countries (such as Colombia) sales are made to approximately 150
customers. The Company's customers included distributors and exporters located
in the United States, most of whom re-export the Company's products directly to
Latin America; however, this aspect of the Company's distribution has been
significantly curtailed. During the last three fiscal years, no customers
accounted for more than 10% of the Company's total net sales.

The Company maintains warehouse facilities in Panama. During 1998 the Company
also leased a warehouse in Miami, Florida, and used on an "as needed" basis a
customs-bonded warehouse also in Miami; the Company ceased using these U.S.
facilities in the last quarter of 1998. Operating from a customs-bonded
warehouse in the Colon Free Zone allows the Company to import, store and export
products without incurring customs duties unless the products are sold locally.
See "Properties", below.

Generally, sales are recorded upon delivery of merchandise to the shipper. The
Company at times sells inventory while still on board vessels inbound from the
Far East. In these instances, inbound freight containers are transloaded in
port or at public warehouses for shipment to the Company's customers to
minimize warehousing and handling costs. Since products are normally shipped to
its customers shortly after receiving an order, the Company historically has
not maintained a significant backlog of orders relative to its sales.

CUSTOMER CREDIT

The majority of sales by the Company are made on open account terms, with
payment due within 30 to 60 days after receipt of goods by the customers. All
other sales are made on the basis of payment on or in advance of delivery of
merchandise to the shipper or upon receipt of a letter of credit. Certain sales
made by the Company are collected in cash and other negotiable instruments. The
Company requires

                                       3
<PAGE>

payment in U. S. dollars for all of its sales. The Company establishes credit
limits for its customers based on its knowledge of the customer, the customer's
payment history with available trade references, market conditions and other
factors. The Company performs its own analysis of the creditworthiness of its
customers, as the credit reporting systems in Latin America do not have an
extensive base. In addition to the risks customarily associated with extending
credit, the Company has experienced losses from uncollectible receivables due
to the difficulty of pursuing judicial remedies in most Latin American
countries.

COMPETITION

The Company competes in the sale of consumer electronics with numerous
wholesalers and distributors, some of which have greater financial and other
resources than the Company. The Company believes that the most important
competitive factors in the sale of consumer electronics in Latin America are
extension of customer credit, price, quality and variety of merchandise and the
ability to obtain sufficient quantities of merchandise for immediate delivery.

EMPLOYEES

At December 31, 1998, the Company had 71 full-time employees, all in Panama. As
of that date, there were no employees in the United States. None of the
Company's employees are represented by a labor union and the Company has not
experienced any material work stoppages. The Company considers its relations
with its employees to be good.

GEOGRAPHICAL SEGMENT INFORMATION

See Notes to the Company's Consolidated Financial Statements, Part II, Item 8,
for geographical segment information regarding sales, assets and operating
income for 1998, 1997 and 1996.

ITEM 2. PROPERTIES

In October 1997, the Company transferred its warehousing operations from two
leased warehouses to a 106,000 square foot warehouse in the Colon Free Zone. In
January 1998, the Company took occupancy of its new 16,140 square feet office &
showroom in the Colon Free Zone, which was completed at a cost of approximately
$1,235,000. The Company believes that the new warehouse and office & showroom
were needed to support the current operations and future growth; these
facilities are leased from "La Zone Libre De Colon" a governmental agency which
owns the land of the Colon Free Zone. The leases of the real property
underlying the warehouse and the office & showroom land expire on July 31, 2014
and October 31, 2016, respectively, and require annual payments of $12,952 and
$6,811, respectively. The leases can be renewed for a 20-year renewal term, at
the option of the Company at the rental rate and terms which are in effect for
the Colon Free Zone at the time of renewal.

ITEM 3. LEGAL PROCEEDINGS

The Company is from time to time involved in routine litigation. The Company
believes that presently pending actions will not have a material adverse impact
on its financial position or results of operations.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of security holders during the quarter
ended December 31, 1998.

                                       4
<PAGE>

                                    PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK EQUITY AND RELATED STOCKHOLDER
        MATTERS

The Company's Common Stock trades on "OTC Bulletin Board" under the symbol
"EZCOF". The following table sets forth the high and low sales prices for the
Common Stock for each quarter during the last two fiscal years as reported by
the Nasdaq National Market, and the "OTC Bulletin Board".

                                        1997                      1998
                               -----------------------   -----------------------
                                  HIGH          LOW         HIGH          LOW
                               ----------   ----------   ----------   ----------
First Quarter 3/31 .........    $  3.81      $  1.81      $  2.19      $  1.06
Second Quarter 6/30 ........       3.13         2.25         1.06         0.63
Third Quarter 9/30 .........       3.13         1.88         0.75         0.25
Fourth Quarter 12/31 .......       2.75         1.88         0.31         0.13

The Company is not in compliance with the new market value of public float
requirement pursuant to NASD Marketplace Rule 4450 (a) (2), which became
effective February 23, 1998. Because of this deficiency, effective August 6,
1998, the Company's common stock was no longer included in the Nasdaq SmallCap
Market, and thereafter the Company's Common Stock began trading on the "OTC
Bulletin Board" market.

There were 73 shareholders of record of the Company's Common Stock on March 20,
1999.

The Company presently has no plans to pay any dividends on its Common Stock and
has never paid any dividends. All earnings will be retained for the foreseeable
future to support operations and to finance the growth and development of the
Company's business. The payment of future cash dividends, if any, will be at
the discretion of the Board of Directors of the Company and will depend upon,
among other things, future earnings, capital requirements, the Company's
financial condition and on such other factors deemed relevant by the Board of
Directors.

The Company is not currently subject to any law or regulation of the British
Virgin Islands which would restrict or affect the remittance of dividends or
other payments to any holders of its Common Stock or which require tax
withholding from any United States holders of its Common Stock. There is no
reciprocal tax treaty between the British Virgin Islands and the United States
regarding withholding.

                                       5
<PAGE>

ITEM 6. SELECTED FINANCIAL DATA

The selected financial data for each of the years in the five-year period ended
December 31, 1998 are derived from the Company's Consolidated Financial
Statements which have been prepared in accordance with generally accepted
accounting principles in the United States and have been audited by the
Company's independent accountants. The selected financial data should be read
in conjunction with the Company's Consolidated Financial Statements and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included in Part II Item 7 of this Form 10-K405/A.

<TABLE>
<CAPTION>
                                                                             YEAR ENDED DECEMBER 31,
                                                       -------------------------------------------------------------------
                                                         1994(1)       1995(1)       1996(1)         1997          1998
                                                       -----------   -----------   -----------   -----------   -----------
                                                                     (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                                     <C>           <C>           <C>           <C>           <C>
INCOME STATEMENT DATA:
Net sales--continuing operations ...................    $104,322      $ 77,529      $108,746      $158,823      $108,930
Operating income (loss) from
  Continuing operations ............................       1,848          (370)        2,596           929          (810)
Income (loss) from continuing operations ...........       2,073           104         1,930          (933)       (2,944)
Income (loss) from discontinued operations .........        (848)         (385)         (852)       (2,609)           --
Net income (loss) ..................................       1,225          (281)        1,078        (3,541)       (2,944)
PER COMMON SHARE:
Income (loss) from continuing operations ...........    $   0.46      $   0.02      $   0.43         (0.21)     $  (0.65)
Income (loss) from discontinued operations .........       (0.19)        (0.08)        (0.19)        (0.58)           --
                                                        --------      --------      --------      --------      --------
Net income (loss) ..................................    $   0.27      $  (0.06)     $   0.24      $  (0.79)     $  (0.65)
                                                        ========      ========      ========      ========      ========
Weighted average number of
  Common shares outstanding ........................       4,500         4,500         4,500         4,504         4,510
                                                        ========      ========      ========      ========      ========
</TABLE>

<TABLE>
<CAPTION>
                                    1994         1995         1996         1997         1998
                                 ----------   ----------   ----------   ----------   ----------
<S>                               <C>          <C>          <C>          <C>          <C>
BALANCE SHEET DATA:
Working capital ..............    $ 7,603      $ 7,414      $ 8,386      $ 3,444      $ 1,609
Total assets .................     33,996       29,336       37,542       56,929       32,631
Short-term debt ..............      7,903        7,728       11,765       29,057       19,524
Long-term debt ...............        574          519          458        1,717        2,732
Shareholders' equity .........      8,940        8,659        9,737        6,208        3,264

<FN>
(1) Amounts have been restated to reflect the discontinued operations of New
    World Interactive.
</FN>
</TABLE>

                                       6
<PAGE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

The "Management's Discussion and Analysis of Financial Condition and Results of
Operations" included herein should be read in conjunction with the Consolidated
Financial Statements and the related Notes to Consolidated Financial
Statements.

The financial information in "Management's Discussion and Analysis of Financial
Condition and Results of Operations" refers to the continuing operations of the
Company and excludes the operations of New World Interactive.

COMPARISON OF YEARS ENDED DECEMBER 31,1998 AND 1997

NET SALES. Net sales decreased 31% to $109 million in 1998 from $159 million in
1997. The decrease is primarily attributable to the decreased sales in the
Company's existing markets, as well as the winding up of business in the United
States of America. The Company has also reduced its product lines to eliminate
low selling brand names. Decreased sales to Colombia ($24 million decrease),
Paraguay ($13 million decrease), Ecuador ($4.4 million decrease) and various
other markets could not be offset by increased sales to Venezuela ($6 million
increase), Dominican Republic ($3.0 million increase) and Guatemala ($2.8
million increase).

During 1998, sales of Sony products decreased to $33.7 million or 31% of net
sales as compared to 1997 sales of $52.4 million or 33% of net sales. Pioneer
sales were $32.3 million in 1998 or 30% of net sales compared to $54.5 million
or 34% of net sales in 1997. Samsung represented a new brand name product line
for the Company in 1997 and contributed $18 million in net sales in 1998 as
compared to $13.8 million in net sales in 1997.

GROSS PROFIT. Gross profit decreased 35% to $7.1 million in 1998 from $10.9
million in 1997. The Company's gross profit margin decreased to 6.5% in 1998
from 6.9% in 1997. The decrease is primarily attributable to excess merchandise
in the markets in which the Company sells its products, which the Company
believes to be an indirect result of the current Asian economic crisis and as a
result of this increased competition the Company experienced a reduction in its
prices for goods sold and decreased margins.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses decreased to $7.9 million in 1998 versus $10 million in
1997. Selling, general and administrative expenses were principally affected by
charges incurred by the Company in 1998 in connection with (i) decrease in
salaries and commissions, closing a sales office, and (ii) the implementation
of a severe austerity program to reduce operating expenses to the minimum.

INTEREST. Interest income increased from $454,102 in 1997 to $495,540 in 1998
due to higher average daily balances of restricted cash.

Interest expense increased from $2.2 million in 1997 to $2.9 million in 1998
from borrowings which were a result of decreased sales.

OTHER INCOME. Other income increased to $276,268 in 1998 from $175,509 in 1997.
This increase is primarily attributable to the additional rental income derived
from partially leasing the warehouse and the yearly increase of rental income
from property leased to third parties.

INCOME (LOSS) FROM CONTINUING OPERATIONS. Loss from continuing operations was
$2.9 million ($.65 per share) in 1998 compared to a loss from continuing
operations of $933,000 ($.21 per share) in 1997. The change was primarily due
to the decrease in gross profit margins because of increasing competition

                                       7
<PAGE>

and the decreased sales volume (principally because of an increased amount of
"cheaper" Asian products), higher provisions for doubtful accounts and higher
interest expenses.

LIQUIDITY AND CAPITAL RESOURCES

The Company has historically financed its operation through short-term bank
borrowings, trade credit and, to a lesser extent, internally generated funds.
The Company has decreased its bank borrowings during 1998 due to the decreased
sales resulting from deterioration in the economic environment of the foreign
countries in which it sells its goods.

The Company generated approximately $4.3 million in cash for operating
activities in 1998. This was primarily due to a decrease in trade accounts
receivables of $8.9 million primarily as a result of reduced sales on credit
which was offset in part by $11.7 million decrease in accounts payable and $6.9
million decreased inventory.

Cash provided for investing activities was approximately $4.2 million in 1998
primarily attributable to a decrease in restricted cash and capital
expenditures related to the purchase of the new warehouse, office and showroom.

Cash used for financing activities was approximately $8.5 million in 1998
principally due to the repayment of notes and acceptances due banks and long
term debt.

The Company receives open account credit from the majority of its principal
suppliers, with the exception of AIWA in amounts determined by such
manufacturers from time to time and are due on terms which range from 30 days
to 90 days after receipt of inventory.

The Company continues to have good relationships with its principal suppliers,
Sony and Pioneer. At December 31, 1998 and 1997, the Company's credit facility
with Sony was $4.8 million which was partially collateralized by $2.4 million
in stand-by letters of credit. The Company's credit facility with Pioneer at
December 31, 1998, was $6 million which was partially collateralized by $1.9
million in stand-by letters of credit as compared to $2.5 million at December
31, 1997. From time to time both Sony and Pioneer have allowed the Company to
exceed its credit line above its stated amount. At December 31, 1998, the
Company's trade payable to Sony and Pioneer was approximately $3.8 million and
$1.6 million, respectively.

The Company finances its purchases of inventory from the Far East by opening
letters of credit to the suppliers up to 45 days in advance of shipment. Upon
receipt of inventory, the related letter of credit is converted to trade
acceptances, typically maturing within 120 to 180 days. The Company incurs bank
charges for the issuance and negotiation of letters of credit as well as
interest charges for the time the promissory notes are outstanding.

At December 31, 1998, the Company had outstanding $19.1 million in notes and
acceptances principally maturing at varying dates through 1999 at varying
interest rates based on LIBOR, IBOR and prime rate ranging from 8.8% to a rate
fixed at 10.3%.

The Company's short-term borrowings are partially collateralized by
approximately $4.5 million of time deposits owned by the Company. None of the
Company's lenders is under any obligation to continue to provide credit to the
Company under currently existing terms.

Management believes that the Company's ability to repay its indebtedness must
be achieved primarily through funds generated from its operations. The Company
intends to consolidate its borrowings in an effort to obtain lower interest
rates and reduce inventory carrying costs by factoring its trade accounts

                                       8
<PAGE>

receivables which would also limit the Company's exposures to credit, political
and transfer risks. There can be no assurances that the Company will be able to
consolidate its borrowings or finance its trade accounts receivables.

As the Company reduced sales in existing markets such sales were primarily made
on a credit basis as compared to cash basis. Therefore, the number of day's
sales in accounts receivable decreased to 64 days at December 31, 1998 from 72
days at December 31, 1997. Future political and economic changes in the Latin
American countries in which the Company sells, such as the imposition or
lifting of exchange controls, may affect the Company's ability to collect its
accounts receivable.

At December 31, 1998, the Company's working capital decreased to $1.6 million
from $3.4 million at December 31, 1997, primarily due to loss from continuing
operations and maintaining a lower inventory.

At December 31, 1998, and March 31, 1999, the Company had available with seven
banks an aggregate of $28 million in bank facilities of which $22.3 million and
$23.1 million, respectively, was utilized. From time to time, the Company is
overdue with various bank lenders for periods of a few days for amounts the
Company does not consider to be significant in light of the size of its
borrowings. All of the Company's lines of credit and credit facilities from its
various lenders are "on demand".

For a variety of political and economic reasons, the importation of
nonessential items such as consumer electronics has been restricted or
prohibited from time to time by many Latin American countries through exchange
controls, import quotas and restrictions, tariffs and other means. Accordingly,
changes in the trade policies of Latin American countries affect both the
market for the Company's products as well as the Company's ability to sell its
products. The ability of the Company to sustain continued sales growth is
greatly dependent on the continuing favorable economic and political climate of
the Latin American countries that it is currently operating in, the Company's
ability to maintain or increase the profit margins on its sales within the
competitive market it operates in, availability of payment methods to our
customers, and, to a lesser extent, product availability.

SEASONALITY

The Company's operations have historically been seasonal with generally higher
sales in the third and fourth fiscal quarters. Higher third and fourth quarter
sales result from increased sales to retail chains and in anticipation of the
Christmas holiday season. Sales may also vary by fiscal quarter as a result of
the availability of merchandise for sale. Therefore, the results of any interim
period are not necessarily indicative of the results that might be expected
during a full fiscal year.

FOREIGN EXCHANGE FLUCTUATIONS

Although fluctuations in foreign exchange rates could affect the Company's cost
of inventory, such fluctuations have not been material to the Company's results
of operations since the Company makes all its purchases in U.S. dollars.
Unforeseen fluctuations in foreign exchange rates could result in the Company's
customers being unable to meet their obligations since the Company requires
payment in U.S. dollars for all of its sales.

ASSET MANAGEMENT

In 1998, the Company's inventory turnover from continuing operations was 17
times compared to 14 times for the year ended December 31, 1997. The generally
high rate of inventory turnover benefits the Company by allowing it to maximize
its sales within its limitations in supplier and bank credit. The Company
generally does not maintain significant inventory of its products. At December
31, 1998 inventories were $2.2 million compared to $9.2 million at December 31,
1997, a decrease of 76%.

                                       9
<PAGE>

At December 31, 1998 trade accounts receivable were $19.3 million compared to
$31.5 million at December 31, 1997, a decrease of 38.9%. The decrease was
primarily due to the reduced level of sales which has primarily been on credit.
At December 31, 1998, the number of days of sales from continuing operations in
accounts receivable was 64 days compared to 72 days at December 31, 1997. This
decrease was principally due to an decrease in the extension of credit and
terms to existing customers over the prior year as a result of negative
economic developments in the countries in which the Company sells its products.

The Company grants credit to its customers after considering various factors,
including reputation, location, available financial information and the number
of years in business. No formal credit reporting is available for Latin
American companies. The Company closely monitors credit sales by monitoring
each customer's payment history and other relevant information.

YEAR 2000 ISSUES

The Company's year 2000 compliance issue, is comprised of two areas, business
applications and equipment. The business applications issue consists of the
Company's business computer systems, as well as the computer systems of third
party suppliers or customers, whose year 2000 problems could potentially impact
the Company. Equipment exposures consist of personal computers, system servers
and telephone equipment whose year 2000 problems could also impact the Company.
The Company's year 2000 project is comprised of three phases: assessment of
systems and equipment affected by the year 2000 issue; development of
strategies to address affected systems and equipment; and remediation of
affected systems and equipment. The Company is in the process of completing the
assessment phase. The Company's internal accounting package is currently not in
year 2000 compliance; however, the Company can secure the software to bring the
accounting system into compliance for less than $50,000. The Company is still
in the assessment phase to determine what will be required of the Company's
hardware to bring the accounting system into compliance. The Company does not
believe that the year 2000 will have any impact on its buyers; however, the
Company will initiate communications with significant suppliers, including SONY
and Pioneer, and other customers to determine the extent to which the Company
will be affected by third-party year 2000 issues. The cost of the year 2000
initiatives is not expected to be material to the Company's results of
operations, financial position or cash flows. Implementation is expected to be
completed before September 30, 1999.

FORWARD LOOKING STATEMENTS

From time to time, the Company publishes "forward-looking statements", within
the meaning of the Private Securities Litigation Reform Act of 1995, including
certain statements in the "Management's Discussion and Analysis of Financial
Condition and Results of Operations," of this Form 10K, which relate to such
matters as anticipated financial performance, business prospects, technological
developments, new products and similar matters. The Private Securities
Litigation Reform Act of 1995 provides a safe harbor for forward-looking
statements. In order to comply with the terms of the safe harbor, the Company
notes that a variety of factors could cause the Company's actual results and
experience to differ materially from the anticipated results or other
expectations expressed in the Company's forward-looking statements. Such
factors include, among others: (i) the successful retrenchment of the Company's
operations in Panama, (ii) the general availability of credit from its
principal suppliers and banks to the Company to finance its inventory,
specifically, the continued cooperation of its major suppliers and its banks to
provide credit, and their forbearance from time to time as well as the
successful consolidation of the Company's borrowings; (iii) the discontinuation
of certain non-profit aspects of its business, e.g., certain products and
customers; (iv) the Company's ability to maintain or increase the profit
margins on its sales within the highly competitive markets in which it
operates; (v) economic developments in those foreign countries in which the
Company conducts a material amount of business, including Colombia, Paraguay,
Ecuador and Venezuela, as well as in those markets which are the source of
competition, e.g., in Asia.

                                       10
<PAGE>

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                   EZCONY INTERAMERICA INC. AND SUBSIDIARIES

                  INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                                                    PAGE
                                                                   -----
Independent Auditors' Report ...................................     12
Consolidated Balance Sheets
  As of December 31, 1998 and 1997 .............................     13
Consolidated Statements of Operations
  For the Years Ended December 31, 1998, 1997 and 1996 .........     14
Consolidated Statements of Shareholders' Equity
  For the Years Ended December 31, 1998, 1997 and 1996 .........     15
Consolidated Statements of Cash Flows
  For the Years Ended December 31, 1998, 1997 and 1996 .........     16
Notes to Consolidated Financial Statements .....................     17


                                       11
<PAGE>

                         INDEPENDENT AUDITORS' REPORT

The Board of Directors
Ezcony Interamerica, Inc. and Subsidiaries
British Virgin Islands

We have audited the consolidated balance sheet of Ezcony Interamerica, Inc. and
subsidiaries as of December 31, 1998 and the related consolidated statements of
operations, shareholders' equity, and cash flows for the year then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits. The consolidated balance sheet of Ezcony Interamerica, Inc. and
subsidiaries as of December 31, 1997 and the related consolidated statements of
operations, shareholders' equity and cash flows for the years ended December
31, 1997 and 1996, were audited by other auditors whose report dated March 30,
1998, expressed an unqualified opinion on those statements.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.

In our opinion, the 1998 financial statements referred to above present fairly,
in all material respects, the consolidated financial position of the Ezcony
Interamerica, Inc. and subsidiaries as of December 31, 1998, and the
consolidated results of its operations and its cash flows for the year then
ended in conformity with generally accepted accounting principles.

                                        /s/ McClain & Company, L.C.

April 13, 1999

                                       12
<PAGE>

                   EZCONY INTERAMERICA INC. AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS

                           (STATED IN U.S. DOLLARS)

<TABLE>
<CAPTION>
                                                                                   DECEMBER 31,
                                                                         ---------------------------------
                                                                               1998              1997
                                                                         ---------------   ---------------
<S>                                                                      <C>               <C>
                             ASSETS
Current assets:
  Cash and cash equivalents ..........................................    $  1,253,073      $  1,280,887
  Trade accounts receivables, net ....................................      19,268,099        31,510,345
  Due from directors, officers and employees, net ....................         347,044           179,162
  Inventories ........................................................       2,218,369         9,176,952
  Prepaid expenses and other current assets ..........................         664,429         1,465,637
  Restricted cash ....................................................       4,491,914         8,834,319
                                                                          ------------      ------------
    Total current assets .............................................      28,242,928        52,447,302
Property and equipment, net ..........................................       4,295,643         4,432,704
Other assets .........................................................          92,281            48,616
                                                                          ------------      ------------
    Total assets .....................................................    $ 32,630,852      $ 56,928,622
                                                                          ============      ============

                LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Notes and acceptances payable ......................................    $ 19,079,097      $ 28,842,438
  Current portion of long-term debt ..................................         444,701           214,537
  Accounts payable ...................................................       6,453,328        18,252,706
  Accrued expenses and other current liabilities .....................         657,138         1,693,543
                                                                          ------------      ------------
    Total current liabilities ........................................      26,634,264        49,003,224
Long-term debt .......................................................       2,732,386         1,717,361
    Total liabilities ................................................      29,366,650        50,720,585
                                                                          ------------      ------------
Commitments and contingencies (Notes 14 and 15)
Shareholders' equity:
  Common stock, no par value, 15,000,000 shares authorized;
    issued and outstanding 4,510,000 shares in 1998 and 1997 .........      12,954,723        12,954,723
  Accumulated deficit ................................................      (9,690,521)       (6,746,686)
                                                                          ------------      ------------
    Total shareholders' equity .......................................       3,264,202         6,208,037
                                                                          ------------      ------------
    Total liabilities and shareholders' equity .......................    $ 32,630,852      $ 56,928,622
                                                                          ============      ============
</TABLE>

          See independent auditors' report and the accompanying notes
       to consolidated financial statements, which are an integral part of
                               these statements.

                                       13
<PAGE>

                   EZCONY INTERAMERICA INC. AND SUBSIDIARIES

        CONSOLIDATED STATEMENTS OF OPERATIONS (STATED IN U.S. DOLLARS)

<TABLE>
<CAPTION>
                                                                       YEARS ENDED DECEMBER 31,
                                                          ---------------------------------------------------
                                                                1998              1997              1996
                                                          ---------------   ---------------   ---------------
<S>                                                       <C>               <C>               <C>
Net sales .............................................    $108,930,340      $158,822,628      $108,746,024
Cost of sales .........................................     101,836,237       147,921,363       100,175,931
                                                           ------------      ------------      ------------
  Gross profit ........................................       7,094,103        10,901,265         8,570,093
Selling, general and administrative expenses ..........       7,904,052         9,971,888         5,973,991
                                                           ------------      ------------      ------------
Operating (loss) income ...............................        (809,949)          929,377         2,596,102
Other income (expenses):
  Interest income .....................................         495,540           454,102           337,246
  Interest expense ....................................      (2,905,694)       (2,235,660)       (1,148,697)
  Litigation expense ..................................              --          (255,000)               --
  Other ...............................................         276,268           174,509           281,667
                                                           ------------      ------------      ------------
(Loss) income from continuing operations
  before income taxes .................................      (2,943,835)         (932,672)        2,066,318
Provision for income taxes ............................              --                --          (136,490)
                                                           ------------      ------------      ------------
(Loss) income from continuing operations ..............      (2,943,835)         (932,672)        1,929,828
                                                           ------------      ------------      ------------
Discontinued operations:
  Loss from discontinued operations,
    net of income taxes ...............................              --          (733,938)         (852,174)
  Loss on disposal, including $687,106 for
    operating losses during the phase out period,
    net of income taxes ...............................      (1,874,786)               --                --
                                                                     --        (2,608,724)         (852,174)
Net (loss) income .....................................    $ (2,943,835)     $ (3,541,396)     $  1,077,654
                                                           ============      ============      ============
Earnings per common share--basic and
  assuming dilution--
  (Loss) income from continuing operations ............    $      (0.65)     $      (0.21)     $       0.43
  Loss from discontinued operations ...................              --             (0.58)            (0.19)
                                                           ------------      ------------      ------------
  Net (loss) income ...................................    $      (0.65)     $      (0.79)     $       0.24
                                                           ============      ============      ============
Weighted average number of common shares
  outstanding--basic ..................................       4,510,000         4,503,644         4,500,000
Dilutive effect of stock options and warrants .........              --                --            21,688
                                                           ------------      ------------      ------------
Weighted average number of common shares
  outstanding--assuming dilution ......................       4,510,000         4,503,644         4,521,688
                                                           ============      ============      ============
</TABLE>

          See independent auditors' report and the accompanying notes
       to consolidated financial statements, which are an integral part of
                               these statements.

                                       14
<PAGE>

                   EZCONY INTERAMERICA INC. AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

             FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996

                           (STATED IN U.S. DOLLARS)

<TABLE>
<CAPTION>
                                         NUMBER OF
                                           SHARES                                               TOTAL
                                         ISSUED AND        COMMON          ACCUMULATED      SHAREHOLDERS'
                                        OUTSTANDING         STOCK            DEFICIT           EQUITY
                                       -------------   --------------   ----------------   --------------
<S>                                    <C>             <C>              <C>                <C>
Balance, January 1, 1995 ...........     4,500,000      $12,941,910       $ (4,282,944)     $  8,658,966
  Net income .......................            --               --          1,077,654         1,077,654
                                         ---------      -----------       ------------      ------------
Balance, December 31, 1996 .........     4,500,000       12,941,910         (3,205,290)        9,736,620
  Stock options exercised ..........        10,000           12,813                 --            12,813
  Net loss .........................            --               --         (3,541,396)       (3,541,396)
                                         ---------      -----------       ------------      ------------
Balance, December 31, 1997 .........     4,510,000       12,954,723         (6,746,686)        6,208,037
  Net loss .........................            --               --         (2,943,835)       (2,943,835)
Balance, December 31, 1998 .........     4,510,000      $12,954,723       $ (9,690,521)     $  3,264,202
                                         =========      ===========       ============      ============
</TABLE>

          See independent auditors' report and the accompanying notes
       to consolidated financial statements, which are an integral part of
                               these statements.

                                       15
<PAGE>

                   EZCONY INTERAMERICA INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                            (STATED IN U.S. DOLLARS)

<TABLE>
<CAPTION>
                                                                                          YEAR ENDED DECEMBER 31,
                                                                           -----------------------------------------------------
                                                                                 1998               1997               1996
                                                                           ----------------   ----------------   ---------------
<S>                                                                        <C>                <C>                <C>
Cash flows from operating activities:
 Net income (loss) .....................................................    $  (2,943,835)     $  (3,541,396)     $  1,077,654
 Adjustments to reconcile net (loss) income to net cash provided by
   (used in) operating activities:
  Depreciation and amortization ........................................          262,709            262,390           187,611
  Provision for doubtful accounts ......................................        3,326,551          2,646,509           901,950
  Loss on abandonment ..................................................           50,886                 --                --
  Provision for inventory write-down ...................................               --             12,189           166,652
  Loss on sale of fixed assets, net ....................................               --              1,830             8,113
  Loss on disposal of discontinued operations ..........................               --          1,874,786                --
  Changes in operating assets and liabilities:
   Decrease (increase) in trade accounts receivable ....................        8,915,695        (15,962,811)       (5,599,150)
   Decrease (increase) in due from affiliates, net .....................            9,686                 --
   Increase in due from directors, officers and employees, net .........         (167,882)           (69,810)          (60,885)
   Decrease (increase) in inventories ..................................        6,958,583            737,357        (4,410,741)
   Decrease (increase) in prepaid expenses and other assets ............          757,543           (332,886)         (240,398)
   (Decrease) increase in accounts payable .............................      (11,799,378)         3,450,059         3,026,862
   (Decrease) increase in accrued expenses and other
     current liabilities ...............................................       (1,044,233)         1,016,007            77,770
   Net changes in discontinued operations ..............................               --         (1,976,643)          355,455
                                                                            -------------      -------------      ------------
    Net cash provided by (used in) operating activities ................        4,316,639        (11,872,733)       (4,509,107)
                                                                            -------------      -------------      ------------
Cash flows from investing activities:
 Net decrease (increase) in restricted cash ............................        4,342,405         (2,751,395)         (951,521)
 Purchases of property and equipment ...................................         (176,534)        (1,487,904)         (308,021)
 Proceeds from sale of property and equipment ..........................               --             17,543            23,450
                                                                            -------------      -------------      ------------
    Net cash provided by (used in) investing activities ................        4,165,871         (4,221,756)       (1,236,092)
                                                                            -------------      -------------      ------------
Cash flows from financing activities:
 (Repayment of) proceeds from notes and acceptances
   payable, net ........................................................    $  (9,755,513)     $  17,138,752      $  3,975,810
 Proceeds from long-term borrowings ....................................        1,450,000            500,000                --
 Repayment of long-term debt ...........................................         (204,811)          (587,608)          (54,525)
 Issuance of common stock ..............................................           12,813                 --                --
                                                                            -------------      -------------      ------------
    Net cash (used in) provided by financing activities ................       (8,510,324)        17,063,957         3,921,285
                                                                            -------------      -------------      ------------
    Net (decrease) increase in cash and cash equivalents ...............          (27,814)           969,468        (1,823,914)
Cash and cash equivalents at beginning of year .........................        1,280,887            311,419         2,135,333
                                                                            -------------      -------------      ------------
Cash and cash equivalents at end of year ...............................    $   1,253,073      $   1,280,887      $    311,419
                                                                            =============      =============      ============
Supplemental disclosures of cash flow information:
 Cash paid during the year for interest ................................    $   2,425,377      $   2,435,047      $  1,429,316
                                                                            =============      =============      ============
 Cash paid during the year for taxes ...................................    $          --      $          --      $    256,263
                                                                            =============      =============      ============
Non-cash investing activities:
 Long-term debt acquired in purchase of warehouse ......................    $          --      $   1,500,000      $         --
                                                                            =============      =============      ============
</TABLE>

          See independent auditors' report and the accompanying notes
       to consolidated financial statements, which are an integral part of
                               these statements.

                                       16
<PAGE>

                   EZCONY INTERAMERICA INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                            (STATED IN U.S. DOLLARS)

NOTE 1 ORGANIZATION

Ezcony Interamerica, Inc. and subsidiaries ("the Company") was incorporated in
the British Virgin Islands on November 29, 1990.

The Company is a wholesale distributor to Latin American markets of a wide
range of brand name consumer electronic products, including televisions,
videocassette recorders, home and automobile audio equipment, cellular products
and appliances. The Company's products are distributed to a variety of
customers, including wholesalers and distributors who resell to retail markets.

NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of Ezcony
Interamerica, Inc. and its wholly owned subsidiaries. All significant
intercompany transactions and balances have been eliminated in consolidation.

 CASH AND CASH EQUIVALENTS

Cash equivalents include all highly liquid investments with maturities of three
months or less when acquired.

 INVENTORIES

Inventories are stated at the lower of cost or market, using the first-in,
first-out method. Inventories in transit are stated at cost.

 PROPERTY AND EQUIPMENT

Property and equipment are stated at cost less accumulated depreciation and
amortization. Depreciation on equipment is computed using the straight-line
method over the estimated lives of these assets, which range from 7 years to 20
years. Depreciation on property is computed using the straight-line method over
a period of 40 years. Amortization of leasehold improvements is computed using
the straight-line method over the shorter of the lease term (including renewal
periods) or the estimated useful life of the related asset. Repairs and
maintenance are charged to expense as incurred while expenditures for major
renewals and betterments are capitalized.

 INCOME TAXES

The Company utilizes the asset and liability method of accounting for income
taxes. Under this method, deferred tax assets and liabilities are determined
based on the difference between the financial statements and tax bases of
assets and liabilities using tax rates in effect for the year in which the
differences are expected to reverse. A valuation allowance is established when
it is more likely than not that some or all of the deferred tax assets will not
be realized.

The Company does not file a consolidated tax return in the United States. The
Company's United States subsidiaries file an income tax return for both state
and federal taxes. The Company's

                                       17
<PAGE>

                   EZCONY INTERAMERICA INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

                            (STATED IN U.S. DOLLARS)

NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)

Panamanian subsidiary, which operates in the Colon Free Zone, Republic of
Panama, enjoys special tax rates granted by the Panamanian tax authorities.
Effective January 1, 1997, all income derived from export operations of
companies operating in the Colon Free Zone are tax exempt.

 EARNINGS PER SHARE

In 1997, the Company adopted Statement of Financial Standards ("SFAS") No. 128,
EARNINGS PER SHARE issued by the Financial Accounting Standards Board ("FASB").
SFAS No. 128 requires the presentation of basic earnings per common share and
diluted earnings per common share. Basic earnings per common share are computed
by dividing income available to common stockholders by the weighted average
number of common shares outstanding. Diluted earnings per common share include
the diluting effect of stock options and warrants. All prior year earnings per
share calculations have been restated in accordance with the provisions of SFAS
No. 128. The adoption of SFAS No. 128 did not have a material effect on the
Company's historically disclosed earnings per share.

 REVENUE RECOGNITION

The Company recognizes revenue when products are shipped to customers.

 USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets, liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amount of revenues and expenses during the reporting period. These
estimates primarily relate to the determination of the allowance for doubtful
accounts. Although these estimates are based on management's knowledge of
current events and actions that it may undertake in the future, actual results
may ultimately differ from estimates.

 NEW ACCOUNTING STANDARDS

Effective for the year ended December 31, 1998, the Company adopted SFAS No.
131, DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION, which
requires a new basis of determining reportable business segments. This approach
(contrasted with the prior requirement which utilized a specific classification
system for determining segments) designates the Company's internal
organizational structure, as used by management for making operating decisions,
as the basis for determining business segments. On this basis, the Company has
one reportable segment:

Wholesale distributor of consumer electronic products.

During 1998, the Company adopted SFAS No. 130, reporting comprehensive income.
It requires disclosure of non-owner changes in stockholders' equity and is
defined as net income, plus direct adjustments to stockholders' equity.

The adoption of SFAS Nos. 131 and 130 will have no effect on the Company's
reported net income.

                                       18
<PAGE>

                   EZCONY INTERAMERICA INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

                            (STATED IN U.S. DOLLARS)

NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)

 FAIR VALUES OF FINANCIAL INSTRUMENTS

Financial Accounting Standards Board Statement No. 107, Disclosures About Fair
Value of Financial Instruments (FAS 107) requires the Company to disclose the
fair value of financial instruments for which it is practicable to estimate
that value. FAS 107 also requires the entity to disclose the method(s) and
significant assumptions used to estimate the fair value of financial
instruments.

The following assumptions were used to estimate the fair value of each class of
financial instruments for which it is practical to estimate that value:

     CASH, CASH EQUIVALENTS, AND RESTRICTED CASH

   The carrying amounts of cash, cash equivalents, and restricted cash
   approximate their fair value.

     DUE FROM DIRECTORS, OFFICERS AND EMPLOYEES, NET

   The carrying amounts of due from directors, officers and employees
   approximate their fair value.

     NOTES PAYABLE, ACCEPTANCES PAYABLE, AND LONG-TERM DEBT

   The fair values of the notes payable, acceptances payable, and long-term
   debt are estimated based upon current rates offered to the Company for debt
   of the same remaining maturities. Carrying amounts of notes payable,
   acceptances payable and long-term debt are reasonable estimates of their
   fair values.

 RECLASSIFICATIONS

Certain amounts included in the prior years' consolidated financial statements
have been reclassified to conform with the current year's presentation.

NOTE 3 DISCONTINUED OPERATIONS

In August 1997, the Company's Board of Directors approved a plan to sell or
liquidate its noncore business subsidiary, New World Interactive, Inc. ("New
World Interactive") as part of an overall reorganization program designed to
focus the Company's resources on its core business, the distribution of
consumer electronics. New World Interactive was engaged in the production and
distribution of Spanish and Portuguese CD-ROM software. The decision to
discontinue the subsidiary was based in part upon continuing significant
working capital requirements and the Company's inability to obtain separate
additional capital through bank financing, public or private placement debt, or
a combination of these for the subsidiary, and the lack of sufficient sales
volumes.

Due to the significant contractual obligations existing at the time of approval
of the plan to discontinue the subsidiary and due to the nature and conduct of
the business, New World Interactive's creditors were advised that New World
Interactive was experiencing significant cash flow problems and a deteriorating
financial condition and that management had decided to stop the production of
any "new"

                                       19
<PAGE>

                   EZCONY INTERAMERICA INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

                            (STATED IN U.S. DOLLARS)

NOTE 3 DISCONTINUED OPERATIONS--(CONTINUED)

titles and continue with the production of titles already contracted for. The
Company anticipated that upon completion of these titles, and with its existing
inventory on completed titles, sufficient sale volumes would materialize as a
result of the Christmas holiday season, and generate sufficient cash flows
allowing New World Interactive to repay its obligations and avoid having to pay
to creditors a pro rata share of New World Interactive's assets. New World
Interactive closed its production facility on October 31, 1997, and ceased
operations on December 31, 1997. Subsequent to December 31, 1997, New World
Interactive is in the process of self-liquidating its remaining assets
(consisting primarily of trade receivables of approximately $92,000 and
inventory of approximately $66,000) on a pro rata basis to its remaining
creditors. New World Interactive surrendered all contract rights it may have
had in any software to its remaining creditors and returned all existing
inventory. These rights and inventory were given to the creditors without
prejudice to any remaining debt or any claim that the creditors may have
against New World Interactive. It is management's intentions that any claims
that creditors may have against New World Interactive will not be defended or
responded to by New World Interactive as there are no other remaining assets to
distribute. The Company believes that the ultimate completion of the
liquidation of New World Interactive, including any potential litigation, will
not have a further material adverse impact on the financial condition and
results of operations of the Company.

Net liabilities of the discontinued operation at December 31, 1997, consist
primarily of accounts payable and accrued expenses (including severance to a
key officer and employees) offset by accounts receivable and inventory. The
inventory is recorded at liquidation value and not at a potential selling price
as surrendered to its creditors. At December 31, 1997, the loss on the disposal
of New World Interactive totaled $1,874,786, which includes a loss of $687,106
for operating losses during the phase out period, and is reflected as loss on
disposal in the accompanying Consolidated Statements of Operations.

The accompanying consolidated statements of operations have been reclassified
to report separately the discontinued operations in the prior periods. Selected
results of the discontinued operations were as follows:

<TABLE>
<CAPTION>
                                                              1998          1997              1996
                                                             ------   ----------------   -------------
<S>                                                          <C>      <C>                <C>
   Net sales .............................................    $--       $  1,909,405      $3,135,047
                                                              ===       ============      ==========
   Gross profit ..........................................    $--       $    214,881      $  860,390
                                                              ===       ============      ==========
   Selling, general and administrative expenses ..........    $--       $    930,564      $1,579,878
                                                              ===       ============      ==========
   Net loss ..............................................    $--       $ (2,608,724)     $ (852,174)
                                                              ===       ============      ==========
</TABLE>

In the third quarter of 1998, the Company decided to restructure its operations
by closing the facility in the United States and transferring the operations to
the Colon Free Zone, Panama facilities.

                                       20
<PAGE>

                   EZCONY INTERAMERICA INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

                            (STATED IN U.S. DOLLARS)

NOTE 4 RESTRICTED CASH

At December 31, 1998 and 1997, certificates of deposit were pledged by the
Company with various banks to guarantee the credit lines. The certificates of
deposit were placed in various banks in the following locations:

                                   1998            1997
                              -------------   -------------
   United States ..........    $1,378,003      $1,484,319
   Panama .................     3,113,911       7,350,000
                               ----------      ----------
                               $4,491,914      $8,834,319
                               ==========      ==========

The certificates of deposit at December 31, 1998 and 1997 have annual interest
rates ranging from 5.2% to 6.6% and 4.9% to 7.8%, respectively.

NOTE 5 INVENTORIES

At December 31, 1998 and 1997, inventories consisted primarily of consumer
electronic products at the following locations:

                                                      1998            1997
                                                 -------------   -------------
   Colon Panama Free Zone warehouse ..........    $2,273,084      $7,343,318
   U.S. warehouses ...........................            --         830,717
   In transit ................................            --       1,091,712
                                                  ----------      ----------
                                                   2,273,084       9,265,747
   Reserve for obsolescence ..................       (54,715)        (88,795)
                                                  ----------      ----------
                                                  $2,218,369      $9,176,952
                                                  ==========      ==========

NOTE 6 PROPERTY AND EQUIPMENT

At December 31, 1998 and 1997, property and equipment consists of the
following:

<TABLE>
<CAPTION>
                                                                     1998              1997
                                                               ---------------   ---------------
<S>                                                            <C>               <C>
   Buildings ...............................................    $  3,950,408      $  3,796,730
   Furniture and office equipment ..........................       1,014,103           977,765
   Transportation equipment ................................         319,863           355,847
   Leasehold improvements ..................................              --            87,109
   Machinery and equipment .................................         237,195           251,957
                                                                ------------      ------------
                                                                   5,521,569         5,469,408
   Less accumulated depreciation and amortization ..........      (1,225,926)       (1,036,704)
                                                                ------------      ------------
                                                                $  4,295,643      $  4,432,704
                                                                ============      ============
</TABLE>

During 1997, the Company purchased a warehouse in the Panama Colon Free Zone
for $1,700,000 and transferred its warehousing operations from two leased
warehouses. In addition, the construction of the Company's office and showroom
in the Panama Colon Free Zone was completed in December 1997 at costs totaling
approximately $1,100,000.

                                       21
<PAGE>

                   EZCONY INTERAMERICA INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

                            (STATED IN U.S. DOLLARS)

NOTE 7 CONCENTRATION OF CREDIT RISK

The Company's sales were made to customers located in, or for distribution in,
the following countries:

<TABLE>
<CAPTION>
                                                   1998             1997             1996
                                              --------------   --------------   --------------
<S>                                           <C>              <C>              <C>
   Colombia ...............................   $ 29,000,026     $ 52,995,593     $ 28,420,660
   Paraguay ...............................     15,727,964       28,486,493       22,551,519
   United States ..........................     11,883,274       15,691,848       11,188,364
   Ecuador ................................      8,015,145       12,401,457       10,815,594
   Venezuela ..............................     18,119,708       12,099,287        1,921,862
   Mexico .................................      4,461,177        4,742,561        5,441,236
   Peru ...................................        812,023        4,458,382        2,553,372
   Brazil .................................        512,299        3,831,209        6,264,275
   All other countries
    (primarily in Latin America) ..........     20,398,724       24,115,798       19,589,142
                                              ------------     ------------     ------------
                                              $108,930,340     $158,822,628     $108,746,024
                                              ============     ============     ============
</TABLE>

A summary of accounts receivable by country of distribution is as follows:

<TABLE>
<CAPTION>
                                                                       1998             1997
                                                                 ---------------   --------------
<S>                                                              <C>               <C>
   Paraguay ..................................................    $  3,919,770      $ 10,186,458
   Colombia ..................................................       7,520,378         9,849,299
   Venezuela .................................................       4,514,485         4,062,259
   Ecuador ...................................................       2,430,869         3,620,585
   Argentina .................................................         891,977         1,005,294
   All other countries (primarily in Latin America) ..........       6,346,816         7,406,552
                                                                  ------------      ------------
                                                                    25,624,295        36,130,447
   Less allowance for doubtful accounts ......................      (6,356,196)       (4,620,102)
                                                                  ------------      ------------
                                                                  $ 19,268,099      $ 31,510,345
                                                                  ============      ============
</TABLE>

Certain sales made by the Company are collected in cash or other negotiable
instruments. During 1998, 1997, and 1996, the Company had no major customers
whose sales exceeded 10% of total net sales.

At various times during the years ended December 31, 1998 and 1997, the Company
maintained cash balances with financial institutions in excess of the amount
insured by the Federal Deposit Insurance Corporation, $100,000.

                                       22
<PAGE>

                   EZCONY INTERAMERICA INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

                            (STATED IN U.S. DOLLARS)

NOTE 8 MAJOR SUPPLIERS

During the years ended December 31, 1998, 1997, and 1996, 31%, 33%, and 37%,
respectively, of the Company's purchases consisted of products purchased from
Sony Corporation of Panama, S.A. ("Sony"). Amounts payable to Sony as of
December 31, 1998 and 1997, were approximately $3,758,000 and $5,346,000,
respectively. Beginning in 1995, the Company significantly increased its
purchases from Pioneer International Latin America, S.A. ("Pioneer"). Pioneer
purchases represented 30%, 34%, and 36% of total purchases for the year ended
December 31, 1998, 1997, and 1996, respectively. Amounts payable to Pioneer as
of December 31, 1998 and 1997 were approximately $1,575,000 and $5,000,000,
respectively.

The Company does not have a written agreement with either Sony or Pioneer to
act as a distributor in any particular country. Sony and Pioneer could, at any
time, stop or limit sales to the Company or prohibit the Company from
distributing its products in any one or more countries. The Company is extended
credit terms from year-to-year.

NOTE 9 GEOGRAPHICAL SEGMENT INFORMATION

Sales originating from Panama, the United States and British Virgin Islands for
the years ended December 31, 1998, 1997 and 1996 were as follows:

<TABLE>
<CAPTION>
                                            1998              1997              1996
                                       --------------   ---------------   ---------------
<S>                                    <C>              <C>               <C>
   Panama ..........................   $ 90,391,151      $139,471,528      $103,648,266
   United States ...................     18,439,249        19,220,055         5,052,613
   British Virgin Islands ..........         99,940           131,045            45,145
                                       ------------      ------------      ------------
                                       $108,930,340      $158,822,628      $108,746,024
                                       ============      ============      ============
</TABLE>

Identifiable assets by geographical area are as follows:

<TABLE>
<CAPTION>
                                            1998             1997
                                       --------------   --------------
<S>                                     <C>              <C>        
   Panama ..........................    $30,714,394      $52,002,854
   United States ...................      1,783,858        4,685,063
   British Virgin Islands ..........        132,600          240,705
                                        -----------      -----------
                                        $32,630,852      $56,928,622
                                        ===========      ===========
</TABLE>

Operating income (loss) from continuing operations by geographical area is as
follows:

<TABLE>
<CAPTION>
                                            1998            1997            1996
                                       -------------   -------------   -------------
<S>                                    <C>             <C>             <C>
   Panama ..........................    $  699,225      $2,615,913      $2,953,042
   United States ...................      (557,112)       (802,393)        109,324
   British Virgin Islands ..........      (952,062)       (884,143)       (466,264)
                                        ----------      ----------      ----------
                                        $ (809,949)     $  929,377      $2,596,102
                                        ==========      ==========      ==========
</TABLE>

                                       23
<PAGE>

                   EZCONY INTERAMERICA INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

                            (STATED IN U.S. DOLLARS)

NOTE 9 GEOGRAPHICAL SEGMENT INFORMATION--(CONTINUED)

Income (loss) from continuing operations before income taxes by geographical
area is as follows:

<TABLE>
<CAPTION>
                                             1998              1997            1996
                                       ----------------   -------------   -------------
<S>                                    <C>                <C>             <C>
   Panama ..........................     $ (1,247,559)     $  788,760      $2,333,567
   United States ...................         (756,503)       (845,755)         81,795
   British Virgin Islands ..........         (939,773)       (875,677)       (349,044)
                                         ------------      ----------      ----------
                                         $ (2,943,835)     $ (932,672)     $2,066,318
                                         ============      ==========      ==========
</TABLE>

NOTE 10 NOTES AND ACCEPTANCES PAYABLE

Acceptances payable to banks and borrowings under several lines of credit
aggregating approximately $28,000,000 at December 31, 1998 and $36,500,000 at
December 31, 1997, bearing interest between 8.8% to 10.3%, maturing at varying
dates through 1999, collateralized by certificates of deposit of $4,491,914 and
$8,834,319 at December 31, 1998 and 1997, respectively, trade accounts
receivables, inventories and guaranteed by certain of the Company's
shareholders.

The weighted average interest rates as of December 31, 1998 and 1997 were 9.35%
and 9.62%, respectively.

NOTE 11 LONG-TERM DEBT

Long-term debt at December 31, 1998 and 1997 consists of the following:

<TABLE>
<CAPTION>
                                                                               1998            1997
                                                                          -------------   -------------
<S>                                                                       <C>             <C>
   Note payable, bearing interest at 10%, payable in monthly
    installments in the amount of $12,681, expiring in May 2001,
    collateralized by a first mortgage on the rental building .........    $  327,032      $  438,887

   Note payable, bearing interest at prime (8.5% at December 31, 1998
    and 1997) plus 2%, payable in monthly installments in the
    amount of $21,090, with the unpaid balance due in
    December 2002, collateralized by a first mortgage on the
    warehouse .........................................................     1,400,055       1,493,011

   Note payable, bearing interest at prime plus 2%, payable in
    monthly installments of $17,262, expiring in 2002, collateralized
    by a first mortgage on building ...................................     1,450,000              --
                                                                           ----------      ----------
                                                                            3,177,087       1,931,898
   Less current portion ...............................................       414,701         214,537
                                                                           ----------      ----------
                                                                           $2,732,386      $1,717,361
                                                                           ==========      ==========
</TABLE>

                                       24
<PAGE>

                   EZCONY INTERAMERICA INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

                            (STATED IN U.S. DOLLARS)

NOTE 11 LONG-TERM DEBT--(CONTINUED)

Maturities of long-term debt as follows:

YEAR ENDING DECEMBER 31,
--------------------------
   1999 ..................    $  444,701
   2000 ..................       470,191
   2001 ..................       408,936
   2002 ..................     1,853,259
   2003 ..................            --
   Thereafter ............            --
                              ----------
                              $3,177,087
                              ==========

NOTE 12 INCOME TAXES

The provision for income taxes includes the following components:

                                         1998     1997       1996
                                        ------   ------   ----------
   United States - Federal ..........    $--      $--      $     --
   Panama ...........................     --       --       136,490
                                         ---      ---      --------
                                         $--      $--      $136,490
                                         ===      ===      ========

The provision for income taxes differed from the amounts computed by applying
the U.S. Federal income tax rate of 34% in 1998, 1997 and 1996 to income (loss)
before income tax expense as a result of the following:

<TABLE>
<CAPTION>
                                                 1998            1997             1996
                                            -------------   --------------   -------------
<S>                                         <C>             <C>              <C>
   Computed "expected" United States tax
    (benefit) expense ...................    $  118,896       $ (317,108)     $  702,548
   Effect of foreign operations .........            --           29,552        (504,700)
   Valuation allowance change ...........      (118,896)         286,282         (75,395)
   Other, net ...........................            --            1,274          14,037
                                             ----------       ----------      ----------
   Provision for income taxes ...........    $       --       $       --      $  136,490
                                             ==========       ==========      ==========
</TABLE>

At December 31, 1998, the Company's U.S. subsidiaries had net operating loss
carryforwards for U.S. tax purposes of approximately $1,990,000 (continuing
operations) and $2,845,000 (discontinued operations), expiring in various years
through 2012. A full valuation allowance has been recorded by the Company since
management believes that it is more likely than not that the deferred tax
assets will not be realized.

The Company's Panamanian subsidiary operates in the Colon Free Zone, Republic
of Panama, and sells to customers abroad. Prior to January 1, 1997, companies
operating in the Colon Free Zone derived local tax benefits from their foreign
sales. These companies enjoyed a special tax rate of 8.5%, as

                                       25
<PAGE>

                   EZCONY INTERAMERICA INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

                            (STATED IN U.S. DOLLARS)

NOTE 12 INCOME TAXES--(CONTINUED)

compared to a statutory rate of up to 34%, on profits derived from sales of
merchandise re-exported from the Colon Free Zone to countries other than
Panama. In addition, profits derived from sales not shipped through Panama
(offshore sales) are exempt from Panamanian taxes. Effective January 1,1997,
all income derived form export operation of companies operating in the Colon
Free Zone are 100% tax exempt.

NOTE 13 STOCK OPTION PLAN AND OTHER

The Company's 1992 stock option plan ("the Plan"), adopted by the Board of
Directors and the shareholders of the Company on April 21, 1992, is intended to
improve the Company's financial performance by providing long-term incentives
to the Company's directors, officers and key employees and to aid in the
recruitment of additional qualified and competent employees. The Plan is
administered by a committee comprised of outside directors ("the Committee").

On June 28, 1996, the shareholders approved the Board of Directors' amendment
to the Plan to increase the number of shares available for grant from 450,000
shares to 900,000 shares.

Under the Plan, 900,000 shares of common shares have been reserved for issuance
upon exercise of options. The Plan provides for the granting of both "incentive
stock options" and non-statutory stock options. Options can be granted under
the Plan on such terms and at such prices as determined by the Committee,
except that the per share exercise price of incentive stock options will not be
less than the fair market value of the common shares on the date of grant. Each
option will be exercisable after the period or periods specified in the option
agreement, but no option will be exercisable within six months after the date
of grant or after the expiration of 10 years from the date of grant. Options
granted under the Plan are not transferable other than by will or by the laws
of descent and distribution. The Plan authorizes the Company to make loans to
optionee's to enable them to exercise their options and authorizes optionee's
to exercise their stock options by payment with common shares, in each case at
the discretion of the Committee.

In connection with a public offering, in August 1992, the Company issued
warrants to purchase 150,000 common shares to the representatives of the
underwriters, exercisable at a price of $9.45 per share, as adjusted, for a
four-year term starting on August 6, 1993. In November 1994, the Company's
Board of Directors, in consideration of financial consulting and advisory
services rendered and to be rendered by such representatives, reduced the
exercise price on the warrants from $9.45 per share to $4.00 per share. In
November 1996, the Company's Board of Directors, in consideration of financial
consulting and advisory services to be rendered by one such representative,
reduced the exercise price on 97,750 warrants form $4.00 per share to $1.63 per
share and extended the term one additional year.

                                       26
<PAGE>

                   EZCONY INTERAMERICA INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

                            (STATED IN U.S. DOLLARS)

NOTE 13 STOCK OPTION PLAN AND OTHER--(CONTINUED)

The following table presents additional information concerning the activity in
the stock option plan:

<TABLE>
<CAPTION>
                                                                            WEIGHTED
                                                                           AVERAGE OF
                                                              NUMBER        EXERCISE
                                                            OF OPTIONS       PRICE
                                                           ------------   -----------
<S>                                                        <C>            <C>
   Balance at December 31, 1995 ........................        86,000      $ 3.38
   Options granted .....................................       759,660      $ 1.86
   Options terminated ..................................       (20,000)     $ 2.39
                                                              --------
   Balance at December 31, 1996 ........................       825,660      $ 2.01
   Options granted .....................................        25,000      $ 2.55
   Options exercised ...................................       (10,000)     $ 1.28
   Options terminated ..................................      (135,630)     $ 2.03
                                                              --------
   Balance at December 31, 1997 ........................       705,030      $ 2.04
   Options granted .....................................        20,000      $ 0.22
                                                              --------
   Balance at December 31, 1998 ........................       725,030      $ 1.98
                                                              ========
   Options repriced during 1996 ........................        97,750
                                                              ========
   1996 weighted average fair value of options .........      $    .80
                                                              ========
</TABLE>

No options were repriced during 1997.

<TABLE>
<CAPTION>
                                                                                 1998         1997         1996
                                                                              ----------   ----------   ----------
<S>                                                                           <C>          <C>          <C>
   Weighted average fair value of options granted during the year .........     $ 0.15       $ 1.82       $ 1.63
                                                                                ======       ======       ======
</TABLE>

<TABLE>
<CAPTION>
                                                       1998
------------------------------------------------------------------------------------------------------------------
                                              WEIGHTED
                                               AVERAGE
                             NUMBER           REMAINING         WEIGHTED             NUMBER            WEIGHTED
                          OUTSTANDING        CONTRACTUAL         AVERAGE          EXERCISABLE          AVERAGE
   RANGE OF PRICES      AT DECEMBER 31,     LIFE (YEARS)     EXERCISE PRICE     AT DECEMBER 31,     EXERCISE PRICE
--------------------   -----------------   --------------   ----------------   -----------------   ---------------
<S>                    <C>                 <C>              <C>                <C>                 <C>
   $0.22                     20,000        4.76                  $ 0.22                   -              N/A
   $1.25 - $1.88            277,530        6.76                  $ 1.77             277,530            $ 1.77
   $1.94 - $2.56            371,500        7.08                  $ 1.98             364,495            $ 1.98
   $3.50 - $4.13             56,000        4.49                  $ 3.72              56,000            $ 3.72
                            -------                                                 -------
                            725,030                              $ 2.04             698,025
                            =======                                                 =======
</TABLE>

As of December 31, 1996, the Company adopted the disclosure provisions of SFAS
No. 123, Accounting for Stock-Based Compensation. Accordingly, the Company is
required to disclose proforma net income and earnings per share as if
compensation expense relative to the fair value of the options granted had been
included in earnings. The fair value of each option grant was estimated using
the Black-Scholes

                                       27
<PAGE>

                   EZCONY INTERAMERICA INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

                            (STATED IN U.S. DOLLARS)

NOTE 13 STOCK OPTION PLAN AND OTHER--(CONTINUED)

option-pricing model with the following assumptions (weighted average) used for
grants in 1998, 1997, and 1996 expected life of 5 years in 1998, 6 years in
1997, and 10 years for 1996; volatility factors of 80% for 1998, 80% for 1997,
and 96% for 1996; risk-free interest rates of 5.2% in 1998, and 6.1% for 1997
and 1996 and no dividend payments. Had compensation cost for the Company's
option plan been determined and recorded consistent with SFAS No. 123, the
Company's net income and earnings per share would have been reduced to the
proforma amounts as follows:

<TABLE>
<CAPTION>
                                                                    YEAR ENDED DECEMBER 31,
                                                     -----------------------------------------------------
                                                           1998               1997               1996
                                                     ----------------   ----------------   ---------------
<S>                                                  <C>                <C>                <C>
   Net (loss) income
     As reported .................................     $ (2,943,835)      $ (3,541,396)      $ 1,077,654
                                                       ============       ============       ===========
     Proforma ....................................     $ (3,032,888)      $ (3,864,939)      $   300,479
                                                       ============       ============       ===========
   Earnings per share--basic and assuming dilution
     As reported .................................     $       (.65)      $       (.79)      $       .24
                                                       ============       ============       ===========
     Proforma ....................................     $       (.67)      $       (.86)      $       .07
                                                       ============       ============       ===========
</TABLE>

The 1998, 1997, and 1996 proforma effect on net income (loss) is not
necessarily indicative of the effect in future years because it does not take
into consideration proforma compensation expense related to grants made prior
to 1996 and does not reflect a tax benefit related to the compensation expense
as such benefit would be reflected directly in shareholders' equity given that
the options are considered incentive stock options.

NOTE 14 COMMITMENTS AND CONTINGENCIES

The Company has entered into various operating lease agreements. The following
is a schedule of future rental payments as of December 31, 1998 for operating
leases having initial noncancelable lease terms in excess of one year.

YEAR ENDING DECEMBER 31,
--------------------------
   1999 ..................    $ 19,763
   2000 ..................      19,763
   2001 ..................      19,763
   2002 ..................      19,763
   2003 ..................      19,763
   Thereafter ............     224,483
                              --------
                              $323,298
                              ========

As a result of restructuring its operations during 1998, the Company bought out
its existing lease contract for an office facility, warehouse and equipment
located in the United States for approximately $155,000.

                                       28
<PAGE>

                   EZCONY INTERAMERICA INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

                            (STATED IN U.S. DOLLARS)

NOTE 14 COMMITMENTS AND CONTINGENCIES--(CONTINUED)

Rent expense was $112,372, $233,181 and $290,242 for the years ended December
31, 1998, 1997, and 1996, respectively.

The Company leases its building in Panama City, Panama. Rental income included
in other income in the accompanying Consolidated Statements of Operations was
$223,110, $174,509, and $164,883 in 1998, 1997, and 1996, respectively. The
minimum future rental payments to be received on this noncancelable lease as of
December 31, 1998 are as follows:

YEAR ENDING DECEMBER 31,
--------------------------
   1999 ..................    $192,233
   2000 ..................     201,870
   2001 ..................     211,963
   2002 ..................     222,513
   2003 ..................          --
   Thereafter ............          --
                              --------
                              $828,579
                              ========

At December 31, 1998, the Company had standby letters of credit in the amount
of $4,400,000, collateralizing the trade accounts of various vendors, primarily
Sony and Pioneer.

The Company is currently in the process of evaluating its computer software and
databases to determine whether or not modifications will be required to prevent
problems related to the year 2000. Management does not currently anticipate any
significant or material impact on the Company as a result of implications
associated with this issue.

NOTE 15 LEGAL MATTERS

In 1998, the Company was notified of a forfeiture action against certain funds
deposited by the Company. The action requested the forfeiture of the seized
funds to the United States Government. The Company believes there is no basis
for the seizure or forfeiture. Nonetheless, to avoid the expense and disruption
of litigation and also the use of the seized funds for an extended period of
time, the Company reached an agreement to settle the forfeiture civil action
against these funds. Terms of the agreement require the return of all funds
seized less $255,000. The Company has recorded the settlement amount as
litigation (expense) reversal in the accompanying Consolidated Statement of
Operations, and as accrued expense and other current liabilities in the
accompanying Consolidated Balance Sheet as the seized funds related to 1997
sales.

The Company is also engaged in ordinary litigation incidental to its business.
The Company does not believe that such ordinary routine litigation will have a
material adverse effect on its consolidated financial position or results of
operations.

                                       29
<PAGE>

   
                                  SCHEDULE II

                  EZCONY INTERAMERICA, INC. AND SUBSIDIARIES
                       VALUATION AND QUALIFYING ACCOUNTS

             FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996

<TABLE>
<CAPTION>
                                        BALANCE AT     CHARGED TO                         BALANCE AT
                                         BEGINNING      COSTS AND                            END
DESCRIPTION                               OF YEAR       EXPENSES        DEDUCTIONS         OF YEAR
-------------------------------------- ------------   ------------   ----------------   -------------
<S>                                    <C>            <C>            <C>                <C>
ALLOWANCE FOR
  DOUBTFUL ACCOUNTS--

Year ended December 31, 1998 .........  $4,620,102     $3,326,551      $ (1,590,457)     $6,356,196
                                        ==========     ==========      ============      ==========
Year ended December 31, 1997 .........  $2,364,537     $2,646,509      $   (390,944)     $4,620,102
                                        ==========     ==========      ============      ==========
Year ended December 31, 1996 .........  $3,431,510     $  901,950      $ (1,968,923)     $2,364,537
                                        ==========     ==========      ============      ==========
</TABLE>
    
                                       30
<PAGE>

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
        ON ACCOUNTING AND FINANCIAL DISCLOSURES

The Company was formally advised in writing on December 2, 1998, that its
independent certified public accountants were withdrawing from their engagement
to audit the Company's financial statements. The accountants' report on the
Company's financial statements for the previous two years did not contain any
adverse opinion, or disclaimer of opinion, nor were any such reports modified
as to uncertainty, audit scope or accounting principles. Further, there have
been no disagreements with the former accountants on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure which disagreement, if not resolved to the satisfaction of the
accountants, would have caused the accountants to make reference to the subject
matter of the disagreement(s) in connection with their report(s) thereon during
the Company's two most recent fiscal years and the subsequent interim period
through December 2, 1998 (the date of the former accountant's resignation). A
copy of the accountants' resignation letter appears as an exhibit hereto.

                                   PART III

   
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY

Certain biographical information concerning the Directors and Executive
Officers of the Company as of March 31, 1998 is set forth below. Such
information was furnished by them to the Company

EZRA COHEN

Ezra Cohen has been President and Chief Executive Officer of the Company since
January 1992. He became Chairman of the Company on April 30, 1996. Mr. Cohen
has also been a director and President of Ezcony International Corporation, a
subsidiary of the Company, since March 1988. Mr. Cohen was a director and
President of Ezcony Trading Corporation, another subsidiary of the Company,
from 1982 until March 1988. Mr. Cohen again became President of Ezcony Trading
Corporation on April 30, 1996.

MOISES EZRA COHEN

Moises Ezra Cohen was Chairman of the Board of the Company from January 1992
until April 30, 1996, and President of Ezcony Trading Corporation from March
1988 until April 30, 1996. Prior to December 1989, Mr. Cohen was owner and
President of Novedades Toby, a group of consumer retail stores in Panama City,
Panama.

EZRA HOMSANY GATENO

Ezra Homsany Gateno has been President of J. Maloul e Hijos, a Panamanian
distribution company, since January 1998. Ezra Homsany Gateno was Chief
Operating Officer and Executive Vice President of the Company from January 1992
until June 1997. Mr. Homsany Gateno was a director and Executive Vice President
of Ezcony International Corporation from March 1988 until June 1997. Mr.
Homsany Gateno was a director and Vice President of Ezcony Trading Corporation
from 1982 until March 1988. Mr. Homsany Gateno was President of New World
Interactive, Inc., a subsidiary of the Company, since its inception in December
1993 until June 1997.

                                       31
<PAGE>

ENRIQUE P. LACS

Enrique P. Lacs was General Manager of Ezcony International Corporation from
1990 until January 1995 when he became Vice President of Operations. Mr. Lacs
is responsible for the operations of Ezcony International Corporation.

LEONARD J. SOKOLOW

Leonard J. Sokolow has been President of Union Atlantic, L C., a privately-held
consulting and merchant banking group, since September 1996, and Chairman of the
Board and President of The Americas Growth Fund, Inc., an investment company,
from August 1994 until December, 1998. Since August 1993, Mr. Sokolow has been
President and Chief Executive Officer of Genesis Partners, Inc., a
privately-held corporation that provides domestic and international investment
banking and financial advisory services. From May 1988 to July 1993, Mr. Sokolow
was employed by Windmere-Durable Holdings, Inc. (a public company engaged in the
manufacture and distribution of personal care products and small household
appliances) most recently as its Executive Vice President of Operations,
Administration and Finance and General Counsel. Mr. Sokolow is a director of
Catalina Lighting Inc., a public company engaged in the import and distribution
of commercial and residential electrical lighting.

CARLOS N. GALVEZ

Carlos N. Galvez served as Vice President of Finance and Administration of
Atlantic Time, S.A., a Nevada corporation and subsidiary of Seiko Corporation
of America in Mahwah, NJ. Mr. Galvez was responsible for marketing throughout
Latin America from 1978 to 1995. Mr. Galvez joined Ezcony Trading Corporation
as Finance Manager in September, 1996 and remains in that post today. He has
handled the duties of Acting Chief Financial Officer since the resignation of
Ana M. Menendez in September of 1998.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the
Company's officers and directors, and persons who beneficially own more than
10% of the Company's Common Shares, to file reports of securities ownership and
changes in such ownership with the Securities and Exchange Commission (the
"SEC"). Officers, directors and greater that 10% beneficial owners also are
required by rules promulgated by the SEC to furnish the Company with copies of
all Section 16(a) forms they file. Based solely upon a review of the copies of
such forms furnished to the Company and representations that no other reports
were required, the Company believes that for 1998, all Section 16(a) filing
requirements applicable to its officers, directors and greater than 10%
beneficial owners were complied with.

                                       32
<PAGE>

ITEM 11. EXECUTIVE COMPENSATION

COMPENSATION OF DIRECTORS AN EXECUTIVE OFFICERS

The following table shows the aggregate compensation paid or earned by the
Company's Chief Executive Officer and each of the four other most highly
compensated executive officers of the Company whose salary and bonus
compensation exceeded $100,000 for services rendered in all capacities during
the year ended December 31, 1998.

                          SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                                                  LONG-TERM
                                                                                                 COMPENSATION
                                                 ANNUAL COMPENSATION                                AWARDS
                                         -----------------------------------                    -------------
                                                                                                  SECURITIES
                                                                                OTHER ANNUAL      UNDERLYING        ALL OTHER
NAME AND PRINCIPAL POSITION      YEAR         SALARY              BONUS         COMPENSATION       OPTIONS        COMPENSATION
-----------------------------   ------   ----------------   ----------------   --------------   -------------   ----------------
<S>                             <C>      <C>                <C>                <C>              <C>             <C>
Ezra Cohen                      1998        $ 310,000          $       0                  0              0         $  50,252(5)
Chief Executive Officer         1997        $ 180,192          $  87,500(2)               0              0         $  16,320(4)
and President                   1996        $ 156,920          $ 158,779                  0        192,140         $  16,230(4)

Ezra Homsany Gateno             1998        $       0          $       0                  0          5,000         $       0
                                1997        $  67,270(3)       $  39,496(3)               0          5,000         $   1,320(1)
                                1996        $ 134,547          $ 140,294                  0        177,360         $  15,996(4)

David Djemal                    1998        $ 105,000          $       0                  0              0         $  43,227(5)
Vice President of Finance       1997        $  97,863          $  60,000(2)               0              0         $  20,565(4)
and Operations Ezcony           1996        $  66,300          $ 200,290                  0        101,290         $  20,565(4)
Trading Corporation

Daniel Homsany                  1998        $ 105,000          $       0                  0              0         $  43,227(5)
Vice President of
Marketing                       1997        $  91,300          $  75,000(2)               0              0         $  20,565(4)
and Sales Ezcony Trading        1996        $  66,300          $ 200,290                  0        101,290         $  20,565(4)
Corporation

Enrique P. Lacs                 1998        $ 145,000          $       0                  0              0         $   9,726(1)
Vice President of
Operations                      1997        $  96,231          $  45,500(2)               0              0         $   1,020(1)
Ezcony International            1996        $ 117,427          $  21,000                  0         46,950         $     600(1)
Corporation

<FN>
(1) Premiums on life insurance paid by the Company.

(2) Earned in 1997 and paid during 1998.

(3) See below for payments due under the "Consulting/Non-Compete Agreement"
    which are not included in the amounts reported hereon.

(4) Includes $15,000 in return for personally guarantying certain loans made to
    the Company by its lenders and, the balance represents premiums on life
    insurance policies paid by the Company.

(5) Includes $30,000 in return for personally guaranteeing bank loans and life
    and health insurance.
</FN>
</TABLE>

Ezra Homsany Gateno served as the Company's Chief Operating Officer and
Executive Vice President until his resignation on June 18, 1997. Ezra Homsany
Gateno resigned from the Company effective June 30, 1997, pursuant to a
Termination Agreement (the "Consulting/Non-Compete Agreement"). Mr. Homsany
Gateno continues to serve as a director of the Company and as a non-employee
director receives the retainer and meeting fees normally paid to non-employee
directors. The terms of the Consulting/Non-Compete Agreement provide for a
consulting period beginning July 1, 1997 through December 31, 1999 during which
Mr. Homsany Gateno serves as a consultant to the Company in exchange for a
total compensation of $375,770 ($114,500 from July 1, 1997 through December 31,
1997, $146,170 from January 1, 1998 through December 31, 1998 and $114,500 from
January 1, 1999 through

                                       33
<PAGE>

December 31, 1999) and for the provision of health insurance benefits through
June 30, 1998. The Consulting/Non-Compete Agreement also requires Mr. Homsany
Gateno to (I) continue as a guarantor for certain of the Company's existing
credit lines, (ii) execute a non-compete and confidentiality agreement covering
a period through June 30, 2000, and (iii) fully vests him on his existing
options waiving the requirement that he exercise the vested options within
ninety days after his termination.

INFORMATION CONCERNING THE BOARD OF DIRECTORS

During 1998, the Board of Directors held four meetings. Each director attended
at least 75% of the combined number of meetings of the Board and any committee
of which he was a member except David Djemal and Daniel Homsany, who each
attended 25% of such meetings.

The Company has an Audit Committee of the Board of Directors, consisting of
Michael G. Dowling, (Chairman) and Leonard J. Sokolow. The Audit Committee
performs the following functions: review of financial statements, communication
with independent accountants, review of the Company's internal accounting
controls and recommendations to the Board of Directors as to selection of
independent auditors. The Audit Committee did not have any meetings during the
1998 Fiscal Year.

The Company has a Compensation Committee of the Board of Directors, consisting
of Leonard J. Sokolow, Chairman of such Committee, and Michael G. Dowling. The
duties of the Compensation Committee are as follows: to review and recommend to
the Board of Directors the annual salary, bonus and other benefits of all
executive officers of the Company and to review and submit to the Board of
Directors recommendations concerning compensation, stock plans, and other
benefits to Company executives and expense account policies.

The Company has no standing nominating committee or other committee performing
a similar function.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS

Neither member of the Board's Compensation Committee is now nor have they ever
been, an employee of the Company or any of its subsidiaries or has any
relationship disclosed under "Certain Transactions" below.

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

Under rules established by the SEC, the Company is required to provide a report
explaining the rationale and considerations that led to fundamental
compensation decisions affecting the Company's executive officers during the
past fiscal year. The report of the Compensation Committee is set forth below.

The Compensation Committee, which is composed of the Company's two outside
directors, has determined that compensation for executive officers should be
linked to Company performance and, to a lesser extent, recognize an
individual's contribution to a business unit and personal performance for the
long-term success of the Company.

In 1997, with the assistance of an outside consulting firm, the Compensation
Committee developed a Strategic Compensation Program (the "Program") which
established a performance management process linked to the Company's Strategic
Plan. The Program is applicable to compensation policies for all executive
officers, and there is no differentiation in application among the executive
officers named in the compensation table.

The 1998 compensation of the executive officers was established in April, 1998
under the Program, and comprised of a base salary, bonus payout computed on
achievement of objective goals and the grant of stock options pursuant to the
Company's stock option plan.

                                       34
<PAGE>

The Compensation Committee determined the base salary based upon a number of
factors. The most important factor in determining base salary was market
comparison of similarly-situated officers in similarly-situated companies based
on research and information supplied by the outside consulting firm to the
Compensation Committee. Other factors that the Compensation Committee evaluated
were the individual officer's contribution to the Company since its inception,
as well as the officer's level of base salary in prior years, responsibilities
and importance to the Company and accomplishments in relation to objective
goals.

While the Compensation Committee reviews each executive officer's performance
against objective goals and in light of similarly-situated officers in
similarly-situated companies, the review and analysis is somewhat subjective.
Also, in connection with these reviews the Compensation Committee and the
outside consulting firm considered the input of the Chief Executive Officer as
to the performance of each of the other executive officers.

INFORMATION AS TO STOCK OPTIONS

Except for 5,000 shares of non-qualified Common Stock options granted to Ezra
Homsany Gateno at an exercise price of $2.563 and which were exercisable
beginning June 2, 1998, and expiring on December 1, 2002, there were no other
stock options issued during 1998 to persons listed in the preceeding "Summary
Compensation Table"

The Company also maintains the 1992 Stock Option Plan (the "Plan"), which is
intended to improve the Company's financial performance by providing long-term
incentives to the Company's executive officers. The Company did not grant any
stock options under the Plan in 1998.

                 AGGREGATED FISCAL YEAR END OPTION VALUE TABLE

The following table sets forth certain information concerning (I) options
exercised during 1998 by the Named Executive Officers and (ii) the number and
value of unexercised stock options held by the Named Executive Officers as of
December 31, 1998, assuming a value per share of Common Stock of $2.00 (the
closing sales price for the Common Shares as reported by the NASDAQ National
Market). All options are currently exercisable.

<TABLE>
<CAPTION>
                                                                       NUMBER OF SHARES             VALUE OF
                             NUMBER OF SHARES                             UNDERLYING              IN-THE-MONEY
                                ACQUIRED ON                           UNEXERCISED OPTIONS     UNEXERCISED OPTIONS
NAME                             EXERCISE         VALUE REALIZED     AT DECEMBER 31, 1998     AT DECEMBER 31, 1998
-------------------------   ------------------   ----------------   ----------------------   ---------------------
<S>                         <C>                  <C>                <C>                      <C>
Ezra Cohen ..............                  0            $ 0                192,140                  $ 16,705
David Djemal ............                  0            $ 0                101,290                  $ 14,255
Daniel Homsany ..........                  0            $ 0                101,290                  $ 14,255
Enrique P. Lacs .........                  0            $ 0                 72,950                  $ 10,400
</TABLE>

                                       35
<PAGE>

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
         AND MANAGEMENT

The following table sets forth, as of May 7, 1999, the beneficial ownership of
Common Shares by all current directors of the Company, all persons nominated to
become directors, all executive officers named in the "Executive Compensation"
section above, and by all directors and executive officers as a group.

<TABLE>
<CAPTION>
NAME                                                       NUMBER OF SHARES     PERCENT OF CLASS
-------------------------------------------------------   ------------------   -----------------
<S>                                                       <C>                  <C>
Ezra Cohen ............................................          275,514(1)           6.11%
Moises Ezra Cohen .....................................        1,833,110(2)          40.65%
David Djemal ..........................................          261,900(3)           5.81%
Michael G. Dowling ....................................           15,000(4)              *
Ezra Homsany Gateno ...................................          207,734(5)           4.61%
Daniel Homsany ........................................          261,900(3)           5.81%
Enrique P. Lacs .......................................           74,507(6)           1.66%
Leonard J. Sokolow ....................................           10,000(7)              *
All current directors and executive officers as a group
  (nine persons) ......................................        2,939,665(8)          65.19%

<FN>
 *  Less than 1%

(1) Includes options to purchase 192,140 shares.

(2) Includes options to purchase 10,000 shares.

(3) Includes options to purchase 101,290 shares.

(4) Includes options to purchase 15,000 shares.

(5) Includes options to purchase 189,360 shares.

(6) Includes options to purchase 72,950 shares.

(7) Includes options to purchase 10,000 shares.

(8) Includes options to purchase 690,030 shares.
</FN>
</TABLE>

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

None
    

                                       36
<PAGE>

                                    PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
         REPORTS ON FORM 8-K.

(A) (1) FINANCIAL STATEMENTS

Financial statements of the Company are set forth in Part II, Item 8.

(2) FINANCIAL STATEMENTS SCHEDULE

Schedule II -- Valuation and Qualifying Accounts for the years ended December
           31, 1998, 1997 and 1996 is set forth in Part II, Item 8.

(3) EXHIBITS

<TABLE>
<CAPTION>
                                                                                                     METHOD
EXHIBIT NO.       DESCRIPTION                                                                       OF FILING
---------------   ------------------------------------------------------------------------------   ----------
<S>               <C>                                                                              <C>
   3   (a)        Amended and Restated Memorandum of Association and Articles of Association       (2)
                  of the Registrant

   3   (b)        Amendment to Amended and Restated Memorandum of Association and                  (3)
                  Articles of Association

   4   (a)        Form of Warrant Agreement                                                        (1)

   4   (b)        Amendment to Warrant Agreement                                                   (5)

   4   (c)        Second Amendment to Warrant Agreement                                            (6)

  10.1            Amended and Restated Stock Option Plan                                           (6)

  10.2            Retirement Agreement dated February 26, 1996 with Moises Ezra Cohen              (5)

  10.3            "Poliza de Credito" from "Banco Exterior" dated January 27, 1992 (with           (1)
                  accompanying English summary)

  10.4            "Poliza de Credito" from "Banco Exterior" dated September 4, 1991 (with          (1)
                  accompanying English summary)

  10.5            Confidentiality and Non-Competition Agreement of Enrique P. Lacs                 (1)

  10.6            "Permiso de Operacion 179" (with accompanying English summary)                   (1)

  10.7            Lease from Ezcony Trading Corporation to Hooters and Dreams, S.A. dated          (4)
                  March 18, 1994 (with accompanying English summary)

  10.8            Hamilton Bank Security Agreement made by Ezcony Trading Corporation              (5)

  10.9            Loan Contract (Line of Credit) with Banco de Iberoamerica (with English          (5)
                  summary)

  10.10           Addendum dated May 12, 1997 to the Distribution Agreement for Motorola           (7)
                  Cellular Products dated June 17, 1996 by and between King David Com.
                  Exportacao e Importacao Ltda. and Ezcony Interamerica Inc.

  10.11           Termination Agreement dated June 18, 1997 and Confidentiality and                (7)
                  Noncompetition Agreement by and between Ezcony Interamerica Inc. and
                  Subsidiaries and Ezra Homsany

  10.12           "Poliza de Credito" from "Banco Exterior" dated July 8, 1997 (with               (8)
                  accompanying English summary)

  10.13           "Poliza de Credito" from "The Chase Manhattan Bank" dated June 4, 1997 (with     (8)
                  accompanying English summary)
</TABLE>

                                       37
<PAGE>

<TABLE>
<CAPTION>
                                                                                                    METHOD
EXHIBIT NO.     DESCRIPTION                                                                        OF FILING
-------------   -------------------------------------------------------------------------------   ----------
<S>             <C>                                                                               <C>
10.14           "Poliza de Credito" from "Banco Confederado De America Latina, S.A." dated         (8)
                June 18, 1997 (with accompanying English summary)

10.15           "Poliza de Credito" from "Banco Panamericano, S.A." dated June 17, 1997 (with      (8)
                accompanying English summary)

10.16           Loan Contract (Line of Credit) with Banco de Iberoamerica (with accompanying       (8)
                English summary)

10.17           "Contrato de Compraventa De Acciones" dated September 2, 1997 (with                (8)
                accompanying English summary)

10.18           Contract for purchase of building from COFRISA dated July 28, 1997 (with           (8)
                accompanying English summary)

10.19           Credit Facility with Hamilton Bank dated December 30, 1998                         (8)

16              Accountant's letter                                                                (9)

22              List of subsidiaries                                                               (5)

23              Consent of McClain & Company, L.C.                                                 (8)

27.1            Financial Data Schedule                                                            (8)

99              Accountant's resignation letter                                                   (10)

<FN>
 (1) Incorporated by reference to Ezcony's Form F-1 dated May 21, 1992 (No.
     33-48061)

 (2) Incorporated by reference to Ezcony's Amendment No. 1 dated July 9, 1992
     to Ezcony's Form F-1

 (3) Incorporated by reference to Ezcony's Form 10-Q for the quarterly period
     ended September 30, 1994

 (4) Incorporated by reference to Ezcony's Form 10-K for the year ended
     December 31, 1994

 (5) Incorporated by reference to Ezcony's Form 10-K for the year ended
     December 31, 1995

 (6) Incorporated by reference to Ezcony's Form 10-K for the year ended
     December 31, 1996

 (7) Incorporated by reference to Ezcony's Form 10-Q for the quarterly period
     ended June 30, 1997

 (8) Incorporated by reference to Ezcony's Form 10-K405/A as filed with the
     Securities and Exchange Commission on April 28, 1998

 (9) Incorporated by reference to Ezcony's Form 8-K/A as filed with the
     Securities and Exchange Commission on December 18, 1998

(10) Incorporated by reference to Ezcony's Form 8-K as filed with the
     Securities and Exchange Commission on December 7, 1998
</FN>
</TABLE>

(b) Reports on Form 8-K

   The following reports on Form 8-K were filed in the last quarter of the
   period covered by this report:

   (1) Form 8-K dated December 2, 1998, as filed with the Securities and
       Exchange Commission on December 7, 1998

   (2) Form 8-K/A dated December 18, 1998, as filed with the Securities &
       Exchange Commission on December 21, 1998.

                                       38
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

                                 EZCONY INTERAMERICA INC.

Date: May 12, 1999
                                 By: /s/ EZRA COHEN
                                     -------------------------------------------
                                         Ezra Cohen
                                         Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
            SIGNATURE                               TITLE                        DATE
--------------------------------   --------------------------------------   -------------
<S>                                <C>                                      <C>
 /s/ EZRA COHEN                    Director, Chairman of the Board,         May 12, 1999
--------------------------------   President and Chief Executive Officer
 Ezra Cohen

 /s/ CARLOS N. GALVEZ              Acting Chief Financial Officer           May 12, 1999
--------------------------------     (Principal Financial and
 Carlos N. Galvez                    Accounting Officer)
 
/s/ MOISES EZRA COHEN              Director                                 May 12, 1999
--------------------------------
 Moises Ezra Cohen

 /s/ MICHAEL DOWLING               Director                                 May 12, 1999
--------------------------------
 Michael Dowling

 /s/ LEONARD J. SOKOLOW            Director                                 May 12, 1999
--------------------------------
 Leonard J. Sokolow

 /s/ EZRA HOMSANY GATENO           Director                                 May 12, 1999
--------------------------------
 Ezra Homsany Gateno

 /s/ ENRIQUE P. LACS               Director                                 May 12, 1999
--------------------------------
 Enrique P. Lacs
</TABLE>

                                       39