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

                                    FORM 10-K
       FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTIONS 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

       (MARK ONE)


     |X|  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
          EXCHANGE ACT OF 1934 For the Fiscal Year Ended December 31, 2001

                                       OR

     |_|  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
          EXCHANGE ACT OF 1934 For the Transition Period from ____ to ____


                         COMMISSION FILE NUMBER: 0-5860
                          ----------------------------

                               RECOTON CORPORATION
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

               NEW YORK                                 11-1771737
   (STATE OR OTHER JURISDICTION OF                    (IRS EMPLOYER
   INCORPORATION OR ORGANIZATION)                   IDENTIFICATION NO.)

                  2950 LAKE EMMA ROAD, LAKE MARY, FLORIDA 32746
          (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)

       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (407) 333-8900

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

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

                          COMMON SHARES, $.20 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
reporting 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 the 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. |_|

     State the aggregate market value of the voting stock held by non-affiliates
of the registrant. The aggregate market value shall be computed by reference to
the price at which the stock was sold, or the average bid and asked prices of
such stock, as of a specified date within 60 days prior to the date of filing:
$51,717,352 based on the closing price on the Nasdaq Stock Market of $4.76 as of
February 28, 2002. 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 persons are, in
fact, affiliates of the registrant.

     Indicate the number of shares outstanding of each of the registrant's
classes of common stock as of the latest practicable date: 12,305,017 common
shares as of March 15, 2002.

                       DOCUMENTS INCORPORATED BY REFERENCE

     Portions of the definitive Proxy Statement to be filed with the Securities
and Exchange Commission (the "Commission") with respect to the registrant's
Annual Meeting of Shareholders to be held in 2002 (the "2002 Proxy Statement")
are incorporated by reference into Part III of this Form 10-K

<PAGE>

                                     PART I

ITEM 1.  BUSINESS

THE COMPANY

     We are a global leader in the development and marketing of consumer
electronic accessories, audio products and gaming products. Our more than 4,000
products include highly functional accessories for audio, video, car audio,
camcorder, multi-media/computer, home office and cellular and standard telephone
products, as well as 900MHz wireless technology products including headphones
and speakers; home, mobile and marine audio products including high fidelity
loudspeakers, home theater speakers and car audio speakers and components; and
accessories for video and computer games.

     We classify our business into three principal segments:

     o    CONSUMER ELECTRONICS ACCESSORIES BUSINESS. This segment consists of
          Recoton Accessories, Inc.; Recoton (Hong Kong) Limited, a Hong Kong
          distributor of all Recoton products; AAMP of Florida, Inc., a
          distributor of car audio installation products; Recoton (UK) Limited ,
          a United Kingdom distributor of consumer electronics accessories; and
          Recoton Canada Ltd., a Canadian distributor of Recoton products.
          Accessory products sold include TV antennas; music, camcorder, and
          photo storage cases; stereo headphones; universal remote controls;
          other accessories for home and mobile audio, camcorder, cellular and
          standard telephone, music, video, satellite, digital, computer and
          home office products; and products utilizing 900 MHz and other
          wireless technology. These products are marketed under numerous brand
          names including JENSEN, ADVENT, AR/ACOUSTIC RESEARCH, RECOTON,
          DISCWASHER, STINGER, AMBICO, AAMP and ROADGEAR and, under license,
          SPRINT for telephone accessories.

     o    AUDIO BUSINESS. This segment consists of Recoton Audio Corporation and
          Recoton International Holdings, Inc. and their United States and
          European subsidiaries, which primarily sell home and mobile audio and
          video products. Products for the home, sold under the JENSEN, ADVENT,
          AR/ACOUSTIC RESEARCH and NHT(NOW HEAR THIS) brand names and under the
          MAGNAT and HECO brand names in Europe, include state-of-the-art
          high-fidelity stereo and home theater loudspeaker systems. Products
          for the automobile and marine aftermarket, sold primarily under the
          JENSEN, ADVENT, LINEAR RESEARCH, ROADGEAR and PHASE LINEAR brand names
          and MAGNAT and MACAUDIO brand names in Europe, include speakers,
          subwoofers, amplifiers, cassette receivers, equalizers, electronic
          crossovers, signal processors, CD players and changers, video monitors
          and installation accessories.

     o    VIDEO AND COMPUTER GAME BUSINESS. This segment consists of InterAct
          International, Inc. and its United States and Chinese subsidiaries.
          These include STD Holding Limited and its Hong Kong and Chinese
          subsidiaries, including our manufacturing operations which produce
          accessories to enhance the enjoyment of playing video and computer
          games as well as products for our other segments; InterAct
          Accessories, Inc., which distributes computer and video game
          accessories in the United States; and InterAct Canada, Ltd., which
          distributes computer and video games accessories in Canada. Products,
          sold primarily under the INTERACT and PERFORMANCE brands, include
          joysticks, controllers, game steering wheels, RF modulators, memory
          cards and other accessories, including our popular GAMESHARK, a device
          which assists game players to improve their play.

     Sales by of each of these segments as an approximate percentage of our
revenues from total net sales were as follows for the periods indicated:

                                        2001           2000         1999
                                        ----           ----         ----
Consumer Electronics                    38%            37%          34%
Audio                                   36             36           33
Video & Computer Game                   26             27           33

For further information about these segments, see Note K of the Notes to the
Consolidated Financial Statements.

     Our products are offered under a number of brand names, many of which are
recognized by consumers and which we believe are valued by our retail customers.
We sell ours products through consumer electronics retailers, mass merchants,
music and video retailers, office and computer products retailers, other
specialty retailers, drug store chains, home centers, e-commerce retailers,
direct mail merchants, TV shopping channels and warehouse clubs. We also sell
certain of our products to original equipment manufacturers. As a result of our
broad array of branded product offerings and our value-added marketing services,
such as customized merchandise planograms, inventory management and just-in-time
delivery, we believe that we are one of the few companies that can act as a
"one-stop shop" to retailers of consumer electronics. We believe that the
combination of our diverse product offerings, value-added marketing services and
multiple brand names has led to our holding leading market positions in key
product areas, which serves as a significant competitive advantage in the
consumer electronic products industry.

     We have grown as the consumer electronics industry has grown. Starting with
our formation in 1936 as a manufacturer of phonograph needles, we have kept pace
with the ever-changing needs of the consumer, expanding our product offerings as
the industry has evolved. From supporting the now-superseded or fading
technologies of phonographs, eight track cartridges, cassette tapes and citizen
band radios, we now provide products for current core technologies such as
digital versatile discs (DVDs), compact discs (CDs), MP3 players and video and
PC games as well as products for emerging technologies such as digital and high
definition television (HDTV) and mobile entertainment systems. We have also
benefited from the growth of home-based offices utilizing business technologies
such as computers and advanced telecommunications. Our product offerings have
expanded with the introduction of each of these new technologies. As each new
technology has emerged, we have found that the demand for our products has
increased, with our new products usually being additive to our business, rather
than immediately replacing older products. While consumers who acquire new
systems desire additional products to interconnect, accessorize or maximize
their new purchases, many of the older systems remain operational and consumers
still need to maintain, upgrade or integrate them.

     Two acquisitions have significantly changed our company profile. In 1995 we
acquired STD Holding Limited, a Hong Kong-based manufacturer of video and
computer game accessories such as joysticks and controllers primarily marketed
under the brand name INTERACT. As a result of this acquisition, we believe we
are now the world's largest third party supplier of video game accessories. In
1996 we significantly enhanced our international presence with the acquisition
of International Jensen Incorporated, now known as Recoton Audio Corporation, a
global developer and marketer of home and car stereo speakers, car stereos
including cassette and CD players and amplifiers sold under many well recognized
brand names including JENSEN, ADVENT, AR/ACOUSTIC RESEARCH, PHASE LINEAR and
NHT(NOW HEAR THIS) in the United States and MAGNAT and MACAUDIO in Germany. This
acquisition has made us one of the world's largest marketers of home speakers
and mobile audio speakers and electronics.

     The products which we sell, most of which are accessories or other products
purchased after a consumer has purchased a home or mobile entertainment system,
game system or information system, usually carry a higher margin for the
retailer than the hardware which comprises the basic system. Retailers therefore
have an incentive to aggressively market these types of products. For this and
other reasons, we have seen a growth in the floor space that retailers devote to
the sale of accessories. We anticipate continuation of this trend as the
consumer electronics industry is entering a new phase based on digitalization of
many of the prevailing technologies. We believe that DVDs are becoming the
prevailing media for at-home movie viewing and will continue to grow as the
superior viewing opportunities of digital television become prevalent. We also
anticipate a growing trend for add-on high quality speakers as digital
television monitors, which are often sold without speakers or only with modest
speaker capability, become the core of the home entertainment system. We
recognize the emergence of digital satellite radio as a new method of receiving
high quality commercial-free audio in vehicles as they travel from coast to
coast. We have created a number of receivers, under the JENSEN brand, to work
with the Sirius Satellite Radio system. We believe that additional growth
opportunities will emerge through the convergence of consumer electronics and
the computer, in both the home and car environment, and the growth of personal
communications equipment such as cell phones.

INDUSTRY OVERVIEW

     The consumer electronics market is large and diverse. It initially included
products such as phonographs, radios, home stereos and televisions. As a result
of the development of a variety of innovative technologies, it has evolved to
include compact disc players and recorders, camcorders, video cassette
recorders, digital video disk players, cellular and cordless telephones,
personal computers, video game systems, in-car entertainment systems, home
theaters, internet appliances and other home entertainment and home office
technologies.

     The consumer electronics market continues to experience rapid and frequent
changes. Advances in technologies for mature products such as televisions,
camcorders and telephones are leading to innovations resulting in such advances
as digital and high definition television, flat screen television and DVD
systems, which deliver ultra-high quality pictures and stereo sound, as well as
digital cameras and camcorders. In addition, there are new over-the-air delivery
systems for television and audio products, such as direct satellite broadcast
systems (sometimes referred to as DBS), and digital satellite-to-vehicle radio
services.

     The expansion of the consumer electronics market has resulted from changes
in consumer tastes, lifestyles and work habits. The emergence of home-based work
and the increasing popularity of telecommuting have driven the demand for
computers, personal digital assistants (PDAs) and telecommunications equipment
for home offices. Additionally, personal computers, fax machines and other
office technologies are increasingly being used for reasons not related to work.
The strong growth in enhanced home theater and in-car entertainment listening
and viewing environments has driven the demand for multimedia and video game
products. Many consumer electronic accessories are necessary to maintain and
operate consumer electronic products while others are used to expand, upgrade or
enhance the functionality of particular products.

     The nature of retail marketing for consumer electronics products has been
evolving in recent years. Traditional department stores have withdrawn from the
market while other types of retailers, such as large national consumer
electronics superstores, mass merchants, music and video retailers, office and
computer retailers, home centers, warehouse clubs and direct mail specialty
retailers, have become more prevalent. Simultaneously, more convenience stores
such as food and drug store chains are now carrying consumer electronics
products and accessories. In addition, internet retailers market consumer
electronic accessory products. We expect these trends towards both larger "big
box" discount stores and smaller size convenience-oriented local stores to
continue.

     As the market for core technologies is rapidly changing, the market for
accessories and other aftermarket products is rapidly expanding. This is due to
several reasons. Each new technology invites the consumer to purchase new
accessories. Consumers who acquire new systems desire additional products to
interconnect, accessorize or maximize their new purchases. New digital
technologies dictate that consumers purchase higher quality accessories such as
superior cables in order to get the best sight and sound quality from their
digital equipment. In addition, many of the older systems remain operational and
consumers still desire to maintain or enhance them and integrate them with the
newer systems. Gross profit margins realized by retailers on accessories are
typically higher than those on electronics components, while inventory costs and
floor space required to display and sell accessories are substantially less than
for equipment. Retailers recognize that having accessories available to offer
can encourage add-on sales to initial consumer electronics purchases, lead to
impulse purchases by customers browsing in their store and encourage repeat
visits to their store by consumers.

     We believe that retailers are increasing their efforts to market
accessories and other aftermarket products such as speakers, multimedia products
and electronic game products. Retailers are increasing floor space allocated to
these products, enhancing their in-store staffing and merchandising and spending
more on advertising and promotion for these products. We believe that in order
to achieve greater purchasing and operating economies and to reduce costs,
retailers are consolidating their relationships with suppliers that sell a broad
assortment of consumer electronics accessories, provide timely product
availability and offer strong merchandising support.

PRODUCTS

     We offer an extensive line of over 4,000 consumer electronics products for
home and mobile aftermarket use. Our products are offered under a number of
well-recognized brand names. These products are positioned, packaged and priced
to appeal to a broad range of retailers and consumers.

     CONSUMER ELECTRONICS ACCESSORIES

     We sell a broad line of consumer electronic accessory products to
interconnect, accessorize and maximize the enjoyment of various consumer
electronics products and systems. These include indoor and outdoor TV antennas;
audio, CD/audio and/or cassette accessories; DVD accessories; camcorder and
video accessories; music, camcorder and photo carrying and storage cases;
cellular and other telephone accessories; headphones; satellite and digital
accessories; mobile audio accessories; remote controls; and computer and home
office accessories, including surge protection devices, connection cables, disc
and disc drive cleaning products, dust covers, copy holders and mouse and wrist
pads. We market these accessory products under many brand names, including
ADVENT, AMBICO, AR/ACOUSTIC RESEARCH, DISCWASHER, INTERACT, JENSEN, RECOTON,
ROAD GEAR and STINGER, depending on the product category. We are licensed to
sell telephone accessories under the SPRINT brand name. We also sell a
proprietary line of wireless products, including stereo headphones, amplified
speaker systems, video broadcast systems and portable indoor/outdoor
weather-resistant speakers. These patented products, sold under the ADVENT and
JENSEN brand names, use 900 MHz and other FM frequencies to transmit pictures
and sound signals from a TV, VCR, cable box, satellite box, computer, stereo or
sound system through walls, floors and ceilings to stereo headphones, amplified
indoor/outdoor loudspeakers or other television sets within 150 feet. We believe
that we are a leading supplier of consumer electronics accessories.

     AUDIO PRODUCTS

     We sell audio products for home and aftermarket car, marine and other
mobile use. Products for home use include technologically advanced high-fidelity
stereo and home theater loudspeaker systems sold primarily under the ADVENT,
AR/ACOUSTIC RESEARCH, JENSEN and NHT(NOW HEAR THIS) brand names domestically and
the MAGNAT and HECO brand names in Europe. Mobile products include speakers, CD
players and changers, MP3 players, cassette radios, receivers, subwoofers,
satellite radio receivers, amplifiers, equalizers, video monitors and tuners,
car installation accessories and marine audio products, sold primarily under the
ADVENT, JENSEN, LINEAR RESEARCH, ROAD GEAR and PHASE LINEAR brand names
domestically and the MAGNAT and MACAUDIO brand names in Europe. Each of our
speaker brands is positioned to reach a different target consumer, from entry
level to audiophile. We believe we are a leading marketer of high-fidelity
speakers and other audio products for the home and mobile markets.

     VIDEO AND COMPUTER GAME PRODUCTS

     We design, manufacture and sell video and computer game accessories, one of
the fastest growing sectors of the consumer electronics industry. These include
controllers, joysticks, steering wheels and other accessories, including the
popular GameShark devices that are used to enhance a player's enjoyment of video
and computer games and are or will be shortly available for all platforms.
GAMESHARK contains hundreds of codes to give the players tips on how to improve
their performance with many of the most popular games. These products are sold
primarily under our INTERACT and PERFORMANCE brand names. We sell some of our
game products under license from MICROSOFT X-BOX and a steering wheel under an
endorsement license from DALE EARNHARDT, JR.. We believe that we are the largest
third-party supplier of accessory products for video and computer games.

CUSTOMERS AND DISTRIBUTION

     We seek to provide consumers with access to our products globally through
multiple distribution channels and at multiple price points. These distribution
channels include consumer electronics retailers, music and video retailers,
office and computer product retailers, other specialty retailers, mass
merchants, drug store chains, home centers, e-commerce retailers, direct mail
merchants, TV shopping channels and warehouse clubs. We have a strong and
diverse customer base of more than 1,000 retail customers, which we believe have
more than 30,000 storefronts.

     We also sell private label or branded accessories products to original
equipment manufacturers (sometimes referred to as OEMs). These products include
video, CD and telephone accessories, loudspeakers and wireless products. We also
operate two factory outlet stores, located in Florida and Arizona.

     During the past five years, we have expanded our sales outside of the U.S.,
especially in Europe and Canada. We also sell Asian-sourced products to OEM
customers around the world. We view our international customer base as an
important source for continued growth. See Note K of the Notes to Consolidated
Financial Statements for information with respect to our operations by
geographic area.

     We normally sell our products on a purchase order basis and do not
ordinarily have long term contracts with our customers. Our sales are reliant to
a great extent on our ability to influence the allocation of retail shelf space
by retailers far in advance of the placement and shipment of orders for our
products. Because it is our practice to maintain sufficient inventory of
finished goods and components to fill orders promptly, we do not believe the
level of backlog is significant and do not consider it to be an important
predictor of future performance.

     Wal-Mart Stores and Best Buy are significant customers. Net sales to
Wal-Mart Stores, including its Wal-Mart and Sam's operations, exceeded 10% of
total net sales in each of 1999, 2000 and 2001 and net sales to Best Buy,
including its Musicland and Future Shop operations, exceeded 10% of total net
sales in 2000 and 2001. No other customer represented greater than 10% of the
Company's net sales in 1999, 2000 or 2001.

SALES, MARKETING AND SUPPORT

     We develop strong relationships with a broad array of retailers as part of
our marketing strategy. We seek to establish "partnership" relationships with
our customers by offering them "one stop shopping" for a wide variety of
consumer electronics products. We aim to attract and support customers who are
consolidating their vendor relationships to achieve greater purchasing and
operating economies. We market our products through multiple retail channels. We
offer extensive marketing, inventory management and customer support services.
These services include consumer support programs, distinctive packaging, drop
shipping, electronic data interchange, extensive product promotion, in-store
inventory management, pre-ticketing services and in-store product displays and
training.

     We further support our products by advertising in leading trade and
consumer publications, participating in trade shows and engaging in a wide
variety of regional promotions and sales incentive programs. We also advertise
and provide support for both our customers and consumers through numerous
Internet web sites, including WWW.RECOTON.COM, which is our homepage. In
addition, our InterAct subsidiary maintains its WWW.GAMESHARK.COM website, which
we believe is one of the most popular sites for video gamers. Information
contained on our websites is not to be considered a part of this annual report.
We have included these website addresses only as an inactive textual reference
and do not intend them to be active links to our websites.

     We utilize a worldwide network of sales executives, regional managers,
independent sales representatives and exclusive distributors. We compensate our
independent sales representatives on a commission basis. Regional sales
personnel work in the field with our customers and independent sales
representative organizations. We also maintain a toll-free support center to aid
consumers in the U.S. and Canada.

     In order to meet customer needs for just-in-time delivery, we generally
carry significant inventory in the products that we offer. This increases our
capital requirements. We generally bill customers at normal trade terms. With
the exception of our inventory and billing practices, we do not have any
extraordinary working capital requirements.

RESEARCH AND PRODUCT DEVELOPMENT

     Our research and development efforts are primarily oriented towards meeting
consumers' desires for changing products to accessorize or supplement existing
and new consumer electronics technologies. In order to remain a leader in the
consumer electronics after-market, we review our product lines to identify new
accessories for introduction as new consumer products are introduced. These
efforts focus primarily on improving existing products and developing similar
products in other emerging categories.

     We maintain research and development facilities for our consumer
electronics accessories business in Florida, for our audio business in Florida,
California, Germany and Hong Kong and for our video and computer game business
in Hong Kong and mainland China. From time to time we utilize selected outside
engineering services.

     Research and development efforts for video and computer game products
include producing new gaming and sound-related products to enhance the video
game experience and entertainment applications for multimedia personal
computers. We have developed additions to our line of accessories for use with
the Sony PlayStation 2, Microsoft's X-Box and Nintendo's Game Cube and GameBoy
Advanced platforms.

     Significant efforts to produce new and advanced loudspeaker systems include
the redesigning of the speaker lines sold under the ADVENT, AR/ACOUSTIC
RESEARCH, JENSEN and NHT brands in the United States and MAGNAT and HECO in
Europe.

     900 MHz wireless technology products in development include advanced
headphones and/speakers for use with home theater systems and in-car
entertainment systems. We are also engaged in customer-funded R&D efforts
including new products for Sirius Radio Inc.'s 100 channel digital
satellite-to-vehicle subscription radio service.

     Our use of in-house industrial designers, software developers and engineers
and other capabilities have been a major strength in obtaining and increasing
our original equipment manufacturing business with other consumer electronics
companies. Through our continual product development efforts, we believe that we
have been able to establish new retail accounts, enhance existing customer
relationships and attract a growing base of OEM customers.

     Our expenditures for research and development were approximately $5.9
million in 1999, $6.1 million in 2000 and $4.8 million in 2001.

PRODUCTION AND SUPPLY

     We utilize our Chinese manufacturing facilities, as well as third-party
manufacturers or suppliers located primarily in China, to produce most of our
products or the components required for our products. Many of our video and
computer game accessories are sourced from our Chinese manufacturing facility.
This facility is also being used to manufacture universal TV remote controls
and wireless 900 MHz headphones. We also assemble products in the U.S. at our
Florida and California facilities with products or components provided by our
own production facilities and third-party manufacturers.

     Most of our products use standard parts and components that we can purchase
from multiple sources. In a few instances, however, components or products are
sourced from one or a small number of suppliers. Alternative sources are
available for all such products.

     While we do not have guaranteed supply arrangements with any of our
suppliers, we have never experienced an inability to obtain necessary components
or other raw materials. We believe that our sourcing and supply of components
and other raw materials are adequate for our needs. No single third-party vendor
or group of related vendors has provided more than 10% of our raw material and
component purchases in any of the years 1999 through 2001. We coordinate most of
our offshore third-party sourcing for the North American market through our Hong
Kong facilities and with our buying agents. These agents coordinate information
flows with suppliers, provide translation services, conduct quality control
inspections and oversee shipping. Our volume allows us to consolidate shipments
and obtain preferential shipping rates. However, it has been necessary from time
to time to utilize more expensive air shipments in order to meet our customers'
time sensitive needs.

MANAGEMENT INFORMATION SYSTEMS

     We believe that advanced information processing is important in order for
it to maintain our competitive position. We have management information systems
which run substantially all of our principal data processing and financial
reporting software applications.

     In 1999 we performed a complete management information system review for
the purpose of planning and considering whether to implement such a system and
in 2000 we selected mySAP.com from SAP America, Inc. as the e-business
infrastructure to consolidate systems and streamline business processes across
the globe. In August 2001 the first phase (for North America) of our new global
enterprise resource planning system became operational. The system is intended
to fully integrate functions such as finance, manufacturing, distribution and
inventory management. The system started operations in China in January 2002.
The new system is currently expected to be fully operational in Europe by June
2002 (although it is not expected to be fully operational in Italy until 2003)
and Asia by July 2002.

     We are planning to utilize the new enterprise resource planning system to
help manage our various businesses and connect our global operations, with the
aim of reducing information processing costs and improving collaboration between
our personnel and with others. We intend to utilize the Internet to redesign our
business processes to address our needs and the needs of our customers and
business partners. When the new enterprise resource planning system is fully
implemented, we should be able to consolidate and upgrade all of our data
systems to one common e-business platform so that we can tighten our ability to
coordinate our businesses around the globe and generate necessary information on
a more timely and consistent basis.

     The entire cost of the project, including software licensing, hardware,
consulting and related expenses, is currently estimated to be approximately
$19.7 million. We are financing the majority of such costs through capital
leases and other financing mechanisms not involving our long term credit
facilities.

COMPETITION

     The consumer electronics market is highly fragmented and subject to intense
competition. Our competitors by segment include:

     o    CONSUMER ELECTRONICS ACCESSORIES: Allsop, Belkin, Fellows,
          Gemini/Philips/Zenith, Jasco/GE, Labtec, Sony and Thomson/RCA;

     o    AUDIO: Bose, Boston Acoustics, Harman International and Polk for home
          audio products and Alpine, Audiovox, Kenwood, Pioneer, Rockford and
          Sony for mobile audio products; and

     o    VIDEO AND COMPUTER GAME: Logitech, MadCatz, Microsoft, Nintendo,
          Pelican, Sony and Thrustmaster.

     Competition is based primarily on brand name reputation; product variety,
features and reliability; customer service and support; the ability to meet
customer delivery needs; price; and the proprietary nature of certain products.
We believe that we compete favorably with respect to these factors. Shelf space
(both in terms of quantity and desirability of location) is a key factor in
determining sales of consumer electronics products. Retailers frequently
allocate their shelf space based on the same factors they use to determine the
products they purchase.

TRADEMARKS AND PATENTS

     We believe that we have established a high level of brand name recognition
with our customers and consumers. As a result of our own product development and
acquisitions, we have over 100 United States and foreign patents, including
patents on our 900 MHz wireless products, speakers, headphones, surge
protectors, CD-to-cassette adapter, antennas, connectors and adapters to
eliminate tangles in coiled telephone cords. Additionally, we have various
patents pending including applications relating to wireless audio products and
car stereos and routinely apply for patents on new products as they are
developed. We do not consider any single patent essential to our current
business.

     We have licensed from other companies use of their trademarks in connection
with certain of our products. These currently include SPRINT for phone
accessories and MICROSOFT for X-Box related video game products. We also license
to others certain of our trademarks, including JENSEN, ADVENT and ACOUSTIC
RESEARCH, and certain of our patents.

     We attempt to protect our proprietary information under domestic and
international patent, copyright and trade secret laws and through the use of
other safeguards. We occasionally receive communications from others asserting
that some of our products may be covered by such parties' patent or intellectual
property rights. We believe that our products do not infringe on the
intellectual property rights of any third parties.

     AAMP OF AMERICA (TM), ADVENT(R), AMBICO(R), AR(R)/ACOUSTIC RESEARCH(R),
DISCWASHER(R), GAMESHARK(R), HECO(R), INTERACT(R), JENSEN(R), LINEAR
RESEARCH(R), MACAUDIO(R), MAGNAT(R), NHT(R) (NOW HEAR THIS(TM)), PERFORMANCE(R),
PERIPHERAL(TM), PHASE LINEAR(R), RECOTON(R), ROAD GEAR(R) and STINGER(R) are
trademarks of Recoton Corporation or its subsidiaries. Dale Earnhardt, Jr. (R),
MICROSOFT X-BOX(R) and SPRINT(R) are marks of other companies licensed for use
in connection with specific products manufactured by or for Recoton Corporation
or its subsidiaries.

EMPLOYEES

     At December 31, 2001, we had approximately 3,354 employees worldwide, of
which approximately 200 were employed by the accessories segment, 262 were
employed by the audio segment, 1,960 were employed by the video and computer
game segment and 932 were employed by the shared services division of Recoton
Corporation, which services all three of our segments. The number of employees
employed at the Chinese manufacturing facility fluctuates significantly on a
seasonal basis.

     Approximately 573 employees at the Lake Mary, Florida premises are covered
by a collective bargaining agreement with the Glass Molders, Pottery, Plastics &
Allied Workers International Union, which expires on August 3, 2003. As Florida
is a "right to work" state, only approximately 16 employees are currently
members of the union. Approximately 70 employees in Canada are covered by a
collective bargaining agreement with the National Automobile, Aerospace,
Transportation and General Workers Union, which expires on August 10, 2002. We
consider our employee relations to be good.

REGULATORY AND ENVIRONMENTAL MATTERS

     We are subject to regulation by the U.S. Federal Communications Commission
with respect to our wireless transmitting devices and some of our computer and
video game accessories and mobile audio products and by the Center for Devices
and Radiological Health of the U. S Food and Drug Administration with respect to
lasers in CD players, and by comparable agencies in other jurisdictions.

     With operations in numerous jurisdictions, we are subject to many national,
state and local laws of general business applicability. These include laws
regulating occupational, health and safety and the work place environment;
discrimination and sexual harassment; removal or remediation of hazardous
substances; the importation and exportation of products; the marketing,
advertising and sale of goods; customs and foreign trade; and payments to
foreign governments and their officials. Additional laws may be enacted from
time to time which may adversely impact us. Under various national, state and
local environmental laws and regulations, a current or previous owner or
operator (including a lessee) of real property may become liable for the cost of
removal or remediation of hazardous substances on such property. Such legal
requirements often impose liability without regard to fault. We have not been
notified of, and are not aware of, any environmental liability in connection
with our leased and owned facilities.

SEASONALITY

     Our results of operations are subject to the seasonality of the consumer
electronics industry and, as a result, net sales and net income have on a
historical basis been substantially greater during the third and fourth quarters
of each year, as our retail customers increase their inventories in anticipation
of the year-end selling season, than during the first two quarters. Our results
of operations may also fluctuate on a quarterly basis due to product sales mix
and the timing of significant orders, new product introductions and
acquisitions.

EXECUTIVE OFFICERS

     The following table sets forth the name, age and position of each of our
executive officers as of December 31, 2001 and their business experience,
principal occupations and employment during at least the last five years. The
executive officers of the Company are appointed by, and serve at the discretion
of, the Board of Directors.


Name and Current Position
(End of Term as Director)                    Age and Business History
-------------------------                    ---------------------------

Robert L. Borchardt,                    Mr. Borchardt, 63, has served
  Chairman, President, Chief            as a director of Recoton since 1964, as
  Executive Officer and a               President since 1976, as Chief Executive
  Director (2002)                       Officer since 1996 and as Chairman since
                                        1998. He previously served as
                                        Co-Chairman from 1992 until 1998 and
                                        Co-Chief Executive Officer from 1992
                                        until 1996. He is currently Chairman of
                                        the Board of Governors of the
                                        Electronics Industries Alliance, the
                                        immediate past Chairman and currently on
                                        the Executive Board of the Consumer
                                        Electronics Association, a division of
                                        the Electronic Industries Alliance, and
                                        a trustee of the Electronics Industries
                                        Foundation.


Stephen Chu,                            Mr. Chu, 44, has served as
  Managing Director of STD              President and a Managing Director of STD
  Holding Limited                       and of its various subsidiaries since
                                        1990. STD was acquired by the Company in
                                        1995. He was a director of Recoton from
                                        1997 until 1999.

Tracy Clark,                            Ms. Clark, 41, has served as
  Vice President-Accounting             Vice President-Accounting and as Chief
  and Chief Accounting Officer          Accounting Officer since 1999. She was
                                        previously Assistant Vice
                                        President-Corporate Accounting from 1997
                                        until 1999 and a Senior Accountant from
                                        1995 until 1997.

Craig W. Dykes,                         Mr. Dykes, 43, has served as
  Senior Vice President-                Senior Vice President-Information
  Information Systems and               Systems and as Chief Information Officer
  Chief Information Officer             since 1999. He previously served as Vice
                                        President-Information Systems from 1991
                                        until 1999.

Peter M. Ildau,                         Mr. Ildau, 63, has served as
  Vice President-Corporate              Vice President-Corporate Communications
  Communications                        since 1993.

Arnold Kezsbom,                         Mr. Kezbom, 49, has served as
  Senior Vice President-                Senior Vice President- Finance, as
  Finance, Treasurer, Chief             Treasurer and as Chief Financial Officer
  Financial Officer and a               since 1999 and as a director of Recoton
  Director (2004)                       since 2001. He previously served as Vice
                                        President-Financial Planning from 1995
                                        until 1999.

Joseph H. Massot,                       Mr. Massot, 57, has served as
  Senior Vice President-                Senior Vice President-Administration and
  Administration and Human              Human Resources since 1999, as Secretary
  Resources, Secretary and a            since 1999 and as a director of Recoton
  Director (2002)                       since 1985. He previously served as
                                        Principal Accounting Officer, Vice
                                        President and Treasurer from 1989 until
                                        1999.

Richard D. Miller,                      Mr. Miller, 39, has served as
  Vice President-Compliance             Vice President-Compliance since 1995.

Stuart Mont,                            Mr. Mont, 61, has served as a
  Executive Vice President,             director of Recoton since 1975, as
  Chief Operating Officer and           Executive Vice President since 2000 and
  a Director (2002)                     as Chief Operating Officer since 1993.
                                        He previously served as Executive Vice
                                        President-Operations from 1992 until
                                        2001, Chief Financial Officer from 1992
                                        until 1999 and Secretary from 1989 until
                                        1999.

Dennis P. Wherry,                       Mr. Wherry, 56, has served as
  Executive Vice President-             Executive Vice President-General Manager
  General Manager,                      of Recoton's Shared Services Division
  Shared Services Division              since 1999. He previously served as
                                        Senior Vice President-Operations from
                                        1993 until 1999.

ITEM 2.  PROPERTIES.

     We consider our facilities to be modern, well maintained and suitable for
their present and intended purposes at the current level of operations.

       CORPORATE OPERATIONS AND CONSUMER ELECTRONICS ACCESSORIES BUSINESS

     Our principal executive office and the principal manufacturing, assembling,
packaging, R&D, warehousing and distribution operations for our consumer
electronics accessories business are located in Lake Mary, Florida, a suburb of
Orlando. Operations at this facility include light assembly, molding and
packaging. The Lake Mary complex, which we own, consists of two buildings
totaling approximately 763,000 square feet situated on two nearby parcels
totaling approximately 43 acres.

     AUDIO BUSINESS

     Our domestic audio business is based in our Lake Mary, Florida facility.
Additionally, we maintain a leased facility in Benecia, California of
approximately 100,000 square feet, which includes facilities for audio research
and development, manufacturing and distribution of accessories and speakers. The
lease runs through December 31, 2002 with a five year renewal option, at an
aggregate annual rent of approximately $573,696, subject to annual adjustments.
The European home and car audio business is based in leased facilities in
Pulheim, Germany totaling approximately 13,121 square meters (141,234 square
feet). The German leases run through April 2008, at an aggregate annual rent of
approximately $865,000, subject to adjustment.

     VIDEO AND COMPUTER GAME BUSINESS

     The administrative, sales, engineering and R&D operations for our game
segment are located in an owned facility in the New Territories of Hong Kong and
total approximately 15,800 square feet. Our rights on the underlying land runs
through June 2047; if the land grant is not renewed at that time, both the land
and the rights to owned space will revert to the government without any
compensation to us. We also lease two nearby facilities aggregating
approximately 11,800 square feet under short term leases with rent aggregating
approximately $81,800. The corporate office for our U.S. game business operated
under the name InterAct is located in leased facilities near Baltimore, Maryland
totaling approximately 14,795 square feet, which lease runs until October 2010
at an annual rental of approximately $259,000, subject to annual adjustments.
InterAct also maintains certain operations in our Lake Mary facility and leases
a warehouse, assembly and packaging facility near Lake Mary totaling
approximately 144,000 square feet at an annual rent of approximately $704,000.
We do not anticipate any difficulty obtaining renewals of these leases or
additional nearby space if necessary.

     The manufacturing facility for the game segment consists of numerous
separate contiguous or near-by facilities owned or leased by us, aggregating
approximately 472,000 square feet, located in Shenzhen, a special economic zone
of the Guanzdong Province of China near Hong Kong. The plant includes eight
production lines, plastics injection facilities and metal works and dormitory
facilities. Video games and computer accessories, as well as other Recoton
products including multimedia speakers, universal TV remote controls and
wireless headphones, are manufactured at this facility. In 1997, the facility
was certified as conforming to the requirements of ISO 9001 by the International
Standards Organization. The owned portion consists of five manufacturing floors
in an industrial building aggregating approximately 44,000 square feet. The
Chinese government has granted us the right to use the land on which the owned
facility is located until July 2025; if the land grant is not renewed, both the
land and the rights to owned space will revert to the government without any
compensation to us. The leased portion consists of additional manufacturing,
warehouse and dormitory facilities aggregating approximately 428,000 square
feet. These leases are generally short term, and aggregate rentals for the
leased facilities total approximately $707,000 per year. We do not anticipate
any difficulty obtaining renewals of these leases or additional nearby space if
necessary.

     ADDITIONAL FACILITIES

     We have additional leased facilities elsewhere in the United States. These
include corporate office, sales, marketing, warehouse and/or research &
development facilities in or near New York, New York; Bentonville, Arkansas;
Lake Mary and Clearwater, Florida; Novi, Michigan; Springfield, Missouri; Tempe,
Arizona; Sparks, Nevada; San Carlos and San Diego, California; and Bellevue,
Washington. Additional overseas facilities include office, sales, marketing,
warehouse and/or distribution facilities in Pickering, Ontario; Manchester and
London, England; Milan, Italy; Tokyo, Japan; and Hong Kong, China. If the leases
for these facilities could no longer be maintained, alternative replacement
facilities could be obtained without any material financial impact on us.

ITEM 3.  LEGAL PROCEEDINGS.

     MATEEL ENVIRONMENTAL JUSTICE FOUNDATION V. SPRINT COMMUNICATIONS, ET. AL.
InterAct Accessories, Inc., four other named defendants (including Sprint
Communications, Koss Corporation and Conair Corporation) and "Does 1 through
100" were sued in June 2000 in the Superior Court of California for the County
of San Francisco. Mateel alleged that adequate warnings with regard to potential
exposure to lead had not been issued in accordance with California Health and
Safety Code Section 25249.6 (sometimes called Proposition 65) for products
containing electrical or data cords coated with polyvinyl chloride. We have
joined a joint defense group consisting of 22 companies sued or put on notice to
be sued. A trial date is currently scheduled for May 2002. The joint defense
group has conducted studies to assess the validity of the plaintiff's claim and
has entered into settlement discussions. We believe that any payment which we
may make under any settlement would not be material.

     LEMELSON MEDICAL EDUCATION & RESEARCH FOUNDATION, LIMITED PARTNERSHIP V.
ESCO ELECTRONICS CORPORATION, ET. AL. Recoton Corporation and 90 other
manufacturers or sellers of electronic or semiconductor products were sued in
2000 in the United States District Court for the District of Arizona by the
Lemelson Medical Education & Research Foundation, Limited Partnership for
alleged violation of various patents claimed to be owned by the Lemelson
Foundation related to machine vision and bar-code technology. The complaint
seeks damages in an unstated amount, injunctive relief and attorneys fees, among
other relief sought. Along with other defendants in this and other similar
actions, we are vigorously defending against the action. This and other suits
brought by the Lemelson Foundation were stayed in April 2001 pending further
developments in a lawsuit against the Lemelson Foundation by Symbol
Technologies, Inc. and others, including manufacturers of bar code scanners. In
that case the plaintiffs brought an action for a declaratory judgment that the
Lemelson patents are invalid, unenforceable and not infringed by the plaintiffs.
The basis of some of these claims was the Lemelson patents should be held
unenforceable for prosecution laches, in other words that the Foundation as the
patent applicant shouldn't be able to keep continuations pending in the patent
office in order to develop patent claims to commercial devices that develop.
While the trial court dismissed the laches claim, the U.S. Court of Appeals for
the Federal Circuit in January 2002 held that such claim could be asserted and
remanded the case back to the trial court for consideration of whether the facts
warrant a prosecution laches claim. Our case should remain stayed until the
Symbol Technologies case is resolved.

     Although we are from time to time involved in ordinary routine litigation
incidental to our business, we is not presently a party to any other legal
proceedings which, if determined adverse to us, would be expected, either
individually or in the aggregate, to have a material adverse affect on our
business or financial condition.

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

     Not applicable.


                                     PART II

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

     The Company's common shares are traded on the Nasdaq Stock Market National
Market System under the symbol "RCOT." The following table sets forth for the
periods indicated the high and low sale prices of such shares as reported on the
Nasdaq Stock Market since January 1, 2000:

<TABLE>
<CAPTION>

         Quarter Ended                                                        High               Low

              <S>                                                           <C>                  <C>
              2000
                    March 31....................................            $14.44               $8.81
                    June 30.....................................             11.75                8.00
                    September 30................................             16.19                8.88
                    December 31.................................             16.44                6.00

              2001
                    March 31....................................              15.13               7.69
                    June 30.....................................              19.75               9.01
                    September 30................................              21.00              11.00
                    December 31.................................              15.21              11.60

</TABLE>

     As of March 15, 2002, there were 456 record holders of the common shares.

     DIVIDEND POLICY. We have never paid cash dividends on our common shares and
do not anticipate paying cash dividends in the foreseeable future. Our policy
has been to retain all available earnings for the development and growth of our
business. Covenants in our current senior indebtedness preclude us from paying
dividends in cash or property other than for stock dividends. In deciding
whether to pay dividends in the future if the current covenants are modified or
eliminated, our Board of Directors will consider factors it deems relevant,
including our earnings and financial condition and our working capital and
capital expenditure requirements.

ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA.

     The following table sets forth our selected consolidated financial data as
of and for each of the years ended December 31, 1997, 1998, 1999, 2000 and 2001
which has been derived from our audited consolidated financial statements. SEE
FOOTNOTE (1) below. The selected consolidated financial data should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations," "Business--Acquisitions" and the consolidated
financial statements, notes thereto and other financial information included
elsewhere in this report.

<TABLE>
<CAPTION>

                                                                            YEAR ENDED DECEMBER 31,
                                                    -------------------------------------------------------------------------
                                                          1997            1998           1999          2000             2001
                                                          ----            ----           ----          ----             ----
                                                                     (IN THOUSANDS, EXCEPT PER SHARE DATA)
STATEMENT OF OPERATIONS DATA(1)
<S>                                                     <C>            <C>            <C>           <C>             <C>
Net sales........................................       $503,954       $703,538       $710,250      $649,295        $613,078
Cost of sales....................................        306,725        429,334        448,894       402,634         385,365
Gross profit.....................................        197,229        274,204        261,356       246,661         227,713
Selling, general and administrative expenses.....
                                                         176,701        231,190        247,764       210,371         205,439
Provision for U.S. customs settlement(2) ........             --         15,000             --            --              --
Restructuring charge.............................             --             --          3,444            --              --
Operating income.................................         20,528         28,014         10,148        36,290          22,274
Interest expense.................................         13,314         18,981         26,467        35,879          26,338
Amortization of financing costs..................            260            331          1,164         2,330           3,213
Investment income................................           (534)          (464)        (1,294)         (830)           (801)
Income (loss) before income taxes and
   extraordinary item............................          7,488          9,166        (16,189)       (1,089)         (6,476)
Income tax provision (credit)....................         (6,093)         4,836          3,076           794           1,080
Income (loss) before extraordinary item..........         13,581          4,330        (19,265)       (1,883)         (7,556)
Extraordinary item: loss on senior debt
   restructuring.................................         --             --             (8,765)       (2,953)            --
                                                         -------        -------          ------         -----           -----
Net income (loss)................................        $13,581         $4,330       $(28,030)      $(4,836)        $(7,556)
                                                         =======         ======          ======         =====           =====
Diluted income (loss) per share..................          $1.18           $.36         $(2.39)      $  (.41)          $(.63)
                                                         =======         ======          ======         =====           =====
Diluted weighted average shares .................         11,546         12,179         11,719        11,744          11,960


                                                                                 As of December 31,
                                                       ----------------------------------------------------------------------
BALANCE SHEET DATA:                                         1997           1998           1999          2000            2001
                                                            ----           ----           ----          ----            ----
Working capital..................................       $222,388       $178,295       $272,168      $258,562         237,945
Total assets.....................................        407,262        486,670        485,327       463,511         457,834
Short-term debt, including current
  portion of long-term debt......................         14,570        104,885         14,656        11,994          13,536
Long-term debt...................................        161,427        114,186        235,739       243,914         239,341
Shareholders' equity.............................        139,283        147,995        120,922       113,259         106,494

---------------

(1)  Data reflects sales, and any resulting profit and income (loss), resulting
     from acquisitions from the dates of such acquisitions. The following
     acquisitions occurred on the dates set forth below: International Jensen
     Incorporated: February 28, 1997; Capa Industries, Inc.: December 18, 1997;
     and AAMP of Florida, Inc.: November 19, 1997.

(2)  In the fourth quarter of 1998, the Company recorded $14.0 million for the
     then-expected global settlement of a pending customs investigation and
     related fees and costs of approximately $1.0 million. The classification of
     the accrual on the 1998 consolidated balance sheet was based on the
     expected periods of payment, subject to approval by the government. Such
     approval was obtained in 1999.

</TABLE>


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


     THE FOLLOWING DISCUSSION AND ANALYSIS SHOULD BE READ IN CONJUNCTION WITH
THE "SELECTED CONSOLIDATED FINANCIAL DATA" APPEARING ABOVE AND THE COMPANY'S
CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1999, 2000
AND 2001 APPEARING AT PAGES F-1 THROUGH F-31.

                                    OVERVIEW

     Recoton Corporation is a global leader in the development, manufacturing
and marketing of consumer electronic accessories, home and mobile audio products
and computer and video gaming products. Our diverse lines include accessories
for audio, video, car audio, camcorder, multi-media/computer, home office,
cellular and standard telephone products, satellite as well as 900MHz wireless
technology products including headphones and speakers; home, mobile and marine
audio products including high fidelity loudspeakers, home theater speakers and
car audio speakers and components; and accessories for video and computer games.
Our products are offered under various brand names including ADVENT, AMBICO,
AR/ACOUSTIC RESEARCH, DISCWASHER, GAMESHARK, HECO, INTERACT, JENSEN, LINEAR
RESEARCH, MACAUDIO, MAGNAT, NHT (NOW HEAR THIS), PHASE LINEAR, RECOTON, ROADGEAR
and STINGER.

                                     GENERAL

     NET SALES. Net sales consist of sales from our domestic and foreign
subsidiaries less returns and allowances and discounts on sales. We generate
sales through retailers and original equipment manufacturing (OEM).

     COST OF SALES. Cost of sales includes the cost of manufacturing,
distribution and warehousing; freight and duty; factory supplies and expenses;
and direct and indirect labor.

     SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses include variable expenses such as selling and shipping
expenses and fixed expenses such as research and development and office
expenses, including payroll and employee benefits, other than for production,
employment taxes, management information systems, marketing, insurance, legal,
and other corporate level expenses. Corporate level expenses are primarily
attributable to our corporate offices in Lake Mary, Florida and New York, New
York.

     RESTRUCTURING EXPENSE. During the third quarter of 1999, we began
implementation of a comprehensive strategic business plan geared towards
improving overall operations, cash flow and return on assets. The strategic plan
included a reduction of staff, consolidation of businesses, the reduction and/or
discontinuation of certain products and the sale of certain assets.
Approximately $17.6 million in charges were recorded in 1999 in conjunction with
the plan.

     INTEREST EXPENSE, NET. Interest expense, net of interest income, includes
interest relating to our credit facility, amortization of financing intangibles
and bank charges.

     SEGMENTS. We classify our operations into three principal segments. Each
segment's earnings before corporate interest and income taxes are reported to
our chief operating decision-makers. General corporate expenses other than
certain interest costs and certain amortization of financing costs have been
allocated to each segment on the basis used for internal management
decision-making purposes.

     We operates our business under three segments as follows:

     o    CONSUMER ELECTRONICS ACCESSORIES BUSINESS. Accessory products sold
          include TV antennas; music, camcorder, and photo storage cases; stereo
          headphones; universal remote controls; other accessories for home and
          mobile audio, camcorder, cellular and standard telephone, music,
          video, satellite, digital, computer and home office products; and
          products utilizing 900 MHz and other wireless technology. These
          products are marketed under numerous brand names including JENSEN,
          ADVENT, AR/ACOUSTIC RESEARCH, RECOTON, DISCWASHER, STINGER, AMBICO and
          ROADGEAR and, under license, SPRINT for telephone accessories. The
          percentage of our net sales by this segment were approximately 38% for
          the year ended December 31, 2001, 37% for the year ended December 31,
          2000 and 34% for the year ended December 31, 1999.

     o    AUDIO BUSINESS. This segment primarily sells home and mobile audio and
          video products. Products for the home, sold under the JENSEN, ADVENT,
          AR/ACOUSTIC RESEARCH and NHT (NOW HEAR THIS) brand names and under the
          MAGNAT and HECO brand names in Europe, include state-of-the-art
          high-fidelity stereo and home theater loudspeaker systems. Products
          for the automobile and marine aftermarket, sold primarily under the
          JENSEN, ADVENT, LINEAR RESEARCH, ROADGEAR and PHASE LINEAR brand names
          and MAGNAT and MACAUDIO brand names in Europe, include CD players and
          changers, cassette receivers, speakers, subwoofers, amplifiers,
          equalizers, electronic crossovers, signal processors, video monitors
          and installation accessories. The percentage of our net sales by this
          segment were approximately 36% for the years ended December 31, 2001
          and 2000 and 33% for the year ended December 31, 1999.

     o    VIDEO AND COMPUTER GAME BUSINESS. Products sold primarily under the
          INTERACT and PERFORMANCE brands include joysticks, controllers, game
          steering wheels, RF modulators, memory cards and other accessories,
          and our popular GAMESHARK, a device which assists game players to
          improve their play. The percentage of our net sales by this segment
          were approximately 26% for the year ended December 31, 2001, 27% for
          the year ended December 31, 2000 and 33% for the year ended December
          31, 1999.

                    CRITICAL ACCOUNTING POLICIES AND ESTIMATE

     The preparation of financial statements in conformity with generally
accepted accounting principles requires the appropriate application of certain
accounting policies, many of which require us to make estimates and assumptions
about future events and their impact on amounts reported in the financial
statements and related notes. Since future events and their impact cannot be
determined with certainty, the actual results will inevitably differ from our
estimates. Such differences could be material to the financial statements.

     We believe application of accounting policies, and the estimates inherently
required by the policies, are reasonable. These accounting policies and
estimates are constantly reevaluated, and adjustments are made when facts and
circumstances dictate a change. Historically, we have found the application of
accounting policies to be appropriate, and actual results have not differed
materially from those determined using necessary estimates.

     Our accounting policies are more fully described in Note A to the
consolidated financial statements, located elsewhere in this 10K. We have
identified certain critical accounting policies which are described below.

     MERCHANDISE INVENTORY - Our merchandise inventory is carried at the lower
of cost or market on a first-in, first-out basis. We write down inventory for
estimated obsolescence or unmarketable inventory equal to the difference between
the cost of inventory and the estimated market value based upon assumptions
about future demand and market conditions. If actual market conditions are less
favorable than those projected by management, additional inventory write-downs
may be required.

     ALLOWANCE FOR DOUBTFUL ACCOUNTS - We maintain an allowance for doubtful
accounts for estimated losses resulting from the inability of our customers to
make required payments. If the financial condition of our customers were to
deteriorate, resulting in an impairment of their ability to make payments,
additional allowances may be required.

     MARKET DEVELOPMENT ACCRUALS - We estimate expenses for customer programs
and incentive offerings including special pricing agreements, price protection,
promotions and other volume-based incentives. If market conditions were to
decline, we may take actions to increase customer incentive offerings possibly
resulting in an incremental expenses at the time the incentive is offered.

     LONG-LIVED ASSETS - In evaluating the fair value and future benefits of
long-lived asset, we perform an analysis of the anticipated undiscounted future
net cash flows of the related long-lived assets and reduce their carrying value
by the excess, if any, of the result of such calculation. We believe at this
time that the long-lived assets' carrying values and useful lives continues to
be appropriate. Future adverse changes in market conditions or poor operating
results of underlying investments could result in an inability to recover the
carrying value of the investments that may not be reflected in an investment's
current carrying value, thereby possibly requiring an impairment charge in the
future.

     DEFERRED TAX VALUATION ALLOWANCE - We record a valuation allowance to
reduce our deferred tax assets to the amount that is more likely than not to be
realized. While we have considered future taxable income and ongoing prudent and
feasible tax planning strategies in assessing the need for the valuation
allowance, if we were to determine that it would be able to realize our deferred
tax assets in the future in excess of its net recorded amount, an adjustment to
the deferred tax asset would increase income in the period such determination
was made. Likewise, should we determine that we would not be able to realize all
or part of our net deferred tax asset in the future, an adjustment to the
deferred tax asset would be charged to income in the period such determination
was made.

                              RESULTS OF OPERATIONS

     The following table sets forth our statement of operations data expressed
as a percentage of net sales for the periods indicated:

<TABLE>
<CAPTION>

                                                                                      Years ended December 31,
                                                                                      ------------------------
                                                                                        1999     2000     2001
                                                                                        ----     ----     ----
                  <S>                                                                    <C>        <C>     <C>
                  Net sales.......................................................       100%       100%    100%
                  Cost of sales...................................................      63.2(a)    62.0    62.9
                                                                                        ----      -----   ------
                  Gross profit....................................................       36.8       38.0    37.1
                  Selling, general and administrative expenses....................       34.9(b)    32.4    33.5
                  Restructuring charge............................................        0.5         -       -
                  Operating income................................................        1.4        5.6     3.6
                  Interest expense................................................        3.7        5.5     4.3
                  Amortization of financing costs.................................         .2        0.4     0.5
                  Investment income...............................................       (0.2)      (0.1)   (0.2)
                                                                                         ----       -----   -----
                  Loss before income taxes and extraordinary item.................       (2.3)      (0.2)   (1.0)
                  Income tax provision............................................        0.4        0.1     0.2
                                                                                         ----       -----   -----
                  Loss before extraordinary item..................................       (2.7)      (0.3)   (1.2)
                  Extraordinary item..............................................        1.2(c)     0.4(d)    -
                                                                                         ----       -----   -----
                  Net Loss........................................................       (3.9)%     (0.7)% ( 1.2)%
                                                                                         ----       -----   -----

               (a)  Includes $8,328,000 (1.2% of net sales) of inventory write
                    downs applicable to products which are being reduced or
                    eliminated.

               (b)  Includes $5,811,000 (.8% of net sales) applicable to the
                    value of assets to be sold and the valuation of related
                    receivables and other assets, and the costs of developing
                    the business plan and $1,200,000 (.2% of net sales)
                    associated with the costs of restructuring bank debt and
                    seeking alternative financing.

               (c)  Includes fees and other costs in connection with
                    restructuring of senior notes, which is treated as debt
                    extinguishments for accounting purposes.

               (d)  Includes fees and other costs in connection with the debt
                    refinancing and the extinguishment of the loans payable
                    pursuant to the prior year's Debt Restructuring.
</TABLE>


     The following table presents certain operating segment information for the
indicated year ended December 31 (further discussed in Note K of the Notes to
Consolidated Financial Statements):

<TABLE>
<CAPTION>

                                  (IN MILLIONS)

                                                     Consumer                          Video and
                                                     Electronics                       Computer
                                                     Accessories         Audio         Game
         2001                                        Business*           Business*     Business*
         ------------------                          ---------           ---------     ---------
         <S>                                          <C>                <C>              <C>
         Net sales...................                 $ 233.9            $ 222.9          $ 156.3
         Gross profit................                   102.7               76.0             49.0
         Income (loss) before income
           taxes, interest and
           unallocated expenses........                  24.8               14.7            (17.2)

         2000
         Net sales...................                 $ 238.3            $ 233.4         $  177.6
         Gross profit................                   100.4               81.6             64.7
         Income (loss) before income
           taxes, interest and
           unallocated expenses.......                   27.0               19.2             (9.9)

         1999
         Net sales...................                 $ 242.5            $ 234.9         $  232.9
         Gross profit**..............                    90.8               69.4            101.2
         Income (loss) before income
           taxes, interest and
           unallocated expenses***.......                 7.3               (4.9)             9.6

          (*)  Certain prior period amounts have been reclassified to conform to
               current period classifications.

          (**) Includes inventory write-downs in conjunction with the Strategic
               Plan aggregating approximately $2.3 million for the Accessories
               Business and $6.0 million for the Audio Business.

          (***) In addition to the inventory write-downs noted above, additional
               charges in conjunction with the Strategic Plan aggregating
               approximately $3.3 million for the Accessories Business, $4.1
               million for the Audio Business and $1.1 million for the Video and
               Computer Game Business.
</TABLE>


     The financial results of the reportable segments have been prepared using a
management approach, which is consistent with the basis and manner in which our
management internally aggregates financial information for the purposes of
assisting in making internal operating decisions. In this regard, certain
corporate expenses were allocated among subsidiaries for decision-making
purposes.

COMPARISON FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000

     Net sales for the year ended December 31, 2001 totaled $613.1 million, a
decrease of $36.2 million or 5.6% from sales for the year ended December 31,
2000 of $649.3 million. The decrease in sales is primarily attributable to lower
sales across all segments due to the general softening of the retail
environment, the transition of the video game industry and the tragic events of
September 11th. Sales by segment were as follows:

     o    Net sales for the consumer electronics accessory business for the year
          ended December 31, 2001 were $233.9 million, a decrease of 1.8%
          compared to $238.3 million for the year ended December 31, 2000. The
          decreases are primarily due to lower OEM sales and a decline in our
          consumer electronic sales in Europe.

     o    Net sales for the audio business for the year ended December 31, 2001
          were $222.9 million, a decrease of 4.5% compared to $233.4 million in
          the year ended December 31, 2000. The reduction is predominantly
          attributable to decreased sales in our mobile audio and home audio
          products as a result of the generally soft economic environment during
          fiscal 2001.

     o    Net sales for the video and computer game business for the year ended
          December 31, 2001 were $156.3 million, a decrease of 12.0%, compared
          to $177.6 million for the year ended December 31, 2000. These
          decreases are primarily attributable to an overall softer retail
          environment and the transition of the video game industry as new video
          game platforms were released in the second half of 2001 and video
          software titles for the new platforms were released thereafter.

     Gross margins for the year ended December 31, 2001 decreased to 37.1% from
38.0% for the year ended December 31, 2000. Gross margins by segment were as
follows:

     o    Gross margin for the consumer electronics accessories business
          increased to 43.9% for the year ended December 31, 2001 from 42.1% for
          the year ended December 31, 2000. These increases were mainly due to
          product mix and a decrease in OEM sales, which traditionally have a
          lower gross margin.

     o    Gross margin for the audio business decreased to 34.1% for the year
          ended December 31, 2001 from 35.0% for the year ended December 31,
          2000. This was a result of our efforts to decrease inventory levels of
          more mature products to prepare for the launch of newer models in the
          later half of fiscal 2001.

     o    Gross margin for the video and computer game business decreased to
          31.3% for the year ended December 31, 2001 from 36.4% for the year
          ended December 31, 2000. This was primarily due to the general
          transition of the video game industry and competitive pricing
          pressures, cost of air freighting goods for product launches and
          certain inherent inefficiencies.

     Selling, general and administrative expenses for the year ended December
31, 2001 decreased by approximately $4.9 million to $205.4 million from $210.4
million for the year ended December 31, 2000 and as a percent of sales increased
to 33.5% for the year ended December 31, 2001 from 32.4% for the year ended
December 31, 2000. The dollar decrease was mainly due to variable expenses as a
result of lower sales volume. Increases as a percent of sales for the year ended
December 31, 2001 compared to the year ended December 31, 2000 are reflective of
fixed costs being absorbed on lower sales volume.

     Operating income for the year ended December 31, 2001 was $22.3 million
compared to $36.3 million for the year ended December 31, 2000. The operating
income decrease was primarily attributable to losses in our video and computer
game business due to the transition of the industry. Sell through of older
platform inventories, new product development costs, cost of air freighting
third goods for product launches, K-Mart's bankruptcy, the high cost of
maintaining party market leadership and certain inherent inefficiencies in our
video game business. We have engaged the services of a financial consultant to
advise with respect to current operations with a view to increasing operating
income, especially in the video and game segment.

     Interest expense decreased by approximately $9.6 million to $26.3 million
for the year ended December 31, 2001 compared to $35.9 million for the year
ended December 31, 2000. The decrease was attributable to lower interest rates
and our present three-year $275 million senior credit facility which replaced
our prior senior debt facility at a lower overall cost of funds (see discussion
under "Liquidity and Capital Resources - Senior Loan Agreement").

     Amortization of financing costs increased to approximately $3.2 million for
the year ended December 31, 2001 compared to approximately $2.3 million for the
year ended December 31, 2000. This was mainly attributable to the debt
refinancing in October 2000.

     On a consolidated basis, the loss before income taxes for the year ended
December 31, 2001 was $6.5 million compared to a loss before income taxes of
$1.1 million reported for the year ended December 31, 2000.

     The following is a discussion, on a segment basis, of income or loss before
income taxes and unallocated expenses (which expenses consist primarily of
corporate interest and certain amortization of financing costs):

     o    Income before income taxes and unallocated expenses for the consumer
          electronics accessories business for the year ended December 31, 2001
          was $24.8 million compared to $27.0 million for the year ended
          December 31, 2000. The decrease is mainly due to a decrease in sales
          of OEM products offset in part by increased sales of accessories
          products.

     o    Income before income taxes and unallocated expenses for the audio
          business for the year ended December 31, 2001 was $14.7 million
          compared to $19.2 million for the year ended December 31, 2000. This
          decrease was primarily due to the general economic conditions and
          decreased gross profit as a result of the sale of more mature products
          during the first six months of 2001 to prepare for the launch of newer
          models in the later half of fiscal 2001.

     o    The loss before income taxes and unallocated expenses for the video
          and computer game business for the year ended December 31, 2001 was
          $17.2 million compared to $9.9 million for the year ended December
          31, 2000. The losses for the year were mainly due to the late launch
          (mid-November) of new video game machines, pricing pressures on
          products associated with older video game platforms, new product
          development costs, cost of air freighting goods for product launches,
          K-Mart's bankruptcy, the high cost of maintaining third party market
          leadership and certain inherent inefficiencies.

     In recent years, our income taxes and effective consolidated income tax
rate have been materially affected by changes in the proportion of domestic and
foreign earnings. While earnings from operations in North America and Western
Europe are primarily taxed at or above United States income tax rates, earnings
from our Asian operations are taxed at a current maximum rate of 16.0%. However,
the actual tax rate from Asian operations is dependent upon the proportion of
earnings from mainland China. Our income tax provision for 2001 and 2000 is the
result of a mix of foreign and domestic earnings and additional U.S. income
taxes on repatriated foreign earnings. This resulted in a net income tax
provision of $1.1 million for the year ended December 31, 2001 and $794,000 for
the year ended December 31, 2000. We currently estimate that the balance of our
Asian retained earnings will remain indefinitely invested. Such estimate is
subject to future revision based upon such factors as the results of domestic
operations, ability to borrow or otherwise obtain funds to finance operations,
market conditions in the consumer electronics industry and general economic
conditions in the United States and in Asia.

     Comprehensive loss is comprised of the net loss and foreign currency
translation adjustments. As a result of fluctuations in the value of the U.S.
dollar in relation to the Euro and British pound currencies for the year ended
December 31, 2001 and the fluctuations in value of the U.S. dollar in relation
to currencies in Western Europe for the year ended December 31, 2000
adjustments, net of income tax effect, were a negative $3.0 million for the year
ended December 31, 2001 and a negative $3.3 million for the year ended December
31, 2000. Total comprehensive loss for the year ended December 31, 2001 was
$10.5 million and for the year ended December 31, 2000 was $8.1 million.

     In the year ended December 31, 2001, basic and diluted loss per share was
$0.63 based on average outstanding shares of 11,960,000. In the year ended
December 31, 2000, basic and diluted loss per share was $0.41 based on average
outstanding shares of 11,744,000.

COMPARISON FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999 (CERTAIN PRIOR PERIOD
AMOUNTS HAVE BEEN RECLASSIFIED TO CONFORM TO CURRENT PERIOD CLASSIFICATIONS)

     Net sales for the year ended December 31, 2000 totaled $649.3 million, down
approximately $61.0 million or 8.6% from the sales for the year ended December
31, 1999 of $710.3 million. The decreases in sales were primarily attributable
to lower sales of our video game and computer products, as well as the
elimination of poorly performing product lines in our international markets
offset slightly by sales increases for the year 2000 in our consumer electronics
accessory segment and domestic and German audio divisions. Sales by segment were
as follows:

     o    Net sales for the consumer electronics accessory business in 2000 were
          $238.3 million, a decrease of 1.7% compared to $242.5 million in 1999.
          The decrease is primarily due to decreased sales of accessory products
          in Recoton UK as well as decreases in satellite accessories and
          antennas in 2000 partially offset by increases sales of 900 MHz
          wireless headphones and speakers, camcorder and video accessories,
          digitally compatible products and car audio accessories.

     o    Net sales for the audio business in 2000 were $233.4 million, a
          decrease of 0.6% compared to $234.9 million in 1999. The reduction is
          predominantly due to the sale of certain European assets as part of
          our reorganization offset by increased sales in our mobile audio
          products, home speaker products and German audio products.

     o    Net sales for the video and computer game business in 2000 were $177.6
          million, a decrease of 23.7% compared to $232.9 in 1999. These
          decreases are primarily attributable to the initial launch shortages
          of the Sony PlayStation2 video game platform and the general
          transition of the video game industry while consumers await the
          introduction of new platforms in 2001.

     Gross margin in 2000 was 38.0% compared to 36.8% in 1999. However, in 1999
gross margin was adversely impacted by inventory write-downs associated with our
strategic plan (see description below). The gross margin before the inventory
write-downs in 1999 was 38.0%. Gross margins by segment were as follows:

     o    Gross margin for the consumer electronics accessories business
          increased to 42.1% in 2000 from 37.4% in 1999 (gross margin before
          inventory write-downs associated with our strategic plan in 1999 was
          38.4%) These increases were mainly due to product mix.

     o    Gross margin for the audio business increased to 35.0% in 2000 from
          29.5% in 1999 (gross margin before inventory write-down associated
          with our strategic plan in 1999 was 32.1%). These increases were
          mainly due to the introduction of higher margin mobile audio products
          and the conversion of domestically manufactured home audio products to
          outsourced products.

     o    Gross margin for the video and computer game business decreased to
          36.4% in 2000 from 43.5% in 1999. This is primarily due to the
          increased competitive environment as dealers cleared out older
          products, the initial launch shortages of the Sony PlayStation2 video
          game platform and the general transition of the video game industry
          while consumers await the introduction of new platforms in 2001.

     Selling, general and administrative expenses decreased in 2000 by
approximately $37.4 million to $210.4 million from $247.8 million in 1999 and
decreased as a percent of net sales to 32.4% in 2000 from 34.9% in 1999 (SG&A
expenses before costs associated with the strategic plan in 1999 were $240.8
million or 33.9% as a percent of sales). These decreases were mainly due to cost
savings and initiatives outlined in our strategic plan initiated in the second
half of 1999 and decreased market development expenses and other variable
expenses as a result of lower sales volume in the video and computer game
segment.

     Operating income in 2000 improved $26.2 million to $36.3 million from $10.1
million in 1999 (operating income before write-downs associated with our
strategic plan and restructuring charges in 1999 was $28.8 million). The
year-to-date operating income increases were mainly due to increased sales by
the accessories segment, higher gross margins in the audio and accessories
segments and reduced selling, general and administrative expenses as a result of
our strategic plan, reduced market development and other variable expenses as a
result of lower sales volume in the video and computer accessories segment.

     Interest expense increased by $9.4 million to $35.9 million in 2000
compared to $26.5 million in 1999. The increase was primarily attributable to
approximately $1.7 million increase in the net present value of the make-whole
provision associated with our senior notes recorded in 2000, increases in
interest rates following the restructuring of our debt in September 1999, as
well as increases in the federal discount rate, which affected our variable rate
debt.

     Amortization of financing costs increased to $2.3 million in 2000 compared
to $1.2 million in 1999. This was mainly attributable to the debt restructuring
in September 1999 and debt refinancing in October 2000.

     On a consolidated basis, the loss before income taxes and extraordinary
item in 2000 was $1.1 million compared to a loss before income taxes and
extraordinary item of $16.2 million in 1999 (income before income taxes and
extraordinary item in 1999 before charges associated with the strategic plan was
$2.5 million.) Our losses in 2000 were mainly due to the continuation of higher
cost financing because of delays in finalizing new financing arrangements and
lower than anticipated sales of video and computer game accessories because of
the significantly reduced quantities of the Sony PlayStation 2 video game system
available at launch.

     The following is a discussion, on a segment basis, of income or loss before
income taxes and unallocated expenses (which expenses consists primarily of
corporate interest and certain amortization of financing costs) and
extraordinary item:

     o    Income before income taxes, unallocated expenses and extraordinary
          item for the consumer electronics accessories business was $27.0
          million in 2000 compared to income of $7.3 million in 1999 (before
          restructuring and other charges associated with our strategic plan
          were recorded in 1999 income before income taxes, unallocated expenses
          and extraordinary item was $12.9 million.) The improved results are
          mainly due to strategic cost savings, increased sales of products with
          higher gross margins and the strong sales of 900 MHz wireless
          headphones and speakers, camcorder and video accessories, digitally
          compatible products and car audio accessories.

     o    Income before income taxes, unallocated expenses and extraordinary
          item for the audio business was $19.2 million in 2000 compared to a
          loss of $4.9 million in 1999 (before charges related to the strategic
          plan in 1999, income before income taxes, unallocated expenses and
          extraordinary item was $5.2 million.) The strong turnaround in the
          audio segment is mainly due to the initiatives outlined in our
          strategic plan, which consolidated the North American home audio
          division into the car audio group, moved our European distribution
          business into Germany and eliminated poorly performing product lines
          in England and Italy. This, together with increased sales of higher
          margin mobile audio products, the conversion of domestically
          manufactured home audio products to outsourced products and the
          introduction of new products including car and marine receivers,
          speakers, and amplifiers, resulted in improved operating results on
          lower sales.

     o    The loss before income taxes, unallocated expenses and extraordinary
          item for the video and computer game business was $9.9 million in
          2000 compared to income of $9.6 million in 1999 (before charges
          associated with the strategic plan, income before income taxes,
          unallocated expenses and extraordinary item in 1999 was $10.7
          million.) The decrease in 2000 was mainly due to the initial launch
          shortages of the Sony PlayStation2 video game platform, the general
          transition of the video game industry while consumers await the
          introduction of new platforms in 2001 and the competitive environment
          as dealers cleared out older products.

     The extraordinary item of $3.0 million recorded in 2000 relates to charges
resulting from the debt refinancing. The extraordinary item of $8.8 million
recorded in 1999 relates to charges resulting from the restructuring of our
senior notes.

     Comprehensive loss is comprised of the net loss and foreign currency
translation adjustments. As a result of fluctuations in the value of the U.S.
dollar in relation to currencies in Western Europe for 2000 and 1999
adjustments, net of income tax effect, were a negative $3.3 million in 2000 and
a negative $3.5 million in 1999. Total comprehensive loss in 2000 was $8.1
million and in 1999 was $31.5 million.

     In 2000, basic and diluted loss per share was $0.41 based on average
outstanding shares of 11,744,000 (includes an extraordinary loss equal to $.25
per share associated with the debt refinancing). In 1999, basic and diluted loss
per share was $2.39 based on average outstanding shares of 11,719,000 (includes
an extraordinary loss equal to $0.75 per share associated with the strategic
plan and restructuring of debt). The effect of the assumed exercise of
outstanding stock options and warrants is antidilutive and therefore is not
reflected in the loss per share amounts.

IMPACT OF INFLATION AND CHANGING PRICES

     The impact of inflation and changing prices on our net sales and revenues
and on income from continuing operations for the year ended December 31, 2001
and 2000 was negligible.

                         LIQUIDITY AND CAPITAL RESOURCES

     SOURCES AND COMPONENTS OF WORKING CAPITAL. At December 31, 2001, we had
cash and cash equivalents of $6.2 million compared to $10.1 million at December
31, 2000. At December 31, 2001, we had working capital of $237.9 million as
compared to $258.6 million at December 31, 2000. The decrease in working capital
primarily resulted from a decrease in inventory levels. The ratio of current
assets to current liabilities was 3.17 to 1 at December 31, 2001 and 3.54 to 1
at December 31, 2000. Trade receivables increased $10.1 million to $175.7
million at December 31, 2001 as compared to $165.6 million at December 31, 2000.
Inventory levels decreased by $19.8 million to $144.8 million at December 31,
2001 from $164.6 million at December 31, 2000. Accounts payable and accrued
expenses were $96.1 million at December 31, 2001 compared to $89.9 million at
December 31, 2000.

     SENIOR LOAN AGREEMENT. We entered into a loan agreement for a $235 million
facility syndicated by Heller Financial, Inc. and General Electric Capital
Corporation (the "Senior Loan Agreement") on October 31, 2000 consisting of:

     o    a $185 million three year revolving loan and letter of credit facility
          bearing interest at 2.50% over LIBOR or 0.75% over the prime rate
          [weighted average rate as of December 31, 2001 was 4.7%] with the
          amount of borrowing availability dependant upon our eligible
          receivables and inventory;

     o    a three year term loan in the principal amount of $20 million with
          interest at 2.75% over LIBOR or 1.00% over the prime rate [weighted
          average rate as of December 31, 2001 was 4.86%] amortized over three
          years with eleven quarterly installments of $500,000 each and a
          balloon payment of $14.5 million due on the third anniversary;

     o    a two year term loan in the principal amount of $15 million with
          interest at 5.00% over LIBOR or 3.25% over the prime rate [weighted
          average rate as of December 31, 2001 was 7.18%] amortized over two
          years with eight equal quarterly principal repayments of $1.875
          million each; and

     o    a term loan of $15 million with interest at 3.00% over the prime rate
          [current rate as of December 31, 2001 was 7.75%] to be paid on the
          second anniversary to the extent that the advance value of the
          collateral exceeds the revolving loan by more than $45 million, with
          any balance generally due in 12 equal monthly installments (subject to
          later payment under certain conditions) ending on the third
          anniversary.

     We also entered into a loan agreement (the "Subordinated Loan Agreement")
with our existing senior lenders, for a $15 million three-year term loan
subordinated to the senior loan, with interest at 5.75% over the prime rate. As
of December 31, 2001 the loan boar interest of 10.5%.

     Our German subsidiaries entered into a 50 million Deutsche Mark factoring
facility (up to approximately $25.0 million) with interest at 2.5% over European
LIBOR [current rate as of December 31, 2001 was 5.86%] which in part supports a
$13 million letter of credit issued in favor of Heller as security for the loans
under the Senior Loan Agreement.

     The borrowings under the Senior Loan Agreement and the Subordinated Loan
Agreement were secured by substantially all of our assets and the assets of our
United States and Canadian subsidiaries, and by 65% of the capital stock of the
other first tier foreign subsidiaries pursuant to certain guarantees, security
agreements and pledge agreements. The credit facility contains a number of
significant covenants that, among other things, restrict our ability to dispose
of assets, incur additional indebtedness, repay other indebtedness, create liens
on assets, make investments or acquisitions and engage in mergers or
consolidations. In addition, we are required to comply with specified ratios and
tests, including quarterly and trailing twelve months EBITDA (as defined) and
minimum consolidated tangible net worth (as defined) and fixed charges coverage.

     At the same time, modifications were made to the existing 1999 Security
Purchase Agreement with our senior subordinated creditors to reflect the
subordination of the rights of the holders of notes issued pursuant to that
agreement and the continuation of certain provisions of the September 8, 1999
Master Restructuring Agreement entered into with our then-existing creditors
including an increased rate of interest (see discussion below) and a cash
payment of $875,000.

     In connection with the 2000 refinancing, warrants to purchase 20,000
Recoton Corporation common shares were issued to the holders of the notes issued
pursuant to the 1999 Security Purchase Agreement. Warrants to purchase an
aggregate of 5,000 Recoton Corporation common shares were issued to certain
lenders under one of the new term loans pursuant to the Senior Loan agreement.
Such warrants expire on October 31, 2005 and have an exercise price of $13.28.

     SOURCES OF CREDIT AT DECEMBER 31, 2001. As of December 31, 2001 we had
credit facilities aggregating $275 million. The credit facilities include a $235
million facility of which $196.7 million was outstanding as at December 31,
2001. At March 25, 2002, our outstanding borrowings under the credit facility
were approximately $178.5 million and approximately $2.6 million was available
for borrowing. The outstanding letters of credit under this facility as of
December 31, 2001 were $22.0 million, including standby letters of credit
aggregating approximately $12.4 million to a foreign bank for the benefit of our
Hong Kong subsidiary primarily for import facilities and discounting of customer
drafts, of which $2.8 million in letters of credit and $9.4 million in trust
receipt loans were outstanding at December 31, 2001. At March 25, 2002, the
outstanding letters of credit were $24.0 million. At December 31, 2001 and March
25, 2002, the Deutsche Mark factoring facility supported a $13 million letter of
credit issued in favor of Heller as security for the loans in the United States
under the Senior Loan Agreement. As of December 31, 2001 there was no debt
outstanding for Germany. (See the discussion above regarding debt refinancing
and the discussion below regarding our outstanding notes.)

     In October 2000 the Company also entered into a loan agreement with its
then existing senior lenders for a $15 million term loan with interest at 5.75%
over prime. As of December 31, 2001 this boar interest of 10.5%

     At December 31, 2001, we were not in compliance with certain financial
covenants under the Credit Facility (those relating to tangible net worth,
minimum EBITDA, , fixed charge coverage and required minimum excess
availability). The bank lenders subsequently waived our non-compliance with
these covenants. In connection with such waiver, the credit facility was amended
to reset the covenant thresholds, authorize certain insurance premium financing,
add certain additional covenants regarding minimum cumulative EBITDA for our
subsidiary InterAct International, Inc., assess minimum excess availability at
all times, modify the inventory advance rate limitation (reducing it in steps
starting September 30, 2002 from 100% to 85% of orderly liquidation value) and
increase interest rates on the revolver and term loan A by 25 basis points. This
will bring the pricing on the revolver to prime plus 1.00% or LIBOR plus 2.75%
and term loan A to prime plus 1.25% or LIBOR plus 3.00%. In addition, we will
pay the lenders an amendment fee of 3/8% of their current outstanding
commitment. There can be no assurance that we will be in compliance with the
modified covenants in the future or that the lenders will waive or amend any of
the covenants should we be in violation of any such covenants in the future.

     In February 1999, we issued $35 million in aggregate principal amount of
senior subordinated notes due February 4, 2004 (the 1999 Notes) with interest of
16.5%. Under the terms of the agreement, we issued warrants to the noteholders
to purchase 310,000 common shares at a price of $18.26 per share which expire on
February 4, 2004. In connection with debt restructuring in September 1999, the
exercise price of the warrants was reduced to $7.77 a share and additional
warrants to purchase 100,000 common shares at a price of $7.77 a share were
issued in place of warrants to purchase up to an additional 310,000 shares which
would have been issuable in May 2001 if the subordinated debt had not been
repaid by that date. These warrants expire on September 8, 2004.

     On March 2, 2001 we entered into a 36 month capital lease agreement with
IBM Credit Corporation to finance approximately $11.1 million in computer
hardware, software and additional related expenses for the purpose of
implementing a new Enterprise Resource Planning (ERP) system (see discussion
below regarding capital expenditures for more information) of which $8.2 million
was outstanding as of December 31, 2001 and $9.0 million was outstanding as of
March 25, 2002. A letter of credit aggregating approximately $2.9 million was
issued pursuant to the existing credit facility in favor of IBM Credit
Corporation as security for the loan.

     CAPITAL EXPENDITURES. We have committed to implement a new global ERP
system to fully integrate functions such as finance, manufacturing, distribution
and inventory management. Implementation for North American operations
(excluding AAMP) has been completed. The estimated timeframe for full
implementation of the ERP system is currently July 2002 for European (excluding
Italy) and June 2002 for Asian operations (excluding Japan). The estimated cost
of the project is approximately $19.7 million including software licensing,
hardware, consulting and related expenses. (See discussion above regarding the
March 2001 capital lease agreement). Historically, we have financed capital
expenditures with borrowings under our credit facility and cash flow from
operations. Other capital expenditures relating to normal business expenditures
which will be financed through working capital and our existing credit facility.

     LEASES. We have long term lease commitments and obligations at December 31,
2001 expiring at various dates through 2013 aggregating $17.7 million.

     FOREIGN OPERATIONS. To date there has been limited exposure to loss due to
foreign currency risks in our Asian subsidiaries, because the Hong Kong dollar
has been pegged to the U.S. dollar at an official exchange rate of HK $7.80 to
US $1.00. Additionally, in recent years there have been no material fluctuations
in the Hong Kong/Chinese exchange rates. Also, we maintain the majority of our
currency in Asia in U.S. dollar accounts. However, there have been discussions
in Hong Kong about eliminating the peg and there can be no assurance that these
relationships will continue.

     Our operations, which are currently being transacted on a global basis, are
exposed to variations in foreign exchange rates. Shareholders' equity was
reduced by a foreign currency translation adjustment of approximately $3.0
million for the year ended December 31, 2001 and $3.3 million for the year ended
December 31, 2000. The changes in the exchange rates of the Euro and British
Pound, which were the principle causes of the foreign translation adjustments in
2001 and the changes in the German and Italian currencies against the American
dollar, which were the principle causes of the foreign translation adjustments
in 2000, had no material impact on the consolidated results of operations but
such adjustments serve to reduce our tangible net worth.

     If there are any material adverse changes in the relationships between the
European and/or Canadian currencies with the United States dollar or if the Hong
Kong or Chinese currencies should no longer be tied to the U.S. dollar, such
changes could adversely affect the results of our European, Canadian and/or
Asian operations included in the consolidated financial statements and could
cause further increases in the amount of foreign currency translation
adjustments which are charged directly to shareholders' equity.

   IMPLICATIONS TO THE COMPANY FROM THE ADOPTION OF A EUROPEAN COMMON CURRENCY

     The countries of the European Union have adopted a single currency, the
"Euro." The Euro came into existence on January 1, 2000, and could have been
used for transactions within and between the countries of the Economic and
Monetary Union (Austria, Belgium, Finland, France, Germany, Netherlands,
Ireland, Italy, Luxembourg, Portugal and Spain), with national currencies
expressed as a denomination (national currency units) of the Euro. During the
three-year transition period following its introduction, countries were allowed
to transact business both in the Euro and in their own currencies at fixed
exchange rates. On January 1, 2002, the Euro became the only currency in
Economic and Monetary Union countries.

     We have extensive operations in certain European countries, including
Germany, Italy and the United Kingdom. We also sell to additional countries in
Europe. For the year ended December 31, 2001, approximately 12% of our net sales
were in Europe. With the exception of the United Kingdom, all of the European
countries in which we have operations adopted the Euro. We have not experienced,
and do not anticipate that there will be, any material adverse impact on our
accounting systems or our European business resulting from the adoption of the
Euro and any resulting changes in European economic and market conditions. We
adopted the Euro for internal systems and reporting as of January 1, 2001.

                             NEW ACCOUNTING STANDARDS

     In June 2001, the Financial Accounting Standards Board ("FASB") issued two
new pronouncements: Statement of Financial Accounting Standard ("SFAS")No. 141,
BUSINESS COMBINATIONS, and SFAS No. 142, GOODWILL AND OTHER INTANGIBLE ASSETS.

     SFAS No. 141 addresses financial accounting and reporting for business
combinations and supersedes APB No. 16 BUSINESS COMBINATIONS and FASB Statement
No. 38, ACCOUNTING FOR PREACQUISITION CONTINGENCIES OF PURCHASED ENTERPRISES.
All business combinations in the scope of this Statement are to be accounted for
using one method, the purchase method. SFAS 141 is effective as follows: a) use
of the pooling-of-interest method is prohibited for business combinations
initiated after June 30, 2001; and b) the provisions of SFAS 141 also apply to
all business combinations accounted for by the purchase method that are
completed after June 30, 2001 (that is, the date of the acquisition is July 2001
or later). We have determined that the adoption of this statement will not have
an impact on our consolidated financial statements.

     SFAS No. 142 addresses financial accounting and reporting for acquired
goodwill and other intangible assets and supersedes APB No. 17, INTANGIBLE
ASSETS. It changes the accounting for goodwill from an amortization method to
either an impairment or periodic amortization approach depending on the
intangible asset. SFAS 142 is effective for fiscal years beginning after
December 15, 2001 to all goodwill and other intangible assets recognized in an
entity's statement of financial position at that date, regardless of when those
assets were initially recognized. We are still evaluating the impact of this
pronouncement as it pertains to unamortized goodwill. Amortization of goodwill
for the year ended December 31, 2001 was $2.2 million.

     In August 2001, the FASB issued SFAS No. 143, ACCOUNTING FOR ASSET
RETIREMENT OBLIGATIONS. This Statement addresses financial accounting and
reporting for obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs. The Statement requires that
the fair value of a liability for an asset retirement obligation be recognized
in the period in which it is incurred if a reasonable estimate of fair value can
be made. The associated asset retirement costs are capitalized as part of the
carrying amount of the long-lived asset. SFAS No. 143 is effective for the first
quarter 2003. We do not believe that the adoption of this pronouncement will
have a material impact on their consolidated results of operations.

     In October of 2001, the FASB issued SFAS No. 144, "ACCOUNTING FOR THE
IMPAIRMENT OR DISPOSAL OF LONG-LIVED ASSETS." This statement supersedes SFAS No.
121 ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS
TO BE DISPOSED OF, but retains the fundamental provisions of SFAS No. 121 for
recognition and measurement of the impairment of long-lived assets to be held
and used and measurement of long-lived assets to be disposed of by sale.
However, SFAS No. 144 applies the fair value method for testing of impairment,
which differs from SFAS No. 121. SFAS No. 144 also supersedes the accounting and
reporting provisions of APB Opinion No. 30 as it pertains to the disposal of a
business segment, but retains the requirement of that opinion to report
discontinued operations separately from continuing operations and extends that
reporting to a component of an entity that either has been disposed of or is
classified as held for sale. SFAS No. 144 is effective for fiscal years
beginning after December 15, 2001. We are evaluating the impact of the adoption
of this standard and have not yet determined the effect of adoption on its
financial position and results of operations.

     In April 2001, the FASB's Emerging Issues Task Force reached a consensus on
Issue No. 00-25, VENDOR INCOME STATEMENT CHARACTERISTICS OF CONSIDERATION PAID
TO A RESELLER OF THE VENDOR PRODUCTS ("EITF No. 00-25"). EITF No. 00-25
concluded that consideration from a vendor to a reseller of the vendor's
products is presumed to be a reduction of the selling prices of the vendor's
products and, therefore, should be characterized as a reduction of revenue when
recognized in the vendor's income statement. That presumption is overcome and
the consideration characterized as a cost incurred if a benefit is or will be
received from the recipient of the consideration if certain conditions are met.
This pronouncement is effective January 1, 2002. We have determined that the
adoption of this statement will not have an impact other than the
reclassification between components of the Statement of Operations.

                           FORWARD LOOKING STATEMENTS

     This report contains forward-looking statements within the meaning of that
term in the Private Securities Litigation Reform Act of 1995 found at Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934. Additional written or oral forward-looking statements may be made by us
from time to time in filings with the Securities Exchange Commission, press
releases or other statements. Statements contained in this Annual Report that
are not historical facts are forward-looking statements made pursuant to the
safe harbor provisions of the Act. Forward-looking statements may include, but
are not limited to, projections of revenue, income or loss and capital
expenditures; statements regarding future operations, financing needs and
anticipated compliance with financial covenants in loan agreements; plans for
acquisition or sale of assets or businesses and consolidation of operations of
newly acquired businesses; plans relating to products or services; assessments
of materiality; and predictions of future events and the effects of litigation,
as well as assumptions relating to these statements. In addition, when used in
this discussion, the words "anticipates," "believes," "estimates," "expects,"
"intends," "plans" and variations of such terms and similar expressions are
intended to identify forward-looking statements.

     Forward-looking statements are inherently subject to risks and
uncertainties, some of which cannot be predicted or quantified based on current
expectations. Consequently, future events and actual results could differ
materially from those set forth in, contemplated by or underlying the
forward-looking statements contained in this Annual Report, other filings, press
releases or other statements by us. Statements in this Annual Report,
particularly in "Item 1. Business", "Item 3. Legal Proceedings", the "Notes to
Consolidated Financial Statements" and "Item 7. Management's Discussion and
Analysis of Financial Condition and Results of Operations," describe certain
factors, among others, that could contribute to or cause such differences.

     Other factors that could contribute to or cause such differences include,
but are not limited to, unanticipated developments in any one or more of the
following areas:

     o    global economic and market conditions, including continuation of or
          changes in the current economic downturn;

     o    receptivity of consumers to new consumer electronics technologies;

     o    our ability to introduce new products to meet consumer need, including
          timely introductions as new consumer technologies are introduced, and
          customer and consumer acceptance of our new product introductions;

     o    timing of introduction by others of new products for which we sell
          accessories;

     o    pressure for us to reduce prices for older products as newer
          technologies or platforms are introduced;

     o    actions taken by our competition, including introduction of new or
          other competitive products and changes in pricing;

     o    number and nature of our customers and their product orders;

     o    our ability to maintain adequate financing, to bear the interest cost
          of such financing and to remain in compliance with financing
          covenants, or to obtain appropriate waivers or modifications;

     o    ability of our suppliers to continue to provide products and services
          at competitive prices;

     o    our ability to maintain appropriate inventory levels, including
          adequate levels to satisfy seasonal demands without having to utilize
          expedited shipping arrangements;

     o    our ability to fully utilize our facilities or to find alternative
          uses for under-utilized facilities;

     o    factors related to our foreign manufacturing, sourcing and sales
          (including Chinese and other foreign government regulations, trade and
          importation concerns and effects of fluctuations in exchange rates);

     o    changes in our taxes due to changes in the mix of U.S. and non-U.S.
          income;

     o    our ability to maintain confidential information and obtain and
          maintain proprietary rights;

     o    effects of any pending or threatened litigation;

     o    our ability to obtain and maintain key personnel;

     o    the operation of our management information and computer systems and
          those of our customers and vendors, including the process of
          implementing our new Enterprise Resource Planning System;

     o    environmental and other legal regulations; and

     o    other risk factors which may be detailed from time to time in our
          Securities and Exchange Commission filings.

     Readers are cautioned not to place undue reliance on any forward-looking
statements contained in this Annual Report, which speak only as of the date set
forth on the signature page. We undertake no obligation to publicly release the
result of any revisions to these forward-looking statements that may be made to
reflect events or circumstances after such date or to reflect the occurrence of
unexpected events.

ITEM 7A: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     Effective as of the October 2000 refinancing, all of our borrowings bear
various rates depending on changes in the LIBOR or prime rates. As of March 25,
2002, we had approximately $193.5 million of principal outstanding which had
variable interest rates. Based on the weighted average borrowings outstanding
during 2001, a 100 basis point change in interest rates would result in an
approximate $2.4 million change to our annual interest expense.

     As part of the October 2000 refinancing, our German subsidiary entered into
a 50 million Deutsche Mark factoring facility (up to approximately $25 million)
with Heller Germany. We have intercompany loans (exclusive of intercompany
receivables and payables for current transactions) made by Recoton Corporation
and its subsidiaries to other subsidiaries in Germany and Italy which are not
denominated in their home country currency. These loans expose us to exchange
rate fluctuations. We have not entered into foreign currency or derivative
contracts to hedge these potential intercompany exchange adjustments, which are
recorded as cumulative foreign currency translation adjustments (a component of
shareholders' equity because they have no fixed due dates). The outstanding
foreign currency loans at December 31, 2001 (expressed in U.S. dollars at
current exchange rates) are approximately $35 million.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

<TABLE>
<CAPTION>

         The following financial statements are included in this report:

                                                                                              Page
         <S>                                                                                    <C>
         Independent Auditors' Reports                                                          F-1

         Recoton Corporation and Subsidiaries --

                  Consolidated Balance Sheets as of December 31, 2000 and
                  2001                                                                          F-2

                  Consolidated Statements of Operations for the years ended
                  December 31, 1999, 2000 and 2001                                              F-3

                  Consolidated Statements of Shareholders' Equity for the
                  years ended December 31, 1999, 2000 and 2001
                                                                                               F-4

                  Consolidated Statements of Cash Flows for the years ended
                  December 31, 1999, 2000 and 2001                                      F-5 to F-6

                  Notes to Consolidated Financial Statements                            F-7 to F-31
</TABLE>


     Financial statement schedules have not been filed because the conditions
requiring the filing do not exist or the required information is provided in the
consolidated financial statements, including the notes thereto. The individual
financial statements of the Company have been omitted because the requirements
for omission have been met.

<PAGE>

INDEPENDENT AUDITORS' REPORT


To the Board of Directors and Shareholders of
Recoton Corporation
Lake Mary, Florida


We have audited the accompanying consolidated balance sheets of Recoton
Corporation and Subsidiaries (the "Company") as of December 31, 2000 and 2001
and the related consolidated statements of operations, shareholders' equity and
cash flows for the three years in the periodended December 31, 2001. 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.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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 audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Recoton
Corporation and Subsidiaries as of December 31, 2000 and 2001, and the results
of their operations and their cash flows for each of the three years in the
period ended December 31, 2001 in conformity with accounting principles
generally accepted in the United States of America.





New York, New York

April 1, 2002


<PAGE>

<TABLE>
<CAPTION>

                                                    RECOTON CORPORATION AND SUBSIDIARIES

                                                        CONSOLIDATED BALANCE SHEETS
                                                           (DOLLARS IN THOUSANDS)

                                            ASSETS                                              DECEMBER 31,
                                            ------                                              ------------
                                                                                           2000            2001
                                                                                       -----------    -------------
CURRENT ASSETS:
    <S>                                                                                  <C>              <C>
    Cash and cash equivalents                                                            $  10,098        $  6,187
    Accounts receivable (less allowance for doubtful accounts
       of $2,944 in 2000 and $4,545 in 2001)                                               165,575         175,661
    Inventories                                                                            164,596         144,750
    Prepaid, refundable and deferred income taxes                                            9,573          10,105
    Prepaid expenses and other current assets                                               10,632          10,851
                                                                                        ----------      ----------

              TOTAL CURRENT ASSETS                                                         360,474         347,554

PROPERTY AND EQUIPMENT, NET                                                                 35,286          45,569
TRADEMARKS AND PATENTS, NET                                                                  4,278           3,984
GOODWILL, NET                                                                               32,698          30,493
DEFERRED INCOME TAXES                                                                       18,882          20,137
OTHER ASSETS                                                                                11,893          10,097
                                                                                         ----------      ----------

              TOTAL ASSETS                                                                $463,511        $457,834
                                                                                          ========        ========

                                   LIABILITIES

CURRENT LIABILITIES:
    Current portion of long-term debt                                                    $  11,994       $  13,536
    Accounts payable                                                                        64,821          72,655
    Accrued expenses                                                                        25,097          23,418
                                                                                        ----------     -----------

              TOTAL CURRENT LIABILITIES                                                    101,912         109,609

LONG-TERM DEBT  (less current portion above)                                               243,914         239,341
OTHER LIABILITIES                                                                            4,426           2,390
                                                                                         ---------     -----------

              TOTAL LIABILITIES                                                            350,252         351,340
                                                                                         ---------       ---------

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY

PREFERRED SHARES - $1.00 par value each - authorized
    10,000,000 shares; none issued                                                          --               --
COMMON SHARES - $.20 par value each - authorized
    40,000,000 shares; issued 12,986,720 shares in
    2000 and 13,556,758 shares in 2001                                                       2,597           2,711
ADDITIONAL PAID-IN CAPITAL                                                                  85,803          92,824
RETAINED EARNINGS                                                                           42,222          34,666
DEFERRED COMPENSATION                                                                        --             (2,866)
ACCUMULATED OTHER COMPREHENSIVE INCOME                                                     (10,866)        (13,844)
                                                                                      ------------      ----------

              TOTAL                                                                        119,756         113,491

TREASURY SHARES - 1,239,330 shares in 2000 and
    1,272,532 shares in 2001, at cost                                                       (6,497)         (6,997)
                                                                                       -----------     -----------

              TOTAL SHAREHOLDERS' EQUITY                                                   113,259         106,494
                                                                                         ---------       ---------

              TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                  $463,511        $457,834
                                                                                          ========        ========


               See accompanying notes to the consolidated financial statements.
</TABLE>


<PAGE>

<TABLE>
<CAPTION>
                                                          RECOTON CORPORATION AND SUBSIDIARIES

                                                         CONSOLIDATED STATEMENTS OF OPERATIONS
                                                           (IN THOUSANDS, EXCEPT PER SHARE DATA)



                                                                                 YEARS ENDED DECEMBER 31,
                                                                       1999                2000                2001
<S>                                                                  <C>                 <C>                  <C>
NET SALES                                                            $710,250            $649,295             $613,078

COST OF SALES                                                         448,894             402,634              385,365
                                                                    ----------          ----------           ---------

GROSS PROFIT                                                          261,356             246,661              227,713

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES                          247,764             210,371              205,439

RESTRUCTURING CHARGE                                                    3,444               -                       -
                                                                  ------------      ---------------           ---------

OPERATING INCOME                                                       10,148              36,290               22,274

OTHER (INCOME) EXPENSES:
   Interest expense                                                    26,467              35,879               26,338
   Amortization of financing costs                                      1,164               2,330                3,213
   Investment income                                                   (1,294)               (830)                (801)
                                                                   -----------       -------------        ------------

LOSS BEFORE INCOME TAXES AND
   EXTRAORDINARY ITEM                                                 (16,189)              (1,089)             (6,476)
INCOME TAX PROVISION                                                    3,076                  794               1,080
                                                                 -------------       -------------          ----------

LOSS BEFORE EXTRAORDINARY ITEM                                        (19,265)             (1,883)              (7,556)
EXTRAORDINARY ITEM (NET OF INCOME                                      (8,765)             (2,953)                 -
                                                                  ------------       --------------          -----------
   TAX BENEFIT OF $1,621 FOR 2000)

NET LOSS                                                            $ (28,030)          $  (4,836)           $  (7,556)
                                                                    ==========          =========            =========

Basic and diluted earnings per share:

   Loss before extraordinary item                                      $(1.64)              $(.16)               $(.63)
   Extraordinary item                                                    (.75)               (.25)                  -
                                                                      --------              ------               ------
   Net loss                                                            $(2.39)              $(.41)               $(.63)
                                                                       =======              =====                ======

Number of shares used in computing basic
 and diluted per share amounts:                                        11,719              11,744               11,960
                                                                       =======             =======              ======

                               See accompanying notes to the consolidated financial statements.

</TABLE>


<PAGE>

<TABLE>
<CAPTION>

                                                      RECOTON CORPORATION AND SUBSIDIARIES
                                                  CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
                                           YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001 (IN THOUSANDS)


                                                    Common Shares
                                               ---------------------


                                                                            Additional
                                                                             Paid-In      Retained      Deferred
                                                  Shares        Amounts      Capital      Earnings    Compensation
                                                ---------     ----------    ----------    ---------  -------------
<S>                                                <C>        <C>           <C>           <C>          <C>     <C>
BALANCE - JANUARY 1, 1999                          12,934     $   2,587     $   80,967    $   75,088   $       -

Comprehensive loss:
  Net Loss                                              -             -              -       (28,030)          -
  Foreign currency translation
  adjustment
  (net of income tax benefit of $1,264)                 -             -              -             -           -

Total comprehensive loss                                -             -              -             -           -

Exercise of stock
options of (net  income
  tax benefit of $87)                                  37             7            265             -           -
Repurchase of stock                                     -             -              -             -           -
Value of common stock
 purchase warrants                                      -             -          4,184             -           -
                                                   ------       -------        -------      --------     -------
BALANCE - DECEMBER 31, 1999                        12,971         2,594         85,316        47,058           -
Comprehensive loss:
   Net Loss                                             -             -              -             -           -
   Foreign currency translation
   adjustment
   (net of income tax benefit of $780)                  -             -              -             -           -
Total comprehensive loss                                -             -              -             -           -
Exercise of stock options
(net of income tax benefit of $42)                     16             3            110             -           -
Value of common stock purchase warrants                 -             -            377             -           -
                                                   ------       -------         ------       -------    --------
BALANCE - DECEMBER 31, 2000                        12,987         2,597         85,803        42,222           -
Comprehensive loss:                                     -             -              -             -           -
   Net loss                                             -             -              -        (7,556)          -
   Foreign currency translation
   adjustment
   (net of income tax benefit of $512)                  -             -              -             -           -
Total comprehensive loss                                -             -              -             -           -
Exercise of stock options
(net of income tax benefit of $972)                   388            77          3,900             -           -
Exercise of warrants                                   14             3             (3)            -           -
Issuance of performance accelerated stock             168            34          3,132        (3,166)
Amortization of
 performance accelerated stock                          -             -              -             -         292
                                                   ------       -------        -------      --------     -------
BALANCE - DECEMBER 31, 2001                        13,557      $  2,711      $  92,832     $  34,666   $  (2,874)
                                                   ======       =======        =======      ========    ========

</TABLE>

<TABLE>
<CAPTION>

                                                                      Treasury Shares
                                                                    -----------------
                                                Accumulated
                                                   Other
                                                Comprehensive
                                                   Loss          Shares      Amounts       Total
                                             ----------------  ----------  ----------    ----------

<S>                                             <C>               <C>        <C>           <C>
BALANCE - JANUARY 1, 1999                       $  (4,090)        1,235      $  (6,457)    $ 147,995

Comprehensive loss:
  Net Loss
  Foreign currency translation
  adjustment
  (net of income tax benefit of $1,264)            (3,468)            -              -             -

Total comprehensive loss                                -             -              -       (31,498)

Exercise of stock
options of (net  income
  tax benefit of $87)                                   -             3            (24)         248
Repurchase of stock                                     -             -             (7)          (7)
Value of common stock
 purchase warrants                                      -             -              -         4,184
                                                  --------       ------        --------    ---------
BALANCE - DECEMBER 31, 1999                        (7,558)        1,238         (6,488)      120,922
Comprehensive loss:
   Net Loss                                             -             -              -
   Foreign currency translation
   adjustment
   (net of income tax benefit of $780)             (3,308)            -              -             -
Total comprehensive loss                                -             -              -        (8,144)
Exercise of stock options
(net of income tax benefit of $42)                      -             1             (9)          104
Value of common stock purchase warrants                 -             -              -           377
                                                   ------       -------        -------     ---------
BALANCE - DECEMBER 31, 2000                       (10,866)        1,239         (6,497)      113,259
Comprehensive loss:                                     -             -              -
   Net loss                                             -             -              -
   Foreign currency translation
   adjustment
   (net of income tax benefit of $512)             (2,978)            -              -
Total comprehensive loss                                -             -              -       (10,534)
Exercise of stock options
(net of income tax benefit of $972)                     -            33           (500)        3,477
Exercise of warrants                                    -             -              -             -
Issuance of performance accelerated stock                                                          -
Amortization of
 performance accelerated stock                          -             -              -           292
                                                   ------       -------         ------     ---------
BALANCE - DECEMBER 31, 2001                      $ 13,844)        1,272       $ (6,997)    $ 106,494
                                                   ======      ========        =======     =========

</TABLE>


<TABLE>
<CAPTION>



                                                      RECOTON CORPORATION AND SUBSIDIARIES

                                                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                             (DOLLARS IN THOUSANDS)



                                                                                   YEARS ENDED DECEMBER 31,
                                                                          -----------------------------------------
                                                                              1999           2000          2001
                                                                          -----------    -----------    -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
   <S>                                                                       <C>            <C>             <C>
   Net loss                                                                  $(28,030)      $ (4,836)       $(7,556)
                                                                             ---------      --------        -------

   Adjustments to reconcile net loss
         to net cash provided by (used in) operating activities:
    Depreciation                                                                9,583          9,046          8,975
    Amortization of intangibles                                                 3,977          5,093          5,800
    Amortization of debt discount costs                                           677          1,109            993
    Write-off of financing costs relating to
        debt restructuring and refinancing                                      7,084          2,014             -
    Provision for (recovery of) losses on accounts receivable                   2,224           (185)         3,062
    Deferred income taxes                                                      (1,744)        (2,151)        (1,186)
         Change in asset and liability accounts:
         Accounts receivable                                                  (27,364)        32,790        (15,389)
         Inventories                                                           18,202        (25,161)        18,232
         Prepaid and refundable income taxes                                      151           (126)          (162)
         Prepaid expenses and other current assets                                (23)         1,776           (161)
         Other assets                                                            (551)          (312)          (553)
         Accounts payable and accrued expenses                                 (1,513)       (17,562)         8,748
         Income taxes payable                                                  (2,018)          (797)        (1,804)
         Other noncurrent liabilities                                          (3,786)          (160)        (2,029)
                                                                          -------------       -------     -----------

               TOTAL ADJUSTMENTS                                                4,899          5,374          24,526
                                                                             --------      ---------     -----------

               NET CASH PROVIDED BY (USED IN)
                  OPERATING ACTIVITIES                                        (23,131)           538         16,830
                                                                           -----------         -----     ----------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Expenditures for trademarks, patents and
      intellectual property                                                      (327)          (251)           (92)
   Expenditures for property and equipment                                     (6,291)        (7,201)       (17,758)
                                                                            ---------      ---------     ----------

               NET CASH USED IN INVESTING ACTIVITIES                           (6,618)        (7,452)       (17,850)
                                                                            ---------      ---------     ----------
</TABLE>


<PAGE>


<TABLE>
<CAPTION>

                                                      RECOTON CORPORATION AND SUBSIDIARIES

                                                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                             (DOLLARS IN THOUSANDS)




                                                                                   YEARS ENDED DECEMBER 31,
                                                                          -----------------------------------------
                                                                              1999           2000          2001
                                                                          -----------    -----------    -----------
Cash flows from financing activities:
     <S>                                                                  <C>                 <C>          <C>
     Initial proceeds from revolving credit agreement                     $    -          $146,460         $  -
     Net borrowings (repayments) under current
         revolving loan facility                                               -            12,322          (246)
     Net borrowings (repayments) under previous
         revolving credit agreements                                       6,058           (26,999)           -
     Proceeds from issuance of senior
         subordinated notes                                               35,000            15,000            -
     Proceeds from long-term bank borrowings                               5,881            50,000            -
     Repayment of long-term bank borrowings                              (12,093)             (379)      (11,995)
     Repayment of refinanced debt                                              -          (191,440)           -
     Payment of debt financing costs                                      (4,527)           (9,334)         (818)
     Proceeds from lease financing                                             -                 -         8,406
     Payment of lease financing                                                -                 -        (1,694)
     Proceeds from exercise of stock options                                 161                62         2,505
     Purchases of treasury stock                                              (7)                -            -
     Income tax benefit applicable to exercise
         of stock options                                                     87                42           972
                                                                       ---------       -----------     ---------

              NET CASH PROVIDED BY (USED IN)
                  FINANCING ACTIVITIES                                    30,560            (4,266)       (2,870)
                                                                      ------------     -----------     ---------

EFFECT OF EXCHANGE RATE CHANGES ON CASH                                     (546)             (372)         (161)
                                                                     -------------     -----------     ---------
NET INCREASE (DECREASE) IN CASH
     AND CASH EQUIVALENTS                                                    265           (11,552)       (3,911)

CASH AND CASH EQUIVALENTS, BEGINNING
     OF THE YEAR                                                          21,385            21,650        10,098
                                                                     -------------     -----------    ----------

CASH AND CASH EQUIVALENTS,
     END OF THE YEAR                                                $     21,650          $ 10,098      $  6,187
                                                                     =============     =========== ============

SUPPLEMENTAL DISCLOSURES:
     Interest paid                                                  $     25,022          $ 32,877      $ 27,539
                                                                     =============     =========== =============

     Income taxes paid                                              $      5,907         $   2,132      $  2,692
                                                                     =============     =========== =============

                                             See accompanying notes to the consolidated financial statements.

</TABLE>



<PAGE>



                      RECOTON CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE A -       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

               DESCRIPTION OF BUSINESS:

               Recoton Corporation and Subsidiaries (collectively, the
               "Company") is a developer, manufacturer and marketer of consumer
               electronic products generally for aftermarket use. The Company's
               products are sold primarily to retailers located in the United
               States and Europe. In addition to its domestic facilities, the
               Company maintains office and warehouse facilities in Asia, Canada
               and Western Europe and manufacturing and assembly facilities in
               the People's Republic of China.

               The Company classifies its business into three principal
               segments; the Consumer Electronics Accessories Business, the
               Audio Business, and the Video and Computer Game Business (see
               Note K for additional information relating to these business
               segments).

               PRINCIPLES OF CONSOLIDATION:

               The consolidated financial statements include the accounts
               of the Company and its wholly owned subsidiaries. All significant
               intercompany accounts and transactions have been eliminated.

               USE OF ESTIMATES:

               The preparation of financial statements in conformity with
               accounting principles generally accepted in the United States of
               America requires management to make estimates and assumptions
               that affect the reported amounts of assets, liabilities,
               operating results, and disclosure of contingent assets and
               liabilities, at the date of the financial statements and the
               reported amounts of revenues and expenses during the reporting
               period. Significant estimates include inventory provision, sales
               return, allowance for doubtful accounts, market development
               accruals and lives of long-lived assets. Actual results could
               differ from those estimates.

               CASH AND CASH EQUIVALENTS:

               Cash equivalents on the balance sheet are comprised of
               certificates of deposit with an original maturity of three months
               or less. Due to the nature and size of the Company and the volume
               of its transactions, it maintains certain domestic cash accounts
               in excess of FDIC insured limits and cash accounts in foreign
               banks, which are not insured by the FDIC.

               INVENTORIES:

               The Company's merchandise inventory is carried at the lower
               of cost or market on a first-in, first-out basis. The Company
               writes down inventory for estimated obsolescence or unmarketable
               inventory equal to the difference between the cost of inventory
               and the estimated market value based upon assumptions about
               future demand and market conditions. If actual market conditions
               are less favorable than those projected by management, additional
               inventory write-downs may be required.

               ALLOWANCE FOR DOUBTFUL ACCOUNTS:

               The Company maintains an allowance for doubtful accounts for
               estimated losses resulting from the inability of its customers to
               make required payments. If the financial condition of Recoton's
               customers were to deteriorate, resulting in an impairment of
               their ability to make payments, additional allowances may be
               required.

               RECLASSIFICATIONS:

               Certain reclassifications have been made to the consolidated
               financial statements for prior periods to conform to the current
               year presentation.

               MARKET DEVELOPMENT ACCRUALS:

               The Company estimates expenses for customer programs and
               incentive offerings including: special pricing agreements, price
               protection, promotions and other volume-based incentives. If
               market conditions were to decline, the Company may take actions
               to increase customer incentive offerings possibly resulting in an
               incremental expense at the time the incentive is offered.

               DEPRECIATION OF PROPERTY AND EQUIPMENT:

               Depreciation is computed over the estimated useful lives of
               the assets on the straight-line method. Interest cost associated
               with financing of construction is capitalized.

               COMPUTER SOFTWARE COSTS:

               In accordance with the Statement of Position ("SOP") 98-1,
               "Accounting for the Costs of Computer Software Developed or
               Obtained for Internal Use" the Company capitalizes costs of
               software developed for internal use. In 2001, the Company,
               capitalized $12.3 million associated with the implementation of
               its new ERP system.

               AMORTIZATION OF TRADEMARKS AND PATENTS:

               Trademarks are being amortized over terms of 5 to 40 years.
               Patents are being amortized over the terms of the related patent,
               or a shorter period, based on the estimated commercial life of
               the related product. Accumulated amortization of trademarks and
               patents was $4,229,000 and $4,615,000 as of December 31, 2000 and
               2001, respectively.

               GOODWILL:

               Goodwill, representing the excess of the purchase price over
               the fair value of the net identifiable assets acquired in
               business combinations treated as purchases, is being charged to
               operations on a straight-line basis over periods of 15 to 30
               years. Accumulated amortization of goodwill was $10,655,000 and
               $12,337,000 as of December 31, 2000 and 2001, respectively.

               DEFERRED FINANCING COSTS:

               Deferred financing costs are being amortized over the life
               of the related debt on the straight-line method. Deferred
               financing costs were $8,392,000 and $5,997,000 as of December 31,
               2000 and 2001, respectively. These costs are included in "Other
               assets" in the consolidated balance sheet.

               DEFERRED TAX VALUATION ALLOWANCE:

               The Company records a valuation allowance to reduce its
               deferred tax assets to the amount that is more likely than not to
               be realized. While the Company has considered future taxable
               income and ongoing prudent and feasible tax planning strategies
               in assessing the need for the valuation allowance, in the event
               the Company were to determine that it would be able to realize
               its deferred tax assets in the future in excess of its net
               recorded amount, an adjustment to the deferred tax asset would
               increase income in the period such determination was made.
               Likewise, should the Company determine that it would not be able
               to realize all or part of its net deferred tax asset in the
               future, an adjustment to the deferred tax asset would be charged
               to income in the period such determination was made.

               TRANSLATION OF FOREIGN SUBSIDIARIES' FINANCIAL STATEMENTS:

               The assets and liabilities of the Company's foreign
               subsidiaries are translated into United States dollars at
               year-end rates of exchange. Operating accounts are translated at
               average rates of exchange during the year. Gains and losses on
               translation are reflected as a separate component (accumulated
               other comprehensive loss) of shareholders' equity on the
               consolidated balance sheet. Also included in accumulated other
               comprehensive loss are the effects of exchange rate changes on
               certain intercompany balances with foreign subsidiaries which are
               deemed by management to be permanently invested.

               FAIR VALUE OF FINANCIAL INSTRUMENTS:

               In management's opinion, the carrying value at December 31,
               2000 and 2001 of the Company's financial instruments approximates
               their fair values because they either have short maturities, bear
               variable interest rates or for the majority of long-term debt,
               there have been no significant changes in the market rates for
               such debt since it was incurred, restructured or refinanced.

               SALES RECOGNITION:

               Sales are recognized when the product is shipped and all
               significant obligations of the Company have been satisfied. The
               customer takes title and assumes the risks and rewards of
               ownership of the products when the merchandise leaves the
               Company's warehouse. Provisions are made for anticipated
               discounts, returns and allowances. The Company incurred bad debt
               expense of $2,224,000 and $3,062,000 for each of the years ended
               December 31,1999 and 2001, respectively. The Company had net bad
               debt recoveries of $185,000 for the year ended December 31, 2000.
               Additionally, the Company incurred write-offs of uncollectible
               accounts, net of recoveries, of $2,448,000 for the year ended
               December 31, 1999, $1,246,000 for the year ended December 31,
               2000 and $1,461,000 for the year ended December 31, 2001.

               SHIPPING AND HANDLING COSTS:

               Shipping and handling costs include all direct costs to
               deliver inventory to customers. Such amounts, which are included
               in selling, general and administrative expenses in the statements
               of operations, aggregated approximately $27,304,000 in 1999,
               $26,547,000 in 2000 and $21,935,000 in 2001.

               ADVERTISING COSTS:

               Advertising expenses are charged to operations at the time
               the advertising first takes place. Advertising expense charged to
               operations aggregated approximately $6,932,000 in 1999,
               $7,100,000 in 2000 and $3,415,000 in 2001.

               RESEARCH AND DEVELOPMENT:

               Research and development costs for new products aggregated
               approximately $5,930,000 in 1999, $6,100,000 in 2000 and
               $4,813,000 in 2001.

               INCOME PER SHARE:

               Basic income (loss) per share amounts are computed using the
               weighted average common shares outstanding for the period,
               without regard to outstanding stock options, warrants or other
               potentially dilutive securities or contingent stock issuances.
               Diluted earnings per share reflect the dilution that would have
               occurred if potential dilutive securities were exercised (after
               application of the treasury stock method) and contingent stock
               issuances were made.

               For the years ended December 31, 1999, 2000 and 2001, the
               effect of outstanding options, warrants and restricted stock was
               anti-dilutive and, therefore, omitted from the per share
               computations. At each of the years ended December 31, 1999, 2000,
               2001, the number of warrants outstanding were 660,000, 710,000
               and 684,000 respectively. For the year ended December 31, 2001,
               the number of performance accelerated restricted stock
               outstanding was 164,000. (See note F for options outstanding)

               COMPREHENSIVE LOSS:

               Comprehensive income, representing the change in equity of a
               business enterprise during a period from transactions and other
               events and circumstances from nonowner sources, includes all
               changes in equity except those resulting from investments by
               owners and distributions to owners. The Company's comprehensive
               loss has been comprised of net loss and foreign currency
               translation adjustments.

               FOREIGN EXCHANGE CONTRACTS:

               Gains and losses on foreign exchange forward contracts that
               are designated as hedges and included in other liabilities or
               other receivables, respectively. While these instruments are
               subject to risk of loss from change in exchange rates, these
               losses would generally be offset by gains on the related
               exposures. Periodically, the Company has entered into various
               types of foreign currency agreements, but does not have any
               significant holding in, nor issue, financial instruments for
               trading and speculative purposes. The Company uses foreign
               exchange forward contracts to hedge risk of changes in foreign
               currency exchange rates associated with firm commitments of less
               than one year that are denominated in foreign currency.

               At December 31, 2000, a German subsidiary of the Company had
               forward foreign exchange contracts to acquire the $1.5 million
               which expired in 2001. Such contracts were entered into in order
               to hedge future purchases. The carrying value of these contracts
               approximates their fair value.

               The forward exchange contracts have little credit risk as
               the counter-parties in each case are principally large banks with
               high credit ratings. Such fair values are determined by the
               Company based upon available market information and appropriate
               valuation methodologies and accordingly may not be indicative of
               the amounts the Company would realize in a current market
               exchange.

               DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES:

               During the first quarter of 2001, the Company adopted SFAS
               No. 133 and 138, ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND
               HEDGING ACTIVITIES. SFAS 133 established accounting and reporting
               standards for derivative instruments, including certain
               derivative instruments embedded in other contracts and hedging
               activities requiring all companies to recognize derivatives as
               either assets or liabilities in the statement of financial
               position and measure those instruments at fair value. SFAS 138 is
               an amendment to SFAS 133, which amended or modified certain
               issues discussed in SFAS 133. Implementation of SFAS 133 and SFAS
               138 did not have a material impact on the Company's consolidated
               financial statements.

               GOODWILL AND OTHER INTANGIBLE ASSETS:

               In June 2001, the Financial Accounting Standards Board
               ("FASB") issued two new pronouncements: Statement of Financial
               Accounting Standard ("SFAS")No. 141, BUSINESS COMBINATIONS, and
               SFAS No. 142, GOODWILL AND OTHER INTANGIBLE ASSETS.

               SFAS No. 141 addresses financial accounting and reporting
               for business combinations and supersedes APB No. 16 BUSINESS
               COMBINATIONS and FASB Statement No. 38, ACCOUNTING FOR
               PREACQUISITION CONTINGENCIES OF PURCHASED ENTERPRISES. All
               business combinations in the scope of this Statement are to be
               accounted for using one method, the purchase method. SFAS 141 is
               effective as follows: a) use of the pooling-of-interest method is
               prohibited for business combinations initiated after June 30,
               2001; and b) the provisions of SFAS 141 also apply to all
               business combinations accounted for by the purchase method that
               are completed after June 30, 2001 (that is, the date of the
               acquisition is July 2001 or later). The Company has determined
               that the adoption of this statement will not have an impact on
               the consolidated financial statements.

               SFAS No. 142 addresses financial accounting and reporting
               for acquired goodwill and other intangible assets and supersedes
               APB No. 17, INTANGIBLE ASSETS. It changes the accounting for
               goodwill from an amortization method to either an impairment or
               periodic amortization approach depending on the intangible asset.
               SFAS 142 is effective for fiscal years beginning after December
               15, 2001 to all goodwill and other intangible assets recognized
               in an entity's statement of financial position at that date,
               regardless of when those assets were initially recognized. The
               Company is still evaluating the impact of this pronouncement as
               it pertains to unamortized goodwill. Amortization of goodwill for
               the year ended December 31, 2001 was $2.2 million.

               ACCOUNTING FOR ASSET RETIREMENT OBLIGATIONS:

               In August 2001, the FASB issued SFAS No. 143, ACCOUNTING FOR
               ASSET RETIREMENT OBLIGATIONS. This Statement addresses financial
               accounting and reporting for obligations associated with the
               retirement of tangible long-lived assets and the associated asset
               retirement costs. The Statement requires that the fair value of a
               liability for an asset retirement obligation be recognized in the
               period in which it is incurred if a reasonable estimate of fair
               value can be made. The associated asset retirement costs are
               capitalized as part of the carrying amount of the long-lived
               asset. SFAS No. 143 is effective for the first quarter 2003. The
               Company does not believe that the adoption of this pronouncement
               will have a material impact on their consolidated results of
               operations.

               IMPAIRMENT OR DISPOSAL OF LONG LIVED ASSETS:

               The Company follows Statement of Financial Accounting
               Standards No. 121, ACCOUNTING FOR IMPAIRMENT OF LONG-LIVED ASSETS
               AND FOR LONG-LIVED ASSETS TO BE DISPOSED OF, which requires
               impairment losses to be recorded on long-lived assets used in
               operations when indicators of impairment are present and the
               undiscounted cash flows estimated to be generated by those assets
               are less than the assets' carrying amount. In evaluating the fair
               value and future benefits of long-lived assets, the Company
               performs an analysis of the anticipated discounted future net
               cash flows of the related long-lived assets and reduces their
               carrying value by the excess, if any, of the result of such
               calculation. Management believes that after the 1999 adjustment
               for impairment disclosed in Note J, the carrying value and useful
               lives of these assets continue to be appropriate.

               In October of 2001, the FASB issued SFAS No. 144,
               "ACCOUNTING FOR THE IMPAIRMENT OR DISPOSAL OF LONG-LIVED ASSETS."
               This statement supersedes SFAS No. 121 ACCOUNTING FOR THE
               IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO BE
               DISPOSED OF, but retains the fundamental provisions of SFAS No.
               121 for recognition and measurement of the impairment of
               long-lived assets to be held and used and measurement of
               long-lived assets to be disposed of by sale. However, SFAS No.
               144 applies the fair value method for testing of impairment,
               which differs from SFAS No. 121. SFAS No. 144 also supersedes the
               accounting and reporting provisions of APB Opinion No. 30 as it
               pertains to the disposal of a business segment, but retains the
               requirement of that opinion to report discontinued operations
               separately from continuing operations and extends that reporting
               to a component of an entity that either has been disposed of or
               is classified as held for sale. SFAS No. 144 is effective for
               fiscal years beginning after December 15, 2001. The Company is
               evaluating the impact of the adoption of this standard and has
               not yet determined the effect of adoption on its financial
               position and results of operations.

               VENDOR INCENTIVES:

               In April 2001, the FASB's Emerging Issues Task Force reached
               a consensus on Issue No. 00-25, VENDOR INCOME STATEMENT
               CHARACTERISTICS OF CONSIDERATION PAID TO A RESELLER OF THE VENDOR
               PRODUCTS ("EITF No. 00-25"). EITF No. 00-25 concluded that
               consideration from a vendor to a reseller of the vendor's
               products is presumed to be a reduction of the selling prices of
               the vendor's products and, therefore, should be characterized as
               a reduction of revenue when recognized in the vendor's income
               statement. That presumption is overcome and the consideration
               characterized as a cost incurred if a benefit is or will be
               received from the recipient of the consideration if certain
               conditions are met. This pronouncement is effective January 1,
               2002. The Company has determined that the adoption of this
               statement will not have an impact other than reclassification
               between components on the statement of operations.


<TABLE>
<CAPTION>

NOTE B -      INVENTORIES:

              Inventories are summarized as follows:

                                                                          (IN THOUSANDS)
                                                                         AS OF DECEMBER 31,
                                                                       2000          2001
                                                                   -----------    -----------
                <S>                                                  <C>            <C>
                Raw materials and work-in-process                    $  30,887      $  18,203
                Finished goods                                         120,621        109,366
                Merchandise in-transit                                  13,088         17,181
                                                                    ----------    -----------

                   TOTALS                                             $164,596       $144,750
                                                                      ========       ========
</TABLE>

<TABLE>
<CAPTION>


NOTE C -      PROPERTY AND EQUIPMENT:

              Property and equipment are summarized as follows:

                                                                       (IN THOUSANDS)             ESTIMATED
                                                                        AS OF DECEMBER 31,       USEFUL LIFE
                                                                       2000          2001           (YEARS)
                                                                   -----------    -----------    ------------
                <S>                                                   <C>           <C>               <C>
                Land                                                  $  3,185      $  3,180
                Buildings, leaseholds and improvements                  21,669        21,880          10 - 40
                Machinery and equipment                                 14,743        15,590           3 - 10
                Furniture, fixtures and office equipment                22,466        35,418           5 - 10
                Tools and dies                                          21,371        18,420           2 - 10
                                                                      --------    ----------

                         TOTALS                                         83,434        94,488


                Less accumulated depreciation
                   and amortization                                     48,148        48,919
                                                                      --------      --------

                                                                       $35,286       $45,569
                                                                      ========      =========
</TABLE>


               The Company recorded $9,583,000, $9,046,000 and $8,975,000 of
               depreciation expense in the years ended December 31, 1999, 2000
               and 2001, respectively. In addition, in 2001 the Company
               capitalized interest costs of $650,000 incurred in connection
               with the implementation of the new ERP system.


NOTE D -      LONG-TERM DEBT:

     Long-term debt included in the consolidated balance sheets is summarized as
follows:

<TABLE>
<CAPTION>

                                                                                AS OF DECEMBER 31,
                                                                           2000                    2001
                                                                         -------------      -------------
                                                                                  (IN THOUSANDS)
              <S>                                                        <C>                     <C>
              Subordinated notes (1)                                     $  50,000               $ 50,000
              Revolving loans (2)                                          158,782                158,536
              Senior term loans (3)                                         50,000                 38,125
              Capital lease financing (4)                                        -                  8,188
              Other                                                            186                     96
                                                                       -----------             ----------

                       TOTAL                                               258,968                254,945

              Less unamortized debt discount                                (3,060)                (2,068)
                                                                       -----------             ----------

                       BALANCE                                             255,908                252,877

              Less current portion                                         (11,994)               (13,536)
                                                                        ----------             ----------

                       NONCURRENT PORTION                                 $243,914               $239,341
                                                                          ========               ========
</TABLE>


               A substantial portion of the Company's outstanding debt at
               December 31, 2001 is comprised of the proceeds of the October 31,
               2000, $235 million facility syndicated by Heller Financial, Inc.
               and General Electric Capital Corporation (the "Senior Loan
               Agreement") which provides for a three year revolving loan and
               letter of credit facility of up to $185 million and three term
               loans aggregating $50 million.

               Proceeds from a previous lending agreement satisfied all
               financial institutions relating to the debt outstanding from a
               September 1999 debt restructuring agreement. In connection with
               the 1999 Debt Restructuring, the Company paid the lenders' fees
               of approximately $1,875,000, which were being amortized over the
               life of the related debt and the Company issued warrants to
               purchase 275,000 shares of the Company's common shares, of which
               250,000 with a fair value of $243,000 were issued in 2000. The
               fair value of the warrants was recorded as debt discount cost and
               was being amortized over the life of the related debt.

               Approximately $191.4 million of the funds obtained from the
               October 31, 2000 loan transactions were used to repay the then
               outstanding borrowings resulting from the Company's September
               1999 Debt Restructuring and other outstanding loans.

               As a result of the October 2000 debt refinancing and the
               extinguishment of the loans payable pursuant to the prior year's
               Debt Restructuring, the Company recorded an extraordinary charge
               in 2000 of approximately $3 million, net of a tax benefit of $1.6
               million, representing the final adjustment to the
               yield-maintenance fee payable caused by the further acceleration
               of the debt repayment date and the write-off of unamortized debt
               discount and financing costs associated with the repaid debt.

               The outstanding borrowings under the Senior Loan Agreement
               and Subordinated Loan Agreement at December 31, 2001 are
               collateralized by substantially all of the operating assets of
               the Company and its subsidiaries in the United States and Canada
               and a pledge of 65% of the capital stock of the Company's first
               tier foreign subsidiaries.

               (1)  On October 31, 2000, the Company entered into the
                    "Subordinated Loan Agreement" with its then existing senior
                    lenders which provides for an additional $15 million loan
                    due October 31, 2003. The notes bear interest at 5.75% over
                    the greater of the prime rate or the federal funds rate plus
                    .50% (10.50% at December 31, 2001). In addition, the Company
                    has subordinated notes of $35 million, payable on February
                    4, 2004 that currently bear interest at 16.5% a year.

               (2)  Borrowings of $158.5 were outstanding under the Company's
                    $185 million Senior Loan Agreement due October 31, 2003.
                    Advances limited to 80% of eligible accounts receivable and
                    65% of eligible inventory and amounts collateralized by
                    letters of credit under the German facility. Advances equal
                    to an additional 5% of eligible inventory (up to $10
                    million) are available during "in season periods." Total
                    amounts advanced for inventories are limited to $130
                    million. The lenders may decrease the foregoing advance
                    rates at their option. Interest is payable at the Company's
                    option at either 2.50% over LIBOR or .75% over the greater
                    of the prime rate or the federal funds rate plus .50%
                    (weighted average rate of 4.70% on outstanding borrowings at
                    December 31, 2001). In addition, on October 31, 2000, the
                    Company's German subsidiaries entered into a 50 million
                    Deutsche Mark annually renewable revolving credit facility
                    (up to approximately $25 million) with interest at 2.5% over
                    European LIBOR. At December 31, 2001, the factoring facility
                    supported a $13 million letter of credit issued in favor of
                    Heller as security for the loans in the United States under
                    the Senior Loan Agreement. As of December 31, 2001, there
                    was no debt outstanding for Germany.

               (3)  Borrowings of $5.6 million bear interest at the Company's
                    option, at either 5.00% over LIBOR or 3.25% over the greater
                    of prime or the federal funds rate plus .50% (weighted
                    average rate of 7.18% at December 31, 2001). Borrowings of
                    $17.5 million bear interest at the Company's option, at
                    either 2.75% over LIBOR or 1% over the greater of prime or
                    the federal funds rate plus .50% (weighted average interest
                    rate of 4.86% at December 31, 2001). The remaining $15
                    million of borrowings, bear interest at 3% over the greater
                    of prime or .50% over the federal funds rate (7.75% at
                    December 31, 2001). As of December 31, 2001, the maturities
                    of the borrowings are due as follows:$5.6 million is due
                    October 2002, $17.5 million is due October 2003 and $15
                    million is due in twelve monthly installments beginning
                    October 31, 2002.

               (4)  In March 2001, the Company entered into a 36 month capital
                    lease agreement with IBM Credit Corporation to finance
                    approximately $11.1 million in computer hardware, software
                    and additional related expenses for the purpose of
                    implementing a new Enterprise Resource Planning (ERP)
                    system. The interest rate, as of December 31, 2001, was
                    14.9%.

               Outstanding letters of credit under the domestic and foreign
               lines aggregated approximately $22.0 million at December 31,
               2001. Such amounts reduce the amounts available for direct
               borrowings under the lines.

               The loan agreements provide for, among other things, the
               maintenance of various specified financial ratios and minimum
               tangible net worth requirements (as defined), contain limitations
               and restrictions on additional borrowings, the payment of
               dividends, repurchases of the Company's common stock, engaging in
               business not directly related to the consumer electronics
               industry, investments, and mergers and sales of the Company's
               assets, other than in the ordinary course of business (as
               defined).

               At December 31, 2001, the Company was not in compliance with
               certain financial covenants under the Senior Loan Agreement
               (those relating to tangible net worth, minimum EBITDA, fixed
               charge coverage and required minimum excess availability). The
               bank lenders subsequently waived the Company's non-compliance
               with these covenants. In connection with such waiver, the Senior
               Loan Agreement was amended to reset the covenant thresholds,
               authorize certain insurance premium financing, add certain
               additional covenants regarding minimum cumulative EBITDA for the
               Company's subsidiary InterAct International, Inc., assess minimum
               excess availability at all times, modify the inventory advance
               rate limitation (reducing it in steps starting September 30, 2002
               from 100% to 85% of orderly liquidation value) and increase
               interest rates.

               Management expects to be in compliance with the amended loan
               agreement covenants through 2002. There can be no assurance that
               the Company will be in compliance with the modified covenants in
               the future or that the lenders will waive or amend any of the
               covenants should it be in violation of any such covenants in the
               future. Because compliance is based on management estimates and
               actual results can differ from those estimates, compliance
               through 2002 cannot be assured. The Company believes the
               assumptions used are appropriate.


NOTE E -       SHAREHOLDERS' EQUITY:

               The Recoton Corporation Stock Bonus Plan provides for the
               issuance to officers and key employees an aggregate of up to
               300,000 shares of stock held in treasury, of which 93,072 shares
               are available for future grants at December 31, 2001. During the
               third quarter of 2001 the Company issued Performance Accelerated
               Restricted Stock (PARs) from this plan to various employees. The
               Company has recorded the issuance of the PARs as a reduction of
               shareholders' equity and is amortizing the compensation expense,
               derived from the market value of the common stock at the date of
               issuance, over the PARs four year vesting period. The PARs have
               an acceleration clause if the Company meets certain targets in
               which case the remaining unamortized deferred compensation will
               be charged to earnings. The Recoton Corporation Stock Bonus Plan
               is administered by a committee of the Board of Directors.

               In previous years the Board of Directors authorized the
               repurchase by the Company of up to 500,000 of its outstanding
               common shares. Through December 31, 2001, the Company has
               repurchased 48,352 shares. Future repurchases of shares are
               limited under the terms of the Company's loan agreements (see
               Note D).

               The Company's shareholders' rights plan becomes operative in
               certain events involving the acquisition of 20% or more of the
               Company's common shares or the commencement of a tender or
               exchange offer by any person or group in a transaction not
               approved by the Company's Board of Directors. Upon the occurrence
               of such an event, each right, unless redeemed by the Board at a
               redemption price of $0.01 per right, entitles its holder to
               purchase for $100 an amount of common shares of the Company, or
               in certain circumstances the acquirer, having a market value of
               twice the purchase price. The Company has reserved 250,000 Series
               A Junior Participating Preferred Shares in connection with the
               rights plan.

               In 1999, 21,334 common shares were issued in exchange for
               2,613 shares of previously issued common shares with a market
               value of $24,000 and in 2000, 8,000 common shares were issued in
               exchange for 1,000 shares of previously issued common shares with
               a market value of $9,000. In 2001, 145,802 shares of common stock
               were issued in exchange for 33,202 shares of previously issued
               common stock with a market value of $500,000. Other transactions
               with respect to stock options are described in Note F.

               In connection with the sale of senior subordinated notes in
               February 1999, the Company issued 310,000 common stock purchase
               warrants with an initial fair value of $2,491,000 immediately
               exercisable at $18.26 a share and which expire in February 2004.
               Pursuant to the Debt Restructuring in September 1999 (see Note
               D), the exercise price was reduced to $7.77 a share which
               increased the fair value by approximately $469,000.

               In September 1999, pursuant to the Debt Restructuring (see
               Note D), the Company issued warrants to purchase 350,000 of the
               Company's common shares with a fair value of $1,224,000, which
               are immediately exercisable at $7.77 a share and which expire in
               September 2004.

               In October 2000, the Company issued warrants to its former
               senior lenders (see Note D) to purchase 25,000 common shares with
               a fair value of $243,000, which are immediately exercisable at
               $14.88 a share and expire in October 2005.

               Pursuant to the debt refinancing in October 2000, the
               Company issued warrants to purchase 25,000 common shares with a
               fair value of $134,000, which are immediately exercisable at
               $13.28 a share and expire in October 2005.

               In 2001, 13,634 common shares were issued pursuant to the
               exercise of 13,634 warrants, and the surrender of 11,899 warrants
               to purchase common shares with a market value of $248,000.

               The fair value of the warrants issued was estimated using
               the Black-Scholes option-pricing model using approximately the
               same expected volatilities and average risk free interest rates
               as described in Note F and average expected holding periods of 5
               years.


NOTE F -       STOCK OPTIONS:

               At December 31, 2001, the Company has two stock option
               plans. Options are outstanding to purchase 1,344,791 shares under
               the 1991 Stock Option Plan. No additional options are available
               for grant under this plan. The Company's 1998 Stock Option Plan
               provides for the granting of options to purchase up to 2,500,000
               common shares. Such options may be either incentive stock options
               (as defined in the Internal Revenue Code) or nonqualified
               options. At December 31, 2001, options to purchase 1,342,314
               shares are available for grant under this plan.

               An employment agreement with Mr. Robert Borchardt, the
               Company's President, Chairman of the Board and Chief Executive
               Officer, provides for the granting of nonqualified options each
               year for the duration of the agreement based on a formula related
               to annual increases in consolidated net income, as defined. No
               options have been granted in connection with the Company's
               operations subsequent to 1997.

               Also, at December 31, 2001, there are non-plan nonqualified
               options outstanding to purchase an aggregate of 20,450 shares of
               common stock, of which options to purchase 7,500 shares at $20.67
               a share were granted to a director of the Company. The non-plan
               options also include options to purchase 2,200 common shares at a
               price of $13.50 a share granted to certain non-U.S. employees in
               1998. In 1998 the Company issued to a consulting firm a non-plan
               option to purchase 10,000 common shares for $25.50 a share. The
               $124,000 fair value of the options at the date of grant was
               credited to additional paid-in capital in 1998 and was amortized
               to operations over the term of the consulting agreement. This
               agreement, which expired in January 2001, was replaced with a new
               agreement providing for the issuance of a non-plan option to
               purchase 20,000 common shares for $10.16 a share. The $150,939
               fair value of the options at the date of grant was credited to
               additional paid-in capital in 2001 and amortized to operations
               over the term of the consulting agreement, which expired on
               December 31, 2001. The length, vesting schedule, option price and
               other terms of the options are determined at the time each option
               is granted, although the term of plan options cannot exceed 10
               years and incentive stock option prices may not be less than the
               fair market value of the stock on date of grant. Since all
               outstanding plan options to officers and employees were granted
               for at least the fair market value of the Company's shares at the
               dates of grant and are considered fixed plan options, no charge
               has been made to operations for these options. No income tax
               benefit is received by the Company upon the granting or exercise
               of incentive stock options but it may receive income tax benefits
               from nonqualified stock options when they are exercised and from
               certain incentive stock options if the shares are resold within
               one year of exercise. Such income tax benefits are credited to
               additional paid-in capital when realized.

               The Company has adopted the disclosure only provisions of
               Statement of Financial Accounting Standards ("SFAS") No. 123,
               "Accounting for Stock Based Compensation," for stock options
               granted to employees, officers and directors and, therefore,
               continues to apply Accounting Principles Board Opinion No. 25 and
               related interpretations in its accounting for stock option plans.
               Accordingly, no compensation cost has been recognized for options
               granted under its stock option plans. If the Company had elected
               to recognize compensation cost for options granted under these
               plans based on a calculated fair value at the grant dates,
               consistent with the method of SFAS No. 123, the pro forma net
               income (loss) and income (loss) per share would be as follows:

<TABLE>
<CAPTION>

                                                                   YEARS ENDED DECEMBER 31,
                                                    ------------------------------------------------------
                                                      1999                   2000                   2001
                                                    ---------------- --------------------- ---------------
                                                         (In thousands, except per share information)

Net loss:
     <S>                                            <C>                     <C>                  <C>
     As reported                                    $(28,030)               $(4,836)             $(7,556)
     Pro forma                                       (29,273)                (7,164)              (9,298)
Loss per share:
     Basic/diluted:
     As reported                                      $(2.39)                 $(.41)               $(.63)
     Pro forma                                         (2.50)                  (.61)                (.78)

</TABLE>

              The fair value of each option grant is estimated on the date of
              each grant using the Black-Scholes option-pricing model with the
              following weighted average assumptions:

<TABLE>
<CAPTION>

                                                               1999                   2000                   2001
                                                            -----------           -----------               --------
<S>                                                             <C>                 <C>                      <C>
Expected volatility                                             57.4%               59.5%                    62.7%
Average risk-free interest rate                                  6.3%                6.0%                     5.0%
Average expected holding period, in years                        6                     6                        7

</TABLE>


               A summary of the status of the Company's outstanding stock
               options as of December 31, 1999, 2000 and 2001 and changes during
               the years then ended is presented below:

<TABLE>
<CAPTION>

                                                                     YEARS ENDED DECEMBER 31,
                                                   1999                        2000                        2001
                                         ------------------------     ------------------------    ----------------------
                                                        Weighted                    Weighted                    WEIGHTED
                                                        Average                     Average                     AVERAGE
                                                        Exercise                    Exercise                    EXERCISE
                                           Shares      Price Per       Shares      Price Per       SHARES      PRICE PER
            Stock Options                 (000's)        Share        (000's)        Share        (000'S)        SHARE
---------------------------------- ------------------ ------------ ------------- -------------- ------------- -----------
<S>                                        <C>            <C>          <C>            <C>          <C>           <C>
Outstanding at beginning of year           1,835          $14.06       2,522          $12.00       2,466         $12.13
Granted                                      836            7.47          65           11.41         340          13.60
Exercised                                    (37)           4.99         (16)           3.31        (389)          7.25
Forfeited/expired                           (112)          14.15        (105)          10.11         (56)         12.17
                                           -----           -----        ----           -----         ----         -----

Outstanding at end of year                 2,522          $12.00       2,466          $12.13       2,361         $13.14
                                           =====          ======       =====          ======       =====         ======

Exercisable at year end                    1,246          $13.70       1,649          $12.98       1,529         $14.16
                                           =====          ======       =====          ======       =====         ======

Weighted - average fair value
of options granted during the year                         $4.42                       $7.03                      $8.93
                                                           =====                       =====                      =====

</TABLE>


     The following table summarizes information about stock options outstanding
at December 31, 2001:

<TABLE>
<CAPTION>

                                              Options Outstanding                          Options Exercisable
                               -------------------------------------------------    -----------------------------------
                                                    Weighted          Weighted                            Weighted
                                                    Average           Average                             Average
          Range of                                 Remaining       Exercise Price                      Exercise Price
      Exercise Prices          Shares (000's)   Contractual Life     Per Share       Shares (000's)      Per Share
------------------------- --------------------  ------------------- -------------- ----------------- ------------------
   <S>                <C>             <C>          <C>                    <C>              <C>               <C>
   $7.44     to       10.44           642          8.0 years              7.61             268               7.69
   11.06     to       16.75         1,475          5.3 years             14.26           1,065              14.60
   18.07     to       25.50           244          5.6 years             20.90             196              20.63
                                   ------                                               ------

         Totals                     2,361                                                1,529
                                    =====                                                =====

</TABLE>


NOTE G -     INCOME TAXES:

             Income taxes applicable to income (loss) before extraordinary items
             on the statements of operations are comprised of the following:

<TABLE>
<CAPTION>

                                                                          (In Thousands)

                                                                    YEARS ENDED DECEMBER 31,
                                                             -------------------------------------
                                                                1999          2000          2001
                                                             ----------    ----------   ----------


                                                                     YEARS ENDED DECEMBER 31,
                                                   ------------------------------------------------------------
                                                       1999                     2000                    2001
                                                    ----------------   ----------------------    --------------
                                                                          (In Thousands)
<S>                                                  <C>                     <C>                     <C>
Current
     Federal                                         $   867                 $     16                $   727
     State and local                                    (116)                     (74)                   166
     Foreign                                           4,069                    1,382                  2,501
                                                     -------                  -------                -------

         Totals                                        4,820                    1,324                  3,394

     Deferred                                         (1,744)                    (530)                (2,314)
                                                     --------                --------               --------

         NET PROVISION                               $ 3,076                  $   794                 $1,080
                                                     =======                  =======                 ======

</TABLE>

               Pretax income (loss) before extraordinary items was derived
               from foreign and domestic sources as follows:

<TABLE>
<CAPTION>

                                                                     YEARS ENDED DECEMBER 31,
                                                    -----------------------------------------------------------
                                                       1999                     2000                    2001
                                                    ---------------  --------------------------- --------------
                                                                          (In Thousands)

     <S>                                            <C>                      <C>                    <C>
     Foreign                                        $ 11,032                 $   (299)              $ (3,564)
     Domestic                                        (27,221)                    (790)                (2,912)
                                                    ---------               ----------              --------

         Totals                                     $(16,189)                $ (1,089)              $ (6,476)
                                                    =========                =========              ========

</TABLE>


              The following table reconciles statutory U.S. federal income taxes
              on the Company's income (loss) before income taxes and
              extraordinary item to the Company's actual income tax provision
              (benefit):

<TABLE>
<CAPTION>

                                                                    (DOLLAR AMOUNTS IN THOUSANDS)
                                                                      YEARS ENDED DECEMBER 31,
                                             ------------------------------------------------------------------
                                                        1999                    2000                   2001
                                             ---------------------- ---------------------- ---------------------
                                               Rate      Amount       Rate      Amount        Rate      Amount
                                             ---------- ---------- ----------- ---------- ------------ ---------
        <S>                                     <C>       <C>          <C>       <C>           <C>       <C>
        Statutory U.S. Federal income
            tax provision (benefit)             (34.0)%   $(5,504)     (34.0)%   $(370)        (34.0)%   $(2,202)
        Effect of:
            State and local income
              tax provision (benefit)
              (net of federal effect)            (4.8)       (769)      (7.8)      (85)         (2.2)       (143)
            Difference between U.S.
              and foreign income tax
              rates on earnings and
              distributions of foreign
              subsidiaries                      104.7      16,959      498.3     5,428          48.2       3,121
            Foreign and other income
              tax credits                       (65.1)    (10,543)    (903.1)   (9,839)        (37.2)     (2,412)
            Provision for expected U.S.
              Customs settlement                 (8.6)     (1,394)
            Valuation reserves on
              deferred tax assets                 7.3       1,175      472.4     5,147          75.4       4,881
            Change in foreign
              income tax rates                                                                 (13.3)       (858)
            Alternative minimum tax               5.9         950
            Other items (net)                    13.6       2,202       47.0       513         (20.2)     (1,307)
                                                 ----     -------       ----    ------         ------     -------
        Actual income tax provision              19.0%    $ 3,076       72.8%   $  794          16.7%     $1,080
                                                 ====     =======       ====    ======          ====      ======

</TABLE>

               The earnings from the Company's Asian operations are taxed
               locally at a current maximum tax rate of 16%. However, the
               effective tax rate from Asian operations has been dependent on
               the proportion of earnings from mainland China. In January 1996,
               a subsidiary of the Company with manufacturing operations in
               mainland China was granted a five year "tax holiday," comprised
               of a full exemption from income taxes for the first two years and
               a 50% reduction from the statutory 15% tax rate for the next
               three years which ended on December 31, 2000. As a result of the
               tax holiday, the Company has saved an aggregate of $7,890,000 in
               income taxes.

               Before 1999, the Company did not provide for additional U.S.
               income taxes which would be payable upon the payment of dividends
               from its Hong Kong subsidiaries, because the earnings of these
               subsidiaries were considered indefinitely invested. However, as a
               result of business requirements of its domestic operations caused
               in part from the provisions of the 1999 Debt Restructuring
               agreement (Note D), in 1999 the Company repatriated $41 million
               of such earnings, of which $18.8 million was previously taxed as
               U.S. Sub-part F income and in 2000 and 2001, the Company
               repatriated an additional $7.8 million and $.5 million,
               respectively, of such earnings. At December 31, 2001, additional
               taxes would aggregate approximately $13.4 million based on the
               Hong Kong subsidiaries' remaining undistributed earnings, which
               aggregate approximately $49 million for income tax purposes. The
               foregoing amounts are stated net of U.S. Sub-Part F taxes paid,
               or payable, which are considered the equivalent of repatriated
               earnings. The Company's effective income tax rate on future
               earnings from Hong Kong and additional U.S. income taxes on the
               Hong Kong retained earnings at December 31, 2001 are, in part,
               dependent upon the Company's future domestic cash requirements.
               While the Company currently projects that its Hong Kong retained
               earnings at December 31, 2001 will remain indefinitely invested
               and accordingly has not recorded any tax liability relating to
               the assumed repatriation of such amounts, such estimate continues
               to be subject to revision based upon economic conditions and
               market conditions in the consumer electronics industry.

              Deferred tax assets and liabilities and the principal temporary
differences from which they arise are:

<TABLE>
<CAPTION>

                                                                                            (In Thousands)

                                                                                             DECEMBER 31,
                                                                                           2000          2001
                                                                                       ----------    -----------
                 <S>                                                                       <C>          <C>
                 Deferred tax assets:
                    Allowance for estimated doubtful accounts and
                      estimated sales returns, allowances and discounts                    $1,818       $  1,641
                    Tax basis adjustments to inventory                                      4,500          4,345
                    Deferred compensation accruals                                            745            922
                    Difference in basis and amortization periods of patents,
                      trademarks and package design costs                                   1,731          2,301
                    Cumulative foreign translation adjustment                               2,840          3,352
                    Net operating loss and tax credit carryforwards                        23,295         27,927
                    Other                                                                     399          1,330
                                                                                        ---------   ------------

                           TOTAL                                                           35,328         41,818

                    Less valuation allowance                                               (9,542)       (14,424)
                                                                                         --------     ----------

                           TOTAL DEFERRED TAX ASSETS                                       25,786         27,394
                                                                                          -------       --------

                 Deferred tax liabilities:
                   Accelerated depreciation of property and equipment                         245            292
                   Tax basis adjustments to prepaid catalog costs                             121            --
                                                                                        ---------        -------

                           TOTAL DEFERRED TAX LIABILITIES                                     366            292
                                                                                           ------         ------

                           NET DEFERRED TAX ASSETS                                        $25,420        $27,102
                                                                                          =======        =======

              The increase in the valuation allowance is analyzed as follows:

                 Foreign tax credit carryforwards                                                       $  3,617
                 Foreign net operating loss carryforwards                                                  1,336
                 Other                                                                                       (72)
                                                                                                       ----------

                           TOTAL                                                                        $  4,881
                                                                                                        ========
</TABLE>

               The Company has net operating loss carryforwards of
               approximately $9.2 million in the United Kingdom, $19.7 million
               in Hong Kong and $1.3 million in Canada, which are available to
               be applied against future earnings in these countries.
               Additionally, at December 31, 2001, the Company has domestic tax
               credit carryforwards of approximately $18.0 million of which
               approximately $12.4 million expire in 2004 and the balance
               expires between 2005 and 2020. The Company has recorded a
               deferred tax asset for the tax benefit of the foregoing
               carryforwards and a valuation allowance for the tax benefit of
               such carryforwards which it estimates is not likely to be
               realized prior to expiration. If the amount subject to valuation
               allowance attributable to preacquisition loss carryforwards of
               acquired businesses is subsequently realized, the income tax
               benefit will be recorded as a reduction of the then unamortized
               goodwill related to the acquisition.


NOTE H -       EMPLOYEE BENEFIT PLANS:

               The Company's profit sharing plans for eligible domestic
               nonunion employees provide for annual contributions as authorized
               by the Board of Directors of up to the maximum allowable as a tax
               deduction by the Treasury Department. Profit sharing expense was
               approximately $434,000 in 1999, $400,000 in 2000 and $401,000 in
               2001.

NOTE I - COMMITMENTS AND CONTINGENCIES:

               LEASES:

               Aggregate minimum rental payments under long-term leases of
               premises which expire at various dates through 2013 are as
               follows:

                YEAR ENDING DECEMBER 31:                       (IN THOUSANDS)
                    2002                                         $      3,941
                    2003                                                2,378
                    2004                                                1,969
                    2005                                                1,764
                    2006                                                1,697
                Subsequent to December 31, 2006                         5,993
                                                                   ----------

                    TOTAL                                         $    17,742
                                                                    =========

               Rent expense was $5,806,000 in 1999, $6,390,000 in 2000 and
               $5,914,000 in 2001.


          EMPLOYMENT AGREEMENT:

          The Company's employment agreement with Mr. Robert Borchardt, the
          Company's President, Chairman of the Board and Chief Executive
          Officer, provides for a base annual salary $1,206,000 for 2001 to be
          increased annually by the greater of 6% or the change in the consumer
          price index, and annual bonuses and nonqualified stock option grants
          based on formulas related to annual increases in the consolidated net
          income of the Company. The agreement terminates on December 31, 2004
          and is automatically renewable for successive two-year periods. If an
          election is made not to renew the agreement, Mr. Borchardt may
          thereafter be retained as a consultant to the Company for life.

          In connection with certain business acquisitions and the
          formation of new subsidiaries in prior years, the Company entered into
          employment agreements with certain key employees, which expire at
          various times through November 2002. The agreements provide for
          specified annual salaries. Certain agreements include provisions for
          annual increases based on changes in consumer price indexes and
          provide for performance based bonuses relating to the results of
          operations of the acquired entity or newly formed subsidiary, which
          are payable in either cash, stock or a combination thereof at the
          Company's option.

          LEGAL PROCEEDINGS:

          Various suits and claims arising in the course of business are
          pending against the Company. In the opinion of management,
          dispositions of these matters are not expected to materially affect
          the Company's consolidated financial position, cash flows or results
          of operations.


NOTE J -  BUSINESS RESTRUCTURING AND RELATED COSTS:

          In September 1999, the Company adopted a strategic business plan
          designed to improve operating efficiencies, increase future
          profitability, improve cash flow and increase the return on assets
          through a combination of staff reductions, consolidation of certain
          businesses, reduction or elimination of certain product lines and
          sales of certain assets. The results of operations for the year ended
          December 31, 1999 reflect a restructuring charge of approximately $3.4
          million, which includes approximately $2.2 million for severance
          benefits associated with the elimination of positions and
          approximately $1.2 million primarily relating to lease terminations
          and related costs. Amounts charged against the reserve aggregated
          approximately $1.6 million in 1999, approximately $1.5 million in 2000
          and approximately $.3 in 2001. No amounts remain at December 31, 2001.

          In connection with the plan, the Company also recorded and
          included in cost of sales approximately $8.3 million of inventory
          write-downs relating to products to be reduced or eliminated.
          Additionally, in 1999 the Company recorded and included in selling,
          general and administrative expenses other charges totaling
          approximately $5.8 million applicable to the value of assets to be
          sold, the valuation of related receivables and other assets and the
          costs of developing the plan.


NOTE K -  SEGMENT INFORMATION AND GEOGRAPHICAL DATA:

          The Company operates three business segments, as follows:

               Consumer Electronics Accessories Business - Consists of the
               accessories' operations of Recoton Corporation and certain other
               subsidiaries. Products sold include 900 MHz and other wireless
               technology products and other consumer electronic accessories.

               Audio Business - Consists of the home and mobile audio
               business of Recoton Audio Corporation and its United States and
               European subsidiaries. Products sold include high-performance and
               home theater loudspeaker systems and mobile audio products.

               Video and Computer Game Business - Consists of the
               manufacturing operations of STD Holdings Limited and its Hong
               Kong and other Chinese subsidiaries and the sale and distribution
               of peripherals and other accessories to enhance the enjoyment of
               playing video and computer games. This segment also manufactures
               certain products sold by the Company's other business segments.
               The profits on these products have been allocated to the other
               segments.

          Each segment's earnings before corporate interest and income
          taxes are reported to the Company's chief operating decision-makers.
          General corporate expenses other than certain interest costs are
          allocated to each segment on the basis used for internal management
          decision making purposes; certain interest expense and assets jointly
          utilized by more than one business segment are reflected as
          "unallocated corporate" in the following presentation.


          The following table presents certain operating segment
          information:
<TABLE>
<CAPTION>

                                                                      (IN THOUSANDS)
                                      ----------------------------------------------------------------------------------------------
                                         CONSUMER                        VIDEO AND
                                         ELECTRONICS                      COMPUTER
                                         ACCESSORIES      AUDIO             GAME          UNALLOCATED
                                         BUSINESS       BUSINESS           BUSINESS         CORPORATE        TOTAL
                                      ----------------------------------------------------------------------------------------------
              <S>                         <C>            <C>              <C>             <C>              <C>
              1999:
                Net sales:
                 External customers       $242,456       $234,906         $232,888        $        -       $710,250
                Intersegment                   504          3,205           36,381                 -         40,090
                Interest expense               834            285              438            24,909         26,466
                Depreciation and
                   Amortization              4,164          3,914            4,186             1,296          13,560
                Restructuring charge           690          2,654                -               100           3,444
                Income (loss) before
                    income taxes and
                   extraordinary item        6,762         (4,483)           9,339           (27,806)        (16,189)
                Identifiable assets        117,063        144,578          152,888            70,798         485,327
                Property and equipment
                   additions                   587            624            2,599             2,481            6,291

              2000:
                Net sales:
                    External customers    $238,290       $233,362         $177,643         $       -         $649,295
                  Intersegment                 109          1,124            6,592                 -            7,825
                Interest expense               551            429              689            34,210           35,879
                Depreciation and
                    amortization             3,618          3,675            4,516             2,330           14,139
                Income (loss) before
                    income taxes and
                   extraordinary item       26,505         18,968          (10,508)          (36,054)          (1,089)
                Identifiable assets        103,645        147,669          142,862            69,335          463,511
                Property and equipment
                   additions                   195            338            3,815             2,853            7,201
              2001:
                Net sales:
                 External customers       $233,849       $222,919         $156,310        $      -           $613,078
                 Intersegment                  384          2,381           12,387               -             15,152
                Interest expense               172            770              619            23,976           25,536
                Depreciation and
                 amortization                2,808          3,496            5,257             3,214           14,775
                Income (loss) before
                 income taxes               24,659         13,862          (17,807)          (27,190)          (6,476)
                Identifiable assets        114,704        144,764          118,756            79,610          457,834
                Property and equipment
                 additions                     770          1,314            2,352            13,322           17,758

</TABLE>

          In 1999 sales to one customer represented approximately 17% of
          consolidated net sales. In 2000 sales to two customers represented 19%
          and 11%. In 2001, sales to two customers represented 18% and 15%. In
          all three years, sales to these customers were made by each of the
          Company's reportable business segments. Revenue from export sales from
          the United States was less than 10% of consolidated net sales in each
          of the three years ended December 31, 2001. The Company currently
          sources certain products from single suppliers. However, to lessen the
          risks of offshore manufacturing, the Company maintains substantial
          inventories of long-lead-time items and continually evaluates
          alternative supply sources.

     Net sales to customers and long-lived tangible assets by geographic
     area are as follows:

<TABLE>
<CAPTION>

                                                                            (IN THOUSANDS)
                                                                       YEARS ENDED DECEMBER 31,
                                                             --------------------------------------------
                                                                1999             2000            2001
                                                             -----------     -----------     ------------
             Net sales to customers in:
                <S>                                             <C>             <C>              <C>
                United States                                   $555,125        $531,725         $494,796
                Europe                                           114,564          71,824            73,702
                Other                                             40,561          45,746           44,580
                                                               ---------       ---------      -----------

                         TOTALS                                 $710,250        $649,295       $613,078
                                                                ========        ========       ========

                                                                            (IN THOUSANDS)
                                                                          AS OF DECEMBER 31,
                                                             --------------------------------------------
                                                                1999             2000            2001
                                                             -----------     -----------      -----------
             Long-lived tangible assets:
                United States                                  $  33,338        $ 32,148         $ 51,292
                Europe                                             3,164           2,401            3,087
                Other                                              4,898           4,579            4,163
                                                             -----------      ----------       ----------

                         TOTALS                                $  41,400        $ 39,128         $ 58,542
                                                               =========        ========         ========
</TABLE>


NOTE L -  SELECTED QUARTERLY INFORMATION (UNAUDITED):

     Unaudited, summarized financial data by quarter for 2000 and 2001 is as
follows (in thousands except per share data):

<TABLE>
<CAPTION>
                                                 FIRST            SECOND              THIRD        FOURTH
YEAR ENDED DECEMBER 31,                          QUARTER          QUARTER             QUARTER      QUARTER
----------------------------------------         ---------        --------            ---------    --------
2000
<S>                                              <C>              <C>                 <C>            <C>
Total Revenues                                   $145,463         $136,678            $157,582       $209,572
Gross Profit                                       52,930           51,949              58,474         83,309
Net (loss) income before
        extraordinary item                         (2,624)          (2,793)             (1,929)         5,463
Extraordinary item                                    -                 -                   -          (2,953)
                                                 ----------       -----------         ---------      ---------
Net (loss) income                                $  (2,624)       $   (2,793)         $ (1,929)      $  2,510
                                                 ==========       ===========         =========      =========

         Basic Earnings Per Share:

Income (Loss) Before Extraordinary Item          $    (.22)       $      (.24)        $    (.16)     $     .47
Extraordinary item                                       -                -                   -           (.25)
                                                 ----------       -----------         ---------      ---------
        Net (loss) income                        $     (.22)      $      (.24)        $    (.16)     $     .22
                                                 ===========      ============        ==========     ===========

Diluted Earnings Per Share:
Income (Loss) Before Extraordinary Item          $     (.22)      $     (.24)         $   (.16)      $     .45
Extraordinary item                                        -               -                  -            (.24)
                                                 ----------       -----------         ---------      ---------
        Net (loss) income                        $     (.22)      $     (.24)         $   (.16)      $     .21
                                                 ===========      ============        ==========     ===========

2001

TOTAL REVENUES                                   $  138,007         $ 132,690          $136,711       $205,670
GROSS PROFIT                                         50,544            49,322            52,505          75,342
NET (LOSS) INCOME BEFORE
       EXTRAORDINARY ITEM                            (2,802)          (2,751)               359          (2,362)
EXTRAORDINARY ITEM                                       -                -                 -                -
                                                 ----------       -----------         ---------      ---------
NET (LOSS) INCOME                                $  (2,802)        $  (2,751)          $    359      $  (2,362)
                                                 ===========      ============        ==========     ==========


BASIC EARNINGS PER SHARE:
(LOSS) INCOME BEFORE EXTRAORDINARY ITEM          $    (.24)        $   (.23)          $    .03      $     (.19)
EXTRAORDINARY ITEM                                      -                -                  -               -
                                                 ----------       -----------         ---------      ---------
        NET (LOSS) INCOME                        $    (.24)        $   (.23)          $    .03      $     (.19)
                                                 ===========      ============        ==========     ==========

DILUTED EARNINGS PER SHARE:
(LOSS) INCOME BEFORE EXTRAORDINARY ITEM          $    (.24)        $   (.23)          $    .03      $     (.19)
EXTRAORDINARY ITEM                                       -                -                 -               -
                                                 ----------       -----------         ---------      ---------
        NET (LOSS) INCOME                        $    (.24)        $   (.23)          $    .03      $     (.19)
                                                 ===========      ============        ==========     ==========

The per share amounts are calculated independently for each of the quarters
presented. The sum of the quarters may not equal the full year per share
amounts.

</TABLE>

<PAGE>



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

     Not applicable.


                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

     That portion of Recoton's definitive proxy statement for the annual meeting
in 2002 appearing under the caption "Election of Directors" (or comparable
language) is incorporated by reference. The information regarding the executive
officers of Recoton is contained under "Executive Officers of Recoton" under
Item 1 to this Report.

ITEM 11.  EXECUTIVE COMPENSATION.

     That portion of Recoton's definitive proxy statement for the annual meeting
in 2002 appearing under the caption "Compensation of Executive Officers" (or
comparable language) is incorporated by reference.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

     That portion of Recoton's definitive proxy statement for the annual meeting
in 2002 appearing under the caption "Security Ownership of Certain Beneficial
Owners and Management" (or comparable language) is incorporated by reference.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     That portion of Recoton's definitive proxy statement for the annual meeting
in 2002 appearing under the caption "Certain Relationships and Related
Transactions" (or comparable language) is hereby incorporated by reference.

                                     PART IV

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


          (a)(1) and (2). Financial Statements and Financial Statement
               Schedules:
               -------------------------------------------------------

               See "Index to Financial Statements" set forth in Item 8,
               "Financial Statements and Supplementary Data" of this Report.

          (a)(3). Exhibits Required to be Filed by Item 601 of Regulation S-K:
                  -----------------------------------------------------------

                    (3)  Articles of Incorporation and By-Laws:
                          -------------------------------------

                        3.1   Composite Certificate of Incorporation

                        3.2   By-Laws of Recoton as amended October 19, 1995
                              (incorporated by reference to Exhibit 3(ii) to the
                              Registrant's Quarterly Report on Form 10-Q for the
                              quarter ended September 30, 1995)

                    (4) Instruments defining the rights of security holders,
                        including indentures:
                        ------------------------------------------------------

                        4.1     Form of Common Stock Certificate (incorporated
                                by reference to Exhibit 4.1 to the Registrant's
                                Form 10-K for the year ended December 31, 1996)

                        4.2A    Rights Agreement, dated as of October 27, 1995,
                                between Recoton Corporation and ChaseMellon
                                Shareholder Services, L.L.C. as Rights Agent
                                (incorporated by reference to Exhibit 4 to the
                                Registrant's Current Report on Form 8-K dated
                                October 27, 1995)

                        4.2B    First Amendment, dated as of June 9, 1999,
                                between Recoton Corporation and ChaseMellon
                                Shareholders Services, L.L.C. (f/k/a
                                ChemicalMellon Shareholder Services, L.L.C.) to
                                Rights Agreement dated as of October 27, 1995,
                                executed on June 28, 1999 (incorporated by
                                reference to Exhibit 4.2 to the Registrant's
                                Form 8-A 12g/A dated June 28, 1999)

                        (10)    Material contracts (an asterisk indicates
                                management contracts and compensatory plans or
                                arrangements):


                        10.1    Employment Agreement between Recoton Corporation
                                and Robert L. Borchardt, dated October 25, 1995
                                (incorporated by reference to Exhibit (10)(1) to
                                the Registrant's Quarterly Report on Form 10-Q
                                for the quarter ended September 30, 1995)*

                        10.2    Deferred Compensation Agreement, effective as of
                                July 1, 1982, between Recoton and Robert
                                Borchardt (incorporated by reference to Exhibit
                                10(C) to the Registrant's Registration Statement
                                on Form S-2, filed on October 12, 1983, File No.
                                2-87097)*

                        10.3    Deferred Compensation Agreement, effective as of
                                October 1, 1982, between Recoton and Peter Wish
                                (incorporated by reference to Exhibit 10(E) to
                                the Registrant's Registration Statement on Form
                                S-2, filed on October 12, 1983, File No.
                                2-87097)*

                        10.4A   Split Dollar Life Insurance Agreements,
                                effective as of February 24, 1989, among Recoton
                                and Trudi Borchardt and Marvin Schlacter and
                                Robert Borchardt in the aggregate face amount of
                                $2,750,000 (incorporated by reference to Exhibit
                                10(G) to the Registrant's Form 10-K for the year
                                ended December 31, 1988)*

                        10.4B   Split Dollar Life Insurance Agreements,
                                effective as of December 17, 1993, among
                                Recoton, the Robert and Trudi Borchardt 1993
                                Family Trust and Robert L. Borchardt in the face
                                amounts of $6,500,000 ("First Policy");
                                $3,500,000 ("Second Policy"); and $1,300,000
                                ("Third Policy") (incorporated by reference to
                                Exhibit 10(G) to the Registrant's Annual Report
                                on Form 10-K for the year ended December 31,
                                1993)*

                        10.4C   Amendment to Split Dollar Life Insurance
                                Agreements Dated as of December 17, 1993, dated
                                as of November 6, 1998, to amend principal
                                amount of First Policy to $10,000,000 and to
                                terminate Second Policy (incorporated by
                                reference to Exhibit 10.5(C) to the Registrant's
                                Annual Report on Form 10-K for the year ended
                                December 31, 1999)*

                        10.4D   Split Dollar Life Insurance Agreement, effective
                                as of November 8, 1998, among Recoton, the
                                Robert and Trudi Borchardt 1993 Family Trust and
                                Robert L. Borchardt in the face amount of
                                $2,250,000 (incorporated by reference to Exhibit
                                10.5(D) to the Registrant's Annual Report on
                                Form 10-K for the year ended December 31, 1999)*

                        10.4E   Split Dollar Life Insurance Agreement, effective
                                as of November 8, 1998, among Recoton, the
                                Robert and Trudi Borchardt 1993 Family Trust and
                                Robert L. Borchardt in the face amount of
                                $2,000,000 (incorporated by reference to Exhibit
                                10.5(E) to the Registrant's Annual Report on
                                Form 10-K for the year ended December 31, 1999)*

                        10.5    Recoton Corporation 1991 Stock Option Plan, as
                                revised March 23, 1998, and form of option
                                agreement (incorporated by reference to Exhibit
                                10.9 to the Registrant's Annual Report on Form
                                10-K for the year ended December 31, 1997)*

                        10.6    Recoton Corporation Nonqualified Stock Option
                                Plan, as revised March 23, 1998 (incorporated by
                                reference to Exhibit 10.10 to the Registrant's
                                Annual Report on Form 10-K for the year ended
                                December 31, 1997)*

                        10.7    Recoton Corporation Stock Bonus Plan, as revised
                                September 15, 1993 (incorporated by reference to
                                Exhibit 10(K) to the Registrant's Annual Report
                                on Form 10-K for the year ended December 31,
                                1993)*

                        10.8    Recoton Corporation 1998 Stock Option Plan and
                                form of option certificate as adopted March 23,
                                1998 and amended June 7, 2001 (incorporated by
                                reference to Exhibit 10.1 to the Registrant's
                                Quarterly Report on Form 10-Q for the quarter
                                ended June 30, 2001)*

                        10.9A   Recoton Corporation Code Section 401(K) Profit
                                Sharing Plan and Trust Agreement, as amended and
                                restated December 29, 1994 (incorporated by
                                reference to Exhibit 10(K) to the Registrant's
                                Annual Report on Form 10-K for the year ended
                                December 31, 1994)*

                        10.9B   First Amendment to Recoton Corporation Code
                                Section 401(K) Profit Sharing Plan and Trust
                                Agreement, effective January 1, 1995*
                                (incorporated by reference to Exhibit 10.11B to
                                the Registrant's Annual Report on Form 10-K for
                                the year ended December 31, 1999)*

                        10.9C   Second Amendment to Recoton Corporation Code
                                Section 401(K) Profit Sharing Plan and Trust
                                Agreement, effective January 1, 1995*
                                (incorporated by reference to Exhibit 10.11C to
                                the Registrant's Annual Report on Form 10-K for
                                the year ended December 31, 1999)*

                        10.9D   Third Amendment to Recoton Corporation Code
                                Section 401(K) Profit Sharing Plan and Trust
                                Agreement, effective January 1, 1998*
                                (incorporated by reference to Exhibit 10.11D to
                                the Registrant's Annual Report on Form 10-K for
                                the year ended December 31, 1999)*

                        10.9E   Fourth Amendment to Recoton Corporation Code
                                Section 401(K) Profit Sharing Plan and Trust
                                Agreement, effective December 31, 1998*
                                (incorporated by reference to Exhibit 10.11E to
                                the Registrant's Annual Report on Form 10-K for
                                the year ended December 31, 1999)

                        10.9F   Fifth Amendment to Recoton Corporation Code
                                Section 401(K) Profit Sharing Plan and Trust
                                Agreement, effective January 1, 1997*
                                (incorporated by reference to Exhibit 10.11F to
                                the Registrant's Annual Report on Form 10-K for
                                the year ended December 31, 1999)*

                        10.9G   Sixth Amendment to Recoton Corporation Code
                                Section 401(K) Profit Sharing Plan and Trust
                                Agreement, effective November 24, 2000*
                                (incorporated by reference to Exhibit 10.11G to
                                the Registrant's Annual Report on Form 10-K for
                                the year ended December 31, 1999)

                        10.10   Retainer letter and option certificate, dated
                                January 12, 2001, with I. Friedman Equities,
                                Inc. (incorporated by reference to Exhibit 10.10
                                to the Registrant's Annual Report on Form 10-K
                                for the year ended December 31, 2000)*

                        10.11   Option Agreement, dated May 5, 1994, with I.
                                Friedman Equities, Inc. (incorporated by
                                reference to Exhibit 10(L) to the Registrant's
                                Annual Report on Form 10-K for the year ended
                                December 31, 1994)*

                        10.12   Common Stock Purchase Option, as of April 7,
                                1998, with the Equity Group, Inc. (incorporated
                                by reference to Exhibit 10.34 to the
                                Registrant's Quarterly Report on Form 10-Q for
                                the quarter ended June 30, 1998)

                        10.13   Employment Agreement dated as of August 31, 1995
                                with Stephen Chu as President of STD Holding
                                Limited* (incorporated by reference to Exhibit
                                10.2 to the Registrant's Quarterly Report on
                                Form 10-Q for the quarter ended June 30, 2001)

                        10.14A  Securities Purchase Agreement between Recoton
                                Corporation, The Prudential Insurance Company of
                                America and ING (U.S.) Capital LLC dated
                                February 4, 1999 (incorporated by reference to
                                Exhibit 5 to the Registrant's Current Report on
                                Form 8-K dated February 4, 1999)

                        10.14B  Form of warrants issued to The Prudential
                                Insurance Company of America and ING (U.S.)
                                Investments Corporation dated February 4, 1999
                                and sheet detailing variable information
                                (incorporated by reference to Exhibit 5 to the
                                Registrant's Current Report on Form 8-K dated
                                February 4, 1999)

                        10.14C  Registration Rights Agreement with The
                                Prudential Insurance Company of America and ING
                                (U.S.) Investments Corporation dated February 4,
                                1999 (incorporated by reference to Exhibit 5 to
                                the Registrant's Current Report on Form 8-K
                                dated February 4, 1999)

                        10.14D  First Amendment to Securities Purchase
                                Agreement, Guaranty and Registration Rights
                                Agreement, dated as of October 31, 1999, between
                                Recoton Corporation, The Prudential Insurance
                                Company of America and ING (U.S.) Capital LLC
                                (incorporated by reference to Exhibit 10.4 to
                                the Registrant's Current Report of Form 8-K
                                dated October 31, 1999).

                        10.15A  Registration Rights Agreement dated as of
                                September 8, 1999 among Recoton Corporation and
                                each of the parties whose signatures are set
                                forth thereto under the heading "LIFO Lenders"
                                (incorporated by reference to Exhibit 5 to the
                                Registrant's Current Report on Form 8-K dated
                                September 8, 1999)

                        10.15B  Form of 1999 Replacement Common Stock Purchase
                                Warrants dated September 8, 1999 issued to the
                                holders of the Company's Subordinated Notes
                                issued February 4, 1999 to purchase an aggregate
                                of 100,000 shares of common stock (incorporated
                                by reference to Exhibit 6 to the Registrant's
                                Current Report on Form 8-K dated September 8,
                                1999)

                        10.15C  Letter from Recoton Corporation dated September
                                8, 1999 to the holders of the Company's
                                Subordinated Notes issued February 4, 1999
                                repricing options expiring on February 4, 2004
                                (incorporated by reference to Exhibit 7 to the
                                Registrant's Current Report on Form 8-K dated
                                September 8, 1999)

                        10.15D  Form of Fixed Facility Fee Common Stock Purchase
                                Warrant dated September 8, 1999 issued to the
                                lenders under the Credit Agreement dated as of
                                September 8, 1999 to purchase an aggregate of
                                75,000 shares of common stock (incorporated by
                                reference to Exhibit 8 to the Registrant's
                                Current Report on Form 8-K dated September 8,
                                1999)

                        10.15E  Form of Cancelable Facility Fee Common Stock
                                Purchase Warrant dated September 8, 1999 issued
                                to the lenders under the Credit Agreement dated
                                as of September 8, 1999 to purchase an aggregate
                                of 175,000 shares of common stock (incorporated
                                by reference to Exhibit 9 to the Registrant's
                                Current Report on Form 8-K dated September 8,
                                1999)

                        10.15F  Form of Prepayment Common Stock Purchase Warrant
                                to purchase an aggregate of up to 75,000 shares
                                of common stock to be issued to the lenders
                                under the Credit Agreement dated as of September
                                8, 1999 under certain circumstances
                                (incorporated by reference to Exhibit 10 to the
                                Registrant's Current Report on Form 8-K dated
                                September 8, 1999)

                        10.15G  Form of Common Stock Purchase Warrant to
                                purchase an aggregate of up to 20,000 shares of
                                common stock to be issued to the holders of the
                                Company's Subordinated Notes issued February 4,
                                1999 under certain circumstances (incorporated
                                by reference to Exhibit 11 to the Registrant's
                                Current Report on Form 8-K dated September 8,
                                1999)

                        10.16A  Loan Agreement, dated as of October 31, 2001
                                between Recoton Corporation, InterAct
                                Accessories, Inc., Recoton Audio Corporation,
                                AAMP of Florida, Inc and Recoton Home Audio
                                Corporation as borrowers (the "Borrowers"), and
                                Christie Design Corporation, Recoton
                                International Holdings, Recoton European
                                Holdings, Recoton Japan, Inc. and Recoton
                                Canada, Ltd. as guarantors (the "Guarantors"
                                and, together with the Borrowers, the "Loan
                                Parties"), Heller Financial, Inc. ("Heller") as
                                Administrative Agent, Senior Agent and a Lender,
                                General Electric Capital Corporation as
                                Collateral Agent, Syndication Agent and a Lender
                                and other lenders party thereto (the "Senior
                                Loan Agreement") for a $235 million loan and
                                letter of credit facility (incorporated by
                                reference to Exhibit 10.1 to the Registrant's
                                Current Report of Form 8-K dated October 31,
                                2000).

                        10.16B  Credit Agreement, dated as of October 31, 2001,
                                among the Loan Parties, the several lenders from
                                time to time parties thereto, and The Chase
                                Manhattan Bank, as Agent (the "Subordinated Loan
                                Agreement") for a $15 million term loan for a
                                $15 million term loan (incorporated by reference
                                to Exhibit 10.2 to the Registrant's Current
                                Report of Form 8-K dated October 31, 2000).

                        10.16C  Security Agreement, dated as of October 31,
                                2001, made by Recoton Corporation and certain of
                                its Subsidiaries in favor of Heller, as
                                Collateral Agent (incorporated by reference to
                                Exhibit 10.3 to the Registrant's Current Report
                                of Form 8-K dated October 31, 2000).

                        10.16D  Form of Common Stock Purchase Warrants dated
                                October 31, 2001 issued to the holders of
                                Recoton Corporation's Subordinated Notes issued
                                February 4, 1999 to purchase an aggregate of
                                20,000 shares of common stock (incorporated by
                                reference to Exhibit 10.5 to the Registrant's
                                Current Report of Form 8-K dated October 31,
                                2000).

                        10.16E  Form of Common Stock Purchase Warrants dated
                                October 31, 2001 issued to the lenders under the
                                Subordinated Loan Agreement to purchase an
                                aggregate of 5,000 shares of common stock
                                (incorporated by reference to Exhibit 10.6 to
                                the Registrant's Current Report of Form 8-K
                                dated October 31, 2000).

                        10.16F  Consent and Amendment No. 1 to the Credit
                                Agreement and Amendment No. 1 to the Security
                                Agreement, dated February 7, 2001 (incorporated
                                by reference to Exhibit 10.1 to the Registrant's
                                Quarterly Report on Form 10-Q for the quarter
                                ended March 31, 2001)

                        10.16G  Amendment No. 2 to the Credit Agreement, dated
                                May 10, 2001 (incorporated by reference to
                                Exhibit 10.2 to the Registrant's Quarterly
                                Report on Form 10-Q for the quarter ended March
                                31, 2001)

                        10.16H  Consent and Amendment No. 3 to the Loan
                                Agreement, Amendment No. 2 to the Security
                                Agreement and Amendment No. 1 to the Pledge
                                Agreement with Heller Financial, Inc. as a
                                Lender and Administrative Agent and as Senior
                                Agent and General Electric Capital Corporation,
                                as a Lender and as Collateral Agent and as
                                Syndication Agent, dated July 3, 2001
                                (incorporated by reference to Exhibit 10.1 to
                                the Registrant's Quarterly Report on Form 10-Q
                                for the quarter ended June 30, 2001)

                        10.16I  First Amendment and Consent to the Credit
                                Agreement with The Chase Manhattan Bank as
                                Administrative Agent to the Lenders, dated July
                                3, 2001 (incorporated by reference to Exhibit
                                10.2 to the Registrant's Quarterly Report on
                                Form 10-Q for the quarter ended June 30, 2001)

                        10.16J  Fourth Amendment to Loan Agreement with Heller
                                Financial, Inc. as a Lender and Administrative
                                Agent and as Senior Agent and General Electric
                                Capital Corporation, as a Lender and as
                                Collateral Agent and as Syndication Agent, dated
                                as of February 26, 2002

                        10.16K  Waiver, Consent and Amendment No. 5 to the Loan
                                Agreement, with Heller Financial, Inc. as a
                                Lender and Administrative Agent and as Senior
                                Agent and General Electric Capital Corporation,
                                as a Lender and as Collateral Agent and as
                                Syndication Agent, dated March 29, 2002

         (11)  Statement re computation of per share earnings:
               not applicable

         (12)  Statement computation of ratios: not applicable

         (13)  Annual report to security holders, Form 10-Q or quarterly report
               to securityholders:  not applicable

         (16)  Letter re change in certifying accountant: not applicable

         (18)  Letter re change in accounting principles:  not applicable

         (21)  Subsidiaries of the registrant

         (22)  Published report regarding matters submitted to vote of
               security holders: not applicable

         (23)  Consent of experts and counsel: Consent of Deloitte & Touche LLP

         (24)  Power of attorney:  not applicable

         (28)  Information from reports furnished to state insurance
               regulatory authorities:  not applicable

         (99)  Additional exhibits:

               99.1   Charter for Audit Committee (incorporated
                      by reference to Exhibit 99.1 to the
                      Registrant's Quarterly Report on Form 10-Q
                      for the quarter ended June 30, 2000)

          (b)  Reports on Form 8-K:   None

<PAGE>

                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.

                                RECOTON CORPORATION


                                By: /s/ Robert L. Borchardt
                                    ------------------------------------------
                                    Robert L. Borchardt, Chairman, Chief
                                    Executive Officer and President

                                    Date:  April 1, 2002

<PAGE>

     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                                   Position                            Date

<S>                                         <C>                                 <C>
/s/ Robert L. Borchardt                     Chief Executive Officer             April 1, 2002
----------------------------------          (Principal Executive
Robert L. Borchardt                         Officer) and Director

/s/ Arnold Kezsbom                          Chief Financial Officer             April 1, 2002
----------------------------------          (Principal Financial Officer)
Arnold Kezsbom                              and Director

/s/ Tracy Clark                             Chief Accounting Officer            April 1, 2002
----------------------------------          (Principal Accounting Officer)
Tracy Clark

/s/ George Calvi                             Director                           April 1, 2002
----------------------------------
George Calvi

/s/ Paul Feffer                              Director                           April 1, 2002
----------------------------------
Paul Feffer

/s/ Irwin S. Friedman                        Director                           April 1, 2002
----------------------------------
Irwin S. Friedman

/s/ Joseph M. Idy                            Director                           April 1, 2002
----------------------------------
Joseph M. Idy

/s/Jerry Kalov                               Director                           April 1, 2002
----------------------------------
Jerry Kalov

/s/Ann R. Leven                              Director                           April 1, 2002
----------------------------------
Ann R. Leven

/s/ Joseph H. Massot                         Director                           April 1, 2002
----------------------------------
Joseph H. Massot

/s/ Stuart Mont                              Director                           April 1, 2002
----------------------------------
Stuart Mont

/s/ Peter Wish                               Director                           April 1, 2002
----------------------------------
Peter Wish

</TABLE>


                                  Exhibit Index

          3.1       Composite Certificate of Incorporation [308379v4]

          10.16J    Fourth Amendment to Loan Agreement with Heller Financial,
                    Inc. as a Lender and Administrative Agent and as Senior
                    Agent and General Electric Capital Corporation, as a Lender
                    and as Collateral Agent and as Syndication Agent, dated as
                    of February 26, 2002

          10.16K    Waiver, Consent and Amendment No. 5 to the Loan Agreement,
                    with Heller Financial, Inc. as a Lender and Administrative
                    Agent and as Senior Agent and General Electric Capital
                    Corporation, as a Lender and as Collateral Agent and as
                    Syndication Agent, dated March 29, 2002

          21        Subsidiaries of the registrant

          23        Consent of Deloitte & Touche LLP

<PAGE>