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SECURITIES AND EXCHANGE COMMISSION
 Washington, DC 20549
 FORM 10-K
  þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the Fiscal Year ended March 31, 2007
 OR
 o
    
    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 001-07731
 EMERSON RADIO CORP.
  Delaware
    
    22-3285224(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification Number)Nine Entin Road, Parsippany, NJ
    
    07054(Address of principal executive offices)
    
    (Zip Code)Registrants telephone number, including area code: (973) 884-5800Securities registered pursuant to Section 12(b) of the Act:Title of each class
    
    Name of each exchange on which registeredCommon Stock, par value $.01 per share
    
    American Stock Exchange
 None.
 o þ
 o þ
 þ o
 þ
 
 o o þ
 o þ
    Document
    
    Part of the Form 10-KProxy Statement for 2007 Annual Meeting of Stockholders, or an amendment to this Annual Report on Form 10-K
    
    Part III




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TABLE OF CONTENTS  PART IItem 1. BUSINESSItem 1A. Business Related RisksItem 1B. UNRESOLVED STAFF COMMENTSItem 2. PROPERTIESItem 3. LEGAL PROCEEDINGSItem 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERSPART IIItem 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER REPURCHASES OF EQUITY SECURITIESItem 6. SELECTED CONSOLIDATED FINANCIAL DATAItem 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSItem 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKItem 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATAItem 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSUREItem 9A. CONTROLS AND PROCEDURESItem 9B. OTHER INFORMATIONPART IIIItem 10. DIRECTORS AND EXECUTIVE OFFICERSItem 11. EXECUTIVE COMPENSATIONItem 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERSItem 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONSItem 14. PRINCIPAL ACCOUNTANT FEES AND SERVICESPART IVItem 15. EXHIBITS, FINANCIAL STATEMENTS AND SCHEDULESSIGNATURESEX-21.1: SUBSIDIARIESEX-23.1: CONSENT OF MOORE STEPHENS, P.C.EX-23.2: CONSENT OF BDO SEIDMAN, L.L.P.EX-31.1: CERTIFICATIONEX-31.2: CERTIFICATIONEX-32: CERTIFICATION    Table of Contents  
 PART I
  
 Item 1. BUSINESS
 The Company  Overview
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Supervision and Regulation
 www.sec.gov
 www.emersonradio.com
 General
 â â
 
    
    video products   televisions, digital video disc players (DVD), video cassette
recorders (VCR) and combination television/VCR/DVD units;
    
    microwave ovens;
    
    audio products, clock radios, home theater systems and multi-media systems;
    
    houseware products; and
    
    video accessories, telecommunication equipment, certain computer accessories,
other consumer electronic products and mobile electronics.
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
    
    recognition of the  (EMERSON LOGO) brand;
    
    our distribution base and established customer relations;
    
    our sourcing expertise and established vendor relations;
    
    an infrastructure with personnel experienced in servicing and providing
logistical support to the domestic mass merchant distribution channel; and
    
    our extensive experience in establishing license and distribution agreements on
a global basis for a variety of products.
   Products
  Video Products
    
    Audio Products
    
    OtherTelevisions
    
    Portable stereo systems
    
    HousewaresSpecialty televisions
    
    Digital clock radios
    
    Home theater systemsDigital video disc players
    
    Shelf stereo systems
    
    Microwave ovensSpecialty video cassette players
    
    Specialty clock radios
    
    Multi-media systemsVideo cassette recorders
    
    iPod Related Products
    
    Telecommunications Equipment
 Growth Strategy
  
    
    higher penetration levels within our existing customers through increases in the
products offered and sold;
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
    
    expansion of our existing customer base in the United States through our sales
staff and outside sales representative organizations;
    
    expansion of our existing worldwide customer base through foreign distribution
agreements and direct selling, particularly in Europe and Asia;
    
    leveraging Grandes manufacturing expertise and direct sales force and
relationships to expand the reach of our consumer electronic products, particularly
in Europe and Asia;
    
    expansion into distribution channels we are not currently utilizing through new
products;
    
    development and sales of new products not presently being offered by us, such as
electronics and accessories that utilize popular theme characters and logos through
the expansion of our inward license agreements;
    
    further development of our direct to consumer sales channel, primarily through
the further development of our internet web-site;
    
    continuing to capitalize on the  (EMERSON LOGO) and H.H. Scottâ trademarks through
outward license agreements with third parties to license the  (EMERSON LOGO) and H.H.
Scottâ trademarks for products not currently being sold, and in geographic
areas not presently being serviced; and
    
    expansion through strategic mergers with and acquisitions of other businesses.
  
 Sales and Distribution
  5




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Domestic Marketing
  
    
    mass merchandisers;
    
    discount retailers;
    
    toy retailers; and
    
    distributors and specialty catalogers.
   6




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Foreign Marketing
  Licensing and Related Activities
  
  ®
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Design and Manufacturing
   8




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Fiscal YearSupplier
    
    2007
    
    2006Midea
    
    
    24
    %
    
    
    22
    %Capetronic Displays
    
    
    14
    %
    
    
    0
    %Lasco Industries
    
    
    13
    %
    
    
    11
    %StarLite
    
    
    *
    
    
    
    15
    %Oxygen
    
    
    *
    
    
    
    10
    %
 
   Warranties
  Returned Products
  
    
    retailer return policies with their customers;
    
    damage to goods in transit and cosmetic imperfections; and
    
    mechanical failures.
  Backlog
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Trademarks
  
    
     (EMERSON LOGO)
    
    Emerson Research®
    
    Emerson Interactive sm
    
    Girl Power
    
    H.H. Scott®
    
    iTone
    
    Scott®
    
    SmartSet®
 
 Competition
   
    
    brand recognition;
    
    reliability;
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
    
    quality;
    
    price;
    
    design;
    
    consumer acceptance of our products; and
    
    quality service and support to retailers and their customers.
  Seasonality
  Working Capital
  Government Regulation
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Product Liability and Insurance
   Employees
  RISK FACTORS
  
 Item 1A. Business Related Risks
 The majority ownership of our common stock by subsidiaries of The Grande Holdings Limited, a Hong
Kong based group of companies, substantially reduces the influence of our other stockholders.
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
    
    the election of our directors; and
    
    the approval of mergers, sales of assets or other corporate transactions or matters
submitted for stockholder approval.
  Because of our relationships with Grande, including our related party transactions, we may become
subject to conflicts of interests that may adversely affect our ability to operate our business.
   The loss or significant reduction in business of any of our key customers, including Wal-Mart,
Target, and Kmart could materially and adversely affect our revenues and earnings.
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The failure to maintain our relationships with our licensees, licensors and distributors or the
failure to obtain new licensees, licensors or distribution relationships could materially and
adversely affect our revenues and earnings.
  Our revenues and earnings could be materially and adversely affected if we cannot anticipate market
trends or enhance existing products or achieve market acceptance of new products.
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We depend on a limited number of suppliers for our products. The availability to secure our
products could reduce our revenues and adversely affect our relationship with our customers.
  
    
    lack of availability of materials and interruptions in delivery of components and
raw materials from our suppliers;
    
    manufacturing delays caused by such lack of availability or interruptions in
delivery;
    
    fluctuations in the quality and the price of components and raw materials, in
particular due to the petroleum price impact on such materials; and
    
    risks related to foreign operations.
  If our original equipment manufacturers are unable to deliver our products in the required amounts
and in a timely fashion, we could experience delays or reductions in shipments to our customers
which could materially and adversely affect our revenues and our relationship with our customers.
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Unanticipated disruptions in our operations or slowdowns by our suppliers, manufacturers and
shipping companies could adversely affect our ability to deliver our products and service our
customers which could materially and adversely affect our revenues and our relationship with our
customers.
  
    
    the efficient and uninterrupted operation of our call center and distribution
centers; and
    
    the timely and uninterrupted performance of third party manufacturers and suppliers,
shipping companies, and dock workers.
  Our revenues and earnings could be materially and adversely affected by foreign regulations and
changes in the political, public health and economic conditions in the foreign countries in which
we operate our business.
  
    
    currency fluctuations which could cause an increase in the price of the components
and raw materials used in our products and a decrease in our profits;
    
    more stringent export restrictions in the countries in which we operate which could
adversely affect our ability to deliver our products to our customers;
    
    tariffs and other trade barriers which could make it more expensive for us to obtain
and deliver our products to our customers;
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
    
    political instability and economic downturns in these countries which could
adversely affect our ability to obtain our products from our manufacturers or deliver
our products to our customers in a timely fashion;
    
    seasonal reductions in business activity in these countries during the summer months
which could adversely affect our sales; and
    
    new restrictions on the sale of electronic products containing certain hazardous
substances.
  The seasonality of our business, as well as changes in consumer spending and economic conditions,
may cause our quarterly operating results to fluctuate and cause our stock price to decline.
  
    
    seasonal variations in operating results;
    
    variations in the sales of our products to our significant customers;
    
    increases in returned consumer electronics products in the March quarter which
follows our peak September and December selling quarters;
    
    variations in manufacturing and supplier relationships;
    
    if we are unable to correctly anticipate and provide for inventory requirements
from quarter to quarter, we may not have sufficient inventory to deliver our products
to our customers in a timely fashion or we may have excess inventory that we are unable
to sell;
    
    the discretionary nature of our customers demands and spending patterns;
    
    changes in market and economic conditions; and
    
    competition.
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If our third party sales representatives fail to adequately promote, market and sell our products,
our revenues could significantly decrease.
  We may seek to make acquisitions that prove unsuccessful or strain or divert our managements
attention and our capital resources.
  
    
    the diversion of our managements attention from our everyday business activities;
    
    the assimilation of the operations and personnel of the acquired business;
    
    the incurring of additional expenses related to such acquisitions, whether or not
such acquisitions are consummated;
    
    the contingent and latent risks associated with the past operations of, and other
unanticipated problems arising in, the acquired business; and
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
    
    the need to expand management, administration and operational systems.
  
    
    we will be able to successfully integrate the operations of any new businesses into
our business;
    
    we will realize any anticipated benefits of completed acquisitions; or
    
    if there will be substantial unanticipated costs associated with acquisitions.
  
    
    potentially dilutive issuances of our equity securities;
    
    the incurrence of additional debt; and
    
    the recognition of significant charges for impairment and amortization expense
related to goodwill and other intangible assets.
  We are subject to intense competition in the industry in which we operate, which could cause
material reductions in the selling price of our products or losses of our market share.
  
    
    reliability;
    
    brand recognition;
    
    quality;
    
    price;
    
    design;
    
    consumer acceptance of the Emerson® trademark; and
    
    quality service and support to retailers and our customers.
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
    
    significantly longer operating histories;
    
    significantly greater managerial, financial, marketing, technical and other
competitive resources; and
    
    greater brand recognition.
  
    
    adapt more quickly to new or emerging technologies and changes in customer
requirements;
    
    devote greater resources to the promotion and sale of their products and services;
and
    
    respond more effectively to pricing pressures.
  
    
    new companies enter the market;
    
    existing competitors expand their product mix; or
    
    we expand into new markets.
  Our business could be materially adversely affected if we cannot protect our intellectual property
rights or if we infringe on the intellectual property rights of others.
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
    
    enforce our intellectual property rights;
    
    protect our trade secrets; and
    
    determine the scope and validity of such intellectual property rights.
   We could be exposed to product liability or other claims for which our product liability or other
insurance may be inadequate.
  
    
    our insurance will provide adequate coverage against potential liabilities;
    
    adequate product liability insurance will continue to be available in the future; or
    
    our insurance can be maintained on acceptable terms.
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The inability to use our tax net operating losses could result in a charge to earnings and could
require us to pay higher taxes .
  Our indebtedness may adversely affect our ability to obtain additional funds and may increase our
vulnerability to economic or business downturns.
  
    
    we must dedicate a portion of our cash flows from operations to pay debt service
costs and, as a result, we have less funds available for operations and other purposes;
    
    it may be more difficult and expensive to obtain additional funds through
financings, if such funds are available at all;
    
    we are more vulnerable to economic downturns and fluctuations in interest rates,
less able to withstand competitive pressures and less flexible in reacting to changes
in our industry and general economic conditions; and
    
    if we default under any of our existing credit facilities or if our creditors demand
payment of a portion or all of our indebtedness, we may not have sufficient funds to
make such payments.
 We have pledged substantially all of our assets to secure our borrowings under our credit
facilities and are subject to covenants that may restrict our ability to operate our business.
  
    
    acceleration of the payment of our outstanding indebtedness;
    
    our inability to borrow additional amounts under our existing financing
arrangements; and
    
    our inability to secure financing on favorable terms or at all from alternative
sources.
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We had identified material weaknesses in our internal controls and, while new internal control
policies and procedures have been installed, if we are unable to maintain appropriate internal
controls and procedures, it could cause us to fail to meet our reporting obligations, result in the
restatement of its financial statements, harm our operating results, limit our access to credit
facilities necessary to fund our operations, subject us to regulatory scrutiny and sanction, cause
investors to lose confidence in the our reported financial information and have a negative effect
on the market price for shares of our common stock.
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Market Related Risks
 The market price of our common stock has experienced significant price and volume fluctuations from
time to time.
  
    
    market conditions in the industries in which we operate;
    
    competition;
    
    sales or the possibility of sales of our common stock;
    
    our results of operations and financial condition; and
    
    general economic conditions.
  Our organizational documents and Delaware law may make it harder for us to be acquired without
the consent and cooperation of our board of directors and management.
  If our common stock is de-listed from the American Stock Exchange, shareholders may not be able to
resell their shares at or above the price at which the shares were purchased, or at all.
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Forward-Looking Information
    
    
    the loss of any of our key customers or reduction in the purchase of our products by
any such customers;
    
    our inability to improve and maintain effective internal controls or the failure by
our personnel to comply with such internal controls;
    
    the failure to maintain our relationships with our licensees and distributors or the
failure to obtain new licensees or distribution relationships on favorable terms;
    
    our inability to anticipate market trends, enhance existing products or achieve
market acceptance of new products;
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
    
    our dependence on a limited number of suppliers for our components and raw
materials;
    
    our dependence on third party manufacturers to manufacture and deliver our products;
    
    the seasonality of our business, as well as changes in consumer spending and
economic conditions;
    
    the failure of third party sales representatives to adequately promote, market and
sell our products;
    
    our inability to protect our intellectual property;
    
    the effects of competition;
    
    changes in foreign laws and regulations and changes in the political and economic
conditions in the foreign countries in which we operate;
    
    conflicts of interest that exist based on our relationship with Grande;
    
    the outcome of the Audit Committees review of our related party transactions and
internal controls;
    
    changes in accounting policies, rules and practices; and
    
    the other factors listed under Risk Factors in this Annual Report on Form 10-K and
other filings with the SEC
  
 Item 1B. UNRESOLVED STAFF COMMENTS
  
 Item 2. PROPERTIES
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ApproximateSquare
    
    
    
    Lease ExpiresFacility Purpose
    
    Footage
    
    Location
    
    or is OwnedCorporate headquarters
    
    
    22,500
    
    
    Parsippany, NJ
    
    December 2009Hong Kong office
    
    
    7,810
    
    
    Hong Kong, China
    
    December 2007Macao office
    
    
    8,700
    
    
    Macao, China
    
    OwnedWarehouse
    
    
    97,100
    
    
    Irving, TX
    
    June 2010Warehouse
    
    
    180,650
    
    
    Mira Loma, CA
    
    February 2011
    
 Item 3. LEGAL PROCEEDINGS
  
 Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 PART II
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Item 5.
    
    MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER REPURCHASES
OF EQUITY SECURITIES
 (a) Market Information
  Fiscal 2007
    
    Fiscal 2006High
    
    Low
    
    High
    
    LowFirst Quarter
    
    $
    3.75
    
    
    $
    3.11
    
    
    $
    3.55
    
    
    $
    2.28Second Quarter
    
    
    3.26
    
    
    
    2.91
    
    
    
    3.98
    
    
    
    2.82Third Quarter
    
    
    3.59
    
    
    
    2.89
    
    
    
    3.60
    
    
    
    2.95Fourth Quarter
    
    
    3.45
    
    
    
    3.11
    
    
    
    3.75
    
    
    
    2.89
  (b) Holders
  (c) Dividends
  (d) Unregistered Securities
  (e) Share Repurchases
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Item 6. SELECTED CONSOLIDATED FINANCIAL DATA
  March 31,
    
    March 31,
    
    March 31,
    
    March 31,
    
    March 31,2007
    
    2006
    
    2005
    
    2004
    
    2003(In thousands, except per share data)Summary of Operations:Net Revenues
    
    $
    284,399
    
    
    $
    233,843
    
    
    $
    230,783
    
    
    $
    179,952
    
    
    $
    245,216Operating Income
    
    $
    7,191
    
    
    $
    4,169
    
    
    $
    9,442
    
    
    $
    3,093
    
    
    $
    20,740Income from continuing operations
    
    $
    3,458
    
    
    $
    3,712
    
    
    $
    5,113
    
    
    $
    60
    
    
    $
    28,128Income (loss) from discontinued
operations,
Net of tax
    
    $
    
    
    
    $
    12,918
    
    
    $
    792
    
    
    $
    (1,134
    )
    
    $
    (1,082
    )Cumulative effect of change in accounting
principle
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (5,546
    )Net income (loss)
    
    $
    3,458
    
    
    $
    16,630
    
    
    $
    5,905
    
    
    $
    (1,074
    )
    
    $
    21,500Balance Sheet Data at Period End:Total Assets
    
    $
    99,408
    
    
    $
    92,502
    
    
    $
    131,168
    
    
    $
    118,669
    
    
    $
    134,562Current Liabilities
    
    
    24,845
    
    
    
    21,772
    
    
    
    45,899
    
    
    
    40,637
    
    
    
    48,668Long-Term Debt
    
    
    676
    
    
    
    575
    
    
    
    31,666
    
    
    
    30,820
    
    
    
    34,657Shareholders Equity
    
    
    73,887
    
    
    
    70,155
    
    
    
    53,603
    
    
    
    47,212
    
    
    
    51,237Working Capital
    
    
    67,183
    
    
    
    60,215
    
    
    
    56,116
    
    
    
    46,729
    
    
    
    49,101Current Ratio
    
    
    3.7 to 1
    
    
    
    3.8 to 1
    
    
    
    2.2 to 1
    
    
    
    2.2 to 1
    
    
    
    2.0 to 1Per Common Share:Basic net income (loss) per share:Continuing operations
    
    $
    .13
    
    
    $
    .13
    
    
    $
    .19
    
    
    $
    .00
    
    
    $
    1.02Discontinued operations
    
    
    
    
    
    
    .48
    
    
    
    .03
    
    
    
    (.04
    )
    
    
    (.04
    )Cumulative effect of change in
accounting principle
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (.20
    )$
    .13
    
    
    $
    .61
    
    
    $
    .22
    
    
    $
    ( .04
    )
    
    $
    .78Diluted net income (loss) per share:Continuing operations
    
    $
    .13
    
    
    $
    .13
    
    
    $
    .19
    
    
    $
    .00
    
    
    $
    .98Discontinued operations
    
    
    
    
    
    
    .48
    
    
    
    .03
    
    
    
    (.04
    )
    
    
    (.04
    )Cumulative effect of change in
accounting principle
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (.19
    )$
    .13
    
    
    $
    .61
    
    
    $
    .22
    
    
    $
    (.04
    )
    
    $
    .75Weighted Average Shares Outstanding:Basic
    
    
    27,087
    
    
    
    27,079
    
    
    
    26,991
    
    
    
    27,227
    
    
    
    27,716Diluted
    
    
    27,127
    
    
    
    27,172
    
    
    
    27,264
    
    
    
    27,227
    
    
    
    28,640
 
 Item 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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Results of Operations:
   2007
    
    2006
    
    2005Net revenues
    
    $
    284,399
    
    
    $
    233,843
    
    
    $
    230,783Cost of sales
    
    
    248,065
    
    
    
    204,010
    
    
    
    198,221Other operating costs and expenses
    
    
    6,492
    
    
    
    6,145
    
    
    
    5,889Selling, general and administrative
    
    
    22,269
    
    
    
    19,097
    
    
    
    17,436Acquisition costs incurred (recovered)
    
    
    190
    
    
    
    48
    
    
    
    (454
    )Stock based costs
    
    
    192
    
    
    
    374
    
    
    
    249Operating income
    
    
    7,191
    
    
    
    4,169
    
    
    
    9,442Interest expense, net
    
    
    54
    
    
    
    785
    
    
    
    1,346Income before income taxes
    
    
    7,137
    
    
    
    3,384
    
    
    
    8,096Provision (benefit) for income taxes
    
    
    3,679
    
    
    
    (328
    )
    
    
    2,983Net income from continuing operations
    
    $
    3,458
    
    
    $
    3,712
    
    
    $
    5,113
 Results of Operations  Fiscal 2007 compared with Fiscal 2006
 Net
Revenues
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i)
    
    Emerson® branded products sales of $208.5 million in fiscal 2007
compared to $176.2 million in fiscal 2006, an increase of $32.3 million, or 18.3%,
primarily resulting from the introduction of the Ipod® compatible product category
late in the prior fiscal year and an increase in the microwave ovens category
offset by decreased sales volumes in the audio product category;ii)
    
    Promotional item sales to ESI in fiscal 2007 totaling $32.9 million,
associated with a major holiday promotion with one of our other major customers.
In addition to increasing net revenues, this promotional sale resulted in an
increase in accounts payable and other current liabilities and accounts receivable
of $20.6 million and $20.8 million, respectively, in the period ended September 30,
2006 as well as an increase in short term deposits of $28.8 million in the same
period due to parts and inventory purchases related to this sale. In order to fund
these purchases, short term borrowings through our revolving line of credit
increased by $24.0 million for the period ended September 30, 2006. These short
term borrowings were repaid in the three months ended December 31, 2006. As of the
date of this filing, the outstanding balances in accounts payable and other current
liabilities, accounts receivable, short term deposits and short term borrowings
associated with this specific promotional item have returned to normal seasonal
business levels. There were no promotional item sales during fiscal 2006.iii)
    
    Themed product sales of $36.2 million in fiscal 2007 compared to $49.9
million in fiscal 2006, a decrease of $13.7 million, or 27.4%, primarily due to the
discontinuance of Nickelodeon® themed products offset slightly by start- up sales
of Mattel® themed products; andiv)
    
    Licensing revenues of $6.6 million in fiscal 2007 compared to $7.7
million in fiscal 2006, a decrease of $1.1 million, or 14.3% primarily due to lower
sales volumes from our video licensing agreements with Funai.v)
    
    In fiscal 2007 Emerson charged agent fees of $233,000, or 0.1% of net revenue, to Sansui Sales
PTE, Ltd and Akai Sales PTE, Ltd, both of which are related parties to Emerson, for assistance in
procuring their product. See Note 3 Related Party Transactions. No related party revenue was
recorded in the prior fiscal year.
 Cost of Sales
 31




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##### Table of Contents



Other Operating Costs and Expenses
 Selling, General
and Administrative Expenses (S,G&A)
 Acquisition Costs
 Non Cash Compensation
 Interest Expense, net
 Provision (benefit) for Income Taxes
 32




---



##### Table of Contents



Income From Continuing Operations
 Results of Operations  Fiscal 2006 compared with Fiscal 2005
 Net Revenues
 i)
    
    Emerson® branded products sales decreased to $176.2 million in fiscal
2006 compared to $202.9 million in fiscal 2005, a decrease of $26.7 million, or
13.2%, primarily resulting from decreased sales volumes in the audio product
category;ii)
    
    Themed product sales increased to $49.9 million in fiscal 2006 compared
to $17.1 million in fiscal 2005, an increase of $32.8 million, primarily due to
increased Nickelodeon sales volume; andiii)
    
    Licensing revenues decreased $3.1 million, or 28.7%, to $7.7 million in
fiscal 2006 compared to $10.8 million in fiscal 2005, primarily due to lower sales
volumes from our video licensing agreements.
 Cost of Sales
  Other Operating Costs and Expenses
 Selling, General and Administrative Expenses (S,G&A)
 33




---



##### Table of Contents



Acquisition Costs Incurred (Recovered)
 Non Cash Compensation
 Interest Expense, net
 Provision (benefit) for Income Taxes
 Income From Continuing Operations
 Liquidity and Capital Resources
   34




---



##### Table of Contents




    
    two letter of credit facilities totaling $10.0 million which are used for
inventory purchases; and
    
    two back-to-back letter of credit facilities totaling $7.5 million.
  Short-Term Liquidity.
 35




---



##### Table of Contents



Contractual Obligations
  Payment due by periodLess than 1
    
    1  3
    
    3  5
    
    More thanTotal
    
    year
    
    Years
    
    years
    
    5 yearsNotes and mortgages
payable
    
    $
    567
    
    
    $
    74
    
    
    $
    148
    
    
    $
    148
    
    
    $
    197Capital lease obligations
    
    
    230
    
    
    
    72
    
    
    
    135
    
    
    
    23
    
    
    
    Leases-related party
    
    
    152
    
    
    
    152
    
    
    
    
    
    
    
    
    
    
    
    Leases-non-affiliate
    
    
    5,163
    
    
    
    1,457
    
    
    
    2,690
    
    
    
    1,016
    
    
    
    Total
    
    $
    6,112
    
    
    $
    1,755
    
    
    $
    2,973
    
    
    $
    1,187
    
    
    $
    197
  Off-Balance Sheet Arrangements.
 Critical Accounting Policies
 36




---



##### Table of Contents



Inventories.
 Trade Accounts Receivable.
 Income Taxes.
 Sales Return Reserves.
 Cooperative Advertising Accruals.
 37




---



##### Table of Contents



Recently-Issued Financial Accounting Pronouncements
       38




---



##### Table of Contents



Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
 Inflation, Foreign Currency, and Interest Rates
   
 Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 Index to Financial Statements
 Page No. ̈
    
    Report of Independent Registered Public Accounting Firm
    
    40  41 ̈
    
    Consolidated Statements of Operations for the years endedMarch 31, 2007, 2006 and 2005
    
    42 ̈
    
    Consolidated Balance Sheets as of March 31, 2007 and 2006
    
    43 ̈
    
    Consolidated Statements of Changes in ShareholdersEquity for the years ended March 31, 2007, 2006 and 2005
    
    44 ̈
    
    Consolidated Statements of Cash Flows for the years endedMarch 31, 2007, 2006 and 2005
    
    45 ̈
    
    Notes to Consolidated Financial Statements
    
    46 ̈
    
    Schedule IIValuation and Qualifying Accounts and Reserves
    
    86 ̈
    
    All other schedules are omitted because they are notapplicable or the required information is shown in the financialstatements or notes thereto.
 39




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
    MOORE STEPHENS, P. C.
Certified Public Accountants.
 
 40




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##### Table of Contents



Report of Independent Registered Public Accountants
 
        41




---



##### Table of Contents



EMERSON RADIO CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For The Years Ended March 31, 2007, 2006, and 2005
(In thousands, except per share data)
 2007
    
    
    2006
    
    
    2005Net revenues:Net revenues
    
    $
    284,166
    
    
    $
    233,843
    
    
    $
    230,783Net revenues-related party
    
    
    233
    
    
    
    
    
    
    
    284,399
    
    
    
    233,843
    
    
    
    230,783Costs and expenses:Cost of sales
    
    
    215,175
    
    
    
    204,010
    
    
    
    198,221Cost of sales-related party
    
    
    32,890
    
    
    
    
    
    
    
    Other operating costs and expenses
    
    
    6,492
    
    
    
    6,145
    
    
    
    5,889Selling, general and administrative expenses
(exclusive of non-cash compensation shown
below)
    
    
    22,269
    
    
    
    19,097
    
    
    
    17,436Acquisition costs (recovered) incurred
    
    
    190
    
    
    
    48
    
    
    
    (454
    )Non-cash compensation
    
    
    192
    
    
    
    374
    
    
    
    249277,208
    
    
    
    229,674
    
    
    
    221,341Operating income
    
    
    7,191
    
    
    
    4,169
    
    
    
    9,442Interest expense, net
    
    
    (692
    )
    
    
    (785
    )
    
    
    (1,346
    )Interest income-related party
    
    
    638
    
    
    
    
    
    
    
    Income before income taxes and discontinued
Operations
    
    
    7,137
    
    
    
    3,384
    
    
    
    8,096Provision (benefit) for income taxes
    
    
    3,679
    
    
    
    (328
    )
    
    
    2,983Income from continuing operations
    
    
    3,458
    
    
    
    3,712
    
    
    
    5,113Income from discontinued operations, net of tax
    
    
    
    
    
    
    12,918
    
    
    
    792Net income
    
    $
    3,458
    
    
    $
    16,630
    
    
    $
    5,905Basic net income per shareContinuing operations
    
    $
    .13
    
    
    $
    .13
    
    
    $
    .19Discontinued operations
    
    
    
    
    
    
    .48
    
    
    
    .03$
    .13
    
    
    $
    .61
    
    
    $
    .22Diluted net income per shareContinuing operations
    
    $
    .13
    
    
    $
    .13
    
    
    $
    .19Discontinued operations
    
    
    
    
    
    
    .48
    
    
    
    .03$
    .13
    
    
    $
    .61
    
    
    $
    .22Weighted average shares outstandingBasic
    
    
    27,087
    
    
    
    27,079
    
    
    
    26,991Diluted
    
    
    27,127
    
    
    
    27,172
    
    
    
    27,264
  42




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##### Table of Contents



EMERSON RADIO CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
As of March 31, 2007 and 2006
(In thousands, except per share data)
 2007
    
    
    2006ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    1,851
    
    
    $
    17,517Restricted cash
    
    
    3,000
    
    
    
    3,000Accounts
receivable (less allowances of $3,573 and $4,770, respectively)
    
    
    19,375
    
    
    
    18,996Other receivables
    
    
    1,536
    
    
    
    1,427Due from affiliates
    
    
    24,690
    
    
    
    Inventories
    
    
    32,463
    
    
    
    33,003Prepaid expenses and other current assets
    
    
    3,376
    
    
    
    3,694Deferred tax assets
    
    
    5,737
    
    
    
    4,350Total current assets
    
    
    92,028
    
    
    
    81,987Property, plant, and equipment, net
    
    
    2,492
    
    
    
    2,500Trademarks and other intangible assets, net
    
    
    311
    
    
    
    442Deferred tax assets
    
    
    4,067
    
    
    
    6,224Other assets
    
    
    510
    
    
    
    1,349Total Assets
    
    $
    99,408
    
    
    $
    92,502LIABILITIES AND SHAREHOLDERS EQUITYCurrent Liabilities:Short-term borrowings
    
    $
    3,111
    
    
    $
    1,841Current maturities of long-term borrowings
    
    
    146
    
    
    
    85Accounts payable and other current liabilities
    
    
    20,044
    
    
    
    18,121Accrued sales returns
    
    
    1,191
    
    
    
    1,583Income taxes payable
    
    
    306
    
    
    
    142Deferred tax liabilities
    
    
    47
    
    
    
    Total current liabilities
    
    
    24,845
    
    
    
    21,772Long-term borrowings
    
    
    651
    
    
    
    575Deferred tax liabilities
    
    
    25
    
    
    
    Commitments
and contingenciesShareholders Equity:Preferred shares  10,000,000 shares authorized; 3,677
shares issued and outstanding; liquidation preference of $3,677
    
    
    3,310
    
    
    
    3,310Common shares  $.01 par value, 75,000,000 shares authorized;
52,945,797 and 52,900,297 shares issued; 27,109,832 and 27,064,332
shares outstanding, respectively
    
    
    529
    
    
    
    529Capital in excess of par value
    
    
    117,371
    
    
    
    117,085Accumulated other comprehensive losses
    
    
    (82
    )
    
    
    (70
    )Accumulated deficit
    
    
    (23,017
    )
    
    
    (26,475
    )Treasury stock, at cost, 25,835,965 shares
    
    
    (24,224
    )
    
    
    (24,224
    )Total shareholders equity
    
    
    73,887
    
    
    
    70,155Total Liabilities and Shareholders Equity
    
    $
    99,408
    
    
    $
    92,502
  43




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##### Table of Contents



EMERSON RADIO CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY
For The Years Ended March 31, 2007, 2006, and 2005
(In thousands, except share data)
 Common Shares Issued
    
    
    
    
    
    
    Capital
    
    
    Accumulated Other
    
    
    
    
    
    
    TotalPreferred
    
    
    Number
    
    
    Par
    
    
    Treasury
    
    
    In Excess Of
    
    
    Comprehensive
    
    
    Accumulated
    
    
    ShareholdersStock
    
    
    Of Shares
    
    
    Value
    
    
    Stock
    
    
    Par Value
    
    
    Losses
    
    
    Deficit
    
    
    EquityBalance  March 31, 2004
    
    $
    3,310
    
    
    
    52,310,350
    
    
    $
    523
    
    
    $
    (23,832
    )
    
    $
    116,304
    
    
    $
    (83
    )
    
    $
    (49,010
    )
    
    $
    47,212Exercise of stock options and warrants
    
    
    
    
    
    
    572,781
    
    
    
    6
    
    
    
    
    
    
    
    107
    
    
    
    
    
    
    
    
    
    
    
    113Stock based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    377
    
    
    
    
    
    
    
    
    
    
    
    377Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,905
    
    
    
    5,905Interest rate swap
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4
    )
    
    
    
    
    
    
    (4
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,901Balance  March 31, 2005
    
    $
    3,310
    
    
    
    52,883,131
    
    
    $
    529
    
    
    $
    (23,832
    )
    
    $
    116,788
    
    
    $
    (87
    )
    
    $
    (43,105
    )
    
    $
    53,603Purchase of treasury stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (392
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (392
    )Exercise of stock options and warrants
    
    
    
    
    
    
    17,166
    
    
    
    
    
    
    
    
    
    
    
    51
    
    
    
    
    
    
    
    
    
    
    
    51Stock based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    246
    
    
    
    
    
    
    
    
    
    
    
    246Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,630
    
    
    
    16,630Unrealized gain on securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17
    
    
    
    
    
    
    
    17Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,647Balance  March 31, 2006
    
    $
    3,310
    
    
    
    52,900,297
    
    
    $
    529
    
    
    $
    (24,224
    )
    
    $
    117,085
    
    
    $
    (70
    )
    
    $
    (26,475
    )
    
    $
    70,155Exercise of stock options and warrants
    
    
    
    
    
    
    45,500
    
    
    
    
    
    
    
    
    
    
    
    94
    
    
    
    
    
    
    
    
    
    
    
    94Stock based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    192
    
    
    
    
    
    
    
    
    
    
    
    192Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,458
    
    
    
    3,458Unrealized loss on securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10
    )
    
    
    
    
    
    
    (10
    )Recognition of realized
losses in net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2
    )
    
    
    
    
    
    
    (2
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,446Balance  March 31, 2007
    
    $
    3,310
    
    
    
    52,945,797
    
    
    $
    529
    
    
    $
    (24,224
    )
    
    $
    117,371
    
    
    $
    (82
    )
    
    $
    (23,017
    )
    
    $
    73,887
  44




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##### Table of Contents



EMERSON RADIO CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For The Years Ended March 31, 2007, 2006, and 2005
(In thousands)
 2007
    
    
    2006
    
    
    2005Cash Flows from Operating Activities:Income from continuing operations
    
    $
    3,458
    
    
    $
    3,712
    
    
    $
    5,113Adjustments to reconcile income to net cash
(used) provided by operating activities:Depreciation and amortization
    
    
    850
    
    
    
    1,076
    
    
    
    775Stock based costs
    
    
    192
    
    
    
    374
    
    
    
    249Deferred tax expense (benefit)
    
    
    842
    
    
    
    (519
    )
    
    
    2,852Asset allowances, reserves, and other
    
    
    1,685
    
    
    
    958
    
    
    
    126Changes in assets and liabilities:Restricted cash
    
    
    
    
    
    
    2,620
    
    
    
    (2,670
    )Accounts receivable
    
    
    507
    
    
    
    (4,227
    )
    
    
    (9,502
    )Other receivables
    
    
    (109
    )
    
    
    117
    
    
    
    968Due from affiliates
    
    
    (24,690
    )
    
    
    
    
    
    
    Inventories
    
    
    (2,423
    )
    
    
    5,030
    
    
    
    (7,885
    )Prepaid expenses and other current assets
    
    
    318
    
    
    
    (394
    )
    
    
    (1,378
    )Other assets
    
    
    756
    
    
    
    (674
    )
    
    
    55Accounts payable and other current liabilities
    
    
    1,923
    
    
    
    621
    
    
    
    (2,206
    )Income taxes payable
    
    
    164
    
    
    
    (101
    )
    
    
    (266
    )Operating cash flow (used) provided by continuing
operations
    
    
    (16,527
    )
    
    
    8,593
    
    
    
    (13,769
    )Operating cash flow (used) provided by discontinued
operations
    
    
    
    
    
    
    220
    
    
    
    4,572Net cash provided by operating activities
    
    
    (16,527
    )
    
    
    8,813
    
    
    
    (9,197
    )Cash Flow From Investing Activities:Additions to property
and equipment (continuing operations)
    
    
    (364
    )
    
    
    (687
    )
    
    
    (2,018
    )Investing activities of discontinued operations,
including proceeds from sale of SSG (net of cash at
date of sale)
    
    
    
    
    
    
    29,488
    
    
    
    (580
    )Net cash (used) provided by investing activities
    
    
    (364
    )
    
    
    28,801
    
    
    
    (2,598
    )Cash Flows from Financing Activities:Short-term borrowings
    
    
    31,892
    
    
    
    
    
    
    
    75Repayments of short-term borrowings
    
    
    (31,831
    )
    
    
    
    
    
    
    Net borrowings (repayments) under foreign bank facilities
    
    
    1,270
    
    
    
    (11,203
    )
    
    
    8,282Purchases of treasury stock
    
    
    
    
    
    
    (392
    )
    
    
    Exercise of stock options
    
    
    94
    
    
    
    51
    
    
    
    107Long-term borrowings
    
    
    85,594
    
    
    
    34,682
    
    
    
    61,661Repayments of long-term borrowings
    
    
    (85,794
    )
    
    
    (46,050
    )
    
    
    (57,730
    )Finance activities of continuing operations
    
    
    1,225
    
    
    
    (22,912
    )
    
    
    12,395Finance activities of discontinued operations
    
    
    
    
    
    
    (143
    )
    
    
    (4,011
    )Net cash provided (used) by financing activities
    
    
    1,225
    
    
    
    (23,055
    )
    
    
    8,384Net (decrease) increase in cash and cash equivalents
    
    
    (15,666
    )
    
    
    14,559
    
    
    
    (3,411
    )Cash and cash equivalents at beginning of year
    
    
    17,517
    
    
    
    2,958
    
    
    
    6,369Cash and cash equivalents at end of year (Including cash
of discontinued operations of $0, $0, and $1,741,
respectively)
    
    $
    1,851
    
    
    $
    17,517
    
    
    $
    2,958Supplemental disclosure of cash flow information:Cash paid for interest
    
    $
    1,037
    
    
    $
    841
    
    
    $
    1,128Cash paid for income taxes
    
    $
    1,224
    
    
    $
    819
    
    
    $
    587
  45




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##### Table of Contents



EMERSON RADIO CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2007
 NOTE 1  SIGNIFICANT ACCOUNTING POLICIES:
 Background and Basis of Presentation
 
 Use of Estimates
  Cash Equivalents
  Fair Values of Financial Instruments
  46




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##### Table of Contents



EMERSON RADIO CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Investments
  Concentrations of Credit Risk
  2007
    
    
    2006(In thousands)Allowance for doubtful accounts
    
    $
    1,064
    
    
    $
    727Chargeback reserves
    
    
    411
    
    
    
    406Allowance for sales returns
    
    
    2,098
    
    
    
    3,637Total account receivable reserves
    
    $
    3,573
    
    
    $
    4,770
 Property and Equipment
  47




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##### Table of Contents



EMERSON RADIO CORP. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  §
    
    Buildings
    
    Thirty years to forty years§
    
    Machinery and Equipment
    
    Five years to ten years§
    
    Computer Equipment and Software
    
    Three years to ten years§
    
    Furniture & Fixtures and Office Equipment
    
    Five years to seven years
 Long-Lived Assets
  Revenue Recognition
  Cost of Sales
  Other Operating Costs and Expenses
  48




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##### Table of Contents



EMERSON RADIO CORP. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Selling, General and Administrative Expenses
  Acquisition Costs (Recovered) Incurred
  Foreign Currency
   Advertising Expenses
  Cooperative Advertising Expenses
  Internet Expenses
  49




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##### Table of Contents



EMERSON RADIO CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Interest Expenses
  2007
    
    
    2006
    
    
    2005(In thousands)Interest expense
    
    $
    1,001
    
    
    $
    841
    
    
    $
    1,074Amortization of deferred
financing costs
    
    
    83
    
    
    
    439
    
    
    
    401Interest income
    
    
    (392
    )
    
    
    (495
    )
    
    
    (129
    )Interest expense, net
    
    $
    692
    
    
    $
    785
    
    
    $
    1,346
 Income Taxes
  Comprehensive Income
  Net Earnings Per Common Share
  50




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##### Table of Contents



EMERSON RADIO CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Stock- Based Compensation
    Derivative Financial Instruments
  51




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##### Table of Contents



EMERSON RADIO CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Recent Pronouncements
        52




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##### Table of Contents



EMERSON RADIO CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Reclassifications
  NOTE 2  INVENTORIES:
  March 31, 2007
    
    
    March 31, 2006(In thousands)Finished goods
    
    $
    36,839
    
    
    $
    32,463Less inventory allowances
    
    
    (4,376
    )
    
    
    (1,413
    )$
    32,463
    
    
    $
    33,003
 NOTE 3  RELATED PARTY TRANSACTIONS
    53




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EMERSON RADIO CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
     54




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##### Table of Contents



EMERSON RADIO CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
     55




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##### Table of Contents



EMERSON RADIO CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 NOTE 4  PROPERTY, PLANT, AND EQUIPMENT:
  2007
    
    
    2006(In thousands)Buildings
    
    $
    1,175
    
    
    $
    1,175Computer Equipment & Software
    
    
    2,747
    
    
    
    2,588Furniture and fixtures
    
    
    1,600
    
    
    
    1,578Machinery and equipment
    
    
    1,366
    
    
    
    951Leasehold improvements
    
    
    643
    
    
    
    6987,531
    
    
    
    6,990Less accumulated depreciation and amortization
    
    
    (5,039
    )
    
    
    (4,490
    )$
    2,492
    
    
    $
    2,500
  NOTE 5  OTHER INTANGIBLE ASSETS
  56




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EMERSON RADIO CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Weighted AverageFiscal Year Ended
    
    Gross Carrying
    
    Amortization
    
    Accumulated
    
    Amortization
    
    AmortizationMarch 31, 2007
    
    Amount
    
    Expense
    
    Amortization
    
    Period
    
    PeriodAmortizable
Intangible AssetsTrademarks
    
    $
    4,923
    
    
    $
    131
    
    
    $
    4,612
    
    
    10-40 years
    
    17 years
 Weighted AverageFiscal Year Ended
    
    Gross Carrying
    
    Amortization
    
    Accumulated
    
    Amortization
    
    AmortizationMarch 31, 2006
    
    Amount
    
    Expense
    
    Amortization
    
    Period
    
    PeriodAmortizable
Intangible AssetsTrademarks
    
    $
    4,923
    
    
    $
    159
    
    
    $
    4,481
    
    
    10-40 years
    
    17 years
   2007
    
    $
    242008
    
    
    242009
    
    
    242010
    
    
    242011
    
    
    24Thereafter
    
    
    191$
    311
 57




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EMERSON RADIO CORP. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 NOTE 6  BORROWINGS:
 Short-term Borrowings
  2007
    
    2006(In thousands)Foreign bank loan
    
    $
    3,111
    
    
    $
    1,841
 Long -term Borrowings
  2007
    
    
    2006(In thousands)Emerson revolver
    
    $
    
    
    
    $
    Mortgage payable
    
    
    567
    
    
    
    641Capitalized lease obligations and other
    
    
    230
    
    
    
    19797
    
    
    
    660Less current maturities
    
    
    146
    
    
    
    85Long-term debt and notes payable
    
    $
    651
    
    
    $
    575
 Emerson Credit Facility 
 58




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EMERSON RADIO CORP. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
      2008
    
    $
    1462009
    
    
    1412010
    
    
    1422011
    
    
    962012
    
    
    75Thereafter
    
    
    197Total
    
    
    797Less current portion
    
    
    146Total long term portion
    
    $
    651
 59




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EMERSON RADIO CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 NOTE 7  INCOME TAXES:
 2007
    
    
    2006
    
    
    2005(In thousands)Current:Federal
    
    $
    906
    
    
    $
    90
    
    
    $
    Foreign, state and other
    
    
    1,931
    
    
    
    100
    
    
    
    131Deferred:Federal
    
    
    1,024
    
    
    
    (389
    )
    
    
    2,637Foreign, state and other
    
    
    (182
    )
    
    
    (129
    )
    
    
    215$
    3,679
    
    
    $
    (328
    )
    
    $
    2,983
   60




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EMERSON RADIO CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 2007
    
    
    2006
    
    
    2005(In thousands)Statutory provision (benefit)
    
    $
    2,427
    
    
    $
    1,285
    
    
    $
    2,603Foreign income tax
    
    
    (252
    )
    
    
    
    
    
    
    (223
    )State taxes
    
    
    1,152
    
    
    
    249
    
    
    
    382Other, net
    
    
    352
    
    
    
    (1,862
    )
    
    
    221Total income tax (benefit)
    
    $
    3,679
    
    
    $
    (328
    )
    
    $
    2,983
  2007
    
    
    2006(In thousands)Deferred tax assets:Accounts receivable reserves
    
    $
    1,846
    
    
    $
    2,540Inventory reserves
    
    
    2,536
    
    
    
    1,309Net operating loss carryforwards
    
    
    3,819
    
    
    
    6,088Accrued expenses
    
    
    1,188
    
    
    
    334Other
    
    
    415
    
    
    
    303Total deferred tax assets
    
    
    9,804
    
    
    
    10,574Valuation allowance
    
    
    
    
    
    
    Net deferred tax assets
    
    
    9,804
    
    
    
    10,574Deferred tax liabilities:Accrued expenses
    
    
    72
    
    
    
    Net deferred taxes
    
    $
    9,732
    
    
    $
    10,574
 Loss year (fiscal)
    
    Included in DTA
    
    Footnote
    
    Expiration year (fiscal)1994
    
    
    4.4
    
    
    [1][2]
    
    
    20091997
    
    
    5.0
    
    
    [2]
    
    
    20121999
    
    
    1.3
    
    
    [2]
    
    
    2019
 
  Loss year (fiscal)
    
    Included in DTA
    
    Expiration year (fiscal)1999
    
    
    2.7
    
    
    
    20082000
    
    
    0.3
    
    
    
    2009
  61




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EMERSON RADIO CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   NOTE 8  COMMITMENTS AND CONTINGENCIES:
 Leases:
  Fiscal Years
    
    Amount
    
    Affiliate
    
    Non-affiliate2008
    
    $
    1,609
    
    
    $
    152
    
    
    $
    1,4572009
    
    
    1,399
    
    
    
    
    
    
    
    1,3992010
    
    
    1,291
    
    
    
    
    
    
    
    1,2912011
    
    
    818
    
    
    
    
    
    
    
    8182012
    
    
    198
    
    
    
    
    
    
    
    198Thereafter
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    5,315
    
    
    $
    152
    
    
    $
    5,163
  62




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EMERSON RADIO CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Letters of Credit:
  Capital Expenditure and Other Commitments:
  Employee Benefit Plan:
  Shareholder Transaction:
  63




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EMERSON RADIO CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 NOTE 9  STOCK BASED COMPENSATION:
    Number of
    
    
    Weighted AverageOptions
    
    
    Exercise PriceOutstanding  April 1, 2004
    
    
    782,334
    
    
    $
    1.09Granted
    
    
    425,000
    
    
    
    3.10Exercised
    
    
    (700,000
    )
    
    
    1.10Outstanding  March 31, 2005
    
    
    507,334
    
    
    $
    2.60Granted
    
    
    50,000
    
    
    
    2.62Exercised
    
    
    (500
    )
    
    
    1.50Cancelled
    
    
    (154,000
    )
    
    
    2.27Outstanding  March 31, 2006
    
    
    402,834
    
    
    $
    2.93Exercised
    
    
    (45,500
    )
    
    
    2.07Outstanding  March 31, 2007
    
    
    357,334
    
    
    $
    3.04Exercisable at March 31, 2007
    
    
    249,002
    
    
    $
    3.00
 64




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EMERSON RADIO CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Options Outstanding
    
    
    Options ExercisableWeighted
    
    
    WeightedAverage
    
    
    Average
    
    
    
    
    
    
    WeightedRange of
    
    Amount
    
    
    Remaining
    
    
    Exercise
    
    
    Amount
    
    
    AverageExercise Prices
    
    Outstanding
    
    
    Contractual Life
    
    
    Price
    
    
    Exercisable
    
    
    Exercise Price$1.00
    
    
    12,334
    
    
    
    3.3
    
    
    $
    1.00
    
    
    
    12,334
    
    
    $
    1.00$2.62
    
    
    20,000
    
    
    
    8.2
    
    
    
    2.62
    
    
    
    20,000
    
    
    
    2.62$2.96 - $2.97
    
    
    125,000
    
    
    
    7.6
    
    
    
    2.96
    
    
    
    83,334
    
    
    
    2.96$3.26
    
    
    200,000
    
    
    
    7.6
    
    
    
    3.26
    
    
    
    133,334
    
    
    
    3.26357,334
    
    
    
    7.4
    
    
    $
    3.04
    
    
    
    249,002
    
    
    $
    3.00
    65




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##### Table of Contents



EMERSON RADIO CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Number of
    
    
    Weighted AverageOptions
    
    
    Exercise PriceOutstanding: April 1, 2004
    
    
    125,000
    
    
    $
    1.00Granted
    
    
    125,000
    
    
    
    3.00Exercised
    
    
    (125,000
    )
    
    
    1.00Outstanding  March 31, 2005
    
    
    125,000
    
    
    $
    3.00Granted
    
    
    100,000
    
    
    
    3.19Exercised
    
    
    (16,666
    )
    
    
    3.00Outstanding  March 31, 2006
    
    
    208,334
    
    
    $
    3.09Granted
    
    
    150,000
    
    
    
    3.23Cancelled
    
    
    (83,334
    )
    
    
    3.07Outstanding  March 31, 2007
    
    
    275,000
    
    
    $
    3.15Exercisable at March 31, 2007
    
    
    58,333
    
    
    $
    3.08
  Options Outstanding
    
    
    Options ExercisableWeighted
    
    
    WeightedAverage
    
    
    Average
    
    
    
    
    
    
    WeightedAmount
    
    
    Remaining
    
    
    Exercise
    
    
    Amount
    
    
    AverageRange of Exercise Prices
    
    Outstanding
    
    
    Contractual Life
    
    
    Price
    
    
    Exercisable
    
    
    Exercise Price$3.00
    
    
    50,000
    
    
    
    7.4
    
    
    $
    3.00
    
    
    
    33,334
    
    
    $
    3.00$3.07
    
    
    25,000
    
    
    
    8.8
    
    
    
    3.07
    
    
    
    8,333
    
    
    
    3.07$3.19
    
    
    150,000
    
    
    
    9.6
    
    
    
    3.19
    
    
    
    
    
    
    
    $3.23
    
    
    50,000
    
    
    
    8.7
    
    
    
    3.23
    
    
    
    16,666
    
    
    
    3.23275,000
    
    
    
    9.0
    
    
    $
    3.15
    
    
    
    58,333
    
    
    $
    3.08
 66




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EMERSON RADIO CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  NOTE 10  SHAREHOLDERS EQUITY:
 Common Shares:
  Common Stock Repurchase Program:
  Series A Preferred Stock:
  67




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EMERSON RADIO CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Warrants:
    NOTE 11  NET EARNINGS PER SHARE:
  (In thousands, except per share amount)2007
    
    
    2006
    
    
    2005Numerator:Net earnings from continuing
operations for basic and diluted
earnings per share
    
    $
    3,458
    
    
    $
    3,712
    
    
    $
    5,113Denominator:Denominator for basic earnings per
share  weighted average shares
    
    
    27,087
    
    
    
    27,079
    
    
    
    26,991Effect of dilutive securities:Options and warrants
    
    
    40
    
    
    
    93
    
    
    
    273Denominator for diluted
earnings per share  weighted
average shares and assumed
conversions
    
    
    27,127
    
    
    
    27,172
    
    
    
    27,264Earnings from continuing operationsBasic and diluted earnings per share
    
    $
    .13
    
    
    $
    .13
    
    
    $
    .19
 68




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##### Table of Contents



EMERSON RADIO CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  NOTE 12  LICENSE AGREEMENTS:
  
  69




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EMERSON RADIO CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 NOTE 13 LEGAL PROCEEDINGS:
  NOTE 14 BUSINESS SEGMENT INFORMATION AND MAJOR CUSTOMERS:
  Year Ended March 31, 2007U.S.
    
    Foreign
    
    ConsolidatedSales to external customers
    
    $
    277,146
    
    
    $
    7,020
    
    
    $
    284,166Income (loss) before income taxes
    
    $
    7,846
    
    
    $
    (709
    )
    
    $
    7,137Identifiable assets
    
    $
    70,886
    
    
    $
    28,522
    
    
    $
    99,408
 Year Ended March 31, 2006U.S.
    
    Foreign
    
    ConsolidatedSales to external customers
    
    $
    224,983
    
    
    $
    8,860
    
    
    $
    233,843Income (loss) before income taxes
    
    $
    3,779
    
    
    $
    (395
    )
    
    $
    3,384Identifiable assets
    
    $
    80,072
    
    
    $
    12,430
    
    
    $
    92,502
 Year Ended March 31, 2005U.S.
    
    Foreign
    
    ConsolidatedSales to external customers
    
    $
    226,551
    
    
    $
    4,232
    
    
    $
    230,783Income (loss) before income taxes
    
    $
    8,317
    
    
    $
    (221
    )
    
    $
    8,096Identifiable assets
    
    $
    74,779
    
    
    $
    11,832
    
    
    $
    86,611
 70




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EMERSON RADIO CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   NOTE 15   QUARTERLY INFORMATION (UNAUDITED):
  Fiscal 2007
    
    Fiscal 20061stQrt
    
    2ndQrt
    
    3rdQrt
    
    4thQrt
    
    1stQrt
    
    2ndQrt
    
    3rdQrt
    
    4thQrtConsolidated Statement
Of OperationsNet revenues
    
    $
    55,241
    
    
    $
    99,588
    
    
    $
    89,339
    
    
    $
    40,231
    
    
    $
    38,647
    
    
    $
    77,576
    
    
    $
    76,514
    
    
    $
    41,106Operating income (loss)
    
    
    490
    
    
    
    5,914
    
    
    
    6,032
    
    
    
    (5,245
    )
    
    
    613
    
    
    
    2,356
    
    
    
    2,458
    
    
    
    (1,258
    )Income (loss) before
Income taxes
    
    
    595
    
    
    
    5,702
    
    
    
    5,575
    
    
    
    (4,735
    )
    
    
    206
    
    
    
    2,157
    
    
    
    2,088
    
    
    
    (1,067
    )Income (loss) from
continuing operations
    
    
    581
    
    
    
    3,804
    
    
    
    3,695
    
    
    
    (4,622
    )
    
    
    144
    
    
    
    1,274
    
    
    
    1,395
    
    
    
    899Income (loss) from
discontinued
operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    272
    
    
    
    12,646
    
    
    
    
    
    
    
    Net income (loss)
    
    $
    581
    
    
    $
    3,804
    
    
    $
    3,695
    
    
    $
    (4,622
    )
    
    $
    416
    
    
    $
    13,920
    
    
    $
    1,395
    
    
    $
    899Basic net income
(loss) per share :Continuing operations
    
    $
    .02
    
    
    $
    .14
    
    
    $
    .14
    
    
    $
    (.17
    )
    
    $
    .01
    
    
    $
    .05
    
    
    $
    .05
    
    
    $
    .02Discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    .01
    
    
    
    .47
    
    
    
    
    
    
    
    $
    .02
    
    
    $
    .14
    
    
    $
    .14
    
    
    $
    (.17
    )
    
    $
    .02
    
    
    $
    .52
    
    
    $
    .05
    
    
    $
    .02Diluted net income
(loss) per share:Continuing operations
    
    $
    .02
    
    
    $
    .14
    
    
    $
    .14
    
    
    $
    (.17
    )
    
    $
    .01
    
    
    $
    .05
    
    
    $
    .05
    
    
    $
    .02
 71




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EMERSON RADIO CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Fiscal 2007
    
    Fiscal 20061stQrt
    
    2ndQrt
    
    3rdQrt
    
    4thQrt
    
    1stQrt
    
    2ndQrt
    
    3rdQrt
    
    4thQrtDiscontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    .01
    
    
    
    .47
    
    
    
    
    
    
    
    $
    .02
    
    
    $
    .14
    
    
    $
    .14
    
    
    $
    (.17
    )
    
    $
    .02
    
    
    $
    .52
    
    
    $
    .05
    
    
    $
    .02Weighted average sharesOutstanding  basic
    
    
    27,065
    
    
    
    27,077
    
    
    
    27,097
    
    
    
    27,110
    
    
    
    27,172
    
    
    
    27,048
    
    
    
    27,048
    
    
    
    27,048Outstanding  diluted
    
    
    27,140
    
    
    
    27,106
    
    
    
    27,117
    
    
    
    27,110
    
    
    
    27,226
    
    
    
    27,177
    
    
    
    27,154
    
    
    
    27,131
 NOTE 16  DISCONTINUED OPERATIONS:
   2006
    
    
    2005Discontinued Operations (SSG)Net revenues
    
    $
    23,218
    
    
    $
    89,921Operating income
    
    
    610
    
    
    
    1,861Gain on sale of SSG, net of tax
    
    
    12,646
    
    
    
    Net income
    
    $
    12,918
    
    
    $
    792
 72




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##### Table of Contents



EMERSON RADIO CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 
 Item 9.
    
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
    
 Item 9A. CONTROLS AND PROCEDURES
 (a) Disclosure controls and procedures
  73




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EMERSON RADIO CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   (b) Changes in Internal Controls Over Financial Reporting
      74




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75




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Item 9B. OTHER INFORMATION
  76




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PART III
 
 Item 10. DIRECTORS AND EXECUTIVE OFFICERS
  
 Item 11. EXECUTIVE COMPENSATION
  
 Item 12.
    
    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
  
 Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
  
 Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
  
 PART IV
 
 Item 15. EXHIBITS, FINANCIAL STATEMENTS AND SCHEDULES
 (a)
    
    Financial Statements and Schedules. See Item 8(b)
    
    Exhibits
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Exhibit Number3.1
    
    Certificate of Incorporation of Emerson (incorporated by reference to Exhibit (3)
(a) of Emersons Registration Statement on Form S-1, Registration No. 33-53621, declared
effective by the SEC on August 9, 1994).3.4
    
    Certificate of Designation for Series A Preferred Stock (incorporated by reference
to Exhibit (3) (b) of Emersons Registration Statement on Form S-1, Registration No.
33-53621, declared effective by the SEC on August 9, 1994).3.5
    
    Amendment dated February 14, 1996 to the Certificate of Incorporation of Emerson
(incorporated by reference to Exhibit (3) (a) of Emersons Quarterly Report on Form 10-Q
for the quarter ended December 31, 1995).3.6
    
    By-Laws of Emerson adopted March 1994 (incorporated by reference to Exhibit (3) (e)
of Emersons Registration Statement on Form S-1, Registration No. 33-53621, declared
effective by the SEC on August 9, 1994).3.7
    
    Amendment dated November 28, 1995 to the By-Laws of Emerson adopted March 1994
(incorporated by reference to Exhibit (3) (b) of Emersons Quarterly Report on Form 10-Q
for the quarter ended December 31, 1995).10.12
    
    License Agreement effective as of January 1, 2001 by and between Funai Corporation and Emerson (incorporated by reference to Exhibit (10) (z) of Emersons Quarterly Report
on Form 10-Q for the quarter ended September 30, 2000).10.12.1
    
    First Amendment to License Agreement dated February 19, 2002 by and between Funai
Corporation and Emerson (incorporated by reference to Exhibit (10.12.1) of Emersons
Annual Report on Form 10-K for the year ended March 31, 2002).10.12.2
    
    Second Amendment to License Agreement effective August 1, 2002 by and between Funai
Corporation and Emerson (incorporated by reference to Exhibit (10.12.2) of Emersons
Quarterly Report on Form 10-Q for the quarter ended September 30, 2002).10.12.3
    
    Third Amendment to License Agreement effective February 18, 2004 by and between Funai
Corporation and Emerson (incorporated by reference to Exhibit 10.12.3 of Emersons Annual
Report on Form 10-K for the year ending March 31, 2004)10.12.4
    
    Fourth Amendment to License Agreement effective December 3, 2004 by and between Funai
Corporation, Inc. and Emerson (incorporated by reference to Exhibit (10.12.4) of
Emersons Quarterly Report on Form 10-Q for the quarter ended December 31, 2004).
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Exhibit Number10.12.5
    
    Fifth Amendment to License Agreement effective May 18, 2005 by and between Funai
Corporation, Inc. and Emerson (incorporated by reference to Exhibit (10.12.5) of
Emersons Annual Report on Form 10-K for the year ending March 31, 2005)10.12.7
    
    Seventh Amendment to License Agreement effective December 22, 2005 by and between
Funai Corporation, Inc. and Emerson (incorporated by reference to Exhibit 10.1 of
Emersons Current Report on Form 8-K filed on December 28, 2005)10.13
    
    Second Lease Modification dated as of May 15, 1998 between Hartz Mountain,
Parsippany and Emerson (incorporated by reference to Exhibit (10) (v) of Emersons Annual
Report on Form 10-K for the year ended April 3, 1998).10.13.1
    
    Third Lease Modification made the 26 day of October, 1998 between Hartz Mountain
Parsippany and Emerson (incorporated by reference to Exhibit (10) (b) of Emersons
Quarterly Report on Form 10-Q for the quarter ended October 2, 1998).10.13.2
    
    Fourth Lease Modification made the 12th day of February, 2003 between Hartz Mountain
Parsippany and Emerson (incorporated by reference to Exhibit (10.13.2) of Emersons
Annual Report on Form 10-K for the year ended March 31, 2003).10.13.4
    
    Fifth Lease Modification Agreement made the 2nd day of December, 2004 between Hartz
Mountain Industries, Inc. and Emerson (incorporated by reference to Exhibit (10.13.3) of
Emersons Quarterly Report on Form 10-Q for the quarter ended December 31, 2004).10.13.3
    
    Lease Agreement dated as of October 8, 2004 between Sealy TA Texas, L.P., a Georgia
limited partnership, and Emerson Radio Corp. (incorporated by reference to Exhibit
(10.13.3) of Emersons Quarterly Report on Form 10-Q for the quarter ended September 30,
2004).10.13.5
    
    Lease Agreement (Single Tenant) between Ontario
Warehouse I, Inc., a Florida corporation, as Landlord, and Emerson Radio Corp., a
Delaware corporation, as Tenant, effective as of December 6, 2005 (incorporated by
reference to Exhibit 10.1 to Emersons Current Report on Form 8-K filed on January
4, 2006).10.13.6
    
    Letter agreement, dated November 28, 2005, between Emerson Radio Corp. and The
Grande Group (hong Kong) limited regarding lease of office space.10.13.7
    
    Letter agreement, dated November 28, 2005, between Emerson Radio
Corp. and The Grande Group (hong Kong) limited regarding management services for office
space.10.14.1
    
    Purchasing Agreement, dated March 5, 1999, between AFG-Elektronik GmbH and
Emerson Radio International Ltd. (incorporated by reference to Exhibit (10) (aa) of
Emersons Annual Report on Form 10-K for the year ended April 2, 1999).
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Exhibit Number10.18.1
    
    Emerson Radio Corp. 2004 Employee Stock Incentive Plan (incorporated by reference to
Exhibit 1 of Emersons 2004 Proxy Statement).10.18.2
    
    Emerson Radio Corp. 2004 Non-Employee Outside Director Stock Option Plan (incorporated
by reference to Exhibit 2 of Emersons 2004 Proxy Statement).10.26
    
    Employment Agreement between Emerson Radio Corp. and John J. Raab, effective as of
September 1, 2001 (incorporated by reference to Exhibit 10.26 of Emersons Quarterly
Report on Form 10-Q for the quarter ended September 30, 2001).10.26.4
    
    Employment Agreement extension letter between Emerson Radio Corp. and John J. Raab
effective as of September 1, 2004 (incorporated by reference to Exhibit 10.26.4 of
Emersons Quarterly Report on Form 10-Q for the quarter ended December 31, 2004).10.26.5
    
    Agreement between Emerson Radio and Guy A. Paglinco,
dated March 23, 2006 (incorporated by reference to Exhibit 10.1 to Emersons
Current Report on Form 8-K filed on March 29, 2006).10.27.5
    
    Loan and Security Agreement dated as of December 23, 2005, among Emerson Radio
Corp., Emerson Radio Macao Commercial Offshore Limited, Majexco Imports, Inc., Emerson
Radio (Hong Kong) Ltd., and Emerson Radio International Ltd. (as Borrowers) and Wachovia
Bank, National Association.(incorporated by reference to Exhibit 10.2 of Emersons Form
8-K dated December 28, 2005).10.28
    
    Common Stock Purchase Warrant Agreement entered into on August 1, 2002 by and
between Emerson Radio Corp. and Further Lane Asset Management LP (incorporated by
reference to Exhibit 10.28 of Emersons Quarterly Report on Form 10-Q for the quarter
ended September 30, 2002).10.28.1
    
    Form of Common Stock Warrant Agreement entered into on October 7, 2003 by and between
Emerson Radio Corp. and Ladenburg Thalmann & Co., Inc. (incorporated by reference to
Exhibit 10.28.1 of Emersons Quarterly Report on Form 10-Q for the quarter ended December
31, 2003).10.28.2
    
    Common Stock Purchase Warrant Agreement entered into on August 1, 2004 by and between
Emerson Radio Corp. and EPOCH Financial Services, Inc. (incorporated by reference to
Exhibit 10.28.2 of Emersons Quarterly Report on Form 10-Q for the quarter ended
September 30, 2004).10.28.3
    
    Stock Purchase Agreement among Emerson Radio Corp.,
Collegiate Pacific Inc. and Emerson Radio (Hong Kong) Limited dated July 1,2005
(incorporated by reference to Exhibit 2.1 to Emersons Current Report on Form 8-K
filed on July 8, 2005).
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##### Table of Contents



Exhibit Number14.1
    
    Code of Ethics for Senior Financial Officers (incorporated by reference to
Exhibit 14.1 of Emersons Annual Report on Form 10-K for the year ended March
31, 2004).16.1
    
    Letter of BDO, dated as of March 13, 2006, to the Securities and Exchange
Commission (incorporated by reference to Exhibit 16.1 of Emersons Current Report on Form
8-K filed on March 13, 2006).21.1
    
    Subsidiaries of the Company as of March 31, 2007. *23.1
    
    Consent of Independent Registered Public Accounting Firm  Moore Stephens,
P.C.*23.2
    
    Consent of Independent Registered Public Accounting Firm  BDO Seidman,
LLP.*31.1
    
    Certification of the Companys Chief Executive Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.*31.2
    
    Certification of the Companys Chief Financial Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*32
    
    Certification of the Companys Chief Executive Officer and Chief Financial Officer
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.*
 
 *
    
    Filed herewith. 81




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##### Table of Contents



SIGNATURES
  EMERSON RADIO CORP.By:
    /s/ Adrian MaAdrian MaChief Executive Officer   /s/
Christopher Ho

Christopher Ho
    
    Chairman of the Board
    
    June 29, 2007/s/ Adrian Ma

Adrian Ma
    
    Chief Executive Officer
(Principal Executive Officer)
    
    June 29, 2007/s/ Greenfield Pitts

Greenfield Pitts
    
    Chief Financial Officer
(Principal Financial and
Accounting Officer)
    
    June 29, 2007/s/ Michael A. B. Binney

Michael A. B. Binney
    
    Director
    
    June 29, 2007/s/ Peter G. Bünger

Peter G. Bünger
    
    Director
    
    June 29, 2007/s/ W. Michael Driscoll

W. Michael Driscoll
    
    Director
    
    June 29, 2007/s/ Jerome H. Farnum

Jerome H. Farnum
    
    Director
    
    June 29, 2007/s/ Norbert R. Wirsching

Norbert R. Wirsching
    
    Director
    
    June 29, 2007/s/ Eduard Will

Eduard Will
    
    President, North American
Operations and Director
    
    June 29, 2007
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##### Table of Contents



EMERSON RADIO CORP. AND SUBSIDIARIES
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
(In thousands)
 Column A
    
    Column B
    
    Column C
    
    Column D
    
    Column EBalance at
    
    Charged to
    
    
    
    
    
    BalanceBeginning
    
    Costs and
    
    
    
    
    
    at end ofDescription
    
    of year
    
    Expenses
    
    Deductions
    
    year (B)Allowance for doubtful accounts:Year ended:March 31, 2007
    
    $
    727
    
    
    $
    1,184
    
    
    $
    847
    (A)
    
    $
    1,064March 31, 2006
    
    
    179
    
    
    
    591
    
    
    
    43
    (A)
    
    
    727March 31, 2005
    
    
    328
    
    
    
    
    
    
    
    149
    (A)
    
    
    179Allowance for chargebacks:Year ended:March 31, 2007
    
    $
    406
    
    
    $
    5
    
    
    $
    
    
    
    $
    411March 31, 2006
    
    
    330
    
    
    
    76
    
    
    
    
    
    
    
    406March 31, 2005
    
    
    326
    
    
    
    4
    
    
    
    
    
    
    
    330Sales Return reserves:Year ended:March 31, 2007
    
    $
    5,217
    
    
    $
    11,424
    
    
    $
    13,354
    
    
    $
    3,287March 31, 2006
    
    
    5,190
    
    
    
    16,953
    
    
    
    16,926
    
    
    
    5,217March 31, 2005
    
    
    4,893
    
    
    
    16,591
    
    
    
    16,294
    
    
    
    5,190