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, 2008
 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) 884-5800
  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 Large
accelerated filero Accelerated filero Non-accelerated filer (Do not check if a smaller reporting company)þ Smaller reporting company o þ
    Document
    
    Part of the Form 10-KProxy Statement for 2008 Annual Meeting of Stockholders, or an amendment to this Annual Report on Form 10-K
    
    Part III




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PART I
  Item 1. BUSINESS
 The Company  Overview
      2




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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.
   3




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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
  
    
    new distribution channels for additional lines of housewares in the non-entry
level category;
 4




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
    
    higher penetration levels within our existing customers through increases in the
products offered and sold;
    
    expansion of our existing customer base in the United States through our sales
staff and outside sales representative organizations;
    
    expansion into distribution channels we are not currently utilizing through new
products and existing products outside of our traditional markets in the United
States and Canada;
    
    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
  
  7




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®
     Fiscal Years
    
    Amount2009
    
    $
    8662010
    
    
    7742011
    
    
    2012
    
    
    2013
    
    
    Thereafter
    
    
    Total
    
    $
    1,640
 8




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Design and Manufacturing
    Fiscal YearSupplier
    
    2008
    
    2007Galanz
    
    
    35
    %
    
    
    *Midea
    
    
    20
    %
    
    
    24
    %Capetronic Displays
    
    
    0
    %
    
    
    14
    %Lasco Industries
    
    
    17
    %
    
    
    13
    %*  less than 10%
  Warranties
  9




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Returned Products
  
    
    retailer return policies with their customers;
    
    damage to goods in transit and cosmetic imperfections; and
    
    mechanical failures.
  Backlog
  Trademarks
  
    
    (EMERSON LOGO)
    
    Emerson Researchâ
    
    Emerson Interactive sm
    
    Girl Power
    
    H.H. Scott®
    
    iTone
    
    Scott®
    
    SmartSet®
  10




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Patents
  Competition
   
    
    brand recognition;
    
    reliability;
    
    quality;
    
    price;
    
    design;
    
    consumer acceptance of our products; and
    
    quality service and support to retailers and their customers.
  Seasonality
  11




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Working Capital
  Government Regulation
   Product Liability and Insurance
   12




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Employees
  Item 1A. Risk Factors
  Business Related Risks
 If we are unable to resist price increases from our suppliers or pass through such increases to our
customers, our profit margins will shrink or be eliminated entirely.
  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 other stockholders.
 Grande
 13




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A number of our directors and senior executive officers also are managing directors or senior
officers of Grande and have loyalties and fiduciary obligations to both Grande and Emerson; those
dual positions subject such persons to conflicts of interest in related party transactions which
may cause such related party transactions to have consequences to us that are less favorable than
those which we could have attained in comparable transactions with unaffiliated entities..
   Although our management has concluded that our internal control over financial reporting, as such
term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f), was effective as of March 31, 2008,
we have previously identified material weaknesses in our internal controls. If we are unable to
maintain appropriate internal controls and procedures, it could cause us to fail to meet our
reporting obligations on a timely basis, result in the restatement of our 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.
   14




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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.
  We depend on a limited number of suppliers for our products. The inability to secure our products
could reduce our revenues and adversely affect our relationship with our customers.
  15




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
    
    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 contract 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.
Unanticipated disruptions in our operations, slowdowns or shutdowns 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.
   16




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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 business could be materially and adversely affected if we cannot protect our intellectual
property rights or if we infringe on the intellectual property rights of others.
  17




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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.
  18




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Foreign regulations and changes in the political, public health and economic conditions in the
foreign countries in which we operate our business could materially and adversely affect our
revenues and earnings.
  
    
    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;
    
    Chinese labor laws;
    
    labor shortages in manufacturing facilities located in China, including the
short-term labor shortage in manufacturing facilities caused by migrant workers seeking
employment opportunities created by the 2008 Summer Olympics to be held in Beijing;
    
    the elimination or reduction of value-added tax refunds to Chinese factories that
manufacture products for export;
    
    the rise of inflation and substantial economic growth in China;
    
    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;
    
    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.
  19




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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 .
  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.
 ®
  The seasonality of our business, 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;
    
    changes in market and economic conditions;
 20




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
    
    the discretionary nature of consumers demands and spending patterns;
    
    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;
    
    new product developments or introductions;
    
    product reviews and other media coverage;
    
    competition, including competitive price pressures; and
    
    political instability, war, acts of terrorism or other disasters.
 If our sales during the holiday season fall below our expectations, our operating results also
could fall below expectations.
  If our third party sales representatives fail to adequately promote, market and sell our products,
our revenues could significantly decrease.
  21




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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.
  A decline in the
value of the auction rate securities included in our investments
could materially adversely affect our liquidity.
   We may seek to make acquisitions that prove unsuccessful or strain or divert our managements
attention and our capital resources.
  22




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
    
    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
    
    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.
  Any substantial indebtedness we incur from time to time may adversely affect our ability to obtain
additional funds and may increase our vulnerability to economic or business downturns.
  
    
    because we would need to dedicate a portion of our cash flows from operations to pay
debt service costs, we would 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;
 23




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
    
    we would be 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 were to default under any of our existing credit facilities or if our
creditors were to 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.
  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.
 24




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Grandes controlling interest in our common stock as well as our organizational documents and
Delaware law make it difficult for us to be acquired without the consent and cooperation of
Grande, our board of directors and management.
  If our common stock is de-listed from the American Stock Exchange, shareholders liquidity in their
shares may be adversely affected and shareholders may have difficulty selling their shares or
attaining a satisfactory price.
  25




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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;
    
    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;
 26




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
    
    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;
    
    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
  ApproximateSquare
    
    
    
    Lease ExpiresFacility Purpose
    
    Footage
    
    Location
    
    or is OwnedCorporate headquarters
    
    
    22,500
    
    
    Parsippany, NJ
    
    December 2009Hong Kong office
    
    
    18,476
    
    
    Hong Kong, China
    
    December 2008New York office
    
    
    3,032
    
    
    New York, NY
    
    July 2012Macao office
    
    
    4,333
    
    
    Macao, China
    
    March 2009Warehouse
    
    
    97,100
    
    
    Irving, TX
    
    June 2010Warehouse
    
    
    180,650
    
    
    Mira Loma, CA
    
    June 2011
   27




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Item 3. LEGAL PROCEEDINGS
     Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  28




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PART II
 Item 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER REPURCHASES
OF EQUITY SECURITIES
 (a) Market Information
  Fiscal 2008
    
    Fiscal 2007High
    
    Low
    
    High
    
    LowFirst Quarter
    
    $
    3.30
    
    
    $
    2.90
    
    
    $
    3.75
    
    
    $
    3.11Second Quarter
    
    
    3.05
    
    
    
    2.12
    
    
    
    3.26
    
    
    
    2.91Third Quarter
    
    
    2.75
    
    
    
    1.20
    
    
    
    3.59
    
    
    
    2.89Fourth Quarter
    
    
    1.45
    
    
    
    1.01
    
    
    
    3.45
    
    
    
    3.11
    29




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COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN
AMONG EMERSON RADIO CORPORATION,
AMEX MARKET AND PEER GROUP INDEX
 
 
 CompanyIndex Market
    
    Fiscal Year Ended3/31/03
    
    3/31/04
    
    3/31/05
    
    3/31/06
    
    3/31/07
    
    3/31/08Emerson Radio Corp.
    
    
    100.00
    
    
    
    55.52
    
    
    
    51.16
    
    
    
    54.36
    
    
    
    46.51
    
    
    
    16.72Peer Group Index
    
    
    100.00
    
    
    
    141.65
    
    
    
    88.19
    
    
    
    69.48
    
    
    
    58.52
    
    
    
    41.49Amex Market Index
    
    
    100.00
    
    
    
    141.33
    
    
    
    148.06
    
    
    
    181.72
    
    
    
    195.41
    
    
    
    191.43
 (b) Holders
  (c) Dividends
  (d) Unregistered Securities
  30




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(e) Share Repurchases
  Item 6. SELECTED CONSOLIDATED FINANCIAL DATA
  March 31, 2008
    
    March 31, 2007
    
    March 31, 2006
    
    March 31, 2005
    
    March 31, 2004(In thousands, except per share data)Summary of Operations:Net Revenues
    
    $
    223,230
    
    
    $
    284,399
    
    
    $
    233,843
    
    
    $
    230,783
    
    
    $
    179,952Operating Income (loss)
    
    $
    (7,323
    )
    
    $
    7,191
    
    
    $
    4,169
    
    
    $
    9,442
    
    
    $
    3,093Income (loss) from continuing operations
    
    $
    (9,021
    )
    
    $
    3,458
    
    
    $
    3,712
    
    
    $
    5,113
    
    
    $
    60Income
(loss) from discontinued operations, Net of tax
    
    $
    
    
    
    $
    
    
    
    $
    12,918
    
    
    $
    792
    
    
    $
    (1,134
    )Net income (loss)
    
    $
    (9,021
    )
    
    $
    3,458
    
    
    $
    16,630
    
    
    $
    5,905
    
    
    $
    (1,074
    )Balance Sheet Data at Period End:Total Assets
    
    $
    87,929
    
    
    $
    99,408
    
    
    $
    92,502
    
    
    $
    131,168
    
    
    $
    118,669Current Liabilities
    
    
    22,978
    
    
    
    24,845
    
    
    
    21,772
    
    
    
    45,899
    
    
    
    40,637Long-Term Debt
    
    
    199
    
    
    
    676
    
    
    
    575
    
    
    
    31,666
    
    
    
    30,820Shareholders Equity
    
    
    64,619
    
    
    
    73,887
    
    
    
    70,155
    
    
    
    53,603
    
    
    
    47,212Working Capital
    
    
    44,297
    
    
    
    67,183
    
    
    
    60,215
    
    
    
    56,116
    
    
    
    46,729Current Ratio
    
    
    2.9 to 1
    
    
    
    3.7 to 1
    
    
    
    3.8 to 1
    
    
    
    2.2 to 1
    
    
    
    2.2 to 1Per Common Share:Basic net income (loss) per share:Continuing operations
    
    $
    (.33
    )
    
    $
    .13
    
    
    $
    .13
    
    
    $
    .19
    
    
    $
    .00Discontinued operations
    
    
    
    
    
    
    
    
    
    
    .48
    
    
    
    .03
    
    
    
    (.04
    )$
    (.33
    )
    
    $
    .13
    
    
    $
    .61
    
    
    $
    .22
    
    
    $
    (.04
    )Diluted net income (loss) per share:Continuing operations
    
    $
    (.33
    )
    
    $
    .13
    
    
    $
    .13
    
    
    $
    .19
    
    
    $
    .00Discontinued operations
    
    
    
    
    
    
    
    
    
    
    .48
    
    
    
    .03
    
    
    
    (.04
    )$
    (.33
    )
    
    $
    .13
    
    
    $
    .61
    
    
    $
    .22
    
    
    $
    (.04
    )Weighted Average Shares Outstanding:Basic
    
    
    27,126
    
    
    
    27,087
    
    
    
    27,079
    
    
    
    26,991
    
    
    
    27,227Diluted
    
    
    27,126
    
    
    
    27,127
    
    
    
    27,172
    
    
    
    27,264
    
    
    
    27,227
 31




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Item 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    Results of Operations:
   2008
    
    2007
    
    2006Net revenues
    
    $
    223,230
    
    
    $
    284,399
    
    
    $
    233,843Cost of sales
    
    
    201,046
    
    
    
    248,065
    
    
    
    204,010Other operating costs and expenses
    
    
    6,097
    
    
    
    6,492
    
    
    
    6,145Selling, general and administrative
    
    
    23,587
    
    
    
    22,269
    
    
    
    19,097Acquisition costs incurred
    
    
    
    
    
    
    190
    
    
    
    48Non-cash compensation costs (recovered)
    
    
    (177
    )
    
    
    192
    
    
    
    374Operating income (loss)
    
    
    (7,323
    )
    
    
    7,191
    
    
    
    4,169Gain on sale of building
    
    
    854
    
    
    
    
    
    
    
    Gain on foreign exchange forward contracts
    
    
    465
    
    
    
    
    
    
    
    Interest income (expense), net
    
    
    303
    
    
    
    (54
    )
    
    
    (785
    )Loss on impairment of securities
    
    
    (1,952
    )
    
    
    
    
    
    
    Income (loss) before income taxes and
minority interest
    
    
    (7,653
    )
    
    
    7,137
    
    
    
    3,384Provision (benefit) for income taxes
    
    
    1,427
    
    
    
    3,679
    
    
    
    (328
    )Minority interest in net loss of
consolidated subsidiary
    
    
    59
    
    
    
    
    
    
    
    Net income (loss) from continuing operations
    
    $
    (9,021
    )
    
    $
    3,458
    
    
    $
    3,712
 32




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Results of Operations  Fiscal 2008 compared with Fiscal 2007
 Net Revenues
 i)
    
    Home appliances product sales increased $37.8 million, or 42.1%, to
$127.6 million in fiscal 2008 as compared to $89.8 million in fiscal 2007. In
fiscal 2008, home appliance product sales consisted of microwave ovens, wine
coolers, small refrigerators, and toaster ovens;ii)
    
    Emerson® branded products sales, excluding home appliances products,
were $78.9 million in fiscal 2008 compared to $118.5 million in fiscal 2007, a
decrease of $39.6 million, or 33.4%, primarily resulting from decreased sales
volumes in several audio product lines and the Ipod® compatible product category;iii)
    
    In fiscal 2007, we had promotional item sales to ESI International of
$32.9 million, associated with a major holiday promotion with one of our 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 fiscal 2007, 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. There were no promotional
item sales during fiscal 2008;iv)
    
    Themed product sales were $9.4 million in fiscal 2008 compared to $36.2
million in fiscal 2007, a decrease of $26.8 million, or 74.0%, primarily due to the
discontinuance of Nickelodeon® themed products offset slightly by sales of Mattel®
themed products which were dampened by $2.4 million in product returns made by one
long time distribution partner;v)
    
    Licensing revenues of $6.9 million in fiscal 2008 compared to $6.6
million in fiscal 2007, an increase of $300,000, or 4.5% primarily due to our video
licensing agreements;vi)
    
    A new joint venture which was formed in the fourth quarter of fiscal
2008 for the primary purpose of manufacturing, selling, distributing, and/or
licensing
audio and video equipment for the home and/or office with sales of $67,000; and
 33




---



##### 



vii)
    
    In fiscal 2008, we charged fees of $102,000 and $233,000, respectively,
to Sansui Sales PTE, Ltd (Sansui Sales) and Akai Sales PTE, Ltd (Akai Sales),
both of which are related parties to us, for assistance in procuring their product.
In fiscal 2008, we charged commissions of $29,000 to Capetronic Displays Ltd,
which is a related party to us, for importation assistance. In fiscal 2008, we
sold to Sansui Sales and Akai Sales $242,000 of Sansui- and Akai-branded product
which we sourced on their behalf from third-party suppliers. See Item 8 
Financial Statements and Supplementary Data  Note 3  Related Party
Transactions. No related party revenue was recorded in the prior fiscal year.
 Cost of Sales
  Other Operating Costs and Expenses
 Selling, General and Administrative Expenses (S,G&A)
 34




---



##### 



Acquisition Costs
 Non Cash Compensation
 Gain on sale of building
 Gains on foreign exchange forward contracts
 Interest Income (Expense), net
 Loss on impairment of securities
 35




---



##### 



Provision (benefit) for Income Taxes
 Minority interest in net loss of consolidated subsidiary
 Net Income (Loss)
 Results of Operations  Fiscal 2007 compared with Fiscal 2006
 Net Revenues
 i)
    
    Emerson® branded products sales of $208.3 million in fiscal 2007
compared to $176.2 million in fiscal 2006, an increase of $32.1 million, or 18.2%,
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
 36




---



##### 



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
  Other Operating Costs and Expenses
 Selling, General and Administrative Expenses (S,G&A)
 37




---



##### 



Acquisition Costs
 Non Cash Compensation
 Interest Expense, net
 Provision (benefit) for Income Taxes
 Income From Continuing Operations
 Liquidity and Capital Resources
   38




---



##### 



Short-Term Liquidity.
 39




---



##### 



Contractual Obligations
  Payments due by period (1)Less than
    
    
    
    
    
    
    
    
    
    More thanTotal
    
    1 year
    
    1-3 years
    
    3-5 years
    
    5 yearsCapital lease obligations
    
    $
    224
    
    
    $
    82
    
    
    $
    124
    
    
    $
    18
    
    
    $
    Operating lease
obligations-related
party
    
    
    276
    
    
    
    276
    
    
    
    
    
    
    
    
    
    
    
    Operating lease
obligations-non-affiliate
    
    
    4,940
    
    
    
    1,777
    
    
    
    2,664
    
    
    
    499
    
    
    
    Total
    
    $
    5,440
    
    
    $
    2,135
    
    
    $
    2,788
    
    
    $
    517
    
    
    $
    
 
 (1)
    
    Amounts in the above table do not include a reserve of approximately $149,000 related to
uncertain tax positions. The Company is not able to reasonably estimate when, if ever, these
reserves would result in actual cash payments.  Off-Balance Sheet Arrangements.
 Other Events and Circumstances Pertaining to Liquidity.
 40




---



##### 



Critical Accounting Policies
  Inventories.
 Trade Accounts Receivable.
 Income Taxes.
 41




---



##### 



Sales Return Reserves.
 Cooperative Advertising Accruals.
 Recently-Issued Financial Accounting Pronouncements
    42




---



##### 



Business Combinations. purchase method
   43




---



##### 



Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
 Inflation, Foreign Currency, and Interest Rates
   44




---



##### 



Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 Index to Consolidated Financial Statements
 Page No.
    
    Report of Independent  Registered Public Accounting Firm
    
    46
    
    Consolidated Statements of Operations for the years ended March 31, 2008, 2007 and 2006
    
    47
    
    Consolidated Balance Sheets as of March 31, 2008 and 2007
    
    48
    
    Consolidated Statements of Changes in Shareholders' Equity for the years ended March 31, 2008, 2007 and 2006
    
    49
    
    Consolidated Statements of Cash Flows for the years ended March 31, 2008, 2007 and 2006
    
    50-51
    
    Notes to Consolidated Financial Statements
    
    52
    
    Schedule IIValuation and Qualifying Accounts and Reserves
    
    All other schedules are omitted because they are not applicable or the required information is shownin the financial statements or notes thereto.
  45




---



##### 








REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM















MOORE STEPHENS, P. C.  Certified Public Accountants.





46



---



##### 



EMERSON RADIO CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For The Years Ended March 31, 2008, 2007, and 2006
(In thousands, except per share data)
 2008
    
    
    2007
    
    
    2006Net revenues:Net revenues
    
    $
    222,857
    
    
    $
    284,166
    
    
    $
    233,843Net revenues-related party
    
    
    373
    
    
    
    233
    
    
    
    223,230
    
    
    
    284,399
    
    
    
    233,843Costs and expenses:Cost of sales
    
    
    200,814
    
    
    
    215,175
    
    
    
    204,010Cost of sales-related party
    
    
    232
    
    
    
    
    
    
    
    Cost of sales-related party purchases
    
    
    
    
    
    
    32,890
    
    
    
    Other operating costs and expenses
    
    
    6,097
    
    
    
    6,492
    
    
    
    6,145Selling, general and administrative expenses
(exclusive
of non-cash compensation shown below)
    
    
    23,587
    
    
    
    22,269
    
    
    
    19,097Acquisition costs incurred
    
    
    
    
    
    
    190
    
    
    
    48Non-cash compensation, net of recoveries
    
    
    (177
    )
    
    
    192
    
    
    
    374230,553
    
    
    
    277,208
    
    
    
    229,674Operating income (loss)
    
    
    (7,323
    )
    
    
    7,191
    
    
    
    4,169Other income (expense):Gain on sale of building
    
    
    854
    
    
    
    
    
    
    
    Gains on foreign exchange forward contracts
    
    
    465
    
    
    
    
    
    
    
    Interest income (expense), net
    
    
    140
    
    
    
    (692
    )
    
    
    (785
    )Interest income-related party
    
    
    163
    
    
    
    638
    
    
    
    Loss on impairment of securities
    
    
    (1,952
    )
    
    
    
    
    
    
    (330
    )
    
    
    (54
    )
    
    
    (785
    )Income (loss) from continuing operations before income
taxes and minority interest
    
    
    (7,653
    )
    
    
    7,137
    
    
    
    3,384Provision (benefit) for income taxes
    
    
    1,427
    
    
    
    3,679
    
    
    
    (328
    )Minority interest in loss of consolidated subsidiary
    
    
    59
    
    
    
    
    
    
    
    Income (loss) from continuing operations
    
    
    (9,021
    )
    
    
    3,458
    
    
    
    3,712Income from discontinued operations, net of tax
    
    
    
    
    
    
    
    
    
    
    12,918Net income (loss)
    
    
    (9,021
    )
    
    
    3,458
    
    
    
    16,630Basic net income (loss) per shareContinuing operations
    
    $
    (.33
    )
    
    $
    .13
    
    
    $
    .13Discontinued operations
    
    
    
    
    
    
    
    
    
    
    .48$
    (.33
    )
    
    $
    .13
    
    
    $
    .61Diluted net income (loss) per shareContinuing operations
    
    $
    (.33
    )
    
    $
    .13
    
    
    $
    .13Discontinued operations
    
    
    
    
    
    
    
    
    
    
    .48$
    (.33
    )
    
    $
    .13
    
    
    $
    .61Weighted average shares outstandingBasic
    
    
    27,126
    
    
    
    27,087
    
    
    
    27,079Diluted
    
    
    27,126
    
    
    
    27,127
    
    
    
    27,172
  47




---



##### 



EMERSON RADIO CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
As of March 31, 2008 and 2007
(In thousands, except per share data)
 2008
    
    
    2007ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    14,444
    
    
    $
    1,851Restricted cash
    
    
    
    
    
    
    3,000Foreign exchange forward contracts
    
    
    134
    
    
    
    Accounts receivable (less allowances of $4,148 and $3,573, respectively)
    
    
    17,289
    
    
    
    19,375Other receivables
    
    
    2,131
    
    
    
    1,536Due from affiliates
    
    
    765
    
    
    
    24,690Net inventory
    
    
    24,854
    
    
    
    32,463Prepaid expenses and other current assets
    
    
    2,246
    
    
    
    3,376Deferred tax assets
    
    
    5,412
    
    
    
    5,737Total current assets
    
    
    67,275
    
    
    
    92,028Property, plant, and equipment, net
    
    
    1,902
    
    
    
    2,492Trademarks and other intangible assets, net
    
    
    279
    
    
    
    311Investments in marketable securities
    
    
    11,948
    
    
    
    Deferred tax assets
    
    
    5,927
    
    
    
    4,067Other assets
    
    
    598
    
    
    
    510Total Assets
    
    $
    87,929
    
    
    $
    99,408LIABILITIES AND SHAREHOLDERS EQUITYCurrent Liabilities:Short-term borrowings
    
    $
    
    
    
    $
    3,111Current maturities of long-term borrowings
    
    
    82
    
    
    
    146Accounts payable and other current liabilities
    
    
    21,737
    
    
    
    20,044Due to affiliates
    
    
    102
    
    
    
    Accrued sales returns
    
    
    872
    
    
    
    1,191Income taxes payable
    
    
    185
    
    
    
    306Deferred tax liabilities
    
    
    
    
    
    
    47Total current liabilities
    
    
    22,978
    
    
    
    24,845Long-term borrowings
    
    
    142
    
    
    
    651Deferred tax liabilities
    
    
    57
    
    
    
    25Minority interest
    
    
    133
    
    
    
    Shareholders 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;
52,965,797 shares issued at March 31, 2008; 52,945,797 shares
issued at March 31, 2007; 27,129,832 shares outstanding at March
31, 2008 and 27,109,832
shares outstanding at March 31, 2007, respectively
    
    
    529
    
    
    
    529Capital in excess of par value
    
    
    117,245
    
    
    
    117,371Accumulated other comprehensive losses
    
    
    (82
    )
    
    
    (82
    )Accumulated deficit
    
    
    (32,159
    )
    
    
    (23,017
    )Treasury stock, at cost, 25,835,965 shares
    
    
    (24,224
    )
    
    
    (24,224
    )Total shareholders equity
    
    
    64,619
    
    
    
    73,887Total Liabilities and Shareholders Equity
    
    $
    87,929
    
    
    $
    99,408
  48




---



##### 



EMERSON RADIO CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY
For The Years Ended March 31, 2008, 2007, and 2006
(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, 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
    )
    
    $
    73,887Exercise of stock options and
warrants
    
    
    
    
    
    
    20,000
    
    
    
    
    
    
    
    
    
    
    
    51
    
    
    
    
    
    
    
    
    
    
    
    51Stock based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (177
    )
    
    
    
    
    
    
    
    
    
    
    (177
    )Adjustment for implementation
of FIN 48
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (121
    )
    
    
    (121
    )Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,021
    )
    
    
    (9,021
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,021
    )Balance  March 31, 2008
    
    $
    3,310
    
    
    
    52,965,797
    
    
    $
    529
    
    
    $
    (24,224
    )
    
    $
    117,245
    
    
    $
    (82
    )
    
    $
    (32,159
    )
    
    $
    64,619
  49




---



##### 



EMERSON RADIO CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For The Years Ended March 31, 2008, 2007, and 2006
(In thousands)
 2008
    
    
    2007
    
    
    2006Cash Flows from Operating Activities:Income (loss) from continuing operations
    
    $
    (9,021
    )
    
    $
    3,458
    
    
    $
    3,712Adjustments to reconcile net income (loss) to net cash
(used) provided by operating activities:Minority interest
    
    
    133
    
    
    
    
    
    
    
    Depreciation and amortization
    
    
    823
    
    
    
    850
    
    
    
    1,076Non cash compensation
    
    
    (177
    )
    
    
    192
    
    
    
    374Deferred tax expense (benefit)
    
    
    (1,550
    )
    
    
    842
    
    
    
    (519
    )Asset allowances, reserves, and other
    
    
    1,746
    
    
    
    1,685
    
    
    
    958Gain on sale of building and other property
    
    
    (865
    )
    
    
    
    
    
    
    Impairment charges and asset write-offs
    
    
    2,072
    
    
    
    
    
    
    
    Gains on foreign exchange forward contracts not settled
    
    
    (134
    )
    
    
    
    
    
    
    Changes in assets and liabilities:Restricted cash
    
    
    3,000
    
    
    
    
    
    
    
    2,620Accounts receivable
    
    
    (479
    )
    
    
    507
    
    
    
    (4,227
    )Other receivables
    
    
    (595
    )
    
    
    (109
    )
    
    
    117Due from affiliates
    
    
    23,925
    
    
    
    (24,690
    )
    
    
    Inventories
    
    
    8,109
    
    
    
    (2,423
    )
    
    
    5,030Prepaid expenses and other current assets
    
    
    1,130
    
    
    
    318
    
    
    
    (394
    )Other assets
    
    
    (171
    )
    
    
    756
    
    
    
    (674
    )Accounts payable and other current liabilities
    
    
    1,693
    
    
    
    1,923
    
    
    
    621Due to affiliates
    
    
    102
    
    
    
    
    
    
    
    Income taxes payable
    
    
    (242
    )
    
    
    164
    
    
    
    (101
    )Operating activities of continuing operations
    
    
    29,499
    
    
    
    (16,527
    )
    
    
    8,593Operating activities of discontinued operations
    
    
    
    
    
    
    
    
    
    
    220Net cash provided (used) by operating activities
    
    
    29,499
    
    
    
    (16,527
    )
    
    
    8,813Cash Flow From Investing Activities:Proceeds from sale of building and other property
    
    
    2,011
    
    
    
    
    
    
    
    Proceeds from partial calls on securities
    
    
    1,100
    
    
    
    
    
    
    
    Purchases of securities
    
    
    (15,000
    )
    
    
    
    
    
    
    Additions to
property and equipment (continuing operations)
    
    
    (1,309
    )
    
    
    (364
    )
    
    
    (687
    )Investing activities of discontinued operations,
including
proceeds from sale of SSG (net of cash at date of sale)
    
    
    
    
    
    
    
    
    
    
    29,488Net cash (used) provided by investing activities
    
    
    (13,198
    )
    
    
    (364
    )
    
    
    28,801Cash Flows from Financing Activities:Short-term borrowings
    
    
    (64
    )
    
    
    31,892
    
    
    
    Repayments of short-term borrowings
    
    
    
    
    
    
    (31,831
    )
    
    
    Net borrowings under foreign bank facilities
    
    
    (3,111
    )
    
    
    1,270
    
    
    
    (11,203
    )Purchases of treasury stock
    
    
    
    
    
    
    
    
    
    
    (392
    )Exercise of stock options
    
    
    51
    
    
    
    94
    
    
    
    51Long-term borrowings
    
    
    183,144
    
    
    
    85,594
    
    
    
    34,682Repayments of long-term borrowings
    
    
    (183,728
    )
    
    
    (85,794
    )
    
    
    (46,050
    )Financing activities of continuing operations
    
    
    (3,708
    )
    
    
    1,225
    
    
    
    (22,912
    )Financing activities of discontinued operations
    
    
    
    
    
    
    
    
    
    
    (143
    )Net cash (used) provided by financing activities
    
    
    (3,708
    )
    
    
    1,225
    
    
    
    (23,055
    )Net (decrease) increase in cash and cash equivalents
    
    
    12,593
    
    
    
    (15,666
    )
    
    
    14,559Cash and cash equivalents at beginning of year
    
    
    1,851
    
    
    
    17,517
    
    
    
    2,958Cash and cash equivalents at end of year (Including cash of
discontinued operations of $0)
    
    $
    14,444
    
    
    $
    1,851
    
    
    $
    17,517
 50




---



##### 



EMERSON RADIO CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
For The Years Ended March 31, 2008, 2007 and 2006
(In thousands)
   Cash paid during the period for:Interest
    
    $
    464
    
    
    $
    1,037
    
    
    $
    841Income taxes
    
    $
    5,393
    
    
    $
    1,224
    
    
    $
    819
  51




---



##### 



EMERSON RADIO CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2008
 NOTE 1  SIGNIFICANT ACCOUNTING POLICIES:
 Background and Basis of Presentation
 
 Use of Estimates
  Cash Equivalents
  Fair Values of Financial Instruments
  52




---



##### 



EMERSON RADIO CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Investments
  Concentrations of Credit Risk
  2008
    
    
    2007(In thousands)Allowance for doubtful accounts
    
    $
    960
    
    
    $
    1,064Chargeback reserves
    
    
    462
    
    
    
    411Allowance for sales returns
    
    
    2,726
    
    
    
    2,098Total account receivable reserves
    
    $
    4,148
    
    
    $
    3,573
  Property and Equipment
  53




---



##### 



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
  54




---



##### 



EMERSON RADIO CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Selling, General and Administrative Expenses
  Acquisition Costs Incurred
  Foreign Currency
   Advertising Expenses
  Cooperative Advertising Expenses
  Internet Expenses
  55




---



##### 



EMERSON RADIO CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Interest (Income) Expense
  2008
    
    
    2007
    
    
    2006(In thousands)Interest expense
    
    $
    440
    
    
    $
    1,001
    
    
    $
    841Amortization of deferred financing
costs
    
    
    83
    
    
    
    83
    
    
    
    439Interest income
    
    
    (663
    )
    
    
    (392
    )
    
    
    (495
    )Interest (income) expense, net
    
    $
    (140
    )
    
    $
    692
    
    
    $
    785
 Income Taxes
  Comprehensive Income
  Net Earnings (Loss) Per Common Share
  56




---



##### 



EMERSON RADIO CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Stock- Based Compensation
    Derivative Financial Instruments
  57




---



##### 



EMERSON RADIO CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Recent Pronouncements
 In July 2006, the Financial Accounting Standards Board (FASB) issued Interpretation No. 48
Accounting for Uncertainty in Income Taxes  an interpretation of FAS 109 (FIN 48). FIN 48
clarifies the application of FAS 109 by defining the criterion that an individual tax position must
meet for any part of the benefit of that position to be recognized in an entitys financial
statements and also provides guidance on measurement, de-recognition, classification, interest and
penalties and disclosure. FIN 48 is effective for years beginning after December 15, 2006. The
adoption of FIN 48 did not have a material impact on our consolidated financial position or results
of operations.In September 2006, the FASB issued FAS No. 157, Fair Value Measurements, which, while not
prescribing any new fair value measurements, supplements other accounting pronouncements that apply
these measurements. FAS No. 157 is effective for fiscal years beginning after November 15, 2007.
The Company is currently evaluating the impact of adopting this new Standard.In September 2006, the United States Securities and Exchange Commission (SEC) issued Staff
Accounting Bulletin No. 108 Considering the Effects of Prior Misstatements When Quantifying
Misstatements in Current Years Financial Statements (SAB 108), which provides interpretive
guidance on how registrants should quantify financial statement misstatements. Under SAB 108
registrants are required to consider both a rollover method, which focuses primarily on the
income statement impact of misstatements, and the iron curtain method, which focuses primarily on
the balance sheet impact of misstatements. The effects of prior year uncorrected errors include
potential accumulation of improper amounts that may result in material misstatement on the balance
sheet or the reversal of prior period errors in the current period that may result in a material
misstatement of the current period income statement amounts. Adjustments to current or prior
period financial statements would be required in the event that after application of various
approaches for assessing materiality of a misstatement in current period financial statements and
consideration of all relevant quantitative factors, a misstatement is determined to be material.
We adopted provisions of SAB 108 as of December 31, 2006 and this did not have a material effect on
the Companys results of operations or financial position.In February 2007, the FASB issued FAS No. 159, The Fair Value Option for Financial Assets and
Financial Liabilities. FAS No. 159 includes an amendment of FAS No. 115 and is intended, as part
of the FASBs ongoing measurement goals, to encourage the application of fair value measurement,
allowing the measurement of many financial instruments at fair value. FAS No. 159 is effective for
fiscal years beginning after November 15, 2007. The Company is currently evaluating the impact of
this new Standard but believes that it will not have a material impact on the Companys financial
position, results of operations or cash flows.In December 2007, the FASB issued FAS No. 141(R), Business Combinations, which replaces FASB
Statement No. 141, Business Combinations. FAS 141(R) stipulates how the acquirer recognizes
assets acquired, liabilities assumed, and any non-controlling interest in the acquiree measured at
their fair values as of the acquisition date. This Statement does not apply to the formation of a joint
venture or combination between businesses under common control. FAS 141(R) makes amendments to
various other Statements and improves upon guidance provided by other authoritative
 58




---



##### 



EMERSON RADIO CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 literature. This Statement applies to business combinations where the acquisition date is on or
after the beginning of the first annual reporting period after December 15, 2008. The Company is
currently evaluating the impact of this new Standard.In December 2007, the FASB issued FAS No. 160, Noncontrolling Interests in Consolidated Financial
Statements  An Amendment of ARB No. 51. FAS No. 160 establishes accounting and reporting
standards for noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary.
FAS No. 160 is effective for fiscal years beginning after December 15, 2008. The Company is
currently evaluating the impact of this new Standard but believes that it will not have a material
impact on the Companys financial position, results of operations or cash flows.In December 2007, the FASB ratified the Emerging Issues Task Force consensus on EITF Issue No.
07-1, Accounting for Collaborative Arrangements Related to the Development and Commercialization
of Intellectual Property. The EITF resolved that revenues and costs incurred and revenues
generated from transactions with third parties outside the collaborative arrangement should be
reported by the collaborators based on the criteria in EITF 99-19, Reporting Revenue Gross as a
Principal Versus Net as an Agent. Payments between collaborators should be characterized based on
existing accounting literature or analogous to such guidance if the payments are not within the
scope of such pronouncements. Disclosures should include the nature and purpose of the
collaborative arrangement along with the relevant accounting policies and classification of
significant financial statement amounts associated with the arrangements. EITF Issue No. 07-1 is
effective for fiscal years beginning after December 15, 2008 and is to be applied retrospectively
to all periods presented for collaborative arrangements in existence on the date of adoption. The
Company is currently evaluating the impact of this new Standard but believes that it will not have
a material impact on the Companys financial position, results of operations or cash flows.In December 2007, the FASB issued FAS No. 161, Disclosures about Derivative Instruments and
Hedging Activities. FAS No. 161 is an amendment of FAS No. 133, Accounting for Derivative
Instruments and Hedging Activities and requires enhanced disclosures of an entitys derivative and
hedging activities. FAS No. 161 is effective for fiscal years beginning after November 15, 2008.
The Company is currently evaluating the impact of this new Standard but believes that it will not
have a material impact on the Companys financial position, results of operations or cash flows.In May 2008, the FASB issued FAS No. 162, The Hierarchy of Generally Accepted Accounting
Principles. FAS No. 162 will be effective 60 days following the SECs approval of the PCAOB
amendments to AU Section 411, The Meaning of Presented Fairly in Conformity with Generally Accepted
Accounting Principles. The Company is currently evaluating the impact of this new Standard, but it
is not anticipated that this Standard would cause any significant change in financial reporting.In May 2008, the FASB issued FAS No. 163, Accounting for Financial Guarantee Insurance Contracts.
FAS No. 163 is an interpretation of FAS No. 60, Accounting and Reporting by Insurance
Enterprises. FAS No. 163 is effective for fiscal years beginning after December 15, 2008. The
Company believes that this Standard will not have a material impact on the Companys financial
position, results of operations or cash flows.
 59




---



##### 



EMERSON RADIO CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Reclassifications
  NOTE 2  INVENTORIES:
  March 31,
    
    
    March 31,2008
    
    
    2007(In thousands)Finished goods
    
    $
    28,730
    
    
    $
    36,839Less inventory allowances
    
    
    (3,876
    )
    
    
    (4,376
    )$
    24,854
    
    
    $
    32,463
 60




---



##### 



EMERSON RADIO CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 NOTE 3  RELATED PARTY TRANSACTIONS
  Grandes Purchase of Controlling Interest in Emerson.
 License Agreement for Scott Brands.
 Unsecured Financial Assistance to Grande.
  61




---



##### 



EMERSON RADIO CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
    Product Sourcing Transactions.
 Sales of goods.
 62




---



##### 



EMERSON RADIO CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Leases and Other Real Estate Transactions.
    63




---



##### 



EMERSON RADIO CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Toy Musical Instruments.
 Freight Forwarding Services.
 Other.
  64




---



##### 



EMERSON RADIO CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
    65




---



##### 



EMERSON RADIO CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 NOTE 4  PROPERTY, PLANT, AND EQUIPMENT:
  2008
    
    
    2007(In thousands)Buildings
    
    $
    
    
    
    $
    1,175Computer equipment & software
    
    
    2,831
    
    
    
    2,747Furniture and fixtures
    
    
    2,002
    
    
    
    1,600Machinery and equipment
    
    
    1,839
    
    
    
    1,366Leasehold improvements
    
    
    672
    
    
    
    6437,344
    
    
    
    7,531Less accumulated depreciation and amortization
    
    
    (5,442
    )
    
    
    (5,039
    )$
    1,902
    
    
    $
    2,492
  NOTE 5  OTHER INTANGIBLE ASSETS
  66




---



##### 



EMERSON RADIO CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Weighted AverageFiscal Year Ended
    
    Gross Carrying
    
    Amortization
    
    Accumulated
    
    Amortization
    
    AmortizationMarch 31, 2008
    
    Amount
    
    Expense
    
    Amortization
    
    Period
    
    PeriodAmortizable
Intangible AssetsTrademarks
    
    $
    361
    
    
    $
    32
    
    
    $
    82
    
    
    15 years
    
    15 years
 Weighted AverageFiscal Year Ended
    
    Gross Carrying
    
    Amortization
    
    Accumulated
    
    Amortization
    
    AmortizationMarch 31, 2007
    
    Amount
    
    Expense
    
    Amortization
    
    Period
    
    PeriodAmortizable
Intangible AssetsTrademarks
    
    $
    929
    
    
    $
    131
    
    
    $
    618
    
    
    15 years
    
    15 years
   2008
    
    $
    242009
    
    
    242010
    
    
    242011
    
    
    242012
    
    
    24Thereafter
    
    
    159$
    279
 67




---



##### 



EMERSON RADIO CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 NOTE 6  BORROWINGS:
 Short-term Borrowings
  .
 2008
    
    2007(In thousands)Foreign bank loan
    
    $
    0
    
    
    $
    3,111
 Long -term Borrowings
  2008
    
    
    2007(In thousands)Mortgage payable
    
    $
    
    
    
    $
    567Capitalized lease obligations and other
    
    
    224
    
    
    
    230224
    
    
    
    797Less current maturities
    
    
    82
    
    
    
    146Long-term debt and notes payable
    
    $
    142
    
    
    $
    651
 Emerson Credit Facility 
 68




---



##### 



EMERSON RADIO CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
       69




---



##### 



EMERSON RADIO CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  2009
    
    $
    822010
    
    
    842011
    
    
    392012
    
    
    192013
    
    
    Thereafter
    
    
    Total
    
    
    224Less current portion
    
    
    82Total long term portion
    
    $
    142
 NOTE 7  INCOME TAXES:
 2008
    
    
    2007
    
    
    2006(In thousands)Current:Federal
    
    $
    
    
    
    $
    906
    
    
    $
    90Foreign, state and other
    
    
    321
    
    
    
    1,931
    
    
    
    100Prior year state and local
    
    
    2,656
    
    
    
    
    
    
    
    Deferred:Federal
    
    
    (1,486
    )
    
    
    1,024
    
    
    
    (389
    )Foreign, state and other
    
    
    (64
    )
    
    
    (182
    )
    
    
    (129
    )$
    1,427
    
    
    $
    3,679
    
    
    $
    (328
    )
   2008
    
    
    2007
    
    
    2006(In thousands)Statutory provision (benefit)
    
    $
    (2,602
    )
    
    $
    2,427
    
    
    $
    1,285Foreign subsidiary
    
    
    977
    
    
    
    (252
    )
    
    
    State taxes
    
    
    1,881
    
    
    
    1,152
    
    
    
    249Permanent differences
    
    
    26
    
    
    
    
    
    
    
    Expiration of NOL
    
    
    873
    
    
    
    
    
    
    
    State tax expensed in a prior
year
    
    
    (748
    )
    
    
    
    
    
    
    Valuation allowance
    
    
    768
    
    
    
    
    
    
    
    Other, net
    
    
    252
    
    
    
    352
    
    
    
    (1,862
    )Total income tax (benefit)
    
    $
    1,427
    
    
    $
    3,679
    
    
    $
    (328
    )
 70




---



##### 



EMERSON RADIO CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  2008
    
    
    2007(In thousands)Deferred tax assets:Current:Accounts receivable reserves
    
    $
    2,030
    
    
    $
    1,846Inventory reserves
    
    
    2,207
    
    
    
    2,536Accruals
    
    
    1,009
    
    
    
    1,188Stock warrants
    
    
    166
    
    
    
    166Non-current:Property, plant, and equipment
    
    
    249
    
    
    
    194Impairment of auction rate securities
    
    
    781
    
    
    
    Net operating loss carryforwards
    
    
    5,587
    
    
    
    3,822Stock compensation
    
    
    78
    
    
    
    52Gross deferred tax assets
    
    
    12,107
    
    
    
    9,804Valuation allowances
    
    
    (768
    )
    
    
    Total deferred tax assets
    
    
    11,339
    
    
    
    9,804Deferred tax liabilities:Current:Accruals
    
    
    
    
    
    
    47Non-current:Capital lease expense
    
    
    57
    
    
    
    25Total Deferred Tax Liabilities
    
    
    57
    
    
    
    72Net deferred tax assets
    
    $
    11,282
    
    
    $
    9,732
 71




---



##### 



EMERSON RADIO CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Expiration yearLoss year (fiscal)
    
    Included in DTA
    
    Footnote
    
    (fiscal)1994
    
    2.2
    
    [1] [2]
    
    20091997
    
    4.6
    
    [2]
    
    20121999
    
    1.3
    
    [2]
    
    20192008
    
    7.8
    
    [2]
    
    2028
 
 [1]
    
    The 1994 loss is limited to an amount of $2.2 million per year by the Internal Revenue Code
section 382 due to a change in control that occurred in March 1994.[2]
    
    As of August 29, 2006 the overall deduction Emerson may utilize each year against its taxable
income is limited to $5.9 million by IRC section 382.  Loss year (fiscal)
    
    Included in DTA
    
    Expiration year (fiscal)2000
    
    0.3
    
    20092008
    
    2.7
    
    2015
      72




---



##### 



EMERSON RADIO CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  in 000sTotal amount of unrecognized tax benefits as of April 1, 2007
    
    $
    121Gross increases in unrecognized tax benefits as a result of tax positions taken during
a prior period
    
    
    28Gross decreases in unrecognized tax benefits as a result of tax positions taken during
a prior period
    
    
    Gross increases in unrecognized tax benefits as a result of tax positions taken during
the current period
    
    
    Gross decreases in unrecognized tax benefits as a result of tax positions taken during
the current period
    
    
    Decreases in unrecognized tax benefits relating to settlements with taxing authorities
    
    
    Reductions to unrecognized tax benefits as a result of lapse of statute of limitations
    
    
    Total amount of unrecognized tax benefits as of March 31, 2008
    
    $
    149
     Jurisdiction
    
    Open tax yearsU.S. federal
    
    2004-2007States
    
    2004-2007
   73




---



##### 



EMERSON RADIO CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  NOTE 8  COMMITMENTS AND CONTINGENCIES:
 Leases and royalties:
  Rental
    
    Royaltycommitments
    
    commitmentsFiscal Years
    
    Amount
    
    Affiliate
    
    Non-affiliate
    
    Minimums2009
    
    $
    2,919
    
    
    $
    276
    
    
    $
    1,777
    
    
    $
    8662010
    
    
    2,348
    
    
    
    
    
    
    
    1,574
    
    
    
    7742011
    
    
    1,090
    
    
    
    
    
    
    
    1,090
    
    
    
    2012
    
    
    406
    
    
    
    
    
    
    
    406
    
    
    
    2013
    
    
    93
    
    
    
    
    
    
    
    93
    
    
    
    Thereafter
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    6,856
    
    
    $
    276
    
    
    $
    4,940
    
    
    $
    1,640
  Letters of Credit:
   74




---



##### 



EMERSON RADIO CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Capital Expenditure and Other Commitments:
  Employee Benefit Plan:
  Shareholder Transaction:
  NOTE 9  STOCK BASED COMPENSATION:
   75




---



##### 



EMERSON RADIO CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Number of
    
    
    Weighted AverageOptions
    
    
    Exercise PriceOutstanding  April 1, 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
    
    
    $
    3.04Exercised
    
    
    (20,000
    )
    
    
    2.62Cancelled
    
    
    (300,000
    )
    
    
    3.16Outstanding  March 31, 2008
    
    
    37,334
    
    
    $
    2.32Exercisable at March 31, 2008
    
    
    37,334
    
    
    $
    2.32
 76




---



##### 



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
    
    
    
    2.3
    
    
    $
    1.00
    
    
    
    12,334
    
    
    $
    1.00$2.97
    
    
    25,000
    
    
    
    6.6
    
    
    
    2.97
    
    
    
    25,000
    
    
    
    2.9737,334
    
    
    
    5.2
    
    
    $
    2.32
    
    
    
    37,334
    
    
    $
    2.32
    77




---



##### 



EMERSON RADIO CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Number of
    
    
    Weighted AverageOptions
    
    
    Exercise PriceOutstanding  April 1, 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
    
    
    $
    3.15Cancelled
    
    
    (100,000
    )
    
    
    3.11Outstanding  March 31, 2008
    
    
    175,000
    
    
    $
    3.18Exercisable at March 31, 2008
    
    
    75,000
    
    
    $
    3.17
  Options Outstanding
    
    
    Options ExercisableWeighted
    
    
    WeightedAverage
    
    
    Average
    
    
    
    
    
    
    WeightedRange of Exercise
    
    Amount
    
    
    Remaining
    
    
    Exercise
    
    
    Amount
    
    
    AveragePrices
    
    Outstanding
    
    
    Contractual Life
    
    
    Price
    
    
    Exercisable
    
    
    Exercise Price$3.07
    
    
    25,000
    
    
    
    7.8
    
    
    $
    3.07
    
    
    
    16,667
    
    
    $
    3.07$3.19
    
    
    125,000
    
    
    
    8.6
    
    
    
    3.19
    
    
    
    41,666
    
    
    
    3.19$3.23
    
    
    25,000
    
    
    
    7.7
    
    
    
    3.23
    
    
    
    16,667
    
    
    
    3.23175,000
    
    
    
    8.4
    
    
    $
    3.18
    
    
    
    75,000
    
    
    $
    3.17
 78




---



##### 



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:
  79




---



##### 



EMERSON RADIO CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Warrants:
   NOTE 10  FINANCIAL INSTRUMENTS:
   NOTE 11  MARKETABLE SECURITIES:
  80




---



##### 



EMERSON RADIO CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 NOTE 12  NET EARNINGS PER SHARE:
  (In thousands, except per share amount)2008
    
    
    2007
    
    
    2006Numerator:Income (loss) from continuing operations for
basic and diluted earnings per share
    
    $
    (9,021
    )
    
    $
    3,458
    
    
    $
    3,712Denominator:Denominator for basic earnings per share 
weighted average shares
    
    
    27,126
    
    
    
    27,087
    
    
    
    27,079Effect of dilutive securities on denominator:Options and warrants
    
    
    
    
    
    
    40
    
    
    
    93Denominator for diluted earnings per share
 weighted average shares and assumed
conversions
    
    
    27,126
    
    
    
    27,127
    
    
    
    27,172Earnings (loss) from continuing operationsBasic and diluted earnings (loss) per share
    
    $
    (.33
    )
    
    $
    .13
    
    
    $
    .13
  NOTE 13  LICENSE AGREEMENTS:
  81




---



##### 



EMERSON RADIO CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  
  NOTE 14 LEGAL PROCEEDINGS:
    82




---



##### 



EMERSON RADIO CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  NOTE 15 BUSINESS SEGMENT INFORMATION AND MAJOR CUSTOMERS:
  Year Ended March 31, 2008U.S.
    
    Foreign
    
    ConsolidatedSales to external customers
    
    $
    218,840
    
    
    $
    4,017
    
    
    $
    222,857Income (loss) before income taxes
    
    $
    (7,379
    )
    
    $
    (274
    )
    
    $
    (7,653
    )Identifiable assets
    
    $
    83,237
    
    
    $
    4,692
    
    
    $
    87,929
 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
 83




---



##### 



EMERSON RADIO CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   84




---



##### 



EMERSON RADIO CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 NOTE 16  QUARTERLY INFORMATION (UNAUDITED):
  Fiscal 2008
    
    Fiscal 2007Consolidated StatementOf Operations
    
    1st Qrt
    
    2nd Qrt
    
    3rd Qrt
    
    4th Qrt
    
    1st Qrt
    
    2nd Qrt
    
    3rd Qrt
    
    4th QrtNet revenues
    
    $
    52,688
    
    
    $
    57,862
    
    
    $
    75,789
    
    
    $
    36,891
    
    
    $
    55,241
    
    
    $
    99,588
    
    
    $
    89,339
    
    
    $
    40,231Operating income (loss)
    
    
    588
    
    
    
    (120
    )
    
    
    (1,719
    )
    
    
    (6,072
    )
    
    
    490
    
    
    
    5,914
    
    
    
    6,032
    
    
    
    (5,245
    )Income (loss) before
income taxes and
minority interest
    
    
    821
    
    
    
    668
    
    
    
    (1,280
    )
    
    
    (7,862
    )
    
    
    595
    
    
    
    5,702
    
    
    
    5,575
    
    
    
    (4,735
    )Net income (loss)
    
    $
    442
    
    
    $
    (3,284
    )
    
    $
    1,114
    
    
    $
    (7,293
    )
    
    $
    581
    
    
    $
    3,804
    
    
    $
    3,695
    
    
    $
    (4,622
    )Basic net income (loss)
per share
    
    $
    .02
    
    
    $
    (.12
    )
    
    $
    .04
    
    
    $
    (.27
    )
    
    $
    .02
    
    
    $
    .14
    
    
    $
    .14
    
    
    $
    (.17
    )Diluted net income
(loss) per share
    
    $
    .02
    
    
    $
    (.12
    )
    
    $
    .04
    
    
    $
    (.27
    )
    
    $
    .02
    
    
    $
    .14
    
    
    $
    .14
    
    
    $
    (.17
    )Weighted average sharesOutstanding  basic
    
    
    27,115
    
    
    
    27,130
    
    
    
    27,130
    
    
    
    27,130
    
    
    
    27,065
    
    
    
    27,077
    
    
    
    27,097
    
    
    
    27,110Outstanding  diluted
    
    
    27,141
    
    
    
    27,130
    
    
    
    27,136
    
    
    
    27,130
    
    
    
    27,140
    
    
    
    27,106
    
    
    
    27,117
    
    
    
    27,110
 85




---



##### 



EMERSON RADIO CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 NOTE 17  DISCONTINUED OPERATIONS:
   Discontinued Operations (SSG)
    
    2006Net revenues
    
    $
    23,218Operating income
    
    
    610Gain on sale of SSG, net of tax
    
    
    12,646Net income
    
    $
    12,918
 Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
    86




---



##### 



Item 9A. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
   Managements Report on Internal Control over Financial Reporting
  87




---



##### 



Changes in Internal Control over Financial Reporting
  Item 9B. OTHER INFORMATION
  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
 88




---



##### 



Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
  PART IV
 Item 15. EXHIBITS, FINANCIAL STATEMENTS AND SCHEDULES
 List of Financial Statements, Financial Statement Schedules, and Exhibits
 Financial Statements
       Financial Statement Schedules
   Exhibits
 Exhibit Number
 89




---



##### 



3.1
    
    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 (incorporated by reference to Exhibit 3.1
of Emersons Quarterly Report on Form 10-Q for the quarter
ended December 31, 2007).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).10.12.5
    
    Fifth Amendment to License Agreement effective May 18, 2005 by and between Funai
Corporation, Inc. and Emerson (incorporated by reference to
 90




---



##### 



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. (Incorporated by
reference to Exhibit 10.13.6 to Emersons Annual Report on Form 10-K for the year ended
March 31, 2006.)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.
(Incorporated by reference to Exhibit 10.13.7 to Emersons Annual Report on Form 10-K for
the year ended March 31, 2006.)10.18.1
    
    Emerson Radio Corp. 2004 Employee Stock Incentive Plan (incorporated by reference to
Exhibit 1 of Emersons 2004 Proxy Statement).
 91




---



##### 



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).10.25
    
    Employment Agreement, dated as of April 3, 2007, by and between Emerson Radio
Corp. and Greenfield Pitts (incorporated by reference to Exhibit 10.1 to Emersons
Current Report on Form 8-K filed with the SEC on April 7, 2008).10.26
    
    Employment Agreement, dated as of October 15, 2007, by and between Emerson Radio
Corp. and John Spielberger*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).10.28.1
    
    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).14.1
    
    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, 2008. *23.1
    
    Consent of Independent Registered Public Accounting Firm  Moore
Stephens, P.C.*
 92




---



##### 



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. Exhibits
 Financial Statement Schedules and Other Financial Statements
   93




---



##### 



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

Christopher Ho
    
    Chairman of the Board of  the
Directors
    
    July 11, 2008/s/ Adrian Ma

Adrian Ma
    
    Chief Executive Officer
 (Principal
Executive Officer)
 and Director
    
    July 11, 2008/s/ Greenfield Pitts

Greenfield Pitts
    
    Chief Financial Officer
(Principal Financial and
Accounting Officer), and Director
    
    July 11, 2008/s/ Michael A. B. Binney

Michael A. B. Binney
    
    Director
    
    July 11, 2008/s/ Kareem E. Sethi

Kareem E. Sethi
    
    Director
    
    July 11, 2008/s/ W. Michael Driscoll

W. Michael Driscoll
    
    Director
    
    July 11, 2008/s/ David R. Peterson

David R. Peterson
    
    Director
    
    July 11, 2008/s/ Norbert R. Wirsching

Norbert R. Wirsching
    
    Director
    
    July 11, 2008/s/ Eduard Will

Eduard Will
    
    Vice Chairman of
the Board of
Directors
    
    July 11, 2008/s/ Mirzan Mahathir

Mirzan Mahathir
    
    Director
    
    July 11, 2008
 94




---



##### 



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, 2008
    
    $
    1,064
    
    
    $
    (98
    )
    
    $
    7
    (A)
    
    $
    959March 31, 2007
    
    
    727
    
    
    
    1,184
    
    
    
    847
    (A)
    
    
    1,064March 31, 2006
    
    
    179
    
    
    
    591
    
    
    
    43
    (A)
    
    
    727Allowance for chargebacks:Year ended:March 31, 2008
    
    $
    411
    
    
    $
    51
    
    
    $
    
    
    
    $
    462March 31, 2007
    
    
    406
    
    
    
    5
    
    
    
    
    
    
    
    411March 31, 2006
    
    
    330
    
    
    
    76
    
    
    
    
    
    
    
    406Sales Return reserves:Year ended:March 31, 2008
    
    $
    3,287
    
    
    $
    16,836
    
    
    $
    16,524
    
    
    $
    3,599March 31, 2007
    
    
    5,217
    
    
    
    11,424
    
    
    
    13,354
    
    
    
    3,287March 31, 2006
    
    
    5,190
    
    
    
    16,953
    
    
    
    16,926
    
    
    
    5,217
 
 (A)
    
    Accounts written off, net of recoveries.(B)
    
    Sales return reserves amounts include related accrued sales returns of $872,000, $1,189,000 and
$1,580,000, for fiscal 2008, 2007, and 2006, respectively, which are not presented as part of the
accounts receivable disclosed as allowances on the Consolidated Balance Sheets.