<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549
                                    FORM 10-K

                                   (Mark One)

[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

                    For the Fiscal Year ended March 31, 2006

                                       OR

[_]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

                For the transition period from _______ to _______

                        COMMISSION FILE NUMBER 001-07731

                               EMERSON RADIO CORP.
             (Exact name of registrant as specified in its charter)

            Delaware                                            22-3285224
(State or other jurisdiction of                              (I.R.S. Employer
 incorporation or organization)                           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

Securities registered pursuant to Section 12(b) of the Act:

                                                          Name of each exchange
         Title of each class                               on which registered
Common Stock, par value $.01 per share                   American Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None.

Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. [_] YES [X] NO.

Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act). [_] YES [X] NO.

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirement for the past 90 days. [X] YES [_] NO.

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

Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act.

[_] Large accelerated filer [_] Accelerated filer [X] Non-accelerated filer

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Act). [_] YES [X] NO.

Aggregate market value of the voting and non-voting common equity of the
registrant held by non-affiliates of the registrant at July 3, 2006 (computed by
reference to the last reported sale price of the Common Stock on the American
Stock Exchange on such date): $47,080,793

Number of Common Shares outstanding at July 3, 2006: 27,064,832

                      DOCUMENTS INCORPORATED BY REFERENCE:

                        Document                           Part of the Form 10-K
Proxy Statement for 2006 Annual Meeting of Stockholders,         Part III
or an amendment to this Annual Report on Form 10-K

<PAGE>

                                     PART I

          This Annual Report on Form 10-K contains, in addition to historical
information, "forward-looking statements" (within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended) that involve risks and uncertainties. See
"Business- Forward-Looking Statements."

ITEM 1. BUSINESS

THE COMPANY - OVERVIEW

          We operate in the consumer electronics business, designing, sourcing,
importing and marketing a variety of consumer electronic products and licensing
our trademarks for a variety of products worldwide. On July 1, 2005, we sold our
53.2% ownership in Sport Supply Group, Inc. to Collegiate Pacific Inc.
("Collegiate") for net proceeds of $30.7 million, after disposition costs, which
resulted in a net gain of $12.6 million, or $0.47 per share, that was reported
in our results for the quarter ended September 30, 2005. Such gain was net of
total estimated income taxes of $4.2 million. SSG distributes and markets sports
related equipment and leisure products primarily to institutional customers in
the United States. SSG was previously reported as our Sporting Goods Segment. As
a result of the sale, the financial position and results of operations of SSG
have been presented as discontinued operations for all periods shown in the
accompanying financial statements, and we now operate in one segment, the
consumer electronics segment.

On December 5, 2005, Geoffrey P. Jurick, our former chairman and chief executive
officer, completed the sale of 10,000,000 of his shares of our common stock to a
subsidiary of The Grande Holdings Limited ("Grande"), a Hong Kong based group of
companies engaged in a number of businesses including the manufacture, sale and
distribution of audio, video and other consumer electronics products. As of June
30, 2006, Grande owns approximately 46% of our outstanding common stock. We
believe that Grande's investment will help us form a beneficial strategic
alliance with Grande, combining substantial resources in manufacturing, brand
marketing and global distribution of a wide range of consumer electronic
products. We expect that Grande's strong presence in Asia, its manufacturing
expertise, particularly for plasma and LCD television sets, and its commitment
to building a first class worldwide electronics distribution network for branded
products will enhance our business opportunities. Through our relationship with
Grande, we hope to benefit from cross licensing and marketing opportunities
internationally, particularly in Europe and Asia, and to leverage Grande's
direct sales force and relationships to expand the reach of our consumer
electronic products.

          Emerson was originally formed in the State of New York in 1956 under
the name Major Electronics Corp. In 1977, we reincorporated in the State of New
Jersey and changed our name to Emerson Radio Corp. In 1994, we were
reincorporated in the State of Delaware. Our principal executive offices are
located at Nine Entin Road, Parsippany, New Jersey 07054-0430. Our telephone
number in Parsippany, New Jersey, is (973) 884-5800.


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          Unless the context otherwise requires, the term "Emerson," "we," "us"
and "our" refers to Emerson Radio Corp. and its subsidiaries, excluding its
former SSG subsidiary.

          For additional disclosures of our major customers, as well as
financial information about geographical areas of our operations, see Item 8 -
"Financial Statements and Supplementary Data" - Note 14 of Notes to Consolidated
Financial Statements.

SUPERVISION AND REGULATION

          We file reports and other information with the Securities and Exchange
Commission ("SEC") pursuant to the information requirements of the Securities
Exchange Act of 1934. Readers may read and copy any document we file at the
SEC's public reference room at 450 Fifth St. N.W., Washington, D.C. 20549.
Please call the SEC at 1-800-SEC-0330 for further information on the operations
of the public reference room. Our filings are also available to the public from
commercial document retrieval services and at the SEC's website at www.sec.gov.

          We make available through our internet website free of charge our
annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on
Form 8-K, amendments to such reports and other filings made by us with the SEC,
as soon as practicable after we electronically file such reports and filings
with the SEC. Our website address is www.emersonradio.com. The information
contained in our website is not incorporated by reference in this report.

GENERAL

          We, directly and through several subsidiaries, design, source, import,
market, sell and license to certain licensees a variety of consumer electronic
products, both domestically and internationally, under the Emerson(R) and HH
Scott(R) brand names. These products include:

               o    video products - televisions, digital video disc players
                    (DVD), video cassette recorders (VCR), combination
                    television/VCR/DVD units, and set top boxes;

               o    microwave ovens;

               o    audio products, clock radios, home theater systems and
                    multi-media systems;

               o    houseware products; and

               o    video accessories, telecommunication equipment, certain
                    computer accessories, specialty, other consumer electronic
                    products and mobile electronics.

          We also license a variety of specialty logos and trademarks from third
parties for use on various products that we design and distribute. We refer to
these licenses agreements as "inward licenses."


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          The trade name "Emerson Radio" dates back to 1912 and is one of the
oldest and most well respected names in the consumer electronics industry. See
"Licensing and Related Activities."

          We believe we possess an advantage over our competitors due to the
combination of:

               o    the "Emerson(R)" brand recognition;

               o    our distribution base and established customer relations;

               o    our sourcing expertise and established vendor relations;

               o    an infrastructure with personnel experienced in servicing
                    and providing logistical support to the domestic mass
                    merchant distribution channel; and

               o    our extensive experience in establishing license and
                    distribution agreements on a global basis for a variety of
                    products.

          We intend to continue leveraging our core competencies to offer a
broad variety of current and new consumer electronic products to customers. In
addition, we intend to enter into additional inward licenses, as well as
licenses for the use of our trade names and trademarks by third parties (which
we refer to as "outward licenses"). We continue to enter into distribution
agreements that take advantage of our trademarks and utilize the logistical and
sourcing advantages of unrelated third-parties for products that are more
efficiently marketed through these agreements. We continuously evaluate
potential licenses and distribution agreements. See "Licensing and Related
Activities."

          Our core business consists of selling, distributing, and licensing
various low and moderately priced consumer electronic products in various
categories. The majority of our marketing and sales efforts are concentrated in
the United States, although we also sell our products in certain other
international regions. Major competitors in these markets are foreign-based
manufacturers and distributors. See "-"Competition."

          Products

          Emerson's current product and branded categories consist of the
following:

<TABLE>
<CAPTION>
VIDEO PRODUCTS                     AUDIO PRODUCTS            OTHER
--------------                     --------------            -----
<S>                                <C>                       <C>
Televisions                        Portable stereo systems   Housewares
Specialty televisions              Digital clock radios      Home theater systems
Digital video disc players         Shelf stereo systems      Microwave ovens
Specialty video cassette players   Specialty clock radios    Multi-media systems
Video cassette recorders                                     Telecommunications Equipment
</TABLE>


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          Growth Strategy

          We believe growth opportunities exist through the implementation of
the following:

               o    higher penetration levels within our existing customers
                    through increases in the products offered and sold;

               o    expansion of our existing customer base in United States
                    through our sales staff and outside sales representative
                    organizations;

               o    expansion of our existing worldwide customer base through
                    foreign distribution agreements and direct selling,
                    particularly in Europe and Asia;

               o    leveraging Grande's manufacturing expertise and direct sales
                    force and relationships to expand the reach of our consumer
                    electronic products, particularly in Europe and Asia;

               o    expansion into distribution channels we are not currently
                    utilizing through new products;

               o    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;

               o    further development of our direct to consumer sales channel,
                    primarily through the further development of our internet
                    web-site;

               o    continuing to capitalize on the "Emerson(R)" and "H.H.
                    Scott(R)" trademarks through outward license agreements with
                    third parties to license the "Emerson(R)" and "H.H.
                    Scott(R)" trademarks for products not currently being sold,
                    and in geographic areas not presently being serviced; and

               o    expansion through strategic mergers with and acquisitions of
                    other businesses.

          In connection with our strategic focus, we may acquire an equity
position in other corporate entities.

          We believe that the "Emerson(R)" trademark is recognized in many
countries. A principal component of our growth strategy is to utilize this
global recognition of our brand name and our reputation for quality and cost
competitive products to aggressively promote our product lines within the United
States and targeted international geographic areas. We believe that we will be
able to compete more effectively in the highly competitive consumer electronics
and microwave oven industries, domestically and internationally, by combining
innovative approaches to our current product line and augmenting our product
line with complementary products, such as wine coolers. We intend to pursue such
plans either independently or through relationships with other companies,
including our relationship with Grande, as well as license


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<PAGE>

arrangements, distributorship agreements and joint ventures. See "-"Licensing
and Related Activities."

          Sales and Distribution

          Our Direct Import Program allows our customers to import and receive
product directly from our contracted manufacturers located outside the United
States. Under the Direct Import Program, title for our product passes to the
customer in the country of origin when the product is shipped by the
manufacturer. We also sell product to customers from our United States based
finished goods inventory, which is referred to as our Domestic Program. Under
the Domestic Program, title for our product primarily passes at the time of
shipment. Under both programs, we recognize revenues at the time title passes to
the customer. See Item 7 - "Management's Discussion and Analysis of Financial
Condition and Results of Operations."

          We have an integrated system to coordinate the purchasing, sales and
distribution aspects of our operations. We receive orders from our major
accounts electronically, via electronic data interface (EDI), facsimile,
telephone or mail. We do not have long-term contracts with any of our customers,
but rather receive orders on an ongoing basis. Products imported by us,
generally from the Far East, are shipped by ocean and/or inland freight and then
stored in contracted public and private warehouse facilities for shipment to
customers. We monitor our inventory levels and goods in transit through the use
of our electronic inventory system. When a purchase order under our Domestic
Program is received, it is filled from our inventory and the warehoused product
is labeled and prepared for outbound shipment to the customer by common,
contract or small package carrier.

          Domestic Marketing

          In the United States, we market our products primarily through:

               o    mass merchandisers;

               o    discount retailers;

               o    toy retailers; and

               o    distributors and specialty catalogers.

          In fiscal 2006 and 2005, Wal-Mart Stores accounted for approximately
37% and 41% of our net revenues, respectively, Target Stores accounted for
approximately 17% and 16% of our net revenues, respectively, and Kmart Stores
accounted for approximately 10% and 9% of our net revenues, respectively. No
other customer accounted for more than 10% of our net revenues in either period.
Management believes that a loss, or a significant reduction, of sales to
Wal-Mart, Target or Kmart would have a materially adverse effect on our business
and results of operations.


                                        6

<PAGE>

          Approximately 55% and 45% of the net revenues in fiscal 2006 and
fiscal 2005, respectively, were made through third-party sales representative
organizations that receive sales commissions and work in conjunction with our
own sales personnel. With our permission, third-party sales representative
organizations may sell competitive products in addition to our products. In most
instances, either party may terminate a sales representative relationship on 30
days prior notice by us and 90 days prior notice by the sales representative
organization in accordance with customary industry practice. We utilize
approximately 19 sales representative organizations, including two through which
approximately 19% and 11% of our net revenues were made in fiscal 2006. For
fiscal 2005, two sales organizations accounted for approximately 18% and 16% of
our net revenues, including sales to two of our three major customers, as
described above. No other sales representative organization accounted for more
than 10% of our net revenues in either year. The remainder of our sales are to
customers that are serviced by our sales personnel. Management does not believe
that the loss of one or more sales representative organizations would have a
material adverse effect on our business and results of operations.

          Foreign Marketing

          We primarily market and distribute our products in the United States.
Accordingly, foreign sales account for less than 10% of total revenues and are
not considered material. We intend to expand our existing worldwide customer
base through our foreign distribution agreements and direct selling,
particularly in Europe and Asia.

          Licensing and Related Activities

          We have several outward license agreements that allow licensees to use
our trademarks for the manufacture and/or the sale of consumer electronics and
other products. These agreements allow the licensee to use our trademarks for a
specific product category, or to use them within a specific geographic area
(examples of such areas includes some or all the countries located in North
America, South America, Mexico and parts of Europe), or for sales to a specific
customer base, or to some combination of the above, or by any other category
that might be defined in the license agreement. These license agreements are
subject to renewal at the expiration of the agreements and are governed by the
laws of the United States. Agreements in effect at March 31, 2006 have various
expiration dates ranging through December of 2010. Total license revenues
recognized and earned in fiscal 2006, 2005, and 2004 were approximately
$7,674,000, $10,804,000, and $10,973,000, respectively. We record licensing
revenues as earned over the term of the related agreements.

          Effective January 1, 2001, we entered into a license agreement (the
"Video License Agreement") with Funai Corporation, Inc. ("Funai"), which was
subsequently amended, to extend the term of the agreement until December 31,
2010. The Video License Agreement allows Funai to manufacture, market, sell and
distribute specified products bearing the "Emerson(R)" trademark to customers in
the U.S. and Canadian markets. Under the terms of the agreement, We receive
non-refundable minimum annual royalty payments of $4.3 million each calendar
year and a license fee on sales of products subject to the Video License
Agreement in excess of the minimum annual royalties. During fiscal 2006, 2005
and 2004, license revenues of $5,321,000, $8,555,000 and $8,759,000,
respectively, were recorded under this agreement.


                                        7

<PAGE>

Throughout various parts of the world, we maintain distribution and outward
license agreements that encompass the sale of various Emerson(R) branded
products into defined geographic areas and intend to pursue additional licensing
and distribution opportunities. We believe that such activities have had and
will continue to have a positive impact on operating results by generating
income with minimal, if any, incremental costs and without any working capital
requirements. We continue to protect our brand through rigid license and product
selection and control processes. See Item 1 - "Business - Forward-Looking
Information" and Item 7 -"Management's Discussion and Analysis of Financial
Condition and Results of Operations."

          Effective March 2003, we entered into an inward license agreement with
MTV Networks to license the Nickelodeon name, trademark and logo, along with
several of Nickelodeon's trademarks and logos. The initial term of the agreement
expired in December 2005, and has been, in accordance with the contract renewal
option, extended by one year to December 2006. Additionally, we entered into a
second contract with MTV Networks for additional Nickelodeon character
trademarks and logos, along with expanded product categories. The term of this
second contract also expires in December 2006. These licenses provide Emerson
with the rights to use such marks in the United States, and require certain
minimum royalties to be paid to MTV Network. We are currently in negotiations
for the extension of these contracts and expect these contracts to be renewed.

          Effective July 2005, we entered into an inward license agreement with
Apple Computer Inc. The license, which expires in June 2007, allows us to
develop and market products that are compatible with the highly popular iPod(R)
portable audio and video devices. In addition, the license further provides the
right to use the "made for iPod(R)" logo on all of our packaging and promotional
material.

          Design and Manufacturing

          Our products are manufactured by several original equipment
manufacturers in accordance with our specifications. During fiscal 2006 and
2005, 100% of our purchases consisted of imported finished goods from
manufacturers primarily located in China.

Our design team is responsible for product development and works closely with
our suppliers. Our engineers determine the detailed cosmetic, electronic and
other features for new products, which typically incorporate commercially
available electronic parts to be assembled according to our design. Accordingly,
the exterior designs and operating features of the products reflect our judgment
of current styles and consumer preferences. Our designs are tailored to meet the
consumer preferences of the local market, particularly in the case of our
international markets.


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          The following summarizes our purchases from our major suppliers:

                    Fiscal Year
                    -----------
     SUPPLIER       2006   2005
-----------------   ----   ----
Midea                22%     *
StarLite             15%    16%
Lasco Industries     11%    15%
Oxygen               10%    11%
* - less than 10%

          No other supplier accounted for more than 10% of our total purchases
in fiscal 2006 or 2005. We consider our relationships with our suppliers to be
satisfactory and believe that, barring any unusual material or part shortages or
economic, fiscal or monetary conditions, we could, and in some cases, already
have developed, alternative suppliers. No assurance can be given that ample
supply of product would be available at current prices if we were required to
seek alternative sources of supply without adequate notice by a supplier or a
reasonable opportunity to seek alternate production facilities and component
parts. See Item 1 - "Business - Forward-Looking Information, Item 7 -
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and Item 7A - "Inflation, Foreign Currency and Interest Rates."

          Warranties

          We offer limited warranties for our consumer electronics, comparable
to those offered to consumers by our competitors in the United States. Such
warranties typically consist of a 90 day period for audio products and one year
period for microwave products, under which we will pay for labor and parts, or
offer a new or similar unit in exchange for a non-performing unit.

          Returned Products

          Our customers return product to us for a variety of reasons,
including:

               o    retailer return policies with their customers;

               o    damage to goods in transit and cosmetic imperfections; and

               o    mechanical failures.

          We have entered into agreements with the majority of our suppliers
that require the supplier to accept returned defective product. We pay a fee to
the supplier and in exchange receive a new unit.


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<PAGE>

          Backlog

          We do not believe that backlog is a significant factor. The ability of
management to correctly anticipate and provide for inventory requirements is
essential to the successful operation of our business.

          Trademarks

          We own the:

               o    "Emerson(R)"

               o    "Emerson Research(R)"

               o    "Emerson Interactive sm"

               o    "Girl Power(TM)"

               o    "H.H. Scott(R)"

               o    "iTone(TM)"

               o    "Scott(R)"

               o    "SmartSet(R)"

trademarks for certain of our home entertainment and consumer electronic
products in the United States, Canada, Mexico and various other countries. Of
the trademarks owned by us, those registered in the United States and Canada
must be renewed at various times through 2011 and 2014, respectively. Our
trademarks are also registered in various other countries, which registrations
must be renewed at various times. We intend to renew all trademarks necessary
for our business. We consider the "Emerson(R)" and HH Scott(R) trademarks to be
of material importance to our business and, to a lesser degree, the remaining
trademarks. We license the "Emerson(R)" and HH Scott(R) trademarks to third
parties, the scope of which is on a limited product and geographic basis and for
a period of time. See "-Licensing and Related Activities."

          Competition

          As published in the January 2006 edition of the Consumer Electronics
Association Market Research report. The market segments of the consumer
electronics industry in which we compete generate approximately $27 billion of
factory sales annually and are highly fragmented, cyclical and very competitive.
The industry is characterized by the short life cycle of products, which
requires continuous design and development efforts.


                                       10

<PAGE>

          We primarily compete in the low to medium-priced sector of the
consumer electronics market. Management estimates that we have several dozen
competitors that are manufacturers and/or distributors, many of which are much
larger and have greater financial resources than Emerson. We compete primarily
on the basis of:

               o    brand recognition

               o    reliability;

               o    quality;

               o    price;

               o    design;

               o    consumer acceptance of our products; and

               o    quality service and support to retailers and their
                    customers.

          We also compete at the retail level for shelf space and promotional
displays, all of which have an impact on our success in established and proposed
distribution channels.

          Seasonality

          We generally experience stronger demand from our customers for our
products in the fiscal quarters ending September and December. However, during
the last several years, this revenue pattern has been less prevalent due to the
need for retailers to plan earlier for the winter holiday selling season and our
management's ability to obtain additional orders to meet increased product
demand during the March and June fiscal quarters.

          Working Capital

          Our operations are impacted by our seasonality because we generally
record the majority of annual sales in the quarters ending September and
December. This seasonality causes us to maintain higher inventory levels during
the quarters ending June and September, which in turn increases the working
capital needed during these periods. Management believes that its efforts to
increase the outward licensing business, improve sales margin stability and
maintain the policies in place for returned products should continue to
favorably impact our cash flow. We also anticipate that cash flow from
operations and the financing presently in place will provide sufficient
liquidity to meet our operating and debt service cash requirements in the year
ahead.

GOVERNMENT REGULATION


                                       11

<PAGE>

          Pursuant to the Tariff Act of 1930, as amended, the Trade Act of 1974
and regulations promulgated there under, the United States government charges
tariff duties, excess charges, assessments and penalties on many imports. These
regulations are subject to constant change and revision by government agencies
and by action by the United States Trade Representative and may have the effect
of increasing the cost of goods purchased by us or limiting quantities of goods
available to us from our overseas suppliers. A number of states have adopted
statutes regulating the manner of determining the amount of payments to
independent service centers performing warranty service on products such as
those sold by us. Additional Federal legislation and regulations regarding the
importation of consumer electronics products, including the products marketed by
us, have been proposed from time-to-time and, if enacted into law, could
adversely affect our financial condition and results of operations.

          Many of our products are subject to various Federal regulations, some
of which empower the Consumer Product Safety Commission (the "CPSC") to regulate
potentially hazardous products. The CPSC has the authority to exclude from the
market certain articles that are found to be hazardous and can require a
manufacturer to refund the purchase price of products that present a substantial
product hazard. CPSC determinations are subject to court review. Similar laws
exist in some states and cities in the United States. During the year ended
March 31, 2006, none of our products were sanctioned by the CPSC as hazardous.

PRODUCT LIABILITY AND INSURANCE

          Because of the nature of the products sold by us, we are periodically
subject to product liability claims resulting from personal injuries. We may
become involved in various lawsuits incidental to our business.

          In recent years, product liability insurance has become much more
expensive, restrictive and difficult to obtain. Accordingly, there can be no
assurance that our general product liability insurance will be sufficient to
cover any successful product liability claims made against us in the future. In
our opinion, any ultimate liability arising out of currently pending product
liability claims will not have a material adverse effect on the financial
condition or results of operations. However, any claims substantially in excess
of our insurance coverage, or any substantial claim not covered by insurance,
could have a material adverse effect on our financial condition and results of
operations.

EMPLOYEES

          As of June 30, 2006, we had approximately 115 employees. None of our
employees are represented by unions, and we believe our labor relations are
good.

BOARD OF DIRECTORS, MANAGEMENT AND ADVISORS

          At the beginning of our fiscal year, our board of directors was
comprised of five individuals (Messrs. Jurick, Farnum, Bunger, Brown and Morey)
who had been associated with Emerson for many years. Mr. Brown passed away in
August 2005 and Mr. Morey, who also had served as chairman of the Audit
Committee, resigned in March 2006. Since December 2005, five individuals
(Messrs. Binney, Driscoll, Ma, Pitts and Will) were added to the board. Of these
directors, two


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<PAGE>

individuals (Messrs. Binney and Ma) are affiliated with Grande, the holder of
approximately 46% of our outstanding common stock. The addition of the new
directors adds substantial international and consumer electronics experience and
expertise to the board. In March 2006, Mr. Will replaced Mr. Morey as chairman
of the Audit Committee.

          Our senior management team also has changed. In March 2006, Adrian Ma
was appointed as our chairman and chief executive officer to replace Geoffrey P.
Jurick who had served in those positions for over a decade. Mr. Ma brings more
than 30 years of senior executive level experience in multinational
organizations focused primarily in the consumer electronics industry. In April
2006, Guy A. Paglinco, our chief financial officer since October 2004 resigned.
In June 2006, John Florian was promoted from being our controller to the
positions of deputy chief financial officer and controller and in July 2006, Mr.
Florian was appointed as our principal financial officer. In addition, within
the last six months, Beth Calianese, our general counsel, Christina Iatrou, our
acting general counsel and Pat Murray, the president of our consumer products
subsidiary and chief marketing and sales officer, resigned.

          Relationships with certain of our advisors and financial institutions
also have changed. In May 2006, we retained Moore Stephens, P.C. as our
independent registered public accounting firm, to replace BDO Siedman, LLP, our
former auditors, who resigned in March 2006 and, in December 2005, we entered
into our new credit facility with Wachovia Bank, replacing our former credit
facility with PNC Bank. In addition, our foreign subsidiaries have developed new
relationships with lenders in Asia.

RISK FACTORS

          You should carefully consider these risk factors in addition to our
financial statements, including the notes to such financial statements.
Additional risks that we do not yet know of or that we currently think are
immaterial may also impair our business operations. If any of the following
risks occur, our business, financial condition or operating results could be
adversely affected. In that case, the trading price of our common stock could
decline.

ITEM 1A. BUSINESS RELATED RISKS

THERE HAS BEEN A SIGNIFICANT CHANGE IN THE COMPOSITION OF OUR BOARD OF
DIRECTORS, SENIOR MANAGEMENT TEAM AND OUTSIDE ADVISORS. THE CHANGES COULD AFFECT
OUR RELATIONSHIPS WITH OUR EXISTING CUSTOMERS, LICENSORS AND LICENSEES, AND OUR
ABILITY TO ENTER INTO NEW RELATIONSHIPS IN THE FUTURE.

          As disclosed under "Business - Board of Directors, Management and
Advisors," there has been significant changes in our board of directors, senior
management team and outside advisors. Although many of our new directors and
senior management personnel have significant experience in the consumer
electronics industry, these individuals have less familiarity with Emerson than
did their predecessors.


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<PAGE>

          Certain of our executive officers have obligations elsewhere and only
will be able to devote a portion of their time to our business. For example, Mr.
Ma also currently serves as the chief executive officer and a director of
Grande.

          These significant changes in our management team, board of directors
and outside advisors could affect our relationships with our existing customers,
licensors and licensees and our ability to enter into new relationships in the
future.

THE SUBSTANTIAL OWNERSHIP OF OUR COMMON STOCK BY A SUBSIDIARY OF THE GRANDE
HOLDINGS LIMITED, A HONG KONG BASED GROUP OF COMPANIES, SUBSTANTIALLY REDUCES
THE INFLUENCE OF OUR OTHER STOCKHOLDERS.

          As noted previously, The Grande Holdings Limited and it's subsidiaries
owns approximately 46% of our outstanding common stock as of June 30, 2006. As a
result, Grande currently has the ability to influence significantly the actions
that require stockholder approval, including:

          o    the election of our directors; and

          o    the approval of mergers, sales of assets or other corporate
               transactions or matters submitted for stockholder approval.

          As a result, our other stockholders may have little or no influence
over matters submitted for stockholder approval.

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 are highly dependent upon sales of our products to certain of our
customers, including Wal-Mart, Target and Kmart. During our fiscal years ended
March 31, 2006 and 2005, Wal-Mart stores accounted for approximately 37% and
41%, respectively, Target stores accounted for approximately 17% and 16%,
respectively, and Kmart stores accounted for approximately 10% and 9%,
respectively, of our net revenues. Although no other customer accounted for
greater than 10% of our net revenues during these periods, other customers may
account for more than 10% of our net revenues in future periods. All purchases
of our products by customers are made through purchase orders and we do not have
any long-term contracts with any of our customers. The loss of Wal-Mart, Target
or Kmart, or any of our other customers to which we sell a significant amount of
our products or any significant portion of orders from Wal-Mart, Target or
Kmart, or such other customers or any material adverse change in the financial
condition of such customers could negatively affect our revenues and decrease
our earnings.


                                       14

<PAGE>

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.

          We maintain license agreements that allow licensees to use our
Emerson(R) and H.H. Scott(R) trademarks for the manufacture and sale of consumer
electronics and other products. In addition, we maintain distribution agreements
for the distribution of our products into defined geographic areas. Although we
have entered into agreements with certain of our licensees and distributors of
our products, most of which have a term of three years or less and will expire
by December 2010, including our agreement with Funai, we cannot assure that such
agreements will be renewed when the terms of such agreements expire, or that our
relationships with our licensees or distributors will be maintained on
satisfactory terms or at all. In addition, during our fiscal year ended March
31, 2006, we recognized a significant decrease in licensing revenues under our
agreement with Funai. The failure to maintain our relationships with Funai and
our other licensees and distributors on terms satisfactory to us, the failure to
obtain new licensees or distribution relationships or the failure by our
licensees to protect the integrity and reputation of our Emerson(R) and H.H.
Scott(R) trademarks could materially and adversely affect our licensing revenues
and our earnings. We also maintain a license agreement with Apple Computer Inc.
to develop and market products that are compatible with the iPod(R) audio and
video devices. This license is set to expire in June 2007. In addition, we
maintain multiple license agreements with MTV Networks to license the
Nickelodeon name, trademark and logo, along with several of Nickelodeon's
trademarks and logos, each of which expire in December 2006. We may not be able
to renew the license on terms favorable to us or at all. The failure to maintain
our relationship with MTV Networks or other licensors could materially and
adversely affect our revenues and our earnings

OUR REVENUES AND EARNINGS COULD BE MATERIALLY AND ADVERSELY AFFECTED IF WE
CANNOT ANTICIPATE MARKET TRENDS OR ENHANCE EXISTING PRODUCTS OR ACHIEVE MARKET
ACCEPTANCE OF NEW PRODUCTS.

          Our success is dependent on our ability to successfully anticipate and
respond to changing consumer demands and trends in a timely manner, as well as
expanding into new markets and developing new products. In addition, to increase
our penetration of current markets and gain footholds in new markets for our
products, we must maintain our existing products and integrate them with new
products. We may not be successful in developing, marketing and releasing new
products that respond to technological developments or changing customer needs
and preferences. We may also experience difficulties that could delay or prevent
the successful development, introduction and sale of these new products. In
addition, these new products may not adequately meet the requirements of the
marketplace and may not achieve any significant degree of market acceptance. If
release dates of any future products or enhancements to our products are
delayed, or if these products or enhancements fail to achieve market acceptance
when released, our sales volume may decline and earnings could be materially and
adversely affected. In addition, new products or enhancements by our competitors
may cause customers to defer or forgo purchases of our products, which could
also materially and adversely affect our revenues and earnings.


                                       15

<PAGE>

WE DEPEND ON A LIMITED NUMBER OF SUPPLIERS FOR OUR PRODUCTS. THE AVAILABILITY TO
SECURE OUR PRODUCTS COULD REDUCE OUR REVENUES AND ADVERSELY AFFECT OUR
RELATIONSHIP WITH OUR CUSTOMERS.

          We rely on a limited number of suppliers for our component parts and
raw materials, most of which are located outside of the United States. Although
there are many suppliers for each of our component parts and raw materials, we
are dependent on a limited number of suppliers for many of the significant
components and raw materials. This reliance involves a number of significant
potential risks, including:

          o    lack of availability of materials and interruptions in delivery
               of components and raw materials from our suppliers;

          o    manufacturing delays caused by such lack of availability or
               interruptions in delivery;

          o    fluctuations in the quality and the price of components and raw
               materials, in particular due to the petroleum price impact on
               such materials; and

          o    risks related to foreign operations.

          We do not have any long-term or exclusive purchase commitments with
any of our suppliers. Midea, StarLite, Oxygen, and Lasco Industries are our
largest suppliers of components for our products, each of which accounted for
more than 10% of our purchases of components for our products for our latest
fiscal year. Our failure to maintain existing relationships with our suppliers
or to establish new relationships in the future could also negatively affect our
ability to obtain our components and raw materials used in our products in a
timely manner. If we are unable to obtain ample supply of product from our
existing suppliers or alternative sources of supply, we may be unable to satisfy
our customers' orders which could materially and adversely affect our revenues
and our relationship with our customers.

IF OUR ORIGINAL EQUIPMENT MANUFACTURERS ARE UNABLE TO DELIVER OUR PRODUCTS IN
THE REQUIRED AMOUNTS AND IN A TIMELY FASHION, WE COULD EXPERIENCE DELAYS OR
REDUCTIONS IN SHIPMENTS TO OUR CUSTOMERS WHICH COULD MATERIALLY AND ADVERSELY
AFFECT OUR REVENUES AND OUR RELATIONSHIP WITH OUR CUSTOMERS.

          All of our products are manufactured in accordance with our
specifications by original equipment manufacturers principally located in China.

          If we are unable to obtain our products from the original equipment
manufacturers located in China in the required quantities and quality and in a
timely fashion, we could experience delays or reductions in product shipments to
our customers which could negatively affect our ability to meet the requirements
of our customers, as well as our relationships with our customers, which in turn
could materially and adversely affect our revenues and operating results.


                                       16

<PAGE>

UNANTICIPATED DISRUPTIONS IN OUR OPERATIONS OR SLOWDOWNS BY OUR SUPPLIERS,
MANUFACTURERS AND SHIPPING COMPANIES COULD ADVERSELY AFFECT OUR ABILITY TO
DELIVER OUR PRODUCTS AND SERVICE OUR CUSTOMERS WHICH COULD MATERIALLY AND
ADVERSELY AFFECT OUR REVENUES AND OUR RELATIONSHIP WITH OUR CUSTOMERS.

          Our ability to provide high quality customer service, process and
fulfill orders and manage inventory depends on:

          o    the efficient and uninterrupted operation of our call center and
               distribution center; and

          o    the timely and uninterrupted performance of third party
               manufacturers and suppliers, shipping companies, and dock
               workers.

          Any material disruption or slowdown in the operation of our call
center, distribution center, manufacturing facilities or management information
systems, or comparable disruptions or slowdowns suffered by our principal
manufacturers, suppliers and shippers could cause delays in our ability to
receive, process and fulfill customer orders and may cause orders to be
canceled, lost or delivered late, goods to be returned or receipt of goods to be
refused. As a result, our revenues and operating results could be materially and
adversely affected.

OUR REVENUES AND EARNINGS COULD BE MATERIALLY AND ADVERSELY AFFECTED BY FOREIGN
REGULATIONS AND CHANGES IN THE POLITICAL, PUBLIC HEALTH AND ECONOMIC CONDITIONS
IN THE FOREIGN COUNTRIES IN WHICH WE OPERATE OUR BUSINESS.

          We derive a significant portion of our revenues from sales of products
manufactured by third parties located primarily in China. In addition, third
parties located in China and other countries located in the same region produce
and supply many of the components and raw materials used in our products.
Conducting an international business inherently involves a number of
difficulties and risks that could materially and adversely affect our ability to
generate revenues and could subject us to increased costs. The main factors that
may adversely affect our revenues and increase our costs are:

          o    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;

          o    more stringent export restrictions in the countries in which we
               operate which could adversely affect our ability to deliver our
               products to our customers;

          o    tariffs and other trade barriers which could make it more
               expensive for us to obtain and deliver our products to our
               customers;

          o    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;

          o    seasonal reductions in business activity in these countries
               during the summer months which could adversely affect our sales;
               and


                                       17

<PAGE>

          o    new restrictions on the sale of electronic products in European
               Union countries containing certain hazardous substances.

          The outbreak of severe acute respiratory syndrome in prior years had a
particularly strong impact in China, Hong Kong and Singapore and negatively
effected our operations. If there was a similar outbreak in the future, our
operations, including our ability to obtain our products in a timely fashion, or
the operation of our suppliers, manufacturers and shipping companies could be
adversely affected which may adversely affect our earnings.

          We have experienced, and may in the future experience, many of these
risks and cannot predict the impact of any particular risk on our operations.
However, any of these factors may materially and adversely affect our revenues
and/or increase our operating expenses.

THE SEASONALITY OF OUR BUSINESS, AS WELL AS CHANGES IN CONSUMER SPENDING AND
ECONOMIC CONDITIONS, MAY CAUSE OUR QUARTERLY OPERATING RESULTS TO FLUCTUATE AND
CAUSE OUR STOCK PRICE TO DECLINE.

          Our net revenue and operating results may vary significantly from
quarter to quarter. The main factors that may cause these fluctuations are:

          o    seasonal variations in operating results;

          o    variations in the sales of our products to our significant
               customers;

          o    increases in returned consumer electronics products in the March
               quarter which follows our peak September and December selling
               quarters;

          o    variations in manufacturing and supplier relationships;

          o    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;

          o    the discretionary nature of our customers' demands and spending
               patterns;

          o    changes in market and economic conditions; and

          o    competition.

In addition, our quarterly operating results could be materially adversely
affected by political instability, war, acts of terrorism or other disasters.

          Sales of our products are somewhat seasonal due to consumer spending
patterns, which tend to result in significantly stronger sales in our September
and December fiscal quarters, especially as a result of the holiday season. This
pattern will probably not change significantly in the future. Although we
believe that the seasonality of our business is based primarily on the timing of
consumer


                                       18

<PAGE>

demand for our products, fluctuations in operating results can also result from
other factors affecting us and our competitors, including new product
developments or introductions, availability of products for resale, competitive
pricing pressures, changes in product mix, pricing and product reviews and other
media coverage. Due to the seasonality of our business, our results for interim
periods are not necessarily indicative of our results for the year.

          Our sales and earnings can also be affected by changes in the general
economy since purchases of consumer electronics are generally discretionary for
consumers. Our success is influenced by a number of economic factors which
affect disposable consumer income, such as employment levels, business
conditions, interest rates and taxation rates. Adverse changes in these economic
factors, among others, may restrict consumer spending, thereby negatively
effecting our sales and profitability.

          As a result of these and other factors, revenues for any quarter are
subject to significant variation, which may adversely affect our results of
operations and the market price for our common stock.

IF OUR THIRD PARTY SALES REPRESENTATIVES FAIL TO ADEQUATELY PROMOTE, MARKET AND
SELL OUR PRODUCTS, OUR REVENUES COULD SIGNIFICANTLY DECREASE.

          A significant portion of our product sales are made through third
party sales representative organizations, whose members are not our employees.
Our level of sales depends on the effectiveness of these organizations, as well
as the effectiveness of our own employees. Some of these third party
representatives may sell (and do sell), with our permission, competitive
products manufactured by other third parties as well as our products. During our
fiscal years ended March 31, 2006 and 2005, these organizations were responsible
for approximately 55% and 45%, respectively, of our net revenues during such
periods. In addition, two of these representative organizations were responsible
for a significant portion of these revenues. If any of our third party sales
representative organizations engaged by us, especially our two largest, fails to
adequately promote, market and sell our products, our revenues could be
significantly decreased until a replacement organization or distributor could be
retained by us. Finding replacement organizations and distributors could be a
time consuming process during which our revenues could be negatively impacted.

WE MAY SEEK TO MAKE ACQUISITIONS THAT PROVE UNSUCCESSFUL OR STRAIN OR DIVERT OUR
MANAGEMENT'S ATTENTION AND OUR CAPITAL RESOURCES.

          We may seek to grow our business through acquisitions of related
businesses. Such acquisitions present risks that could materially adversely
affect our earnings, including:

          o    the diversion of our management's attention from our everyday
               business activities;

          o    the assimilation of the operations and personnel of the acquired
               business;

          o    the incurring of additional expenses related to such
               acquisitions, whether or not such acquisitions are consummated;


                                       19

<PAGE>

          o    the contingent and latent risks associated with the past
               operations of, and other unanticipated problems arising in, the
               acquired business; and

          o    the need to expand management, administration and operational
               systems.

If we make such acquisitions, we cannot predict whether:

          o    we will be able to successfully integrate the operations of any
               new businesses into our business;

          o    we will realize any anticipated benefits of completed
               acquisitions; or

          o    if there will be substantial unanticipated costs associated with
               acquisitions.

In addition, future acquisitions by us may result in:

          o    potentially dilutive issuances of our equity securities;

          o    the incurrence of additional debt; and

          o    the recognition of significant charges for impairment and
               amortization expense related to goodwill and other intangible
               assets.

We continuously evaluate potential acquisitions of related businesses. However,
competition for such potential acquisitions is intense and we have not reached
any agreement or arrangement with respect to any particular acquisition and we
may not be able to complete any acquisitions on favorable terms or at all.

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 consumer electronics industry is highly competitive, especially
with respect to pricing and the introduction of new products and features. Our
products compete in the low to medium-priced sector of the consumer electronics
market and compete primarily on the basis of:

          o    reliability;

          o    brand recognition;

          o    quality;

          o    price;

          o    design;


                                       20

<PAGE>

          o    consumer acceptance of the Emerson(R) trademark; and

          o    quality service and support to retailers and our customers.

          In recent years we and many of our competitors have regularly lowered
prices, and we expect these pricing pressures to continue. If these pricing
pressures are not mitigated by increases in volume, cost reductions from our
supplier or changes in product mix, our revenues and profits could be
substantially reduced. As compared to us, many of our competitors have:

          o    significantly longer operating histories;

          o    significantly greater managerial, financial, marketing, technical
               and other competitive resources; and

          o    greater name recognition.

          As a result, our competitors may be able to:

          o    adapt more quickly to new or emerging technologies and changes in
               customer requirements;

          o    devote greater resources to the promotion and sale of their
               products and services; and

          o    respond more effectively to pricing pressures.

          These factors could materially adversely affect our operations and
financial condition. In addition, competition could increase if:

          o    new companies enter the market;

          o    existing competitors expand their product mix; or

          o    we expand into new markets.

          An increase in competition could result in material price reductions
or loss of our market share.

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.

          Our ability to compete effectively will depend on our ability to
maintain and protect our proprietary rights. We own the Emerson(R) trademark,
which is materially important to our business, as well as our licenses, other
trademarks and proprietary rights that are used for certain of our home
entertainment and consumer electronics products. Our trademarks are registered
throughout the world, including the United States, Canada, Mexico, France,
Spain, Germany and the United Kingdom. However, third parties may seek to
challenge, invalidate, circumvent or render


                                       21

<PAGE>

unenforceable any proprietary rights owned by or licensed to us. In addition, in
the event third party licensees fail to protect the integrity of our trademarks,
the value of these marks could be materially and adversely affected.

          The laws of some foreign countries in which we operate may not protect
our proprietary rights to the same extent as do laws in the United States. The
protections afforded by the laws of such countries may not be adequate to
protect our intellectual property rights.

          Our inability to protect our proprietary rights could materially
adversely affect the license of our trade names and trademarks to third parties
as well as our ability to sell our products. Litigation may be necessary to:

          o    enforce our intellectual property rights;

          o    protect our trade secrets; and

          o    determine the scope and validity of such intellectual property
               rights.

          Any such litigation, whether or not successful, could result in
substantial costs and diversion of resources and management's attention from the
operation of our business.

          We may receive notice of claims of infringement of other parties'
proprietary rights. Such actions could result in litigation and we could incur
significant costs and diversion of resources in defending such claims. The party
making such claims could secure a judgment awarding substantial damages, as well
as injunctive or other equitable relief. Such relief could effectively block our
ability to make, use, sell, distribute or market our products and services in
such jurisdiction. We may also be required to seek licenses to such intellectual
property. We cannot predict, however, whether such licenses would be available
or, if available, that such licenses could be obtained on terms that are
commercially reasonable and acceptable to us. The failure to obtain the
necessary licenses or other rights could delay or preclude the sale, manufacture
or distribution of our products and could result in increased costs to us.

WE COULD BE EXPOSED TO PRODUCT LIABILITY OR OTHER CLAIMS FOR WHICH OUR PRODUCT
LIABILITY OR OTHER INSURANCE MAY BE INADEQUATE.

          A failure of any of the products marketed by us may subject us to the
risk of product liability claims and litigation arising from injuries allegedly
caused by the improper functioning or design of our products. Although we
currently maintain product liability insurance in amounts which we consider
adequate, we cannot assure that:

          o    our insurance will provide adequate coverage against potential
               liabilities;

          o    adequate product liability insurance will continue to be
               available in the future; or

          o    our insurance can be maintained on acceptable terms.


                                       22

<PAGE>

          Although we maintain liability insurance in amounts that we consider
adequate, we cannot assure that such policies will provide adequate coverage
against potential liabilities. To the extent product liability or other
litigation losses are beyond the limits or scope of our insurance coverage, our
expenses could materially increase.

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 have substantial tax net operating losses available to reduce
taxable income for federal and state income tax purposes. A portion of the
benefit associated with the tax net operating losses has been recognized as a
deferred tax asset in our financial statements and could be used to reduce our
tax liability in future profitable periods. We believe these net deferred tax
assets will be realized through tax planning strategies available in future
periods and future profitable operating results. Although realization is not
assured, we believe it is more likely than not that all of the remaining net
deferred tax assets will be realized. The amount of the deferred tax asset
considered realizable, however, could be reduced or eliminated in the near term
if certain tax planning strategies are not successfully executed, or estimates
of future taxable income during the carry-forward period is reduced.

OUR INDEBTEDNESS MAY ADVERSELY AFFECT OUR ABILITY TO OBTAIN ADDITIONAL FUNDS AND
MAY INCREASE OUR VULNERABILITY TO ECONOMIC OR BUSINESS DOWNTURNS.

          From time to time we incur substantial debt in connection with our
operations. As a result, we may be subject to the risks associated with
indebtedness, including:

          o    we must dedicate a portion of our cash flows from operations to
               pay debt service costs and, as a result, we have less funds
               available for operations and other purposes;

          o    it may be more difficult and expensive to obtain additional funds
               through financings, if such funds are available at all;

          o    we are more vulnerable to economic downturns and fluctuations in
               interest rates, less able to withstand competitive pressures and
               less flexible in reacting to changes in our industry and general
               economic conditions; and

          o    if we default under any of our existing credit facilities or if
               our creditors demand payment of a portion or all of our
               indebtedness, we may not have sufficient funds to make such
               payments.

WE HAVE PLEDGED SUBSTANTIALLY ALL OF OUR ASSETS TO SECURE OUR BORROWINGS UNDER
OUR CREDIT FACILITIES AND ARE SUBJECT TO COVENANTS THAT MAY RESTRICT OUR ABILITY
TO OPERATE OUR BUSINESS.

          Our indebtedness under our credit facilities is secured by
substantially all of our assets. If we default under the indebtedness secured by
our assets, those assets would be available to the secured creditor to satisfy
our obligations to the secured creditor. In addition, our credit facilities
impose certain restrictive covenants, including financial, ownership,
operational and net worth covenants. Failure to satisfy any of these covenants
could result in all or any of the following:


                                       23

<PAGE>

          o    acceleration of the payment of our outstanding indebtedness;

          o    our inability to borrow additional amounts under our existing
               financing arrangements; and

          o    our inability to secure financing on favorable terms or at all
               from alternative sources.

          Any of these consequences could significantly reduce the amount of
cash and financing available to us which in turn would adversely affect our
ability to operate our business, including acquiring our products from our
manufacturers and distributing our products to our customers.

MARKET RELATED RISKS

THE MARKET PRICE OF OUR COMMON STOCK HAS EXPERIENCED SIGNIFICANT PRICE AND
VOLUME FLUCTUATIONS FROM TIME TO TIME.

          The market price for our common stock and for securities of similar
companies has from time to time experienced significant price and volume
fluctuations. Factors which may affect our market price include:

          o    market conditions in the industries in which we operate;

          o    competition;

          o    sales or the possibility of sales of our common stock;

          o    our results of operations and financial condition; and

          o    general economic conditions.

          Furthermore, the stock market has experienced significant price and
volume fluctuations unrelated to the operating performance of particular
companies. These market fluctuations may also adversely affect the market price
of our common stock.

OUR ORGANIZATIONAL DOCUMENTS AND DELAWARE LAW MAY MAKE IT HARDER FOR US TO BE
ACQUIRED WITHOUT THE CONSENT AND COOPERATION OF OUR BOARD OF DIRECTORS AND
MANAGEMENT.

          Several provisions of our organizational documents and Delaware law
may deter or prevent a takeover attempt, including a takeover attempt in which
the potential purchaser offers to pay a per share price greater than the current
market price of our common stock. Under the terms of our certificate of
incorporation, our board of directors has the authority, without further action
by the stockholders, to issue shares of preferred stock in one or more series
and to fix the rights, preferences, privileges and restrictions thereof. The
ability to issue shares of preferred stock could tend to discourage takeover or
acquisition proposals not supported by our current board of directors.


                                       24

<PAGE>

IF OUR COMMON STOCK IS DE-LISTED FROM THE AMERICAN STOCK EXCHANGE, SHAREHOLDERS
MAY NOT BE ABLE TO RESELL THEIR SHARES AT OR ABOVE THE PRICE AT WHICH THE SHARES
WERE PURCHASED, OR AT ALL.

          In order for our common stock to continue to be listed on the American
Stock Exchange, we must meet the current American Stock Exchange continued
listing requirements, including, among other things, maintaining a majority of
independent directors, satisfying the audit committee composition requirements
and meeting our filing requirements with the SEC. If we are unable to meet these
requirements, our common stock could be de-listed from the American Stock
Exchange. If our common stock were to be de-listed from the American Stock
Exchange, our common stock could continue to trade on the National Association
of Securities Dealers' over-the-counter bulletin board or on the Pink Sheets, as
the case may be. Any such de-listing of our common stock could have an adverse
effect on the market price of, and the efficiency of the trading market for our
common stock, not only in terms of the number of shares that can be bought and
sold at a given price, but also through delays in the timing of transactions and
less coverage of us by securities analysts, if any. Also, if in the future we
were to determine that we need to seek additional equity capital, it could have
an adverse effect on our ability to raise capital in the public or private
equity markets.

FORWARD-LOOKING INFORMATION

          This report contains forward looking statements made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform Act of 1995
under Section 27A of the Securities Act of 1933, as amended, and Section 21E of
the Securities Exchange Act of 1934, as amended.

          Forward-looking statements include statements with respect to our
beliefs, plans, objectives, goals, expectations, anticipations, assumptions,
estimates, intentions, and future performance, and involve known and unknown
risks, uncertainties and other factors, which may be beyond our control, and
which may cause our actual results, performance or achievements to be materially
different from future results, performance or achievements expressed or implied
by such forward-looking statements.

          All statements other than statements of historical fact are statements
that could be forward-looking statements. You can identify these forward-looking
statements through our use of words such as "may," "will," "can," "anticipate,"
"assume," "should," "indicate," "would," "believe," "contemplate," "expect,"
"seek," "estimate," "continue," "plan," "project," "predict," "could," "intend,"
"target," "potential," and other similar words and expressions of the future.
These forward-looking statements may not be realized due to a variety of
factors, including, without limitation:

          o    the perception by our customers, licensors and licensees that
               there is a lack of continuity and stability in our board of
               directors, management team and advisors;


                                       25

<PAGE>

          o    the loss of any of our key customers or reduction in the purchase
               of our products by any such customers;

          o    the failure to maintain our relationships with our licensees and
               distributors or the failure to obtain new licensees or
               distribution relationships on favorable terms;

          o    our inability to anticipate market trends, enhance existing
               products or achieve market acceptance of new products;

          o    our dependence on a limited number of suppliers for our
               components and raw materials;

          o    our dependence on third party manufacturers to manufacture and
               deliver our products;

          o    the seasonality of our business, as well as changes in consumer
               spending and economic conditions;

          o    the failure of third party sales representatives to adequately
               promote, market and sell our products;

          o    our inability to protect our intellectual property;

          o    the effects of competition;

          o    changes in foreign laws and regulations and changes in the
               political and economic conditions in the foreign countries in
               which we operate;

          o    changes in accounting policies, rules and practices; and

          o    the other factors listed under "Risk Factors" in this Annual
               Report on Form 10-K and other filings with the SEC.

          All forward-looking statements are expressly qualified in their
entirety by this cautionary notice. You are cautioned not to place undue
reliance on any forward-looking statements, which speak only as of the date of
this annual report or the date of the document incorporated by reference into
this annual report. We have no obligation, and expressly disclaim any
obligation, to update, revise or correct any of the forward-looking statements,
whether as a result of new information, future events or otherwise. We have
expressed our expectations, beliefs and projections in good faith and we believe
they have a reasonable basis. However, we cannot assure you that our
expectations, beliefs or projections will result or be achieved or accomplished.

ITEM 1B. UNRESOLVED STAFF COMMENTS

         Not Applicable
                                       26

<PAGE>

ITEM 2. PROPERTIES

          The following table sets forth the material properties owned or leased
by us:

                         APPROXIMATE
                            SQUARE                        LEASE EXPIRES
   FACILITY PURPOSE        FOOTAGE         LOCATION        OR IS OWNED
----------------------   -----------   ----------------   -------------
Corporate headquarters      22,500     Parsippany, NJ     December 2009
Hong Kong office             9,396     Hong Kong, China   December 2006
Macao office                 8,700     Macao, China       Owned
Warehouse                   97,100     Irving, TX         June 2010
Warehouse                  180,650     Mira Loma, CA      February 2011

          We also utilize public warehouse space with terms typically of one
year or less. Public warehouse expenses vary based upon the volume and value of
products shipped from each leased location.

          We believe that the properties used for our operations are in
satisfactory condition and adequate for our present and anticipated future
operations.

ITEM 3. LEGAL PROCEEDINGS

Putative Class Actions

          On December 15, 2005, Jeffrey S. Abraham, as Trustee of the Law
Offices of Jeffrey S. Abraham Money Purchase Plan dated December 31, 1999 F/B/O
Jeffrey S. Abraham ("Plaintiff"), on behalf of himself and all common
shareholders of Sport Supply Group, Inc. ("Sport Supply"), filed a putative
class action and derivative complaint against Emerson, Geoffrey P. Jurick,
Arthur J. Coerver, Harvey Rothenberg, Collegiate Pacific, Inc. and Michael J.
Blumenfeld and nominal defendant Sport Supply in the Court of Chancery of the
State of Delaware, Civil Action No. 1845-N.

          The complaint asserted two causes of action: The first cause of action
was a purported class claim against Emerson and Mr. Jurick for breach of
fiduciary duty to the minority shareholders of Sport Supply by selling Emerson's
controlling stake in Sport Supply to Collegiate at a premium, allegedly knowing
that Collegiate intended to use for its own benefit the proprietary assets of
Sport Supply. The second cause of action asserts a purported derivative claim
against Collegiate and Messrs. Coerver and Rothenberg for alleged breaches of
fiduciary duty and unjust enrichment. Plaintiff alleges that in connection with
the purchase of Emerson's controlling block of Sport Supply's stock, Collegiate
and Messrs. Coerver and Rothenberg breached their fiduciary duties of loyalty
and good faith to Sport Supply's shareholders by transferring assets and
technology to Collegiate without compensation to Sport Supply's shareholders.
Plaintiff further alleges that Collegiate was unjustly enriched through the use
and transfer of Sport Supply's assets.


                                       27

<PAGE>

          Emerson and Mr. Jurick moved to dismiss the first cause of action, and
oral argument on their motion was conducted on June 23, 2006. On July 5, 2006,
the court granted Emerson and Mr. Jurick's motion and the first cause of action
was dismissed. Based on the expectation that Emerson and Mr. Jurick would
prevail in their defense, no loss was accrued in this matter as of March 31,
2006.

          For more than two-and-a-half years, Emerson has been defending a
consolidated putative class action captioned In Re Emerson Radio Corp.
Securities Litigation, 03cv4201 (JLL) (the "Consolidated Action") filed in the
United States District Court for the District of New Jersey. The class action
complaint asserted claims against Emerson and Messrs. Geoffrey Jurick, Kenneth
Corby, John Raab and Jerome Farnum (the "Individual Defendants") on behalf of
purchasers of Emerson's publicly traded securities between January 29, 2003 and
August 12, 2003 (the "Class Period"). By a December 19, 2005 Opinion and Order,
the Court granted the defendants' motion to dismiss the complaint without
prejudice and granted the plaintiffs leave to amend their pleading consistent
with the rulings in the Court's Opinion and Order.

          On March 3, 2006, one of the lead plaintiffs, Clark Niss, moved to
withdraw as a lead plaintiff, which motion was granted on March 29, 2006. On
April 13, 2006, the court entered a Stipulation and Order dismissing all claims
asserted in the class action complaint with prejudice. On April 26, 2006, the
remaining lead plaintiff, Jeffrey Hoffman, filed a Notice of Appeal, taking an
appeal of the court's December 19, 2005 dismissal order to the United States
Court of Appeals for the Third Circuit. Emerson and the Individual Defendants
continue to deny all allegations and intend to defend the appeal vigorously.

          Generally, the complaint had alleged that Emerson and the Individual
Defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of
1934, and Rule 10b-5 promulgated thereunder, by (i) issuing certain positive
statements during the Class Period regarding our ability to replace lost
revenues attributable to the Hello Kitty(R) license and (ii) omitting to
disclose that Emerson suffered allegedly soured relationships with its largest
retail customers. Based on the expectation that the defendants will ultimately
prevail in their defense, no loss has been accrued in this matter as of March
31, 2006.

Other Matters

          The Company is a party to various other litigation matters, in most
cases involving ordinary and routine claims incidental to our business. We
cannot estimate with certainty our ultimate legal and financial liability with
respect to such pending litigation matters. However, we believe, based on our
examination of such matters, that our ultimate liability will not have a
material adverse effect on our financial position, results of operations or cash
flows.

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

          No matters were submitted to a vote of security holders during the
fourth quarter.


                                       28

<PAGE>

                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
        ISSUER REPURCHASES OF EQUITY SECURITIES

          (a) Market Information

          Our common stock has traded on the American Stock Exchange under the
symbol MSN since December 22, 1994. The following table sets forth the range of
high and low sales prices for our common stock as reported by the American Stock
Exchange during the last two fiscal years.

                  FISCAL 2006     FISCAL 2005
                 -------------   -------------
                  High    Low     High    Low
                 -----   -----   -----   -----
First Quarter    $3.55   $2.28   $4.10   $3.00
Second Quarter    3.98    2.82    3.25    2.56
Third Quarter     3.60    2.95    3.83    2.58
Fourth Quarter    3.75    2.89    3.98    3.00

          There is no established trading market for our Series A convertible
preferred stock, whose conversion feature expired as of March 31, 2002.

          (b) Holders

          At June 27, 2006, there were approximately 321 stockholders of record
of our common stock. We believe that the number of beneficial owners is
substantially greater than the number of record holders, because a large portion
of our common stock is held of record in broker "street names."

          (c) Dividends

          Our policy has been to retain all available earnings, if any, for the
development and growth of our business. We have not paid and do not intend to
pay cash dividends on our common stock. In addition, our credit facility
restricts our ability to pay cash dividends on our common stock.

          (d) Unregistered Securities

          None

          (e) Share Repurchases

          During the fourth quarter of the fiscal year ended March 31, 2006, we
did not repurchase any shares under the Emerson Radio Corp.'s common stock share
repurchase program. The share


                                       29

<PAGE>

repurchase program was publicly announced in September 2003 to repurchase up to
2,000,000 shares of Emerson's outstanding common stock. Share repurchases are
made from time to time in open market transactions in such amounts as determined
in the discretion of Emerson's management within the guidelines set forth by
Rule 10b - 18 under the Securities Exchange Act. As of March 31, 2006, we
repurchased a total of 1,267,623 shares of which 155,998 shares were purchased
in fiscal 2006 under this program. The maximum number of shares that are
available to be repurchased under Emerson Radio Corp's common share repurchase
program as of March 31, 2006 was 732,377.

ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA

          The following table sets forth our selected consolidated financial
data for the five years ended March 31, 2006. The selected consolidated
financial data should be read in conjunction with our Consolidated Financial
Statements, including the notes thereto, and Item 7 - "Management's Discussion
and Analysis of Financial Condition and Results of Operations."

<TABLE>
<CAPTION>
                                                 MARCH 31,   MARCH 31,   MARCH 31,   MARCH 31,   MARCH 31,
                                                    2006        2005(2)     2004(2)     2003(2)   2002 (1),(2)
                                                 ---------   ---------   ---------   ---------   ---------
                                                         (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                              <C>         <C>         <C>         <C>         <C>
SUMMARY OF OPERATIONS:
   Net Revenues                                  $ 233,843   $ 230,783   $ 179,952   $ 245,216   $ 212,503
   Operating Income                              $   4,169   $   9,442   $   3,093   $  20,740   $  13,531
   Income from continuing  operations            $   3,712   $   5,113   $      60   $  28,128   $  21,635
   Income (loss) from discontinued operations,
      Net of tax                                 $  12,918   $     792   $  (1,134)  $  (1,082)     (2,228)
   Cumulative effect of change in accounting
      principle                                         --          --          --   $  (5,546)         --
   Net income (loss)                             $  16,630   $   5,905   $  (1,074)  $  21,500   $  19,407

BALANCE SHEET DATA AT PERIOD END:
   Total Assets                                  $  92,502   $ 131,168   $ 118,669   $ 134,562   $ 135,839
   Current Liabilities                              21,772      45,899      40,637      48,668      54,723
   Long-Term Debt                                      575      11,960       8,030         467      29,437
   Shareholders' Equity                             70,155      53,603      47,212      51,237      34,740
   Working Capital                                  60,215      56,116      46,729      49,101      49,290
   Current Ratio                                  3.8 to 1    2.2 to 1    2.2 to 1    2.0 to 1    1.9 to 1

PER COMMON SHARE: (1)
   Basic net income (loss) per share:
      Continuing operations                      $     .13   $     .19   $     .00   $    1.02   $     .69
      Discontinued operations                          .48         .03        (.04)       (.04)       (.07)
      Cumulative effect of change in
         accounting principle                           --          --          --        (.20)
                                                 ---------   ---------   ---------   ---------   ---------
                                                 $     .61   $     .22   $    (.04)  $     .78   $     .62
                                                 =========   =========   =========   =========   =========

   Diluted net income (loss) per share:
      Continuing operations                      $     .13   $     .19   $     .00   $     .98   $     .53
      Discontinued operations                          .48         .03        (.04)       (.04)       (.05)
      Cumulative effect of change in
         accounting principle                           --          --          --        (.19)         --
                                                 ---------   ---------   ---------   ---------   ---------
                                                 $     .61   $     .22   $    (.04)  $     .75   $     .48
                                                 =========   =========   =========   =========   =========

WEIGHTED AVERAGE SHARES OUTSTANDING:
   Basic                                            27,079      26,991      27,227      27,716      31,298
   Diluted                                          27,172      27,264      27,227      28,640      40,485
</TABLE>


                                       30

<PAGE>

(1)  For fiscal 2002, dilutive securities include 3,531,000 shares assuming
     conversion of Series A preferred stock at a price equal to 80% of the
     weighted average market value of a share of common stock, determined as of
     March 31, 2002. For fiscal 2006, 2005, 2003, and 2002, dilutive securities
     also include 93,000, 273,000, 924,000, and 452,000 shares assuming
     conversion of 440,000, 732,000, 1,357,000, and 1,645,000 options,
     respectively, and 50,000, 50,000, and 200,000 warrants for fiscal 2006,
     2005, and 2003, respectively. For fiscal 2002, dilutive securities also
     included 5,204,000 shares assuming the conversion of convertible
     debentures. Per common share data is based on the net income or loss for
     the year and deduction of the amount of dividends required to be paid to
     the holders of the preferred stock and the weighted average of common stock
     outstanding during each fiscal year. Loss per share in fiscal 2004 does not
     include potentially dilutive securities assumed outstanding since the
     effects of such conversion would be anti-dilutive.

(2)  All amounts restated for discontinued operations as a result of the sale
     of SSG.

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

          The following discussion of our operations and financial condition
should be read in conjunction with the Financial Statements and notes thereto
included elsewhere in this Annual Report on Form 10-K.

          Special Note: Certain statements set forth below constitute
forward-looking statements made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. See Item 1A - "Risk Factors -
Forward-Looking Information."

          In the following discussions, most percentages and dollar amounts have
been rounded to aid presentation. As a result, all figures are approximations.


                                       31

<PAGE>

RESULTS OF OPERATIONS:

          As a result of the sale of SSG, the results of operations of SSG have
been presented as discontinued operations for all periods presented, and we now
operate in one segment, the consumer electronics segment. Accordingly, only the
consumer electronics segment is presented in the following Management's
Discussion and Analysis.

          The following table summarizes certain financial information for the
fiscal years ended March 31 (in thousands):

                                           2006       2005       2004
                                         --------   --------   --------
Net revenues                             $233,843   $230,783   $179,952
Cost of sales                             204,010    198,221    153,643
Other operating costs and expenses          6,145      5,889      5,254
Selling, general and administrative        19,097     17,436     15,886
Acquisition costs incurred (recovered)         48       (454)     1,553
Non cash compensation                         374        249        523
                                         --------   --------   --------
   Operating income                         4,169      9,442      3,093
Interest expense, net                         785      1,346        883
                                         --------   --------   --------
Income before income taxes                  3,384      8,096      2,210
(Benefit) Provision for income taxes         (328)     2,983      2,150
                                         --------   --------   --------
Net income from continuing operations    $  3,712   $  5,113   $     60
                                         ========   ========   ========

RESULTS OF OPERATIONS - FISCAL 2006 COMPARED WITH FISCAL 2005

          Net Revenues - Net revenues for fiscal 2006 increased $3.0 million, or
1.3%, to $233.8 million as compared to $230.8 million for fiscal 2005. Net
revenues are comprised of Emerson(R) branded product sales, themed product sales
and licensing revenues. Emerson(R) branded product sales are earned from the
sale of products bearing the Emerson(R) or HH Scott(R) brand name; themed
product sales represent products sold bearing a certain theme or character; and
licensing revenues are derived from licensing the Emerson(R) and HH Scott(R)
brand names to licensees for a fee. The increase in net revenues was comprised
of:

               i)   Emerson(R) branded products sales decreased to $175.4
                    million in fiscal 2006 compared to $202.9 million in fiscal
                    2005, a decrease of $27.5 million, or 13.5%, primarily
                    resulting from decreased sales volumes in the audio product
                    category;

               ii)  Themed product sales increased to $50.7 million in fiscal
                    2006 compared to $17.1 million in fiscal 2005, an increase
                    of $33.6 million, primarily due to increased Nickelodeon
                    sales volume; and

               iii) Licensing revenues decreased $3.1 million, or 29.0%, to $7.7
                    million in fiscal 2006 compared to $10.8 million in fiscal
                    2005, primarily due to lower sales


                                       32

<PAGE>

                    volumes from our video licensing agreements. This downward
                    trend in our video license revenue has continued over the
                    last several quarters and is expected to continue in future
                    quarters.

               Cost of Sales - In absolute terms, cost of sales increased $5.8
million, or 2.9%, to $204.0 million in fiscal 2006 as compared to $198.2 million
in fiscal 2005. Cost of sales, as a percentage of net revenues, increased from
85.9% in fiscal 2005 to 87.2% in fiscal 2006. The increase in cost of sales in
relative terms was primarily due to the proportionate decrease in license
revenues as a percentage of sales revenues. The cost of sales as a percentage of
sales revenues less license revenues was largely unchanged as it increased to
90.2% in 2006 from 90.1% in 2005, reflecting continued price pressure from our
major competitors.

          Gross profit margins continue to be subject to competitive pressures
arising from pricing strategies associated with the price categories of the
consumer electronics market in which we compete. Our products are generally
placed in the low-to-medium priced category of the market, which has a tendency
to be highly competitive.

          Other Operating Costs and Expenses - Other operating costs and
expenses include those components as described in Note 1 of the Notes to the
Consolidated Financial Statements. As a result of increased activity in these
areas, other operating costs and expenses as a percentage of net revenues were
2.6% in both fiscal 2006 and fiscal 2005. In absolute terms, other operating
costs and expenses increased $256,000, or 4.3%, to $6.1 million for fiscal 2006
as compared to $5.9 million in fiscal 2005.

          Selling, General and Administrative Expenses ("S,G&A") - S,G&A, as a
percentage of net revenues, were 8.2% in fiscal 2006 as compared to 7.6% in
fiscal 2005. S,G&A, in absolute terms, increased $1.7 million, or 9.5%, to $19.1
million in fiscal 2006 as compared to $17.4 million for fiscal 2005. The
increase in S,G&A in absolute terms between fiscal 2006 and 2005 was primarily
due to increased sales commissions of $262,000, an increase in personnel
expenditures of $484,000, increased advertising costs of $111,000, an increase
in accounts receivable reserves of $650,000, and an increase in depreciation
expenses of $309,000. These expenses were partially offset by a decrease in
professional fees of $220,000

          Acquisition Costs Incurred (Recovered) - In fiscal 2005, adjustments
to acquisition costs incurred in the prior year were recorded resulting in a
recovery of such costs of $454,000, or -0.2% of net revenues, compared to
expenses of $48,000 in fiscal 2006. These costs were associated with
contemplated acquisition transactions that were not completed.

          Non Cash Compensation - relate to stock options expense associated
with the early adoption of SFAS 123R "Share-Based Payments." Stock based costs
increased to $374,000 (0.2% of net revenues) in fiscal 2006 compared to $249,000
(0.1% of net revenues) in fiscal 2005, including approximately $0 and $89,000
respectively, associated with the cost of warrants issued in exchange for
consulting services.

          Interest Expense, net - Interest expense decreased $561,000, or 41.7%,
to $785,000 (0.3% of net revenues) in fiscal 2006 from $1.3 million (0.6% of net
revenues) in fiscal 2005. The


                                       33

<PAGE>

decrease was primarily attributable to decreased borrowings and borrowing costs
as well as an increase in foreign interest income.

          (Benefits) Provision for Income Taxes - Our provision for income
taxes, which primarily represents the deferred tax charges associated with our
profits in the United States, resulted in a benefit of $328,000 for fiscal 2006,
or 0.1% of net revenues, as compared to $3.0 million for fiscal 2005, or 1.3% of
net revenues.

          Income From Continuing Operations - As a result of the foregoing
factors, net income from continuing operations amounted to approximately $3.7
million (1.6% of net revenues) for fiscal 2006 as compared to $5.1 million (2.2%
of net revenues) in fiscal 2005.

RESULTS OF OPERATIONS - FISCAL 2005 COMPARED WITH FISCAL 2004

          Net Revenues - Net revenues for fiscal 2005 increased $50.8 million,
or 28.3%, to $230.8 million as compared to $180.0 million for fiscal 2004. Net
revenues are comprised of Emerson(R) branded product sales, themed product sales
and licensing revenues. Emerson(R) branded product sales are earned from the
sale of products bearing the Emerson(R) or HH Scott(R) brand name; themed
product sales represent products sold bearing a certain theme or character; and
licensing revenues are derived from licensing the Emerson(R) and HH Scott(R)
brand names to licensees for a fee. The increase in net revenues comprised of:

               i)   Emerson(R) branded products sales increased to $202.9
                    million in fiscal 2005 compared to $158.5 million in fiscal
                    2004, an increase of $44.3 million, or 28.0%, primarily
                    resulting from increased sales volume;

               ii)  Themed product sales increased to $17.1 million in fiscal
                    2005 compared to $10.4 million in fiscal 2004, an increase
                    of $6.7 million (63.7%), primarily due to increased
                    Nickelodeon sales volume; and

               iii) Licensing revenues decreased $169,000, or 1.5%, to $10.8
                    million in fiscal 2005 compared to $11.0 million in fiscal
                    2004, primarily due to slightly lower sales volumes from our
                    video licensing agreements.

          Cost of Sales - In absolute terms, cost of sales increased $44.6
million, or 29.0%, to $198.2 million in fiscal 2005 as compared to $153.6
million in fiscal 2004. Cost of sales, as a percentage of net revenues,
increased from 85.4% in fiscal 2004 to 85.9% in fiscal 2005. The increase in
cost of sales in relative terms was primarily due to lower margins on Emerson(R)
branded and themed products, primarily attributable to competitive market
conditions.

          Gross profit margins continue to be subject to competitive pressures
arising from pricing strategies associated with the price categories of the
consumer electronics market in which we compete, accordingly, a change in
revenues does not directly correlate to a change in unit volume. Our products
are generally placed in the low-to-medium priced category of the market, which
has a tendency to be highly competitive.

          Other Operating Costs and Expenses - Other operating costs and
expenses include those components as described in Note 1 of Notes to
Consolidated Financial Statements. As a result of increased activity in these
areas, other operating costs and expenses as a percentage of net


                                       34

<PAGE>

revenues were 2.6% in fiscal 2005 as compared to 2.9% in fiscal 2004. In
absolute terms, other operating costs and expenses increased $635,000, or 12.1%,
to $5.9 million for fiscal 2005 as compared to $5.3 million in fiscal 2004.

          Selling, General and Administrative Expenses ("S,G&A") - S,G&A, as a
percentage of net revenues, were 7.6% in fiscal 2005 as compared to 8.8% in
fiscal 2004. S,G&A, in absolute terms, increased $1.5 million, or 9.8%, to $17.4
million in fiscal 2005 as compared to $15.9 million for fiscal 2004. The
increase in S,G&A in absolute terms between fiscal 2005 and 2004 was primarily
due to increased freight out costs totaling $1.0 million, and increased
advertising expenditures of $800,000, partially offset by a decrease in
professional fees of $700,000, offset by smaller variances in other S,G&A
expenses.

         Acquisition Costs (Recovered) Incurred - Adjustments to acquisition
costs incurred in the prior year were recorded in fiscal 2005, resulting in a
recovery of such costs of $454,000, or -0.2% of net revenues. For fiscal 2004,
acquisition costs were $1.6 million, or 0.9% of net revenues, due to two
unsuccessful acquisition attempts during the year.

          Stock Based Costs - Stock based costs relate to the cost of warrants
associated with consulting service agreements and stock options expense
associated with the early adoption of SFAS 123R "Share-Based Payments." Stock
based costs decreased from $523,000 (0.3% of net revenues) in fiscal 2004 to
$249,000 (0.1% of net revenues) in fiscal 2005, including approximately $161,000
related to the early adoption of SFAS 123R.

          Interest Expense, net - Interest expense increased $463,000, or 52.4%,
to $1.3 million (0.6% of consumer electronics net revenues) in fiscal 2005 from
$0.9 million (0.5% of net revenues) in fiscal 2004. The increase was
attributable primarily to increased borrowings and borrowing costs during fiscal
2005.

          Provision for Income Taxes - Our provision for income taxes, which
primarily represents the deferred tax charges associated with our profits in the
United States, was $3.0 million for fiscal 2005, or 1.3% of consumer electronics
net revenues, as compared to $2.2 million for fiscal 2004, or 1.2% of consumer
electronics net revenues.

          Income From Continuing Operations - As a result of the foregoing
factors, net income from continuing operations totaled $5.1 million (2.2% of net
revenues) in fiscal 2005 as compared to $60,000 (less than 0.1% of net revenues)
in fiscal 2004.

LIQUIDITY AND CAPITAL RESOURCES

          As of March 31, 2006, we had cash and cash equivalents of
approximately $17.5 million, compared to approximately $1.8 million at March 31,
2005. Working capital increased to $60.2 million at March 31, 2006 as compared
to $56.1 at March 31, 2005. The increase in cash and cash equivalents of
approximately $15.7 million was primarily due to cash received from the sale of
the SSG business and other financing and operating activities as described
below.


                                       35

<PAGE>

          Operating cash flow provided by continuing operating activities was
approximately $8.6 million for fiscal 2006, resulting from income before
depreciation and amortization and deferred tax expenses of approximately $3.7
million, primarily offset by increases in accounts receivable. Growth in
accounts receivable accounted for a usage of cash of approximately $4.2 million
as a result of the shift from the direct import business (which represents sales
under LC arrangements) to domestic business (which represents sales on account),
and an increase in consumer demand. Decreases in restricted cash of $2.6 million
and inventories of $5.0 million primarily contributed to the increase in sources
of cash provided by continuing operations.

          Net cash provided by investing activities of $28.8 million for fiscal
2006, resulted primarily from the proceeds received on the sale of SSG.

          Net cash used by financing activities was $23.1 million for fiscal
2006. Cash was primarily utilized for the repayments of long-term borrowings in
the financing of inventory purchases due to the higher level of sales in the
current fiscal year, as well as the continuing shift from the direct import to
domestic business.

          On December 23, 2005, we entered into a $45.0 million Revolving Credit
Agreement with Wachovia Bank, National Association. The $45.0 million revolving
line of credit facility provides for revolving loans subject to individual
maximums which, in the aggregate, are not to exceed the lesser of $45.0 million
or a "Borrowing Base" as defined in the loan agreement. The Borrowing Base
amount is established by specified percentages of eligible accounts receivables
and inventories and bears interest ranging from Prime plus 0.00% to 0.50% or, at
our election, the London Interbank Offered Rate ("LIBOR") plus 1.25% to 2.25%
depending on excess availability. Pursuant to the loan agreement, we are
restricted from, among other things, paying certain cash dividends, and entering
into certain transactions without the lender's prior consent and are subject to
certain leverage financial covenants. Borrowings under the loan agreement are
secured by substantially all of our tangible assets.

          At March 31, 2006, there were approximately $4.3 million of letters of
credit outstanding under this facility. At March 31, 2006, we were in compliance
with the covenants on our credit facilities.

          Our foreign subsidiaries maintain various credit facilities,
aggregating $18.7 million, with foreign banks consisting of the following:

               o    two letter of credit facilities totaling $11.2 million which
                    is used for inventory purchases; and

               o    two back-to-back letter of credit facilities totaling $7.5
                    million.

          At March 31, 2006, our foreign subsidiaries pledged approximately $3.0
million in certificates of deposit to these banks to assure the availability of
the $18.7 million credit facilities. The compensating amount of $3.0 million of
restricted cash is legally restricted from use for general business purposes. At
March 31, 2006, there were approximately $14.3 million of letters of credit
outstanding under these credit facilities. These letter of credit facilities


                                       36

<PAGE>

contain a net worth covenant of the foreign subsidiaries with which the
subsidiaries were in compliance at March 31, 2006.

          Short-Term Liquidity. Liquidity is impacted by our seasonality in that
we generally record the majority of our annual sales in the quarters ending
September and December. This requires us to maintain higher inventory levels
during the quarters ending June and September, therefore increasing the working
capital needs during these periods. Additionally, we receive the largest
percentage of product returns in the quarter ending March. The higher level of
returns during this period adversely impacts our collection activity, and
therefore our liquidity. Management believes that continued sales margin
improvement and the policies in place for returned products, should continue to
favorably impact our cash flow. In fiscal 2006, products representing
approximately 32% of net revenues were imported directly to our customers. This
contributes significantly to Emerson's liquidity in that this inventory does not
need to be financed directly by us.

          Our principal existing sources of cash are generated from operations
and borrowings available under our revolving credit facilities. As of March 31,
2006, we had $41.0 million of borrowing capacity available under our $45.0
million revolving credit facilities, of which there were $4.0 million of letters
of credit outstanding, and there were no loans outstanding. In addition, at
March 31, 2006, we had $18.7 million of letter of credit facilities, of which
approximately $9.5 million was available. We believe that our existing sources
of cash, including cash flows generated from operations, will be sufficient to
support our existing operations over the next 12 months; provided, however, we
may raise additional financing, which may include the issuance of equity
securities, or the incurrence of additional debt, in connection with our
operations or if we elect to grow our business through acquisitions.

          Contractual Obligations

The following summarizes our obligations at March 31, 2006 for the periods shown
(in thousands):

                                             PAYMENT DUE BY PERIOD
                              --------------------------------------------------
                                       LESS THAN 1    1 - 3    3 - 5   MORE THAN
                               TOTAL       YEAR       YEARS    YEARS    5 YEARS
                              ------   -----------   ------   ------   ---------
Notes and mortgages payable   $  641      $   74     $  148   $  148      $271
Capital lease obligations         19          11          8       --        --
Leases                         6,607       1,643      2,890    2,074        --
                              ------      ------     ------   ------      ----
Total                         $7,267      $1,728     $3,046   $2,222      $271
                              ======      ======     ======   ======      ====

          As of March 31, 2006, there were no material capital expenditure
commitments and no substantial commitments for purchase orders outside the
normal purchase orders used to secure product.

          Off-Balance Sheet Arrangements. We do not have any off-balance sheet
arrangements.


                                       37

<PAGE>

CRITICAL ACCOUNTING POLICIES

          The discussion and analysis of our financial condition and results of
operations are based upon our consolidated financial statements, which have been
prepared in accordance with accounting principles that are generally accepted
within the United States. The preparation of our financial statements requires
us to make estimates and judgments that affect the reported amounts of assets,
liabilities, revenues and expenses. We consider certain accounting policies
related to inventories, trade accounts receivables, impairment of long lived
assets, valuation of deferred tax assets, sales return reserves and cooperative
advertising accruals to be critical policies due to the estimation processes
involved in each.

          Inventories. Inventories are stated at the lower of cost or market.
Cost is determined using the first-in, first-out basis. We record inventory
reserves to reduce the carrying value of inventory for estimated obsolescence or
unmarketable inventory equal to the difference between the cost of inventory and
the estimated market value based upon assumptions about future demand and market
conditions. If actual market conditions are less favorable than those projected
by management, additional inventory reserves may be required. Conversely, if
market conditions improve, such reserves are reduced.

          Trade Accounts Receivable. We extend credit based upon evaluations of
a customer's financial condition and provide for any anticipated credit losses
in our financial statements based upon management's estimates and ongoing
reviews of recorded allowances. If the financial conditions of our customers
were to deteriorate, resulting in an impairment of their ability to make
payments, additional reserves may be required. Conversely, reserves are reduced
to reflect credit and collection improvements.

          Income Taxes. We record a valuation allowance to reduce the amount of
our deferred tax assets to the amount that management estimates is more likely
than not to be realized. While we have considered future taxable income and
ongoing tax planning strategies in assessing the need for the valuation
allowance, in the event that we determined that we would be able to realize our
deferred tax assets in the future in excess of the net recorded amount, an
adjustment to the deferred tax asset would increase income in the period such
determination was made. Likewise, if it was determined that we would not be able
to realize all or part of the net deferred tax asset in the future, an
adjustment to the deferred tax asset would be charged to income in the period
such determination was made.

          Sales Return Reserves. Our management must make estimates of potential
future product returns related to current period product revenue. Management
analyzes historical returns, current economic trends and changes in customer
demand for our products when evaluating the adequacy of the reserve for sales
returns. Management judgments and estimates must be made and used in connection
with establishing the sales return reserves in any accounting period. If actual
sales returns increase above the historical return rates, then additional
reserves may be required. Conversely, the sales return reserve could be
decreased if the actual return rates are less than the historical return rates,
which were used to establish such sales return reserve.


                                       38

<PAGE>

          Cooperative Advertising Accruals. Cooperative advertising programs,
promotions and other volume-based incentives, which are provided to retailers
and distributors for advertising and sales promotions, are accounted for on an
accrual basis as a reduction in net revenues in the period in which the related
sales are recognized as per EITF 01-09 "Accounting for Consideration Given by a
Vendor to a Customer." If additional cooperative advertising programs,
promotions and other volume-based incentives are required to promote the
Company's products, then additional reserves may be required. Conversely,
reserves are decreased to reflect the lesser need for cooperative advertising
programs.

RECENTLY-ISSUED FINANCIAL ACCOUNTING PRONOUNCEMENTS

On December 16, 2004, the FASB issued Statement No. 153, "Exchanges of
Nonmonetary Assets" , an amendment of APB Opinion No. 29 ("FAS No. 153"). FAS
No. 153 addresses the measurement of exchanges of nonmonetary assets and
redefines the scope of transactions that should be measured based on the fair
value of the assets exchanged. FAS No. 153 is effective for fiscal periods after
June 15, 2005. The Company does not believe adoption of FAS No. 153 will have a
material effect on its consolidated financial position, results of operations or
cash flows.

In May 2005, the FASB issued FAS No. 154, "Accounting Changes and Error
Corrections--a replacement of APB Opinion No. 20 and FASB Statement No. 3." This
Statement requires retrospective application to prior periods' financial
statements of changes in accounting principle, unless it is impracticable to
determine either the period-specific effects or the cumulative effect of the
change. When it is impracticable to determine the period-specific effects of an
accounting change on one or more individual prior periods presented, this
Statement requires that the new accounting principle be applied to the balances
of assets and liabilities as of the beginning of the earliest period for which
retrospective application is practicable and that a corresponding adjustment be
made to the opening balance of retained earnings (or other appropriate
components of equity or net assets in the statement of financial position) for
that period rather than being reported in an income statement. When it is
impracticable to determine the cumulative effect of applying a change in
accounting principle to all prior periods, this Statement requires that the new
accounting principle be applied as if it were adopted prospectively from the
earliest date practicable. This Statement is effective for fiscal years
beginning after December 15, 2005. The Company does not believe adoption of FAS
No. 154 will have a material effect on its consolidated financial position,
results of operations or cash flows.

In February 2006, the FASB issued FAS No. 155, "Accounting for Certain Hybrid
Financial Instruments ("FAS No. 155")" , which amends FAS No. 133, "Accounting
for Derivatives Instruments and Hedging Activities" and FAS No. 140, "Accounting
for Transfers and Servicing of Financial Assets and Extinguishment of
Liabilities". FAS No.155 amends FAS No. 133 to narrow the scope exception for
interest-only and principal-only strips on debt instruments to include only such
strips representing rights to receive a specified portion of the contractual
interest or principle cash flows. FAS No. 155 also amends FAS No.140 to allow
qualifying special-purpose entities to hold a passive derivative financial
instrument pertaining to beneficial interests that itself is a derivative
instrument. FAS No. 155 is effective for fiscal years beginning after September
15, 2006. The Company is currently evaluating the impact 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


                                       39

<PAGE>

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

          INFLATION, FOREIGN CURRENCY, AND INTEREST RATES

          Neither inflation nor currency fluctuations had a significant effect
on our results of operations during fiscal 2006. Our exposure to currency
fluctuations has been minimized by the use of U.S. dollar denominated purchase
orders. Emerson purchases virtually all of its products from manufacturers
located in China.

          The interest on borrowings under our credit facilities is based on the
prime rate or LIBOR, at our option, on the Revolving Credit Agreement. While a
significant increase in interest rates could have an adverse effect on our
financial condition and results of operations, management believes that given
the present economic climate, interest rates are expected to increase, but not
so significantly during the coming year as to have a material adverse effect or
our financial condition and results of operations.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

          Index to Financial Statements

                                                                        Page No.
                                                                        --------
o    Report of Independent Registered Public Accounting Firm             41 - 42
o    Consolidated Statements of Operations for the years ended March
     31, 2006, 2005 and 2004                                               43
o    Consolidated Balance Sheets as of March 31, 2006 and 2005             44
o    Consolidated Statements of Changes in Shareholders' Equity for
     the years ended March 31, 2006, 2005 and 2004                         45
o    Consolidated Statements of Cash Flows for the years ended March
     31, 2006, 2005 and 2004                                               46
o    Notes to Consolidated Financial Statements                            47
o    Schedule II--Valuation and Qualifying Accounts and Reserves           85
o    All other schedules are omitted because they are not applicable
     or the required information is shown in the financial statements
     or notes thereto.


                                       40

<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders
of Emerson Radio Corp.

We have audited the accompanying consolidated balance sheet of Emerson Radio
Corp. and Subsidiaries (the "Company"), as of March 31, 2006, and the related
consolidated statements of operations, changes in shareholders' equity, and cash
flows for the year then ended. Our audit also included the financial statement
schedule listed in the Index. These consolidated financial statements and
schedule are the responsibility of the Company's management. Our responsibility
is to express an opinion on these consolidated financial statements and
financial statement schedule based on our audit.

We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. The Company
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audit included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Company's internal control
over financial reporting. Accordingly, we express no such opinion. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements and schedule. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall presentation of the
consolidated financial statements and schedule. We believe that our audit
provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of the
Company as of March 31, 2006, and the consolidated results of their operations,
and their cash flows for the year then ended, in conformity with U.S. generally
accepted accounting principles. Also, in our opinion, the related financial
statement schedule presents fairly, in all material respects, the information
set forth therein.


MOORE STEPHENS, P. C.
CERTIFIED PUBLIC ACCOUNTANTS.

Cranford, New Jersey
July 13, 2006


                                       41

<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders
of Emerson Radio Corp.

          We have audited the accompanying consolidated balance sheet of Emerson
Radio Corp. and Subsidiaries as of March 31, 2005, and the related consolidated
statements of operations, shareholders' equity, and cash flows for the years
ended March 31, 2005 and March 31, 2004. Our audits also included the financial
statement schedule listed in the Index at Item 15(a) for the years ended March
31, 2005 and March 31, 2004. These consolidated financial statements and
schedule are the responsibility of the management of Emerson Radio Corp. and
Subsidiaries. Our responsibility is to express an opinion on these financial
statements and financial statement schedule based on our audits.

          We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audits to obtain reasonable assurance about whether the
financial statements and schedule are free of material misstatement. The Company
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audits included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Company's internal control
over financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements and schedule, assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall presentation of the financial statements and schedule. We
believe that our audits provide a reasonable basis for our opinion.

          In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position of
Emerson Radio Corp. and Subsidiaries at March 31, 2005, and the results of their
operations and their cash flows for each of the years ended March 31, 2005, and
March 31, 2004 in conformity with accounting principles generally accepted in
the United States. Also, in our opinion, the related financial statement
schedule presents fairly, in all material respects, the information set forth
therein for the years ended March 31, 2005 and March 31, 2004.


BDO SEIDMAN, LLP

New York, New York
May 20, 2005, except Note 6,
as to which the date is
June 27, 2005, and Note 17,
as as to which the date is
July 1, 2005


                                       42

<PAGE>

                      EMERSON RADIO CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
               FOR THE YEARS ENDED MARCH 31, 2006, 2005, AND 2004
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                               2006       2005       2004
                                                             --------   --------   --------
<S>                                                          <C>        <C>        <C>
NET REVENUES                                                 $233,843   $230,783   $179,952

COSTS AND EXPENSES:
   Cost of sales                                              204,010    198,221    153,643
   Other operating costs and expenses                           6,145      5,889      5,254
   Selling, general and administrative expenses (exclusive     19,097     17,436     15,886
      of non-cash compensation shown below)
   Acquisition costs (recovered) incurred                          48       (454)     1,553
   Non-Cash compensation                                          374        249        523
                                                             --------   --------   --------
                                                              229,674    221,341    176,859
                                                             --------   --------   --------
OPERATING INCOME                                                4,169      9,442      3,093
   Interest expense, net                                         (785)    (1,346)      (883)
                                                             --------   --------   --------
INCOME BEFORE INCOME TAXES AND DISCONTINUED
   OPERATIONS                                                   3,384      8,096      2,210
   (Benefit) Provision for income taxes                          (328)     2,983      2,150
                                                             --------   --------   --------
INCOME FROM CONTINUING OPERATIONS                               3,712      5,113         60
   Income (loss) from discontinued operations, net of tax      12,918        792     (1,134)
                                                             --------   --------   --------
NET INCOME  (LOSS)                                           $ 16,630   $  5,905   $ (1,074)
                                                             ========   ========   ========
BASIC NET INCOME (LOSS) PER SHARE
   Continuing operations                                     $    .13   $    .19   $    .00
   Discontinued operations                                        .48        .03       (.04)
                                                             --------   --------   --------
                                                             $    .61   $    .22   $   (.04)
                                                             ========   ========   ========
DILUTED NET INCOME (LOSS) PER SHARE
   Continuing operations                                     $    .13   $    .19   $    .00
   Discontinued operations                                        .48        .03       (.04)
                                                             --------   --------   --------
                                                             $    .61   $    .22   $   (.04)
                                                             ========   ========   ========
WEIGHTED AVERAGE SHARES OUTSTANDING
   Basic                                                       27,079     26,991     27,227
   Diluted                                                     27,172     27,264     27,227
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.


                                       43

<PAGE>

                      EMERSON RADIO CORP. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                          AS OF MARCH 31, 2006 AND 2005
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                                2006       2005
                                                                              --------   --------
<S>                                                                           <C>        <C>
ASSETS

Current Assets:
   Cash and cash equivalents                                                  $ 17,517   $  1,817
   Restricted cash                                                               3,000      5,620
   Accounts receivable (less allowances of $4,770 and $3,783, respectively)     18,996     15,940
   Other receivables                                                             1,427      1,544
   Inventories                                                                  33,003     38,156
   Prepaid expenses and other current assets                                     3,694      3,300
   Deferred tax assets                                                           4,350      3,666
   Current assets of discontinued operations                                       --     31,972
                                                                              --------   --------
      Total current assets                                                      81,987    102,015
Property, plant, and equipment, net                                              2,500      2,292
Trademarks and other intangible assets, net                                        442        600
Deferred tax assets                                                              6,861     11,245
Other assets                                                                       712        477
Non current assets of discontinued operations                                       --     14,539
                                                                              --------   --------
         Total Assets                                                         $ 92,502   $131,168
                                                                              ========   ========
LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities:
   Short-term borrowings                                                      $  1,841   $ 13,044
   Current  maturities of long-term  borrowings                                     85         85
   Accounts payable and other current liabilities                               18,121     17,500
   Accrued sales returns                                                         1,583      1,919
   Income taxes payable                                                            142        243
   Current liabilities of discontinued operations                                   --     13,108
                                                                              --------   --------
      Total current liabilities                                                 21,772     45,899
Long-term borrowings                                                               575     11,960
Non current liabilities of discontinued operations                                  --      3,010
Minority interest                                                                   --     16,696
Commitments and contingencies
Shareholders' Equity:
   Preferred shares - 10,000,000 shares authorized; 3,677
      shares issued and outstanding                                              3,310      3,310
   Common shares -- $.01 par value, 75,000,000 shares authorized;
      52,900,297 and 52,883,131 shares issued; 27,064,332 and 27,203,164
      shares outstanding, respectively                                             529        529
   Capital in excess of par value                                              117,085    116,788
   Accumulated other comprehensive losses                                          (70)       (87)
   Accumulated deficit                                                         (26,475)   (43,105)
   Treasury stock, at cost, 25,835,965 and 25,679,967 shares, respectively     (24,224)   (23,832)
                                                                              --------   --------
      Total shareholders' equity                                                70,155     53,603
                                                                              --------   --------
         Total Liabilities and Shareholders' Equity                           $ 92,502   $131,168
                                                                              ========   ========
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.


                                       44

<PAGE>

                      EMERSON RADIO CORP. AND SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
               FOR THE YEARS ENDED MARCH 31, 2006, 2005, AND 2004
                        (IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
                                                        COMMON SHARES ISSUED
                                                        --------------------              CAPITAL IN
                                            PREFERRED       NUMBER     PAR     TREASURY    EXCESS OF
                                              STOCK       OF SHARES   VALUE      STOCK     PAR VALUE
                                            ---------    ----------   -----    --------   ----------
<S>                                           <C>        <C>           <C>     <C>          <C>
Balance - March 31, 2003                      $3,310     51,981,431    $520    $(19,675)    $115,122
   Purchase of treasury stock                                                    (4,157)
   Exercise of stock options and warrants                   328,919       3                      281
   Stock based costs                                                                             511
   Tax benefit from exercise of employee
      stock options                                                                              390
   Comprehensive income (loss):
      Net loss
      Interest rate swap
      Recognition of realized loss
         in net loss
      Unrealized loss on securities

         Comprehensive income
                                              ------     ----------    ----    --------     --------
Balance - March 31, 2004                       3,310     52,310,350     523     (23,832)     116,304
   Exercise of stock options and warrants                   572,781       6                      107
   Stock based costs                                                                             377
   Comprehensive income:
      Net income
      Interest rate swap

         Comprehensive income
                                              ------     ----------    ----    --------     --------
Balance - March 31, 2005                       3,310     52,883,131     529     (23,832)     116,788
   Purchase of treasury stock                                                      (392)
   Exercise of stock options and warrants                    17,166                               51
   Stock based costs                                                                             246
   Comprehensive income:
      Net income
      Unrealized gain on securities

         Comprehensive income
                                              ------     ----------    ----    --------     --------
Balance - March 31, 2006                      $3,310     52,900,297    $529    $(24,224)    $117,085
                                              ======     ==========    ====    ========     ========

<CAPTION>
                                             ACCUMULATED
                                                OTHER                         TOTAL
                                            COMPREHENSIVE   ACCUMULATED   SHAREHOLDERS'
                                                LOSSES        DEFICIT        EQUITY
                                            -------------   -----------   -------------
<S>                                             <C>          <C>             <C>
Balance - March 31, 2003                        $(104)       $(47,936)       $51,237
   Purchase of treasury stock                                                 (4,157)
   Exercise of stock options and warrants                                        284
   Stock based costs                                                             511
   Tax benefit from exercise of employee
      stock options                                                              390
   Comprehensive income (loss):
      Net loss                                                 (1,074)        (1,074)
      Interest rate swap                          (16)                           (16)
      Recognition of realized loss
         in net loss                               42                             42
      Unrealized loss on securities                (5)                            (5)
                                                                             -------
         Comprehensive income                                                 (1,053)
                                                -----        --------        -------
Balance - March 31, 2004                          (83)        (49,010)        47,212
   Exercise of stock options and warrants                                        113
   Stock based costs                                                             377
   Comprehensive income:
      Net income                                                5,905          5,905
      Interest rate swap                           (4)                            (4)
                                                                             -------
         Comprehensive income                                                  5,901
                                                -----        --------        -------
Balance - March 31, 2005                          (87)        (43,105)        53,603
   Purchase of treasury stock                                                   (392)
   Exercise of stock options and warrants                                         51
   Stock based costs                                                             246
   Comprehensive income:
      Net income                                               16,630         16,630
      Unrealized gain on securities                17                             17
                                                                             -------
         Comprehensive income                                                 16,647
                                                -----        --------        -------
Balance - March 31, 2006                        $ (70)       $(26,475)       $70,155
                                                =====        ========        =======
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.


                                       45

<PAGE>

                      EMERSON RADIO CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE YEARS ENDED MARCH 31, 2006, 2005, AND 2004
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                  2006       2005       2004
                                                                --------   --------   --------
<S>                                                             <C>        <C>        <C>
CASH FLOWS FROM OPERATING ACTIVITIES:

   INCOME FROM CONTINUING OPERATIONS                            $  3,712   $  5,113   $     60
   Adjustments to reconcile income  to net cash
      provided (used) by operating activities:
      Depreciation and amortization                                1,076        775        643
      Non cash compensation                                          374        249        511
      Deferred tax expense (benefit)                                (519)     2,852      1,483
      Asset allowances, reserves, and other                          958        126     (1,695)
      Changes in assets and liabilities:
         Restricted cash                                           2,620     (2,670)    (1,250)
         Accounts receivable                                      (4,227)    (9,502)    (2,007)
         Other receivables                                           117        968        (47)
         Inventories                                               5,030     (7,885)    (4,398)
         Prepaid expenses and other current assets                  (394)    (1,378)     2,692
         Other assets                                               (674)        55        (95)
         Accounts payable and other current liabilities              621     (2,206)     5,222
         Income taxes payable                                       (101)      (266)      (243)
                                                                --------   --------   --------
Operating cash flow provided (used) by continuing operations       8,593    (13,769)       876
Operating cash flow provided (used) by discontinued operations       220      4,572       (559)
                                                                --------   --------   --------
Net cash provided (used) by operating activities                   8,813     (9,197)       317

CASH FLOW FROM INVESTING ACTIVITIES:
         Additions to property and equipment                        (687)    (2,018)        27
                                                                --------   --------   --------
         Investing Activities of continuing operations              (687)    (2,018)        27
         Investing Activities of discontinued operations,
          including proceeds from sale of SSG (net of cash
          at date of sale)                                        29,488       (580)    10,233
                                                                --------   --------   --------
Net cash provided (used) by investing activities                  28,801      2,598     10,260

CASH FLOWS FROM FINANCING ACTIVITIES:
   Short-term borrowings (repayments)                                 --         75    (11,556)
   Net borrowings (repayments) under line of credit facility     (11,203)     8,282      2,844
   Purchases of common stock                                        (392)        --     (4,157)
   Exercise of stock options and warrants                             51        107        284
   Long-term borrowings                                           34,682     61,661     44,458
   Repayments of long-term borrowings                            (46,050)   (57,730)   (36,834)
                                                                --------   --------   --------
Finance Activities of continuing operations                      (22,912)    12,395     (4,961)
Finance Activities of discontinued operations                       (143)    (4,011)   (10,660)
                                                                --------   --------   --------
Net cash provided (used) by financing activities                 (23,055)     8,384    (15,621)
Net increase (decrease) in cash and cash equivalents              14,559     (3,411)    (5,044)
Cash and cash equivalents at beginning of year                     2,958      6,369     11,413
                                                                --------   --------   --------
Cash and cash equivalents at end of year (including cash of
 discontinued operations of $0, $1,741 and $1,156,
 respectively)                                                  $ 17,517   $  2,958   $  6,369
                                                                ========   ========   ========
Supplemental disclosure of cash flow information:
   Cash paid for interest                                            841   $  1,128   $    733
                                                                ========   ========   ========
   Cash paid for income taxes                                   $    819   $    587   $  1,546
                                                                ========   ========   ========
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.


                                       46

<PAGE>

                      EMERSON RADIO CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2006

NOTE 1 -- SIGNIFICANT ACCOUNTING POLICIES:

BACKGROUND AND BASIS OF PRESENTATION

          The consolidated financial statements include the accounts of Emerson
Radio Corp. ("Emerson", consolidated - the "Company"), which operates in the
consumer electronics business. On July 1, 2005, Emerson sold its 53.2% ownership
in Sport Supply Group, Inc. ("SSG"), which was previously reported as the
Company's Sporting Goods Segment, to Collegiate Pacific Inc. ("Collegiate") for
net proceeds of $30.6 million, after disposition costs, which resulted in a net
gain of $12.6 million, or $0.47 per share, that was reported in the Company's
results for the quarter ended September 30, 2005. Such gain was net of total
estimated income taxes of $4.2 million. As a result of the sale, the financial
position and results of operations of SSG have been presented as discontinued
operation for all periods shown in the accompanying financial statements (see
Note 17), and the Company now operates in one segment, the consumer electronics
segment. The consumer electronics business includes the design, sourcing,
importing and marketing of a variety of consumer electronic products and the
licensing of the "Emerson(R)" trademark for a variety of products domestically
and internationally to certain licensees.

USE OF ESTIMATES

          In preparing financial statements in conformity with generally
accepted accounting principles, the Company is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial
statements and revenues and expenses during the reporting period. Actual results
could differ from those estimates.

CASH EQUIVALENTS

          Short-term investments with original maturities of three months or
less at the time of purchase are considered to be cash equivalents.

FAIR VALUES OF FINANCIAL INSTRUMENTS

          The carrying amounts for cash and cash equivalents, cash securing bank
loans, trade accounts receivable, accounts payable and accrued liabilities
approximate fair value due to short-term maturity of these financial
instruments. The carrying amounts of bank debt approximate their fair values due
to their variable rate interest features.


                                       47

<PAGE>

                      EMERSON RADIO CORP. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

INVESTMENTS

          The Company determines the appropriate classifications of securities
at the time of purchase and evaluates the continuing appropriateness of that
classification thereafter. The investments held by the Company of approximately
$3,000 and $175,000 at March 31, 2006 and 2005, respectively, were classified as
"available-for-sale securities," and are included in prepaid expenses and other
current assets. Realized gains and losses are reported separately as a component
of income, and unrealized gains and losses are reported separately as a
component of comprehensive income and accumulated other comprehensive income.
Declines in the market value of securities deemed to be other than temporary are
included in earnings.

CONCENTRATIONS OF CREDIT RISK

          Certain financial instruments potentially subject the Company to
concentrations of credit risk. Accounts receivable represent sales to retailers
and distributors of consumer electronics throughout the United States and
Canada. The Company periodically performs credit evaluations of its customers
but generally does not require collateral. The Company provides for any
anticipated credit losses in the financial statements based upon management's
estimates and ongoing reviews of recorded allowances. The accounts receivable
allowance for fiscal 2006, 2005 and 2004 consists of the following:

                                     2006     2005     2004
                                    ------   ------   ------
                                         (IN THOUSANDS)
Allowance for doubtful accounts     $  730   $  182   $  331
Chargeback reserves                    406      330      326
Allowance for sales returns          3,634    3,271    2,509
                                    ------   ------   ------
Total account receivable reserves   $4,770   $3,783   $3,166
                                    ======   ======   ======

PROPERTY AND EQUIPMENT

          Property and equipment are carried at cost, less accumulated
depreciation and amortization. Depreciation is being computed using the
straight-line method over the estimated useful lives. Leasehold improvements are
amortized on a straight-line basis over the shorter of the useful life of the
improvement or the term of the lease. The cost of maintenance and repairs is
charged to expense as incurred. Significant renewals and betterments are
capitalized and depreciated over the remaining estimated useful lives of the
related assets. At time of disposal, the cost and related accumulated
depreciation are removed from the Company's records and the difference between
net carrying value of the asset and the sale proceeds is recorded as a gain or
loss.


                                       48

<PAGE>

                      EMERSON RADIO CORP. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

Depreciation of property, plant and equipment is provided by the straight-line
method as follows:

     o    Buildings                                  Thirty years to forty years
     o    Machinery and Equipment                    Five years to ten years
     o    Computer Equipment and Software            Three years to ten years
     o    Furniture & Fixtures and Office Equipment  Five years to seven years

LONG-LIVED ASSETS

          The Company's long-lived assets include property and equipment,
trademark and other amortizable intangibles. At March 31, 2006, the Company had
approximately $2,500,000 of property and equipment, net of accumulated
depreciation, and approximately $442,000 of trademark and other amortizable
intangible assets, net of amortization, accounting for approximately 3% of the
Company's total assets. The Company reviews its long-lived assets for impairment
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable in accordance with Statement of Financial
Accounting Standards (SFAS) No. 144, "Accounting for the Impairment or Disposals
of Long-Lived Assets." Recoverability of assets held and used are measured by a
comparison of the carrying amount of an asset to estimated undiscounted pre-tax
future net cash flows. Future events could cause the Company to conclude that
impairment indicators exist and that long-lived assets may be impaired. Any
resulting impairment loss could have a material adverse impact on the Company's
financial condition and results of operations.

REVENUE RECOGNITION

          Revenues are recognized at the time title passes to the customer.
Under the Direct Import Program, title passes in the country of origin. Under
the Domestic Program, title passes primarily at the time of shipment. Estimates
for possible returns are based upon historical return rates and netted against
revenues. Returns are not permitted unless defective.

COST OF SALES

          Cost of sales includes actual product cost, change in inventory
reserves, duty, buying costs, the cost of transportation to the Company's
warehouses from its manufacturers, warehousing costs, and an allocation of
depreciation and amortization.

OTHER OPERATING COSTS AND EXPENSES

          Other operating costs and expenses include costs associated with
returned product received from retailers, the costs associated with the markdown
of returned inventory, and an allocation of depreciation and amortization.
Because we do not include other operating costs and expenses in cost of sales,
our gross margin may not be comparable to those of other distributors that may
include all costs related to the cost of product to their cost of sales and in
the calculation of gross margin.


                                       49

<PAGE>

                      EMERSON RADIO CORP. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

          Selling, general and administrative expenses include all operating
costs of the Company that are not directly related to the cost of procuring
product or costs not included in other operating costs and expenses.

ACQUISITION COSTS (RECOVERED) INCURRED

          Acquisition costs include all costs incurred by the Company in
unsuccessful acquisition attempts. These costs are charged to operations when
the potential acquisition is terminated.

FOREIGN CURRENCY

          The assets and liabilities of foreign subsidiaries have been
translated at current exchange rates, and related revenues and expenses have
been translated at average rates of exchange in effect during the year. Related
translation adjustments are reported as a separate component of shareholders'
equity. Losses and gains resulting from foreign currency transactions are
included in the results of operations.

          The Company does not enter into foreign currency exchange contracts to
hedge its exposures related to foreign currency fluctuations.

ADVERTISING EXPENSES

          Advertising expenses are charged to operations as incurred and are
included in selling, general and administrative expenses. Total advertising
expenses were approximately $1,108,000, $945,000, and $151,000 for fiscal 2006,
2005, and 2004, respectively.

COOPERATIVE ADVERTISING EXPENSES

          Cooperative advertising programs and other volume-based incentives are
accounted for on an accrual basis as a reduction in net revenue according to the
requirements of Emerging Issue Task Force 01-09, "Accounting for Consideration
Given By a Vendor to a Customer or a Reseller of the Vendor's Products" in the
period in which the related sales are recognized. Cooperative advertising
expenses were approximately $5,014,000, $4,446,000, and $2,671,000, for fiscal
2006, 2005, and 2004, respectively.

INTERNET EXPENSES

          The Company expenses the operating and development costs of its
Internet websites when incurred.


                                       50

<PAGE>

                      EMERSON RADIO CORP. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

INTEREST EXPENSES

          The Company expenses the interest expenses when incurred. The interest
expenses for fiscal 2006, 2005 and 2004 consist of:

                                            2006    2005    2004
                                           -----   ------   ----
                                               (In thousands)
Interest expense                           $ 841   $1,074   $561
Amortization of deferred financing costs     439      401    370
Interest income                             (495)    (129)   (48)
                                           -----   ------   ----
   Interest Expense, net                   $ 785   $1,346   $883
                                           =====   ======   ====

INCOME TAXES

          Deferred income taxes are provided for the tax effects of differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Deferred tax assets have
been recorded, net of an appropriate valuation allowance, to the extent
management believes it is more likely than not that such assets will be
realized. (See Note 7).

COMPREHENSIVE INCOME

          Comprehensive income or loss, as disclosed in the Consolidated
Statements of Changes in Shareholders' Equity, is net income or loss adjusted
for changes in the fair value of hedge instruments, unrealized gains or losses
on securities, and foreign currency translation adjustments.

NET EARNINGS PER COMMON SHARE

          Net earnings per share are based upon the weighted average number of
common and common equivalent shares outstanding. Outstanding stock options and
warrants are treated as common stock equivalents when dilution results from
their assumed exercise.


                                       51

<PAGE>

                      EMERSON RADIO CORP. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

STOCK- BASED COMPENSATION

          During the fourth quarter of fiscal 2005, the Company elected to
early-adopt Statement of Financial Accounting Standard No. 123R, "Share-Based
Payment" ("SFAS 123R") under the modified retrospective approach applied only to
prior interim periods in the current year. As a result, the Company has applied
SFAS 123R to new awards and to awards modified, repurchased, or cancelled after
April 1, 2004. Additionally, compensation cost for the portion of awards for
which the requisite service had not been rendered that were outstanding as of
April 1, 2004 are being recognized as the requisite service is rendered on or
after April 1, 2004 (generally over the remaining option vesting period). The
compensation cost for that portion of awards has been based on the grant-date
fair value of those awards as calculated for pro forma disclosures under
previously issued accounting standards. As a result of applying the provisions
of SFAS 123R, the Company has recorded compensation costs of $374,000 and
$249,000 during fiscal 2006 and fiscal 2005, respectively. Prior to the adoption
of SFAS 123R, the Company followed Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" ("APB 25") and related
Interpretations in accounting for its employee stock options. Under APB 25,
because the exercise price of the Company's employee stock options equaled or
exceeded the market price of the underlying stock on the date of grant, no
compensation expense was recognized. The Company adopted the disclosure-only
provisions under Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation" ("SFAS 123"). For the purposes of SFAS
123 pro forma disclosures, the estimated fair value of the options is amortized
to expense over the options' vesting periods. The Company's pro forma
information for fiscal 2004 is as follows:

                                                               2004
                                                             -------
Income (loss) from continuing operations (in thousands):
   As reported                                               $(3,735)
   Less: Stock-based compensation expense                        (35)
                                                             -------
   Pro forma (loss)                                          $(3,770)
                                                             =======
Income (loss) from continuing operations per common share:
   Basic - as reported                                       $  (.14)
   Basic - pro forma                                         $  (.14)
   Diluted - as reported                                     $  (.14)
   Diluted - pro forma                                       $  (.14)

                                                               2004
                                                             -------
Net income (loss) (in thousands):
   As reported                                               $(1,074)
   Less: Stock-based compensation expense                        (35)
                                                             -------
   Pro forma (loss)                                          $(1,109)
                                                             =======
Net income (loss) per common share:
   Basic - as reported                                       $  (.04)
   Basic - pro forma                                         $  (.04)
   Diluted - as reported                                     $  (.04)
   Diluted - pro forma                                       $  (.04)


                                       52

<PAGE>

                      EMERSON RADIO CORP. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

The fair value of Emerson's options for purposes of recording expenses under
SFAS 123R and pro forma disclosures under SFAS 123 were calculated using the
Black-Scholes option valuation model and the following assumptions for fiscal
2006 and 2005, respectively: (i) a risk free interest rate of 3.50% and 3.50%;
(ii) a weighted average expected life of 10 years and 5 years; (iii) an expected
volatility of 49% and 49%; and (iv) no dividend yield for both years. The
weighted average fair value of employee stock options granted for the Emerson
Plan in fiscal 2006 and 2005 was $1.58 and $1.56, respectively. No options were
granted by Emerson in fiscal 2004.

          The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options, which have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions including the expected stock price
volatility. Because Emerson's employee stock options have characteristics
significantly different from those of traded options, and because changes in the
subjective input assumptions can materially affect the fair value estimate, in
management's opinion the existing models do not necessarily provide a reliable
single measure of the fair value of its employee stock options.

DERIVATIVE FINANCIAL INSTRUMENTS

          The Company accounts for its interest rate protection agreement under
SFAS 133, "Accounting for Derivative Instruments and Hedging Activities". SFAS
133 requires all derivatives to be recorded as assets or liabilities and
measured at fair value. Gains or losses resulting from changes in the values of
derivatives are recognized immediately or deferred, depending on the use of the
derivative and whether or not it qualifies as a hedge. The Company uses a
derivative financial instrument to manage its interest rate risk associated with
fluctuations in interest rates on its debt. (See Note 15).

RECENT PRONOUNCEMENTS

     On December 16, 2004, the FASB issued Statement No. 153, "Exchanges of
     Nonmonetary Assets" , an amendment of APB Opinion No. 29 ("FAS No. 153").
     FAS No. 153 addresses the measurement of exchanges of nonmonetary assets
     and redefines the scope of transactions that should be measured based on
     the fair value of the assets exchanged. FAS No. 153 is effective for fiscal
     periods after June 15, 2005. The Company does not believe adoption of FAS
     No. 153 will have a material effect on its consolidated financial position,
     results of operations or cash flows.


                                       53

<PAGE>

                      EMERSON RADIO CORP. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

     In May 2005, the FASB issued FAS No. 154, "Accounting Changes and Error
     Corrections--a replacement of APB Opinion No. 20 and FASB Statement No. 3"
     . This Statement requires retrospective application to prior periods'
     financial statements of changes in accounting principle, unless it is
     impracticable to determine either the period-specific effects or the
     cumulative effect of the change. When it is impracticable to determine the
     period-specific effects of an accounting change on one or more individual
     prior periods presented, this Statement requires that the new accounting
     principle be applied to the balances of assets and liabilities as of the
     beginning of the earliest period for which retrospective application is
     practicable and that a corresponding adjustment be made to the opening
     balance of retained earnings (or other appropriate components of equity or
     net assets in the statement of financial position) for that period rather
     than being reported in an income statement. When it is impracticable to
     determine the cumulative effect of applying a change in accounting
     principle to all prior periods, this Statement requires that the new
     accounting principle be applied as if it were adopted prospectively from
     the earliest date practicable. This Statement is effective for fiscal years
     beginning after December 15, 2005. The Company does not believe adoption of
     FAS No. 154 will have a material effect on its consolidated financial
     position, results of operations or cash flows.

     In February 2006, the FASB issued FAS No. 155, "Accounting for Certain
     Hybrid Financial Instruments ("FAS No. 155")" , which amends FAS No. 133,
     "Accounting for Derivatives Instruments and Hedging Activities" and FAS No.
     140, "Accounting for Transfers and Servicing of Financial Assets and
     Extinguishment of Liabilities". FAS No.155 amends FAS No. 133 to narrow the
     scope exception for interest-only and principal-only strips on debt
     instruments to include only such strips representing rights to receive a
     specified portion of the contractual interest or principle cash flows. FAS
     No. 155 also amends FAS No.140 to allow qualifying special-purpose entities
     to hold a passive derivative financial instrument pertaining to beneficial
     interests that itself is a derivative instrument. FAS No. 155 is effective
     for fiscal years beginning after September 15, 2006. The Company is
     currently evaluating the impact 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

RECLASSIFICATIONS

          Certain reclassifications were made to conform prior year's financial
statements to the current presentation.


                                       54

<PAGE>

                      EMERSON RADIO CORP. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

NOTE 2 -- INVENTORIES:

          Inventories are stated at the lower of cost or market. Cost is
determined using the first-in, first-out method. As of March 31, 2006 and 2005,
inventories consisted of the following:

                            MARCH 31, 2006   MARCH 31, 2005
                            --------------   --------------
                                     (IN THOUSANDS)

Finished goods                 $34,416           $39,446
Less inventory allowances       (1,413)           (1,290)
                               -------           -------
                               $33,003           $38,156
                               =======           =======

NOTE 3 - RELATED PARTY TRANSACTIONS

          On December 5, 2005, ("Grande") purchased approximately 37%
(10,000,000 shares) of the Company's outstanding common stock from the Company's
Chairman and Chief Executive Officer, Geoffrey P. Jurick. In January 2006,
Emerson commenced leasing office space and procuring services in connection with
this office space rental in Hong Kong from Grande on terms which Emerson
management believes reflect arms length transactions. For fiscal year ended
March 31, 2006 Emerson incurred expenses with Grande for such fees approximating
$53,000 under these arrangements. Since the initial purchase of common stock
from Mr. Geoffrey P. Jurick, Grande has increased its holdings of Emerson Radio
Corp. common stock to approximately 46%.

NOTE 4 -- PROPERTY, PLANT, AND EQUIPMENT:

          As of March 31, 2006 and 2005, property, plant, and equipment is
comprised of the following:

                                                   2006      2005
                                                 -------   -------
                                                   (IN THOUSANDS)

Buildings                                        $ 1,175   $ 1,344
Computer Equipment & Software                      2,588     2,438
Furniture and fixtures                             1,578     1,537
Machinery and equipment                              951       626
Leasehold improvements                               698       358
                                                 -------   -------
                                                   6,990     6,303
Less accumulated depreciation and amortization    (4,490)   (4,011)
                                                 -------   -------
                                                 $ 2,500   $ 2,292
                                                 =======   =======


                                       55

<PAGE>

                      EMERSON RADIO CORP. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

          Depreciation and amortization of property, plant, and equipment from
continuing operations amounted to $630,000, $321,000, and $393,000 for the years
ended March 31, 2006, 2005 and 2004, respectively.

NOTE 5 - GOODWILL AND OTHER INTANGIBLE ASSETS

          In June 2001, the Financial Accounting Standards Board issued
Statement No. 142, "Goodwill and Other Intangible Assets" ("SFAS 142"). SFAS 142
requires that goodwill not be amortized but instead be tested for impairment at
least annually by reporting unit. The Company adopted SFAS 142 effective April
1, 2002 and ceased amortizing goodwill on that date.

          Goodwill was required to be tested for impairment in a transitional
test upon adoption of SFAS 142 and then at least annually by reporting unit.
Goodwill impairment testing must also be performed more frequently if events or
other changes in circumstances indicate that goodwill might be impaired. Under
the provisions of SFAS 142, a two step process is used to evaluate goodwill
impairment. Under step one of the evaluation process, the carrying value of a
reporting unit is compared to its fair value to determine if potential goodwill
impairment exists. If potential goodwill impairment is identified during step
one, then the amount of goodwill impairment, if any, is measured using a
hypothetical purchase price allocation approach under step two of the evaluation
process.

          Other intangible assets as of March 31, 2006 and related amortization
expense for the year then ended, consist of the amounts shown below (in
thousands). Trademarks relate to costs incurred in connection with the licensing
agreements for the use of certain trademarks and service marks in conjunction
with the sale of our products. The cost of intangible assets and related
accumulated amortization are removed from the Company's accounts during the year
in which they become fully amortized.


                                       56

<PAGE>

                      EMERSON RADIO CORP. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

<TABLE>
<CAPTION>
                                                                                              WEIGHTED AVERAGE
FISCAL YEAR ENDED MARCH 31,     GROSS CARRYING   AMORTIZATION    ACCUMULATED   AMORTIZATION     AMORTIZATION
2006                                AMOUNT          EXPENSE     AMORTIZATION      PERIOD           PERIOD
-----------------------------   --------------   ------------   ------------   ------------   ----------------
<S>                                 <C>              <C>           <C>          <C>               <C>
Amortizable Intangible Assets
   Trademarks                       $4,923           $159          $4,481       10-40 years       17 years
</TABLE>

<TABLE>
<CAPTION>
                                                                                              WEIGHTED AVERAGE
FISCAL YEAR ENDED MARCH 31,     GROSS CARRYING   AMORTIZATION    ACCUMULATED   AMORTIZATION     AMORTIZATION
2005                                AMOUNT          EXPENSE     AMORTIZATION      PERIOD           PERIOD
-----------------------------   --------------   ------------   ------------   ------------   ----------------
<S>                                 <C>              <C>           <C>          <C>               <C>
Amortizable Intangible Assets
   Trademarks                       $4,923           $144          $4,322       10-40 years       17 years
</TABLE>

          Amortization expense for the year ended March 31, 2004 was $141,000.

          As of March 31, 2006, estimated amortization expense of other
intangible assets for each of the next five years, and thereafter, is as follows
(in thousands):

2007         $137
2008           24
2009           24
2010           24
2011           24
Thereafter    209
             ----
             $442
             ====


                                       57

<PAGE>

                      EMERSON RADIO CORP. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

NOTE 6 -- BORROWINGS:

SHORT-TERM BORROWINGS

          As of March 31, 2006 and 2005, short-term borrowings consisted of
amounts outstanding under the Company's foreign bank facilities held by its
foreign subsidiaries. Availability under this facility totals $9.5 million and
is maintained by the pledge of bank deposits of approximately $3.0 million and
$5.6 million as of March 31, 2006 and March 31, 2005, respectively. These
compensating amounts are legally from use for general business purposes and are
classified as restricted cash in the current asset section of the balance sheet.

                     2006      2005
                    ------   -------
                     (IN THOUSANDS)

Foreign bank loan   $1,841   $13,044

LONG -TERM BORROWINGS

          As of March 31, 2006 and 2005, long-term borrowings consisted of the
following:

                                      2006     2005
                                      ----   -------
                                      (IN THOUSANDS)

Emerson revolver                      $ --   $11,300
Mortgage payable                       641       715
Equipment notes and other               19        30
                                      ----   -------
                                       660    12,045
Less current maturities                 85        85
                                      ----   -------
   Long-term debt and notes payable   $575   $11,960
                                      ====   =======

          Emerson Credit Facility - On December 23, 2005, the Company entered
into a $45.0 million Revolving Credit Agreement with Wachovia Bank, National
Association. The loan agreement provides for a $45.0 million revolving line of
credit which replaced the Company's prior $35.0 million credit facility under
substantially the same terms and conditions. The $45.0 million revolving line of
credit facility provides for revolving loans subject to individual maximums
which, in the aggregate, are not to exceed the lesser of $45.0 million or a
"Borrowing Base" as defined in the loan agreement. The Borrowing Base amount is
established by specified percentages of eligible accounts receivables and
inventories and bears interest ranging from Prime (0.00% as of March 31, 2006)
plus 0.00% to 0.50% or, at the Company's election, LIBOR (1.25% as of March 31,
2005) plus 1.25% to 2.25% depending on excess availability. Pursuant to the
Revolving Credit Agreement, the Company is restricted from, among other things,
paying certain cash dividends, and entering into certain transactions without
the lender's prior consent and is subject to certain leverage financial
covenants. Amounts outstanding under the loan agreement will be secured by
substantially all of the Company's tangible assets.


                                       58

<PAGE>

                      EMERSON RADIO CORP. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

          As of March 31, 2006, there were approximately $4.3 million of letters
of credit outstanding under this facility. At March 31, 2006 we were in
compliance with the covenants contained in the loan agreement.

          As of March 31, 2006, the carrying value of this credit facility
approximated fair value.

          Maturities of long-term borrowings as of March 31, 2006, by fiscal
year and in the aggregate are as follows (in thousands):

2007                         $ 85
2008                           82
2009                           74
2010                           74
2011                           74
Thereafter                    271
                             ----
   Total                      660
Less current portion           85
                             ----
   Total long term portion   $575
                             ====

NOTE 7 - INCOME TAXES:

                              2006     2005     2004
                              ----    ------   ------
                                  (IN THOUSANDS)
Current:
   Federal                   $  90    $   --   $   --
   Foreign, state and other    100       131      667
Deferred:
   Federal                    (389)    2,637    1,843
   Foreign, state and other   (129)      215     (360)
                             -----    ------   ------
                             $(328)   $2,983   $2,150
                             =====    ======   ======

          The Company files a consolidated federal return and certain state and
local income tax returns.

          The difference between the effective rate reflected in the provision
for income taxes and the amounts determined by applying the statutory U.S. rate
of 34% to income before income taxes from continuing operations for the years
ended March 31, 2006, 2005, and 2004 are analyzed below:


                                       59

<PAGE>

                      EMERSON RADIO CORP. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

                                 2006    2005     2004
                                 ----   ------   ------
                                     (IN THOUSANDS)
Statutory provision (recovery) $ 1,285  $2,603   $1,727
Foreign income taxes                --    (223)     434
State taxes                        249     382      662
Other, net                      (1,862)    221     (673)
                               -------  ------   ------
Total income tax (benefit)     $  (328) $2,983   $2,150
                               =======  ======   ======

          As of March 31, 2006 and 2005, the significant components of the
Company's deferred tax assets and liabilities were as follows:

                                      2006     2005
                                      ----   -------
                                      (IN THOUSANDS)
Deferred tax assets:
   Accounts receivable reserves    $ 2,540    $ 2,279
   Inventory reserves                1,309      1,028
   Net operating loss carryforwards  6,724     11,149
   Other                               637        455
                                   -------    -------
      Total deferred tax assets     11,210     14,911
   Valuation allowance                  --        --
                                   -------   -------
      Net deferred tax assets       11,210    14,911
Deferred tax liabilities:
   Property, plant and equipment        --        --
                                   -------   -------
      Net deferred taxes           $11,210   $14,911
                                   =======   =======

          Total deferred tax at March 31, 2005, include the tax benefit on $90
million of net operating loss carryforwards as of March 31, 2005, and are
subject to limitations under IRC section 382 and expire in the years 2006
through 2019. The tax benefits related to these operating loss carryforwards and
future deductible temporary differences are recorded to the extent management
believes it is more likely than not that such benefits will be realized.

          Income (loss) of foreign subsidiaries before taxes was $230,000,
$526,000, and $(2,872,000) for the years ended March 31, 2006, 2005, and 2004,
respectively.


                                       60

<PAGE>

                      EMERSON RADIO CORP. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

          No provision was made for U.S. or additional foreign taxes on
undistributed earnings of foreign subsidiaries. Such earnings have been and will
be reinvested but could become subject to additional tax if they were remitted
as dividends, or were loaned to the Company or an U.S. affiliate, or if the
Company should sell its stock in the foreign subsidiaries. It is not practible
to determine the amount of additional tax, if any, that might be payable on the
undistributed foreign earnings.

NOTE 8 -- COMMITMENTS AND CONTINGENCIES:

LEASES:

          The Company leases warehouse and office space with annual commitments
as follows (in thousands):

FISCAL YEARS   AMOUNT
------------   ------
    2007       $1,643
    2008        1,446
    2009        1,444
    2010        1,332
    2011          742
 Thereafter        --
               ------
    Total      $6,607
               ======

          Rent expense from continuing operations, which includes month-to-month
leases, aggregated $1,283,000, $1,241,000, and $1,249,000 for fiscal 2006, 2005,
and 2004, respectively.

LETTERS OF CREDIT:

          At March 31, 2006 there were $4.0 million of letters of credit
outstanding under the Company's Credit Facilities (see Note 6). The Company's
foreign subsidiaries also currently maintain various credit facilities
aggregating $18.7 million with foreign banks subject to annual review consisting
of the following: (i) two letter of credit facilities totaling $11.2 and (ii)
two back-to-back credit facilities totaling $7.5 million. These facilities are
used for inventory purchases and require the Company to pledge approximately
$3.0 million of cash for such availability and for the benefit of its' foreign
subsidiaries, who establish back-to-back letters of credit with the Company's
customers. The $3.0 million is legally restricted from use for general business
purposes and is classified as restricted cash in the current asset section of
the balance sheet. At March 31, 2006, there were $9.2 million of letters of
credit outstanding under these credit facilities. These credit facilities
require net worth covenants of the foreign subsidiaries, for which they were in
compliance at March 31, 2006.


                                       61

<PAGE>

                      EMERSON RADIO CORP. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

CAPITAL EXPENDITURE AND OTHER COMMITMENTS:

          As of March 31, 2006, there were no material capital expenditure
commitments and there were no substantial commitments for purchase orders
outside the normal purchase orders used to secure product.

EMPLOYEE BENEFIT PLAN:

          The Company currently sponsors defined contribution 401(k) retirement
plans which are subject to the provisions of the Employee Retirement Income
Security Act (ERISA). The Company matches a percentage of the participants'
contributions up to a specified amount. These contributions to the plan for
fiscal 2006, 2005 and 2004 were $93,000, $94,000, and $103,000, respectively and
were charged to operations for the periods presented.

SHAREHOLDER TRANSACTION:

          On December 5, 2005, the Company announced that its Chairman and Chief
Executive Officer, Geoffrey P. Jurick, had completed the sale of 10 million of
his Emerson common shares to Grande, a Hong Kong based group of companies
engaged in a number of businesses including the manufacture, sale and
distribution of audio, video and other consumer electronics and video products.
The purchase price was $5.20 per share and was paid in a combination of cash and
a convertible debenture of Grande. As a result of the sale, Grande became the
owner of approximately 37% of the Company's outstanding shares. Since the
initial purchase of common stock from Mr. Geoffrey P. Jurick, Grande has
increased its holdings of the Company's common stock to approximately 46%.

NOTE 9 -- STOCK BASED COMPENSATION:

          In July 1994, the Company adopted a Stock Compensation Program
("Program"). The maximum aggregate number of shares of common stock available
pursuant to the Program is 2,000,000 shares and the Program is comprised of four
parts--the Incentive Stock Option Plan, the Supplemental Stock Option Plan, the
Stock Appreciation Rights Plan and the Stock Bonus Plan. In 2004 the Company
adopted the 2004 Employee Stock Options Plan. The provisions for exercise price,
term and vesting schedule are, for the most part, the same as the previous
Incentive Stock Option Plan.


                                       62

<PAGE>

                      EMERSON RADIO CORP. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

A summary of transactions during the last three years is as follows:

                                NUMBER OF   WEIGHTED AVERAGE
                                 OPTIONS     EXERCISE PRICE
                                ---------   ----------------
Outstanding - March 31, 2003    1,059,603         $1.07
   Exercised                     (277,269)         1.00
                                ---------         -----
Outstanding - March 31, 2004      782,334          1.09
   Granted                        425,000          3.10
   Exercised                     (700,000)         1.10
                                ---------         -----
Outstanding - March 31, 2005      507,334          2.60
                                ---------         -----
   Granted                         50,000          2.62
   Exercised                         (500)         1.50
   Cancelled                     (154,000)         2.27
                                ---------         -----
Outstanding - March 31, 2006      402,834         $2.93
                                =========         =====
Exercisable at March 31, 2006     136,166         $2.71
                                =========         =====

          The following table provides additional information as to the options
outstanding under the Stock Compensation Program and the 2004 Employee Stock
Option Plan as of March 31, 2006:

<TABLE>
<CAPTION>
                             OPTIONS OUTSTANDING                   OPTIONS EXERCISABLE
                  -----------------------------------------   ----------------------------
                                    WEIGHTED       WEIGHTED
                                    AVERAGE         AVERAGE                    WEIGHTED
RANGE OF             AMOUNT        REMAINING       EXERCISE     AMOUNT         AVERAGE
EXERCISE PRICES   OUTSTANDING   CONTRACTUAL LIFE     PRICE    EXERCISABLE   EXERCISE PRICE
---------------   -----------   ----------------   --------   -----------   --------------
<S>                 <C>                <C>           <C>        <C>              <C>
$1.00                27,334            4.3           $1.00       27,334          $1.00
$1.50                   500            5.0            1.50          500           1.50
$2.62                50,000            9.2            2.62           --             --
$2.96 - $2.97       125,000            8.6            2.96       41,666           2.96
$3.26               200,000            8.6            3.26       66,666           3.26
                    -------            ---           -----      -------          -----
                    402,834            8.3           $2.93      136,166          $2.71
                    =======            ===           =====      =======          =====
</TABLE>


                                       63

<PAGE>

                      EMERSON RADIO CORP. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

          Subject to the terms set forth in each option agreement, generally,
the term of each option is ten years, except for incentive stock options issued
to any person who owns more than 10% of the voting power of all classes of
capital stock, for which the term is five years. Unless otherwise provided,
options may not be exercised during the first year after the date of the grant.
Thereafter, each option becomes exercisable on a pro rata basis on each of the
first through third anniversaries of the date of the grant. The exercise price
of options granted must be equal to or greater than the fair value of the shares
on the date of the grant, except that the option price with respect to an option
granted to any person who owns more than 10% of the voting power of all classes
of capital stock shall not be less than 110% of the fair value of the shares on
the date of the grant. As of March 31, 2006, there were a total of 402,834
options outstanding with exercise prices ranging from $1.00 per share to $3.26
per share. As of March 31, 2006, 27,834 of the total options outstanding were
fully vested with 325,000 options vesting through October 2007 and 50,000
options vesting through June 2008. At March 31, 2006, 2005 and 2004, the
weighted average exercise price of exercisable options under the Program was
$2.71, $1.01 and $1.09, respectively.

          In October 1994, the Company's Board of Directors adopted, and the
stockholders subsequently approved, the 1994 Non-Employee Director Stock Option
Plan. The maximum number of shares of Common Stock available under such plan was
300,000 shares. In 2004, the Company's Board of Directors, and the stockholders
subsequently approved the 2004 Non-Employee Director Stock Option Plan, the
provisions for exercise price, term and vesting schedule being, for the most
part, the same as the 1994 Non-Employee Director Stock Option Plan. A summary of
transactions under the plan for the three years ended March 31, 2006 is as
follows:

                                NUMBER OF   WEIGHTED AVERAGE
                                 OPTIONS     EXERCISE PRICE
                                ---------   ----------------
Outstanding: March 31, 2003      133,333          $1.00
   Exercised                      (8,333)          1.00
                                --------          -----
Outstanding: March 31, 2004      125,000           1.00
   Granted                       125,000           3.00
   Exercised                    (125,000)          1.00
                                --------          -----
Outstanding - March 31, 2005     125,000           3.00
   Granted                       175,000           3.23
   Exercised                     (16,666)          3.00
                                --------          -----
Outstanding - March 31, 2006     283,334          $3.14
                                ========          =====
Exercisable at March 31, 2006     25,000          $3.00
                                ========          =====


                                       64

<PAGE>

                      EMERSON RADIO CORP. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

       The following table provides additional information as to the options
outstanding under the Non-Employee Director Stock Option Plan as of March 31,
2006:

<TABLE>
<CAPTION>
                                      OPTIONS OUTSTANDING                   OPTIONS EXERCISABLE
                           -----------------------------------------   ----------------------------
                                             WEIGHTED       WEIGHTED
                                             AVERAGE         AVERAGE                    WEIGHTED
                             AMOUNT         REMAINING       EXERCISE      AMOUNT         AVERAGE
RANGE OF EXERCISE PRICES   OUTSTANDING   CONTRACTUAL LIFE     PRICE    EXERCISABLE   EXERCISE PRICE
------------------------   -----------   ----------------   --------   -----------   --------------
<S>                          <C>                <C>           <C>         <C>             <C>
$3.00                         108,334           8.4           $3.00       25,000          $3.00
$3.07                          25,000           9.8            3.07           --             --
$3.23                          75,000           9.7            3.23           --             --
$3.28                          75,000           9.9            3.28           --             --
                             --------           ---           -----       ------          -----
                              283,334           9.3           $3.14       25,000          $3.00
                             ========           ===           =====       ======          =====
</TABLE>

          All options granted under the Non-Employee Director Stock Option Plan
during the fiscal years ending March 31, 2003, 2004 and 2005 were at exercise
prices equal to or greater than the fair value of the Company's stock on the
date of the grant, which was accounted for by using APB25 for fiscal 2003 and
2004. As of March 31, 2006, there were a total of 283,334 options outstanding
with exercise prices ranging from $3.00 per share to $3.28 per share. As of
March 31, 2006, none of the options outstanding were fully vested with 108,334,
75,000, 25,000 and 75,000 options vesting through August 2007, December 2008,
January 2009 and March 2009, respectively. At March 31, 2006, 2005 and 2004, the
weighted average exercise price of exercisable options under the Non-Employee
Director Stock Option Plan was $3.00, $0.00 and $1.00, respectively.

NOTE 10 -- SHAREHOLDERS' EQUITY:

COMMON SHARES:

          Authorized common shares consists of 75,000,000 shares of common
shares, par value $0.01 per share, of which, 27,064,332 and 27,203,164 shares
were issued and outstanding as of March 31, 2006 and 2005, respectively. Shares
held in treasury at March 31, 2006 and 2005 were 25,835,965 and 25,679,967,
respectively.


                                       65

<PAGE>

                      EMERSON RADIO CORP. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

COMMON STOCK REPURCHASE PROGRAM:

          In January 2000, September 2001 and September 2003, the Company's
Board authorized share repurchase programs for 5,000,000 shares, 1,000,000
shares, and 2,000,000 shares, respectively. In fiscal 2006, the Company
repurchased 155,998 shares for $392,109, pursuant to the programs. In fiscal
2005, no shares were repurchased under these programs. In fiscal 2004, the
Company repurchased 1,111,625 shares for $4,157,000, pursuant to the programs.
The shares were repurchased in open market transactions within guidelines set
forth by Rule 10b-18 of the Securities and Exchange Act of 1934 and were funded
by working capital. As of March 31, 2006, 732,377 shares remain available for
repurchase under the program established in September 2003.

SERIES A PREFERRED STOCK:

          The Company has issued and outstanding 3,677 shares of Series A
Preferred Stock, ("Preferred Stock") $.01 par value, with a face value of
$3,677,000, which had no market value as of March 31, 2006. Effective March 31,
2002, the previously existing conversion feature of the Preferred Stock expired.
Effective March 31, 2001, dividends are no longer accrued on these shares.

WARRANTS:

          On August 1, 2002, in connection with a consulting agreement, the
Company granted 200,000 warrants with an exercise price of $2.20, of which
100,000 warrants vested after six months and 100,000 warrants vested one year
from date of grant. The warrants were valued using the Black-Scholes option
valuation model and were charged to earnings over the related service period of
the consulting agreement with approximately $420,000 and $49,000 being charged
to operations for fiscal 2004 and 2003, respectively. During February 2003,
100,000 of these warrants were exercised, and accordingly the Company issued
100,000 shares of common stock. In November 2003, the remaining 100,000 of these
warrants were exercised under a cashless exercise and 45,544 shares of common
stock were issued.

          On October 7, 2003, in connection with a consulting arrangement, the
Company granted 50,000 warrants with an exercise price of $5.00 per share. These
warrants were valued using the Black-Scholes option valuation model, which
resulted in $90,500 being charged to earnings during fiscal 2004. As of March
31, 2006, these warrants had not been exercised.

          On August 1, 2004, in connection with a consulting agreement, the
Company granted 50,000 warrants with immediate vesting and an exercise price of
$3.00 per share with an expiration date of August 2009. These warrants were
valued using the Black-Scholes valuation model, which resulted in $88,500 being
charged to earnings during the fiscal year ended March 31, 2005. As of March 31,
2006, these warrants had not been exercised.


                                       66

<PAGE>

                      EMERSON RADIO CORP. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

NOTE 11 -- NET EARNINGS PER SHARE:

          The following table sets forth the computation of basic and diluted
earnings per share for the years ended March 31, 2006, March 31, 2005, and March
31, 2004:

                     (IN THOUSANDS, EXCEPT PER SHARE AMOUNT)

                                                       2006      2005      2004
                                                     -------   -------   -------
NUMERATOR:
Net earnings from continuing operations for
   basic and diluted earnings per share              $ 3,712   $ 5,113   $    60
                                                     =======   =======   =======
DENOMINATOR:
Denominator for basic earnings per share -
   weighted average shares                            27,079    26,991    27,227
Effect of dilutive securities:
   Options and warrants                                   93       273        --
                                                     -------   -------   -------
Denominator for diluted earnings per share -
   weighted average shares and assumed conversions    27,172    27,264    27,227
                                                     =======   =======   =======
EARNINGS FROM CONTINUING OPERATIONS
   Basic and diluted earnings per share              $   .13   $   .19   $   .00
                                                     =======   =======   =======

          For fiscal 2004, loss per share does not include potentially dilutive
securities assumed outstanding since the effects of such conversion would be
anti-dilutive. For the year ended March 31, 2005, 50,000 shares attributable to
outstanding stock warrants were excluded from the calculation of diluted
earnings per share because the exercise price of the stock warrants exceeded the
average price of the common shares, and therefore their inclusion would have
been antidilutive. For the year ended March 31, 2006, 350,000 shares
attributable to outstanding stock options and 50,000 shares attributable to
outstanding stock warrants were excluded from the calculation of diluted
earnings per share because the exercise price of the options and warrants
exceeded the average price of the common shares, and therefore their inclusion
would have been antidilutive.


                                       67

<PAGE>

                      EMERSON RADIO CORP. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

NOTE 12 -- LICENSE AGREEMENTS:

          The Company has several license agreements that allow licensees to use
its trademarks for the manufacture and/or the sale of consumer electronics and
other products and are referred to as outbound licenses. These license
agreements (i) allow the licensee to use the Company's trademarks for a specific
product category, or for sale within specific geographic areas, or for sales to
a specific customer base, or any combination of the above, or any other category
that might be defined in the license agreement, (ii) may be subject to renewal
at the initial expiration of the agreements and are governed by the laws of the
United States and (iii) have expiration dates ranging from March 2006 through
September 2010. License revenues recognized and earned in fiscal 2006, 2005, and
2004, including the amounts described in the next paragraph, were approximately
$7,674,000, $10,804,000, and $10,973,000, respectively. The Company records
licensing revenues as earned over the term of the related agreements.

          Effective January 1, 2001, the Company entered into a license
agreement ("Video License Agreement") with Funai Corporation, Inc. ("Funai"),
which was subsequently amended, with the latest amendment extending the Video
License Agreement to December 31, 2010. The Video License Agreement provides
that Funai will manufacture, market, sell and distribute specified products
bearing the "Emerson(R)" trademark to customers in the U.S., and Canadian
markets. Under the terms of the agreement, Emerson will receive non-refundable
minimum annual royalty payments of $4.3 million each calendar year and a license
fee on sales of product subject to the Video License Agreement in excess of the
minimum annual royalties. During fiscal 2006, 2005 and 2004, revenues of
$5,320,000, $8,555,000 and $8,759,000 respectively, were recorded under this
agreement.

NOTE 13 -- LEGAL PROCEEDINGS:

Putative Class Actions

On December 15, 2005, Jeffrey S. Abraham, as Trustee of the Law Offices of
Jeffrey S. Abraham Money Purchase Plan dated December 31, 1999 F/B/O Jeffrey S.
Abraham ("Plaintiff"), on behalf of himself and all common shareholders of Sport
Supply Group, Inc. ("Sport Supply"), filed a putative class action and
derivative complaint against Emerson, Geoffrey P. Jurick, Arthur J. Coerver,
Harvey Rothenberg, Collegiate Pacific, Inc. and Michael J. Blumenfeld and
nominal defendant Sport Supply in the Court of Chancery of the State of
Delaware, Civil Action No. 1845-N.


                                       68

<PAGE>

                      EMERSON RADIO CORP. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

The complaint asserted two causes of action: The first cause of action was a
purported class claim against Emerson and Mr. Jurick for breach of fiduciary
duty to the minority shareholders of Sport Supply by selling Emerson's
controlling stake in Sport Supply to Collegiate at a premium, allegedly knowing
that Collegiate intended to use for its own benefit the proprietary assets of
Sport Supply. The second cause of action asserts a purported derivative claim
against Collegiate and Messrs. Coerver and Rothenberg for alleged breaches of
fiduciary duty and unjust enrichment. Plaintiff alleges that in connection with
the purchase of Emerson's controlling block of Sport Supply's stock, Collegiate
and Messrs. Coerver and Rothenberg breached their fiduciary duties of loyalty
and good faith to Sport Supply's shareholders by transferring assets and
technology to Collegiate without compensation to Sport Supply's shareholders.
Plaintiff further alleges that Collegiate was unjustly enriched through the use
and transfer of Sport Supply's assets.

Emerson and Mr. Jurick moved to dismiss the first cause of action, and oral
argument on their motion was conducted on June 23, 2006. On July 5, 2006, the
court granted Emerson and Mr. Jurick's motion and the first cause of action was
dismissed. Based on the expectation that Emerson and Mr. Jurick would prevail in
their defense, no loss was accrued in this matter as of March 31, 2006.

For more than two-and-a-half years, Emerson has been defending a consolidated
putative class action captioned In Re Emerson Radio Corp. Securities Litigation,
03cv4201 (JLL) (the "Consolidated Action") filed in the United States District
Court for the District of New Jersey. The class action complaint asserted claims
against Emerson and Messrs. Geoffrey Jurick, Kenneth Corby, John Raab and Jerome
Farnum (the "Individual Defendants") on behalf of purchasers of Emerson's
publicly traded securities between January 29, 2003 and August 12, 2003 (the
"Class Period"). By a December 19, 2005 Opinion and Order, the Court granted the
defendants' motion to dismiss the complaint without prejudice and granted the
plaintiffs leave to amend their pleading consistent with the rulings in the
Court's Opinion and Order.

On March 3, 2006, one of the lead plaintiffs, Clark Niss, moved to withdraw as a
lead plaintiff, which motion was granted on March 29, 2006. On April 13, 2006,
the court entered a Stipulation and Order dismissing all claims asserted in the
class action complaint with prejudice. On April 26, 2006, the remaining lead
plaintiff, Jeffrey Hoffman, filed a Notice of Appeal, taking an appeal of the
court's December 19, 2005 dismissal order to the United States Court of Appeals
for the Third Circuit. Emerson and the Individual Defendants continue to deny
all allegations and intend to defend the appeal vigorously.

Generally, the complaint had alleged that Emerson and the Individual Defendants
violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and
Rule 10b-5 promulgated thereunder, by (i) issuing certain positive statements
during the Class Period regarding our ability to replace lost revenues
attributable to the Hello Kitty(R) license and (ii) omitting to disclose that
Emerson suffered allegedly soured relationships with its largest retail
customers. Based on the expectation that the defendants will ultimately prevail
in their defense, no loss has been accrued in this matter as of March 31, 2006.


                                       69

<PAGE>

                      EMERSON RADIO CORP. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

NOTE 14 -- BUSINESS SEGMENT INFORMATION AND MAJOR CUSTOMERS:

          Operations for the Company are summarized below by geographic area (in
thousands):

                                        YEAR ENDED MARCH 31, 2006
                                    ---------------------------------
                                      U.S.     FOREIGN   CONSOLIDATED
                                    --------   -------   ------------
Sales to external customers         $224,983   $ 8,860     $233,843
                                    ========   =======     ========
Income (loss) before income taxes   $  3,779   $  (395)    $  3,384
                                    ========   =======     ========
Identifiable assets                 $ 80,072   $12,430     $ 92,502
                                    ========   =======     ========

                                        YEAR ENDED MARCH 31, 2005
                                    ---------------------------------
                                      U.S.     FOREIGN   CONSOLIDATED
                                    --------   -------   ------------
Sales to external customers         $226,551   $ 4,232     $230,783
                                    ========   =======     ========
Income (loss) before income taxes   $  8,317   $  (221)    $  8,096
                                    ========   =======     ========
Identifiable assets                 $ 74,779   $11,832     $ 86,611
                                    ========   =======     ========

                                        YEAR ENDED MARCH 31, 2004
                                    ---------------------------------
                                      U.S.     FOREIGN   CONSOLIDATED
                                    --------   -------   ------------
Sales to external customers         $172,765   $ 7,187     $179,952
                                    ========   =======     ========
Income (loss) before income taxes   $  2,314   $  (104)    $  2,210
                                    ========   =======     ========
Identifiable assets                 $ 62,288   $ 9,688     $ 71,976
                                    ========   =======     ========

          Identifiable assets are those assets used in operations in each
geographic area. In addition to operating assets, at March 31, 2006, 2005, and
2004, there were non-operating assets of $8,714,000, $8,798,000 and $11,437,000,
respectively, located in foreign countries.


                                       70

<PAGE>

                      EMERSON RADIO CORP. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

The Company's net sales to one customer aggregated approximately 37%, 41% and
25% of net revenues for the years ended March 31, 2006, 2005, and 2004,
respectively. The Company's net sales to another customer aggregated 17%, 16%,
and 15% for the years ended March 31, 2006, 2005, and 2004, respectively. The
Company's net sales to a third customer aggregated 10%, 9%, and 4% for the years
ended March 31, 2006, 2005 and 2004. The trade accounts receivable balance for
these three customers, net of specific reserves, approximated 55%, 7% and 7% of
consolidated trade accounts receivable as of March 31, 2006, respectively, and
approximated 50%, less than 1% and 9% of consolidated trade accounts receivable
as of March 31, 2005, respectively. The Company has policies and procedures to
limit its credit risk related to this and other customers.

NOTE 16 -- QUARTERLY INFORMATION (UNAUDITED):

          The following table sets forth certain information regarding the
Company's results of operations for each full quarter within the fiscal years
ended March 31, 2006 and March 31, 2005, with amounts in thousands, except for
per share data. Due to rounding, quarterly amounts may not fully sum to yearly
amounts. (In thousands, except per share data).

<TABLE>
<CAPTION>
                                                        FISCAL 2006                        FISCAL 2005
                                            ----------------------------------  ----------------------------------
CONSOLIDATED STATEMENT OF OPERATIONS        1ST QRT  2ND QRT  3RD QRT  4TH QRT  1ST QRT  2ND QRT  3RD QRT  4TH QRT
------------------------------------------  -------  -------  -------  -------  -------  -------  -------  -------
<S>                                         <C>      <C>      <C>      <C>      <C>      <C>      <C>      <C>
Net revenues                                $38,647  $77,576  $76,514  $41,106  $47,826  $59,880  $80,345  $42,732
Operating income (loss)                         613    2,356    2,458   (1,258)   2,355    3,088    4,951     (952)
Income (loss) before income taxes               206    2,157    2,088   (1,067)   2,120    2,759    4,551   (1,334)
Income (loss) from continuing operations        144    1,274    1,395      899    1,174    1,747    2,919     (727)
Income (loss) from discontinued operations      272   12,646       --       --      631      415   (1,014)     760
                                            -------  -------  -------  -------  -------  -------  -------  -------
Net income (loss)                           $   416  $13,920  $ 1,395  $   899  $ 1,805  $ 2,162  $ 1,905  $    33
                                            =======  =======  =======  =======  =======  =======  =======  =======
Basic net income (loss) per share :
Continuing operations                       $   .01  $   .05  $   .05  $   .02 $   .05  $   .06  $   .11  $  (.03)
Discontinued operations                         .01      .47       --       --      .02      .02     (.04)     .03
                                            -------  -------  -------  -------  -------  -------  -------  -------
                                            $   .02  $   .52  $   .05  $   .02 $   .07  $   .08  $   .07  $   0.0
                                            =======  =======  =======  =======  =======  =======  =======  =======
Diluted net income
(loss) per share:
Continuing operations                       $   .01  $   .05  $   .05  $   .02  $   .05  $   .06  $   .11  $  (.03)
Discontinued operations                         .01      .46       --       --      .02      .02     (.04)     .03
                                            -------  -------  -------  -------  -------  -------  -------  -------
                                            $   .02  $   .51  $   .05  $   .02  $   .07  $   .08  $   .07  $   0.0
                                            =======  =======  =======  =======  =======  =======  =======  =======
Weighted average shares
   Outstanding - basic                       27,172   27,048   27,048   27,048   26,630   27,076   27,103   27,154
   Outstanding - diluted                     27,226   27,177   27,154   27,048   27,261   27,216   27,239   27,154
</TABLE>


                                       71

<PAGE>

                      EMERSON RADIO CORP. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

          As a result of the Company's adoption of SFAS No. 123R, "Share-Based
Payments" in the fourth quarter of fiscal 2005, effective April 1, 2004, the
amounts presented above for the second and third quarters of fiscal 2005 have
increased (decreased) relative to the amounts previously reported for operating
income by approximately $1.3 million and ($68,000), respectively, and for income
from continuing operations as well as net income by $1.2 million and ($68,000),
respectively. In addition, diluted net income per share increased by $.04 for
the second quarter and remained unchanged for the third quarter.

NOTE 17 - DISCONTINUED OPERATIONS:

          On July 1, 2005, the Company sold its 53.2% interest in SSG to
Collegiate. After disposition costs, the Company realized and reported in the
quarter ended September 30, 2005, a gain of approximately $12.6 million, net of
estimated deferred taxes of $4.2 million. Proceeds from the sale were used to
pay down $18.5 million of indebtedness.

          The following table summarizes the result of these discontinued
operations, net of income taxes for which there was no provision or recovery in
any period (in thousands).

Discontinued Operations (SSG)       2006      2005      2004
                                  -------   -------   -------
Net revenues                      $23,218   $89,921   $83,822
Operating income                      610     1,861    (4,125)
Gain on sale of SSG, net of tax    12,646        --        --
Net income                        $12,918   $   792   $(1,134)


                                       72

<PAGE>

                      EMERSON RADIO CORP. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

          Net assets related to discontinued operations of $13.7 million are
reported on the accompanying March 31, 2005 balance sheet and consist of:

Cash and cash equivalents                       $ 1,137
Accounts receivable                              13,770
Inventories, net                                 15,361
Deferred tax assets                               1,257
Prepaid and other current assets                    447
                                                -------
Total current assets                            $31,972
                                                -------
Property, plant and equipment, net                5,983
Intangible assets, net                            4,478
Deferred catalog expenses                         1,597
Deferred tax assets                               2,130
Other assets                                        351
                                                -------
Total non current assets                        $14,539
                                                =======
Account payable and other current liabilities   $13,108
Long term borrowings                              3,010
Minority interest                                16,696
                                                -------
Total liabilities and Minority interest         $32,814
                                                =======
Net assets                                      $13,697
                                                =======

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

          As previously reported in a Form 8-K dated May 23, 2006, on May 17,
2006, we retained the services of Moore Stephens, P.C. as our independent
auditors to replace our former independent auditors, BDO Seidman, LLP. This
engagement and replacement was approved by our Audit Committee. During the two
most recent fiscal years, and any subsequent interim period prior to May 17,
2006, we did not consult with Moore Stephens, P.C. regarding any matters noted
in Items 304(a) of Regulation S-K.

          There have been no "disagreements" within the meaning of Item
304(a)(1)(iv) of Regulation S-K, or any events of the type listed in Item
304(a)(1)(v)(A) through (D) of Regulation S-K, involving BDO Seidman that
occurred within the two most recent fiscal years and the interim period prior to
May 17, 2006. BDO Seidman's report on our financial statements for the fiscal
years ended March 31, 2004 and 2005 did not contain any adverse opinions or
disclaimers of opinion, and were not qualified or modified as to uncertainty,
audit scope or accounting principles.


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<PAGE>

                      EMERSON RADIO CORP. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

          We provided BDO Seidman with a copy of the disclosures made pursuant
to the Form 8-K (which disclosures are consistent with the disclosures noted
above) and BDO Seidman furnished us with a letter addressed to the SEC stating
that it agreed with the statements made by us in the Form 8-K filing, a copy of
which was filed as an exhibit to the Form 8-K.

ITEM 9A. CONTROLS AND PROCEDURES

(a)  Disclosure controls and procedures.

          During the fourth quarter of fiscal 2006, our management, including
          the principal executive officer and principal financial officer,
          evaluated our disclosure controls and procedures (as defined in Rules
          13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934)
          related to the recording, processing, summarization and reporting of
          information in our reports that we file with the SEC. These disclosure
          controls and procedures have been designed to ensure that material
          information relating to us, including our subsidiaries, is made known
          to our management, including these officers, by other of our
          employees, and that this information is recorded, processed,
          summarized, evaluated and reported, as applicable, within the time
          periods specified in the SEC's rules and forms. Due to the inherent
          limitations of control systems, not all misstatements may be detected.
          These inherent limitations include the realities that judgments in
          decision-making can be faulty and that breakdowns can occur because of
          simple error or mistake. Additionally, controls can be circumvented by
          the individual acts of some persons, by collusion of two or more
          people, or by management override of the control. Our controls and
          procedures can only provide reasonable, not absolute, assurance that
          the above objectives have been met.

          Based on their evaluation as of March 31, 2006, our principal
          executive officer and principal financial officer have concluded that
          our disclosure controls and procedures (as defined in Rules 13a-15(e)
          and 15d-15(e) under the Securities Exchange Act of 1934) are
          effective.

(b)  Changes in internal controls over financial reporting.

There have been no changes in our internal controls over financial reporting
that occurred during our last fiscal quarter to which this Annual Report on Form
10-K relates that have materially affected, or are reasonably likely to
materially affect, our internal controls over financial reporting.

ITEM 9B. OTHER INFORMATION

     None


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<PAGE>

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS

          The information required is incorporated herein by reference to
Emerson's definitive Proxy Statement, or an amendment to this Annual Report on
Form 10-K, to be filed with the Securities and Exchange Commission on or before
July 29, 2006.

ITEM 11. EXECUTIVE COMPENSATION

          The information required is incorporated herein by reference to
Emerson's definitive Proxy Statement, or an amendment to this Annual Report on
Form 10-K, to be filed with the Securities and Exchange Commission on or before
July 29, 2006.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
         RELATED STOCKHOLDER MATTERS

          The information required is incorporated herein by reference to
Emerson's definitive Proxy Statement, or an amendment to this Annual Report on
Form 10-K, to be filed with the Securities and Exchange Commission on or before
July 29, 2006.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

          The information required is incorporated herein by reference to
Emerson's definitive Proxy Statement, or an amendment to this Annual Report on
Form 10-K, to be filed with the Securities and Exchange Commission on or before
July 29, 2006.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

          The information required is incorporated herein by reference to
Emerson's definitive Proxy Statement, or an amendment to this Annual Report on
Form 10-K, to be filed with the Securities and Exchange Commission on or before
July 29, 2006.

                                     PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENTS AND SCHEDULES

          (a)  Financial Statements and Schedules. See Item 8

          (b)  Exhibits


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<PAGE>

Exhibit Number
--------------
    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 adopted March 1994 (incorporated by
                 reference to Exhibit (3) (e) of Emerson's Registration
                 Statement on Form S-1, Registration No. 33-53621, declared
                 effective by the SEC on August 9, 1994).

    3.7          Amendment dated November 28, 1995 to the By-Laws of Emerson
                 adopted March 1994 (incorporated by reference to Exhibit (3)
                 (b) of Emerson's Quarterly Report on Form 10-Q for the quarter
                 ended December 31, 1995).

    10.6         Registration Rights Agreement dated as of February 4, 1997 by
                 and among Emerson, FIN, the Creditors, FIL and TM Capital Corp.
                 (incorporated by reference to Exhibit (10) (b) of Emerson's
                 Quarterly Report on Form 10-Q for the quarter ended December
                 31, 1996).

    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).


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<PAGE>

    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 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


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<PAGE>

                 Delaware corporation, as Tenant, effective as of December 6,
                 2005 (incorporated by reference to Exhibit 10.1 to Emerson's
                 Current Report on Form 8-K filed on January 4, 2006).

    10.13.6      Letter agreement, dated November 28, 2005, between Emerson
                 Radio Corp. and The Grande Group (hong Kong) limited regarding
                 lease of office space.

    10.13.7      Letter agreement, dated November 28, 2005, between Emerson
                 Radio Corp. and The Grande Group (hong Kong) limited regarding
                 management services for office space.

    10.14.1      Purchasing Agreement, dated March 5, 1999, between
                 AFG-Elektronik GmbH and Emerson Radio International Ltd.
                 (incorporated by reference to Exhibit (10) (aa) of Emerson's
                 Annual Report on Form 10-K for the year ended April 2, 1999).

    10.18.1      Emerson Radio Corp. 2004 Employee Stock Incentive Plan
                 (incorporated by reference to Exhibit 1 of Emerson's 2004 Proxy
                 Statement).

    10.18.2      Emerson Radio Corp. 2004 Non-Employee Outside Director Stock
                 Option Plan (incorporated by reference to Exhibit 2 of
                 Emerson's 2004 Proxy Statement).

    10.23        Management Services Agreement dated July 1, 1997 to be
                 effective as of March 7, 1997 by and between Sport Supply
                 Group, Inc. and Emerson (incorporated by reference to Exhibit
                 10.2 of Sport Supply's Quarterly Report on Form 10-Q for the
                 quarter ended August 1, 1997).

    10.26        Employment Agreement between Emerson Radio Corp. and John J.
                 Raab, effective as of September 1, 2001 (incorporated by
                 reference to Exhibit 10.26 of Emerson's Quarterly Report on
                 Form 10-Q for the quarter ended September 30, 2001).

    10.26.2      Letter re Employment Agreement between Emerson Radio Corp.,
                 Emerson Radio International Ltd., Emerson Radio (Hong Kong)
                 Limited and Geoffrey P. Jurick, effective as of September 1,
                 2001 (incorporated by reference to Exhibit 10.26.2 of Emerson's
                 Quarterly Report on Form 10-Q for the quarter ended September
                 30, 2001).

    10.26.3      Employment Agreement extension letter between Emerson Radio
                 Corp., Emerson Radio International Ltd., Emerson Radio (Hong
                 Kong Limited and Geoffrey P. Jurick effective as of September
                 1, 2004 (incorporated by reference to Exhibit 10.26.3 of
                 Emerson's Quarterly Report on Form 10-Q for the quarter ended
                 December 31, 2004).

    10.26.4      Employment Agreement extension letter between Emerson Radio
                 Corp. and John J. Raab effective as of September 1, 2004
                 (incorporated by reference to


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<PAGE>

                 Exhibit 10.26.4 of Emerson's Quarterly Report on Form 10-Q for
                 the quarter ended December 31, 2004).

    10.26.5      Agreement between Emerson Radio and Guy A. Paglinco, dated
                 March 23, 2006 (incorporated by reference to Exhibit 10.1 to
                 Emerson's Current Report on Form 8-K filed on March 29, 2006).

    10.27.5      Loan and Security Agreement dated as of December 23, 2005,
                 among Emerson Radio Corp., Emerson Radio Macao Commercial
                 Offshore Limited, Majexco Imports, Inc., Emerson Radio (Hong
                 Kong) Ltd., and Emerson Radio International Ltd. (as Borrowers)
                 and Wachovia Bank, National Association.(incorporated by
                 reference to Exhibit 10.2 of Emerson's Form 8-K dated December
                 28, 2005).

    10.28        Common Stock Purchase Warrant Agreement entered into on August
                 1, 2002 by and between Emerson Radio Corp. and Further Lane
                 Asset Management LP (incorporated by reference to Exhibit 10.28
                 of Emerson's Quarterly Report on Form 10-Q for the quarter
                 ended September 30, 2002).

    10.28.1      Form of Common Stock Warrant Agreement entered into on October
                 7, 2003 by and between Emerson Radio Corp. and Ladenburg
                 Thalmann & Co., Inc. (incorporated by reference to Exhibit
                 10.28.1 of Emerson's Quarterly Report on Form 10-Q for the
                 quarter ended December 31, 2003).

    10.28.2      Common Stock Purchase Warrant Agreement entered into on August
                 1, 2004 by and between Emerson Radio Corp. and EPOCH Financial
                 Services, Inc. (incorporated by reference to Exhibit 10.28.2 of
                 Emerson's Quarterly Report on Form 10-Q for the quarter ended
                 September 30, 2004).

    10.28.3      Stock Purchase Agreement among Emerson Radio Corp., Collegiate
                 Pacific Inc. and Emerson Radio (Hong Kong) Limited dated July
                 1,2005 (incorporated by reference to Exhibit 2.1 to Emerson's
                 Current Report on Form 8-K filed on July 8, 2005).

    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, 2006. *

    23.1         Consent of Independent Registered Public Accounting Firm -
                 Moore Stephens, P.C.*


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<PAGE>

    23.2         Consent of Independent Registered Public Accounting Firm - BDO
                 Seidman, LLP.*

    31.1         Certification of the Company's Chief Executive Officer pursuant
                 to 18 U.S.C. Section 1350, as adopted pursuant to Section 302
                 of the Sarbanes-Oxley Act of 2002.*

    31.2         Certification of the Company's Chief Financial Officer pursuant
                 to 18 U.S.C. Section 1350, as adopted pursuant to Section 302
                 of the Sarbanes-Oxley Act of 2002.*

    32           Certification of the Company's Chief Executive Officer and
                 Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as
                 adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
                 2002.*

----------
*    Filed herewith.


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<PAGE>

                                   SIGNATURES

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

                                                   EMERSON RADIO CORP.


                                                   By: /s/ Adrian Ma
                                                       -------------------------
                                                       Adrian Ma
                                                       Chairman of the Board and
                                                       Chief Executive Officer
Dated: July 17, 2006

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


/s/ Adrian Ma                 Chairman of the Board and       July 17, 2006
---------------------------   Chief Executive Officer
Adrian Ma                     (Principal Executive Officer)


/s/ Geoffrey P. Jurick        President and Director          July 17, 2006
---------------------------
Geoffrey P. Jurick


/s/ John D. Florian           Deputy Chief                    July 17, 2006
---------------------------   Financial Officer
John D. Florian               and Controller
                              (Principal Financial and
                              Accounting Officer)


/s/ Eduard Will               Director                        July 17, 2006
---------------------------
Eduard Will.


/s/ Michael A. B. Binney      Director                        July 17, 2006
---------------------------
Michael A. B. Binney


/s/ Peter G. Bunger           Director                        July 17, 2006
---------------------------
Peter G. Bunger


/s/ Jerome H. Farnum          Director                        July 17, 2006
---------------------------
Jerome H. Farnum


/s/ Greenfield Pitts          Director                        July 17, 2006
---------------------------
Greenfield Pitts


/s/ W. Michael Driscoll       Director                        July 17, 2006
---------------------------
W. Michael Driscoll


                                       81