10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended December 31, 2003

or

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

For the transition period from ____________ to ____________

Commission file number     0-25226

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 No.)

9 Entin Road Parsippany, New Jersey	07054
(Address of principal executive offices)	(Zip code)

(973) 884-5800

(Registrant’s telephone number, including area code)

(Former name, former address, and former fiscal year, if changed since last report)

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

     Indicate by check mark whether the registrant is an accelerated Filer (as defined in Rule 12b-2 of the Exchange Act). [   ] Yes [X] No

     Indicate the number of shares outstanding of common stock as of February 9, 2004: 26,723,983.

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION
	Item 1. Financial Statements
		CONSOLIDATED STATEMENTS OF OPERATIONS
		CONSOLIDATED BALANCE SHEETS
		CONSOLIDATED STATEMENTS OF CASH FLOWS
		NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
	Item 2. Management’s Discussion and Analysis of Results of Operations and Financial Condition
	Item 3. Quantitative and Qualitative Disclosures About Market Risk
	Item 4. Controls and Procedures
PART II OTHER INFORMATION
	ITEM 1. Legal Proceedings
	ITEM 2. Changes in Securities and Use of Proceeds
	ITEM 3. Default Upon Senior Securities
	ITEM 4. Submission of Matters to a Vote of Security Holders
	ITEM 5. Other Information
	ITEM 6. Exhibits and Reports on Form 8-K
SIGNATURES
Amendment to Revolving Credit and Loan Agreement
Amendment to Revolving Credit and Loan Agreement
Common Stock Warrant Agreement
Certification of CEO Pursuant to Section 302
Certification of CFO Pursuant to Section 302
Certification of CEO & CFO Pursuant to Section 906

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

EMERSON RADIO CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except earnings per share data)

			Three Months Ended						Nine Months Ended
			December			December			December			December 31,
			31, 2003			31, 2002			31, 2003			2002
Net revenues			$	76,345		$	86,553		$	209,389		$	276,488
Costs and expenses:
Cost of sales				62,992			70,832			171,381			222,224
Other operating costs and Expenses				1,414			1,058			3,963			3,251
Selling, general & administrative expenses				10,545			10,226			30,571			32,696
Stock based costs				487			19			511			31
				75,438			82,135			206,426			258,202
Operating income				907			4,418			2,963			18,286
Interest expense, net				(322	)		(405	)		(1,144	)		(1,977	)
Minority interest in net income (loss) of consolidated subsidiary				(272	)		1,104			(190	)		996
Income before income taxes, discontinued operations and cumulative effect of change in accounting principle				313			5,117			1,629			17,305
Provision for income taxes				653			1,931			1,628			5,999
Income (loss) from continuing Operations				(340	)		3,186			1			11,306
Income from discontinued operations, net of tax				3,153			92			3,048			584
Cumulative effect of change in accounting principle				—			—			—			(5,546	)
Net income			$	2,813		$	3,278		$	3,049		$	6,344
Basic net income per share:
	Income (loss) from continuing operations		$	(0.01	)	$	0.12		$	—		$	0.41
	Discontinued operations			0.11			—			0.11			0.02
	Cumulative effect of change In accounting principle			—			—			—			(0.20	)
			$	0.10		$	0.12		$	0.11		$	0.23
Diluted net income per share:
	Income (loss) from continuing operations		$	(0.01	)	$	0.12		$	—		$	0.39
	Discontinued operations			0.11			—			0.11			0.02
	Cumulative effect of change In accounting principle			—			—			—			(0.19	)
				0.10		$	0.12		$	0.11		$	0.22
Weighted average shares outstanding:
		Basic		27,189			27,134			27,388			27,837
		Diluted		27,189			28,274			28,259			28,678

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

2

EMERSON RADIO CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)

			December 31, 2003			March 31, 2003
			(Unaudited)
ASSETS
Current Assets:
	Cash and cash equivalents		$	6,940		$	11,413
	Accounts receivable (less allowances of $4,749 and $3,938, respectively)			26,233			24,593
	Other receivables			1,873			2,954
	Inventories			37,920			45,177
	Prepaid expenses and other current assets			5,030			6,871
	Net assets related to discontinued operations			522			—
	Deferred tax assets			6,297			6,761
		Total current assets		84,815			97,769
Property and equipment - (net of accumulated depreciation and amortization of $7,225 and $6,628, respectively)				8,239			9,823
Deferred catalog expenses				1,341			1,912
Trademarks and other intangible assets (net of accumulated amortization of $3,739 and $3,403,respectively)				5,277			5,613
Deferred tax assets				14,184			17,595
Other assets				1,446			1,850
		Total Assets	$	115,302		$	134,562
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
	Current maturities of long-term borrowings		$	71		$	11,634
	Short-term borrowings			4,050			1,918
	Accounts payable and other current liabilities			30,019			30,596
	Accrued sales returns			2,855			3,768
	Income taxes payable			12			752
		Total current liabilities		37,007			48,668
Long-term borrowings				9,383			18,079
Minority interest				16,772			16,578
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; 52,310,350 and 51,981,431 shares issued; 26,956,683 and 27,413,089 shares outstanding, respectively			523			520
	Capital in excess of par value			115,912			115,122
	Accumulated other comprehensive losses			(100	)		(104	)
	Accumulated deficit			(44,887	)		(47,936	)
	Treasury stock, at cost 25,353,667 and 24,568,342 shares, respectively			(22,618	)		(19,675	)
		Total shareholders’ equity		52,140			51,237
		Total Liabilities and Shareholders’ Equity	$	115,302		$	134,562

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

3

EMERSON RADIO CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)

				Nine Months Ended
				December			December
				31, 2003			31, 2002
Cash Flows from Operating Activities:
	Income from continuing operations			$	1		$	5,760
	Adjustments to reconcile net income (loss) to net cash provided by operating activities:
		Minority interest			190			(996	)
		Depreciation and amortization			2,769			2,394
		Deferred tax assets			3,875			4,093
		Cumulative effect of accounting change			—			5,546
		Asset allowances, reserves and other			628			4,438
		Changes in assets and liabilities:
			Accounts receivable		(7,580	)		3,017
			Other receivables		1,072			680
			Inventories		2,367			(4,851	)
			Prepaid expenses and other current assets		2,341			548
			Other assets		(21	)		(1,185	)
			Accounts payable and other current liabilities		1,235			467
			Income taxes payable		(740	)		1,125
	Operating cash flow provided by continuing operations				6,137			21,036
	Operating cash flow provided by discontinued operations				469			584
	Net cash provided by operating activities				6,606			21,620
Cash Flows from Investing Activities:
	Additions of property and equipment				(323	)		(495	)
	Proceeds from sale of discontinued operations				10,517			—
	Net cash (used) provided by investing activities				10,194			(495	)
Cash Flows from Financing Activities:
	Net borrowings (repayments) under line of Credit facility				2,132			(6,142	)
	Purchase of common stock				(2,943	)		(5,697	)
	Exercise of stock options and warrants				281			343
	Long-term borrowings				114,010			137,024
	Repayments of long-term borrowings				(134,753	)		(142,921	)
	Net cash used by financing activities				(21,273	)		(17,393	)
Net increase (decrease) in cash and cash equivalents					(4,473	)		3,732
Cash and cash equivalents at beginning of year					11,413			19,228
Cash and cash equivalents at end of period				$	6,940		$	22,960

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

4

EMERSON RADIO CORP. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

NOTE 1 – BACKGROUND AND BASIS OF PRESENTATION

          The consolidated financial statements include the accounts of Emerson Radio Corp. (“Emerson”, consolidated - “Us”, “We”, “Our”) and its majority-owned subsidiaries, including Sport Supply Group, Inc. (“SSG”). We operate in two business segments: consumer electronics and sporting goods. The consumer electronics segment designs, sources, imports and markets a variety of consumer electronic products and licenses the “” trademark for a variety of products domestically and internationally to certain licensees. The sporting goods segment, which is operated through Emerson’s 53.2% ownership of SSG, manufactures, markets, and distributes sports related equipment and leisure products to institutional customers in the United States.

          The unaudited interim consolidated financial statements reflect all normal and recurring adjustments that are, in the opinion of management, necessary to present a fair statement of our consolidated financial position as of December 31, 2003 and the results of operations for the three and nine month periods ended December 31, 2003 and 2002. The unaudited interim consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission and accordingly do not include all of the disclosures normally made in our annual consolidated financial statements. It is suggested that these unaudited interim consolidated financial statements be read in conjunction with the consolidated financial statements and notes thereto for the fiscal year ended March 31, 2003 (“fiscal 2003”), included in our annual report on Form 10-K.

          The consolidated financial statements include our accounts and all of our majority-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. The preparation of the unaudited interim consolidated financial statements requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes; actual results could materially differ from those estimates.

          From July 2003 through October 2003 certain of SSG’s team dealers located in Little Rock, Arkansas, Enid, Oklahoma and Wichita, Kansas were discontinued. In November 2003, SSG sold all of the issued and outstanding capital stock of it’s wholly-owned subsidiary, Athletic Training Equipment Company, Inc. (“ATEC”). Collectively, SSG refers to these as “Discontinued Operations” and accordingly, the accompanying financial statements reflect these as discontinued operations. See Note 12 Discontinued Operations.

5

          Due to the seasonal nature of both segments, the results of operations for the three and nine month periods ended December 31, 2003 are not necessarily indicative of the results of operations that may be expected for any other interim period or for the full year ending March 31, 2004 (“fiscal 2004”).

          Emerson and SSG have elected to follow 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 our employee stock options equals or exceeds the market price of the underlying stock on date of grant, no compensation expense is recognized. Emerson and SSG have 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. Our pro forma information for the three and nine month periods ended December 31, 2003 and 2002 follows:

		Three Months Ended						Nine Months Ended
		December			December			December			December
		31, 2003			31, 2002			31, 2003			31, 2002
Income (loss) from continuing operations (in thousands)
	As reported	$	(340	)	$	3,186		$	1		$	11,306
	Less: Employee stock- based compensation expense		(10	)		(29	)		(24	)		(83	)
	Pro forma	$	(350	)	$	3,157		$	(23	)	$	11,223
Income (loss) from continuing operations per common share:
	Basic - as reported	$	(0.01	)	$	0.12		$	—		$	0.41
	Basic - pro forma	$	(0.01	)	$	0.12		$	—		$	0.40
	Diluted - as reported	$	(0.01	)	$	0.12		$	—		$	0.39
	Diluted - pro forma	$	(0.01	)	$	0.11		$	—		$	0.39

		Three Months Ended						Nine Months Ended
		December			December			December			December
		31, 2003			31, 2002			31, 2003			31, 2002
Net income:(in thousands)
	As reported	$	2,813		$	3,278		$	3,049		$	6,344
	Less: Employee stock- based compensation expense		(10	)		(29	)		(24	)		(83	)
	Pro forma	$	2,803		$	3,249		$	3,025		$	6,261

6

\

		Three Months Ended				Nine Months Ended
		December		December		December		December
		31, 2003		31, 2002		31, 2003		31, 2002
Net income per common share:
	Basic - as reported	$	0.10	$	0.12	$	0.11	$	0.23
	Basic - pro forma	$	0.10	$	0.12	$	0.11	$	0.22
	Diluted - as reported	$	0.10	$	0.12	$	0.11	$	0.22
	Diluted - pro forma	$	0.10	$	0.11	$	0.11	$	0.22

          Certain reclassifications were made to conform prior years financial Statements to the current presentation.

NOTE 2 - COMPREHENSIVE INCOME

          Our comprehensive income for the three and nine month periods ended December 31, 2003 and 2002 is as follows (in thousands):

	Three Months Ended						Nine Months Ended
	December			December			December			December
	31, 2003			31, 2002			31, 2003			31,2002
	(Unaudited)						(Unaudited)
Net income	$	2,813		$	3,278		$	3,049		$	6,344
Currency translation adjustment		—			(1	)		—			—
Interest rate swap		(4	)		(7	)		(12	)		(44	)
Cumulative effect on equity of SFAS 133, net of taxes		—			—			—			(40	)
Unrealized loss on securities, net		(23	)		—			(26	)		(2	)
Recognition of unrealized losses related to investments included in net income		—			—			42			—
Comprehensive income	$	2,786		$	3,270		$	3,053		$	6,258

NOTE 3 - EARNINGS PER SHARE

          The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share amounts):

	Three Months Ended					Nine Months Ended
	December			December		December		December
	31, 2003			31,2002		31, 2003		31,2002
	(Unaudited)					(Unaudited)
Numerator:
Net earnings (loss) before discontinued operations and cumulative effect of change in accounting principle and for basic and diluted earnings per share	$	(340	)	$	3,186	$	1	$	11,306

7

		Three Months Ended					Nine Months Ended
		December			December		December		December
		31, 2003			31,2002		31, 2003		31,2002
		(Unaudited)					(Unaudited)
Denominator:
Denominator for basic earnings per share - weighted average shares			27,189			27,134		27,388		27,837
Effect of dilutive securities:
	Options and warrants		—			1,140		871		841
Denominator for diluted earnings per share - weighted average shares and assumed conversions			27,189			28,274		28,259		28,678
Basic earnings (loss) per share, from continuing operations		$	(0.01	)	$	0.12	$	—	$	0.41
Discontinued operations			0.11			—		0.11		0.02
Cumulative effect of change in accounting principle			—			—		—		(0.20	)
Basic earnings per share		$	0.10		$	0.12	$	0.11	$	0.23
Diluted earnings(loss) per share, from continuing operations		$	(0.01	)	$	0.12	$	—	$	0.39
Discontinued operations			0.11			—		0.11		0.02
Cumulative effect of change in accounting principle			—			—		—		(0.19	)
Diluted earnings per share		$	0.10		$	0.12	$	0.11	$	0.22

NOTE 4- CAPITAL STRUCTURE

          Our outstanding capital stock at December 31, 2003 consisted of common stock and Series A convertible preferred stock in which the conversion feature expired effective March 31, 2002.

          At December 31, 2003, Emerson had outstanding approximately 907,000 options with exercise prices ranging from $1.00 to $1.50 and SSG had outstanding approximately 239,000 options with exercise prices ranging from $0.95 to $9.44.

          On August 1, 2002, Emerson granted 200,000 warrants with an exercise price of $2.20, vesting 50% in six months and 50% one year from date of grant in conjunction with a consulting agreement. The warrants were valued using the Black-Scholes option valuation model and are charged to earnings over the related service period of the consulting agreement with $396,000 and $420,664 being charged to operations for the three and nine month periods ending December 31, 2003, and $18,501 and $30,835 for the three and nine month periods ending December 31, 2002. In February 2003, 100,000 of these warrants were exercised. 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 conjunction with a consulting agreement, Emerson 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 the three and nine month periods ending December 31, 2003. As of December 31, 2003 these warrants had not been exercised.

8

NOTE 5 - INVENTORY

          Inventories are stated at the lower of cost or market. Cost is determined using the first-in, first-out method for the consumer electronics segment and for the sporting goods segment, standard cost method for items manufactured and weighted average cost for items purchased for resale. As of December 31, 2003 and March 31, 2003, inventories consisted of the following (in thousands):

	December 31,			March 31,
	2003			2003
	(Unaudited)
Raw materials	$	1,135		$	2,095
Work-in-process		37			318
Finished		38,788			45,387
		39,960			47,800
Less inventory allowances		(2,040	)		(2,623	)
	$	37,920		$	45,177

NOTE 6 - INCOME TAXES

          We have tax net operating loss carry forwards included in net deferred tax assets that are available to offset future taxable income and can be carried forward for 15 to 20 years. Although realization is not assured, we believe it is more likely than not that all of the net deferred tax assets will be realized through tax planning strategies available in future periods and through future profitable operating results. The amount of the deferred tax asset considered realizable, however, could be reduced or eliminated if certain tax planning strategies are not successfully executed or estimates of future taxable income during the carryforward period are reduced. If we determine 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.

          Tax benefits resulting from operating losses and discontinued operations losses for the nine months ended December 31, 2003 have been fully reserved in our tax allowance and, accordingly, a tax benefit was not recorded in our consolidated Statement of Operations. Income taxes from the gain on the sale of ATEC are reflected as a reduction to our net deferred tax asset. The high effective tax rate reflected in the consolidated statement of operations for the three and nine months ended December 31, 2003 was the result of our multinational tax structure, which yields varying tax effective rates. See Note 1 - Background and Basis of Presentation and Note 12 - Discontinued Operations.

9

          At December 31, 2003, approximately $20.5 million of deferred tax assets were reported on our balance sheet.

NOTE 7 - INVESTMENT IN SPORT SUPPLY GROUP, INC.

          As of December 31, 2003 and March 31, 2003, Emerson owned 4,746,023 (approximately 53.2% of the issued and outstanding) shares of common stock of SSG. SSG’s results of operations and the minority interest related to those results have been included in our quarterly and year-to-date results of operations.

          Effective March 1997, Emerson entered into a Management Services Agreement with SSG, under which each company provides various managerial and administrative services to the other company for a fee at terms reflected in an arms-length transaction. These charges have been eliminated in consolidation.

NOTE 8 - 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. As a result of adopting SFAS 142, we ceased recording amortization of goodwill on April 1, 2002 and, recorded a non-cash “cumulative effect of change in accounting principle” of approximately $5.5 million ($0.19 per diluted share for the nine month period ended December 31, 2002), associated with the write-off of all of the goodwill attributed to the sporting goods segment.

          As of December 31, 2003, estimated amortization expense of other intangible assets for each of the next five years is as follows (in thousands):

2004	$	504
2005		504
2006		466
2007		406
2008		337
Thereafter		3,060
	$	5,277

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NOTE 9 - BORROWINGS

          As of December 31, 2003 and March 31, 2003, short-term borrowings consisted of the following (in thousands):

	December 31,		March 31,
	2003		2003
	(Unaudited)
Foreign bank loan	$	4,050	$	1,918

          As of December 31, 2003 and March 31, 2003, long-term borrowings consisted of the following (in thousands):

		December 31,		March 31,
		2003		2003
		(Unaudited)
Revolver (Revolver A)		$	2,450	$	—
Term loan (Term Loan)			—		12,000
Revolving line of credit (Revolver B)			6,876		17,522
Equipment notes and other			128		191
			9,454		29,713
Less current maturities			71		11,634
	Long term debt and notes payable	$	9,383	$	18,079

          Refinancing Transaction in Fiscal 2003 - On June 28, 2002, Emerson entered into a $40 million Revolving Credit and Term Loan Agreement (“Loan Agreement”) with several U.S. financial institutions. The Loan Agreement provides for a $25 million revolving line of credit (Revolver A) and a $15 million term loan (Term Loan). The $25 million revolving line of credit replaced Emerson’s $15 million senior secured facility and provides for revolving loans, subject to individual maximums which, in the aggregate, are not to exceed the lesser of $25 million or a “Borrowing Base” as defined in the Loan Agreement.

          Revolver A and Term Loan - The Borrowing Base amount is established by specified percentages of eligible accounts receivables and inventories and bears interest ranging from Prime plus 0.50% to 1.25% or, at Emerson’s election, LIBOR plus 2.00% to 2.75% depending on certain financial covenants. The interest rate charged on the Term Loan ranged from Prime plus 1.00% to 1.75% or, at Emerson’s election, LIBOR plus 2.50% and 3.25% depending on certain financial covenants and amortizes over a three-year period. Pursuant to the Loan Agreement, Emerson is restricted from, among other things, paying certain cash dividends, repurchasing Emerson’s common stock and entering into certain transactions without the lender’s prior consent and are subject to certain net worth and leverage financial covenants. Amounts outstanding under the Loan Agreement are secured by substantially all of Emerson’s tangible assets.

11

          As of December 31, 2003, Emerson repaid in full ahead of schedule the Term Loan, and had approximately $2.5 million outstanding under Revolver A and was in compliance with the covenants contained in the Loan Agreement, as amended during the three months ended December 31, 2003.

          Revolver B - During the quarter ending December 31, 2003, SSG amended its Loan and Security Agreement to finance its working capital requirements through October 31, 2007. Under this amendment, SSG’s line of credit was reduced from $25 million to $20 million; its LIBOR borrowing rates were reduced from 2.5% to 2.25%; and its inventory and accounts receivable borrowing rates were increased. This agreement provides for revolving loans and letters of credit which, in the aggregate, cannot exceed the lesser of $20 million or a “Borrowing Base” amount based upon specified percentages of eligible accounts receivables and inventories. Amounts outstanding under the senior credit facility are secured by substantially all the assets of SSG and its subsidiaries. Pursuant to the loan documents governing this line of credit, SSG is restricted from, among other things, paying cash dividends and entering into certain transactions without the lender’s prior consent and it is required to maintain certain net worth levels.

          SSG’s Loan and Security Agreement allows its lender to accelerate payment upon the occurrence of an event that has a material adverse effect upon the business, operations, properties, assets, goodwill, or condition (financial or otherwise) of SSG on a consolidated basis. Additionally, the Loan and Security Agreement requires SSG to maintain a depository account in favor of our lender. SSG’s lender has agreed to modify the Loan and Security Agreement to make the material adverse change clause provision an event of default only if availability levels, net of borrowings, fall below certain levels. As of December 31, 2003, SSG was in compliance with the covenants in the Loan Agreement, as amended.

          As of December 31, 2003, the carrying value of these credit facilities approximated fair value.

NOTE 10 - SEGMENT INFORMATION

          The following table presents certain operating segment information for each of the three and nine month periods ended December 31, 2003 and 2002 (in thousands):

	Three Months Ended				Three Months Ended
	December 31, 2003				December 31, 2002
	Consumer				Consumer
	Electronics		Sporting Goods		Electronics		Sporting Goods
Net revenues from external customers		$61,619	$	14,726	$	71,427	$	15,126

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	Three Months Ended					Three Months Ended
	December 31, 2003					December 31, 2002
	Consumer					Consumer
	Electronics		Sporting Goods			Electronics		Sporting Goods
Income (loss) before income taxes, discontinued operations and cumulative effect of change in accounting principle	$	2,885	$	(2,572	)	$	7,456	$	(2,339	)
Segment assets	$	70,260	$	45,042		$	69,794	$	55,594

	Nine Months Ended					Nine Months Ended
	December 31, 2003					December 31, 2002
	Consumer					Consumer
	Electronics		Sporting Goods			Electronics		Sporting Goods
Net revenues from external customers	$	149,684	$	59,705		$	217,776	$	58,712
Income (loss) before income taxes, discontinued operations and cumulative effect of change in accounting principle	$	4,271	$	(2,642	)	$	20,016	$	(2,711	)

NOTE 11 - LEGAL PROCEEDINGS

Putative Class Actions

          Between September 4, 2003 and October 30, 2003, several putative class action lawsuits were filed in the United States District Court for the District of New Jersey against us and Mssrs. Geoffrey Jurick, Kenneth Corby and John Raab (the “Individual Defendants”) on behalf of purchasers of our publicly traded securities who bought shares between January 29, 2003 and August 12, 2003 (the “Class Period.”) On December 17, 2003, the Court entered a Joint Stipulation and Order consolidating these putative class actions under the caption In Re Emerson Radio Corp. Securities Litigation, 03cv4201 (JLL) (the “Consolidated Action.”) Further to that Stipulation and Order, lead plaintiff was appointed and co-lead counsel and co-liaison counsel were approved by the Court in the Consolidated Action.

          Generally, the original complaints allege that we 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 issuing certain positive statements during the Class Period regarding our growth and demand for our products. The complaints further allege that these statements were each materially false and misleading when made because we allegedly misrepresented and omitted certain adverse facts which then existed and disclosure of which was necessary to make the statements not false and misleading.

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          The lead plaintiff in the Consolidated Action is currently scheduled to file an Amended and Consolidated Complaint on or about March 15, 2004, which may contain additional allegations. We and the Individual Defendants intend to defend these lawsuits vigorously.

          We are also involved in legal proceedings and claims of various types in the ordinary course of our business. While any such litigation to which we are a party contains an element of uncertainty, we presently believe that the outcome of each such proceeding or claim which is pending or known to be threatened, or all of them combined, will not have a material adverse effect on our consolidated financial position.

NOTE 12 - DISCONTINUED OPERATIONS

          In July 2003, SSG discontinued operations at its team dealer located in Little Rock, Arkansas and in October 2003, sold substantially all of the assets at that location (other than cash and accounts receivable). In October 2003, SSG discontinued operations at its team dealer located in Enid, Oklahoma and in November 2003, sold substantially all the assets (other than cash and accounts receivable) of its team dealer located in Wichita, Kansas. These closures and sales of assets, and related discontinued operations resulted in a loss of approximately $780,000 for the three months ended December 31, 2003, which combined with the previously recorded loss recognized totaled $1.2 million for the nine months ended December 31, 2003. On November 18, 2003, SSG sold all of the issued and outstanding capital stock of ATEC, resulting in a net gain of approximately $3.8 million. The results of these transactions are included in discontinued operations in the accompanying Consolidated Statement of Operations for the three and nine month periods ended December 31, 2003. See Note 1 - Background and Basis of Presentation.

          The following table represents the results of these discontinued operations, net of related income taxes (in thousands). See Note 6 — Income Taxes.

	Three Months Ended						Nine Months Ended
	December			December			December			December
	31, 2003			31, 2002			31, 2003			31, 2002
Net revenues-ATEC	$	2,797		$	2,005		$	6,184		$	7,468
Net revenues-Team Dealers		368			1,387			3,043			5,200
Earnings from operations - ATEC		181			384			477			892
Loss from operations - Team Dealers		(148	)		(292	)		(352	)		(308	)
Loss on sale of Team Dealers		(632	)		—			(829	)		—
Gain on sale of ATEC, net		3,752			—			3,752			—
Total discontinued operations, net	$	3,153		$	92		$	3,048		$	584

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Item 2. Management’s Discussion and Analysis of Results of Operations and Financial Condition

          Management’s Discussion and Analysis of Results of Operation is presented in three parts: consolidated operations, the consumer electronics segment and the sporting goods segment.

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

Consolidated Operations:

          The following table sets forth, for the periods indicated, certain items related to the consolidated statements of operations as a percentage of net revenues for the three and nine month periods ended December 31, 2003 and 2002. A detailed discussion of the material changes in our operating results is set forth under our discussion of our two operating segments: consumer electronics and sporting goods.

		Three Months Ended						Nine Months Ended
		December 31						December 31
		2003			2002			2003			2002
		(Unaudited)						(Unaudited)
Net revenues (in thousands)		$	76,345		$	86,553		$	209,389		$	276,488
			100.0	%		100.0	%		100.0	%		100.0	%
Cost of sales			82.5	%		81.8	%		81.9	%		80.4	%
Other operating costs and Expenses			1.9	%		1.2	%		1.9	%		1.1	%
Selling, general and administrative expenses			13.8	%		11.9	%		14.6	%		11.9	%
Stock based costs			.6	%		—			.2	%		—
	Operating income		1.2	%		5.1	%		1.4	%		6.6	%
Interest expense			.4	%		.5	%		.5	%		.7	%
Minority interest in net income (loss) Of consolidated subsidiary			(.4	%)		1.3	%		(.1	%)		.4	%
Provision for income taxes			.8	%		2.2	%		.8	%		2.2	%
Income from discontinued Operations, net of tax			4.1	%		.1	%		1.5	%		.2	%
Cumulative effect of change in accounting principle			—			—			—			(2.0	%)
	Net income		3.7	%		3.8	%		1.5	%		2.3	%

Net Revenues - Consolidated net revenues for the three and nine month periods ended December 31, 2003 decreased to $76.3 million from $86.6 million ($10.3 million or 11.8%) and to $209.4 million from $276.5 million ($67.1 million or 24.3%) respectively, as compared to the same periods ended December 31, 2002. The decreases for both the three and nine month periods were primarily attributable to decreases in the consumer electronics segment.

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Cost of Sales - Cost of sales, as a percentage of consolidated net revenues, for the three and nine month period ended December 31, 2003 and December 31, 2002 increased to 82.5% and 81.9% from 81.8% and 80.4%, respectively. The increase in cost of sales as a percentage of net revenues for the three and nine month periods was primarily the result of lower margins in both the consumer electronics and sporting goods segments. In absolute terms, cost of sales decreased to $63.0 million from $70.8 million ($7.8 million or 11.0%) and to $171.4 million from $222.2 million ($50.8 million or 22.9%) for the three and nine month periods of fiscal 2004 as compared to the same periods in fiscal 2003, respectively.

Other Operating Costs and Expenses - Other operating costs and expenses are associated with the consumer electronics segment. As a percentage of consolidated net revenues, other operating costs and expenses increased to 1.9% from 1.2% for the three months ended December 31, 2003 compared to the same period in fiscal 2003. For the nine months ended December 31, 2003, other operating costs, as a percentage of consolidated net revenues, increased to 1.9% from 1.1% compared to the same period in fiscal 2003. In absolute terms other operating costs and expenses increased to $1.4 million from $1.1 million ($356,000 or 33.6%) and to $4.0 million from $3.3 million ($712,000 or 21.9%) for the three and nine month periods of fiscal 2004 as compared to the same periods in fiscal 2003, respectively.

Selling, General and Administrative Expenses (“S,G&A”) - S,G&A, as a percentage of consolidated net revenues, were 13.8% for the three months ended December 31, 2003 as compared to 11.9% for the three months ended December 31, 2002. For the nine months ended December 31, 2003, S,G&A, as a percentage of consolidated net revenues, were 14.6% as compared to 11.9% for the same period in fiscal 2003. In absolute terms S,G&A increased to $10.5 million from $10.2 million ($319,000 or 3.1%) for the three month period ended December 31, 2003 compared to the same period in fiscal 2003, and decreased to $30.6 million from $32.7 million ($2.1 million or 6.5%) for the nine month period ended December 31, 2003 as compared to the same period in fiscal 2003. The fiscal 2004 quarterly increase is primarily due to the consumer electronics segment, while the decrease for the nine month period is due to decreases in both segments.

Stock Based Costs - Stock Based Costs are associated with the consumer electronics segment, which relate to the cost of warrants issued in exchange for consulting services. As a percentage of consolidated net revenues, stock based costs increased to 0.6% from 0 % for the three months ended December 31, 2003 compared to the same period in fiscal 2003. For the nine months ended December 31, 2003, stock based costs, as a percentage of consolidated net revenues, increased to 0.2% from 0 % for the same period in fiscal 2003. In absolute terms stock based costs increased by $468,000 and $480,000 for the three and nine month periods of fiscal 2004 as compared to the same periods in fiscal 2003.

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Interest Expense, Net - Interest expense decreased $83,000 (20.5%) to $322,000 (0.4% of net revenues) for the three months ended December 31, 2003 from $405,000 (0.5% of net revenues) for the three months ended December 31, 2002. For the nine months ended December 31, 2003 interest expense decreased $833,000 (42.1%) to $1.1 million (0.5% of net revenues) from $2.0 million (0.7% of net revenues) for the same period in fiscal 2003. The decrease in interest expense was a result of lower average borrowings and lower borrowing costs in both segments.

Minority Interest in Net Income (Loss) of Consolidated Subsidiary - Minority interest in net income (loss) of consolidated subsidiary represents that portion of the sporting goods segment for the three and nine month periods ended December 31, 2003 and 2002. See “Note 1 - Background and Basis of Presentation.”

Provision for Income Taxes - The provision for income taxes for the three and nine months ended December 31, 2003 and 2002 was primarily the result of utilizing previously recognized net operating loss carryforwards from the consumer electronics segment. The higher effective tax rate for the three and nine months ended December 31, 2003 as compared to the same year ago periods was the result of our multinational tax structure, which yields varying tax effective rates.

Income from Discontinued Operations - In July, October and November 2003, SSG ceased operations of its Team Dealer locations in Little Rock, Arkansas, Enid, Oklahoma, and Wichita, Kansas, respectively. In addition, SSG sold all of the issued and outstanding capital stock of ATEC. SSG has recorded gains from discontinued operations of $3.2 million and $3.0 million for the three and nine months ended December 31, 2003 as compared to $92,000 and $584,000 for the three and nine months ended December 31, 2002.

Cumulative Effect of Change in Accounting Principle - On April 1, 2002, we adopted Financial Accounting Standards Board’s Statement No. 142, “Goodwill and Other Intangible Assets” (SFAS 142) that requires that goodwill not be amortized, but instead be tested for impairment at least annually by reporting unit. As a result of our impairment testing, we recorded a non-cash “cumulative effect of accounting change” of approximately $5.5 million for the nine months ended December 31, 2002, due to the impairment of all of the goodwill attributed to the Company’s sporting goods segment. See “Note 8 - Goodwill and Other Intangible Assets.”

Net Income - As a result of the foregoing factors, we earned net income of $2.8 million (3.7% of net revenues) and $3.0 million (1.5% of net revenues) for the three and nine months ended December 31, 2003 as compared to $3.3 million (3.8% of net revenues) and $6.3 million (2.3% of net revenues) for the same periods in fiscal 2003.

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Consumer Electronics Segment:

The following table summarizes certain financial information relating to the consumer electronics segment for the three and nine month periods ended December 31, 2003 and 2002 (in thousands):

		Three Months Ended						Nine Months Ended
		December 31						December 31
		2003			2002			2003			2002
		(Unaudited)						(Unaudited)
Net revenues		$	61,619		$	71,427		$	149,684		$	217,776
Cost of sales			52,014			59,617			127,658			180,169
Other operating Costs			1,414			1,058			3,963			3,251
Selling, general & administrative			4,340			4,090			12,356			13,758
Stock based Costs			487			19			511			31
	Operating income		3,364			6,643			5,196			20,567
Interest expense, Net			(207	)		(291	)		(735	)		(1,547	)
Income before income taxes			3,157			6,352			4,461			19,020
Provision for income taxes			653			1,819			1,628			5,999
	Net income	$	2,504		$	4,533		$	2,833		$	13,021

Net Revenues - Consumer electronics net revenues for the three months ended December 31, 2003 decreased $9.8 million (13.7%) to $61.6 million from $71.4 million for the three months ended December 31, 2002. For the nine months ended December 31, 2003 net revenues decreased $68.1 million (31.3%) to $149.7 million from $217.8 million for the nine months ended December 31, 2002. Consumer electronics net revenues are comprised of Emerson branded product sales, themed product sales and licensing revenues. Emerson branded product sales are earned from the sale of products bearing the Emerson or HH Scott brand name; themed product sales represent products sold bearing a certain theme or character; and licensing revenues are derived from licensing the Emerson and HH Scott brand names to licensees for a fee. The decrease in net revenues for the three and nine month period was comprised of:

i) Revenues from the sale of Emerson branded product for the three months ended December 31, 2003 were relatively unchanged at $54.2 million from $54.1 million for the three months ended December 31, 2002. Revenues from the sale of Emerson branded product decreased to $131.4 million from $171.3 million for the nine months ended December 31, 2003 and December 31, 2002, respectively, associated with increased competition, a reduction in orders from our primary customers and an overall slower economy.

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ii)	A decrease in themed product sales to $4.5 and $10.2 million from $15.8 and $39.0 million for the three and nine months ended December 31, 2003 and December 31, 2002, respectively. These decreases were due to the discontinuance of sales of NASCAR, Mary Kate and Ashley and Hello Kitty themed products, partially offset by the continued introduction of Nickelodeon themed products.
iii)	Licensing revenues increased to $2.9 and $8.1 million from $1.5 and $7.5 million for the three and nine months ended December 31, 2003,respectively, associated with existing license agreements.

Cost of Sales - Cost of sales for the three months ended December 31, 2003 decreased $7.6 million (12.8% of consumer electronic net revenues) to $52.0 million from $59.6 million for the three months ended December 31, 2002. For the nine months ended December 31, 2003 cost of sales decreased $52.5 million (29.1% of consumer electronic net revenues) to $127.7 million from $180.2 million for the nine months ended December 31, 2002. In relative terms, cost of sales for the three months ended December 31, 2003 increased to 84.4% from 83.5% for the three months ended December 31, 2002. For the nine months ended December 31, 2003 cost of sales increased to 85.3% from 82.7% for the nine months ended December 31, 2002. In relative terms, the increases in cost of sales for the three and nine month periods were due to lower sales of traditionally higher margin themed products, and lower margins on Emerson branded product, primarily attributable to competitive market conditions.

Gross profit margins continue to be subject to competitive pressures arising from lower pricing of the product categories in the consumer electronics market in which Emerson competes. Emerson’s branded products are generally placed in the low-to-medium priced category of the market.

Other Operating Costs and Expenses - Other operating costs and expenses, as a percentage of consumer electronics net revenues, increased to 2.3% from 1.5% and to 2.6% from 1.5% for the three and nine month periods ended December 31, 2003 as compared to the same periods in fiscal 2003. In absolute terms, other operating costs and expenses increased to $1.4 million from $1.1 million ($356,000 or 33.6%) and to $4.0 million from $3.3 million ($712,000 or 21.9%)for the three and nine month periods ended December 31, 2003 as compared to the same periods in fiscal 2003, respectively. The increase for both the three and nine month period in absolute terms was primarily due to increased inventory servicing costs.

Selling, General and Administrative Expenses (“S,G&A”) - S,G&A, increased approximately $250,000 or 6.1%, to $4.3 million (7.0% of the consumer electronics net revenues) from $4.1 million (5.7% of the consumer electronics net revenues) for the three months ended December 31, 2003 as compared to the three months ended December 31, 2002. For the nine months ended December 31, 2003, S,G&A decreased $1.4 million, or 10.2%, to $12.4 million (8.3% of the consumer electronics net revenues) from $13.8 million (6.3% of the consumer electronics net revenues). The increases in

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absolute terms for the three months ended December were primarily due to increased legal fees. The decreases in absolute terms for the nine months ended December 31, 2003, resulted from decreases in: i.) payroll related costs of approximately $450,000; ii.) bad debt charges of approximately $1.3 million; and iii.) sales commissions of approximately $560,000. These decreases for the nine month period were partially offset by increases in legal fees and expenses associated with an unsuccessful acquisition of approximately $375,000 and $643,000, respectively.

Stock Based Costs - Stock Based Costs as a percentage of consumer electronics net revenues, increased to 0.8% from 0% and 0.3% from 0% for the three and nine month periods ended December 31, 2003 as compared to the same periods in fiscal 2003. In absolute terms, stock based costs increased to $487,000 from $19,000, and to $511,000 from $31,000 for the three and nine month periods ended December 31, 2003 as compared to the same periods in fiscal 2003, respectively. The increase for both the three and nine month periods in absolute terms was primarily due to the re-measurement of warrants in the current period that were issued in a prior period, and the issuance of additional warrants in the current period.

Interest Expense, net - Interest expense decreased $84,000 or 28.9%, to $207,000 (0.3% of the consumer electronics net revenues) for the three months ended December 31, 2003, from $291,000 (0.4% of the consumer electronics net revenues) for the three months ended December 31, 2002. For the nine months ended December 31, 2003, interest expense decreased $812,000 or 52.5%, to $735,000 (0.5% of the consumer electronics net revenues) from $1.5 million (0.7% of the consumer electronics net revenues) for the same period ended December 31, 2002. The decreases in interest expense for the three and nine month periods were the result of lower average borrowings and lower borrowing costs.

Provision for Income Taxes - The provision for income taxes was $653,000 and $1.6 million for the three and nine months ended December 31, 2003, respectively, as compared to $1.8 million and $6.0 million for the three and nine month periods ended December 31, 2002, respectively. The decreases in the provisions for the three and nine month periods ended December 31, 2003 were primarily the result of lower taxable income as compared to the same periods in fiscal 2003.

Net Income - As a result of the foregoing factors, the consumer electronics segment earned net income of $2.5 million (4.1% of net revenues) for the three months ended December 31, 2003 as compared to $4.5 million (6.3% of net revenues) for the three months ended December 31, 2002. For the nine months ended December 31, 2003 the consumer electronics segment earned $2.8 million (1.9% of net revenues) as compared to $13.0 million (6.0% of net revenues) for the nine months ended December 31, 2002.

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Sporting Goods Segment:

          The following table summarizes certain financial information relating to the sporting goods segment as reported by SSG for the three and nine month periods ended December 31, 2003 and 2002 (in thousands):

		Three Months Ended						Nine Months Ended
		December 31						December 31
		2003			2002			2003			2002
		(Unaudited)						(Unaudited)
Net revenues		$	14,726		$	15,126		$	59,705		$	58,712
Cost of sales			10,978			11,215			43,723			42,055
Selling, general & Administrative			6,205			6,136			18,215			18,938
	Operating loss		(2,457	)		(2,225	)		(2,233	)		(2,281	)
Interest expense, net			(115	)		(114	)		(409	)		(430	)
Loss before income taxes, discontinued operations and cumulative effect of accounting change			(2,572	)		(2,339	)		(2,642	)		(2,711	)
Provision (benefit) for income taxes			—			112			—			—
Income from discontinued operations			3,153			92			3,048			584
Cumulative effect of change in accounting principle			—			—			—			(7,442	)
	Net income (loss)	$	581		$	(2,359	)	$	406		$	(9,569	)

Net Revenues - Net revenues decreased $400,000 (2.6%) to $14.7 million from $15.1 million and increased $993,000 (1.7%) to $59.7 million from $58.7 million for the three and nine month periods ended December 31, 2003 and December 31, 2002, respectively. These variances are primarily associated with increased competition, a decreased sales force, continued restrictions in state, federal and school budgets, and declining participation and funding of youth sports organizations. SSG is continuing with its implementation of sales and marketing programs to stabilize revenues in a very competitive marketplace.

Cost of Sales - Cost of sales decreased by approximately $237,000 (2.1%) to $11.0 million from $11.2 million and increased $1.7 million (4.0%) to $43.7 million from $42.1 million for the three and nine month periods ended December 31, 2003, respectively, as compared to same periods last year. As a percentage of net revenues, cost of sales increased to 74.5% from 74.1%, and to 73.2% from 71.6% for the three and nine month periods ended December 31, 2003, respectively, as compared to the same periods in the prior fiscal year. The increase in cost of sales for the nine month period was primarily the result of more aggressive pricing within the markets which SSG competes, increased freight and increased importing costs.

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Selling, General and Administrative Expenses (“S,G&A”) - S,G&A expenses increased approximately $69,000 (1.1%) to $6.2 million from $6.1 million and decreased approximately $723,000 (3.8%) to $18.2 million from $18.9 million for the three and nine month periods ended December 31, 2003, respectively, as compared to the three and nine month periods ended December 31, 2002. As a percentage of sporting goods net revenues, SG&A increased to 42.1% from 40.6% and decreased to 30.5% from 32.3% for the three and nine month periods ended December 31, 2003, as compared to the same periods in fiscal 2003. The increases in SG&A for the three month period were primarily a result of increases of approximately $216,000 and $152,000 in legal fees and sales and marketing expenses, respectively. These increases were partially offset by a decrease in payroll related expense of approximately $250,000 attributable to a reduced headcount. The decreases in SG&A for the nine month period were primarily the result of decreases in payroll related expenses of approximately $308,000 and a decrease in sales and marketing expenses of approximately $379,000. In addition, SSG has elected not to renew its Huffy and AMF license agreements and expects a royalty expense reduction in future fiscal years of approximately $185,000, annually, without an offsetting reduction to revenues.

Interest Expense, net - Interest expense was relatively unchanged for the three months ending December 31, 2003 as compared to the same period in the prior year, and decreased by $21,000 (4.9%) to $409,000 from $430,000 for the nine month period ended December 31, 2003, as compared to the same periods in fiscal 2003. The cash received from the sale of SSG’s ATEC subsidiary in November 2003 resulted in a reduction of SSG’s debt, and is expected to reduce future interest expense.

Provision for Income Taxes - SSG recorded no income tax provision for the three and nine month periods ended December 31, 2003, respectively, as compared to a tax provision of approximately $112,000 and no tax provision for the three and nine month periods ended December 31, 2002, respectively. Discontinued operations are reported net of income tax provisions. See Note 6 – Income Taxes.

Income from Discontinued Operations – Discontinued operations reflect net operating losses related to our discontinued and sold team dealer operations, and the net income from and net gain on sales of SSG’s ATEC subsidiary for the three and nine month periods ended December 31, 2003 and 2002. See Note 12 – Discontinued Operations.

Cumulative Effect of Change in Accounting Principle - On March 30, 2002, SSG adopted Financial Accounting Standards Board 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. Goodwill is required to be tested for impairment in a transitional test upon adoption and then at least annually

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by reporting unit. As a result of its impairment testing, SSG recorded a non-cash “cumulative effect of accounting change” impairment write down of approximately $7.4 million for the nine month period ended December 31, 2002.

Net Income (Loss) - As a result of the foregoing factors, the sporting goods segment earned net income of approximately $581,000 for the three months ended December 31, 2003 as compared to net loss of $2.4 million for the three months ended December 31, 2002. For the nine months ended December 31, 2003 the sporting goods segment earned net income of $406,000 as compared to a net loss of $9.6 million for the nine months ended December 31, 2002.

Liquidity and Capital Resources

          Operating cash flow provided by continuing operating activities was approximately $6.1 million for the nine months ended December 31, 2003. Cash was primarily provided from decreases in inventory, prepaid expenses and other current assets, partially offset by an increase in accounts receivable and a decrease in accounts payable and other current liabilities.

          Operating cash flow provided by discontinued operations for the nine months ended December 31, 2003 was approximately $469,000 due to the results and disposals of SSG’s ATEC subsidiary and Team Dealer locations in Arkansas, Oklahoma and Kansas.

          Net cash provided by investing activities was approximately $10.2 million for the nine months ended December 31, 2003, due to the sale of ATEC shares of $10.5 million, offset by the purchase of fixed assets, which consisted mainly of computer and office equipment.

          Net cash used for financing activities was approximately $21.3 million for the nine months ended December 31, 2003. Cash was primarily utilized for the reduction of borrowings and the repurchase of Emerson’s common stock.

          Emerson and SSG maintain credit facilities as described in Note 9 – Borrowings. At December 31, 2003, there were approximately $9.5 million of borrowings outstanding under these facilities, of which no letters of credit were outstanding. Approximately $2.6 million of borrowings were outstanding by Emerson and $6.9 million of borrowings were outstanding by SSG. At December 31, 2003, Emerson and SSG were in compliance with the covenants in the Loan Agreements, as amended.

          Certain of our foreign subsidiaries maintain credit facilities, as amended, aggregating $87.5 million consisting of the following: (i) two letter of credit facilities totaling $12.5 million that provide for a $2.5 million seasonal increase. The facilities are used for inventory purchases and require us to pledge approximately $3.0 million in certificates of deposit for such availability and, (ii) four back-to-back

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letter of credit facilities totaling $75 million that require a compensating cash balance of $1.5 million. At December 31, 2003, there were approximately $7.3 million and $502,000, respectively, of letters of credit outstanding under these credit facilities.

          At present, we believe that future cash flow from operations and our existing institutional financing noted above will be sufficient to fund all of our cash requirements for the next twelve months.

          The following summarizes our obligations at December 31, 2003 for the periods shown (in thousands):

	Payment due by period
			Less than 1						More than 5
	Total		year		1 – 3 years		3 – 5 years		years
Notes Payable	$	9,335	$	9	$	2,450	$	6,876	$	—
Capital lease obligations		119		62		57		—		—
Leases		4,601		1,816		2,091		694		—
Total	$	14,055	$	1,887	$	4,598	$	7,570	$	—

          There were no material capital expenditure commitments and no substantial commitments for purchase orders outside the normal course of business used to secure product as of December 31, 2003.

Contingencies

          During the past several years, SSG used the services of Strategic Technologies, Inc. (“STI”) to process their outbound truck freight bills. STI audited SSG’s freight bills and provided a listing of freight invoices that were scheduled for payment, at which time SSG transferred funds to STI. STI was required to issue checks to the various carriers within forty-eight (48) hours of receipt of SSG’s funds. STI filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code on July 19, 2002, which was converted to Chapter 7 of the U.S. Bankruptcy Code on July 31, 2002. In certain circumstances, SSG has had to pay their freight carriers for invoices that were previously paid to STI and is attempting to recover such monies from STI. SSG has filed a proof of claim of approximately $593,000 for unpaid shipping charges and service fees paid to STI. No assurance can be made that SSG will be able to recover such money.

          During the past several years, SSG used the services of Consolidated Freightways Corporation to ship product to its customers. Consolidated Freightways Corporation filed for reorganization under Chapter 11 of the U. S. Bankruptcy Code on December 2, 2002, in the United States Bankruptcy Court in the District of California, Case No. RS 02-24284-MG. On August 25, 2003, the Bankruptcy Trustee for Consolidated

24

Freightways Corporation of Delaware filed a lawsuit in the United States Bankruptcy Court, Central District of California, to collect fees for the transportation of goods, that are alleged to be owed to the bankruptcy estate. The Trustee’s initial claim is $866,684, which includes approximately $265,000 in collection fees and late payment charges. SSG disputes the amount claimed by the Trustee and claims an offset of approximately $308,000 for goods lost or damaged by Consolidated Freightways in transit.

          It is not possible at this time to determine the ultimate liabilities or recoveries that we may incur resulting from these lawsuits, claims, and proceedings. If these matters were to be ultimately resolved unfavorably at amounts exceeding our reserves, an outcome not currently anticipated, it is possible that such outcome could have a material adverse effect on our consolidated financial position or results of operations.

Critical Accounting Policies

          For the three and nine month periods ended December 31, 2003, there were no significant changes to our accounting policies from those reported in Form 10-K for the fiscal year ended March 31, 2003.

Inflation, Foreign Currency, and Interest Rates

          Neither inflation nor currency fluctuations had a significant effect on our results of operations during the first three quarters of fiscal 2004. Our exposure to currency fluctuations has been minimized by the use of U.S. dollar denominated purchase orders, and by sourcing production in more than one country. The consumer electronics segment purchases virtually all of its products from manufacturers located in various Asian countries.

          The interest on borrowings under our credit facilities is based on the prime and LIBOR rate. We believe that given the present economic climate, interest rates are not expected to increase significantly during the coming year.

Recent Pronouncements of the Financial Accounting Standards Board

          In January 2003, the Financial Accounting Standards Board issued Interpretation No. 46 (“FIN 46”), “Consolidation of Variable Interest Entities,” which addresses consolidation of variable interest entities (“VIE’s”). FIN 46 requires a variable interest entity to be consolidated by a parent company if that company is subject to a majority of the risk of loss from the variable interest entity’s activities or entitled to receive a majority of the entity’s residual returns or both. A variable interest entity is a corporation, partnership, trust or any

25

other legal structure used for business purposes that either does not have equity investors with voting rights or has equity investors that do not provide sufficient financial resources for the entity to support its activities. In October 2003, the FASB agreed to defer the effective date of FIN 46 for variable interest held by public companies in all entities that were acquired prior to February 1, 2003. This deferral is to allow time for certain implementation issues to be addressed through the issuance of a potential modification to the interpretation. The deferral revised the effective date for consolidation of these entities until the end of the first interim or annual period ending after December 15, 2003. We adopted this statement as of December 31, 2003 and it did not have any material impact on our financial statements.

          In April 2003, the FASB issued FAS 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities.” FAS 149 amends and clarifies financial accounting and reporting for derivative instruments. This statement is effective for contracts entered into or modified after June 30, 2003. We adopted this statement as of July 1, 2003 and it did not have any material impact on our financial statements.

          In May 2003, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 150 (SFAS 150), “Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity,” which addresses how an issuer classifies and measures financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances) because that financial instrument embodies an obligation of the issuers. This Statement shall be effective for financial instruments entered into or modified after May 31, 2003, and otherwise shall be effective (except for certain measurement requirements, the effective date of which has been deferred indefinitely) at the beginning of the first interim period beginning after June 15, 2003. For financial instruments created before the issuance date of this Statement and still existing at the beginning of the interim period of adoption, transition shall be achieved by reporting the cumulative effect of a change in an accounting principle by initially measuring the financial instruments at fair value or other measurement attribute required by this Statement. We adopted this statement as of July 1, 2003 and it did not have any material impact on our financial statements.

Forward-Looking Information

          This report contains various forward-looking statements made pursuant to the safe harbor provisions under the Private Securities Litigation Reform Act of 1995 (the “Reform Act”) and information that is based on management’s beliefs as well as assumptions made by and information currently available to management. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. When used in this report, the words “anticipate”, “believe”,

26

“estimate”, “expect”, “predict”, “project”, and similar expressions are intended to identify forward-looking statements. Readers are cautioned not to place undue reliance on forward-looking statements which speak only as of the date hereof, and should be aware that our actual results could differ materially from those contained in the forward-looking statements due to a number of factors, including the statements under “Risk Factors” set forth in our Form 10-K for the fiscal year ended March 31, 2003 and other filings with the Securities and Exchange Commission (the “SEC”). For additional risk factors as they relate to the sporting goods segment, see SSG’s Form 10-K for the fiscal year ended March 28, 2003 Item 7 – “Certain Factors that May Affect the Company’s Business or Future Operating Results” and other filings with the SEC. We undertake no obligation to publicly release the results on any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

          We maintain a website at www.emersonradio.com. We make available on our website the proxy statements and reports on Forms 8-K, 10-K and 10-Q that we file with the SEC and other filings with the SEC with respect to our securities as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

     There have been no significant changes from items disclosed in Form 10-K for the fiscal year ended March 31, 2003.

Item 4. Controls and Procedures

(a)

Disclosure controls and procedures. As of the end of the period covered by this Quarterly Report on Form 10-Q, we carried out an evaluation, with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures pursuant to Securities Exchange Act Rule 13a-15. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective in ensuring that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms.

(b)

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

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PART II OTHER INFORMATION

ITEM 1. Legal Proceedings.

Putative Class Actions

          Between September 4, 2003 and October 30, 2003, several putative class action lawsuits were filed in the United States District Court for the District of New Jersey against us and Mssrs. Geoffrey Jurick, Kenneth Corby and John Raab (the “Individual Defendants”) on behalf of purchasers of our publicly traded securities who bought shares between January 29, 2003 and August 12, 2003 (the “Class Period.”) On December 17, 2003, the Court entered a Joint Stipulation and Order consolidating these putative class actions under the caption In Re Emerson Radio Corp. Securities Litigation, 03cv4201 (JLL) (the “Consolidated Action.”) Further to that Stipulation and Order, lead plaintiff was appointed and co-lead counsel and co-liaison counsel were approved by the Court in the Consolidated Action.

          Generally, the original complaints allege that we and the Individual Defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated there under, by issuing certain positive statements during the Class Period regarding our growth and demand for our products. The complaints further allege that these statements were each materially false and misleading when made because we allegedly misrepresented and omitted certain adverse facts which then existed and disclosure of which was necessary to make the statements not false and misleading.

          The lead plaintiff in the Consolidated Action is currently scheduled to file an Amended and Consolidated Complaint on or about March 15, 2004, which may contain additional allegations. We and the Individual Defendants intend to defend these lawsuits vigorously.

          For other information on litigation to which we are a party, reference is made to Part 1 Item-3-Legal Proceedings in our most recent annual report on Form 10-K.

ITEM 2. Changes in Securities and Use of Proceeds.

Issuance of Securities:

          In October 2003, in connection with a consulting arrangement, we granted warrants to purchase 50,000 shares of our common stock with an exercise price of $5.00 per share. In addition, in November 2003, we issued 45,544 shares of our common stock upon exercise of 100,000

28

outstanding warrants under a cashless transaction. These securities were issued in transactions not involving a public offering and exempt from registration under Section 4(2) of the Securities Act of 1933, as amended.

Share Repurchases:

           The following table summarizes Emerson Radio Corp.’s common stock share repurchase program for the quarter ending December 31, 2003. The share 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 the Securities and Exchange Act Rule 10B (18). Prior to the December 31, 2003 quarter, we repurchased 188,800 shares under this program.

					Cumulative
					Number of		Maximum Number
					Shares Purchased		of Shares that
					as Part of		May Yet Be
	Total Number		Average		Publicly		Purchased
	of Shares		Price Paid		Announced		Under the
Period	Purchased		Per Share		Programs		Programs
October 01, 2003 through October 31, 2003		267,000	$	3.99		455,800		1,544,200
November 01, 2003 through November 30, 2003		84,425	$	3.76		540,225		1,459,775
December 01, 2003 through December 31, 2003		245,100	$	3.39		785,325		1,214,675
TOTAL		596,525	$	3.71

ITEM 3. Default Upon Senior Securities.

(a)	None
(b)	None

ITEM 4. Submission of Matters to a Vote of Security Holders.

None

ITEM 5. Other Information.

(a) None

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ITEM 6. Exhibits and Reports on Form 8-K.

(a)	Exhibits:
10.27.1	Amendment to Revolving Credit and Term Loan Agreement (Number One) dated November 7, 2003 among Emerson Radio Corp., Majexco Imports, Inc., Emerson Radio (Hong Kong) Ltd., and Emerson Radio international Ltd. Jointly and Severally, and PNC Bank, National Association.*
10.27.2	Amendment to Revolving Credit and Term Loan Agreement (Number Two) dated December 31, 2003 among Emerson Radio Corp., Majexco Imports, Inc., Emerson Radio (Hong Kong) Ltd., and Emerson Radio international Ltd. Jointly and Severally, and PNC Bank, National Association.*
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.*
10.35.3	Fourth Amendment to Loan and Security Agreement dated December 29, 2003 by and between Sport Supply Group, Inc. and Congress Financial Corporation (incorporated by reference to Exhibit 10.1 of Sport Supply’s Quarterly Report on Form 10-Q for the quarter ended December 26, 2003).
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.*
(b)	Reports on Form 8-K:
	Current report on Form 8-K, dated November 14, 2003, furnishing the press release announcing the Company’s financial results for the quarter ended September 30, 2003.

* filed herewith

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SIGNATURES

          Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	EMERSON RADIO CORP.
	(Registrant)
Date: February 17, 2004	/s/ Geoffrey P. Jurick
	Geoffrey P. Jurick
	Chairman of the Board,
	Chief Executive Officer and
	President
	(Principal Executive Officer)

Date: February 17, 2004	/s/ Kenneth A. Corby Kenneth A. Corby
	Kenneth A. Corby
	Executive Vice President and
	Chief Financial Officer
	(Principal Finance and
	Accounting Officer)

31 EX-10.27.1 3 d12717exv10w27w1.txt AMENDMENT TO REVOLVING CREDIT AND LOAN AGREEMENT EXHIBIT 10.27.1 AMENDMENT TO REVOLVING CREDIT AND TERM LOAN AGREEMENT (NUMBER ONE) This AMENDMENT TO REVOLVING CREDIT AND TERM LOAN AGREEMENT (NUMBER ONE) dated as of November 7, 2003 (the "Amendment"), amends that certain Revolving Credit and Term Loan Agreement dated as of June 28, 2002 (the "Loan Agreement") by and among EMERSON RADIO CORP. ("ERC US"), a Delaware corporation, MAJEXCO IMPORTS, INC. ("MI"), a California corporation, EMERSON RADIO (HONG KONG) LIMITED ("ER HONG KONG") a Hong Kong corporation, and EMERSON RADIO INTERNATIONAL LTD. ("ER BVI"), a British Virgin Islands company, jointly and severally as co-borrowers and co-obligors, except as expressly set forth herein in Section 10.8 hereof (individually and collectively, the "Borrower"), PNC BANK, NATIONAL ASSOCIATION and each other lender signatory hereto or which becomes a Lender pursuant to Section 9.1 (each a "Lender" and, collectively, the "Lenders") and PNC BANK, NATIONAL ASSOCIATION as agent for the Lenders (in such capacity, the "Agent"). WITNESSETH: A. Pursuant to the Loan Agreement, the Lenders provided the Borrower a revolving credit facility and a term loan as described in the Loan Agreement. B. The Borrower has requested the Agent and the Lenders clarify the reporting requirements set forth in Section 5.1 (a)(ii) of the Loan Agreement to assure the Borrower's ability to comply with said reporting requirement now and in the future. C. The Agent and the Lenders are willing to provide said clarifications subject to, and in accordance with, the terms and conditions set forth herein. D. The Borrower has further requested various other modifications to certain of the other terms and conditions set forth in the Loan Agreement (in each case as more fully described below) and the Agent and the Lenders are willing to so modify the Loan Agreement subject to, and in accordance with, the terms and conditions set forth herein. E. The Agent, and the Lenders and the Borrower further desire to amend the Loan Agreement to reflect the assumption of the Revolving Loan Commitment and Term Loan Commitment of LaSalle Business Credit, LLC (the "Exiting Lender") by PNC Bank, National Association and Sovereign Bank (together, the "Assuming Lenders"), and the related adjustments to the Commitments and Percentages of the Assuming Lenders. NOW, THEREFORE, in consideration of the premises and the covenants and agreements set forth herein, and for value received by each party, the parties hereto agree as follows: 1. Definitions. Unless otherwise defined or modified herein, capitalized terms used herein shall have the meanings set forth in the Loan Agreement. 2. Amendments to Loan Agreement. Subject to the satisfaction of the conditions to effectiveness set forth in Section 8 below, the Loan Agreement shall be amended as follows: (a) The following additional defined terms shall be inserted into Section 1.1 of the Loan Agreement in their respective appropriate alphabetical order: ""Permitted ERC US Stock Repurchases" means the purchase by ERC US of up to 2,000,000 shares of its publicly traded stock from Persons other than Affiliates of the Borrower for an aggregate consideration not to exceed $10,000,000." ""Permitted SSG Stock Repurchases" means the purchase by ERC US of up to 500,000 shares of the publicly traded stock of SSG from Persons other than Affiliates of the Borrower or SSG for an aggregate consideration not to exceed $1,000,000." (b) The first sentence of Section 2.19(a) of the Loan Agreement is hereby amended in its entirety to read as follows: "(a) The proceeds of the Revolving Credit Loans shall be used for working capital needs of the Borrower and for general corporate purposes and to fund Permitted ERC US Stock Repurchases and to fund Permitted SSG Stock Repurchases." (c) Clause (ii) of Section 5.1(a) of the Loan Agreement is hereby amended in its entirety to read as follows: "(ii) as soon as available but in any event within 105 days of the end of each other fiscal year of ERC US ending after March 31, 2002, (1) a copy of the consolidated and consolidating balance sheet of ERC US and its consolidated Subsidiaries as at the end of such fiscal year and the related consolidated and consolidating statements of income and retained earnings and of cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, prepared internally by a Responsible Person, (2) a copy of the consolidated balance sheet of ERC US and its consolidated Subsidiaries as at the end of such fiscal year and the related consolidated statements of income and retained earnings and of cash flows for such fiscal year, certified by and reported on without a "going concern" or like qualification or exception, or qualification arising out of the scope of the audit, by Ernst & Young, LLP or other independent certified public accountants of nationally recognized standing reasonably acceptable to the Agent; together with consolidating schedules which set forth columnar information for each of ERC US and its consolidated Subsidiaries (other than SSG) and SSG, an elimination column and the consolidated results for ERC US and its consolidated Subsidiaries, and in any event in substantially the same format as presented to the Agent by Ernst & Young for the fiscal year ended March 31, 2003, and (3) a compliance certificate by a Responsible Officer as to such financial statements being fairly stated in all material respects when considered in relation to the consolidated financial statements of ERC US and its consolidated Subsidiaries; and" (d) Clause (b) of Section 6.6 of the Loan Agreement is hereby amended in its entirety to read as follows: "(b) So long as no Event of Default shall have occurred and be continued, ERC US may (i) acquire Capital Stock in SSG (provided such Capital Stock of SSG is acquired only with Capital Stock of ERC US and provided giving effect to any such acquisition shall not cause any Person who holds less than 10% (or such greater percentage as the Required 2 Lenders may agree to in writing) of any class of Capital Stock of ERC US on the date hereof to hold more than 10% (or such greater percentage as the Required Lenders may agree to in writing) of any such class of Capital Stock of ERC US, (ii) acquire additional Capital Stock in SSG in connection with Permitted SSG Stock Repurchases and (iii) beginning on the first anniversary of the Closing Date, in accordance with the strategic objectives of its business plan, acquire Capital Stock in other Persons (other than Inactive Subsidiaries) in businesses related to that of ERC US; provided, however, that in the cases described in clauses (i) and (iii), taken together in an aggregate amount for each 12 month period beginning on an anniversary of the Closing Date and ending on the next succeeding anniversary of the Closing Date (each such period, an "Acquisition Period") not exceeding the lesser of (x) $500,000 and (y) the principal amount of the Term Loan repaid pursuant to Section 2.9(e) during the twelve month period immediately preceding the then current Acquisition Period;" For the avoidance of doubt, notwithstanding the date of this Amendment, the Permitted ERC US Stock Repurchases and Permitted SSG Stock Repurchase that may have been consummated on or after September 2, 2003 but prior to the Effective Date (as defined in Section 8 below) shall be deemed to be in compliance with Section 6.6(b) of the Loan Agreement (as amended hereby) without any further action required of the Agent, the Lenders or the Borrower. (e) Section 6.12 of the Loan Agreement is hereby amended in its entirety to read as follows: "Section 6.12 Fixed Charge Coverage Ratio. Permit the Fixed Charge Coverage Ratio for the period of four consecutive fiscal quarters preceding any date of determination to be less than 1.25 to 1, except in the case of the four consecutive fiscal quarters preceding March 31, 2004, in which case, said ratio shall not be permitted to be less than 1.10 to 1." (f) Section 6.14 of the Loan Agreement is hereby amended in its entirety to read as follows: "Section 6.14 Minimum Post-Repurchase Availability. At all times during the Repurchase Period permit the Undrawn Availability to be less than $2,000,000. As used herein, "Repurchase Period" means the period commencing upon the commencement of either the Permitted ERC US Stock Repurchases or the Permitted SSG Stock Repurchases (whether or not funded in whole or in pan with the proceeds of the Revolving Credit Loans) and ending upon the earlier to occur of (i) the consummation of both the Permitted ERC US Stock Repurchases and Permitted SSG Stock Repurchases or (ii) the date that the Borrower furnishes to the Agent written notice certifying that (y) no further Permitted ERG US Stock Repurchases or Permitted SSG Stock Repurchases shall be made and (z) the benefits of Section 6.6 (b)(ii) of this Agreement shall no longer be available to the Borrower." (g) For the purpose of adjusting the Commitments and Percentages of the Assuming Lenders, SCHEDULE I to the Loan Agreement is hereby deleted in its entirety and SCHEDULE I attached hereto is hereby substituted in its place and made a part of the Loan Agreement. 3 3. Assumption of Exiting Lender's Obligations; New Notes. (a) Pursuant to that certain Commitment Transfer Supplement dated on or before the Effective Date, each Assuming Lender shall have taken by assignment and purchased from the Exiting Lender, without recourse to, or representation or warranty, by the Exiting Lender of any kind or description, an interest in the Revolving Credit Loans and Term Loans owing to the Exiting Lender as of the Effective Date (but excluding accrued interest and fees up to but excluding the Effective Date) equal to Percentage of such Assuming Lender (after giving effect to this Amendment) of said outstanding obligations. On or before the Effective Date, the Borrower shall pay to the Exiting Lender all accrued and unpaid interest on the outstanding principal amount of the Loans owing to the Exiting Lender, together with the Exiting Lender's pro rata share of any accrued and unpaid fees under the Loan Agreement, in each case through but excluding the Effective Date. (b) To evidence the obligations of the Borrower owing to the Assuming Lenders, as of the Effective Date, the Borrower shall issue to each Assuming Lender a new Revolving Credit Note and a new Term Note substantially in the form attached hereto. Each such note shall be (i) dated the Effective Date, and (ii) in an original principal amount of up to the respective Commitment of the applicable Assuming Lender in the Loan evidenced by such Note, in each case, after giving effect to this Amendment. 4. Effects of Clarification. The Borrower acknowledges and agrees the amendments made pursuant to clause (c) of Section 2 above have been made to clarify the reporting requirements set forth therein and in no event shall be construed as the establishment of a custom or course of dealing among the Borrower, the Agent or the Lenders with respect to any current or future issue of the Borrower's non-compliance with any term, condition or covenant set forth in this Loan Agreement or the other Loan Documents. 5. References to Loan Agreement. This Amendment is an amendment to the Loan Agreement. Unless the context of this Amendment otherwise requires, the Loan Agreement and this Amendment shall be read together and shall have effect as if the provisions of the Loan Agreement and this Amendment were contained in one agreement. 6. Full Force and Effect. Except as expressly modified by this Amendment, all of the terms and conditions of the Loan Agreement and the other Loan Documents shall continue in full force and effect, and all parties hereto shall be entitled to the benefits thereof. This Amendment is limited as written and shall not be deemed (a) to be an amendment of or a consent under or waiver of any other term or condition of the Loan Agreement, or (b) to prejudice any right or rights which the Lender now has or may have in the future under or in connection with the Loan Agreement or the other Loan Documents. 7. Post-Closing Undertakings. In consideration of the modifications to the Loan Agreement set forth herein, the Borrower covenants and agrees that it shall furnish to the Agent each of the items specified in SCHEDULE "A", in each case in form and substance satisfactory to the Agent and the Lenders on or before (i) November 14, 2003 in the case of Item 1 on said Schedule and (ii) November 26, 2003 in the case of Item 2 on said Schedule. The Borrower further acknowledges that this Amendment is a Loan Document as defined in the Loan Agreement and consequently the failure to comply with the foregoing post-closing undertaking will constitute an Event of Default under the Loan Agreement entitling the Agent and the Lenders to exercise the rights and remedies afforded such parties under the Loan Agreement and Loan Documents. 4 8. Conditions. This Amendment shall not be effective until the following conditions precedent have been fulfilled to the satisfaction of the Agent and the Lenders: (i) the Agent shall have received counterparts of this Amendment duly executed by each of the parties hereto, (ii) the Borrower shall have paid the Agent (for ratable distribution to the Assuming Lenders) a modification fee of $15,000 in consideration of the modification to the Loan Agreement set forth herein and (iii) the assignment and purchase of the Exiting Lender's Loans as contemplated in Section 3(a) above shall have been consummated. In addition, the Borrower agrees to pay upon execution of this Amendment, all reasonable costs and expenses of the Agent and each Lender, including, without limitation, the legal fees and expenses in the amount of $9,600 incurred by the Agent's counsel in connection with the preparation, negotiation, execution and delivery and review of this Amendment. In the event Borrower does not remit such payment together with this executed Amendment, the Borrower hereby authorizes the Agent, without notice to the Borrower, to charge any account of the Borrower maintained by the Agent or its Affiliates in payment of the amounts due under this Section 8. The date on which all of the aforementioned conditions have been satisfied is herein referred to as the "Effective Date". 9. Estoppel; Representations and Warranties. In order to induce the Lenders to enter into this Amendment, the Borrower makes the following representations and warranties, which representations and warranties shall survive the execution and delivery hereof: (a) each of the Loan Agreement, the Notes, the Security Documents and the other Loan Documents are in full force and effect; (b) as amended hereby, each of the Loan Agreement, the Notes, the Security Documents, the other Loan Documents and this Amendment have been duly authorized, executed and delivered by the Borrower and constitute legal, valid and binding obligations of the Borrower enforceable against the Borrower in accordance with their respective terms; (c) the Borrower has no offset, defense or counterclaim with respect to any of their obligations under the Loan Agreement, the Notes, the Security Documents and the other Loan Documents (any such offset, defense or counterclaim as may now exist being hereby irrevocably waived by the Borrower); (d) no material adverse change in the financial condition of the Borrower has occurred since the date of its most recent financial statements delivered to the Lender; (e) no Event of Default has occurred and is continuing under the Loan Agreement or the other Loan Documents, and no event has occurred which, with notice, lapse of time or both, would constitute such an Event of Default; (f) except as discussed on SCHEDULE "B", all of the representations made by or on behalf of the Borrower in the Loan Agreement and the other Loan Documents are true and correct on and as of the date hereof; (g) neither the execution and delivery of this Amendment by the Borrower, nor consummation by the Borrower of the transactions contemplated herein, nor compliance by the Borrower with the terms, conditions and provisions hereof will conflict with or result in a breach of any of the terms, conditions or provisions of (i) any Borrower's Certificate of Incorporation and By-Laws or other organizational or governing document, (ii) any agreement or instrument to which any Borrower is a party or by which the property of the Borrower is or may be bound, (iii) any judgment or order, writ, injunction or decree of any court, or (iv) any applicable law or governmental regulation; and 5 (h) no action of, or filing with, any governmental or public body or authority is required to authorize, or is otherwise required in connection with the execution, delivery and performance of this Amendment by the Borrower. 10. Security Interests. The Borrower confirms the validity and effectiveness of the Security Documents made by the Borrower in favor of the Agent (for the benefit of the Lenders) and confirms that the Security Documents secures payment of the Obligations (as defined in the Security Documents). 11. Governing Law. This Amendment, including the validity thereof and the rights and obligations of the parties hereunder, shall be construed in accordance with and governed by, the laws of the State of New Jersey. 12. Counterparts. This Amendment may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original, and all which when taken together shall constitute one and the same agreement. 6 IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the day and year first above written. BORROWERS: EMERSON RADIO CORP. By: /s/ KENNETH A. CORBY ------------------------- Name: Kenneth A. Corby Title: EVP & CFO MAJEXCO IMPORTS, INC. By: /s/ KENNETH A. CORBY ------------------------- Name: Kenneth A. Corby Title: EVP & CFO EMERSON RADIO (HONG KONG) LIMITED By: /s/ JOHN J. RAAB ------------------------- Name: Title: EMERSON RADIO INTERNATIONAL LTD. By: /s/ KENNETH A. CORBY ------------------------- Name: Kenneth A. Corby Title: EVP & CFO 7 AGENT: PNC BANK, NATIONAL ASSOCIATION, as Agent By: /s/ PAUL E. KELLEMAN --------------------------- Name: Title: LENDERS: PNC BANK, NATIONAL ASSOCIATION, as Lender By: /s/ PAUL E. KELLEMAN --------------------------- Name: Title: SOVEREIGN BANK By: /s/ CHRIS D. WOLFSLAYER --------------------------- Name: Chris D. Wolfslayer Title: Vice President 8 SCHEDULE "A" POST-CLOSING ISSUES OUTSTANDING 1. LANDLORD WAIVERS: The Borrower shall furnish a certificate of a Responsible Person certifying that the copies of the waivers and consents received from the following landlords comport with the originals and the same have not been altered, amended or otherwise modified through the date hereof: (i) Gilbert West, Inc.; (ii) Team Ocean Services; and (iii) Pride Products. 2. UCC TERMINATION STATEMENTS: The Borrower shall furnish evidence of termination of all UCC Financing Statements filed against it in favor of Congress Financial. A-1 SCHEDULE "B" The following class action complaints have been filed in the US District Court for the District of New Jersey: 1.) Kaplan v. Emerson Radio Corn., et al., 03-cv-4202 (JLL) 2.) Pelone v. Emerson Radio Corp., et al., 03-cv-4201 (JLL) 3.) Howard v. Jurick, et al., 03-cv-4330 (WGB) 4.) Glascoff V. Emerson Radio Corp., et al., 03-cv-4506 (JLL) 5.) Stromer v. Emerson Radio Corp, at al., 03-cv-4647 (JLL) 6.) Kaplan v. Emerson Radio Corp., et al., 03-cv-4856 7.) Freitag v. Emerson Radio Corp., et al., 03-cv-5140 The complaints allege violations of federal securities laws including 1) against all defendants: Section 10(b) of the Exchange Act Against and Rule 10-b-5 promulgated thereunder, and 2) against all individual defendants: Section 20(a) of the Exchange Act. B-1 SCHEDULE I (AMENDED AND RESTATED AS OF 11/7/03) Commitments LENDER FACILITY PERCENTAGE COMMITMENT PNC Revolving Credit 65% $16,250,000 Term Loan 65% $ 1,673,750* TOTAL $17,923,750 LENDER FACILITY PERCENTAGE COMMITMENT Sovereign Bank Revolving Credit 35% $ 8,750,000 Term Loan 35% $ 901,250* TOTAL $ 9,651,250 ----------- Aggregate 100% Aggregate $27,575,000 Percentage Commitment The Percentage of any Lender as of any date shall be equal to a fraction (expressed as a decimal) the numerator of which shall be, in the case of outstanding Loans, the outstanding principal amount of Loans held by such Lender and the denominator of which shall be the aggregate outstanding principal amount of all Loans held by all Lenders. If no Loans are outstanding, the Percentage of any Lender as of any date shall be equal to a fraction (expressed as a decimal) the numerator of which shall be the aggregate principal amount of Loans such Lender is committed to fund and the denominator of which shall be the aggregate principal amount of Loans all Lenders are committed to fund. - ---------- * indicates Percentage of the applicable Lender in the outstanding principal balance of Term Loan as of 11/7/03 $(2,575,000) S-1 EX-10.27.2 4 d12717exv10w27w2.txt AMENDMENT TO REVOLVING CREDIT AND LOAN AGREEMENT EXHIBIT 10.27.2 AMENDMENT TO REVOLVING CREDIT AND TERM LOAN AGREEMENT (NUMBER TWO) This AMENDMENT TO REVOLVING CREDIT AND TERM LOAN AGREEMENT (NUMBER TWO) dated as of December 31, 2003 (the "Amendment"), amends that certain Revolving Credit and Term Loan Agreement dated as of June 28, 2002, as amended by that certain Amendment to Revolving Credit and Term Loan Agreement (Number One) dated as of November 7, 2003 (said loan agreement, as so amended, the "Loan Agreement") by and among EMERSON RADIO CORP. ("ERC US"), a Delaware corporation, MAJEXCO IMPORTS, INC. ("MI"), a California corporation, EMERSON RADIO (HONG KONG) LIMITED ("ER HONG KONG") a Hong Kong corporation, and EMERSON RADIO INTERNATIONAL LTD. ("ER BVI"), a British Virgin Islands company, jointly and severally as co-borrowers and co-obligors, except as expressly set forth herein in Section 10.8 hereof (individually and collectively, the "Borrower"), PNC BANK, NATIONAL ASSOCIATION and each other lender signatory hereto or which becomes a Lender pursuant to Section 9.1 (each a "Lender" and, collectively, the "Lenders") and PNC BANK, NATIONAL ASSOCIATION as agent for the Lenders (in such capacity, the "Agent"). WITNESSETH: A. Pursuant to the Loan Agreement, the Lenders provided the Borrower a revolving credit facility and a term loan as described in the Loan Agreement. B. The Borrower has further requested various other modifications to certain of the financial covenants set forth in the Loan Agreement (in each case as more fully described below) and the Agent and the Lenders are willing to so modify the Loan Agreement subject to, and in accordance with, the terms and conditions set forth herein. NOW, THEREFORE, in consideration of the premises and the covenants and agreements set forth herein, and for value received by each party, the parties hereto agree as follows: 1. Definitions. Unless otherwise defined or modified herein, capitalized terms used herein shall have the meanings set forth in the Loan Agreement. 2. Amendments to Loan Agreement. Subject to the satisfaction of the conditions to effectiveness set forth in Section 8 below, the Loan Agreement shall be amended as follows: (a) Section 6.12 of the Loan Agreement is hereby amended in its entirety to read as follows: "Section 6.12. Fixed Charge Coverage Ratio. Permit the Fixed Charge Coverage Ratio for the period of four consecutive fiscal quarters preceding any date of determination to be less than 1.25 to 1, except in the case of the four consecutive fiscal quarters preceding March 31, 2004, in which case, said ratio shall not be permitted to be less than 1.10 to 1; provided, however that (i) the parties acknowledge and agree that the Fixed Charge Coverage Ratio will not be tested for the test period ending December 31, 2003 and (ii) for purposes of the determination of the Fixed Charge Coverage Ratio for the test period ending March 31, 2004, Borrower shall by permitted to add back into the Consolidated EBITDA the non-recurring expenses related to its unconsummated so-called "Recoton" acquisition in an amount not to exceed $643,000." (b) Immediately following Section 6.16 of the Loan Agreement, there shall be added a new Section 6.17, that shall read as follows: "Section 6.17. Minimum Consolidated EBITDA. Permit the Consolidated EBITDA to be less than $2,500,000 for the fiscal quarter beginning October 1, 2003 and ending December 31, 2003 on a non-cumulative basis." 3. Effects of Clarification. The Borrower acknowledges and agrees that the amendment made pursuant to clause (a) of Section 2 above and the additional requirements set forth in clause (b) of Section 2 above have been made to clarify and establish certain financial covenants for the fiscal periods therein specified and in no event shall be construed as the establishment of a custom or course of dealing among the Borrower, the Agent or the Lenders with respect to any current or future issue of the Borrower's non-compliance with any term, condition or covenant set forth in this Loan Agreement or the other Loan Documents. 4. References to Loan Agreement. This Amendment is an amendment to the Loan Agreement. Unless the context of this Amendment otherwise requires, the Loan Agreement and this Amendment shall be read together and shall have effect as if the provisions of the Loan Agreement and this Amendment were contained in one agreement. 5. Full Force and Effect. Except as expressly modified by this Amendment, all of the terms and conditions of the Loan Agreement and the other Loan Documents shall continue in full force and effect, and all parties hereto shall be entitled to the benefits thereof. This Amendment is limited as written and shall not be deemed (a) to be an amendment of or a consent under or waiver of any other term or condition of the Loan Agreement, or (b) to prejudice any right or rights which the Lender now has or may have in the future under or in connection with the Loan Agreement or the other Loan Documents. 6. Conditions. This Amendment shall not be effective until the following conditions precedent have been fulfilled to the satisfaction of the Agent and the Lenders: (i) the Agent shall have received counterparts of this Amendment duly executed by each of the parties hereto, and (ii) the Borrower shall have paid the Agent (for ratable distribution to the Lenders) a modification fee of $5,000 in consideration of the modification to the Loan Agreement set forth herein. In addition, the Borrower agrees to pay upon execution of this Amendment, all reasonable costs and expenses of the Agent and each Lender, including, without limitation, the legal fees incurred by the Agent's counsel in connection with the preparation, negotiation, execution and delivery and review of this Amendment. In the event Borrower does not remit such payment together with this executed Amendment, the Borrower hereby authorizes the Agent, without notice to the Borrower, to charge any account of the Borrower maintained by the Agent or its Affiliates in payment of the amounts due under this Section 6. 7. Estoppel; Representations and Warranties. In order to induce the Lenders to enter into this Amendment, the Borrower makes the following representations and warranties, which representations and warranties shall survive the execution and delivery hereof: 2 (a) each of the Loan Agreement, the Notes, the Security Documents and the other Loan Documents are in full force and effect; (b) as amended hereby, each of the Loan Agreement, the Notes, the Security Documents, the other Loan Documents and this Amendment have been duly authorized, executed and delivered by the Borrower and constitute legal, valid and binding obligations of the Borrower enforceable against the Borrower in accordance with their respective terms; (c) the Borrower has no offset, defense or counterclaim with respect to any of their obligations under the Loan Agreement, the Notes, the Security Documents and the other Loan Documents (any such offset, defense or counterclaim as may now exist being hereby irrevocably waived by the Borrower); (d) no material adverse change in the financial condition of the Borrower has occurred since the date of its most recent financial statements delivered to the Lender; (e) no Event of Default has occurred and is continuing under the Loan Agreement or the other Loan Documents, and no event has occurred which, with notice, lapse of time or both, would constitute such an Event of Default; (f) except as discussed on SCHEDULE "A", all of the representations made by or on behalf of the Borrower in the Loan Agreement and the other Loan Documents are true and correct on and as of the date hereof; (g) neither the execution and delivery of this Amendment by the Borrower, nor consummation by the Borrower of the transactions contemplated herein, nor compliance by the Borrower with the terms, conditions and provisions hereof will conflict with or result in a breach of any of the terms, conditions or provisions of (i) any Borrower's Certificate of Incorporation and By-Laws or other organizational or governing document, (ii) any agreement or instrument to which any Borrower is a party or by which the property of the Borrower is or may be bound, (iii) any judgment or order, writ, injunction or decree of any court, or (iv) any applicable law or governmental regulation; and (h) no action of, or filing with, any governmental or public body or authority is required to authorize, or is otherwise required in connection with the execution, delivery and performance of this Amendment by the Borrower. 8. Security Interests. The Borrower confirms the validity and effectiveness of the Security Documents made by the Borrower in favor of the Agent (for the benefit of the Lenders) and confirms that the Security Documents secures payment of the Obligations (as defined in the Security Documents). 9. Release of Collateral. In connection with the payment in full of the Term Loans, the Agent (on behalf of the Lenders) shall release from the lien and security interest created pursuant to the Intellectual Property Security Agreements, the intellectual property itemized on the schedules attached thereto (said intellectual property is herein referred to as the "Released Assets"). In connection with said release, the Agent shall execute and deliver to the Borrower such instruments of release and termination as the Borrower may reasonably present to the Agent for execution and delivery. All of the cost and expense related to the release contemplated herein (including, without limitation, any and all filing or recordation fees) shall be bourne by the Borrower. In connection with the release of the Released Assets, the Borrower represents, warrants, acknowledges and agrees as follows: (i) notwithstanding said release, all of the 3 Released Assets remain subject to the restrictions set forth in Section 6.2 and 6.5 of the Loan Agreement and (ii) in connection with the enforcement of any rights or remedies of the Agent or any Lender under the Security Agreement, the Borrower hereby waives any right it may have to challenge the disposition of any Collateral based on infringement or dilution of any IP Right (as defined in the Intellectual Property Security Agreements) pursuant to, and to the fullest extent provided under, applicable law. 10. Governing Law. This Amendment, including the validity thereof and the rights and obligations of the parties hereunder, shall be construed in accordance with and governed by, the laws of the State of New Jersey without regard to any conflicts of laws principles. 11. Counterparts. This Amendment may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original, and all which when taken together shall constitute one and the same agreement. [Signatures on following pages] 4 IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the day and year first above written. Borrower: EMERSON RADIO CORP By: /s/ KENNETH A. CORBY ---------------------------- Name: Kenneth A. Corby Title: EVP, CEO MAJEXCO IMPORTS, INC. By: /s/ KENNETH A. CORBY ---------------------------- Name: Kenneth A. Corby Title: EVP, CEO EMERSON RADIO (HONG KONG) LIMITED By: /s/ GEOFFREY P. JURICK ---------------------------- Name: Geoffrey P. Jurick Title: Chairman & CEO EMERSON RADIO INTERNATIONAL LTD. By: /s/ KENNETH A. CORBY ---------------------------- Name: Kenneth A. Corby Title: EVP, CEO 5 AGENT: PNC BANK, NATIONAL ASSOCIATION, as Agent By: /s/ PAUL E. KELLEMAN ---------------------------- Name: Paul E. Kelleman Title: Vice President LENDERS: PNC BANK, NATIONAL ASSOCIATION, as a Lender By: /s/ PAUL E. KELLEMAN ---------------------------- Name: Paul E. Kelleman Title: Vice President SOVEREIGN BANK, as a Lender By: ---------------------------- Name: Title: 6 AGENT: PNC BANK, NATIONAL ASSOCIATION, as Agent By: ---------------------------- Name: Title: LENDERS: PNC BANK, NATIONAL ASSOCIATION, as a Lender By: ---------------------------- Name: Title: SOVEREIGN BANK, as a Lender By: /s/ CHRIS D. WOLFSLAYER ---------------------------- Name: Chris D. Wolfslayer Title: Vice President 7 EX-10.28.1 5 d12717exv10w28w1.txt COMMON STOCK WARRANT AGREEMENT Exhibit 12.28.1 THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY OTHER SECURITIES LAWS. SUCH SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF (1) AN EFFECTIVE REGISTRATION STATEMENT COVERING SUCH SECURITIES UNDER THE SECURITIES ACT OF 1933 AND ANY OTHER APPLICABLE SECURITIES LAWS, OR (2) AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED. COMMON STOCK PURCHASE WARRANT AGREEMENT EMERSON RADIO CORP., a Delaware corporation (the "Company"), hereby certifies that, for value received, LADENBURG THALMANN & CO. INC. or its registered transferees, successors or assigns (each, a "holder"), is the registered holder of warrants (the "Warrants") to subscribe for and purchase 50,000 shares of Common Stock (as adjusted pursuant to Section 3 hereof, the "Shares") of the Company, at a purchase price per share equal to the Warrant Exercise Price (as defined below), subject to the provisions and upon the terms and conditions hereinafter set forth. As used herein, (a) the term "Common Stock" shall mean the Company's presently authorized Common Stock, par value $.01 per share, and any stock into or for which such Common Stock may hereafter be converted or exchanged, (b) the term "Grant Date" shall mean as of October 7, 2003, and (c) the term "Warrant" shall be deemed to include any warrant issued upon transfer or partial exercise of this Warrant, unless the context clearly requires otherwise. 1. EXERCISE OF WARRANTS. (a) The Warrants may be exercised by the Holder, in whole at any time or in part from time to time, at any time up to October 7, 2008 (the "Expiration Date") at 5:00 p.m. New York City time, when such Warrants shall expire, at an exercise price of $5.00 per share (the "Warrant Exercise Price"). The Holder shall deliver to the Company written notice of the Holder's intent to exercise the Warrants at Nine Entin Road, Parsippany, New Jersey 07054-0430, or at such other address as the Company shall designate in writing to the Holder, together with this Warrant Agreement and a certified or official bank check payable to the order of the Company for the aggregate purchase price of the Shares so purchased. Upon exercise of the Warrants as aforesaid, the Company shall as promptly as practicable, and in any event within 10 days thereafter, execute and deliver to the Holder a certificate or certificates in the name of the Holder for the total number of whole Shares for which the Warrants are being exercised. If the Warrants shall be exercised with respect to less than all of the Shares, the Holder shall be entitled to receive a similar warrant of like tenor and date covering the number of Shares in respect of which the Warrants were not exercised. The Warrants covered by this Warrant Agreement shall lapse and be null and void if not exercised by the Holder on or before 5:00 p.m., New York City time, on the Expiration Date. 1 (b) In lieu of exercising this Warrant in the manner set forth in paragraph 1(a) above, this Warrant may be exercised prior to the Expiration Date by surrender of the Warrant without payment of any other consideration, commission or remuneration, together with the cashless exercise subscription form at the end hereof, duly executed. The number of Shares to be issued in exchange for the Warrant shall be the product of (x) the excess of the market price of the Common Stock on the date of surrender of the Warrant and the exercise subscription form over the Warrant Exercise Price and (y) the number of shares subject to issuance upon exercise of the Warrant, divided by the market price of the Common Stock on such date. Upon such exercise and surrender of this Warrant, the Company will (i) issue a certificate or certificates in the name of the Holder for the number of whole shares of the Common Stock to which the Holder shall be entitled, rounded down to the nearest whole number of Shares so that no fractional Shares shall be issued, and (ii) deliver the other securities and properties receivable upon the exercise of this Warrant, pursuant to the provisions of this Warrant. If the Warrants shall be exercised with respect to less than all of the Shares, the Holder shall be entitled to receive a similar warrant of like tenor and date covering the number of Shares in respect of which the Warrants were not exercised. (c) The market price of Common Stock shall mean the price of a share of Common Stock on the relevant date, determined on the basis of the last reported sale price of the Common Stock as reported on the American Stock Exchange ("AMEX"), or, if there is no such reported sale on the day in question, on the basis of the average of the closing bid and asked quotations as so reported, or, if the Common Stock is not listed on AMEX, the last reported sale price of the Common Stock on such other national securities exchange or market upon which the Common Stock is listed, or, if the Common Stock is not listed on any national securities exchange, on the basis of the average of the closing bid and asked quotations on the day in question in the over-the-counter market as reported by the National Association of Securities Dealers' Automated Quotations System, or, if not so quoted, as reported by National Quotation Bureau, Incorporated or a similar organization. 2. COVENANTS OF THE COMPANY. The Company covenants and agrees that all the Shares which may be issued upon the exercise of the Warrants represented by this Warrant Agreement will, upon issuance, be fully paid and nonassessable and free from all taxes, liens, and charges with respect to the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue). The Company further covenants and agrees that during the period within which the Warrants represented by this Warrant Agreement may be exercised, the Company will at all times have authorized and reserved a sufficient number of Shares to provide for the exercise of the Warrants represented by this Warrant Agreement. 2 3. ADJUSTMENTS OF WARRANT EXERCISE PRICE AND NUMBER OF SHARES. (a) If the Company shall, without the payment of new value, at any time declare a stock dividend on its outstanding shares of Common Stock or effectuate a stock split or reverse stock split, by subdivision or consolidation in any manner, regarding the number of shares of the Common Stock then outstanding into a different number of shares of the Common Stock, with or without par value, then thereafter the number of Shares which the holder shall have the right to purchase (calculated immediately prior to such change), shall be increased or decreased, as the case may be, in direct proportion to the increase or decrease in the number of shares of the Common Stock of the Company issued and outstanding by reason of such dividend or change, and the Warrant Exercise Price of the Shares after such change shall in the event of an increase in the number of shares of the Common Stock be proportionately reduced, and in the event of a decrease in the number of shares of the Common Stock be proportionately increased. (b) No adjustment in the Warrant Exercise Price shall be required unless such adjustment would require an increase or decrease of at least $0.05 per share of Common Stock; provided, however, that any adjustments which by reason of this sub-section (b) are not required to be made shall be carried forward and taken into account in any subsequent adjustment; and provided further, however, that adjustments shall be required and made in accordance with the provisions of this Section 3 (other than this sub-section (b)) not later than such time as may be required in order to preserve the tax-free nature of a distribution to the Holder of this Warrant or Common Stock. All calculations under this Section 3 shall be made to the nearest cent or to the nearest 1/100th of a share, as the case may be. Anything in this Section 3 to the contrary notwithstanding, the Company shall be entitled to make such reductions in the Warrant Exercise Price, in addition to those required by this Section 3, as it in its discretion shall deem to be advisable in order that any stock dividend, subdivision of shares or distribution of rights to purchase stock or securities convertible or exchangeable for stock hereafter made by the Company to its shareholders shall not be taxable. (c) Notwithstanding anything herein to the contrary, for purposes of this Section 3, the Holder agrees that no adjustment shall be made to the Warrant Exercise Price or the number of Shares issuable upon the exercise of this Warrant Agreement upon issuance of Common Stock (or any other securities) of the Company for any purposes other than as set forth in Sections 3(a) and 4 herein. 4. SURVIVAL IN THE EVENT OF MERGERS AND REORGANIZATIONS. In the event of the reclassification or change in the outstanding Common Stock (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision, combination or stock dividend), or in the event of a sale of all or substantially all of the assets of the Company, or in the event of any consolidation of the Company with, or merger of the Company into, another corporation, the Company, or such successor corporation, as the case may be, shall provide that, the Holder shall thereafter be entitled to purchase the kind and amount of shares of stock and other 3 securities and property receivable upon such reclassification, change, consolidation, sale, or merger by a holder of the number of Shares which this Warrant Agreement entitled the holder thereof to purchase immediately prior to such reclassification, change, consolidation, sale, or merger. Such corporation, which thereafter shall be deemed to be the Company for purposes of this Warrant Agreement, shall provide for adjustments, if any, which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Warrant Agreement. 5. SALE OF ASSETS, DISSOLUTION. Notwithstanding paragraph 4 hereof, in the event of a sale of all or substantially all the assets of the Company, or in the event of any distribution of all or substantially all of its assets in dissolution or liquidation, or in the event of any other distribution or dividend (other than cash dividends) or other event described in Section 4, the Company shall mail notice thereof by registered mail to the Holder and shall make no distribution to the stockholders of the Company until the expiration of 10 days from the date of mailing of the aforesaid notice; provided, however, that in any such event, if the Holder shall not exercise the Warrants within 10 days from the date of mailing such notice, all rights herein granted and not so exercised within such 10 day period shall thereafter become null and void. The Company shall not, however, be prevented from consummating any such merger, consolidation, sale or distribution without awaiting the expiration of such 10 day period, it being the intent and purpose hereof to enable the Holder, upon exercise of the Warrants, to participate in the distribution of the consideration to be received by the Company upon any such merger, consolidation, or sale or in the distribution of assets upon any dissolution or liquidation or in the event of any other distribution or dividend (as provided above). 6. NO FRACTIONAL SHARES. The number of Shares subject to issuance upon the complete exercise of the Warrants shall be rounded down to the nearest whole number of Shares so that no fractional Shares shall be issued upon the complete exercise of the Warrants. The Holder shall not be entitled to receive any compensation or property for such fractional Share to which it may have been entitled to in the absence of this provision. 7. NOTICES. If there shall be any adjustment in accordance with this Warrant Agreement, or if securities or property other than Shares of the Company shall become purchasable in lieu of Shares upon exercise of the Warrants, the Company shall forthwith cause written notice thereof to be sent by registered mail, postage prepaid, to the Holder at its address shown on the books of the Company, which notice shall be accompanied by a certificate of either independent public accountants of recognized standing or the Chairman, President, or any Vice President of the Company setting forth in reasonable detail the basis for the Holder becoming entitled to purchase such Shares and the number of Shares which may be purchased and the exercise price thereof, or the facts requiring any such adjustment, or the kind and amount of any such securities or property so purchasable upon the exercise of the Warrants, as the case may be. 8. TAXES. The issue of any stock or other certificate upon the exercise of the Warrant shall be made without charge to the Holder for any stamp, duty, excise, or 4 similar tax (but not including the Holder's income or similar taxes) in respect of the issue of such certificate. The Company shall not, however, be required to pay any tax which may be payable in respect of any transfer involved in the issue and delivery of any certificate in a name other than that of the Holder, as the registered holder of this Warrant Agreement, and the Company shall not be required to issue or deliver any such certificate unless and until the person or persons requesting the issue thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid. 9. LIMITED TRANSFERABILITY. This Warrant is not transferable or assignable by the Holder except (i) to Ladenburg Thalmann & Co. Inc., any successor firm or corporation of Ladenburg Thalmann & Co. Inc., (ii) to any of the officers of Ladenburg Thalmann & Co. Inc. or of any such successor firm, or (iii) in the case of an individual, pursuant to such individual's last will and testament or the laws of descent and distribution and is so transferable only upon the books of the Company which it shall cause to be maintained for the purpose. The Company may treat the registered holder of this Warrant as he or it appears on the Company's books at any time as the Holder for all purposes. The Company shall permit any holder of a Warrant or his duly authorized attorney, upon written request during ordinary business hours, to inspect and copy or make extracts from its books showing the registered holders of Warrants. All Warrants will be dated the same date as this Warrant. 10. WARRANT HOLDER NOT STOCKHOLDER. This Warrant Agreement does not confer upon the Holder any right to vote or to consent or to receive notice as a stockholder of the Company, as such in respect of any matters whatsoever, or any other rights or liabilities as a stockholder, prior to the exercise hereof as provided herein. 11. INVESTMENT REPRESENTATIONS. The Holder, by acceptance hereof, and with reference to the Warrants and the Shares issuable upon exercise of the Warrants, represents and warrants that: (a) The Holder is acquiring such securities for investment purposes only, for its own account, and not with a view toward resale or other distribution thereof, and has no present intention of selling or otherwise disposing of such securities. (b) The Holder is aware that the offer and sale of the securities have not been registered under the Securities Act of 1933, as amended ("Securities Act"), or any state securities law, that upon exercise of the Warrants, the Shares must be held indefinitely unless they are subsequently registered or an exemption from such registration is available and that the Company is under no obligation to register the offer and sale of the Shares under the Securities Act or any applicable state securities laws, except as otherwise set forth in Section 13 hereof. (c) The Holder acknowledges that the Warrants may not be made subject to a security interest, pledged, hypothecated, sold, or otherwise transferred in the absence of an effective registration statement for such Warrants under the Securities Act 5 and such applicable state securities laws or there is an applicable exemption therefrom. The Holder further acknowledges that, unless the offer and sale of the Shares issuable upon exercise of the Warrants have been registered under the Securities Act, the Shares issued upon the exercise of the Warrants shall be restricted in the same manner and to the same extent as the Warrants and the certificates representing such Shares shall bear the following legend: "THESE SHARES OF COMMON STOCK HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY OTHER SECURITIES LAWS. SUCH SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF (1) AN EFFECTIVE REGISTRATION STATEMENT COVERING SUCH SECURITIES UNDER THE SECURITIES ACT OF 1933 AND ANY OTHER APPLICABLE SECURITIES LAWS, OR (2) AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED." In making the above representations and warranties, the Holder intends that the Company rely thereon and understands that, as the result of such reliance, such securities are not being registered under the Securities Act or any applicable state securities laws in reliance upon the applicability of certain exemptions relating to transactions not involving a public offering. 12. LOST WARRANTS. In case this Warrant Agreement shall be mutilated, lost, stolen, or destroyed, the Company will issue a new Warrant Agreement of like date, tenor, denomination and terms and conditions, and deliver the same in exchange and substitution for and upon surrender and cancellation of the mutilated Warrant Agreement, or in lieu of any Warrant Agreement lost, stolen, or destroyed, upon receipt of evidence satisfactory to the Company of the loss, theft, or destruction of such Warrant Agreement, and upon receipt of indemnity satisfactory to the Company. 13. REGISTRATION RIGHTS. (a) The Company agrees that if at any time hereafter the Company proposes to file with the Securities and Exchange Commission (the "Commission") a registration statement ("Registration Statement") under the Securities Act on a form suitable for registering the Shares issuable upon exercise of the Warrants (other than on Form S-4, S-8, or comparable registration statement; other than any registration statement which has been declared effective by the Commission prior to the date hereof or has been filed with the Commission prior to the date hereof but has not yet been declared effective), it will give written notice to such effect to the Holder, at least 30 days prior to such filing, and, at the written request of the Holder, made within 10 days after the receipt of such notice, will include therein at the Company's cost and expense (except for the fees and expenses of counsel to the Holder and underwriting discounts and commissions attributable to the Shares of Warrant Common Stock (as defined below) 6 included therein) such number of Shares of Warrant Common Stock held by the Holder as it shall request. If the registration is an underwritten primary registration on behalf of the Company, and the managing underwriter(s) advise the Company in writing that in their good faith opinion, based upon market conditions, the number of securities requested to be included in such registration exceeds the number which can be sold in such offering, the Company will include in such registration (i) first, the securities the Company proposes to sell, (ii) second, the Warrant Common Stock (as hereinafter defined) requested to be included in such registration and any other securities requested to be included in such registration pursuant to contractual arrangements between Company and such other security holders ("Registration Rights Holders"), pro rata among the holders of the Warrant Common Stock and the Registration Rights Holders on the basis of the number of securities requested to be included in such registration by such holders and the Registration Rights Holders, and (iii) third, other securities requested to be included in such registration. The Company, at its own expense, will use its commercial reasonable efforts to file and seek the effectiveness of such Registration Statement with the Commission and will cause the prospectus included in such Registration Statement to meet the requirements of the Securities Act necessary to effect the sale of the Shares included at the request of the Holder and keep such Registration Statement effective for a period of 180 days thereafter. The term "Warrant Common Stock" shall mean the Shares issuable and issued pursuant to this Warrant Agreement and all other Warrants originally granted to Ladenburg and/or its employees or consultants as contemplated herein and pursuant to all Warrants issued upon transfer, division, or combination of, or in substitution for, any thereof. (b) The Company promptly shall notify the Holder, as a participating holder of Warrant Common Stock, of the occurrence of any event as a result of which any prospectus included in a registration statement filed pursuant to this Section 13 includes any misstatement of a material fact or omission of any material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading. (c) The Company's obligations under this Section 13 with respect to the Holder, as the holder of Warrant Common Stock, are expressly conditioned upon the Holder promptly, completely, and accurately furnishing to the Company in writing such information concerning the Holder and the terms of the Holder's proposed offering as the Company shall request for inclusion in the Registration Statement. 14. INDEMNIFICATION. (a) The Company agrees to indemnify and hold harmless each selling holder of shares of Warrant Common Stock and each person who controls any such selling holder within the meaning of Section 15 of the Securities Act, and each and all of them, from and against any and all losses, claims, damages, liabilities or actions, joint or several, to which any selling holder of shares of Warrant Common Stock or they or any of them may become subject under the Securities Act or otherwise and to reimburse the persons indemnified above for any legal or other expenses (including the reasonable cost of any 7 investigation and preparation) incurred by them in connection with any litigation or threatened litigation, whether or not resulting in any liability, but only insofar as such losses, claims, damages, liabilities or actions arise out of, or are based upon, any untrue statement or alleged untrue statement of a material fact contained in any registration statement pursuant to which shares of Warrant Common Stock were registered under the Securities Act (hereinafter called a "Registration Statement"), any preliminary prospectus, the final prospectus or any amendment or supplement thereto (or in any application or document filed in connection therewith) or document executed by the Company based upon written information furnished by or on behalf of the Company filed in any jurisdiction in order to register or qualify the shares of Warrant Common Stock under the securities laws thereof or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the indemnity agreement contained in this sub-section (a) shall not extend to any selling holder of shares of Warrant Common Stock in respect of any such losses, claims, damages, liabilities or actions arising out of, or based upon, any such untrue statement or alleged untrue statement, or any such omission or alleged omission, if such statement or omission was based upon and made in conformity with information furnished in writing to the Company by a selling holder of shares of Warrant Common Stock specifically for use in connection with the preparation of such Registration Statement, any final prospectus, any preliminary prospectus or any such amendment or supplement thereto. The Company agrees to pay any reasonable legal and other expenses for which it is liable under this sub-section (a) from time to time (but not more frequently than monthly) within 30 days after its receipt of a bill therefor. (b) Each selling holder of shares of Warrant Common Stock, severally and not jointly, will indemnify and hold harmless the Company, its directors, its officers who shall have signed the Registration Statement and each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act to the same extent as the foregoing indemnity from the Company, but in each case to the extent, and only to the extent, that any statement in or omission from or alleged omission from such Registration Statement, any final prospectus, any preliminary prospectus or any amendment or supplement thereto was made in reliance upon information furnished in writing to the Company by such selling holder specifically for use in connection with the preparation of the Registration Statement, any final prospectus or the preliminary prospectus or any such amendment or supplement thereto; provided, however, that the obligation of any holder of shares of Warrant Common Stock to indemnify the Company under the provisions of this sub-section (b) shall be limited to the product of the number of shares of Warrant Common Stock being sold by the selling holder and the market price of the Common Stock on the date of the sale to the public of these shares of Warrant Common Stock. Each selling holder of shares of Warrant Common Stock agrees to pay any legal and other expenses for which it is liable under this sub-section (b) from time to time (but not more frequently than monthly) within 30 days after receipt of a bill therefor. (c) If any action is brought against a person entitled to indemnification pursuant to the foregoing Sections 14(a) or (b) (an "indemnified party") in respect of which 8 indemnity may be sought against a person granting indemnification (an "indemnifying party") pursuant to such Sections, such indemnified party shall promptly notify such indemnifying party in writing of the commencement thereof; but the omission so to notify the indemnifying party of any such action shall not release the indemnifying party from any liability it may have to such indemnified party otherwise than on account of the indemnity agreement contained in sub-sections (a) or (b) of this Section 14, except to the extent that such failure or delay in providing notice of an indemnifiable claim shall have materially prejudiced the defense of such indemnifiable claim. In case any such action is brought against an indemnified party and it notifies an indemnifying party of the commencement thereof, the indemnifying party against which a claim is to be made will be entitled to participate therein at its own expense and, to the extent that it may wish, to assume at its own expense the defense thereof, with counsel reasonably satisfactory to such indemnified party; provided, however, that (i) if the defendants in any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded based upon advice of counsel that there may be legal defenses available to it and/or other indemnified parties which are different from or additional to those available to the indemnifying party, the indemnified party shall have the right to select separate counsel to assume such legal defenses and otherwise to participate in the defense of such action on behalf of such indemnified party or parties, and (ii) in any event, the indemnified party shall be entitled to have counsel chosen by such indemnified party participate in, but not conduct, the defense at the expense of the indemnifying party. Upon receipt of notice from the indemnifying party to such indemnified party of its election so to assume the defense of such action and approval by the indemnified party of counsel, the indemnifying party will not be liable to such indemnified party under this Section 14 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof unless (i) the indemnified party shall have employed such counsel in connection with the assumption of legal defenses in accordance with proviso (i) to the next preceding sentence (it being understood, however, that the indemnifying party shall not be liable for the expenses of more than one separate counsel), (ii) the indemnifying party shall not have employed counsel reasonably satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of commencement of the action, or (iii) the indemnifying party has authorized the employment of counsel for the indemnified party at the expense of the indemnifying party. An indemnifying party shall not be liable for any settlement of any action or proceeding effected without its written consent. (d) In order to provide for just and equitable contribution in circumstances in which the indemnity agreement provided for this Section 14 is unavailable in accordance with its terms, the Company and the selling holder of shares of Warrant Common Stock shall contribute to the aggregate losses, claims, damages and liabilities, of the nature contemplated by said indemnity agreement, incurred by the Company and the selling holder of shares of Warrant Common Stock, in such proportions as is appropriate to reflect the relative benefits received by the Company and the selling holder of shares of Warrant Common Stock from any offering of the shares of Warrant Common Stock; provided, however, that if such allocation is not permitted by applicable law or if the indemnified party failed to give the notice required under sub-section (c) of this Section 9 14, then the relative fault of the Company and the selling holder of shares of Warrant Common Stock in connection with the statements or omissions which resulted in such losses, claims, damages and liabilities and other relevant equitable considerations will be considered together with such relative benefits. (e) The respective indemnity and contribution agreements by the Company and the selling holder of shares of Warrant Common Stock in sub-sections (a), (b), (c) and (d) of this Section 14 shall remain operative and in full force and effect regardless of (i) any investigation made by any selling holder of shares of Warrant Common Stock or by or on behalf of any person who controls such selling holder or by the Company or any controlling person of the Company or any director or any officer of the company, (ii) payment for any of the shares of Warrant Common Stock, or (iii) any termination of this Agreement, and shall survive the delivery of the shares of Warrant Common Stock, and any successor of the Company, or of any selling holder of shares of Warrant Common Stock, or of any person who controls the Company or of any selling holder of shares of Warrant Common Stock, as the case may be, shall be entitled to the benefit of such respective indemnity and contribution agreements. The respective indemnity and contribution agreements by the Company and the selling holder of shares of Warrant Common Stock contained in sub-sections (a), (b), (c) and (d) of this Section 14 shall be in addition to any liability which the Company and the selling holder of shares of Warrant Common Stock may otherwise have. 15. APPLICABLE LAW. This Warrant Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without regard to the conflict of laws provisions thereof. IN WITNESS WHEREOF, the parties hereto have executed this Warrant Agreement effective as of the day and year first above written. EMERSON RADIO CORP. By: ----------------------------------- (Name) (Title) LADENBURG THALMANN & CO., INC. By: --------------------------- (Name) (Title) 10 NOTICE OF EXERCISE To: Emerson Radio Corp. 1. The undersigned hereby elects to purchase _____ shares of Common Stock of ______________________ pursuant to the terms of the attached Warrant, and tenders herewith payment of the purchase price of such shares in full. 2. Please issue a certificate or certificates representing said shares in the name of the undersigned or in such other name or names as are specified below: - ------------------------------- (Name) - ------------------------------- (Address) 3. The undersigned represents that the aforesaid shares are being acquired for the account of the undersigned for investment and not with a view to, or for resale in connection with, the distribution thereof and that the undersigned has no present intention of distributing or reselling such shares. - ------------------------------- (Signature) - ------------------------ (Date) 4. Please issue a new Warrant of equivalent form and tenor for the unexercised portion of the attached Warrant in the name of the undersigned or in such other name as is specified below: - ------------------------------- Date: ------------------------- (Warrantholder) ------------------------- Name: (Print) --------------------------- Its: ----- 11 SUBSCRIPTION FOR CASHLESS WARRANT SUBSCRIPTION The undersigned, _____________, pursuant to the provisions of the foregoing Warrant, hereby agrees to subscribe to that number of shares of the Common Stock as are issuable in accordance with the formula set forth in paragraph 1(b) of the Warrant, and makes payment therefor in full by surrender and delivery of this Warrant. Dated: Signature: Address: 12 ASSIGNMENT FOR VALUE RECEIVED, _____________ hereby sells, assigns and transfers unto the foregoing Warrant and all rights evidenced thereby, and does irrevocably constitute and appoint _____________, attorney, to transfer said Warrant on the books of _______________. Dated: Signature: Address: 13 PARTIAL ASSIGNMENT FOR VALUE RECEIVED, _____________ hereby assigns and transfers unto ___________ the right to purchase ____________ shares of the Common Stock of ____________ by the foregoing Warrant, and a proportionate part of said Warrant and the rights evidenced hereby, and does irrevocably constitute and appoint _____________, attorney, to transfer that part of said Warrant on the books of ______________. Dated: Signature: Address: 14 EX-31.1 6 d12717exv31w1.htm CERTIFICATION OF CEO PURSUANT TO SECTION 302

Exhibit 31.1

Certification

Pursuant to Section 302 of the Sarbanes - Oxley Act of 2002

I, Geoffrey P. Jurick, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Emerson Radio Corp.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over

financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 17, 2004
	/s/ Geoffrey P. Jurick_
	Chairman of the Board,
	Chief Executive Officer and
	President

EX-31.2 7 d12717exv31w2.htm CERTIFICATION OF CFO PURSUANT TO SECTION 302

Exhibit 31.2

Certification

Pursuant to Section 302 of the Sarbanes - Oxley Act of 2002

I, Kenneth A. Corby, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Emerson Radio Corp.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 17, 2004
	/s/ Kenneth A. Corby________
	Executive Vice President and Chief
	Financial Officer

EX-32 8 d12717exv32.htm CERTIFICATION OF CEO & CFO PURSUANT TO SECTION 906

Exhibit 32

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Emerson Radio Corp., (the “Company”) on Form 10-Q for the period ended December 31, 2003, filed with the Securities and Exchange Commission , Geoffrey P. Jurick, Chief Executive Officer, and Kenneth A. Corby, Chief Financial Officer, of the Company each hereby certifies pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)  The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as amended; and

(2)  The information contained in the Report fairly presents, in all material respects, the consolidated financial condition of the Company as of the dates presented and the consolidated result of operations of the Company for the periods presented.

Dated: February 17, 2004
	By:	/s/ Geoffrey P. Jurick
	Geoffrey P. Jurick
	Chief Executive Officer
	By:	/s/ Kenneth A. Corby_______
	Executive Vice President and
	Chief Financial Officer

The foregoing certification is being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code) and is not being filed as part of the Form 10-Q or as a separate disclosure document.

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Emerson Radio Corp. and will be retained by Emerson Radio Corp. and furnished to the Securities and Exchange Commission or its staff upon request.

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EX-10.27.1

                                                                 EXHIBIT 10.27.1

              AMENDMENT TO REVOLVING CREDIT AND TERM LOAN AGREEMENT
                                  (NUMBER ONE)

         This AMENDMENT TO REVOLVING CREDIT AND TERM LOAN AGREEMENT (NUMBER ONE)
dated as of November 7, 2003 (the "Amendment"), amends that certain Revolving
Credit and Term Loan Agreement dated as of June 28, 2002 (the "Loan Agreement")
by and among EMERSON RADIO CORP. ("ERC US"), a Delaware corporation, MAJEXCO
IMPORTS, INC. ("MI"), a California corporation, EMERSON RADIO (HONG KONG)
LIMITED ("ER HONG KONG") a Hong Kong corporation, and EMERSON RADIO
INTERNATIONAL LTD. ("ER BVI"), a British Virgin Islands company, jointly and
severally as co-borrowers and co-obligors, except as expressly set forth herein
in Section 10.8 hereof (individually and collectively, the "Borrower"), PNC
BANK, NATIONAL ASSOCIATION and each other lender signatory hereto or which
becomes a Lender pursuant to Section 9.1 (each a "Lender" and, collectively, the
"Lenders") and PNC BANK, NATIONAL ASSOCIATION as agent for the Lenders (in such
capacity, the "Agent").

                                   WITNESSETH:

         A. Pursuant to the Loan Agreement, the Lenders provided the Borrower a
revolving credit facility and a term loan as described in the Loan Agreement.

         B. The Borrower has requested the Agent and the Lenders clarify the
reporting requirements set forth in Section 5.1 (a)(ii) of the Loan Agreement to
assure the Borrower's ability to comply with said reporting requirement now and
in the future.

         C. The Agent and the Lenders are willing to provide said clarifications
subject to, and in accordance with, the terms and conditions set forth herein.

         D. The Borrower has further requested various other modifications to
certain of the other terms and conditions set forth in the Loan Agreement (in
each case as more fully described below) and the Agent and the Lenders are
willing to so modify the Loan Agreement subject to, and in accordance with, the
terms and conditions set forth herein.

         E. The Agent, and the Lenders and the Borrower further desire to amend
the Loan Agreement to reflect the assumption of the Revolving Loan Commitment
and Term Loan Commitment of LaSalle Business Credit, LLC (the "Exiting Lender")
by PNC Bank, National Association and Sovereign Bank (together, the "Assuming
Lenders"), and the related adjustments to the Commitments and Percentages of the
Assuming Lenders.

         NOW, THEREFORE, in consideration of the premises and the covenants and
agreements set forth herein, and for value received by each party, the parties
hereto agree as follows:

     1. Definitions. Unless otherwise defined or modified herein, capitalized
terms used herein shall have the meanings set forth in the Loan Agreement.

     2. Amendments to Loan Agreement. Subject to the satisfaction of the
conditions to effectiveness set forth in Section 8 below, the Loan Agreement
shall be amended as follows:

         (a) The following additional defined terms shall be inserted into
Section 1.1 of the Loan Agreement in their respective appropriate alphabetical
order:




                           ""Permitted ERC US Stock Repurchases" means the
         purchase by ERC US of up to 2,000,000 shares of its publicly traded
         stock from Persons other than Affiliates of the Borrower for an
         aggregate consideration not to exceed $10,000,000."

                           ""Permitted SSG Stock Repurchases" means the purchase
         by ERC US of up to 500,000 shares of the publicly traded stock of SSG
         from Persons other than Affiliates of the Borrower or SSG for an
         aggregate consideration not to exceed $1,000,000."

                  (b) The first sentence of Section 2.19(a) of the Loan
         Agreement is hereby amended in its entirety to read as follows:

                  "(a) The proceeds of the Revolving Credit Loans shall be used
         for working capital needs of the Borrower and for general corporate
         purposes and to fund Permitted ERC US Stock Repurchases and to fund
         Permitted SSG Stock Repurchases."

                  (c) Clause (ii) of Section 5.1(a) of the Loan Agreement is
         hereby amended in its entirety to read as follows:

                  "(ii) as soon as available but in any event within 105 days of
         the end of each other fiscal year of ERC US ending after March 31,
         2002, (1) a copy of the consolidated and consolidating balance sheet of
         ERC US and its consolidated Subsidiaries as at the end of such fiscal
         year and the related consolidated and consolidating statements of
         income and retained earnings and of cash flows for such fiscal year,
         setting forth in each case in comparative form the figures for the
         previous fiscal year, prepared internally by a Responsible Person, (2)
         a copy of the consolidated balance sheet of ERC US and its consolidated
         Subsidiaries as at the end of such fiscal year and the related
         consolidated statements of income and retained earnings and of cash
         flows for such fiscal year, certified by and reported on without a
         "going concern" or like qualification or exception, or qualification
         arising out of the scope of the audit, by Ernst & Young, LLP or other
         independent certified public accountants of nationally recognized
         standing reasonably acceptable to the Agent; together with
         consolidating schedules which set forth columnar information for each
         of ERC US and its consolidated Subsidiaries (other than SSG) and SSG,
         an elimination column and the consolidated results for ERC US and its
         consolidated Subsidiaries, and in any event in substantially the same
         format as presented to the Agent by Ernst & Young for the fiscal year
         ended March 31, 2003, and (3) a compliance certificate by a Responsible
         Officer as to such financial statements being fairly stated in all
         material respects when considered in relation to the consolidated
         financial statements of ERC US and its consolidated Subsidiaries; and"

                  (d) Clause (b) of Section 6.6 of the Loan Agreement is hereby
         amended in its entirety to read as follows:

                  "(b) So long as no Event of Default shall have occurred and be
         continued, ERC US may (i) acquire Capital Stock in SSG (provided such
         Capital Stock of SSG is acquired only with Capital Stock of ERC US and
         provided giving effect to any such acquisition shall not cause any
         Person who holds less than 10% (or such greater percentage as the
         Required


                                       2


         Lenders may agree to in writing) of any class of Capital Stock of ERC
         US on the date hereof to hold more than 10% (or such greater percentage
         as the Required Lenders may agree to in writing) of any such class of
         Capital Stock of ERC US, (ii) acquire additional Capital Stock in SSG
         in connection with Permitted SSG Stock Repurchases and (iii) beginning
         on the first anniversary of the Closing Date, in accordance with the
         strategic objectives of its business plan, acquire Capital Stock in
         other Persons (other than Inactive Subsidiaries) in businesses related
         to that of ERC US; provided, however, that in the cases described in
         clauses (i) and (iii), taken together in an aggregate amount for each
         12 month period beginning on an anniversary of the Closing Date and
         ending on the next succeeding anniversary of the Closing Date (each
         such period, an "Acquisition Period") not exceeding the lesser of (x)
         $500,000 and (y) the principal amount of the Term Loan repaid pursuant
         to Section 2.9(e) during the twelve month period immediately preceding
         the then current Acquisition Period;"

         For the avoidance of doubt, notwithstanding the date of this Amendment,
the Permitted ERC US Stock Repurchases and Permitted SSG Stock Repurchase that
may have been consummated on or after September 2, 2003 but prior to the
Effective Date (as defined in Section 8 below) shall be deemed to be in
compliance with Section 6.6(b) of the Loan Agreement (as amended hereby) without
any further action required of the Agent, the Lenders or the Borrower.

                  (e) Section 6.12 of the Loan Agreement is hereby amended in
         its entirety to read as follows:

                  "Section 6.12 Fixed Charge Coverage Ratio. Permit the Fixed
         Charge Coverage Ratio for the period of four consecutive fiscal
         quarters preceding any date of determination to be less than 1.25 to 1,
         except in the case of the four consecutive fiscal quarters preceding
         March 31, 2004, in which case, said ratio shall not be permitted to be
         less than 1.10 to 1."

                  (f) Section 6.14 of the Loan Agreement is hereby amended in
         its entirety to read as follows:

                  "Section 6.14 Minimum Post-Repurchase Availability. At all
         times during the Repurchase Period permit the Undrawn Availability to
         be less than $2,000,000. As used herein, "Repurchase Period" means the
         period commencing upon the commencement of either the Permitted ERC US
         Stock Repurchases or the Permitted SSG Stock Repurchases (whether or
         not funded in whole or in pan with the proceeds of the Revolving Credit
         Loans) and ending upon the earlier to occur of (i) the consummation
         of both the Permitted ERC US Stock Repurchases and Permitted SSG Stock
         Repurchases or (ii) the date that the Borrower furnishes to the Agent
         written notice certifying that (y) no further Permitted ERG US Stock
         Repurchases or Permitted SSG Stock Repurchases shall be made and (z)
         the benefits of Section 6.6 (b)(ii) of this Agreement shall no longer
         be available to the Borrower."

                  (g) For the purpose of adjusting the Commitments and
         Percentages of the Assuming Lenders, SCHEDULE I to the Loan Agreement
         is hereby deleted in its entirety and SCHEDULE I attached hereto is
         hereby substituted in its place and made a part of the Loan Agreement.
                                       3


     3. Assumption of Exiting Lender's Obligations; New Notes. (a) Pursuant to
that certain Commitment Transfer Supplement dated on or before the Effective
Date, each Assuming Lender shall have taken by assignment and purchased from the
Exiting Lender, without recourse to, or representation or warranty, by the
Exiting Lender of any kind or description, an interest in the Revolving Credit
Loans and Term Loans owing to the Exiting Lender as of the Effective Date (but
excluding accrued interest and fees up to but excluding the Effective Date)
equal to Percentage of such Assuming Lender (after giving effect to this
Amendment) of said outstanding obligations. On or before the Effective Date, the
Borrower shall pay to the Exiting Lender all accrued and unpaid interest on the
outstanding principal amount of the Loans owing to the Exiting Lender, together
with the Exiting Lender's pro rata share of any accrued and unpaid fees under
the Loan Agreement, in each case through but excluding the Effective Date.

     (b) To evidence the obligations of the Borrower owing to the Assuming
Lenders, as of the Effective Date, the Borrower shall issue to each Assuming
Lender a new Revolving Credit Note and a new Term Note substantially in the form
attached hereto. Each such note shall be (i) dated the Effective Date, and (ii)
in an original principal amount of up to the respective Commitment of the
applicable Assuming Lender in the Loan evidenced by such Note, in each case,
after giving effect to this Amendment.

     4. Effects of Clarification. The Borrower acknowledges and agrees the
amendments made pursuant to clause (c) of Section 2 above have been made to
clarify the reporting requirements set forth therein and in no event shall be
construed as the establishment of a custom or course of dealing among the
Borrower, the Agent or the Lenders with respect to any current or future issue
of the Borrower's non-compliance with any term, condition or covenant set forth
in this Loan Agreement or the other Loan Documents.

     5. References to Loan Agreement. This Amendment is an amendment to the
Loan Agreement. Unless the context of this Amendment otherwise requires, the
Loan Agreement and this Amendment shall be read together and shall have effect
as if the provisions of the Loan Agreement and this Amendment were contained in
one agreement.

     6. Full Force and Effect. Except as expressly modified by this Amendment,
all of the terms and conditions of the Loan Agreement and the other Loan
Documents shall continue in full force and effect, and all parties hereto shall
be entitled to the benefits thereof. This Amendment is limited as written and
shall not be deemed (a) to be an amendment of or a consent under or waiver of
any other term or condition of the Loan Agreement, or (b) to prejudice any right
or rights which the Lender now has or may have in the future under or in
connection with the Loan Agreement or the other Loan Documents.

     7. Post-Closing Undertakings. In consideration of the modifications to the
Loan Agreement set forth herein, the Borrower covenants and agrees that it shall
furnish to the Agent each of the items specified in SCHEDULE "A", in each case
in form and substance satisfactory to the Agent and the Lenders on or before (i)
November 14, 2003 in the case of Item 1 on said Schedule and (ii) November 26,
2003 in the case of Item 2 on said Schedule. The Borrower further acknowledges
that this Amendment is a Loan Document as defined in the Loan Agreement and
consequently the failure to comply with the foregoing post-closing undertaking
will constitute an Event of Default under the Loan Agreement entitling the Agent
and the Lenders to exercise the rights and remedies afforded such parties under
the Loan Agreement and Loan Documents.


                                       4

     8. Conditions. This Amendment shall not be effective until the following
conditions precedent have been fulfilled to the satisfaction of the Agent and
the Lenders: (i) the Agent shall have received counterparts of this Amendment
duly executed by each of the parties hereto, (ii) the Borrower shall have paid
the Agent (for ratable distribution to the Assuming Lenders) a modification fee
of $15,000 in consideration of the modification to the Loan Agreement set forth
herein and (iii) the assignment and purchase of the Exiting Lender's Loans as
contemplated in Section 3(a) above shall have been consummated. In addition, the
Borrower agrees to pay upon execution of this Amendment, all reasonable costs
and expenses of the Agent and each Lender, including, without limitation, the
legal fees and expenses in the amount of $9,600 incurred by the Agent's counsel
in connection with the preparation, negotiation, execution and delivery and
review of this Amendment. In the event Borrower does not remit such payment
together with this executed Amendment, the Borrower hereby authorizes the Agent,
without notice to the Borrower, to charge any account of the Borrower maintained
by the Agent or its Affiliates in payment of the amounts due under this Section
8. The date on which all of the aforementioned conditions have been satisfied is
herein referred to as the "Effective Date".

     9. Estoppel; Representations and Warranties. In order to induce the Lenders
to enter into this Amendment, the Borrower makes the following representations
and warranties, which representations and warranties shall survive the execution
and delivery hereof:

         (a) each of the Loan Agreement, the Notes, the Security Documents and
the other Loan Documents are in full force and effect;

         (b) as amended hereby, each of the Loan Agreement, the Notes, the
Security Documents, the other Loan Documents and this Amendment have been duly
authorized, executed and delivered by the Borrower and constitute legal, valid
and binding obligations of the Borrower enforceable against the Borrower in
accordance with their respective terms;

         (c) the Borrower has no offset, defense or counterclaim with respect to
any of their obligations under the Loan Agreement, the Notes, the Security
Documents and the other Loan Documents (any such offset, defense or counterclaim
as may now exist being hereby irrevocably waived by the Borrower);

         (d) no material adverse change in the financial condition of the
Borrower has occurred since the date of its most recent financial statements
delivered to the Lender;

         (e) no Event of Default has occurred and is continuing under the Loan
Agreement or the other Loan Documents, and no event has occurred which, with
notice, lapse of time or both, would constitute such an Event of Default;

         (f) except as discussed on SCHEDULE "B", all of the representations
made by or on behalf of the Borrower in the Loan Agreement and the other Loan
Documents are true and correct on and as of the date hereof;

         (g) neither the execution and delivery of this Amendment by the
Borrower, nor consummation by the Borrower of the transactions contemplated
herein, nor compliance by the Borrower with the terms, conditions and provisions
hereof will conflict with or result in a breach of any of the terms, conditions
or provisions of (i) any Borrower's Certificate of Incorporation and By-Laws or
other organizational or governing document, (ii) any agreement or instrument to
which any Borrower is a party or by which the property of the Borrower is or may
be bound, (iii) any judgment or order, writ, injunction or decree of any court,
or (iv) any applicable law or governmental regulation; and



                                       5





         (h) no action of, or filing with, any governmental or public body or
authority is required to authorize, or is otherwise required in connection with
the execution, delivery and performance of this Amendment by the Borrower.

     10. Security Interests. The Borrower confirms the validity and
effectiveness of the Security Documents made by the Borrower in favor of the
Agent (for the benefit of the Lenders) and confirms that the Security Documents
secures payment of the Obligations (as defined in the Security Documents).

     11. Governing Law. This Amendment, including the validity thereof and the
rights and obligations of the parties hereunder, shall be construed in
accordance with and governed by, the laws of the State of New Jersey.

     12. Counterparts. This Amendment may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original,
and all which when taken together shall constitute one and the same agreement.



                                       6

         IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the day and year first above written.


                                             BORROWERS:

                                             EMERSON RADIO CORP.

                                             By: /s/ KENNETH A. CORBY
                                                -------------------------
                                                Name:  Kenneth A. Corby
                                                Title: EVP & CFO


                                             MAJEXCO IMPORTS, INC.

                                             By: /s/ KENNETH A. CORBY
                                                -------------------------
                                                Name:  Kenneth A. Corby
                                                Title: EVP & CFO


                                             EMERSON RADIO (HONG KONG)
                                             LIMITED

                                             By: /s/ JOHN J. RAAB
                                                -------------------------
                                                Name:
                                                Title:


                                             EMERSON RADIO INTERNATIONAL
                                             LTD.

                                             By: /s/ KENNETH A. CORBY
                                                -------------------------
                                                Name:  Kenneth A. Corby
                                                Title: EVP & CFO


                                       7

                                             AGENT:


                                             PNC BANK, NATIONAL ASSOCIATION,
                                             as Agent

                                             By: /s/ PAUL E. KELLEMAN
                                                ---------------------------
                                                Name:
                                                Title:

                                             LENDERS:


                                             PNC BANK, NATIONAL ASSOCIATION,
                                             as Lender

                                             By: /s/ PAUL E. KELLEMAN
                                                ---------------------------
                                                Name:
                                                Title:


                                             SOVEREIGN BANK

                                             By: /s/ CHRIS D. WOLFSLAYER
                                                ---------------------------
                                                Name:  Chris D. Wolfslayer
                                                Title: Vice President

                                       8

                                  SCHEDULE "A"

                         POST-CLOSING ISSUES OUTSTANDING

1.       LANDLORD WAIVERS: The Borrower shall furnish a certificate of a
         Responsible Person certifying that the copies of the waivers and
         consents received from the following landlords comport with the
         originals and the same have not been altered, amended or otherwise
         modified through the date hereof: (i) Gilbert West, Inc.; (ii) Team
         Ocean Services; and (iii) Pride Products.

2.       UCC TERMINATION STATEMENTS: The Borrower shall furnish evidence of
         termination of all UCC Financing Statements filed against it in favor
         of Congress Financial.


                                      A-1


                                  SCHEDULE "B"

         The following class action complaints have been filed in the US
District Court for the District of New Jersey:

1.) Kaplan v. Emerson Radio Corn., et al., 03-cv-4202 (JLL)

2.) Pelone v. Emerson Radio Corp., et al., 03-cv-4201 (JLL)

3.) Howard v. Jurick, et al., 03-cv-4330 (WGB)

4.) Glascoff V. Emerson Radio Corp., et al., 03-cv-4506 (JLL)

5.) Stromer v. Emerson Radio Corp, at al., 03-cv-4647 (JLL)

6.) Kaplan v. Emerson Radio Corp., et al., 03-cv-4856

7.) Freitag v. Emerson Radio Corp., et al., 03-cv-5140

         The complaints allege violations of federal securities laws including
1) against all defendants: Section 10(b) of the Exchange Act Against and Rule
10-b-5 promulgated thereunder, and 2) against all individual defendants: Section
20(a) of the Exchange Act.

                                       B-1




                                   SCHEDULE I

                      (AMENDED AND RESTATED AS OF 11/7/03)

                                   Commitments


LENDER            FACILITY          PERCENTAGE             COMMITMENT

PNC               Revolving Credit     65%                 $16,250,000

                  Term Loan            65%                 $ 1,673,750*

                                               TOTAL       $17,923,750


LENDER            FACILITY          PERCENTAGE             COMMITMENT

Sovereign Bank    Revolving Credit  35%                    $ 8,750,000

                  Term Loan         35%                    $   901,250*

                                               TOTAL       $ 9,651,250
                                                           -----------

                       Aggregate   100%      Aggregate     $27,575,000
                       Percentage            Commitment


         The Percentage of any Lender as of any date shall be equal to a
fraction (expressed as a decimal) the numerator of which shall be, in the case
of outstanding Loans, the outstanding principal amount of Loans held by such
Lender and the denominator of which shall be the aggregate outstanding principal
amount of all Loans held by all Lenders. If no Loans are outstanding, the
Percentage of any Lender as of any date shall be equal to a fraction (expressed
as a decimal) the numerator of which shall be the aggregate principal amount of
Loans such Lender is committed to fund and the denominator of which shall be the
aggregate principal amount of Loans all Lenders are committed to fund.

- ----------

* indicates Percentage of the applicable
Lender in the outstanding principal
balance of Term Loan as of 11/7/03
$(2,575,000)


                                      S-1

EX-10.27.2

                                                                 EXHIBIT 10.27.2


             AMENDMENT TO REVOLVING CREDIT AND TERM LOAN AGREEMENT
                                  (NUMBER TWO)


         This AMENDMENT TO REVOLVING CREDIT AND TERM LOAN AGREEMENT (NUMBER TWO)
dated as of December 31, 2003 (the "Amendment"), amends that certain Revolving
Credit and Term Loan Agreement dated as of June 28, 2002, as amended by that
certain Amendment to Revolving Credit and Term Loan Agreement (Number One) dated
as of November 7, 2003 (said loan agreement, as so amended, the "Loan
Agreement") by and among EMERSON RADIO CORP. ("ERC US"), a Delaware corporation,
MAJEXCO IMPORTS, INC. ("MI"), a California corporation, EMERSON RADIO (HONG
KONG) LIMITED ("ER HONG KONG") a Hong Kong corporation, and EMERSON RADIO
INTERNATIONAL LTD. ("ER BVI"), a British Virgin Islands company, jointly and
severally as co-borrowers and co-obligors, except as expressly set forth herein
in Section 10.8 hereof (individually and collectively, the "Borrower"), PNC
BANK, NATIONAL ASSOCIATION and each other lender signatory hereto or which
becomes a Lender pursuant to Section 9.1 (each a "Lender" and, collectively, the
"Lenders") and PNC BANK, NATIONAL ASSOCIATION as agent for the Lenders (in such
capacity, the "Agent").

                                  WITNESSETH:

         A. Pursuant to the Loan Agreement, the Lenders provided the Borrower a
revolving credit facility and a term loan as described in the Loan Agreement.

         B. The Borrower has further requested various other modifications to
certain of the financial covenants set forth in the Loan Agreement (in each case
as more fully described below) and the Agent and the Lenders are willing to so
modify the Loan Agreement subject to, and in accordance with, the terms and
conditions set forth herein.

         NOW, THEREFORE, in consideration of the premises and the covenants and
agreements set forth herein, and for value received by each party, the parties
hereto agree as follows:

         1. Definitions. Unless otherwise defined or modified herein,
capitalized terms used herein shall have the meanings set forth in the Loan
Agreement.

         2. Amendments to Loan Agreement. Subject to the satisfaction of the
conditions to effectiveness set forth in Section 8 below, the Loan Agreement
shall be amended as follows:

                  (a) Section 6.12 of the Loan Agreement is hereby amended in
its entirety to read as follows:

                "Section 6.12. Fixed Charge Coverage Ratio. Permit the Fixed
         Charge Coverage Ratio for the period of four consecutive fiscal
         quarters preceding any date of determination to be less than 1.25 to 1,
         except in the case of the four consecutive fiscal quarters preceding
         March 31, 2004, in which case, said ratio shall not be permitted to be
         less than 1.10 to 1; provided, however that (i) the parties acknowledge
         and agree that the Fixed Charge Coverage Ratio will not be tested for
         the test period ending December 31, 2003 and (ii) for purposes of the
         determination of the Fixed Charge Coverage Ratio for


        the test period ending March 31, 2004, Borrower shall by permitted to
        add back into the Consolidated EBITDA the non-recurring expenses related
        to its unconsummated so-called "Recoton" acquisition in an amount not to
        exceed $643,000."

                (b) Immediately following Section 6.16 of the Loan Agreement,
there shall be added a new Section 6.17, that shall read as follows:

                "Section 6.17. Minimum Consolidated EBITDA. Permit the
Consolidated EBITDA to be less than $2,500,000 for the fiscal quarter beginning
October 1, 2003 and ending December 31, 2003 on a non-cumulative basis."

         3. Effects of Clarification. The Borrower acknowledges and agrees that
the amendment made pursuant to clause (a) of Section 2 above and the additional
requirements set forth in clause (b) of Section 2 above have been made to
clarify and establish certain financial covenants for the fiscal periods
therein specified and in no event shall be construed as the establishment of a
custom or course of dealing among the Borrower, the Agent or the Lenders with
respect to any current or future issue of the Borrower's non-compliance with any
term, condition or covenant set forth in this Loan Agreement or the other Loan
Documents.

         4. References to Loan Agreement. This Amendment is an amendment to the
Loan Agreement. Unless the context of this Amendment otherwise requires, the
Loan Agreement and this Amendment shall be read together and shall have effect
as if the provisions of the Loan Agreement and this Amendment were contained in
one agreement.

         5. Full Force and Effect. Except as expressly modified by this
Amendment, all of the terms and conditions of the Loan Agreement and the other
Loan Documents shall continue in full force and effect, and all parties hereto
shall be entitled to the benefits thereof. This Amendment is limited as written
and shall not be deemed (a) to be an amendment of or a consent under or waiver
of any other term or condition of the Loan Agreement, or (b) to prejudice any
right or rights which the Lender now has or may have in the future under or in
connection with the Loan Agreement or the other Loan Documents.

         6. Conditions. This Amendment shall not be effective until the
following conditions precedent have been fulfilled to the satisfaction of the
Agent and the Lenders: (i) the Agent shall have received counterparts of this
Amendment duly executed by each of the parties hereto, and (ii) the Borrower
shall have paid the Agent (for ratable distribution to the Lenders) a
modification fee of $5,000 in consideration of the modification to the Loan
Agreement set forth herein. In addition, the Borrower agrees to pay upon
execution of this Amendment, all reasonable costs and expenses of the Agent and
each Lender, including, without limitation, the legal fees incurred by the
Agent's counsel in connection with the preparation, negotiation, execution and
delivery and review of this Amendment. In the event Borrower does not remit such
payment together with this executed Amendment, the Borrower hereby authorizes
the Agent, without notice to the Borrower, to charge any account of the Borrower
maintained by the Agent or its Affiliates in payment of the amounts due under
this Section 6.

         7. Estoppel; Representations and Warranties. In order to induce the
Lenders to enter into this Amendment, the Borrower makes the following
representations and warranties, which representations and warranties shall
survive the execution and delivery hereof:



                                       2

         (a) each of the Loan Agreement, the Notes, the Security Documents and
the other Loan Documents are in full force and effect;

         (b) as amended hereby, each of the Loan Agreement, the Notes, the
Security Documents, the other Loan Documents and this Amendment have been duly
authorized, executed and delivered by the Borrower and constitute legal, valid
and binding obligations of the Borrower enforceable against the Borrower in
accordance with their respective terms;

         (c) the Borrower has no offset, defense or counterclaim with respect to
any of their obligations under the Loan Agreement, the Notes, the Security
Documents and the other Loan Documents (any such offset, defense or counterclaim
as may now exist being hereby irrevocably waived by the Borrower);

         (d) no material adverse change in the financial condition of the
Borrower has occurred since the date of its most recent financial statements
delivered to the Lender;

         (e) no Event of Default has occurred and is continuing under the Loan
Agreement or the other Loan Documents, and no event has occurred which, with
notice, lapse of time or both, would constitute such an Event of Default;

         (f) except as discussed on SCHEDULE "A", all of the representations
made by or on behalf of the Borrower in the Loan Agreement and the other Loan
Documents are true and correct on and as of the date hereof;

         (g) neither the execution and delivery of this Amendment by the
Borrower, nor consummation by the Borrower of the transactions contemplated
herein, nor compliance by the Borrower with the terms, conditions and provisions
hereof will conflict with or result in a breach of any of the terms, conditions
or provisions of (i) any Borrower's Certificate of Incorporation and By-Laws or
other organizational or governing document, (ii) any agreement or instrument to
which any Borrower is a party or by which the property of the Borrower is or may
be bound, (iii) any judgment or order, writ, injunction or decree of any court,
or (iv) any applicable law or governmental regulation; and

         (h) no action of, or filing with, any governmental or public body or
authority is required to authorize, or is otherwise required in connection with
the execution, delivery and performance of this Amendment by the Borrower.

         8. Security Interests. The Borrower confirms the validity and
effectiveness of the Security Documents made by the Borrower in favor of the
Agent (for the benefit of the Lenders) and confirms that the Security Documents
secures payment of the Obligations (as defined in the Security Documents).

         9. Release of Collateral. In connection with the payment in full of
the Term Loans, the Agent (on behalf of the Lenders) shall release from the lien
and security interest created pursuant to the Intellectual Property Security
Agreements, the intellectual property itemized on the schedules attached thereto
(said intellectual property is herein referred to as the "Released Assets"). In
connection with said release, the Agent shall execute and deliver to the
Borrower such instruments of release and termination as the Borrower may
reasonably present to the Agent for execution and delivery. All of the cost and
expense related to the release contemplated herein (including, without
limitation, any and all filing or recordation fees) shall be bourne by the
Borrower. In connection with the release of the Released Assets, the Borrower
represents, warrants, acknowledges and agrees as follows: (i) notwithstanding
said release, all of the

                                       3

Released Assets remain subject to the restrictions set forth in Section 6.2 and
6.5 of the Loan Agreement and (ii) in connection with the enforcement of any
rights or remedies of the Agent or any Lender under the Security Agreement, the
Borrower hereby waives any right it may have to challenge the disposition of any
Collateral based on infringement or dilution of any IP Right (as defined in the
Intellectual Property Security Agreements) pursuant to, and to the fullest
extent provided under, applicable law.

         10. Governing Law. This Amendment, including the validity thereof and
the rights and obligations of the parties hereunder, shall be construed in
accordance with and governed by, the laws of the State of New Jersey without
regard to any conflicts of laws principles.

         11. Counterparts. This Amendment may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original,
and all which when taken together shall constitute one and the same agreement.

                         [Signatures on following pages]



                                       4

         IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the day and year first above written.


                                                Borrower:

                                                EMERSON RADIO CORP

                                                By: /s/ KENNETH A. CORBY
                                                    ----------------------------
                                                Name: Kenneth A. Corby
                                                Title: EVP, CEO


                                                MAJEXCO IMPORTS, INC.

                                                By: /s/ KENNETH A. CORBY
                                                    ----------------------------
                                                Name: Kenneth A. Corby
                                                Title: EVP, CEO


                                                EMERSON RADIO (HONG KONG)
                                                LIMITED

                                                By: /s/ GEOFFREY P. JURICK
                                                    ----------------------------
                                                Name: Geoffrey P. Jurick
                                                Title: Chairman & CEO

                                                EMERSON RADIO INTERNATIONAL LTD.

                                                By: /s/ KENNETH A. CORBY
                                                    ----------------------------
                                                Name: Kenneth A. Corby
                                                Title: EVP, CEO



                                       5

                                                AGENT:

                                                PNC BANK, NATIONAL ASSOCIATION,
                                                as Agent

                                                By: /s/ PAUL E. KELLEMAN
                                                    ----------------------------
                                                Name: Paul E. Kelleman
                                                Title: Vice President

                                                LENDERS:

                                                PNC BANK, NATIONAL ASSOCIATION,
                                                as a Lender

                                                By: /s/ PAUL E. KELLEMAN
                                                    ----------------------------
                                                Name: Paul E. Kelleman
                                                Title: Vice President

                                                SOVEREIGN BANK,
                                                as a Lender

                                                By:
                                                    ----------------------------
                                                Name:
                                                Title:

                                       6

                                                AGENT:

                                                PNC BANK, NATIONAL ASSOCIATION,
                                                as Agent

                                                By:
                                                    ----------------------------
                                                Name:
                                                Title:

                                                LENDERS:

                                                PNC BANK, NATIONAL ASSOCIATION,
                                                as a Lender

                                                By:
                                                    ----------------------------
                                                Name:
                                                Title:

                                                SOVEREIGN BANK,
                                                as a Lender

                                                By: /s/ CHRIS D. WOLFSLAYER
                                                    ----------------------------
                                                Name: Chris D. Wolfslayer
                                                Title: Vice President



                                       7

EX-10.28.1

                                                                 Exhibit 12.28.1

THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE THEREOF HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY OTHER SECURITIES
LAWS. SUCH SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF (1) AN EFFECTIVE REGISTRATION STATEMENT COVERING
SUCH SECURITIES UNDER THE SECURITIES ACT OF 1933 AND ANY OTHER APPLICABLE
SECURITIES LAWS, OR (2) AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

                     COMMON STOCK PURCHASE WARRANT AGREEMENT

                  EMERSON RADIO CORP., a Delaware corporation (the "Company"),
hereby certifies that, for value received, LADENBURG THALMANN & CO. INC. or its
registered transferees, successors or assigns (each, a "holder"), is the
registered holder of warrants (the "Warrants") to subscribe for and purchase
50,000 shares of Common Stock (as adjusted pursuant to Section 3 hereof, the
"Shares") of the Company, at a purchase price per share equal to the Warrant
Exercise Price (as defined below), subject to the provisions and upon the terms
and conditions hereinafter set forth. As used herein, (a) the term "Common
Stock" shall mean the Company's presently authorized Common Stock, par value
$.01 per share, and any stock into or for which such Common Stock may hereafter
be converted or exchanged, (b) the term "Grant Date" shall mean as of October 7,
2003, and (c) the term "Warrant" shall be deemed to include any warrant issued
upon transfer or partial exercise of this Warrant, unless the context clearly
requires otherwise.

                  1. EXERCISE OF WARRANTS. (a) The Warrants may be exercised by
the Holder, in whole at any time or in part from time to time, at any time up to
October 7, 2008 (the "Expiration Date") at 5:00 p.m. New York City time, when
such Warrants shall expire, at an exercise price of $5.00 per share (the
"Warrant Exercise Price"). The Holder shall deliver to the Company written
notice of the Holder's intent to exercise the Warrants at Nine Entin Road,
Parsippany, New Jersey 07054-0430, or at such other address as the Company shall
designate in writing to the Holder, together with this Warrant Agreement and a
certified or official bank check payable to the order of the Company for the
aggregate purchase price of the Shares so purchased. Upon exercise of the
Warrants as aforesaid, the Company shall as promptly as practicable, and in any
event within 10 days thereafter, execute and deliver to the Holder a certificate
or certificates in the name of the Holder for the total number of whole Shares
for which the Warrants are being exercised. If the Warrants shall be exercised
with respect to less than all of the Shares, the Holder shall be entitled to
receive a similar warrant of like tenor and date covering the number of Shares
in respect of which the Warrants were not exercised. The Warrants covered by
this Warrant Agreement shall lapse and be null and void if not exercised by the
Holder on or before 5:00 p.m., New York City time, on the Expiration Date.

                                       1


                  (b) In lieu of exercising this Warrant in the manner set forth
in paragraph 1(a) above, this Warrant may be exercised prior to the Expiration
Date by surrender of the Warrant without payment of any other consideration,
commission or remuneration, together with the cashless exercise subscription
form at the end hereof, duly executed. The number of Shares to be issued in
exchange for the Warrant shall be the product of (x) the excess of the market
price of the Common Stock on the date of surrender of the Warrant and the
exercise subscription form over the Warrant Exercise Price and (y) the number of
shares subject to issuance upon exercise of the Warrant, divided by the market
price of the Common Stock on such date. Upon such exercise and surrender of this
Warrant, the Company will (i) issue a certificate or certificates in the name of
the Holder for the number of whole shares of the Common Stock to which the
Holder shall be entitled, rounded down to the nearest whole number of Shares so
that no fractional Shares shall be issued, and (ii) deliver the other securities
and properties receivable upon the exercise of this Warrant, pursuant to the
provisions of this Warrant. If the Warrants shall be exercised with respect to
less than all of the Shares, the Holder shall be entitled to receive a similar
warrant of like tenor and date covering the number of Shares in respect of which
the Warrants were not exercised.

                  (c) The market price of Common Stock shall mean the price of a
share of Common Stock on the relevant date, determined on the basis of the last
reported sale price of the Common Stock as reported on the American Stock
Exchange ("AMEX"), or, if there is no such reported sale on the day in question,
on the basis of the average of the closing bid and asked quotations as so
reported, or, if the Common Stock is not listed on AMEX, the last reported sale
price of the Common Stock on such other national securities exchange or market
upon which the Common Stock is listed, or, if the Common Stock is not listed on
any national securities exchange, on the basis of the average of the closing bid
and asked quotations on the day in question in the over-the-counter market as
reported by the National Association of Securities Dealers' Automated Quotations
System, or, if not so quoted, as reported by National Quotation Bureau,
Incorporated or a similar organization.

                  2. COVENANTS OF THE COMPANY. The Company covenants and agrees
that all the Shares which may be issued upon the exercise of the Warrants
represented by this Warrant Agreement will, upon issuance, be fully paid and
nonassessable and free from all taxes, liens, and charges with respect to the
issue thereof (other than taxes in respect of any transfer occurring
contemporaneously with such issue). The Company further covenants and agrees
that during the period within which the Warrants represented by this Warrant
Agreement may be exercised, the Company will at all times have authorized and
reserved a sufficient number of Shares to provide for the exercise of the
Warrants represented by this Warrant Agreement.

                                       2


                  3. ADJUSTMENTS OF WARRANT EXERCISE PRICE AND NUMBER OF SHARES.

                  (a) If the Company shall, without the payment of new value, at
any time declare a stock dividend on its outstanding shares of Common Stock or
effectuate a stock split or reverse stock split, by subdivision or consolidation
in any manner, regarding the number of shares of the Common Stock then
outstanding into a different number of shares of the Common Stock, with or
without par value, then thereafter the number of Shares which the holder shall
have the right to purchase (calculated immediately prior to such change), shall
be increased or decreased, as the case may be, in direct proportion to the
increase or decrease in the number of shares of the Common Stock of the Company
issued and outstanding by reason of such dividend or change, and the Warrant
Exercise Price of the Shares after such change shall in the event of an increase
in the number of shares of the Common Stock be proportionately reduced, and in
the event of a decrease in the number of shares of the Common Stock be
proportionately increased.

                  (b) No adjustment in the Warrant Exercise Price shall be
required unless such adjustment would require an increase or decrease of at
least $0.05 per share of Common Stock; provided, however, that any adjustments
which by reason of this sub-section (b) are not required to be made shall be
carried forward and taken into account in any subsequent adjustment; and
provided further, however, that adjustments shall be required and made in
accordance with the provisions of this Section 3 (other than this sub-section
(b)) not later than such time as may be required in order to preserve the
tax-free nature of a distribution to the Holder of this Warrant or Common Stock.
All calculations under this Section 3 shall be made to the nearest cent or to
the nearest 1/100th of a share, as the case may be. Anything in this Section 3
to the contrary notwithstanding, the Company shall be entitled to make such
reductions in the Warrant Exercise Price, in addition to those required by this
Section 3, as it in its discretion shall deem to be advisable in order that any
stock dividend, subdivision of shares or distribution of rights to purchase
stock or securities convertible or exchangeable for stock hereafter made by the
Company to its shareholders shall not be taxable.

                  (c) Notwithstanding anything herein to the contrary, for
purposes of this Section 3, the Holder agrees that no adjustment shall be made
to the Warrant Exercise Price or the number of Shares issuable upon the exercise
of this Warrant Agreement upon issuance of Common Stock (or any other
securities) of the Company for any purposes other than as set forth in Sections
3(a) and 4 herein.

                  4. SURVIVAL IN THE EVENT OF MERGERS AND REORGANIZATIONS. In
the event of the reclassification or change in the outstanding Common Stock
(other than a change in par value, or from par value to no par value, or from no
par value to par value, or as a result of a subdivision, combination or stock
dividend), or in the event of a sale of all or substantially all of the assets
of the Company, or in the event of any consolidation of the Company with, or
merger of the Company into, another corporation, the Company, or such successor
corporation, as the case may be, shall provide that, the Holder shall thereafter
be entitled to purchase the kind and amount of shares of stock and other

                                       3


securities and property receivable upon such reclassification, change,
consolidation, sale, or merger by a holder of the number of Shares which this
Warrant Agreement entitled the holder thereof to purchase immediately prior to
such reclassification, change, consolidation, sale, or merger. Such corporation,
which thereafter shall be deemed to be the Company for purposes of this Warrant
Agreement, shall provide for adjustments, if any, which shall be as nearly
equivalent as may be practicable to the adjustments provided for in this Warrant
Agreement.

                  5. SALE OF ASSETS, DISSOLUTION. Notwithstanding paragraph 4
hereof, in the event of a sale of all or substantially all the assets of the
Company, or in the event of any distribution of all or substantially all of its
assets in dissolution or liquidation, or in the event of any other distribution
or dividend (other than cash dividends) or other event described in Section 4,
the Company shall mail notice thereof by registered mail to the Holder and shall
make no distribution to the stockholders of the Company until the expiration of
10 days from the date of mailing of the aforesaid notice; provided, however,
that in any such event, if the Holder shall not exercise the Warrants within 10
days from the date of mailing such notice, all rights herein granted and not so
exercised within such 10 day period shall thereafter become null and void. The
Company shall not, however, be prevented from consummating any such merger,
consolidation, sale or distribution without awaiting the expiration of such 10
day period, it being the intent and purpose hereof to enable the Holder, upon
exercise of the Warrants, to participate in the distribution of the
consideration to be received by the Company upon any such merger, consolidation,
or sale or in the distribution of assets upon any dissolution or liquidation or
in the event of any other distribution or dividend (as provided above).

                  6. NO FRACTIONAL SHARES. The number of Shares subject to
issuance upon the complete exercise of the Warrants shall be rounded down to the
nearest whole number of Shares so that no fractional Shares shall be issued upon
the complete exercise of the Warrants. The Holder shall not be entitled to
receive any compensation or property for such fractional Share to which it may
have been entitled to in the absence of this provision.

                  7. NOTICES. If there shall be any adjustment in accordance
with this Warrant Agreement, or if securities or property other than Shares of
the Company shall become purchasable in lieu of Shares upon exercise of the
Warrants, the Company shall forthwith cause written notice thereof to be sent by
registered mail, postage prepaid, to the Holder at its address shown on the
books of the Company, which notice shall be accompanied by a certificate of
either independent public accountants of recognized standing or the Chairman,
President, or any Vice President of the Company setting forth in reasonable
detail the basis for the Holder becoming entitled to purchase such Shares and
the number of Shares which may be purchased and the exercise price thereof, or
the facts requiring any such adjustment, or the kind and amount of any such
securities or property so purchasable upon the exercise of the Warrants, as the
case may be.

                  8. TAXES. The issue of any stock or other certificate upon the
exercise of the Warrant shall be made without charge to the Holder for any
stamp, duty, excise, or


                                       4


similar tax (but not including the Holder's income or similar taxes) in respect
of the issue of such certificate. The Company shall not, however, be required to
pay any tax which may be payable in respect of any transfer involved in the
issue and delivery of any certificate in a name other than that of the Holder,
as the registered holder of this Warrant Agreement, and the Company shall not be
required to issue or deliver any such certificate unless and until the person or
persons requesting the issue thereof shall have paid to the Company the amount
of such tax or shall have established to the satisfaction of the Company that
such tax has been paid.

                  9. LIMITED TRANSFERABILITY. This Warrant is not transferable
or assignable by the Holder except (i) to Ladenburg Thalmann & Co. Inc., any
successor firm or corporation of Ladenburg Thalmann & Co. Inc., (ii) to any of
the officers of Ladenburg Thalmann & Co. Inc. or of any such successor firm, or
(iii) in the case of an individual, pursuant to such individual's last will and
testament or the laws of descent and distribution and is so transferable only
upon the books of the Company which it shall cause to be maintained for the
purpose. The Company may treat the registered holder of this Warrant as he or it
appears on the Company's books at any time as the Holder for all purposes. The
Company shall permit any holder of a Warrant or his duly authorized attorney,
upon written request during ordinary business hours, to inspect and copy or make
extracts from its books showing the registered holders of Warrants. All Warrants
will be dated the same date as this Warrant.

                  10. WARRANT HOLDER NOT STOCKHOLDER. This Warrant Agreement
does not confer upon the Holder any right to vote or to consent or to receive
notice as a stockholder of the Company, as such in respect of any matters
whatsoever, or any other rights or liabilities as a stockholder, prior to the
exercise hereof as provided herein.

                  11. INVESTMENT REPRESENTATIONS. The Holder, by acceptance
hereof, and with reference to the Warrants and the Shares issuable upon exercise
of the Warrants, represents and warrants that:

                  (a) The Holder is acquiring such securities for investment
purposes only, for its own account, and not with a view toward resale or other
distribution thereof, and has no present intention of selling or otherwise
disposing of such securities.

                  (b) The Holder is aware that the offer and sale of the
securities have not been registered under the Securities Act of 1933, as amended
("Securities Act"), or any state securities law, that upon exercise of the
Warrants, the Shares must be held indefinitely unless they are subsequently
registered or an exemption from such registration is available and that the
Company is under no obligation to register the offer and sale of the Shares
under the Securities Act or any applicable state securities laws, except as
otherwise set forth in Section 13 hereof.

                  (c) The Holder acknowledges that the Warrants may not be made
subject to a security interest, pledged, hypothecated, sold, or otherwise
transferred in the absence of an effective registration statement for such
Warrants under the Securities Act

                                       5


and such applicable state securities laws or there is an applicable exemption
therefrom. The Holder further acknowledges that, unless the offer and sale of
the Shares issuable upon exercise of the Warrants have been registered under the
Securities Act, the Shares issued upon the exercise of the Warrants shall be
restricted in the same manner and to the same extent as the Warrants and the
certificates representing such Shares shall bear the following legend:

                  "THESE SHARES OF COMMON STOCK HAVE NOT BEEN
                  REGISTERED UNDER THE SECURITIES ACT OF 1933
                  OR ANY OTHER SECURITIES LAWS. SUCH
                  SECURITIES MAY NOT BE OFFERED FOR SALE,
                  SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED
                  IN THE ABSENCE OF (1) AN EFFECTIVE
                  REGISTRATION STATEMENT COVERING SUCH
                  SECURITIES UNDER THE SECURITIES ACT OF 1933
                  AND ANY OTHER APPLICABLE SECURITIES LAWS, OR
                  (2) AN OPINION OF COUNSEL REASONABLY
                  SATISFACTORY TO THE COMPANY THAT SUCH
                  REGISTRATION IS NOT REQUIRED."

                  In making the above representations and warranties, the Holder
intends that the Company rely thereon and understands that, as the result of
such reliance, such securities are not being registered under the Securities Act
or any applicable state securities laws in reliance upon the applicability of
certain exemptions relating to transactions not involving a public offering.

                  12. LOST WARRANTS. In case this Warrant Agreement shall be
mutilated, lost, stolen, or destroyed, the Company will issue a new Warrant
Agreement of like date, tenor, denomination and terms and conditions, and
deliver the same in exchange and substitution for and upon surrender and
cancellation of the mutilated Warrant Agreement, or in lieu of any Warrant
Agreement lost, stolen, or destroyed, upon receipt of evidence satisfactory to
the Company of the loss, theft, or destruction of such Warrant Agreement, and
upon receipt of indemnity satisfactory to the Company.

                  13.  REGISTRATION RIGHTS.

                  (a) The Company agrees that if at any time hereafter the
Company proposes to file with the Securities and Exchange Commission (the
"Commission") a registration statement ("Registration Statement") under the
Securities Act on a form suitable for registering the Shares issuable upon
exercise of the Warrants (other than on Form S-4, S-8, or comparable
registration statement; other than any registration statement which has been
declared effective by the Commission prior to the date hereof or has been filed
with the Commission prior to the date hereof but has not yet been declared
effective), it will give written notice to such effect to the Holder, at least
30 days prior to such filing, and, at the written request of the Holder, made
within 10 days after the receipt of such notice, will include therein at the
Company's cost and expense (except for the fees and expenses of counsel to the
Holder and underwriting discounts and commissions attributable to the Shares of
Warrant Common Stock (as defined below)


                                       6


included therein) such number of Shares of Warrant Common Stock held by the
Holder as it shall request. If the registration is an underwritten primary
registration on behalf of the Company, and the managing underwriter(s) advise
the Company in writing that in their good faith opinion, based upon market
conditions, the number of securities requested to be included in such
registration exceeds the number which can be sold in such offering, the Company
will include in such registration (i) first, the securities the Company proposes
to sell, (ii) second, the Warrant Common Stock (as hereinafter defined)
requested to be included in such registration and any other securities requested
to be included in such registration pursuant to contractual arrangements between
Company and such other security holders ("Registration Rights Holders"), pro
rata among the holders of the Warrant Common Stock and the Registration Rights
Holders on the basis of the number of securities requested to be included in
such registration by such holders and the Registration Rights Holders, and (iii)
third, other securities requested to be included in such registration. The
Company, at its own expense, will use its commercial reasonable efforts to file
and seek the effectiveness of such Registration Statement with the Commission
and will cause the prospectus included in such Registration Statement to meet
the requirements of the Securities Act necessary to effect the sale of the
Shares included at the request of the Holder and keep such Registration
Statement effective for a period of 180 days thereafter. The term "Warrant
Common Stock" shall mean the Shares issuable and issued pursuant to this Warrant
Agreement and all other Warrants originally granted to Ladenburg and/or its
employees or consultants as contemplated herein and pursuant to all Warrants
issued upon transfer, division, or combination of, or in substitution for, any
thereof.

                  (b) The Company promptly shall notify the Holder, as a
participating holder of Warrant Common Stock, of the occurrence of any event as
a result of which any prospectus included in a registration statement filed
pursuant to this Section 13 includes any misstatement of a material fact or
omission of any material fact required to be stated therein or necessary to make
the statements made therein, in light of the circumstances under which they were
made, not misleading.

                  (c) The Company's obligations under this Section 13 with
respect to the Holder, as the holder of Warrant Common Stock, are expressly
conditioned upon the Holder promptly, completely, and accurately furnishing to
the Company in writing such information concerning the Holder and the terms of
the Holder's proposed offering as the Company shall request for inclusion in the
Registration Statement.

         14.  INDEMNIFICATION.

         (a) The Company agrees to indemnify and hold harmless each selling
holder of shares of Warrant Common Stock and each person who controls any such
selling holder within the meaning of Section 15 of the Securities Act, and each
and all of them, from and against any and all losses, claims, damages,
liabilities or actions, joint or several, to which any selling holder of shares
of Warrant Common Stock or they or any of them may become subject under the
Securities Act or otherwise and to reimburse the persons indemnified above for
any legal or other expenses (including the reasonable cost of any


                                       7


investigation and preparation) incurred by them in connection with any
litigation or threatened litigation, whether or not resulting in any liability,
but only insofar as such losses, claims, damages, liabilities or actions arise
out of, or are based upon, any untrue statement or alleged untrue statement of a
material fact contained in any registration statement pursuant to which shares
of Warrant Common Stock were registered under the Securities Act (hereinafter
called a "Registration Statement"), any preliminary prospectus, the final
prospectus or any amendment or supplement thereto (or in any application or
document filed in connection therewith) or document executed by the Company
based upon written information furnished by or on behalf of the Company filed in
any jurisdiction in order to register or qualify the shares of Warrant Common
Stock under the securities laws thereof or the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that the indemnity agreement contained
in this sub-section (a) shall not extend to any selling holder of shares of
Warrant Common Stock in respect of any such losses, claims, damages, liabilities
or actions arising out of, or based upon, any such untrue statement or alleged
untrue statement, or any such omission or alleged omission, if such statement or
omission was based upon and made in conformity with information furnished in
writing to the Company by a selling holder of shares of Warrant Common Stock
specifically for use in connection with the preparation of such Registration
Statement, any final prospectus, any preliminary prospectus or any such
amendment or supplement thereto. The Company agrees to pay any reasonable legal
and other expenses for which it is liable under this sub-section (a) from time
to time (but not more frequently than monthly) within 30 days after its receipt
of a bill therefor.

         (b) Each selling holder of shares of Warrant Common Stock, severally
and not jointly, will indemnify and hold harmless the Company, its directors,
its officers who shall have signed the Registration Statement and each person,
if any, who controls the Company within the meaning of Section 15 of the
Securities Act to the same extent as the foregoing indemnity from the Company,
but in each case to the extent, and only to the extent, that any statement in or
omission from or alleged omission from such Registration Statement, any final
prospectus, any preliminary prospectus or any amendment or supplement thereto
was made in reliance upon information furnished in writing to the Company by
such selling holder specifically for use in connection with the preparation of
the Registration Statement, any final prospectus or the preliminary prospectus
or any such amendment or supplement thereto; provided, however, that the
obligation of any holder of shares of Warrant Common Stock to indemnify the
Company under the provisions of this sub-section (b) shall be limited to the
product of the number of shares of Warrant Common Stock being sold by the
selling holder and the market price of the Common Stock on the date of the sale
to the public of these shares of Warrant Common Stock. Each selling holder of
shares of Warrant Common Stock agrees to pay any legal and other expenses for
which it is liable under this sub-section (b) from time to time (but not more
frequently than monthly) within 30 days after receipt of a bill therefor.

         (c) If any action is brought against a person entitled to
indemnification pursuant to the foregoing Sections 14(a) or (b) (an "indemnified
party") in respect of which

                                       8


indemnity may be sought against a person granting indemnification (an
"indemnifying party") pursuant to such Sections, such indemnified party shall
promptly notify such indemnifying party in writing of the commencement thereof;
but the omission so to notify the indemnifying party of any such action shall
not release the indemnifying party from any liability it may have to such
indemnified party otherwise than on account of the indemnity agreement contained
in sub-sections (a) or (b) of this Section 14, except to the extent that such
failure or delay in providing notice of an indemnifiable claim shall have
materially prejudiced the defense of such indemnifiable claim. In case any such
action is brought against an indemnified party and it notifies an indemnifying
party of the commencement thereof, the indemnifying party against which a claim
is to be made will be entitled to participate therein at its own expense and, to
the extent that it may wish, to assume at its own expense the defense thereof,
with counsel reasonably satisfactory to such indemnified party; provided,
however, that (i) if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded based upon advice of counsel that there may be legal
defenses available to it and/or other indemnified parties which are different
from or additional to those available to the indemnifying party, the indemnified
party shall have the right to select separate counsel to assume such legal
defenses and otherwise to participate in the defense of such action on behalf of
such indemnified party or parties, and (ii) in any event, the indemnified party
shall be entitled to have counsel chosen by such indemnified party participate
in, but not conduct, the defense at the expense of the indemnifying party. Upon
receipt of notice from the indemnifying party to such indemnified party of its
election so to assume the defense of such action and approval by the indemnified
party of counsel, the indemnifying party will not be liable to such indemnified
party under this Section 14 for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense thereof unless
(i) the indemnified party shall have employed such counsel in connection with
the assumption of legal defenses in accordance with proviso (i) to the next
preceding sentence (it being understood, however, that the indemnifying party
shall not be liable for the expenses of more than one separate counsel), (ii)
the indemnifying party shall not have employed counsel reasonably satisfactory
to the indemnified party to represent the indemnified party within a reasonable
time after notice of commencement of the action, or (iii) the indemnifying party
has authorized the employment of counsel for the indemnified party at the
expense of the indemnifying party. An indemnifying party shall not be liable for
any settlement of any action or proceeding effected without its written consent.

         (d) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for this Section 14 is
unavailable in accordance with its terms, the Company and the selling holder of
shares of Warrant Common Stock shall contribute to the aggregate losses, claims,
damages and liabilities, of the nature contemplated by said indemnity agreement,
incurred by the Company and the selling holder of shares of Warrant Common
Stock, in such proportions as is appropriate to reflect the relative benefits
received by the Company and the selling holder of shares of Warrant Common Stock
from any offering of the shares of Warrant Common Stock; provided, however, that
if such allocation is not permitted by applicable law or if the indemnified
party failed to give the notice required under sub-section (c) of this Section


                                       9


14, then the relative fault of the Company and the selling holder of shares of
Warrant Common Stock in connection with the statements or omissions which
resulted in such losses, claims, damages and liabilities and other relevant
equitable considerations will be considered together with such relative
benefits.

         (e) The respective indemnity and contribution agreements by the Company
and the selling holder of shares of Warrant Common Stock in sub-sections (a),
(b), (c) and (d) of this Section 14 shall remain operative and in full force and
effect regardless of (i) any investigation made by any selling holder of shares
of Warrant Common Stock or by or on behalf of any person who controls such
selling holder or by the Company or any controlling person of the Company or any
director or any officer of the company, (ii) payment for any of the shares of
Warrant Common Stock, or (iii) any termination of this Agreement, and shall
survive the delivery of the shares of Warrant Common Stock, and any successor of
the Company, or of any selling holder of shares of Warrant Common Stock, or of
any person who controls the Company or of any selling holder of shares of
Warrant Common Stock, as the case may be, shall be entitled to the benefit of
such respective indemnity and contribution agreements. The respective indemnity
and contribution agreements by the Company and the selling holder of shares of
Warrant Common Stock contained in sub-sections (a), (b), (c) and (d) of this
Section 14 shall be in addition to any liability which the Company and the
selling holder of shares of Warrant Common Stock may otherwise have.

         15. APPLICABLE LAW. This Warrant Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, without regard
to the conflict of laws provisions thereof.

         IN WITNESS WHEREOF, the parties hereto have executed this Warrant
Agreement effective as of the day and year first above written.

                                    EMERSON RADIO CORP.

                                    By:
                                        -----------------------------------
                                        (Name)    (Title)



                                    LADENBURG THALMANN & CO., INC.

                                    By:
                                        ---------------------------
                                        (Name)    (Title)


                                       10


                               NOTICE OF EXERCISE

To: Emerson Radio Corp.

1. The undersigned hereby elects to purchase _____ shares of Common Stock of
______________________ pursuant to the terms of the attached Warrant, and
tenders herewith payment of the purchase price of such shares in full.

2. Please issue a certificate or certificates representing said shares in the
name of the undersigned or in such other name or names as are specified below:


- -------------------------------
           (Name)


- -------------------------------
          (Address)

3. The undersigned represents that the aforesaid shares are being acquired for
the account of the undersigned for investment and not with a view to, or for
resale in connection with, the distribution thereof and that the undersigned has
no present intention of distributing or reselling such shares.

- ------------------------------- (Signature)
- ------------------------ (Date)

4. Please issue a new Warrant of equivalent form and tenor for the unexercised
portion of the attached Warrant in the name of the undersigned or in such other
name as is specified below:

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

Date:
      -------------------------

(Warrantholder)
                -------------------------
Name: (Print)
              ---------------------------
                                                                      Its:
                                                                           -----

                                       11

                 SUBSCRIPTION FOR CASHLESS WARRANT SUBSCRIPTION


         The undersigned, _____________, pursuant to the provisions of the
foregoing Warrant, hereby agrees to subscribe to that number of shares of the
Common Stock as are issuable in accordance with the formula set forth in
paragraph 1(b) of the Warrant, and makes payment therefor in full by surrender
and delivery of this Warrant.


Dated:                                       Signature:

                                             Address:



                                       12


                                   ASSIGNMENT

         FOR VALUE RECEIVED, _____________ hereby sells, assigns and transfers
unto            the foregoing Warrant and all rights evidenced thereby, and does
irrevocably constitute and appoint _____________, attorney, to transfer said
Warrant on the books of _______________.


Dated:                                            Signature:

                                              Address:

                                       13


                               PARTIAL ASSIGNMENT


         FOR VALUE RECEIVED, _____________ hereby assigns and transfers unto
___________ the right to purchase ____________ shares of the Common Stock of
____________ by the foregoing Warrant, and a proportionate part of said Warrant
and the rights evidenced hereby, and does irrevocably constitute and appoint
_____________, attorney, to transfer that part of said Warrant on the books of
______________.



Dated:                                              Signature:

                                              Address:


                                       14

EX-31.1

exv31w1

EX-31.2

exv31w2

EX-32

exv32