EMERSON RADIO CORP - 10-K Annual Report

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K
(Mark One)

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year ended March 31, 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 incorporation or organization) (I.R.S. Employer Identification Number)

Nine Entin Road, Parsippany, NJ 07054
- -------------------------------------------- ---------------------------------------
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (973) 884-5800
- ----------------------------------------------------------------------

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

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

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

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

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act) [ ] YES [X] NO.

Aggregate market value of the voting and non-voting common equity of the
registrant held by non-affiliates of the registrant at September 30, 2002
(computed by reference to the last reported sale price of the Common Stock on
the American Stock Exchange on such date): $63,361,971.

Number of Common Shares outstanding at June 16, 2003: 27,421,389

DOCUMENTS INCORPORATED BY REFERENCE:

PART I

ITEM 1. BUSINESS

THE COMPANY

We operate in two business segments:

o consumer electronics; and

o sporting goods.

The consumer electronics segment designs, sources, imports and markets
a variety of consumer electronic products and licenses its trademarks for a
variety of products world wide. The sporting goods segment, which is operated
through our 53% ownership of Sport Supply Group, Inc., distributes and markets
sports related equipment and leisure products primarily to institutional
customers in the United States.

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

Unless the context otherwise requires, the term:

o "Emerson" refers to our "consumer electronics" segment which is
operated through Emerson Radio Corp. and its subsidiaries, other
than SSG;

o "SSG" refers to our "sporting goods" segment which is operated
through Sport Supply Group, Inc. and its subsidiaries; and

o "we", "us" and "our" refers to both Emerson and SSG.

For a more detailed discussion of SSG's business and financial data,
see SSG's Form 10-K for the fiscal year ended March

28, 2003.

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

AVAILABLE INFORMATION

We file reports and other information with the Securities and Exchange
Commission ("SEC") pursuant to the information requirements of the Securities
Exchange Act of 1934. Readers may read and copy any document we file at the
SEC's public reference room at 450 Fifth St. N.W., Washington, D.C. 20549.
Please call the SEC at 1-800-SEC-0330 for further

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information on the operations of the public reference room. Our filings are also
available to the public from commercial document retrieval services and at the
SEC's website at www.sec.gov.

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

CONSUMER ELECTRONICS SEGMENT

General

Emerson, directly and through several subsidiaries, designs, sources,
imports, markets, sells and licenses to certain licensees a variety of consumer
electronics both domestically and internationally under the Emerson(R) and HH
Scott(R) brand names. These products include:

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

o microwave ovens;

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

o houseware products; and

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

Emerson also licenses a variety of specialty themed logos and marks
from third parties for use on audio products that bear the names of these third
parties. We refer to these licenses as inbound licenses.

The trade name "Emerson Radio" dates back to 1912 and is one of the
oldest and most well respected names in the consumer electronics industry. See
Item 1 - "Consumer Electroncis Segment -Licensing and Related Activities."

Emerson believes it possesses an advantage over its competitors due to
the combination of:

o the "(EMERSON LOGO)" brand recognition;

o its distribution base and established customer relations;

o its sourcing expertise and established vendor relations;

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

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

Emerson intends to continue leveraging its core competencies to offer a
broad variety of current and new consumer electronic products to customers. In
addition, Emerson intends to enter into additional licenses of third party trade
names and trademarks by third parties ("inward licenses"), as well as licenses
for the use of Emerson's trade names and trademarks ("outward licenses") and
distribution agreements that take advantage of Emerson's trademarks and utilize
the logistical and sourcing advantages for products that are more efficiently
marketed through these agreements. We continuously evaluate potential licenses
and distribution agreements. In March 2003, Emerson entered into a license
agreement with Nickelodeon to license the Nickelodeon name, trademark and logo,
along with several other of Nickelodeon trademarks and logos. See " Consumer
Electronics Segment - Licensing and Related Activities".

Emerson's core business consists of selling, distributing, and licensing various
low to moderately priced categories of consumer electronic products. The
majority of Emerson's marketing and sales efforts are concentrated in the United
States and, to a lesser extent, certain other international regions. Major
competitors in these markets are foreign-based manufacturers and distributors.
See "Consumer Electronics Segment-Competition."

Products

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

Growth Strategy

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

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

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

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

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o expansion into distribution channels we are not currently
utilizing; through new products that are being offered by Emerson;

o development and sales of new products not presently being offered
by Emerson, such as electronics and accessories that utilize
popular theme characters and logos through the use of various
trademarks licensed from third parties;

o further development of our direct to consumer sales channel,
through Emerson's internet web-site and infomercials;

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

o expansion through strategic mergers and acquisitions of other
businesses.

In connection with Emerson's strategic focus, Emerson may take an
equity position in various corporate entities.

Emerson believes that the "(EMERSON LOGO)" trademark is recognized in
many countries. A principal component of Emerson's growth strategy is to utilize
this global brand name recognition together with its reputation for quality and
cost competitive products to aggressively promote its product lines within the
United States and targeted geographic areas on an international basis. Emerson
believes that it will be able to compete more effectively in the highly
competitive consumer electronics and microwave oven industries, domestically and
internationally, by combining innovative approaches to its current product line
and augmenting its product line with complementary products. Emerson intends to
pursue such plans either independently or by forging new relationships,
including license arrangements, distributorship agreements and joint ventures.
See Item 1 "Consumer Electronics Segment -Licensing and Related Activities."

Sales and Distribution

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

Emerson has an integrated system to coordinate the purchasing, sales
and distribution aspects of its operations. Emerson receives orders from its
major accounts electronically, via electronic data interface (EDI), facsimile,
telephone or mail. Emerson does not have long-term contracts with any of its
customers, but rather receives orders on an ongoing basis. Products imported by
Emerson, generally from the Far East, are shipped by ocean and/or inland freight
and then stored in contracted public warehouse facilities for shipment to
customers. All

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inventory is monitored by Emerson's electronic inventory system. As a purchase
order is received and filled from inventory, warehoused product is labeled and
prepared for outbound shipment to customers by common, contract or small package
carriers for sales made from inventory.

Domestic Marketing

In the United States, Emerson markets its products primarily through:

o mass merchandisers;

o discount retailers;

o toy retailers; and

o distributors and specialty catalogers.

Wal-Mart Stores accounted for approximately 23% and 21%; Target Stores
accounted for approximately 17% and 19%; and K-Mart accounted for approximately
11% and 6% of our consolidated net revenues in fiscal 2003 and 2002,
respectively. No other customer accounted for more than 10% of our consolidated
net revenues in either period. Management believes that a loss of any one of the
three customers listed above would have a material adverse affect on our
business and results of operations.

Approximately 59% and 56% of the net consumer electronics revenues in
fiscal 2003 and 2002, respectively, were made through third party sales
representative organizations that receive sales commissions and work in
conjunction with Emerson's own sales personnel. With Emerson's permission third
party sales representative organizations may sell competitive products in
addition to Emerson's products. In most instances, either party may terminate a
sales representative relationship on 30 days' prior notice by Emerson and 90
days prior notice by the sales representative organization in accordance with
customary industry practice. Emerson utilizes approximately 20 sales
representative organizations, including two through which approximately 23% and
19% of the net consumer electronics revenues were made in fiscal 2003. For
fiscal 2002 these same two sales organizations accounted for approximately 29%
and 11% of the net consumer electronics revenues. No other sales representative
organization accounted for more than 10% of the consumer electronics net
revenues in either year. The remainder of Emerson's sales are serviced by its
sales personnel. Management does not believe that the loss of one or more sales
representative organizations would have a material adverse affect on our
business and results of operations.

Foreign Marketing

Approximately 2% of the consumer electronics segment net revenues in
fiscal 2003 and 2002 were derived from customers based in foreign countries
through license and distribution agreements primarily in South America, Canada,
and Mexico.

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Licensing and Related Activities

Emerson has several license agreements that allow licensees to use its
trademarks for the manufacture and/or the sale of consumer electronics and other
products and are referred to as outbound licenses. These license agreements
allow the licensee to use our trademarks by a specific product category, a
specific geographic area, a specific customer base or any other category defined
in the license agreement. These license agreements primarily cover some or all
the countries located in North America, South American, Mexico and parts of
Europe, are subject to renewal at the initial expiration of the agreements and
are governed by the laws of the United States. These license agreements have
expiration dates ranging from November 2003 through December 2006. License
revenues recognized and earned in fiscal 2003, 2002, and 2001 were approximately
$10,388,000, $6,952,000, and $3,930,000, respectively. Emerson records licensing
revenues as earned over the term of the related agreements.

Effective January 1, 2001, Emerson entered into a license agreement
("Video License Agreement") with Funai Corporation, Inc. ("Funai"), which was
amended to extend the Video License Agreement to December 31, 2004 and replaced
a prior agreement with Daewoo Electronics Co. Ltd. ("Daewoo"). The Video License
Agreement provides that Funai will manufacture, market, sell and distribute
specified products bearing the "[EMERSON LOGO]" trademark to customers in U.S.
and Canadian markets. Under the terms of the agreement, Emerson will receive
non-refundable minimum annual royalty payments of $4.3 million each calendar
year and a license fee on sales of products subject to the Video License
Agreement in excess of the minimum annual royalties. The minimums are credited
against royalties earned for the sale of products. During fiscal 2003, 2002 and
2001, license revenues of $8,520,000, $5,624,000 and $1,075,000, respectively,
were recorded under this agreement.

Throughout various parts of the world, Emerson maintains distribution
and outbound license agreements that encompass various Emerson branded products
into defined geographic areas.

Emerson intends to pursue additional licensing and distribution
opportunities and believes that such activities have had and will continue to
have a positive impact on operating results by generating income with minimal
incremental costs, if any, and without the necessity of utilizing working
capital. See Item 7 -"Forward Looking Information" and "Management's Discussion
and Analysis of Results of Operations and Financial Condition."

Effective March 2003, Emerson entered into a license agreement with
Nickelodeon to license the Nickelodeon name, trademark and logo, along with
several of Nickelodeon's trademarks and logos. The term of the agreement is
April 2003 through December 2005 ("initial term"), and includes an option to
extend the initial period by one year. This license provides Emerson with the
right to use such marks in the United States, and requires certain minimum
royalties.

Design and Manufacturing

Emerson's products are manufactured by several original equipment
manufacturers in accordance with Emerson's specifications. During fiscal 2003
and 2002, 100% of Emerson's purchases consisted of imported finished goods from
manufacturers primarily located in:

o South Korea;

o China;

o Malaysia; and

o Thailand.

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

The following summarizes Emerson's purchases from its major suppliers:

No other supplier accounted for more than 10% of Emerson's total
purchases in fiscal 2003 or 2002. Emerson considers its relationships with its
suppliers to be satisfactory and believes that, barring any unusual material or
part shortages or economic, fiscal or monetary conditions Emerson could develop,
as it already has, alternative suppliers. No assurance can be given that ample
supply of product would be available at current prices if Emerson were required
to seek alternative sources of supply without adequate notice by a supplier or a
reasonable opportunity to seek alternate production facilities and component
parts. See Item 7 - "Management's Discussion and Analysis of Results of
Operations and Financial Condition" and "Forward - Looking Information," and
Item 7A - "Inflation and Foreign Currency."

Warranties

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

Returned Products

Emerson's customers return product to Emerson for a variety of reasons,
including:

o retailer return policies with their customers;

o damage to goods in transit and cosmetic imperfections; and

o mechanical failures.

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Emerson has entered into agreements with the majority of its suppliers
that require the supplier to accept returned defective product. Emerson pays a
fee to the supplier and in exchange receives a unit.

Backlog

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

Trademarks

Emerson owns the:

o "(EMERSON LOGO)";

o "Emerson Research(R)";

o "Emerson Interactive sm";

o "H.H. Scott(R)"; and

o "Scott(R)"

marks for certain of its home entertainment and consumer electronic products in
the United States, Canada, Mexico and various other countries. Of the trademarks
owned by Emerson, those registered in the United States and Canada must be
renewed at various times through 2011 and 2014, respectively. Emerson's
trademarks are also registered in various other countries, which registrations
must be renewed at various times. Emerson intends to renew all trademarks
necessary for its business. Emerson considers the "(EMERSON LOGO)" and HH
Scott(R) trademarks to be of material importance to its business and, to a
lesser degree, the remaining trademarks. Emerson licenses the "(EMERSON LOGO)"
and HH Scott(R) trademark to third parties, the scope of which is on a limited
product and geographic basis and for a period of time. See "Consumer Electronics
Segment - Licensing and Related Activities."

Competition

The market segment of the consumer electronics industry in which
Emerson competes generates approximately $14 billion of factory sales annually
and is highly fragmented, cyclical and very competitive. The industry is
characterized by the short life cycle of products, which requires continuous
design and development efforts.

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

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o its reliability;

o quality;

o price;

o design;

o consumer acceptance of our products; and

o quality service and support to retailers and their customers.

Emerson also competes at the retail level for shelf space and
promotional displays, all of which have an impact on its established and
proposed distribution channels.

Seasonality

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

Working Capital

This segment is impacted by its seasonality in that it generally
records the majority of annual sales in the quarters ending September and
December, requiring it to maintain higher inventory levels during the quarters
ending June and September, therefore increasing the working capital needs during
these periods. Management believes that the outward license agreements,
continued sales margin improvements and the policies in place for returned
products should continue to favorably impact our cash flow. Management believes
that anticipated cash flow from operations and the financing presently in place
will provide sufficient liquidity to meet its operating and debt service cash
requirements in the year ahead. Management believes the Company's working
capital practices are similar to those of its industry.

SPORTING GOODS SEGMENT

General

Management believes SSG to be a leading direct mail marketer of sports
related equipment and leisure products for sale primarily to the institutional
market in the United States.

Products

Management believes SSG manufactures and distributes one of the
broadest lines of sporting goods, physical educational, recreational and leisure
products to the institutional market. SSG offers over 10,000 products, of which
SSG manufactures approximately 1,000 of these products and obtains the remainder
from external manufacturers. The SSG product lines include: archery; baseball;
softball; basketball; camping; football; tennis and other racquet

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sports; gymnastics; indoor recreation; game tables and physical education;
soccer; field and floor hockey; lacrosse; track and field; volleyball; weight
lifting; fitness equipment; outdoor playground equipment; and early childhood
development products.

Management believes brand recognition is important to the institutional
market. Most of SSG's products are marketed under trade names or trademarks
owned or licensed by SSG and include the following:

Alumagoal(R) AMF(R) ATEC(R)
Blastball(R) BSN(R) Champion Barbell
Curvemaster(R) Fibersport Flag A Tag(R)
Gamecraft GSC Sports MacGregor(R)
Huffy(R) Maxpro(R) Passon's Sports
New England Camp & Supply NorthAmerican Recreation(R) Pro Base(R)
Pillo Polo(R) Port-A-Pit(R) Rol-Dri(R)and Tidi-Court
Pro Down(R) Pro Net Voit(R)
Toppleball(R) U.S. Games, Inc(R)

Growth Strategy

SSG believes it is well positioned to grow the business due
to:

its ability to process and fulfill a high capacity of orders;

its well-developed expertise in catalog design and
merchandising; and

its information technology system and its Internet platform.

One of the most important contributions of SSG's information technology
platform is that the order processing and fulfillment capabilities are
integrated throughout the operations of SSG, including all of SSG's websites.
Each website is strategically targeted to a specific customer group or product
line. The continued migration of SSG's customers to its websites is important to
SSG's growth and success.

Sales and Distribution

SSG's websites enable its customers to place orders, access account
information, track orders, and perform routine customer service inquiries on a
real-time basis, twenty-four hours a day, seven days a week. This functionality
allows for more convenience and added flexibility for its customers.

SSG's sourcing, warehousing, distribution and fulfillment capabilities
and its fully integrated information system, provide the necessary capacities,
logistics, information and technological capabilities to meet the demands and
growth potential of commerce via the Internet.

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Domestic Marketing

SSG offers products directly to the institutional market primarily
through:

o a variety of distinctive, information-rich catalogs;

o sales personnel strategically located in certain large
metropolitan areas;

o in-bound and out-bound telemarketers;

o a team of experienced bid and quote personnel; and

o the Internet.

SSG's marketing efforts are supported by a database of over 250,000
customers, a call center, a custom-designed distribution center and several
manufacturing facilities. SSG currently offers approximately 10,000 sports
related equipment products to over 100,000 customers, which include: public and
private schools; colleges; universities and military academies; municipal and
governmental agencies; military facilities; churches; clubs; camps; hospitals;
youth sports leagues; non-profit organizations; team dealers; and certain large
retail sporting goods chains.

SSG believes that its customer base in the United States is the largest
in the institutional direct mail market for sports related equipment.

Licensing and Related Activities

SSG has inward licenses for many well-known names and trademarks that allow it
to manufacture, sell, and distribute specified sport related products and
equipment to institutional customers using the licensed names for specified
royalty fees paid to licensors. See Item 1 "Business-Sporting Goods Segment
- -Trademarks."

Design and Manufacturing

SSG manufactures, assembles and distributes many of its products at its
facilities. See Item 2 -- "Properties."

Most of SSG's manufactured products are standardized. Certain products
manufactured by SSG are custom made; such as tumbling mats ordered in color or
size specifications. The principal raw materials used by SSG in manufacturing
are, for the most part, readily available from several different sources. No one
supplier accounts for more than 10% of the total raw materials supplied to SSG.
Such raw materials include: foam; vinyl; nylon thread; steel and aluminum
tubing.

Items not manufactured by SSG are purchased from various suppliers
primarily located in the United States, Taiwan, Australia, the Philippines,
Thailand, China, Pakistan, Sweden and Canada. SSG has no significant purchase
contracts with any major supplier of finished products, and most products
purchased from suppliers are available from other sources. Purchases of most

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finished products are made in U.S. dollars and are, therefore, not subject to
direct foreign exchange rate differences.

Warranties

SSG typically offers limited warranties for its sporting goods, which
are comparable to its competitors.

Returned Products

In most instances, SSG's customers have the right to return product
within 30 days. Returned products in the sporting goods segment are less
frequent than the consumer products segment, and are not considered a
significant factor in SSG's operations.

Backlog

We believe that backlog is not a significant factor in our sporting
goods segment. However, the ability of management to correctly anticipate and
provide for inventory requirements is essential to the successful operation of
SSG's business.

Trademarks

SSG licenses many well known trade names and trademarks, such as:

o Voit(R);

o Huffy(R);

o MacGregor(R);

o Maxpro(R); and

o AMF(R).

These licenses allow SSG to manufacture, sell, and distribute specified
sport related products and equipment to institutional customers using these
names for specified royalty fees. These license agreements have expiration dates
ranging from September 30, 2003 through 2040, in some cases with renewable
terms.

Competition

SSG competes in the institutional sporting goods market principally
with:

o local sporting goods dealers;

o retail sporting goods stores;

o other direct mail catalog marketers; and

o providers of sporting goods on the Internet.

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SSG has identified approximately 15 other direct mail and internet
companies in the institutional market most of whom we believe are competitors
that are substantially smaller than SSG in terms of geographic coverage,
products, e-commerce capability, customer base and revenues.

SSG competes in the institutional market principally on the basis of
brand, price, product availability and customer service. SSG believes it has an
advantage in the institutional market over traditional sporting goods retailers
and team dealers because its selling prices do not include comparable price
markups attributable to traditional multi-distribution channel markups. In
addition, SSG's expansive product lines and the ability to control the
availability of goods which SSG sources enables it to respond more rapidly to
customer demand.

Seasonality

The seasonality of Emerson is counterbalanced by SSG which has
historically experienced strong revenues during the March quarter primarily due
to volume generated by spring and summer sports, favorable outdoor weather
conditions and school needs before summer closings, and weak revenues during the
December quarter.

Working Capital

The sporting goods segment is impacted by seasonality with its March
quarter highest sales period, and the quarter ending December being its lowest
sales period. This seasonality requires the sporting goods segment to maintain
higher amounts of inventory during the quarters ending March and June, therefore
increasing the working capital needs during these periods.

GOVERNMENT REGULATION

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

Many of our products are subject to Federal regulations, among other
laws, which empowers the Consumer Product Safety Commission (the "CPSC") to
protect consumers from hazardous sporting goods and other articles. The CPSC has
the authority to exclude from the market certain articles that are found to be
hazardous and can require a manufacturer to refund the purchase price of
products that present a substantial product hazard. CPSC determinations are
subject to court review. Similar laws exist in some states and cities in the
United States.

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PRODUCT LIABILITY AND INSURANCE

Because of the nature of the products sold by us, particularly those
products sold by SSG, we are periodically subject to product liability claims
resulting from personal injuries. We may become involved in various lawsuits
incidental to our business. Additionally, significantly increased product
liability claims continue to be asserted successfully against manufacturers and
distributors of sports equipment throughout the United States resulting in
general uncertainty as to the nature and extent of manufacturers' and
distributors' liability for personal injuries. See Item 3 - "Legal Proceedings".

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

EMPLOYEES

As of May 28, 2003, we had approximately 485 employees, of which 145
were employed by Emerson, and 340 were employed by SSG. None of our employees
are represented by unions, and we believe our labor relations are good.

RISK FACTORS

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

BUSINESS RELATED RISKS

The loss of any of our key customers, including Wal-Mart, Target and K-Mart,
could negatively affect our revenues and could decrease our earnings.

We are highly dependent upon sales of our consumer electronic products
to certain of our customers, including Wal-Mart, Target and K-Mart. During our
fiscal years ended March 31, 2003 and 2002, Wal-Mart stores accounted for
approximately 23% and 21%, respectively, Target stores accounted for
approximately 17% and 19%, respectively, and K-Mart accounted for approximately
11% and 6%, respectively. Although no other customer in either of our operating
segments accounted for greater than 10% of our consolidated net revenues during
these periods, other customers may account for more than 10% of our consolidated
net revenues in future periods. All purchases of our products by customers in
both of our operating segments are made through purchase orders and we do not
have any long-term contracts with any of our customers. The loss of customers
such as Wal-Mart, Target or K-Mart or any of our other customers to which we
sell a significant amount of our products or any significant portion of orders
from Wal-Mart, Target or K-Mart or such other customers or any material adverse
change in the financial condition of such customers could negatively affect our
revenues and decrease our earnings.

15

The failure to maintain our relationships with our licensees and distributors or
the failure to obtain new licensees or distribution relationships could
negatively affect our revenues and decrease our earnings.

We maintain license agreements that allow licensees to use our
Emerson(R) and H.H. Scott(R) trademarks for the manufacture and sale of consumer
electronics and other products. In addition, we maintain distribution agreements
for the distribution of our consumer electronics products into defined
geographic areas. Although we have entered into agreements with certain of our
licensees and distributors of consumer electronics products, most of which have
a term of three years or less and expire between November 2003 and December
2006, we cannot assure that such agreements will be renewed when the terms of
such agreements expire or that our relationships with our licensees or
distributors will be maintained on satisfactory terms or at all. The failure to
maintain our relationships with our licensees and distributors, the failure to
obtain new licensees or distribution relationships or the failure by our
licensees to protect the integrity and reputation of our Emerson(R) and H.H.
Scott(R) trademarks could negatively affect our licensing revenues and decrease
our earnings.

Our sporting goods business licenses many well-known names and
trademarks, including Voit(R) and MacGregor(R). These licenses allow us to
manufacture, promote, sell and distribute specified products and equipment. The
licensing agreements with Voit(R) and MacGregor(R) expire in 2004 and 2040,
respectively. Each of these agreements provides for renewal terms, however, we
cannot assure that such agreements will be renewed when the terms of such
agreements expire or that our relationship with these licensors will be
maintained on satisfactory terms or at all. The non-renewal or termination of
one or more of our material licenses in our sporting goods business could
materially reduce our ability to sell products bearing such names and trademarks
and decrease our earnings.

Our revenues and earnings could be negatively affected if we cannot anticipate
market trends or enhance existing products or achieve market acceptance of new
products.

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

We depend on a limited number of suppliers for our components and raw materials
and any interruption in the availability of these components and raw materials
used in our products could reduce our revenues and adversely affect our
relationship with our customers.

We rely on a limited number of suppliers, most of which are located
outside of the United States, for the components and raw materials used in our
consumer electronics and sporting good

16

products. Although there are many suppliers for each of our component parts and
raw materials, we are dependent on a limited number of suppliers for many of the
significant components and raw materials. This reliance involves a number of
significant risks, including:

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

o manufacturing delays caused by such unavailability or interruptions
in delivery;

o fluctuations in the quality and the price of components and raw
materials; and

o risks related to foreign operations.

We do not have any long-term or exclusive purchase commitments with any of our
suppliers. Avatar Mfg., Tonic Electronics and Daewoo are our largest suppliers
of components for our consumer electronics products, each of which accounted for
more than 10% of our purchases of components for our consumer electronics
products for each of our last two fiscal years. In addition, during our latest
fiscal year, GMT Industries also accounted for more than 10% of our purchases of
components for our consumer electronics products. Our failure to maintain
existing relationships with our suppliers or to establish new relationships in
the future could also negatively affect our ability to obtain our components and
raw materials used in our products in a timely manner. If we are unable to
obtain ample supply of product from our existing suppliers or alternative
sources of supply, we may be unable to satisfy our customers' orders which could
reduce our revenues and adversely affect our relationship with our customers.

The operating results of our sporting good segment could be affected by
budgetary restrictions of schools and government agencies.

A substantial portion of our sporting goods product revenues are
generated through sales to the institutional market, including:

o public and private schools;

o colleges and universities;

o military academies;

o municipal and governmental agencies;

o military facilities;

o youth sports leagues; and

o certain retail sporting goods chains.

As a result, our sporting goods business is substantially dependent on the
budgetary allowances of schools as well as local, state and federal government
agencies. Restrictions or reductions to the budgeted spending of these entities
could reduce the amount of goods purchased from us and could materially
adversely affect our revenues and earnings.

17

If our original equipment manufacturers are unable to deliver our products in
the required amounts and in a timely fashion, we could experience delays or
reductions in shipments to our customers which could reduce our revenues and
adversely affect our relationship with our customers.

All of our consumer electronic products and approximately 20.0% of our
sporting good products are manufactured in accordance with our specifications by
original equipment manufacturers located in:

o South Korea;

o China;

o Malaysia; and

o Thailand.

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

Unanticipated disruptions in our operations or slowdowns by our suppliers,
manufacturers and shipping companies could adversely affect our ability to
deliver our products and service our customers which could reduce our revenues
and adversely affect our relationship with our customers..

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

o the efficient and uninterrupted operation of our call center,
distribution center and manufacturing facilities related to our
sporting goods segment; and

o the timely performance of third party manufacturers and suppliers,
catalog printers and shipping companies.

Any material disruption or slowdown in the operation of our call center,
distribution center, manufacturing facilities or management information systems,
or comparable disruptions or slowdowns suffered by our principal manufacturers,
suppliers and shippers could cause delays in our ability to receive, process and
fulfill customer orders and may cause orders to be canceled, lost or delivered
late, goods to be returned or receipt of goods to be refused. Our sporting goods
segment ships approximately 70% of its products using United Parcel Service. A
strike by UPS or any of our other major carriers could materially adversely
affect our results of operations as a result of our failure to deliver our
products in a timely manner and using other more expensive freight carriers.

In addition to the foregoing, the International Longshore and Warehouse
Union, which is the union of dock workers that receives our cargo of import
containers on the West Coast, and the Pacific Maritime Association, a group of
global ship owners and terminal operators, renew their contracts periodically. A
strike by the ILWU, or lockout by the PMA, would significantly slow the receipt
of our import products and could cause delays in our ability to process and
fulfill customer orders. In addition, these delays may cause orders to be
canceled or delivered late and may result in orders being

18

returned or receipt of goods being refused. Any strike or lockout could also
cause an increase in backlog and freight charges such as port congestion
surcharges, extended peak season surcharges and charges as a result of force
majeure clauses, all of which could materially adversely affect our ability to
deliver our products to our customers in a timely manner and cause our operating
expenses to materially increase.

The operations of our sporting goods segment are subject to high fixed costs
which could adversely affect our earnings.

The operations and maintenance of our call center, distribution center,
manufacturing facilities and management information systems related to our
sporting goods segment involve substantial fixed costs. Paper and postage are
significant components of our sporting goods segment operating costs. Catalog
mailings entail substantial paper, postage, and costs associated with catalog
development, each of which is subject to price fluctuations. If net revenues are
substantially below expectations, these fixed costs may not be proportionately
reduced and could materially adversely affect the earnings of our sporting goods
segment and, in turn, our consolidated earnings.

Our revenues and earnings could be adversely affected by foreign regulations and
changes in the political, public health and economic conditions in the foreign
countries in which we operate our business.

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

o currency fluctuations which could cause an increase in the price of
the components and raw materials used in our products and a decrease
in our profits;

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

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

o political instability and economic downturns in these countries which
could adversely affect our ability to obtain our products from our
manufacturers or deliver our products to our customers in a timely
fashion; and

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

In addition, the recent outbreak of severe acute respiratory syndrome, or SARS,
which has had particular impact in China, Hong Kong and Singapore, could have a
negative effect on our operations. Our operations, including our ability to
obtain our products in a timely fashion, may be impacted by a number of SARS
related factors, including disrupting the operation of our suppliers,
manufacturers and shipping companies, each of which could adversely affect our
earnings.

19

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

The seasonality of our business, as well as changes in consumer spending and
economic conditions, may cause our quarterly operating results to fluctuate and
cause our stock price to decline.

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

o seasonal variations in operating results;

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

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

o variations in manufacturing and supplier relationships;

o if we are unable to correctly anticipate and provide for inventory
requirements from quarter to quarter, we may not have sufficient
inventory to deliver our products to our customers in a timely
fashion or we may have excess inventory that we are unable to sell;

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

o changes in market and economic conditions; and

o competition.

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

Sales of our consumer electronics products are somewhat seasonal due to
consumer spending patterns which tend to result in significantly stronger sales
in our September and December fiscal quarters, especially as a result of the
holiday season. Our sporting goods segment is also somewhat seasonal due to
stronger demand for its products during the March fiscal quarter due to volume
generated by spring and summer sports, favorable outdoor weather conditions and
school needs before summer closings and weaker revenues during the December
fiscal quarter. These patterns will probably not change significantly in the
future. Although we believe that the seasonality of our business is based
primarily on the timing of consumer demand for our products, fluctuations in
operating results can also result from other factors affecting us and our
competitors, including new product developments or introductions, availability
of products for resale, competitive pricing pressures, changes in product mix
and pricing and product reviews and other media coverage. Due to the seasonality
of our business, our results for interim periods are not necessarily indicative
of our results for the year.

20

Our sales and earnings can also be affected by changes in the general
economy since purchases of consumer electronics and sporting goods are generally
discretionary for consumers and subject to budgetary constraints by schools and
government agencies. Our success is influenced by a number of economic factors
affecting disposable consumer income, such as employment levels, business
conditions, budgetary restrictions of schools and government agencies, interest
rates and taxation rates. Adverse changes in these economic factors, among
others, may restrict consumer spending or increase budgetary restrictions at
schools and government agencies, thereby negatively affecting our sales and
profitability.

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

If our third party sales representatives fail to adequately promote, market and
sell our consumer electronic products, our revenues could significantly
decrease.

A portion of our consumer electronic products sales are made through
third party sales representative organizations whose members are not our
employees. Our level of sales depends on the effectiveness of these
organizations, as well as the effectiveness of our own employees. Some of these
third party representatives may sell, with our permission, competitive products
manufactured by other third parties as well as our products. During our fiscal
years ended March 31, 2003 and 2002 , these organizations were responsible for
approximately 59% and 56%, respectively, of our net consumer electronics
revenues during such periods. In addition, two of these representative
organizations were responsible for a significant portion of these revenues. If
any of our third party sales representative organizations engaged by us,
especially our two largest, fails adequately to promote, market and sell our
consumer electronics products, our revenues could be significantly decreased
until a replacement organization or distributor could be retained by us. Finding
replacement organizations and distributors could be a time consuming process
during which our revenues could be negatively impacted.

Our existing indebtedness may adversely affect our ability to obtain additional
funds and may increase our vulnerability to economic or business downturns.

Our consolidated indebtedness aggregated approximately $29.7 million as
of March 31, 2003. As a result, we are subject to the risks associated with
significant indebtedness, including:

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

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

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

21

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

We have pledged substantially all of our assets to secure our borrowings and are
subject to covenants that may restrict our ability to operate our business.

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

o acceleration of the payment of our outstanding indebtedness;

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

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

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

The ownership of our common stock by Geoffrey P. Jurick, our Chairman, Chief
Executive Officer and President, substantially reduces the influence of our
other stockholders.

Geoffrey Jurick, our Chairman, Chief Executive Officer and President
owns approximately 36.0% of our outstanding common stock. Upon completion of the
previously announced public offering of shares of common stock owned by Mr.
Jurick, he would own approximately 20.7% of our outstanding common stock. As a
result, Geoffrey Jurick has the ability to influence significantly the actions
that require stockholder approval, including:

o the election of our directors; and

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

As a result, our other stockholders may have little or no influence over matters
submitted for stockholder approval. In addition, the selling stockholder's
influence could preclude any unsolicited acquisition of us and consequently
materially adversely affect the price of our common stock.

We are subject to intense competition in the industries in which we operate
which could cause material reductions in the selling price of our products or
losses of our market share.

The consumer electronics industry and the institutional market for
sporting goods and leisure products are highly competitive, especially with
respect to pricing and the introduction of new

22

products and features. Our consumer electronics segment competes in the low to
medium-priced sector of the consumer electronics market and competes primarily
on the basis of:

o reliability;

o quality;

o price;

o design;

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

o quality service and support to retailers and our customers.

Our sporting goods segment competes in the institutional sporting goods market
principally with local sporting goods dealers, retail sporting goods stores,
other direct mail catalog marketers and providers of sporting goods on the
Internet. Our sporting goods segment competes principally on the basis of:

o brand;

o price;

o product availability; and

o customer service.

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

o significantly longer operating histories;

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

o greater name recognition.

As a result, our competitors may be able to:

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

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

o respond more effectively to pricing pressures.

23

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

o new companies enter the market;

o existing competitors expand their product mix; or

o we expand into new markets.

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

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

Our ability to compete effectively will depend on our ability to
maintain and protect our proprietary rights. We own the Emerson(R) trademark,
which is materially important to our business, as well as our other trademarks
and proprietary rights that are used for certain of our home entertainment and
consumer electronics products. In addition, we license names and trademarks in
connection with our sporting goods business. Our trademarks are registered
throughout the world, including the United States, Canada, Mexico, France,
Spain, Germany and the United Kingdom. However, third parties may seek to
challenge, invalidate, circumvent or render unenforceable any proprietary rights
owned by or licensed to us. In addition, in the event third party licensees fail
to protect the integrity of our trademarks, the value of these marks could be
adversely affected.

The laws of some foreign countries in which we operate may not protect
our proprietary rights to the same extent as do laws in the United States. The
protections afforded by the laws of such countries may not be adequate to
protect our intellectual property rights. Our inability to protect our
proprietary rights could materially adversely affect the license of our
tradenames and trademarks to third parties as well as our ability to sell our
products. Litigation may be necessary to:

o enforce our intellectual property rights;

o protect our trade secrets; and

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

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

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

24

rights could delay or preclude the sale, manufacture or distribution of our
products and could result in increased costs to us.

We could be exposed to product liability claims for which our product liability
insurance may be inadequate.

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

o our insurance will provide adequate coverage against potential
liabilities;

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

o our insurance can be maintained on acceptable terms.

To the extent product liability losses are beyond the limits or scope of our
insurance coverage, our expenses could materially increase.

We may seek to make acquisitions that prove unsuccessful or strain or divert our
resources.

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

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

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

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

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

If we make such acquisitions we cannot predict whether:

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

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

o there will be substantial unanticipated costs associated with
acquisitions.

In addition, future acquisitions by us may result in:

o potentially dilutive issuances of our equity securities;

25

o the incurrence of additional debt; and

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

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

The inability to use our tax net operating losses could result in a charge to
earnings and could require us to pay higher taxes.

Both Emerson and SSG have substantial tax net operating losses
available to reduce taxable income for federal and state income tax purposes. A
portion of the benefit associated with the tax net operating losses has been
recognized as a deferred tax asset in our financial statements and could be used
to reduce our tax liability in future profitable periods. We believe these net
deferred tax assets will be realized through tax planning strategies available
in future periods and future profitable operating results. Although realization
is not assured at either Emerson or SSG, we believe it is more likely than not
that all of the remaining net deferred tax assets will be realized. The amount
of the deferred tax asset considered realizable, however, could be reduced or
eliminated in the near term if certain tax planning strategies are not
successfully executed or estimates of future taxable income during the
carryforward period are reduced. In addition, transactions consummated by us or
Geoffrey Jurick, including the offering of the shares by Mr. Jurick in
connection with the offering, that together with other transactions consummated
by Emerson, SSG or the selling stockholder or that involve the common stock of
Emerson or SSG that are deemed collectively to result in a change of control of
Emerson or SSG, respectively, under the tax code could limit the use of our tax
net operating losses. In the event that either Emerson or SSG is unable to
utilize its tax net operating losses in a reasonable time frame, it would be
required to adjust its deferred tax asset on its financial statements which
would result in a charge to earnings. Additionally, should the utilization of
tax net operating losses be limited, we would be required to pay a greater
amount of taxes in future periods.

MARKET RELATED RISKS

The market price of our common stock has experienced significant price and
volume fluctuations from time to time.

The market price for our common stock and for securities of similar
companies have from time to time experienced significant price and volume
fluctuations that are unrelated to operating performance. Factors which may
affect our market price include:

o market conditions in the industries in which we operate;

o competition;

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

o our results of operations and financial condition; and

o general economic conditions.

26

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

Our organizational documents and Delaware law may make it harder for us to be
acquired without the consent and cooperation of our board of directors and
management.

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

Future sales of our common stock may affect our stock price.

The placement or sale of a substantial number of shares of our common
stock could cause a decrease in the market price of our common stock. We had
approximately 27.4 million shares of common stock issued and outstanding as of
May 31, 2003. As of May 31, 2003, approximately 17.5 million shares were freely
tradeable without restriction and the remainder will be saleable with
restriction under Rule 144. We have filed a registration statement for the
public offering of approximately 4.2 million shares of common stock and upon
closing of the offering, approximately 21.7 million shares would be freely
tradeable without restriction. In addition, options and warrants to purchase
approximately 1.3 million shares of our common stock were outstanding as of May
31, 2003. As of May 31, 2003, 1.1 million of those stock options and warrants
were vested and substantially all of the remaining options and warrants will
vest over the next year. We may also issue additional shares in connection with
our business and may grant additional stock options to our employees, officers,
directors and consultants under our stock option plans or warrants to third
parties. If a significant portion of such shares were sold in the public market,
the market value of our common stock could be adversely affected.

FORWARD-LOOKING INFORMATION

This report contains various forward-looking statements made 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", "estimate", "expect", "predict",
"project", and similar expressions are intended to identify forward-looking
statements. We cannot guarantee the accuracy of the forward-looking statements,
and you 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 above and "Critical
Accounting Policies" set forth in Item 7 - "Management's Discussion and Analysis
of Financial Condition and Results of Operations".

27

Due to these uncertainties and risks, readers are cautioned not to
place undue reliance on these forward-looking statements, which speak only as of
the date of this report. 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 - "Management's Discussion and Analysis of Financial Condition and
Results of Operations - Certain Factors that May Affect the Company's Business
or Future Operating Results".

ITEM 2. PROPERTIES

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

Emerson also utilizes public warehouse space. Such public warehouse commitments
are evidenced by contracts with terms typically of one year. Public warehouse
expenses for Emerson varies based on a percentage of sold products shipped from
the location. In addition, Emerson leases from SSG on a month to month basis
approximately 75,000 sq. ft of warehousing space.

We believe that the properties used for our operations are in satisfactory
condition and adequate for our present and anticipated future operations. In
addition to the facilities listed above, SSG leases space in various locations,
primarily for use as sales offices, which lease terms range from month to month
to three years and are not material to us.

ITEM 3. LEGAL PROCEEDINGS

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

28

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

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

PART II

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

(a) Market Information

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

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

(b) Holders

At May 8, 2003, there were approximately 385 stockholders of record of
our common stock. We believe that the number of beneficial owners is
substantially greater than the number of record holders, because a large portion
of our common stock is held of record in broker "street names."

(c) Dividends

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

(d) Unregistered Securities

On August 1, 2002, Emerson granted 200,000 warrants with an exercise
price of $2.20 which fully vest after one year from date of grant in conjunction
with a consulting agreement. During February 2003, 100,000 warrants were
exercised, and accordingly the Company issued 100,000 shares of restricted stock
under the terms of the agreement. The above transaction was a private
transaction not involving a public offering and was exempt from the registration
provisions of the Securities Act of 1933, as amended ("the Act"), pursuant to
Section 4(2)

29

thereof. The sale of the securities was without the use of an underwriter, and
the shares of common stock bear a restrictive legend permitting transfer thereof
only upon registration or an exemption under the Act.

ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA

The following table sets forth our selected consolidated financial data
for the five years ended March 31, 2003. For the years ended April 2, 1999
through March 31, 2000, we changed our financial reporting year to a 52/53 week
year ending on the Friday closest to March 31. Beginning in fiscal 2001, we
changed our financial reporting year to end on March 31. The selected
consolidated financial data should be read in conjunction with our Consolidated
Financial Statements, including the notes thereto, and Item 7 - "Management's
Discussion and Analysis of Results of Operations and Financial Condition."

(1) Prior to March 23, 2001, the investment in SSG was accounted for under the
equity method of accounting. On March 23, 2001, a majority interest in SSG
was reached and required this interest be accounted for as a partial
purchase to the extent of the change in control. The assets and liabilities
of SSG have been revalued to fair value to the extent of Emerson's interest
in SSG. SSG's results of operations and the minority interest

30

related to those results have been included in our results of operations as
though it
had been acquired at April 1, 2000.

(2) Net revenues have been reclassified for fiscal 1999 through 2002 due to the
adoption of EITF 01-09, "Accounting For Consideration Given by a Vendor to
a Customer" in fiscal 2003.

(3) For fiscal 2002, 2001 and 2000, dilutive securities include 3,531,000,
3,066,000 and 5,876,000 shares, respectively, assuming conversion of Series
A preferred stock at a price equal to 80% of the weighted average market
value of a share of common stock, determined as of March 31, 2002, 2001,
and 2000. For fiscal 2003, 2002 and 2001, dilutive securities also include
924,000, 452,000 and 437,000 shares assuming conversion of 1,195,000,
1,645,000 and 1,658,000 options, respectively, and 100,000 warrants for
fiscal 2003. For fiscal 2002 dilutive securities also included 5,204,000
shares assuming the conversion of convertible debentures. Per common share
data is based on the net income and deduction of the amount of dividends
required to be paid to the holders of the preferred stock (resulting in a
loss attributable to common stockholders for fiscal 1999) and the weighted
average of common stock outstanding during each fiscal year. Loss per share
does not include potentially dilutive securities assumed outstanding since
the effects of such conversion would be anti-dilutive.

(4) Calculated based on common shareholders' equity divided by the basic
weighted average shares of common stock outstanding. Common shareholders'
equity for fiscal years 2003 through 1999, is equal to total shareholders'
equity less the Series A preferred stock equity of $3,677,000, $3,677,000,
$3,677,000, $3,677,000, and $3,714,000, respectively.

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

During fiscal 2001, Emerson increased its ownership in SSG to 50.1%.
Accordingly, Emerson's and SSG's results of operations are consolidated for
fiscal 2003, 2002 and 2001. See Item 8 - "Financial Statements and Supplementary
Data - Note 1 and Note 3 of Notes to the Consolidated Financial Statements."

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 our consolidated statements of operations as a percentage of net revenues for
the fiscal years ended March 31. 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.

31

RESULTS OF CONSOLIDATED OPERATIONS - FISCAL 2003 COMPARED WITH FISCAL 2002

Net Revenues - Net revenues for fiscal 2003 were $347.8 million as
compared to $316.0 million for fiscal 2002. The increase in net revenues was
primarily due to an increase of approximately $32.7 million in the consumer
electronics segment, partially offset by a decrease of approximately $1.0
million in the sporting goods segment.

Cost of Sales - Cost of sales, as a percentage of consolidated net
revenues, decreased from 80.3% in fiscal 2002 to 79.1% in fiscal 2003. The
decrease in cost of sales was primarily the result of higher margins in the
consumer electronics segment in the current fiscal year. In absolute terms, cost
of sales increased $21.4 million in fiscal 2003 as compared to fiscal 2002.

Other Operating Costs and Expenses - Other operating costs and expenses
are associated with the consumer electronics segment. Other operating costs
decreased from $4.9 million (1.6% of net revenues) in fiscal 2002 to $4.3
million (1.3% of net revenues) in fiscal 2003, primarily as a result of a
decrease in costs related to inventory carrying expenses.

Selling, General and Administrative Expenses ("S,G&A") - S,G&A were
$48.7 million (14.0% of net revenues) in fiscal 2003 as compared to $46.9
million (14.8% of net revenues) in fiscal 2002. The increase in S,G&A in
absolute terms was primarily the result of increases in S,G&A in the consumer
electronics segment, partially offset by decreases in the sporting goods
segment.

Litigation Settlement, net - Litigation settlement in fiscal 2002 was
the result of the consumer electronics segment settling litigation in the amount
of $2.9 million, net of legal costs with a former trademark licensee.

Interest expense, net - Interest expense decreased from $3.2 million
(1.0% of net revenues) in fiscal 2002 to $2.5 million (0.7% of net revenues) in
fiscal 2003. The decrease is primarily due to the consumer electronics segment
along with a lesser decrease in the sporting goods segment. The decreases in
both segments were the result of lower borrowing and lower interest rates.

Minority Interest in Net Loss of Consolidated Subsidiary - Minority
interest in net loss of consolidated subsidiary represents that portion of the
sporting goods segment loss for the fiscal year that was not included in the
consolidated statements of operations. See Item 8- "Financial Statements and
Supplementary Data - Note 1 of Notes to Consolidated Financial Statements."

32

Benefit For Income Taxes - Benefit for income taxes in absolute terms
was ($9.3) million in fiscal 2003 as compared to ($7.7) million in fiscal 2002.
The increase in tax benefit in fiscal 2003 was primarily the result of a
reduction in a valuation reserve in the consumer electronics segment, previously
established against the deferred tax assets relating to the accounts receivable
and inventory temporary differences, as well as the recognition of management's
estimation of net operating loss carryforwards subject to limitations under IRC
Section 382. See Item 8 - "Financial Statements and Supplementary Data - Note 7
of Notes to Consolidated Financial Statements."

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). 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 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 due to the impairment of all of the
goodwill attributed to the Company's sporting goods segment. See Item 8 -
"Financial Statements and Supplementary Data - Note 5 of Notes to Consolidated
Financial Statements."

Net Income - As a result of the foregoing factors, we earned net income
of $21.5 million (6.2% of net revenues) for fiscal 2003 as compared to $19.4
million (6.1% of net revenues) for fiscal 2002.

RESULTS OF CONSOLIDATED OPERATIONS - FISCAL 2002 COMPARED WITH FISCAL 2001

Net Revenues - Net revenues for fiscal 2002 were $316.0 million as
compared to $373.0 million for fiscal 2001. The decrease in net revenues was
primarily due to a decrease of approximately $47.5 million in the consumer
electronics segment and approximately a $9.5 million decrease in the sporting
goods segment. During fiscal 2002 and 2001, license revenues of $7.0 million and
$3.9 million, respectively, were recorded by the consumer electronics segment.

Cost of Sales - Cost of sales, as a percentage of consolidated net
revenues, decreased from 81.7% in fiscal 2001 to 80.3% in fiscal 2002. The
decrease in cost of sales was primarily the result of higher margins in the
consumer electronics segment in the current fiscal year, and the benefit of
higher license revenues in fiscal 2002 by the consumer electronics segment. In
absolute terms, cost of sales decreased $50.9 million in fiscal 2002 as compared
to fiscal 2001.

Other Operating Costs and Expenses - Other operating costs and expenses
are associated with the consumer electronics segment. Other operating costs
increased from $4.4 million (1.2% of net revenues) in fiscal 2001 to $4.9
million (1.6% of net revenues) in fiscal 2002, primarily as a result of an
increase in costs related to inventory carrying expenses and a lower sales base.

Selling, General and Administrative Expenses ("S,G&A") - S,G&A, as a
percentage of net revenues, were 14.8% in fiscal 2002 as compared to 13.5% in
fiscal 2001, and in absolute terms were $46.9 million for fiscal 2002 as
compared to $50.4 million for fiscal 2001. The decrease in S,G&A in fiscal 2002
was primarily the result of decreases in S,G&A in the sporting goods segment.

33

Litigation Settlement, net - Litigation settlement is the result of the
consumer electronics segment settling litigation in fiscal 2002 in the amount of
$2.9 million, net of legal costs with a former trademark licensee.

Interest expense, net - Interest expense decreased from $4.1 million
(1.1% of net revenues) in fiscal 2001 to $3.2 million (1.0% of net revenues) in
fiscal 2002. The decreases in both segments were the result of lower borrowing
and lower interest rates.

Minority Interest in Net Loss of Consolidated Subsidiary - Minority
interest in net loss of consolidated subsidiary represents that portion of the
sporting goods segment loss for the fiscal year that was not included in the
consolidated statements of operations. See Item 8 - "Financial Statements and
Supplementary Data - Note 1 of Notes to Consolidated Financial Statements."

Benefit For Income Taxes - Benefit for income taxes in absolute terms
was ($7.7) million in fiscal 2002 as compared to ($944,000) in fiscal 2001. The
increase in the tax benefit was primarily the result of a reduction in a
valuation reserve in the consumer electronics segment previously established
against the deferred tax assets relating to the accounts receivable and
inventory temporary differences, as well as the recognition of management's
estimation of net operating loss carryforwards subject to limitations under IRC
Section 382.

Net Income - As a result of the foregoing factors, we earned net income
of $19.4 million (6.1% of net revenues) for fiscal 2002 as compared to $12.7
million (3.4% of net revenues) for fiscal 2001.

CONSUMER ELECTRONICS SEGMENT:

The following table summarizes certain financial information relating
to the consumer electronics segment for the fiscal years ended March 31 (in
thousands):

RESULTS OF CONSUMER ELECTRONICS OPERATIONS - FISCAL 2003 COMPARED WITH FISCAL
2002

Net Revenues - Net revenues for fiscal 2003 increased $32.7 million
(15.4%) to $245.2 million as compared to $212.5 million for fiscal 2002. The
increase in net revenues was a result of an increase in licensing, unit sales of
audio and themed products offset by a reduction in unit sales of microwave oven
products.

34

Cost of Sales - Cost of sales, as a percentage of net revenues,
decreased from 84.6% in fiscal 2002 to 82.7% in fiscal 2003. The decrease in
cost of sales was primarily due to higher margins on product sales and an
increase in licensing revenue. In absolute terms, cost of sales increased $22.9
million in fiscal 2003 as compared to fiscal 2002. Gross profit margins continue
to be subject to competitive pressures arising from pricing strategies
associated with the price categories of the consumer electronics market in which
Emerson competes. Emerson's products are generally placed in the low-to-medium
priced category of the market, which has a tendency to be highly competitive.
Emerson believes that the combination of its direct import program; various
outward license agreements; the continued introduction of higher margin
products; use of inward license agreements; and further reduction in product
return rates will continue to favorably impact its gross profit margins.

Other Operating Costs and Expenses - Other operating costs and
expenses, as a percentage of net revenues, were 1.8% in fiscal 2003 as compared
to 2.3% in fiscal 2002. In absolute terms, other operating costs and expenses
decreased $602,000 for fiscal 2003 as compared to the same period in fiscal
2002. The decrease was primarily due to a decrease in inventory servicing costs.

Selling, General and Administrative Expenses ("S,G&A") - S,G&A, as a
percentage of net revenues, were 7.2% in fiscal 2003 as compared to 6.9% in
fiscal 2002. S,G&A, in absolute terms, increased $3.1 million in fiscal 2003 as
compared to the prior fiscal year. The increase in S,G&A in absolute terms
between fiscal 2003 and 2002 was primarily due to additional bad debt expense
and increased payroll costs.

Litigation Settlement, net - Litigation settlement was the result of a
settled litigation in fiscal 2002, which was a one time event.

Interest Expense, net - Interest expense decreased from $2.4 million
(1.1% of net revenues) in fiscal 2002 to $1.9 million (0.8% of net revenues) in
fiscal 2003. The decrease was attributable primarily to decreased borrowings and
lower interest costs.

Provision (benefit) for Income Taxes - Emerson's benefit for income
taxes was $9.3 million (-3.8% of net revenues) for fiscal 2003 as compared to a
benefit of $7.7 million (-3.6% of net revenues) for fiscal 2002. The benefit of
$9.3 million consisted primarily of the reduction in the valuation reserve
previously established against the deferred tax assets relating to the accounts
receivable and inventory temporary differences, as well as the recognition of
management's estimation of net operating loss carryforward's subject to
limitations under IRC Section 382, which management believes it was likely to
realize the benefit of such net deferred tax assets. This is partially offset by
foreign and state taxes. See Item 8 - "Financial Statements and Supplementary
Data - Note 7 of Notes to Consolidated Financial Statements."

Net Income - As a result of the foregoing factors, the consumer
electronics segment generated net income of $22.3 million (9.1% of net revenues)
in fiscal 2003 as compared to $21.3 million (10.0% of net revenues) in fiscal
2002.

35

RESULTS OF CONSUMER ELECTRONICS OPERATIONS - FISCAL 2002 COMPARED WITH FISCAL
2001

Net Revenues - Net revenues for fiscal 2002 decreased $47.5 million
(18.3%) to $212.4 million as compared to $259.9 million for fiscal 2001. The
decrease in net revenues was a result of a general slow-down in the economy and
a reduction in unit sales of microwave oven products and audio products. Such
decreases were partially offset by revenues earned from the licensing of the
Emerson's trademarks increasing by $3.0 million for the twelve months ended
March 31, 2002 as compared to the same period in the prior fiscal year.

Cost of Sales - Cost of sales, as a percentage of consolidated net
revenues, decreased from 86.2% in fiscal 2001 to 84.6% in fiscal 2002. The
decrease in cost of sales was primarily due to higher margins on product sales
and an increase in licensing revenue. In absolute terms, cost of sales decreased
$44.2 million in fiscal 2002 as compared to fiscal 2001.

Other Operating Costs and Expenses - Other operating costs and expenses
as a percentage of net revenues were 2.3% in fiscal 2002 as compared to 1.7% in
fiscal 2001. In absolute terms, other operating costs and expenses increased
$591,000 for fiscal 2002 as compared to the same period in fiscal 2001. The
increase was primarily due to an increase in inventory servicing costs.

Selling, General and Administrative Expenses ("S,G&A") - S,G&A,
remained relatively unchanged in absolute terms at $14.5 million (5.6%) in
fiscal 2001 as compared to $14.6 million (6.9% of net revenues) in fiscal 2002.
The increase in S,G&A in relative terms was mainly due to the fixed nature of
the S,G&A costs. In absolute terms, increases in costs were a result of
establishing an additional bad debt reserve for an account that filed for
bankruptcy protection, and increased professional fees, which were partially
offset by the collection of non-trade receivables that were written off in
fiscal 2001. The non-trade credit receivables represented receivables related
to licensing activity that at the time of write-off the collectibility was
questionable.

Litigation Settlement, net - Litigation settlement is the result of a
settled litigation in fiscal 2002 in the amount of $2.9 million, net of legal
costs, with a former trademark licensee. The license agreement with Emerson
ceased in the year ending March 31, 1998.

Interest Expense, net - Interest expense increased from $2.1 million
(0.8% of net revenues) in fiscal 2001 to $2.4 million (1.1% of net revenues) in
fiscal 2002. The increase was attributable primarily to increased borrowings
partially offset by lower interest costs.

Provision for Income Taxes - Emerson recorded a benefit of $7.7 million
(-3.6% of net revenues) for fiscal 2002 as compared to $1.1 million (0.4% of net
revenues) provision for fiscal 2001. The benefit of $7.7 million consisted
primarily of the reduction in the valuation reserve previously established
against the deferred tax assets relating to the accounts receivable and
inventory temporary differences, as well as the recognition of management's
estimation of net operating loss carryforward's subject to limitations under IRC
Section 382, which management believes it was likely to realize the benefit of
such net deferred tax assets. This is partially offset by foreign and state
taxes. See Item 8 - "Financial Statements and Supplementary Data - Note 7 of
Notes to Consolidated Financial Statements."

Net Income - As a result of the foregoing factors, the consumer
electronics segment generated net income of $21.3 million (10.0% of net
revenues) in fiscal 2002 as compared to $13.9 million (5.4% of net revenues) in
fiscal 2001.

36

SPORTING GOODS SEGMENT:

The following table summarizes certain financial information relating
to the sporting goods segment for the fiscal years 2003, 2002, and 2001 (in
thousands):

RESULTS OF SPORTING GOODS OPERATIONS - FISCAL 2003 COMPARED WITH FISCAL 2002

Net Revenues - Net revenues for fiscal 2003 decreased approximately
$984,000 (1.0%) as compared to fiscal 2002. The decrease in net revenues was
primarily a result of revenue losses in our Team Dealer operations and decreases
in school spending for athletic programs.

Cost of Sales - Cost of sales, as a percentage of net revenues,
decreased for fiscal 2003 to 70.7% as compared to 71.5% for 2002. In absolute
terms, cost of sales decreased in fiscal 2003 by $1.5 million as compared to
fiscal 2002 due to the consolidation of several of our plants, exiting certain
unprofitable product lines and improved product sourcing.

Selling, General and Administrative Expenses ("S,G&A") - S,G&A expenses
for fiscal 2003 decreased by $1.3 million (4.1%) as compared to fiscal 2002. As
a percentage of net revenues, S,G&A decreased to 30.2% in fiscal 2003 from 31.2%
in fiscal 2002. The decrease in S,G& A in absolute and relative terms was
primarily due to: (i) a decrease in payroll related costs; (ii) a decrease in
amortization and depreciation; and (iii) a decrease in professional fees.

Interest Expense, net - Interest expense, net decreased approximately
$175,000 (22.1%) in fiscal 2003 as compared to fiscal 2002. The decrease was
attributable primarily to decreased overall levels of borrowing and lower
interest rates.

Provision (benefit) for Income Taxes - No benefit for income taxes was
recorded in the fiscal 2003 or fiscal 2002. The sporting goods segment has a net
operating loss carryforward included in net deferred tax assets that can be used
to offset future taxable income and can be carried forward for 15 to 20 years.
As such, realization of the deferred tax asset is dependent on generating
sufficient taxable income, either through operations or tax planning strategies,
prior to the expiration of loss

37

carryforwards. See Item 8 - "Financial Statements and Supplementary Data - Note
7 of Notes to Consolidated Financial Statements."

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). 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 by reporting unit. As a result of our
testing, a non-cash "cumulative effect of accounting change" write down of
approximately $7.4 million was recorded. As a result of the write down of $7.4
million, SSG has no remaining goodwill on their financial statements.

Net loss - As a result of the foregoing factors, a net loss of $9.0
million was reported for fiscal 2003 as compared to a net loss of $3.6 million
for fiscal 2002.

RESULTS OF SPORTING GOODS OPERATIONS - FISCAL 2002 COMPARED WITH FISCAL 2001

Net Revenues - Net revenues for fiscal 2002 decreased $9.5 million
(8.4%) as compared to fiscal 2001. The decrease in net revenues was primarily a
result of a general slow-down in the economy, reduced participation in
traditional youth sports, a reduced sales force and the discontinuation of
certain unprofitable and low margin product lines.

Cost of Sales - Cost of sales, as a percentage of net revenues,
remained primarily the same for fiscal 2002 and fiscal 2001 at 71.5%. In
absolute terms, cost of sales decreased in fiscal 2002 by $6.7 million as
compared to fiscal 2001 due to decreases in net revenues.

Selling, General and Administrative Expenses ("S,G&A") - S,G&A expenses
for fiscal 2002 decreased by $3.6 million as compared to fiscal 2001. As a
percentage of net revenues, S,G&A decreased to 31.2% in fiscal 2002 from 31.7%
in fiscal 2001. The decrease in expenses was primarily due to a decrease in
payroll related costs, promotional costs, depreciation and amortization and
lower sales and use tax expense.

Interest Expense, net - Interest expense, net decreased $1.2 million
(60.7%) in fiscal 2002 as compared to fiscal 2001. The decrease was attributable
primarily to decreased overall levels of borrowing and lower interest rates.

Provision (benefit) for Income Taxes - The benefit for income taxes
decreased approximately $2.1 million to a benefit of $0 in fiscal 2002 as
compared to fiscal 2001. The sporting goods segment has a net operating loss
carryforward included in net deferred tax assets that can be used to offset
future taxable income and can be carried forward for 15 to 20 years. As such,
realization of the sporting goods deferred tax asset is dependent on generating
sufficient taxable income, either through operations or tax planning strategies,
prior to the expiration of loss carryforwards. Based upon the operating results
of the sporting goods segment for fiscal 2002, the sporting goods segment has
not provided an income tax benefit related to its loss before income taxes. See
Item 8 - "Financial Statements and Supplementary Data - Note 7 of Notes to
Consolidated Financial Statements."

38

Net loss - As a result of the foregoing factors, the sporting goods
segment generated a net loss of $3.6 million for each of fiscal 2002, and fiscal
2001.

LIQUIDITY AND CAPITAL RESOURCES

Net cash provided by operating activities was $15.5 million for fiscal
2003. Cash was primarily provided by our profitability, and a reduction of
accounts receivable, partially offset by an increase in inventory and prepaid
expenses and other current assets.

Net cash used by investing activities was $647,000 for fiscal 2003
primarily for additions to property, plant and equipment, which primarily was
used for additions to the computer and software category.

Net cash utilized by financing activities was $22.6 million for fiscal
2003 primarily for reducing short and long-term borrowings, and by purchases of
our stock.

Emerson and SSG maintain credit facilities of $40 million and $25
million, respectively. These facilities provide for a term loan, revolving loans
and letters of credit. The term loan which is recorded on Emerson's books is a
$15 million facility which amortized over a three year period. As of March 31,
2003, there was $12 million outstanding under this facility. In addition Emerson
and SSG have revolving credit facilities both in the amounts of $25 million,
which are subject to certain limits which, in the aggregate cannot exceed the
lesser of $25 million, or a "Borrowing Base" amount based on specified
percentages of eligible accounts receivable and inventories. Both Emerson and
SSG are required to maintain various financial covenants, with which they were
both in compliance as of March 31, 2003. At March 31, 2003, there were
approximately $17.5 million of borrowings under SSG's facility, with no
borrowings by Emerson. No letters of credit were outstanding under either
facility as of March 31, 2003.

Two of our foreign subsidiaries maintain various credit facilities,
aggregating $52.5 million, with Hong Kong banks consisting of the following:

o a $7.5 million letter of credit facility with a $2.5 million
seasonal increase which is used for inventory purchases; and

o two back-to-back letter of credit facilities totaling $45 million.

At March 31, 2003, our Hong Kong subsidiary pledged $1.7 million in
certificates of deposit to this bank to assure the availability of the $7.5
million credit facility and a $2.5 million seasonal line increase. At March 31,
2003, there were approximately $5.9 million of letters of credit outstanding
under these credit facilities. The letter of credit facility requires a net
worth covenant of the foreign subsidiaries with which the Company was in
compliance at March 31, 2003.

Short-Term Liquidity. Cash decreased to $11.4 million as of March 31,
2003 from $19.2 million as of March 31, 2002.

39

Liquidity for the consumer electronics segment is impacted by its
seasonality in that it generally records the majority of our annual sales in the
quarters ending September and December. This requires the consumer electronics
segment to maintain higher inventory levels during the quarters ending June and
September, therefore increasing the working capital needs during these periods.
Additionally, the consumer electronics segment receives the largest percentage
of product returns in the quarter ending March. The higher level of returns
during this period adversely impacts Emerson's collection activity, and
therefore its liquidity. Management believes that the license agreements as
discussed above, continued sales margin improvement and the policies in place
for returned products, should continue to favorably impact its cash flow. In
fiscal 2003, products representing approximately 64% of net revenues of the
consumer electronics segment were imported directly to our customers which
contributes significantly to Emerson's liquidity.

Liquidity for the sporting goods segment is also impacted by its
seasonality in that it generally records the majority of revenues in the March
quarter which is its highest sales period. The quarter ending December is its
lowest sales period. This requires the sporting goods segment to maintain higher
amounts of inventory during the quarters ending March and June, therefore
increasing the working capital needs during these periods.

Our principal existing sources of cash are generated from operations
and borrowings available under our revolving credit facility. As of March 31,
2003, we had $17.7 million of borrowing capacity available under our $50.0
million revolving credit facilities (reflecting outstanding loans of
approximately $ 17.5 million). In addition, at March 31, 2003 we had $44.7
million available under our letters of credit facilities, which total $52.5
million. We believe that our existing sources of cash for the consumer
electronics segment and sporting goods segment will be sufficient to support our
existing operations over the next 12 months.

Long-Term Liquidity. We continue to be subject to competitive pressures
arising from pricing strategies. SSG has discontinued certain lower margin
products in favor of higher margin replacement products. Management believes
that this, together with our various license agreements and the continued
introduction of higher margin products in both segments, the closure of certain
manufacturing locations at SSG and the related sourcing of less costly product
from foreign manufacturers combined with reduced selling, general and
administrative expenses will result in continued improved profitability. Both
senior secured credit facilities for Emerson and SSG impose financial covenants.
Non-compliance with the covenants could materially affect our future liquidity.
Management believes that anticipated cash flow from operations and the financing
noted above will provide sufficient liquidity to meet our operating and debt
service cash requirements on a long-term basis.

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

40

As of March 31, 2003, there were no material capital expenditure
commitments and no substantial commitments for purchase orders outside the
normal purchase orders used to secure product.

CRITICAL ACCOUNTING POLICIES

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

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

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

Intangible Assets. SSG has intangible assets related to other acquired
intangibles. The determination of related estimated useful lives and whether
or not these assets are impaired involves management judgments. Changes in
strategy and/or market conditions could significantly impact these judgments
and require adjustments to recorded asset balances. On April 1, 2002, we
adopted SFAS 142, which requires us to cease amortization of goodwill, to
perform a transitional test for potential goodwill impairment upon adoption,
and then test

41

goodwill for impairment at least annually by reporting unit. See Note 5 -
"Goodwill and Other Intangible Assets".

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

Sales Return Reserves. Our management must make estimates of potential
future product returns related to current period product revenue. Management
analyzes historical returns, current economic trends and changes in customer
demand for our products when evaluating the adequacy of the reserve for
sales returns. Management judgments and estimates must be made and used in
connection with establishing the sales return reserves in any accounting
period.

Cooperative Advertising Accruals. Cooperative advertising programs
promotions and other volume-based incentives, which are provided to
retailers and distributors for advertising and sales promotions, are
accounted for on an accrual basis as a reduction in net revenues in the
period, which the related sales are recognized as per EITF 01-09 "Accounting
for Consideration Given by a Vendor to a Customer".

RECENTLY-ISSUED FINANCIAL ACCOUNTING PRONOUNCEMENTS

In August 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 144, "Accounting for
the Impairment or Disposal of Long-Lived Assets." SFAS 144 provides guidance
on differentiating between assets held and used, held for sale, and held for
disposal other than by sale. We adopted this standard on April 1, 2002. The
adoption of SFAS No. 144 did not have an impact on our consolidated
financial statements.

In April 2002, the FASB issued Statement of Financial Accounting
Standards No. 145, "Rescission of FASB Statements No. 4, 44, and 62,
Amendment of FASB Statement No. 13, and Technical Corrections (Statement
145)." Statement 145 requires gains and losses on extinguishments of debt to
be classified as income or loss from continuing operations rather than as
extraordinary items as previously required under Statement 4. Extraordinary
treatment will be required for certain extinguishments as provided in APB
Opinion No. 30. Statement 145 also amends Statement 13 to require certain
modifications to capital leases be treated as a sale-leaseback and modifies
the accounting for sub-leases when the original lessee remains a secondary
obligor (or guarantor). In addition, the FASB rescinded Statement 44 and
made numerous technical corrections. We adopted this standard on January 1,
2003. The adoption of SFAS 145 did not have an effect on our consolidated
financial statements other than reclassification of amounts reported.

42

In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities". This standard addresses
financial accounting and reporting for costs associated with business exit
or disposal activities and requires companies to recognize costs associated
with exit or disposal activities when they are incurred rather than at the
date of a commitment to an exit or disposal plan. This standard nullifies
EITF Issue No. 94-3, "Liability Recognition for Certain Employee Termination
Benefits and other Costs to Exit an Activity (including Certain Costs
incurred in a Restructuring)". This standard is effective for exit or
disposal activities initiated after December 31, 2002. We adopted this
standard on January 1, 2003. The adoption of SFAS 146 did not have an effect
on our consolidated financial statements.

In November 2002, the FASB issued Interpretation No. 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others". This interpretation requires certain
guarantees entered into after December 31, 2002 to be initially recognized
and recorded at fair value and also requires new disclosures related to
guarantees even if the likelihood of a guarantor having to make payments
under the guarantees is remote. We adopted this interpretation as of January
1, 2003 and such adoption did not have an impact on our consolidated
financial statements.

In December 2002, the FASB issued Statement of Financial Accounting
Standards No. 148, "Accounting for Stock-Based Compensation - Transition and
Disclosure." Statement 148 provides alternative methods of transition to
Statement 123's fair value method of accounting for stock-based employee
compensation. It also amends the disclosure provisions of Statement 123 and
APB Opinion No. 28, Interim Financial Reporting, to require disclosure in
the summary of significant accounting policies of the effects of an entity's
accounting with respect to stock-based employee compensation on reported net
income and earnings per share in annual and interim financial statements.
Statement 148's amendment of the transition and annual disclosure
requirements of Statements 123 are effective for fiscal years ending after
December 15, 2002. Statement 148's amendment of the disclosure requirements
of Opinion 28 is effective for interim periods beginning after December 15,
2002. We adopted this standard on January 1, 2003. The adoption of SFAS 148
is reflected in Note 9 to the Notes to Consolidated Financial Statements.

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 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. The
consolidation requirements of FIN 46 apply immediately to VIE's created
after January 31, 2003. For older entities, these requirements will begin to
apply in the first fiscal year or interim period beginning after June 15,
2003. We do not believe that FIN 46 will have an impact on the Company's
consolidated 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

43

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 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 have not determined the
impact of SFAS 150 on our consolidated financial statements.

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

INFLATION, FOREIGN CURRENCY, AND INTEREST RATES

Neither inflation nor currency fluctuations had a significant effect on
our results of operations during fiscal 2003. 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 rate. While a significant increase in interest rates could have an
adverse effect on our financial condition and results of operations,
management believes that given the present economic climate, interest rates
are not expected to increase significantly during the coming year.

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Index to Financial Statements

44

REPORT OF INDEPENDENT AUDITORS

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

We have audited the accompanying consolidated balance sheets of Emerson
Radio Corp. and Subsidiaries as of March 31, 2003 and March 31, 2002, and the
related consolidated statements of operations, shareholders' equity, and cash
flows for each of the three years in the period ended March 31, 2003. Our audits
also included the financial statement schedule listed in the Index at Item
14(a)(1). These consolidated financial statements and schedule are the
responsibility of the management of Emerson Radio Corp. and Subsidiaries. Our
responsibility is to express an opinion on these financial statements and
financial statement schedule based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audits to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Emerson Radio Corp. and Subsidiaries at March 31, 2003 and 2002, and the
consolidated results of its operations and cash flows for each of the three
years in the period ended March 31, 2003, in conformity with accounting
principles generally accepted in the United States. Also, in our opinion, the
related financial statement schedule, when considered in relation to the basic
financial statements taken as a whole, presents fairly in all material respects
the information set forth therein.

As discussed in Note 5 to the consolidated financial statements, the
Company adopted Statement of Accounting Standard No. 142, "Goodwill and Other
Intangible Assets," effective April 1, 2002.

ERNST & YOUNG LLP

New York, New York
May 19, 2003

45

EMERSON RADIO CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED MARCH 31, 2003, 2002, AND 2001
(IN THOUSANDS, EXCEPT PER SHARE DATA)

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

46

EMERSON RADIO CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2003 AND 2002
(IN THOUSANDS, EXCEPT SHARE DATA)

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

47

EMERSON RADIO CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED MARCH 31, 2003, 2002, AND 2001
(IN THOUSANDS, EXCEPT SHARE DATA)

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

48

EMERSON RADIO CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED MARCH 31, 2003, 2002, AND 2001
(IN THOUSANDS)

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

49

EMERSON RADIO CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2003

NOTE 1 -- SIGNIFICANT ACCOUNTING POLICIES:

BACKGROUND AND BASIS OF PRESENTATION

The consolidated financial statements include the accounts of Emerson Radio
Corp. ("Emerson", consolidated - the "Company") and its majority-owned
subsidiaries, including Sport Supply Group, Inc. ("SSG"). All significant
intercompany transactions and balances have been eliminated.

The Company operates 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 "(EMERSON
LOGO)" 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 and markets sports related
equipment and leisure products to institutional customers in the United States.

Prior to March 23, 2001, Emerson accounted for its investment in SSG using
the equity method of accounting. On March 23, 2001, Emerson obtained a
controlling interest in SSG and is accounting for this interest as a step
acquisition. The assets and liabilities of SSG have been revalued to fair value
to the extent of Emerson's 50.1% interest in SSG as of March 23, 2001. For
fiscal 2001, SSG's results of operations and the minority interest related to
those results have been included in the Company's results of operations as
though it had been acquired at the beginning of the year ended March 31, 2001.

The preparation of the financial statements in conformity with generally
accepted accounting principles 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.

CASH EQUIVALENTS

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

FAIR VALUES OF FINANCIAL INSTRUMENTS

The carrying amounts for cash and cash equivalents, trade accounts
receivable, accounts payable and accrued liabilities approximate fair value due
to short-term maturity of these financial instruments. The carrying amounts of
bank debt approximate their fair value due to their variable rate interest
features. The fair value of the preferred stock is based on the fair value of
the common stock into which the preferred stock is convertible. The carrying
value of the debentures approximate fair value.

50

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

INVESTMENTS

The Company determines the appropriate classifications of securities at the
time of purchase. The investments held by the Company at March 31, 2003 and 2002
were classified as "available-for-sale securities", and are included in prepaid
expenses and other current assets. Realized gains and losses are reported
separately as a component of income, and unrealized gains and losses are
reported separately as a component of comprehensive income. Declines in the
market value of securities deemed to be other than temporary are included in
earnings.

CONCENTRATIONS OF CREDIT RISK

Certain financial instruments potentially subject the Company to
concentrations of credit risk. Accounts receivable for the consumer electronics
segment represent sales to retailers and distributors of consumer electronics
throughout the United States and Canada. Accounts receivable for the sporting
goods segment represent sales to all levels of public and private schools,
colleges, universities, and military academies, municipal and governmental
agencies, military facilities, churches, clubs, camps, hospitals, youth sports
leagues, non-profit organizations, team dealers and certain large retail
sporting goods chains. The Company periodically performs credit evaluations of
its customers but generally does not require collateral. The Company provides
for any anticipated credit losses in the financial statements based upon
management's estimates and ongoing reviews of recorded allowances. The allowance
for doubtful accounts was approximately $1,243,000, $2,945,000, and $2,105,000
as of March 31, 2003, 2002, and 2001, respectively. See Note 14 - Business
Segment Information and Major Customers.

DEPRECIATION, AMORTIZATION AND VALUATION OF PROPERTY

Property and equipment, stated at cost, are being depreciated by the
straight-line method over their estimated useful lives. Leasehold improvements
are amortized on a straight-line basis over the shorter of the useful life of
the improvement or the term of the lease. The cost of maintenance and repairs is
charged to expense as incurred. Significant renewals and betterments are
capitalized and depreciated over the remaining estimated useful lives of the
related assets.

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

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

INTANGIBLE ASSETS

Goodwill and other intangible assets are primarily related to acquisitions.
Trademarks and servicemarks relate to costs incurred in connection with the
licensing agreements for the use of certain trademarks and service

51

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

marks in conjunction with the sale of our products. Other items classified as
other intangible assets consist of patents, trademarks, websites, and customer
base.

Amortization of intangible assets is provided by the straight-line method as
follows:

o Trademarks and servicemarks Five to forty years
o Patents Seven to eleven years

The cost of intangible assets and related accumulated amortization are
removed from our accounts during the year in which they become fully amortized.
See Note 5 - Goodwill and Other Intangible Assets of Notes to the Consolidated
Financial Statements.

REVENUE RECOGNITION

Revenues are recognized primarily FOB shipping point. Under the Direct Import
Program for the consumer electronics segment, title passes in the country of
origin. Under the Domestic Program for the consumer electronics segment and the
sporting goods segment, title passes primarily at the time of shipment.
Estimates for possible returns are based upon historical return rates and netted
against revenues. Under the sporting goods segment, subject to certain
limitations, customers have the right to return product within a set period if
they are not completely satisfied. Under the consumer electronics segment,
returns are not permitted unless defective.

COST OF SALES

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

OTHER OPERATING COSTS AND EXPENSES

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

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

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

52

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

FOREIGN CURRENCY

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

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

ADVERTISING AND DEFERRED CATALOG EXPENSES

Advertising expenses are charged to operations as incurred, except for
production costs related to direct-response advertising activities, which are
capitalized. Direct response advertising pertains to the sporting goods segment
of the Company, which consists primarily of catalogs. Production and
distribution costs, primarily printing and postage, associated with catalogs are
amortized over twelve months which approximates average usage of the catalogs
produced. Catalog amortization expenses, which are included in the selling,
general and administrative expenses line item of the consolidated statements of
operations for the fiscal 2003, 2002, and 2001 were approximately $3,270,000,
$3,363,000, and $4,022,000, respectively.

COOPERATIVE ADVERTISING EXPENSES

Cooperative advertising programs and other volume-based incentives are
accounted for under the accrual basis as a reduction in net revenue per the
requirements of EITF 01-09 in the period in which the related sales are
recognized. Cooperative advertising expenses were approximately $4,632,000,
$2,403,000, and $3,325,000, for fiscal 2003, 2002, and 2001, respectively.

INTERNET EXPENSES

The Company expenses the operating and development costs of it's Internet
websites.

INCOME TAXES

Deferred income taxes are provided for the tax effects of differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Valuation reserves are
provided for the deferred tax assets when realization of the assets is not
reasonably assured. See Note 7.

53

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

COMPREHENSIVE INCOME

Comprehensive income is net income adjusted for changes in fair value of
hedge instruments, unrealized gains or losses, and foreign currency translation
adjustments. See the Consolidated Statements of Changes in Shareholders' Equity
for a table of comprehensive income.

NET EARNINGS PER COMMON SHARE

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

STOCK- BASED COMPENSATION

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 the Company's 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. The Company's pro forma
information for fiscal 2003, 2002 and 2001 follows:

The weighted average fair values of employee stock options granted under the
Emerson plan in fiscal 2003, 2002 and 2001 are $0.68, $1.18 and $0.84,
respectively. The fair values were estimated using the following assumptions and
the Black-Scholes option valuation model:

54

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

SSG's fair values were calculated using the following for fiscal 2003,
2002 and 2001: (i) a risk free interest rate of 4.10%, 4.15% and 4.29%; (ii) a
weighted average expected life of 3 years; (iii) an expected volatility of 36%,
39% and 55%; and (iv) a no dividend yield. The weighted average fair value of
employee stock options granted for the SSG Plan in fiscal 2003, 2002, and 2001
was $0.59, $0.41 and $0.59, respectively.

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

DERIVATIVE FINANCIAL INSTRUMENTS

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

RECENT PRONOUNCEMENTS

In August 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets." SFAS 144 provides guidance on
differentiating between assets held and used, held for sale, and held for
disposal other than by sale. We adopted this standard on April 1, 2002. The
adoption of SFAS No. 144 did not have an impact on our consolidated financial
statements.

In April 2002, the FASB issued Statement of Financial Accounting
Standards No. 145, "Rescission of FASB Statements No. 4, 44, and 62, Amendment
of FASB Statement No. 13, and

55

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

technical Corrections" (Statement 145). Statement 145 requires gains and losses
on extinguishments of debt to be classified as income or loss from continuing
operations rather than as extraordinary items as previously required under
Statement 4. Extraordinary treatment will be required for certain
extinguishments as provided in APB Opinion No. 30. Statement 145 also amends
Statement 13 to require certain modifications to capital leases be treated as a
sale-leaseback and modifies the accounting for sub-leases when the original
lessee remains a secondary obligor (or guarantor). In addition, the FASB
rescinded Statement 44 and made numerous technical corrections. We adopted this
standard on January 1, 2003. The adoption of SFAS 145 did not have an effect on
our consolidated financial statements.

In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities". This standard addresses financial
accounting and reporting for costs associated with exit or disposal activities
and requires companies to recognize costs associated with exit or disposal
activities when they are incurred rather than at the date of a commitment to an
exit or disposal plan. This standard nullifies EITF Issue No. 94-3, "Liability
Recognition for Certain Employee Termination Benefits and other Costs to Exit an
Activity (including Certain Costs incurred in a Restructuring)". This standard
is effective for exit or disposal activities initiated after December 31, 2002.
We adopted this standard on January 1, 2003. The adoption of SFAS 146 did not
have an effect on our consolidated financial statements.

In November 2002, the FASB issued Interpretation No. 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others". This interpretation requires certain
guarantees entered into after December 31, 2002 to be initially recognized and
recorded at fair value and also requires new disclosures related to guarantees
even if the likelihood of a guarantor having to make payments under the
guarantees is remote. We adopted this interpretation as of January 1, 2003 and
such adoption did not have an impact on our consolidated financial statements.

In December 2002, the FASB issued Statement of Financial Accounting
Standards No. 148, "Accounting for Stock-Based Compensation - Transition and
Disclosure." Statement 148 provides alternative methods of transition to
Statement 123's fair value method of accounting for stock-based employee
compensation. It also amends the disclosure provisions of Statement 123 and APB
Opinion No. 28, Interim Financial Reporting, to require disclosure in the
summary of significant accounting policies of the effects of an entity's
accounting with respect to stock-based employee compensation on reported net
income and earnings per share in annual and interim financial statements.
Statement 148's amendment of the transition and annual disclosure requirements
of Statements 123 are effective for fiscal years ending after December 15, 2002.
Statement 148's amendment of the disclosure requirements of Opinion 28 is
effective for interim periods beginning after December 15, 2002. We adopted this
standard on January 1, 2003.

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

56

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

entitled to receive a majority of the entity's residual returns or both. A
variable interest entity is a corporation, partnership, trust or any 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. The consolidation
requirements of FIN 46 apply immediately to VIE's created after January 31,
2003. For older entities, these requirements will begin to apply in the first
fiscal year or interim period beginning after June 15, 2003. We do not believe
that FIN 46 will have an impact on the Company's consolidated 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 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 have not
determined the impact of SFAS 150 on our consolidated financial statements.

RECLASSIFICATIONS

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

NOTE 2 -- INVENTORIES:

Inventories are stated at the lower of cost or market. Cost is
determined using the first-in, first-out for the consumer electronics segment
and for the sporting goods segment, standard cost methods for items manufactured
and weighted-average cost for items purchased for resale. As of March 31, 2003
and 2002, inventories consisted of the following:

57

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

NOTE 3 -- ACQUISITION OF AFFILIATE:

As of March 31, 2001 Emerson owned 4,463,223 (50.1% of the issued and
outstanding) shares of common stock of SSG. Accordingly, for fiscal 2001, 2002
and 2003 Emerson accounted for its investment in SSG by consolidating SSG under
purchase method of accounting. As of March 31, 2003 and March 31, 2002, Emerson
owned 4,746,023 (53.2% of the issued and outstanding) shares of common stock of
SSG.

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. For the fiscal years 2003, 2002, and 2001, SSG billed
Emerson pursuant to the management services agreement fees of approximately
$627,000, $539,000, and $401,000, respectively, while Emerson billed SSG
management service agreement fees of $320,000, $276,000, and $164,000,
respectively. These charges have been eliminated in consolidation.

NOTE 4 -- PROPERTY, PLANT, AND EQUIPMENT:

As of March 31, 2003 and 2002, property, plant, and equipment was comprised
of the following:

58

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

Depreciation and amortization of property, plant, and equipment amounted to
$2,191,000, $2,352,000, and $2,729,000 for the years ended March 31, 2003, 2002
and 2001, respectively.

NOTE 5 - GOODWILL AND OTHER INTANGIBLE ASSETS

In June 2001, the Financial Accounting Standards Board issued Statement No.
142, "Goodwill and Other Intangible Assets" (SFAS 142). SFAS 142 requires that
goodwill not be amortized but instead be tested for impairment at least annually
by reporting unit. We adopted SFAS 142 effective April 1, 2002. As a result, we
ceased recording amortization of goodwill on April 1, 2002.

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

The results of our step one analysis indicated that we had a potential
impairment of goodwill. In our step two analysis, the fair value of the goodwill
was determined through a third party appraisal. The appraisal determined fair
value of the assets and liabilities to be the price that they could be sold for
in a current arms-length transaction between willing parties. As a result of our
step two impairment testing, we recorded a non-cash "cumulative effect of
accounting change" increase in our net loss of approximately $5.5 million.

Changes in the carrying amount of goodwill for the fiscal year ended March
31, 2003, are as follows (in thousands):

Balance as of April 1, 2002 $ 5,546

Impairment charges (5,546)
--------
Balance as of March 31, 2003 $ --
========

The reconciliation of previously reported net income and earnings per share
to adjusted net income and earnings per share excluding goodwill amortization is
as follows for the years ended March 31, 2003, 2002 and 2001 (in thousands,
except per share data):

59

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

60

Other intangible assets as of March 31, 2003 consist of (in thousands):

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

2004 $ 407
2005 407
2006 369
2007 305
2008 241
Thereafter 3,884
-------
$ 5,613
=======

NOTE 6 -- BORROWINGS:

As of March 31, 2003 and 2002, short-term borrowings consisted of the
following:

61

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

As of March 31, 2003 and 2002, long-term borrowings consisted of the
following:

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 B) and a $15 million term loan (Term
Loan). The $25 million revolving line of credit replaced Emerson's existing $15
million senior secured facility (Revolver A) 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.

The $15 million term loan (Term Loan) combined with cash earned from
Emerson's operations was used to retire all of Emerson's 8.5% Senior
Subordinated Convertible Debentures (Debentures) in the amount of $20.75
million.

Revovler A - As of March 31, 2002, Emerson had an existing Loan and Security
Agreement (the "Loan and Security Agreement"), which included a senior secured
credit facility in the amount of $15 million with a U.S. financial institution.
The facility provided for revolving loans and letters of credit, subject to
individual maximums, which in the aggregate, could not exceed the lesser of $15
million or a "Borrowing Base" amount based on specified percentages of eligible
accounts receivable and inventories. Amounts outstanding under the senior credit
facility were secured by (i) substantially all of Emerson's U.S. and Canadian
assets except for trademarks, which were subject to a negative pledge covenant,
and (ii) a portion of its investment in SSG. At March 31, 2002, the weighted
average interest rate on the outstanding borrowings was 7.43%. The interest rate
charged on this facility was the prime rate of interest plus 1.25%. Pursuant to
the Loan and Security Agreement, the Company was restricted from, among other
things, paying cash dividends (other than on the Series A Preferred Stock),
redeeming stock in certain instances, and entering into certain transactions
without the lender's prior consent and was required to maintain certain net
worth levels. As of March 31, 2002, approximately $8.7 million was outstanding
under this

62

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

facility, no letters of credit for inventory purchases were outstanding and the
carrying value of the credit facility approximated its fair value. As noted
above, this facility was replaced by a Loan Agreement on June 28, 2002.

Revolver B and Term Loan - On June 28, 2002, Emerson entered into a $40
million Loan Agreement with several U.S. financial institutions. The Loan
Agreement provides for a $25 million revolving line of credit (Revolver B) and a
$15 million term loan (Term Loan). The $25 million revolving line of credit
replaced Emerson's existing $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" amount based on
specified percentages of eligible accounts receivables and inventories and bears
interest ranging from Prime plus .5% 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 ranges from Prime plus 1.0% to 1.75% or, at Emerson's
election, LIBOR plus 2.50% to 3.25% depending on certain financial covenants and
amortizes over a three year period. At March 31, 2003, the weighted average
interest rate on the outstanding borrowings was 5.0% under the revolver and 4.6%
under the term loan. Pursuant to the Loan Agreement, we will be restricted from,
among other things, paying cash dividends other than on preferred shares,
repurchasing our 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 assets. As of March 31, 2003, approximately $12.0
million was outstanding under this term facility, there were no borrowings under
the revolver and the carrying value of the credit facility approximated its fair
value.

Debentures - Senior Subordinated Convertible Debentures ("Debentures"), which
were issued by Emerson in August 1995, were retired in the second quarter of
fiscal 2003. These Debentures bore interest at the rate of 8 1/2% per annum,
payable quarterly, and were subordinated to all existing and future senior
indebtedness (as defined in the Indenture governing the Debentures). The
Debentures were convertible into shares of Emerson's common stock at any time
prior to redemption or maturity at an initial conversion price of $3.9875 per
share, subject to adjustment under certain circumstances. The Debentures were
redeemable in whole or in part at our option and, in the case of Emerson's
exercise of the Debentures call provision, required a call price of 101% of
principal, were subject to certain restrictions on transfer and restricted,
among other things, the amount of senior indebtedness and other indebtedness
that Emerson, and, in certain instances, its consolidated subsidiaries, could
incur. Each holder of Debentures had the right to cause Emerson to redeem the
Debentures if certain designated events (as defined in the Indenture governing
the Debentures) were to occur. At March 31, 2002, the carrying value of the
debentures approximated their fair value.

Revolver C - Notes payable under a revolving line of credit (Revolver C) were
issued by SSG in March 2001, replacing a prior facility. The facility provides
for a three-year $25 million revolving line of credit, and provides for
revolving loans and is subject to individual maximums which, in the aggregate,
cannot exceed the lesser of $25 million or a "Borrowing Base" amount based upon
specified percentages of eligible accounts receivables and inventories. Amounts
outstanding under the senior credit facility are

63

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

secured by substantially all the assets of the Sport Supply Group, Inc. and
subsidiaries. At March 31, 2003 and 2002, the weighted average interest rate on
the outstanding borrowings was 4.2% and 4.9%, respectively. The interest rate
charged under this facility at March 31, 2003 was 4.25%. Pursuant to loan
documents governing this line of credit, the Company is restricted from, among
other things, paying cash dividends, and entering into certain transactions
without the lender's prior consent. At March 31, 2003, the carrying value of the
note payable approximated its fair value.

Maturities of long-term borrowings as of March 31, 2003, by fiscal year
and in the aggregate are as follows (in thousands):

2004 $ 11,634
2005 16,304
2006 1,775
2007 --
2008 --
Thereafter --
--------
Total 29,713
Less current portion (11,634)
--------
Total long term portion $ 18,079
========

NOTE 7 - INCOME TAXES:

The Company, with the exception of SSG, files a consolidated federal and
certain state and local income tax returns.

The difference between the effective rate reflected in the provision for
income taxes and the amounts determined by applying the statutory U.S. rate of
34% to income before income taxes for the years ended March 31, 2003, 2002, and
2001 are analyzed below:

64

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

As of March 31, 2003 and 2002, the significant components of the
Company's deferred tax assets and liabilities are as follows:

Total deferred tax assets for the consumer electronics segment at March 31,
2003 and 2002 include the tax-effected net operating loss carry forwards subject
to annual limitations (as discussed below) and tax-effected deductible temporary
differences. For the year ended March 31, 2003, the valuation reserve has been
reduced for the consumer electronics segment recognizing the future benefits of
the deferred tax assets as management believes it is likely that such benefit
will be realized in the future.

The sporting goods segment has net operating loss carryforwards that can be
used to offset future taxable income and can be carried forward for 15 to 20
years. A valuation allowance for approximately $3.8 million has been established
as realization of the deferred tax assets is dependent on the successful

65

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

outcome of certain tax planning strategies, as well as the Company's ability to
generate sufficient taxable income to fully utilize net operating loss
carryforwards.

Income of foreign subsidiaries before taxes was $6,198,000, $2,808,000,
and $7,486,000 for the years ended March 31, 2003, 2002, and 2001, respectively.

As of March 31, 2003, the Company had a federal net operating loss
carryforward of approximately $102,000,000, which will expire in the years 2006
through 2019. The utilization of these net operating losses are subject to
limitations under IRC section 382. In addition, SSG has federal net operating
loss carryforwards of approximately $25,200,000, which will expire in the years
2011 through 2022.

NOTE 8 -- COMMITMENTS AND CONTINGENCIES:

LEASES:

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

Rent expense which includes month-to-month leases, aggregated $3,489,000,
$3,413,000, and $3,064,000 for fiscal 2003, 2002, and 2001, respectively.

LETTERS OF CREDIT:

There were no letters of credit outstanding under the Loan Agreement (See
Note 6) as of March 31, 2003 or under the Loan and Security Agreement as of
March 31, 2002. The Company's Hong Kong subsidiary also currently maintains
various credit facilities aggregating $52.5 million with banks in Hong Kong
subject to annual review consisting of the following: (i) a $7.5 million credit
facility with a $2.5 million seasonal increase which is generally used for
letters of credit for inventory purchases, and (ii) two credit facilities
totaling $45 million with seasonal over - advances, for the benefit of a foreign
subsidiary, which is for the establishment of back-to-back letters of credit
with the Company's largest customers. At March 31, 2003, the Company's Hong Kong
subsidiary had pledged $1.7 million in certificates of deposit to this bank to
assure the availability of the $7.5 million credit facility. At March 31, 2003,
there were $4,136,000 and $1,807,000 of letters of credit outstanding under
these credit facilities. The credit facility

66

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

requires a net worth covenant of the foreign subsidiary, which the Company was
in compliance with at March 31, 2003.

CAPITAL EXPENDITURE AND OTHER COMMITMENTS:

As of March 31, 2003, there were no material capital expenditure
commitments and there were no substantial commitments for purchase orders
outside the normal purchase orders used to secure product for either segment.

EMPLOYEE BENEFIT PLAN:

The Company currently sponsors defined contribution 401 (k) retirement
plans which are subject to the provisions of ERISA. Under the consumer
electronics segment plan, Emerson matches a percentage of the participants'
contributions up to a specified amount. Under the sporting goods segment plan,
SSG has not matched a percentage of the participant's contributions for the last
two fiscal years. The combined contributions to the plans for fiscal 2003, 2002
and 2001 were $72,000, $56,000, and $143,000, respectively.

NOTE 9 -- STOCK BASED COMPENSATION:

Consumer Electronics Segment:

In July 1994, Emerson adopted a Stock Compensation Program ("Program"). The
maximum aggregate number of shares of common stock available pursuant to the
Program is 2,000,000 shares and the Program is comprised of four parts--the
Incentive Stock Option Plan, the Supplemental Stock Option Plan, the Stock
Appreciation Rights Plan and the Stock Bonus Plan. A summary of transactions
during the last three years is as follows:

67

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

The following table provides additional information as to the options
outstanding under the Stock Compensation Program as of March 31, 2003:

Subject to the terms set forth in each option agreement, generally, the term
of each option is ten years, except for options issued to any person who owns
more than 10% of the voting power of all classes of capital stock, for which the
term is five years. Options may not be exercised during the first year after the
date of the grant. Thereafter, each option becomes exercisable on a pro rata
basis on each of the first through third anniversaries of the date of the grant.
The exercise price of options granted must be equal to, or greater than the fair
market value of the shares on the date of the grant, except that the option
price with respect to an option granted to any person who owns more than 10% of
the voting power of all classes of capital stock shall not be less than 110% of
the fair market value of the shares on the date of the grant. As of March 31,
2003, there were a total of 1,054,603 options outstanding with exercise prices
ranging from $1.00 per share to $1.50 per share. As of March 31, 2003, 962,913
of the total options outstanding were fully vested with 91,690 options vesting
through April 2004. At March 31, 2003, 2002 and 2001, the weighted average
exercise price of exercisable options under the Program was $1.07, $1.05 and
$1.04, respectively.

In October 1994, Emerson's Board of Directors adopted, and the stockholders
subsequently approved, the 1994 Non-Employee Director Stock Option Plan. The
maximum number of shares of Common Stock available under such plan is 300,000
shares. A summary of transactions under the plan for the three years ending
March 31, 2003 is as follows:

68

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

The following table provides additional information as to the options
outstanding under the Non-Employee Director Stock Option Plan as of March 31,
2003:

All options granted under the Non-Employee director Stock Option Plan during
the fiscal years ending March 31, 2001, 2002 and 2003 were at exercise prices
equal to or greater than the fair market value of Emerson's stock on the date of
the grant.

The provisions for the 1994 Non-Employee Director Stock Option Plan for
exercise price, term and vesting schedule are the same as noted above for the
Stock Compensation Program.

Sporting Goods Segment:

SSG has a stock option plan that provides up to 2,000,000 shares of common
stock for awards of incentive and non-qualified stock options to directors and
employees (the "SSG Plan"). Under the SSG Plan, the exercise price of options
will not be less than: the fair market value of the common stock at the date of
grant; or not less than 110% of the fair market value for incentive stock
options granted to certain employees, as more fully described in the Amended and
Restated Stock Option Plan. Options expire ten years from the grant date, or
five years from the grant date for incentive stock options granted to certain

69

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

employees, or such earlier date as determined by the Board of Directors of SSG
(or a Stock Option Committee comprised of members of the Board of Directors).

A summary of transactions under the SSG Plan for the fiscal year ending March
31, 2003 is as follows:

The following table provides additional information as to the options
outstanding under the SSG Plan as of March 31, 2003:

All options granted under the SSG Plan during the fiscal year ending March
31, 2003 were at exercise prices equal to or greater than the fair market value
of SSG's stock on the date of the grant.

70

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

NOTE 10 -- SHAREHOLDER'S EQUITY:

Common Shares:

Authorized common shares consists of 75,000,000 shares of common shares, par
value $.01 per share, of which, 27,413,089 shares were outstanding and
24,568,342 shares were held in treasury at March 31, 2003, and 31,166,478 shares
were outstanding and 20,309,033 shares were held in treasury at March 31, 2002.

Common Stock Repurchase Program:

In January 2000 Emerson's Board authorized a share repurchase program for
5,000,000 shares and in September 2001 a 1,000,000 share repurchase program was
approved by the Board superceding the previous program. In fiscal 2003, the
Company repurchased 159,300 shares for $197,000. In fiscal 2002, the Company
repurchased 177,500 shares for $236,000, and in fiscal 2001, repurchased 100,000
shares for $75,000, pursuant to the programs. The shares were repurchased in the
open market and were funded by working capital.

Additional Common Stock Repurchases:

On May 25, 2000, the Company entered into a Termination, Settlement,
Redemption and Option Agreement, (the "Agreement") with Geoffrey P. Jurick, its
Chairman, Chief Executive Officer and President, and two of Mr. Jurick's
institutional creditors, resolving outstanding litigation between Mr. Jurick and
two of his three outside creditors. In accordance with the Agreement, the
Company, on May 25, 2000, purchased 7.0 million shares of Common Stock from the
two institutional creditors for $6.0 million. On July 31, 2000, the Company
purchased 8,177,533 shares of Common Stock for approximately $4.1 million in a
private transaction as part of the terms of the Agreement. Additionally under
the terms of the Agreement, the Company was granted an option to purchase from
the two institutional creditors the remaining 4.1 million shares of Common Stock
owned by them for approximately $5.5 million (the "Option Purchase Price"). On
May 25, 2001, the Company extended the option term for one additional year by
making a $550,000 payment. On June 10, 2002, the Company exercised the 4.1
million share option for $5.5 million. The Company used cash generated from
operations and required no additional borrowings to complete this transaction.
Since the Company and its stockholders benefited from the repurchase of such
shares, it also incurred the cost of exercising the extension option and,
accordingly, would not seek such an expense reimbursement from Mr. Jurick.

Series A Convertible Preferred Stock:

The Company has issued and outstanding 3,677 shares of Series A Convertible
Preferred Stock, ("Preferred Stock") $.01 par value, with a face value of
$3,677,000, which had no market value as of March 31, 2003. Effective March 31,
2002 the conversion feature of the Preferred shares expired. Dividends accrued
through March 31, 2002 were reversed into shareholder's equity. The Preferred
Stock is

71

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

non-voting and was convertible into Common Stock through March 31, 2002, at a
price per share of Common Stock equal to 80% of the defined average market value
of a share of Common Stock on the date of conversion. Effective March 31, 2001,
dividends were no longer accrued on these shares.

During the years ended March 31, 2002 and March 31, 2001, there were no
conversions of the Company's Series A Preferred Stock.

Warrants:

The Company issued warrants on March 31, 1994 for the purchase of
approximately 750,000 shares of Common Stock exercisable at $1.40 per share
during fiscal 2001. During fiscal 2001, 68,896 warrants were exercised and
converted into 68,896 shares of common stock. On March 31, 2001 approximately
680,000 warrants expired unexercised.

On August 1, 2002, Emerson granted 200,000 warrants with an exercise price of
$2.20, which 100,000 warrants vest after six months and 100,000 warrants vest
one year from date of grant in conjunction with a consulting agreement. The
warrants were valued using the Black-Scholes option valuation model and will be
recognized over the related service period of the consulting agreement which
corresponds to the vesting period. During February 2003, 100,000 of these
warrants were exercised, and accordingly the Company issued 100,000 shares of
common stock. For the fiscal year ending March 31, 2003, approximately $49,000
was expense to operations as a result of the granting of these options.

NOTE 11 -- NET EARNINGS PER SHARE:

The following table sets forth the computation of basic and diluted earnings
per share for the years ended March 31, 2003, March 31, 2002, and March 31, 2001

72

(IN THOUSANDS, EXCEPT PER SHARE AMOUNT)

Senior Subordinated Debentures convertible into 5,204,000 shares of common
stock if converted were not included in computing diluted earnings per share for
fiscal 2001 because the effect would be antidilutive.

NOTE 12 -- LICENSE AGREEMENTS:

Emerson has several license agreements that allow licensees to use the
"(EMERSON LOGO)" and "H.H. Scott(R) trademarks for the manufacture and/or the
sale of consumer electronics and other products and are referred to as outbound
licenses. These license agreements primarily cover North America, South America,
Mexico and Europe, are subject to renewal at the initial expiration of the
agreements and are governed by the laws of the United States. License revenues
recognized and earned in fiscal 2003, 2002, and 2001 were approximately
$10,388,000, $6,952,000, and $3,930,000, respectively. Emerson records a
majority of licensing revenues as earned over the term of the related
agreements.

Effective January 1, 2001, Emerson began a license agreement ("Video License
Agreement") with Funai Corporation, Inc. ("Funai"), which was amended to extend
the Video License Agreement to December 31, 2004 and replaced a prior agreement
with Daewoo Electronics Co. Ltd. ("Daewoo"). The Video License Agreement
provides that Funai will manufacture, market, sell and distribute specified
products bearing the "(EMERSON LOGO)" trademark to customers in the U.S. and
Canadian markets. Under the terms of the agreement, Emerson will receive
non-refundable minimum annual royalty payments of $4.3 million for each calendar
year and a license fee on sales of product subject to the Video License
Agreement in excess of the minimum annual royalties. The minimums are credited
against royalties earned for the sale of products. During fiscal 2003, 2002 and
2001, revenues of $8,520,000, $5,624,000 and $1,075,000 respectively, were
recorded under this agreement.

NOTE 13-- LEGAL PROCEEDINGS:

The Company is involved in legal proceedings and claims of various types in
the ordinary course of business. While any such litigation to which the Company
is a party contains an element of uncertainty,

73

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

management presently believes 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 the Company's consolidated financial position
or results of operations.

NOTE 14 --BUSINESS SEGMENT INFORMATION AND MAJOR CUSTOMERS:

The Company has two business segments, the consumer electronics business and
the sporting goods segment. Operations in these business segments are summarized
below by geographic area (in thousands):

74

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

75

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

Identifiable assets are those assets used in operations in each geographic
area. In addition to operating assets, at March 31, 2003, 2002, and 2001, there
were non-operating assets of $9,492,000, $9,136,000 and $9,282,000,
respectively, located in foreign countries.

The Company's net sales to one customer aggregated approximately 23%, 21% and
41% of consolidated net revenues for the years ended March 31, 2003, 2002, and
2001, respectively. The Company's net sales to another customer aggregated 17%,
19%, and 14% for the years ended March 31, 2003, 2002, and 2001, respectively.
The trade accounts receivable balance of both customers, net of specific
reserves was not material as of March 31, 2003. The Company's net sales to a
third customer, a customer that filed for bankruptcy protection in fiscal 2002,
aggregated 11%, 6%, and less than 1% for the years ended March 31, 2003, 2002
and 2001. The trade accounts receivable balance, net of specific reserves for
the third customer approximated 5%, 15%, and 0% of consolidated trade accounts
receivable as of March 31, 2003, 2002 and 2001. The Company has policies and
procedures to limit its credit risk related to this customer.

NOTE 15 -- DERIVATIVE FINANCIAL INSTRUMENTS

As of March 31, 2003, the Company had outstanding an interest swap
agreement that converts $10 million of its variable rate Loan Agreement to a
fixed rate instrument through 2004. This swap agreement is designated as a cash
flow hedge and the change in fair value of the hedge is recorded in other
comprehensive income and reclassified into earnings in the same period during
which the hedged transaction affected earnings. During fiscal 2003, the Company
recorded a charge of approximately $100,000 related to the ineffective portion
of the cash flow hedge. Subsequent to March 31, 2003, the Company terminated the
interest rate swap agreement as a result of total borrowing covered under the
hedge were to be below the $10 million level.

NOTE 16 -- QUARTERLY INFORMATION (UNAUDITED):

The following table sets forth certain information regarding the Company's
results of operations for each full quarter within the fiscal years ended March
31, 2003 and March 31, 2002, with amounts in thousands, except for per share
data. Due to rounding, quarterly amounts may not fully sum to yearly amounts.
(In thousands, except per share data).

76

The first quarter of fiscal 2003 was restated as a result of the
Company's adoption of SFAS No. 142 and reflects the non-cash charge of
approximately $5.5 million to reduce the carrying value of goodwill. See Note 5
- - Goodwill and Other Intangible Assets of Notes to the Consolidated Financial
Statements for further information.

77

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

None

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS

The information required is incorporated herein by reference to
Emerson's definitive Proxy Statement to be filed with the Securities and
Exchange Commission on or before July 29, 2003.

ITEM 11. EXECUTIVE COMPENSATION

The information required is incorporated herein by reference to
Emerson's definitive Proxy Statement to be filed with the Securities and
Exchange Commission on or before July 29, 2003.

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

The information required is incorporated herein by reference to
Emerson's definitive Proxy Statement to be filed with the Securities and
Exchange Commission on or before July 29, 2003.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required is incorporated herein by reference to
Emerson's definitive Proxy Statement to be filed with the Securities and
Exchange Commission on or before July 29, 2003.

ITEM 14. CONTROLS AND PROCEDURES

Within 90 days prior to the date of this report, we carried out an
evaluation, under the supervision and with the participation of our management,
including our Chief Executive Officer and Chief Financial Officer, of the
effectiveness of the design and operation of our disclosure controls and
procedures pursuant to Securities Exchange Act Rule 13a-14 and 15d-14. Based
upon that evaluation, our Chief Executive Officer and Chief Financial Officer
concluded that our disclosure controls and procedures are effective in timely
alerting them to material information relating to us (including our consolidated
subsidiaries) required to be included in our periodic SEC filings. There have
been no significant changes in our internal controls or in other factors that
could significantly affect internal controls subsequent to the date of their
evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.

78

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENTS, STATEMENT SCHEDULE AND REPORTS ON FORM
8-K

(a) Financial Statements and Schedules. See Item 8

(b) Reports on Form 8-K - During the three month period ended March 31,
2003, the following Form 8-K's were filed:

On March 17, 2003, we announced the filing of a registration
statement in connection with the proposed public offering of our common
stock owned by Geoffrey P. Jurick, our Chairman, Chief Executive Officer
and President.

On March 17, 2003, we announced the filing of a registration
statement on Form S-3 with the Securities and Exchange Commission with
the risk factors attached to the Current Report on Form 8-K.

On June 30, 2003, we announced the filing with the Securities and
Exchange Commission to extend the filing date of the Company's Form 10-K
for the fiscal year ended March 31, 2003.

(c) Exhibits

79

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

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

3.8 Amended and Restated Bylaws of Sport Supply Group, Inc.
(incorporated by reference to Exhibit 3.2 of Sport Supply's
Annual Report on Form 10-K for the year ended November 1,
1996).

10.4 Stipulation of Settlement and Order dated June 11, 1996 by
and among the Official Liquidator of Fidenas International
Bank Limited, Petra Stelling, Barclays Bank PLC, the
Official Liquidator of Fidenas Investment Limited, Geoffrey
P. Jurick, Fidenas International Limited, L.L.C., Elision
International, Inc., GSE Multimedia Technologies Corporation
and Emerson. (incorporated by reference to Exhibit 10(af) of
Emerson's Annual Report on Form 10-K for the year ended
March 31, 1996.)

10.5 Pledge Agreement dated as of February 4, 1997 by Fidenas
International Limited, L.L.C. ("FIN") in favor of TM Capital
Corp. (incorporated by reference to Exhibit (10) (a) of
Emerson's Quarterly Report on Form 10-Q for the quarter
ended December 31, 1996).

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

10.7 Securities Purchase Agreement dated as of November 27, 1996,
by and between Sport Supply Group, Inc. ("SSG") and Emerson
(incorporated by reference to Exhibit (2)(a) of Emerson's
Current Report on Form 8-K dated November 27, 1996).

10.9 Form of Registration Rights Agreement by and between SSG and
Emerson (incorporated by reference to Exhibit (4)(b) of
Emerson's Current Report on Form 8-K dated November 27,
1996).

10.10 License and Exclusive Distribution Agreement with Cargil
International Corp. dated as of February 12, 1997
(incorporated by reference to Exhibit (10) (c) of Emerson's
Quarterly Report on Form 10-Q for the quarter ended December
31, 1996).

10.12 License Agreement effective as of January 1, 2001 by and
between Funai Corporation and Emerson (incorporated by
reference to Exhibit (10) (z) of Emerson's Quarterly Report
on Form 10-Q for the quarter ended September 30, 2000).

10.12.1 First Amendment to License Agreement dated February 19, 2002
by and between Funai Corporation and Emerson (incorporated
by reference to Exhibit (10.12.1) of Emerson's Annual Report
on Form 10-K for the year ended March 31, 2002).

80

10.12.2 Second Amendment to License Agreement effective August 1,
2002 by and between Funai Corporation and Emerson
(incorporated by reference to Exhibit (10.12.2) of Emerson's
Quarterly Report on Form 10-Q for the quarter ended
September 30, 2002).

10.13 Second Lease Modification dated as of May 15, 1998 between
Hartz Mountain, Parsippany and Emerson (incorporated by
reference to Exhibit (10) (v) of Emerson's Annual Report on
Form 10-K for the year ended April 3, 1998).

10.13.1 Third Lease Modification made the 26 day of October, 1998
between Hartz Mountain Parsippany and Emerson (incorporated
by reference to Exhibit (10) (b) of Emerson's Quarterly
Report on Form 10-Q for the quarter ended October 2, 1998).

10.13.2 Fourth Lease Modification made the 12th day of February,
2003 between Hartz Mountain Parsippany and Emerson. *

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

10.15 Supplemental Letter of Employment for Marino Andriani, dated
as of October 11, 1999 (incorporated by reference to Exhibit
(10) (a) of Emerson's Quarterly Report on Form 10-Q for the
quarter ended October 1, 1999).

10.15.1 Supplemental Letter of Employment for Marino Andriani,
effective as of April 1, 2001 (incorporated by reference to
Exhibit 10.15.1 of Emerson's Annual Report on Form 10-K for
the year ended March 31, 2001).

10.16 Letter of Employment for Patrick Murray, dated May 3, 2001
(incorporated by reference to Exhibit 10.16 of Emerson's
Annual Report on Form 10-K for the year ended March 31,
2001).

10.17 Form of Indemnification Agreement entered into between Sport
Supply and each of the directors of Sport Supply and Sport
Supply's General Counsel (incorporated by reference to
Exhibit 10.3 of Sport Supply's Registration Statement on
Form S-1, Registration No. 33-39218).

10.18 Sport Supply Group, Inc. Amended and Restated Stock Option
Plan (incorporated by reference to Exhibit 4.1 of Sport
Supply's Registration Statement on Form S-1, Registration
No. 33-27193).

10.19 Assignment and Assumption Agreement, dated to be effective
as of February 28, 1992, by and between Aurora and Sport
Supply Group, Inc. (incorporated by reference to Exhibit
10.27 of Sport Supply's Annual Report on Form 10-K for the
year ended 1991).

81

10.20 Amendment No. 1 to AMF Licensing Agreement (incorporated by
reference to Exhibit 10 of Sport Supply's Quarterly Report
on Form 10-Q for the quarter ended January 1, 1999).

10.21 License Agreement, dated as of September 23, 1991, by and
between Proacq Corp. and Sport Supply Group, Inc.
(incorporated by reference to Exhibit 10.17 of Sport
Supply's Annual Report on Form 10-K for the year ended
1991).

10.22 Sport Supply Group Employees' Savings Plan dated June 1,
1993 (incorporated by reference to Exhibit 10.27 of Sport
Supply's Annual Report on Form 10-K for the year ended
1993).

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

10.24 Non-Qualified Stock Option Agreement by and between Sport
Supply Group, Inc. and Geoffrey P. Jurick (incorporated by
reference to Exhibit 10.5 of Sport Supply's Quarterly Report
on Form 10-Q for the quarter ended August 1, 1997).

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

10.26.1 Employment Agreement between Emerson Radio Corp. and
Elizabeth J. Calianese McPartland, effective as of September
1, 2001 (incorporated by reference to Exhibit 10.26.1 of
Emerson's Quarterly Report on Form 10-Q for the quarter
ended September 30, 2001).

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

10.26.3 Employment Agreement between Emerson Radio Corp. and Kenneth
A. Corby, effective as of September 1, 2001 (incorporated by
reference to Exhibit 10.26.3 of Emerson's Quarterly Report
on Form 10-Q for the quarter ended December 31, 2001).

10.27 Revolving Credit and Term Loan Agreement dated June 28, 2002
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
(incorporated by reference to Exhibit 10.27 of Emerson's
Quarterly Report on Form 10-Q for the quarter ended December
31, 2002).

10.28 Common Stock Purchase Warrant Agreement entered into on
August 1, 2002 by and between Emerson Radio Corp. and
Further Lane Asset Management LP (incorporated

82

by reference to Exhibit 10.28 of Emerson's Quarterly Report
on Form 10-Q for the quarter ended September 30, 2002).

10.35 Loan and Security Agreement dated March 27, 2001 by and
between Sport Supply Group, Inc. and Congress Financial
Corporation (incorporated by reference to Exhibit 10.29 of
Sport Supply's Annual Report on Form 10-K for the year ended
March 30, 2001).

10.35.1 First Amendment to the Loan and Security Agreement dated
October 1, 2002 by and Between Sport Supply Group, Inc. and
Congress Financial Corporation (incorporated by reference to
Exhibit 10.2 of Sport Supply's Quarterly Report on Form 10-Q
for the quarter ended December 27, 2002).

12 Computation of Ratio of Earnings (Loss) to Combined Fixed
Charges and Preferred Stock Dividends. *

21 Subsidiaries of the Company as of March 31, 2003. *

23 Consent of Independent Auditors. *

99.1 Certification of Chief Executive Officer, as required by
Section 906 of the Sarbanes-Oxley Act of 2002. *

99.2 Certification of Chief Financial Officer, as required by
Section 906 of the Sarbanes-Oxley Act of 2002. *

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

83

SIGNATURES

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

EMERSON RADIO CORP.

By: /s/ Geoffrey P. JURICK
Geoffrey P. Jurick
Chairman of the Board

Dated: July 11, 2003

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

/s/ Geoffrey P. Jurick Chairman of the Board, July 11, 2003
Geoffrey P. Jurick Chief Executive Officer and
President
(Principal Executive Officer)

/s/ Kenneth A. Corby Executive Vice President, July 11, 2003
Kenneth A. Corby Chief Financial Officer
(Principal Finance and
Accounting Officer)

/s/ Robert H. Brown, Jr. Director July 11, 2003
Robert H. Brown, Jr.

/s/ Peter G. Bunger Director July 11, 2003
Peter G. Bunger

/s/ Jerome H. Farnum Director July 11, 2003
Jerome H. Farnum

/s/ Stephen H. Goodman Director July 11, 2003
Stephen H. Goodman

84

Certifications

PURSUANT TO SECTION 302 OF THE SARBANES - OXLEY ACT OF 2002

I, Geoffrey P. Jurick, certify that:

1. I have reviewed this annual report on Form 10-K of Emerson Radio Corp.;

2. Based on my knowledge, this annual 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 annual
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual 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 annual report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a) designed such disclosure controls and procedures 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 annual report is
being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this annual report (the "Evaluation Date"); and

c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, 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 in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and

b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and

6. The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date: July 11, 2003

/s/ Geoffrey P. Jurick
-----------------------
Chairman of the Board,
Chief Executive Officer and
President

85

CERTIFICATIONS
PURSUANT TO SECTION 302 OF THE SARBANES - OXLEY ACT OF 2002

I, Kenneth A. Corby, certify that:

1. I have reviewed this annual report on Form 10-K of Emerson Radio Corp.;

2. Based on my knowledge, this annual 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 annual
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual 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 annual report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a) designed such disclosure controls and procedures 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 annual report is
being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this annual report (the "Evaluation Date"); and

c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, 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 in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and

b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and

6. The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date: July 11, 2003

/s/ Kenneth A. Corby
------------------------
Executive Vice President and
Chief Financial Officer

86

EMERSON RADIO CORP. AND SUBSIDIARIES
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
(IN THOUSANDS)

(A) Accounts written off, net of recoveries.

(B) Amounts do not include certain accounts receivable reserves that are
disclosed as "allowances" on the Consolidated Balance Sheets since they are
not valuation reserves.

87

INDEX TO EXHIBITS

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

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

3.8 Amended and Restated Bylaws of Sport Supply Group, Inc.
(incorporated by reference to Exhibit 3.2 of Sport Supply's
Annual Report on Form 10-K for the year ended November 1,
1996).

10.4 Stipulation of Settlement and Order dated June 11, 1996 by
and among the Official Liquidator of Fidenas International
Bank Limited, Petra Stelling, Barclays Bank PLC, the
Official Liquidator of Fidenas Investment Limited, Geoffrey
P. Jurick, Fidenas International Limited, L.L.C., Elision
International, Inc., GSE Multimedia Technologies Corporation
and Emerson. (incorporated by reference to Exhibit 10(af) of
Emerson's Annual Report on Form 10-K for the year ended
March 31, 1996.)

10.5 Pledge Agreement dated as of February 4, 1997 by Fidenas
International Limited, L.L.C. ("FIN") in favor of TM Capital
Corp. (incorporated by reference to Exhibit (10) (a) of
Emerson's Quarterly Report on Form 10-Q for the quarter
ended December 31, 1996).

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

10.7 Securities Purchase Agreement dated as of November 27, 1996,
by and between Sport Supply Group, Inc. ("SSG") and Emerson
(incorporated by reference to Exhibit (2)(a) of Emerson's
Current Report on Form 8-K dated November 27, 1996).

10.9 Form of Registration Rights Agreement by and between SSG and
Emerson (incorporated by reference to Exhibit (4)(b) of
Emerson's Current Report on Form 8-K dated November 27,
1996).

10.10 License and Exclusive Distribution Agreement with Cargil
International Corp. dated as of February 12, 1997
(incorporated by reference to Exhibit (10) (c) of Emerson's
Quarterly Report on Form 10-Q for the quarter ended December
31, 1996).

10.12 License Agreement effective as of January 1, 2001 by and
between Funai Corporation and Emerson (incorporated by
reference to Exhibit (10) (z) of Emerson's Quarterly Report
on Form 10-Q for the quarter ended September 30, 2000).

10.12.1 First Amendment to License Agreement dated February 19, 2002
by and between Funai Corporation and Emerson (incorporated
by reference to Exhibit (10.12.1) of Emerson's Annual Report
on Form 10-K for the year ended March 31, 2002).

10.12.2 Second Amendment to License Agreement effective August 1,
2002 by and between Funai Corporation and Emerson
(incorporated by reference to Exhibit (10.12.2) of Emerson's
Quarterly Report on Form 10-Q for the quarter ended
September 30, 2002).

10.13 Second Lease Modification dated as of May 15, 1998 between
Hartz Mountain, Parsippany and Emerson (incorporated by
reference to Exhibit (10) (v) of Emerson's Annual Report on
Form 10-K for the year ended April 3, 1998).

10.13.1 Third Lease Modification made the 26 day of October, 1998
between Hartz Mountain Parsippany and Emerson (incorporated
by reference to Exhibit (10) (b) of Emerson's Quarterly
Report on Form 10-Q for the quarter ended October 2, 1998).

10.13.2 Fourth Lease Modification made the 12th day of February,
2003 between Hartz Mountain Parsippany and Emerson. *

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

10.15 Supplemental Letter of Employment for Marino Andriani, dated
as of October 11, 1999 (incorporated by reference to Exhibit
(10) (a) of Emerson's Quarterly Report on Form 10-Q for the
quarter ended October 1, 1999).

10.15.1 Supplemental Letter of Employment for Marino Andriani,
effective as of April 1, 2001 (incorporated by reference to
Exhibit 10.15.1 of Emerson's Annual Report on Form 10-K for
the year ended March 31, 2001).

10.16 Letter of Employment for Patrick Murray, dated May 3, 2001
(incorporated by reference to Exhibit 10.16 of Emerson's
Annual Report on Form 10-K for the year ended March 31,
2001).

10.17 Form of Indemnification Agreement entered into between Sport
Supply and each of the directors of Sport Supply and Sport
Supply's General Counsel (incorporated by reference to
Exhibit 10.3 of Sport Supply's Registration Statement on
Form S-1, Registration No. 33-39218).

10.18 Sport Supply Group, Inc. Amended and Restated Stock Option
Plan (incorporated by reference to Exhibit 4.1 of Sport
Supply's Registration Statement on Form S-1, Registration
No. 33-27193).

10.19 Assignment and Assumption Agreement, dated to be effective
as of February 28, 1992, by and between Aurora and Sport
Supply Group, Inc. (incorporated by reference to Exhibit
10.27 of Sport Supply's Annual Report on Form 10-K for the
year ended 1991).

10.20 Amendment No. 1 to AMF Licensing Agreement (incorporated by
reference to Exhibit 10 of Sport Supply's Quarterly Report
on Form 10-Q for the quarter ended January 1, 1999).

10.21 License Agreement, dated as of September 23, 1991, by and
between Proacq Corp. and Sport Supply Group, Inc.
(incorporated by reference to Exhibit 10.17 of Sport
Supply's Annual Report on Form 10-K for the year ended
1991).

10.22 Sport Supply Group Employees' Savings Plan dated June 1,
1993 (incorporated by reference to Exhibit 10.27 of Sport
Supply's Annual Report on Form 10-K for the year ended
1993).

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

10.24 Non-Qualified Stock Option Agreement by and between Sport
Supply Group, Inc. and Geoffrey P. Jurick (incorporated by
reference to Exhibit 10.5 of Sport Supply's Quarterly Report
on Form 10-Q for the quarter ended August 1, 1997).

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

10.26.1 Employment Agreement between Emerson Radio Corp. and
Elizabeth J. Calianese McPartland, effective as of September
1, 2001 (incorporated by reference to Exhibit 10.26.1 of
Emerson's Quarterly Report on Form 10-Q for the quarter
ended September 30, 2001).

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

10.26.3 Employment Agreement between Emerson Radio Corp. and Kenneth
A. Corby, effective as of September 1, 2001 (incorporated by
reference to Exhibit 10.26.3 of Emerson's Quarterly Report
on Form 10-Q for the quarter ended December 31, 2001).

10.27 Revolving Credit and Term Loan Agreement dated June 28, 2002
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
(incorporated by reference to Exhibit 10.27 of Emerson's
Quarterly Report on Form 10-Q for the quarter ended December
31, 2002).

10.28 Common Stock Purchase Warrant Agreement entered into on
August 1, 2002 by and between Emerson Radio Corp. and
Further Lane Asset Management LP (incorporated

by reference to Exhibit 10.28 of Emerson's Quarterly Report
on Form 10-Q for the quarter ended September 30, 2002).

10.35 Loan and Security Agreement dated March 27, 2001 by and
between Sport Supply Group, Inc. and Congress Financial
Corporation (incorporated by reference to Exhibit 10.29 of
Sport Supply's Annual Report on Form 10-K for the year ended
March 30, 2001).

10.35.1 First Amendment to the Loan and Security Agreement dated
October 1, 2002 by and Between Sport Supply Group, Inc. and
Congress Financial Corporation (incorporated by reference to
Exhibit 10.2 of Sport Supply's Quarterly Report on Form 10-Q
for the quarter ended December 27, 2002).

12 Computation of Ratio of Earnings (Loss) to Combined Fixed
Charges and Preferred Stock Dividends. *

21 Subsidiaries of the Company as of March 31, 2003. *

23 Consent of Independent Auditors. *

99.1 Certification of Chief Executive Officer, as required by
Section 906 of the Sarbanes-Oxley Act of 2002. *

99.2 Certification of Chief Financial Officer, as required by
Section 906 of the Sarbanes-Oxley Act of 2002. *

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