EMERSON RADIO CORP (Form: 10-Q, Received: 11/14/2011 16:11:29)

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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended September 30, 2011


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

For the transition period from to

Commission file number 001-07731

EMERSON RADIO CORP.

(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 No.)

85 Oxford Drive, Moonachie, New Jersey		07074

(Address of principal executive offices)		(Zip code)

(973) 428-2000

(Registrant’s telephone number, including area code)

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

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every interactive data file required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). þ Yes o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer o	Accelerated filer o	Non-accelerated filer o	Smaller reporting company þ
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o Yes þ No

Indicate the number of shares outstanding of common stock as of November 14, 2011: 27,129,832.

TABLE OF CONTENTS


PART I — FINANCIAL INFORMATION

Item 1. Financial Statements			3

Item 2. Management’s Discussion and Analysis of Results of Operations and Financial Condition			11

Item 3. Quantitative and Qualitative Disclosures About Market Risk			15

Item 4. Controls and Procedures			16

PART II — OTHER INFORMATION

Item 1. Legal Proceedings			16

Item 1A. Risk Factors			16

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds			16

ITEM 3. Defaults Upon Senior Securities			16

ITEM 4. Removed and Reserved			16

ITEM 5. Other Information			16

ITEM 6. Exhibits			17

SIGNATURES			18

Exhibit 10.30
Exhibit 10.31
Exhibit 10.32
Exhibit 31.1
Exhibit 31.2
Exhibit 32
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT

PART I — FINANCIAL INFORMATION


Item 1.		Financial Statements.

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


	Three Months Ended					Six Months Ended
	September 30					September 30
	2011			2010		2011		2010

Net revenues	$	41,380		$	51,966	$	92,904	$	119,121
Costs and expenses:
Cost of sales		37,005			45,892		82,600		103,415
Other operating costs and expenses		302			712		689		1,011
Selling, general and administrative expenses		2,380			2,045		4,069		3,974

		39,687			48,649		87,358		108,400
Operating income		1,693			3,317		5,546		10,721
Interest (expense) income, net		(1	)		4		30		14
Realized gain on sale of marketable security		—			—		828		—

Income before income taxes		1,692			3,321		6,404		10,735
(Benefit) provision for income taxes		(71	)		98		1,304		1,633

Net income	$	1,763		$	3,223	$	5,100	$	9,102


Net income per share:
Basic	$	.06		$	.12	$	.19	$	.34
Diluted	$	.06		$	.12	$	.19	$	.34

Weighted average shares outstanding :
Basic		27,130			27,130		27,130		27,130
Diluted		27,130			27,131		27,130		27,131

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

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


	September 30, 2011			March 31, 2011(A)
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	31,938		$	39,796
Restricted cash		667			600
Investment in marketable security		—			4,725
Accounts receivable, net		16,264			10,929
Other receivables		1,012			1,413
Due from affiliates		9			—
Inventory, net		25,312			8,515
Prepaid expenses and other current assets		964			549
Deferred tax assets		2,193			2,825

Total current assets		78,359			69,352
Property, plant and equipment, net		2,754			2,921
Trademarks, net		1,545			1,545
Deferred tax assets		2,080			2,540
Other assets		330			358

Total assets	$	85,068		$	76,716

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term borrowings	$	—		$	2,466
Current maturities of long-term borrowings		44			46
Accounts payable and other current liabilities		20,676			14,408
Due to affiliates		1			2
Accrued sales returns		1,586			1,199
Income taxes payable		117			196

Total current liabilities		22,424			18,317
Long-term borrowings		117			150
Deferred tax liabilities		162			158

Total liabilities		22,703			18,625
Shareholders’ equity:
Preferred shares — $.01 par value, 10,000,000 shares authorized; 3,677 shares issued and outstanding; liquidation preference of $3,677,000		3,310			3,310
Common shares — $.01 par value, 75,000,000 shares authorized, 52,965,797 shares issued, and 27,129,832 shares outstanding		529			529
Capital in excess of par value		98,785			98,785
Accumulated other comprehensive (losses) income		(82	)		746
Accumulated deficit		(15,953	)		(21,055	)
Treasury stock, at cost, 25,835,965 shares		(24,224	)		(24,224	)

Total shareholders’ equity		62,365			58,091

Total liabilities and shareholders’ equity	$	85,068		$	76,716


(A)		Reference is made to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2011 filed with the Securities and Exchange Commission on July 14, 2011.

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

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


	Six Months Ended
	September 30
	2011			2010

Cash flows from operating activities: Net income	$	5,100		$	9,102
Adjustments to reconcile net income to net cash used by operating activities:
Depreciation and amortization		167			299
Deferred tax expense		1,096			1,050
Asset allowances, reserves and other		(918	)		94
Gain on sale of marketable security		(828	)		—
Changes in assets and liabilities:
Accounts receivable		(5,708	)		518
Other receivables		401			(302	)
Due from affiliates		(9	)		(45	)
Inventories		(15,117	)		(24,444	)
Prepaid expenses and other current assets		(415	)		207
Other assets		28			(14	)
Accounts payable and other current liabilities		6,268			3,367
Due to affiliates		(1	)		(26	)
Interest and income taxes payable		(79	)		154

Net cash used by operating activities		(10,015	)		(10,040	)

Cash flows from investing activities:
Proceeds from sale of marketable security		4,725			—
(Increase) decrease in restricted cash		(67	)		2,886
Additions to property and equipment		—			(66	)

Net cash provided by investing activities		4,658			2,820

Cash flows from financing activities:
Repayments of short-term borrowings		(2,468	)		(44	)
Decrease in capital lease and other rental obligations		(33	)		(97	)
Borrowings under long-term credit facility		—			56,820
Repayments of borrowings under long-term credit facility		—			(56,820	)

Net cash used by financing activities		(2,501	)		(141	)

Net decrease in cash and cash equivalents		(7,858	)		(7,361	)
Cash and cash equivalents at beginning of period		39,796			9,969

Cash and cash equivalents at end of period	$	31,938		$	2,608


Cash paid during the period for:
Interest	$	13		$	63
Income taxes	$	850		$	471

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

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

NOTE 1 — BACKGROUND AND BASIS OF PRESENTATION

The consolidated financial statements include the accounts of Emerson Radio Corp. (“Emerson”, consolidated — the “Company”), and its subsidiaries. The Company designs, sources, imports and markets a variety of houseware and consumer electronic products, and licenses the Company’s trademarks for a variety of products domestically and internationally.

The unaudited interim consolidated financial statements reflect all normal and recurring adjustments that are, in the opinion of management, necessary to present a fair statement of the Company’s consolidated financial position as of September 30, 2011 and the results of operations for the three and six month periods ended September 30, 2011 and September 30, 2010. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary in order to make the financial statements not misleading have been included. All significant intercompany accounts and transactions have been eliminated in consolidation. The preparation of the unaudited interim consolidated financial statements requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes; actual results could materially differ from those estimates. The unaudited interim consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission and accordingly do not include all of the disclosures normally made in the Company’s annual consolidated financial statements. Accordingly, these unaudited interim consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the fiscal year ended March 31, 2011 (“fiscal 2011”), included in the Company’s annual report on Form 10-K, as amended, for fiscal 2011.

The results of operations for the three and six month periods ended September 30, 2011 are not necessarily indicative of the results of operations that may be expected for any other interim periods or for the full year ended March 31, 2012 (“fiscal 2012”).

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

Unless otherwise disclosed in the notes to these financial statements, the estimated fair value of the financial assets and liabilities approximates the carrying value.

Stock-Based Compensation

The Company measures compensation cost for stock-based compensation arrangements based on grant date fair value. The computed fair value is expensed ratably over the requisite vesting period as required by ASC Topic 718 “Compensation — Stock Compensation”. All outstanding stock based compensation arrangements issued by the Company were fully vested as of November 30, 2009. Consequently, the Company recorded no compensation costs during either of the three or six month periods ended September 30, 2011 and September 30, 2010.

Sales Allowance and Marketing Support Expenses

Sales allowances, marketing support programs, promotions and other volume-based incentives which are provided to retailers and distributors are accounted for on an accrual basis as a reduction to net revenues in the period in which the related sales are recognized in accordance with ASC topic 605, “Revenue Recognition”, subtopic 50 “Customer Payments and Incentives” and Securities and Exchange Commission Staff Accounting Bulletins 101 “Revenue Recognition in Financial Statements,” and 104 “Revenue Recognition, corrected copy” (“SAB’s 101 and 104”).

At the time of sale, the Company reduces recognized gross revenue by allowances to cover, in addition to estimated sales returns as required by ASC topic 605, “Revenue Recognition”, subtopic 15 “Products”, (i) sales incentives offered to customers that meet the criteria for accrual under ASC topic 605, subtopic 50 and (ii) under SAB’s 101 and 104, an estimated amount to recognize additional non-offered deductions it anticipates and can reasonably estimate will be taken by customers which it does not expect to recover. Accruals for the estimated amount of future non-offered deductions are required to be made as contra-revenue items because that percentage of shipped revenue fails to meet the collectability criteria within SAB 104’s and 101’s four revenue recognition criteria, all of which are required to be met in order to recognize revenue.

If additional marketing support programs, promotions and other volume-based incentives are required to promote the Company’s products subsequent to the initial sale, then additional reserves may be required and are accrued for when such support is offered.

NOTE 2 — COMPREHENSIVE INCOME

Comprehensive income equaled net income for both of the three and six month periods ended September 30, 2011 and September 30, 2010.

NOTE 3 — NET EARNINGS PER SHARE

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


	Three months ended				Six months ended
	September 30				September 30
	2011		2010		2011		2010
Numerator:
Net income	$	1,763	$	3,223	$	5,100	$	9,102

Denominator:
Denominator for basic earnings per share — weighted average shares		27,130		27,130		27,130		27,130
Effect of dilutive securities on denominator:
Options (computed using the treasury stock method)		—		1		—		1

Denominator for diluted earnings per share — weighted average shares and assumed conversions		27,130		27,131		27,130		27,131

Basic and diluted earnings per share	$	.06	$	.12	$	.19	$	.34

NOTE 4 — SHAREHOLDERS’ EQUITY

Outstanding capital stock at September 30, 2011 consisted of common stock and Series A convertible preferred stock. The Series A convertible preferred stock is non-voting, has no dividend preferences and has not been convertible since March 31, 2002; however, it retains a liquidation preference.

At September 30, 2011, the Company had approximately 50,000 options outstanding with exercise prices ranging from $3.07 to $3.19.

NOTE 5 — INVENTORY

Inventories are stated at the lower of cost or market. Cost is determined using the first-in, first-out method. As of September 30, 2011 and March 31, 2011, inventories consisted of the following (in thousands):


	September 30, 2011			March 31, 2011
	(Unaudited)
Finished goods	$	25,709		$	10,593
Less inventory allowances		(397	)		(2,078	)

Net inventory	$	25,312		$	8,515

NOTE 6 — INCOME TAXES

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

The Company’s effective tax rate differs from the federal statutory rate primarily due to expenses that are not deductible for federal income tax purposes, income and losses incurred in foreign jurisdictions and taxed at locally applicable tax rates, and state income taxes.

The Company is subject to examination and assessment by tax authorities in numerous jurisdictions. A summary of the Company’s open tax years is as follows as of September 30, 2011:


Jurisdiction	Open tax years
U.S. federal		2007-2010
States		2006-2010

Based on the outcome of tax examinations or due to the expiration of statutes of limitations, it is reasonably possible that the unrecognized tax benefits related to uncertain tax positions taken in previously filed returns may be different from the liabilities that have been recorded for these unrecognized tax benefits. As a result, the Company may be subject to additional tax expense.

NOTE 7 — RELATED PARTY TRANSACTIONS

From time to time, Emerson engages in business transactions with its controlling shareholder, The Grande Holdings Limited (Provisional Liquidators Appointed) (“Grande”), and one or more of Grande’s direct and indirect subsidiaries. Set forth below is a summary of such transactions.

Majority Shareholder

Grande’s Ownership Interest in Emerso n. Grande, a Bermuda corporation, has advised the Company that, as of September 30, 2011, one of its indirect subsidiaries held beneficially 15,243,283 shares or approximately 56.2% of the outstanding common stock of Emerson. That number of shares includes 3,389,401 shares (the “Pledged Shares”) which, according to public filings made by Deutsche Bank AG (“Deutsche Bank”) in March 2010 had previously been pledged to Deutsche Bank to secure indebtedness owed to it. In February 2011, Deutsche Bank filed a Schedule 13G with the Securities and Exchange Commission stating that Deutsche Bank had sole voting and sole dispositive power over the Pledged Shares (which represent approximately 12.5% of the Company’s outstanding common stock). The Company believes that both Grande and Deutsche Bank have claimed beneficial ownership of the Pledged Shares. As of November 14, 2011, the Company has not been able to verify independently the beneficial ownership of the Pledged Shares.

Related Party Transactions

Leases and Other Real Estate Transactions.

Rented Space in Hong Kong

Effective January 1, 2010, Emerson entered into a lease agreement with Lafe Properties (Hong Kong) Limited (“Lafe”), a related party of Grande at that time, pursuant to which Emerson rented 36,540 square feet from Lafe for the purpose of housing its Hong Kong based office personnel and for its use to refurbish certain returned products. This lease agreement expired on December 31, 2010 and was renewed for a one year period on substantially the same terms during December 2010, and therefore now expires on December 31, 2011. On December 31, 2010, Lafe was sold by its immediate holding company to an independent third party. As such, the Company is no longer considering Lafe to be a related party to the Company beginning December 31, 2010.

Related service charges associated with this lease agreement that the Company continues to procure from Brighton Marketing Limited, a subsidiary of Grande, The Grande Properties Management Limited, a related party of Grande, and The Grande Group (HK) Ltd., a related party of Grande, totaled approximately $15,000 and $54,000 for the three and six months ended September 30, 2011, respectively. Emerson owed Brighton Marketing Limited approximately $1,000 pertaining to these charges at September 30, 2011.

For the three and six months ended September 30, 2010, Emerson’s rent expense and related service charges associated with this lease agreement totaled approximately $174,000 and $347,000, respectively. Emerson owed Brighton Marketing Limited approximately $3,000 pertaining to these charges at September 30, 2010. In addition, at September 30, 2010, Lafe held a security deposit of approximately $113,000 that Emerson had paid to Lafe on the leased property, which was reclassified by Emerson to third party rental deposit in December 2010.

Rented Space in the People’s Republic of China

In December 2008, Emerson signed a lease agreement with Akai Electric (China) Co., Ltd. (“Akai China”), a subsidiary of Grande prior to its disposal on December 24, 2010, concerning the rental of office space, office equipment, and lab equipment for Emerson’s quality assurance personnel in Zhongshan, People’s Republic of China. The lease term began in July 2007 and ended by its terms in June 2009, at which time the agreement renewed automatically on a month-by-month basis unless canceled by either party. The agreement was cancelled in May 2011.

On December 24, 2010, Grande announced that it sold Capetronic Group Ltd. (“Capetronic”) to a purchaser who, along with its beneficial owner, are third parties independent of Grande and its connected persons, as defined in the Listing Rules to the best of Grande’s and its directors’ knowledge, information and belief, having made all reasonable enquiries (the “Sale”). As Akai China was a subsidiary of Capetronic at the time of the Sale, and was disposed of along with Capetronic by Grande, the Company is no longer considering Akai China to be a related party to the Company beginning December 24, 2010.

For the three and six months ended September 30, 2010, Emerson’s rent expense associated with this lease agreement totaled approximately $28,000 and $56,000, respectively, and Emerson owed nil to Akai China related to this agreement at September 30, 2010. In addition, at September 30, 2010, Akai China held a security deposit of approximately $32,000 that Emerson had paid to Akai China on the leased property, which was reclassified by Emerson to third party rental deposit in December 2010.

Other.

During the three and six months ended September 30, 2011, Emerson paid consulting fees of approximately $11,000 and $14,000, respectively, to Mr. Eduard Will, a director of Emerson, for work performed by Mr. Will related to strategy for the Kayne Litigation as more fully described in Note 9 — “Legal Proceedings — Kayne Litigation ”, merger and acquisition research, as well as work related to the strategy for a shareholder derivative lawsuit that the Company settled in January 2011. In addition, during the three and six months ended September 30, 2011, Emerson paid expense reimbursements and advances of nil and approximately $18,000, respectively, to Mr. Eduard Will, related to this consulting work and his service as a director of Emerson. At September 30, 2011, Mr. Will owed the Company approximately $8,000 in the form of unused travel advances previously paid to him for which the travel had not yet occurred.

During the three and six months ended September 30, 2010, Emerson paid consulting fees of approximately $29,000 and $61,000 to Mr. Will for work performed by Mr. Will related to strategy for a shareholder derivative lawsuit that the Company settled in January 2011. In addition, during the three and six months ended September 30, 2010, Emerson paid expense reimbursements and advances of approximately $20,000 and $22,000, respectively, to Mr. Will, related to this consulting work and his service as a director of Emerson. At September 30, 2010, Mr. Will owed the Company approximately $11,000 in the form of unused travel advances previously paid to him for which the travel had not yet occurred.

During the three and six months ended September 30, 2010, Akai Sales Pte Ltd. (“Akai Sales”), a subsidiary of Grande, invoiced Emerson nil and approximately $7,300 for travel expenses and courier fees. At September 30, 2010, Emerson owed Akai Sales nil.

During the three and six months ended September 30, 2011, Emerson invoiced Vigers Property Management Services (HK) Ltd. and Vigers Appraisal & Consulting Ltd. (together “Vigers”), related parties of Grande, in the aggregate, approximately $1,000 and $2,000, respectively, for office rental and usage of telephone and data lines maintained by Emerson. Vigers owed Emerson approximately $1,000 at September 30, 2011 related to this activity. During the three and six months ended September 30, 2010, Emerson invoiced Vigers, in the aggregate, approximately $2,000 and $3,000, respectively, for the same type of activity. Vigers owed Emerson nil at September 30, 2010, related to this activity.

On April 7, 2010, upon a request made to the Company by its foreign controlling stockholder, S&T International Distribution Limited (“S&T”), a subsidiary of Grande, the Company entered into an agreement with S&T, whereby the Company returned to S&T on April 7, 2010 that portion of the taxes that the Company had withheld from the dividend paid on March 24, 2010 to S&T, which the Company believes is not subject to U.S. tax based on the Company’s good-faith estimate of its accumulated earnings and profits (the “Agreement”). The Company believes this transaction results in an off-balance sheet arrangement, which is comprised of a possible contingent tax liability of the Company, which, if recognized, would be offset by the calling by the Company on S&T of the indemnification provisions of the Agreement. Per the terms of the Agreement, Emerson invoiced S&T in June 2010 approximately $42,000 for reimbursement of legal fees incurred by Emerson with regard to the Agreement and approximately $33,000 as a transaction fee for having entered into the Agreement. At June 30, 2010, S&T owed these fees, totaling $75,000, to Emerson. In January 2011, Emerson agreed, upon the request of S&T, to waive approximately $5,000 of the legal charges that had been invoiced to S&T in June 2010. S&T paid the full amount owed to Emerson of approximately $70,000 in February 2011 and consequently owed Emerson nil at September 30, 2011.

NOTE 8 — BORROWINGS

Short-term Borrowings

At September 30, 2011, the Company had no short-term borrowings. At March 31, 2011, the Company had $2.5 million of short-term borrowings outstanding under a credit line maintained with Smith Barney, collateralized by the Company’s auction rate security holdings, which were sold in full for cash in May 2011. Upon the sale of this last remaining auction rate security in May 2011, the Company paid in full the $2.5 million balance of its short-term borrowings using the sale proceeds (see Note 10 — Marketable Securities).

Letters of Credit — Beginning November 2010, the Company began utilizing Hang Seng Bank to issue letters of credit on behalf of the Company, as needed, on a 100% cash collateralized basis. At September 30, 2011, the Company had outstanding letters of credit totaling $667,000. A like amount of cash, which was posted by the Company as collateral against these outstanding letters of credit, at September 30, 2011, has been classified by the Company as Restricted Cash on the balance sheet.

Long-term Borrowings

At September 30, 2011 and March 31, 2011, borrowings under long-term facilities consisted of the following (in thousands):


	September 30, 2011			March 31, 2011
	(Unaudited)
Capitalized lease obligations and other		161			196
Less current maturities		(44	)		(46	)

Long term debt and notes payable	$	117		$	150

NOTE 9 — LEGAL PROCEEDINGS

Kayne Litigation — On July 7, 2011, the Company was served with an amended complaint (the “Complaint”) filed in the United States District Court for the Central District of California alleging, among other things, that the Company, certain of its present and former directors and other entities or individuals now or previously associated with Grande, intentionally interfered with the ability of the plaintiffs to collect on a judgment (now approximately $47 million) they had against Grande by engaging in transactions (such as the dividend paid to all shareholders in March 2010) which transferred assets out of the United States. The Complaint also asserts claims under the civil RICO statute and for alter ego liability. In the Company’s opinion, based on an initial review, the claims appear to be devoid of merit. Accordingly, on September 27, 2011, Emerson moved to dismiss the action for failure to state a claim (the “Motion”). The Court has scheduled oral argument for the Motion for December 19, 2011. In the interim, and in the event that the Motion is denied, Emerson intends to defend the action vigorously.

Except for the litigation matters described above, the Company is not currently a party to any legal proceedings other than litigation matters, in most cases involving ordinary and routine claims incidental to our business. Management cannot estimate with certainty the Company’s ultimate legal and financial liability with respect to such pending litigation matters. However, management believes, based on our examination of such matters, that the Company’s ultimate liability will not have a material adverse effect on the Company’s financial position, results of operations or cash flows.

NOTE 10 — MARKETABLE SECURITIES:

As of September 30, 2011 and March 31, 2011, the Company had nil and $5.0 million (with a net book value of zero and $4.7 million, respectively) face value in trading securities, which consisted entirely of student loan auction rate securities (“SLARS”). These securities had long-term nominal maturities for which interest rates were historically reset through a Dutch auction process at pre-determined calendar intervals; a process which, prior to February 2008, had historically provided a liquid market for these securities. As a result of the liquidity issues experienced in the global credit and capital markets, these SLARS had multiple failed auctions, although the Company was successful in May 2011 in selling its final SLARS for $4.7 million, upon which the Company recorded a realized gain of $828,000.

ASC Topic 820 “Fair Value Measurements and Disclosures” defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The standard outlines a valuation framework and creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and the related disclosures.

Under ASC Topic 820, financial assets and liabilities are measured using inputs from the three levels of the fair value hierarchy. The three levels are as follows:

Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level 2 inputs are other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities that are not active, inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).

Level 3 inputs are unobservable inputs that reflect our own assumptions about the assumptions that market participants would use in pricing the asset or liability. The Company would develop these inputs based on the best information available, including its own data.

In accordance with the fair value hierarchy described above, the following table shows the fair value of the Company’s securities available for sale that are required to be measured at fair value as of September 30, 2011:

Fair Value Measurement at Reporting Date Using:


Significant Unobservable Inputs (Level 3)	September 30, 2011
Investments in marketable securities (classified as trading securities)		—

Investments in marketable securities		—

The following table summarizes the changes in fair value for our Level 3 assets:


	Fair Value Measurement of Asset using
	Level 3 inputs
	Trading Securities non-current
Balance at March 31, 2011		4,725
Total gains (losses) (realized or unrealized):
Realized — included in earnings for the six months ended September 30, 2011		828
Unrealized — reclassification adjustment for realized gain included in earnings		(828	)
Redemptions of principal		(4,725	)
Balance at September 30, 2011		—


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

The following discussion of the Company’s operations and financial condition should be read in conjunction with the Financial Statements and notes thereto included elsewhere in this Quarterly Report.

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

Forward-Looking Information

This report contains forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.

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

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

•

the impact, if any, on the Company’s business, financial condition and results of operation arising from the appointment of the Provisional Liquidators over Grande;

•

the decline in, and any further deterioration of, consumer spending for retail products, such as the Company’s products;

•

the Company’s inability to resist price increases from its suppliers or pass through such increases to its customers;

•

the loss of any of the Company’s key customers or reduction in the purchase of the Company’s products by any such customers;

•

conflicts of interest that exist based on the Company’s relationship with Grande;

•

the Company’s inability to improve and maintain effective internal controls or the failure by its personnel to comply with such internal controls;

•

the Company’s inability to maintain its relationships with its licensees and distributors or the failure to obtain new licensees or distribution relationships on favorable terms;

•

cash generated by operating activities represents the Company’s principal source of funding and therefore the Company depends on its ability to successfully manage its operating cash flows to fund its operations;

•

the Company’s inability to anticipate market trends, enhance existing products or achieve market acceptance of new products;

•

the Company’s dependence on a limited number of suppliers for its components and raw materials;

•

the Company’s dependence on third party manufacturers to manufacture and deliver its products;

•

changes in consumer spending and economic conditions;

•

the failure of third party sales representatives to adequately promote, market and sell the Company’s products;

•

the Company’s inability to protect its intellectual property;

•

the effects of competition;

•

changes in foreign laws and regulations and changes in the political and economic conditions in the foreign countries in which the Company operates;

•

changes in accounting policies, rules and practices;

•

the effects of the continuing appreciation of the renminbi and increases in costs of production in China;

•

the other factors listed under “Risk Factors” in the Company’s Form 10-K, as amended, for the fiscal year ended March 31, 2011 and other filings with the Securities and Exchange Commission.

All forward-looking statements are expressly qualified in their entirety by this cautionary notice. The reader is cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date of this report or the date of the document incorporated by reference into this report. The Company has no obligation, and expressly disclaims any obligation, to update, revise or correct any of the forward-looking statements, whether as a result of new information, future events or otherwise. Management has expressed its expectations, beliefs and projections in good faith and it believes it has a reasonable basis for them. However, management cannot assure the reader that its expectations, beliefs or projections will be achieved or accomplished.

Results of Operations

The following table summarizes certain financial information for the three and six month periods ended September 30, 2011 (fiscal 2012) and September 30, 2010 (fiscal 2011) (in thousands):


	Three months ended					Six months ended
	September 30					September 30
	2011			2010		2011		2010
Net revenues	$	41,380		$	51,966	$	92,904	$	119,121
Cost of sales		37,005			45,892		82,600		103,415
Other operating costs and expenses		302			712		689		1,011
Selling, general and administrative expenses		2,380			2,045		4,069		3,974

Operating income		1,693			3,317		5,546		10,721
Interest (expense) income, net		(1	)		4		30		14
Realized gain on sale of marketable security		—			—		828		—

Income before income taxes		1,692			3,321		6,404		10,735
(Benefit) provision for income taxes		(71	)		98		1,304		1,633

Net income	$	1,763		$	3,223	$	5,100	$	9,102

Net Revenues — Net revenues for the second quarter of fiscal 2012 were $41.4 million as compared to $52.0 million for the second quarter of fiscal 2011, a decrease of $10.6 million or 20.4%. For the six month period of fiscal 2012, net revenues were $92.9 million as compared to $119.1 million for the six month period of fiscal 2011, a decrease of $26.2 million or 22.0%. Net revenues may be periodically impacted by adjustments made to the Company’s sales allowance and marketing support accrual to record unanticipated customer deductions from accounts receivable or to reduce the accrual by any amounts which were accrued in the past but not taken by customers through deductions from accounts receivable within a certain time period. In the aggregate, these adjustments had the effect of increasing net revenues and operating income by approximately $280,000 and $136,000 for the second quarters of fiscal 2012 and fiscal 2011, respectively, and approximately $533,000 and $267,000 for the six month periods of fiscal 2012 and fiscal 2011, respectively.

Net revenues are comprised of the sales of houseware and audio products which bear the Emerson ^® brand name, as well as the licensing revenues derived from licensing the Emerson ^® , HH Scott ^® and Olevia ^® brand names to licensees for a fee. The major elements which contributed to the overall decrease in net revenues were as follows:

Houseware product net sales decreased $9.2 million, or 19.8%, to $37.3 million in the second quarter of fiscal 2012 as compared to $46.5 million in the second quarter of fiscal 2011, principally driven by a decrease in sales of microwave ovens, which resulted from the discontinuation of one model by one of the Company’s largest retail customers beginning in December 2010, as well as decreases in sales of toaster ovens and coffee makers, partially offset by increases in sales of compact refrigerators and wine coolers. For the six month period of fiscal 2012, houseware product net sales were $84.6 million, a decrease of $23.5 million or 21.8%, from $108.1 million for the six month period of fiscal 2011, principally driven by a decrease in sales of microwave ovens, which resulted mainly from the discontinuation of the model mentioned above, as well as decreases in sales of toaster ovens and wine coolers, partially offset by increases in sales of compact refrigerators;

ii)

Audio product net sales were $2.9 million in the second quarter of fiscal 2012 as compared to $4.2 million in the second quarter of fiscal 2011, a decrease of $1.3 million, or 30.1%, resulting from decreased audio sales volumes. For the six month period of fiscal 2012, audio product net sales were $5.7 million, a decrease of $2.5 million, or 29.8%, from $8.2 million in the six month period of fiscal 2011, primarily resulting from decreased audio sales volumes;

iii)

Licensing revenues in the second quarter of fiscal 2012 were $1.2 million compared to $1.3 million in the second quarter of fiscal 2011, a decrease of $100,000 or 10.0%. Licensing revenues for the six month period of fiscal 2012 were $2.6 million as compared to $2.8 million for the six month period of fiscal 2011, a decrease of $200,000 or 9.0%.

Cost of Sales — In absolute terms, cost of sales decreased $8.9 million, or 19.4%, to $37.0 million in the second quarter of fiscal 2012 as compared to $45.9 million in the second quarter of fiscal 2011. Cost of sales, as a percentage of net revenues, was 89.4% and 88.3% in the second quarters of fiscal 2012 and fiscal 2011, respectively. In absolute terms, cost of sales decreased $20.8 million, or 20.1%, to $82.6 million for the six month period of fiscal 2012 as compared to $103.4 million for the six month period of fiscal 2011. Cost of sales, as a percentage of net revenues, was 88.9% and 86.8% for the six month periods of fiscal 2012 and fiscal 2011, respectively. Cost of sales as a percentage of net sales revenues less licensing revenues was 92.0% and 90.6% in the second quarters of fiscal 2012 and fiscal 2011, respectively. The increase in cost of sales as a percentage of net sales revenues less licensing revenues for the second quarter of fiscal 2012 as compared to the second quarter of fiscal 2011 was related to higher landed product costs as a percentage of selling price. Cost of sales as a percentage of net sales revenues less licensing revenues was 91.5% for the six month period of fiscal 2012 as compared to 88.9% for the six month period of fiscal 2011. The increase in cost of sales as a percentage of net sales revenues less licensing revenues for the second quarter of fiscal 2012 as compared to the second quarter of fiscal 2011 was related to higher landed product costs as a percentage of selling price, partially offset by year-over-year reductions in inventory valuation reserves.

Other Operating Costs and Expenses — As a percentage of net revenues, other operating costs and expenses were 0.7% in the second quarter of fiscal 2012 and 1.4% in the second quarter of fiscal 2011. In absolute terms, other operating costs and expenses decreased $410,000, or 57.6%, to $302,000 for the second quarter of fiscal 2012 as compared to $712,000 in the second quarter of fiscal 2011 as a result of lower warranty and returns processing costs. For the six month period of fiscal 2012, other operating costs were 0.7% of net revenues as compared to 0.8% of net revenues for the six month period of fiscal 2011. In absolute terms, other operating costs and expenses decreased $322,000, or 31.9%, to $0.7 million for the six month period of fiscal 2012 as compared to $1.0 million for the six month period of fiscal 2011 also resulting from lower warranty and returns processing costs.

Selling, General and Administrative Expenses (“S,G&A”) — S,G&A, as a percentage of net revenues, was 5.8% in the second quarter of fiscal 2012 as compared to 3.9% in the second quarter of fiscal 2011. S,G&A, in absolute terms, increased $0.4 million, or 16.4%, to $2.4 million for the second quarter of fiscal 2012 as compared to $2.0 million for the second quarter of fiscal 2011. The increase in S,G&A in absolute terms between the second quarter of fiscal 2012 and second quarter of fiscal 2011 was primarily due to higher legal expense associated with the Kayne litigation (see Note 9 — “Legal Proceedings — Kayne Litigation ”). For the six month period of fiscal 2012, S,G&A was 4.4% of net revenues as compared to 3.3% for the six month period of fiscal 2011. In absolute terms, S,G&A increased $0.1 million, or 2.4%, to $4.1 million for the six month period of fiscal 2012 as compared to $4.0 million in the six month period of fiscal 2011. The increase in S,G&A in absolute terms between the six month periods of fiscal 2012 and 2011 was primarily due to higher legal expense associated with the Kayne litigation (see Note 9 — “Legal Proceedings — Kayne Litigation ”).

Interest (Expense) Income, net — Interest expense, net, was $1,000 in the second quarter of fiscal 2012 as compared to interest income, net, of $4,000 in the second quarter of fiscal 2011. For the six month period of fiscal 2012, interest income, net was $30,000 as compared to $14,000 in the six month period of fiscal 2011.

Realized Gain on Sale of Marketable Security — Realized gain on sale of marketable security was nil for the second quarters of fiscal 2012 and fiscal 2011. For the six month period of fiscal 2012, realized gain on sale of marketable security was $828,000 as compared to nil for the six month period of fiscal 2011. The realized gain resulted from the sale in May 2011 of the Company’s last remaining auction rate security. See Note 10 — “Marketable Securities”.

(Benefit) Provision for Income Taxes was a benefit of $71,000 in the second quarter of fiscal 2012 as compared to a provision of $98,000 in the second quarter of fiscal 2011. The provision for income taxes was $1.3 million for the six month period of fiscal 2012 as compared to $1.6 million for the six month period of fiscal 2011.

Net income — As a result of the foregoing factors, the Company realized net income of $1.8 million in the second quarter of fiscal 2012 as compared to $3.2 million in the second quarter of fiscal 2011. For the six month periods of fiscal 2012 and 2011 the company realized net income of $5.1 million and $9.1 million, respectively.

Liquidity and Capital Resources

General

As of September 30, 2011, the Company had cash and cash equivalents of approximately $31.9 million, as compared to approximately $2.6 million at September 30, 2010. Working capital increased to $55.9 million at September 30, 2011 as compared to $34.2 million at September 30, 2010. The increase in cash and cash equivalents of approximately $29.3 million was due to net income generated by the Company of $11.9 million, reductions of inventory of $9.7 million, reductions in accounts receivable of $4.2 million and reductions in restricted cash of $1.5 million during the twelve months ended September 30, 2011. In addition, the Company netted cash proceeds of $2.2 million from the sale of its last remaining auction rate securities, after fully settling its outstanding loan obligation against them.

Cash flow used by operating activities was $10.0 million for the six months ended September 30, 2011, resulting primarily from increases in inventory and accounts receivable, partially offset by increased accounts payable and the net income generated during the period.

Net cash provided by investing activities was $4.7 million for the six months ended September 30, 2011 on the sale by the Company of its last remaining auction rate security (see Note 10 — “Marketable Securities”), partially offset by an increase in restricted cash.

Net cash used by financing activities was $2.5 million for the six months ended September 30, 2011, resulting from the $2.5 million payoff of the Company’s short-term loan upon the sale by the Company its last remaining auction rate security (see Note 10 — “Marketable Securities”).

Other Events and Circumstances Pertaining to Liquidity

On May 31, 2011, upon application of a major creditor, the High Court of Hong Kong appointed Provisional Liquidators over Grande, which is the Company’s majority stockholder. Following the appointment of the Provisional Liquidators over Grande, certain major factory suppliers, including Midea, which is the Company’s largest factory supplier, have significantly reduced the maximum amount of open credit lines available to the Company. At the factories’ request, the Company made accelerated payments in June and July of 2011 to reduce the balances owing from the Company on its open trade payable accounts with the respective factory suppliers to comply with such new credit terms. The Company relies on its cash on hand and cash generated by ongoing operations to manage its business.

Credit Arrangements

Short-term Liquidity

During the three and six months ended September 30, 2011, products representing approximately 49% and 52% of net sales, respectively, were imported directly to the Company’s customers. The direct importation of product by the Company to its customers significantly benefits the Company’s liquidity because this inventory does not need to be financed by the Company.

The Company’s principal existing sources of cash are generated from operations. The Company believes that its existing cash balance and sources of cash will be sufficient to support existing operations over the next 12 months.

Recently Issued Accounting Pronouncements

There were no pronouncements made by the Financial Accounting Standards Board that relate to the Company or the industry in which the Company operates during the three months ended September 30, 2011.

Inflation, Foreign Currency, and Interest Rates

The Company’s exposure to currency fluctuations has been minimized by the use of U.S. dollar denominated purchase orders. The Company purchases virtually all of its products from manufacturers located in China.


Item 3.		Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Item 4. Controls and Procedures

(a) Disclosure controls and procedures .

The Company maintains disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d — 15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that are designed to ensure that information required to be disclosed in its Exchange Act reports are recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to management, including the Company’s principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. Due to the inherent limitations of control systems, not all misstatements may be detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons; by collusion of two or more people, or by management override of the control. Our controls and procedures can only provide reasonable, not absolute, assurance that the above objectives have been met.

The Company’s management concluded that disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), as of September 30, 2011, are effective to reasonably ensure that information required to be disclosed in the reports that the Company files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to management, including the Company’s principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

(b) Changes in Internal Controls Over Financial Reporting

There have been no changes in the Company’s internal control over financial reporting that occurred during the fiscal quarter ended September 30, 2011 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II — OTHER INFORMATION


Item 1.		Legal Proceedings

Kayne Litigation On July 7, 2011, the Company was served with an amended complaint (the “Complaint”) filed in the United States District Court for the Central District of California alleging, among other things, that the Company, certain of its present and former directors and other entities or individuals now or previously associated with Grande, intentionally interfered with the ability of the plaintiffs to collect on a judgment (now approximately $47 million) they had against Grande by engaging in transactions (such as the dividend paid to all shareholders in March 2010) which transferred assets out of the United States. The Complaint also asserts claims under the civil RICO statute and for alter ego liability. In the Company’s opinion, based on an initial review, the claims appear to be devoid of merit. Accordingly, on September 27, 2011, Emerson moved to dismiss the action for failure to state a claim (the “Motion”). The Court has scheduled oral argument for the Motion for December 19, 2011. In the interim, and in the event that the Motion is denied, Emerson intends to defend the action vigorously.

Except for the items included above, there were no material changes to the legal proceedings previously disclosed in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on July 14, 2011.


Item 1A.		Risk Factors

There were no material changes in any risk factors previously disclosed in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on July 14, 2011.


ITEM 2.		Unregistered Sales of Equity Securities and Use of Proceeds.

None


ITEM 3.		Defaults Upon Senior Securities.

(a) None

(b) None


ITEM 4.		Removed and Reserved.


ITEM 5.		Other Information.

None


ITEM 6.		Exhibits.


10.30		Consulting Agreement dated as of September 4, 2010 between the Company and Mr. Greenfield Pitts.*

10.31		Employment Agreement dated as of March 31, 2011 between the Company and Mr. Hon Tak Kwong.*

10.32		Consultancy Agreement dated as of July 28, 2011 between the Company and Mr. Ma Chi Chiu.*

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

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

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

101.1	+	XBRL Instance Document. ***

101.2	+	XBRL Taxonomy Extension Schema Document. ***

101.3	+	XBRL Taxonomy Extension Calculation Linkbase Document. ***

101.4	+	XBRL Taxonomy Extension Definition Linkbase Document. ***

101.5	+	XBRL Taxonomy Extension Label Linkbase Document. ***

101.6	+	XBRL Taxonomy Extension Presentation Linkbase Document. ***


*		filed herewith

**		furnished herewith

***		The XBRL information is being furnished and not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not incorporated by reference into any registration statement under the Securities Act of 1933, as amended.

SIGNATURES

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


	EMERSON RADIO CORP. (Registrant)
	/s/ Duncan Hon
Date: November 14, 2011	Duncan Hon
	Chief Executive Officer (Principal Executive Officer)


	/s/ Andrew L. Davis
Date: November 14, 2011	Andrew L. Davis
	Chief Financial Officer (Principal Financial and Accounting Officer)

Exhibit 10.30

Emerson Radio Consumer Products Corp. 85 Oxford Drive, Moonachie, NJ 07074 (973) 884-5800

Effective as of September 4, 2010 (the “Effective Date”)

Greenfield Pitts
212 East 48 ^th Street
Apartment 3C
New York, NY 10017

RE: CONSULTING SERVICES

Dear Greenfield:

Your have informed Emerson Radio Corp. (“Emerson”) that, effective September 3, 2010, you are: (a) voluntarily resigning from your (i) positions as Executive Vice President and Chief Financial Officer of Emerson, (ii) position as a member of Emerson’s Board of Directors, and (iii) employment with Emerson; and (b) terminating the March 30, 2007 Offer of Employment from Emerson that you accepted on April 3, 2007 (the “Employment Agreement”).

This letter agreement (the “Agreement”), when signed by you, will confirm the agreement between you and Emerson relating to certain consulting services to be provided by you for Emerson following your resignation.

Emerson has agreed to waive your obligation to provide ninety (90) days advance written notice of resignation and termination of the Employment Agreement. However, this Agreement is subject to you memorializing your voluntary resignation by signing and delivering the resignation letter in the form attached to this Agreement as Exhibit A (the “Resignation Letter”). Notwithstanding anything contained herein to the contrary, if the Resignation Letter is not signed by you and delivered to Emerson on or before September 3, 2010, this Agreement shall be void and of no force and effect.

During the Consulting Period (as defined below), Emerson hereby engages you, and you hereby agree to serve, as an independent contractor to provide the Consulting Services (as described below) to Emerson. The Consulting Services shall consist of providing business and management advisory services to, and serving as a general resource with respect to business and management matters for, the Chief Executive Officer of Emerson (the “CEO”), as and when requested by the CEO (or the CEO’s nominee). It is hereby agreed that the level and types of Consulting Services contemplated by this Agreement shall be designated solely by Emerson management. The Consulting Services shall be provided by you on a non-exclusive basis. Accordingly, subject to your compliance with your obligations under this Agreement the Surviving Employment Agreement Provisions (as defined below) and the Covenants Agreement (as defined below), nothing in this Agreement shall restrict your right to become employed by or engaged to perform services for, another Individual, entity or business enterprise during the Consulting Period.

The Consulting Period shall commence on the Effective Date (as defined above) and, subject to earlier termination in accordance with Section 4 below, shall continue until September 3, 2011 (the “Expiration Date”).

This Agreement and the Consulting Period shall automatically terminate on the Expiration Date. Further, It is understood and agreed that Emerson may terminate this Agreement and the Consulting Period at any time prior to the Expiration Date (Immediately upon notice to you). In the event of your (a) failure to satisfactorily perform the Consulting Services, (b) negligence in the performance of the Consulting Services, (c) breach of your obligations under this Agreement, the Surviving Employment Agreement Provisions, or the Covenants Agreement, (d) failure to comply with any of Emerson’s policies and/or procedures applicable to independent contractors, (e) inability to perform the Consulting Services due to your disability or death, (f) gross negligence or misconduct in the performance of the Consulting Services, (g) material breach of your obligations under this Agreement, the Surviving Employment Agreement Provisions or the Covenants Agreement that has or may reasonably be expected to have a material adverse effect on the reputation or Interests of Emerson, (h) material failure to comply with any of Emerson’s policies and/or procedures applicable to Independent contractors, (i) failure to comply with applicable laws and/or regulations with respect to Emerson operations or the performance of the Consulting Services, (j) dishonesty or other willful acts that are (or reasonably could be) detrimental to Emerson or its good will or damaging to its relationships with its customers, investors, suppliers, employees or agents, or (k) conviction of, or plea of guilty or no contest to, felony or any crime involving moral turpitude, dishonesty or theft.

Emerson Radio Consumer Products Corp. 85 Oxford Drive, Moonachie, NJ 07074 (973) 884-5800

You shall devote your best efforts and abilities to the performance of the Consulting Services and the Consulting Services shall be performed by you in a first-class workman-like manner. You warrant and covenant that, in performing the Consulting Services you will strictly comply with the descriptions as to the requirements of the Consulting Services as designated by Emerson’s management and shall perform only such services as a specifically requested by the CEO or the CEO’s nominee.

Unless other wise required from time to time upon notice to you by the CEO (or the CEO’s nominee), the Consulting Services shall be performed by you from your home office located at your residence, namely 212 East 48 ^th Street, Apartment 3C, New York, NY 10017.

Emerson shall reimburse you for reasonable and necessary business expenses (Including transportation and lodging expenses) incurred by you in connection with the performance of the Consulting Services provided that (I) you obtain advance written permission to incur the expense from the CEO or the CEO’s nominee, and (II) promptly submit reasonable documentation substantiating such expenses. Notwithstanding the foregoing, it is understood and agreed that Emerson shall not be responsible for any costs incurred by you in traveling occasionally to Emerson’s offices in New Jersey during the Consulting Period.

You shall keep and maintain all records regarding the Consulting Services for not less than seven (7) years following the termination of this Agreement and shall provide to Emerson, upon request, all reports regarding the Consulting Services, in the time frame and form requested by Emerson. You shall permit Emerson or an authorized Emerson representative, upon telephone notice and at no charge to Emerson, to inspect books and records relating to the Consulting Services.

During the Consulting Period, for all Consulting Services rendered by you under this Agreement, you shall earn consulting fees (the “Consulting Fees”) at the rate of Ten Thousand Four Hundred Sixteen and 67/100 United States Dollars (USD $10,416.67) per month (prorated for partial months). You shall be required to maintain and submit to Emerson monthly invoices with respect to the Consulting Services in the manner requested from time to time by the CEO (or the CEO’s nominee). The Consulting Fees shall be payable to you in arrears on a monthly basis, within twenty (20) days following Emerson’s receipt of your monthly invoice. All Consulting Fees shall be payable without deduction for federal income, social security or state or local income taxes.

10.

Upon the expiration or earlier termination of this Agreement in accordance with Section 4, Emerson’s sole obligation to you under this Agreement or otherwise shall be to pay to you any Consulting Fees that were earned (but not yet paid) by you through the date of such expiration or earlier termination and reimburse you for expenses incurred by you through the date of such expiration or earlier termination in accordance with (and subject to) Section 7 above (collectively, the “Accrued Obligations”). Notwithstanding the foregoing, in the event that Emerson terminates this Agreement and the Consulting Period prior to December 3, 2010 and such termination is other than as a result of the occurrence of any of the events set forth in clauses (f), (k) (Inclusive) of the second sentence of Section 4 above, then. In addition to the Accrued Obligations, Emerson also shall pay to you an amount equal to (A) the sum of (i) $62,500, and (ii) the costs incurred by you (or that will otherwise become due and payable by you) with respect to continuing health and dental insurance coverage for you and your dependents under COBRA through December 3, 2010, less (B) the Consulting Fees earned by you through the effective date of termination of this Agreement and the Consulting Period. Upon the expiration or earlier termination of this Agreement and the Consulting Period, you shall promptly return to Emerson all Confidential Information (as defined below), and any and all reports, documents, catalogs, literature, materials and tangible property supplied by, or belonging to Emerson, or created during the performance of, or relating to, the Consulting Services.

Emerson Radio Consumer Products Corp. 85 Oxford Drive, Moonachie, NJ 07074 (973) 884-5800

11.

You acknowledge that (a) Emerson is the sole owner of all proprietary and intellectual property rights in any way related to the services that you provided in the past in your capacity as an employee or otherwise, or as part of any future Consulting Services, and (b) all information regarding such rights, Emerson or the Consulting Services, as well as any programs and codes resident on, or to be installed in, Emerson’s computers and networks, AS400 and all other Emerson information including, but not limited to, any computers, programs, pricing, customers, vendors, accounting, boat systems, imports, payables, receivables, models, sales and finance modules and data, is confidential (hereafter “Confidential Information”) and shall (a) not be disclosed by you to any third parties, (b) be used by you solely to the extent required to perform the Consulting Services, and (c) not be used to the detriment of Emerson. You agree to keep confidential, respect and protect the Confidential Information.

12.

During the Consulting Period, you shall not, directly or indirectly, (a) anywhere in the world, either directly or indirectly, whether alone or as an owner, shareholder, partner, member, joint venturer, officer, director, consultant, independent contractor, agent, employee or otherwise of any company or other business enterprise, assist in, engage in or otherwise be connected to or benefit from any business competitive with that of Emerson, (ii) contact, communicate, solicit, transact business with or perform services for (or assist any third party in contacting, communicating, soliciting, transacting business with or performing any services for) any person or entity that is or was (at any time within 12 months prior to the contact, communication, solicitation, transaction of business, or performance of services), a customer or supplier (or prospective customer or supplier being actively solicited) of Emerson, provided that you knew (or reasonably should have known) that such person or entity was a customer, supplier, prospective customer or prospective supplier, or (iii) engage in any activities that conflict with the interests of (or give the appearance of conflicting with the interests of) Emerson. In addition, during the Consulting Period and for one (1) year after the expiration or earlier termination of this Agreement, you shall not, (a) directly or indirectly, solicit, recruit, hire, engage or refer (or assist any third party in soliciting, recruiting, hiring, engaging or referring) any person or entity who or which either is, or during the twelve (12) months immediately preceding the termination of this Agreement was, an employee, agent, consultant or independent contractor or Emerson; or (b) interfere with, disrupt, or attempt to interfere with or disrupt, the relationships, contractual or otherwise, between Emerson and any of its independent contractors, agents or employees. Notwithstanding the foregoing, in the event that Emerson terminates this Agreement and the Consulting Period prior to December 3, 2010 and such termination is other than as a result of the occurrence of any of the events set forth in clauses (f)-(k) (inclusive) of the second sentence of Section 4 above, you shall not be bound by the post termination restrictions set forth in the preceding sentence; provided , however , nothing shall limit your obligation to continue to comply with the Surviving Employment Agreement Provisions and the Covenants Agreement.

13.

You warrant that the performance of the Consulting Services by you shall be in accordance with generally applicable standards in the industry and you shall comply with all applicable laws, rules and regulations. You further represent and warrant that the performance of the Consulting Services will not result in the violation of, or in any way infringe upon, the rights of Emerson or any third parties, including such parties’ property, contractual, employment, trade secret, proprietary and non-disclosure rights, or any trademarks, copyrights or patent rights and you further warrant and represent that you have the right to execute and perform the Consulting Services hereunder without causing any breach of any agreement.

Emerson Radio Consumer Products Corp. 85 Oxford Drive, Moonachie, NJ 07074 (973) 884-5800

14.

(A) You shall Indemnify, defend and hold Emerson, its affiliates and subsidiaries, and each of their respective officers, directors, shareholders, members, partners, employees and agents (the “Indemnified Parties”) harmless from and against any and all demands, claims, damages, losses, costs and expenses arising out of or resulting from your gross negligence or without misconduct in the performance of the Consulting Services and any material breech of this Agreement (Including reasonable costs, fees of attorneys, accountants and expert witnesses). No settlement shall be made without Emerson’s prior written consent.

(B) Emerson shall Indemnify, defend and hold you harmless from and against any and all demands, claims, damages, losses, costs and expenses (including reasonable costs, fees of attorneys, accountants and expert witnesses) in connection with any action, claim or other proceeding brought against you (other than any action, claim or other proceeding brought by or in the right of Emerson) arising out of your engagement as a consultant under this Agreement or your performance of the Consulting Services under this Agreement; provided however, Emerson shall have no obligation to you under this Section 14(B) if such action, claim or other proceeding arises out of your willful misconduct or gross negligence in the performance of the Consulting Services or material breach of your obligations under this Agreement. No settlement shall be made without your prior written consent.

15		With the exception of damages arising out of your willful misconduct or gross negligence or the breach of your obligations under the Surviving Employment Agreement Provisions, the Covenants Agreement or Section 12 of this Agreement, your aggregate liability to Emerson for damages arising out of a breach of your obligations under this Agreement or your performance of the Consulting Services shall be limited to the amounts paid to you by Emerson pursuant to this Agreement.

16.		It is expressly understood and agreed that you are acting solely as an independent contractor in performing the Consulting Services. Neither party to this Agreement has any authority to bind or commit the other nor will either party’s acts or omissions be deemed the acts of the other. Emerson shall carry no workers’ compensation insurance or any health or accident insurance to cover you. Emerson shall not pay any contributions to Social Security, unemployment insurance, federal or state withholding taxes, or provide any other contributions or benefits which might be expected in an employer-employee relationship and you expressly waive any right to such participation or coverage. By accepting the Agreement, you agree that you shall make such contributions, obtain workers’ compensation insurance and pay applicable taxes and, without limitation of Section 14 above, you hereby indentitify and hold harmless the Indemnified Parties in the event of your failure to do so.

17.		By accepting this Agreement, you acknowledge that (a) the Employment Agreement and your employment with Emerson terminated on September 3, 2010, (b) your obligations under Section 5 of the Employment Agreement captioned “Confidential Information” (the “Surviving Employment Agreement Provisions”) and your obligations under the Employee Covenants Agreement that you signed (the “Covenants Agreement”) survive the termination of the Employment Agreement and the termination of your employment, and (c) Emerson has fully satisfied all of its obligations to you with respect to your employment (whether under the Employment Agreement or otherwise). However, nothing in this Agreement is intended to limit your rights (a) to seek indemnification under applicable law (including the General Corporation Law of the State of Delaware), Emerson’s Certificate of incorporation, Emerson’s Bylaws and any other agreement between Emerson and you, (b) under the 2004 Non-Employee Outside Director Stock Option Plan (the “Plan”) with respect to options to purchase shares of Emerson’s common stock previously granted to you under the Plan that are vested as of September 3, 2010 (c) under Emerson’s 401(k) Plan, or (d) or under COBRA.

18.		This Agreement and any and all matters arising directly or indirectly herefrom shall be governed by the laws of the State of New Jersey, without reference to office of law rules. With respect to any and all actions arising out of this Agreement, the Consulting Services or the termination thereof, the parties irrevocably consent to the exclusive jurisdiction of the state and federal courts of the State of New Jersey. However, nothing herein shall preclude Emerson’s right to make application for, and seek enforcement of, injective or other equitable relief in any court having jurisdiction.

Emerson Radio Cunsumer Products Corp. 85 Oxford Drive, Moonachie, NJ 07074 (973) 884-5800

19.		All notices, requests, demands and other communications required or permitted hereunder shall be given in writing and shall be deemed to have been duly given (i) on the date delivered if personally delivered, (ii) upon receipt by the receiving party of any notice sent by registered or certified mail (first-class mail, postage pre-paid, return receipt requested), or (iii) on the date targeted for delivery if delivered by nationally recognized overnight courier or similar courier service, addressed in the case of (x) notices to you, to 212 East 48 ^th Street, Apartment 3C, New York, NY 10017, and (y) to Emerson, to 85 Oxford Drive, Moonachie, NJ 07074 (Attn: CEO). Any party may notify the other party in writing of a change in address by giving notice in the manner provided in this Section 18. Service of process in connection with any suit, action or proceeding may be served on each party hereto anywhere in the world by the same methods as are specified for the giving of notices under this Agreement.

20.		This Agreement is personal to you and you shall not assign or sub-contract the whole or any part of this Agreement, the performance of the Consulting Services, or your duties hereunder without Emerson’s prior written consent in each instance.

21.		This Agreement sets for the entire understanding of the parties and may not be modified, amended or changed, and no provisions may be waived, except in a writing signed by the party to be bound. This Agreement supersedes any and all other agreements between you and Emerson with respect to the matters set forth herein.

22.		This Agreement and the rights and obligations hereunder do not and shall not confer any rights to any third parties and no third parties shall have any rights under this Agreement. All remedies available to either party for breach of this Agreement are cumulative and may be exercised concurrently or separately. The exercise of any one remedy shall not be deemed an election of such remedy to the exclusion of other remedies. If any provision is held to be unenforceable by a court of competent jurisdiction as written, then such provision shall be deemed limited and restricted to the extent that the court shall deem the provision to be enforceable. If any provision of this Agreement shall to any extent be finally held to be prohibited, invalid or unenforceable in any jurisdiction, the remaining provisions of this Agreement shall remain in full force and effect, and any such prohibition, invalidation or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

23.		The rights and obligations set forth in this Agreement which by their nature are intended to survive the termination of this Agreement, shall survive the termination of this Agreement.

Emerson Radio Cunsumer Products Corp. 85 Oxford Drive, Moonachie, NJ 07074 (973) 884-5800

This Agreement is first being forwarded to you for review. If acceptable, please acknowledge your agreement to the terms as set forth above by signing and returning a copy of this letter to Emerson, to the attention of Kristy Koller, Human Resource Manager. This Agreement shall not become effective or be binding upon Emerson until signed by a duly authorized officer of Emerson.

Sincerely,

EMERSON RADIO CORP.


By:	/s/ Adrian Ma		3 September 2010

	Name:	Adrian Ma	Date:
	Title:	Chief Executive Officer

Accepted and Agreed:


By:	/s/ Greenfield Pitts		3 Sept. 2010

	Name:	Greenfield Pitts	Date:

Exhibit 10.31

DATED THE 31 ^ST DAY OF MARCH 2011

EMERSON RADIO MACAO COMMERCIAL OFFSHORE LIMITED

and

MR. HON TAK KWONG

CONTRACT OF EMPLOYMENT

CONTENTS


Clause	Heading	Page

1.	Interpretation		1

2.	Appointment		1

3.	Commencement Date		2

4.	Executive’s Duties		2

5.	Remuneration and Benefits		3

6.	Leave		3

7.	Termination		4

8.	Executive’s Undertakings		5-6

9.	Intellectual Properties		6-7

10.	Entire Agreement		7

11.	Miscellaneous		7-8

12.	Execution		8

THIS AGREEMENT is made on the 31 ^st day of March 2011 .

BETWEEN:

(1)		EMERSON RADIO MACAO COMMERCIAL OFFSHORE LIMITED of Alameda Dr. Carlos D’ Assumpcao, Nos 335-341, Hotline Centro, 17 andar R-U, Macau (“the Company”); and

(2)		Mr. HON Tak Kwong of 456 Alexandra Road, NOL Building, #12-01, Singapore 119962. (“the Executive”).

WHEREBY IT IS AGREED as follows:

INTERPRETATION

1.01

In this Agreement, unless the context requires otherwise;

“Basic Salary” means that part of the remuneration of the Executive as is referred to in Clause 5(a);

“Board” means the board of directors for the time being of the Company;

“Group” means the Company and its subsidiaries from time to time and “member of the Group” shall be construed accordingly; and

“month” means calendar month.

1.02

References herein to Clauses are to clauses in this Agreement unless the context requires otherwise.

1.03

The headings are inserted for convenience only and shall not affect the construction of this Agreement.

1.04

Unless the context requires otherwise, words importing the singular include the plural and vice versa and words importing a gender include every gender.

APPOINTMENT

The Company will employ the Executive and the Executive will serve the Company as Deputy Chief Executive Officer upon the terms and conditions hereinafter appearing.

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COMMENCEMENT DATE

Employment will commence on 1 ^st April 2011 (the “Commencement Date”).

EXECUTIVE’S DUTIES

The Executive shall, during the continuance of his employment hereunder:

(a)

serve the Company as Deputy Chief Executive Officer and, in such capacity, perform the duties and exercise the powers from time to time assigned to or vested in his by the Board;

(b)

comply with and conform to any lawful and reasonable instructions or directions from time to time given or made by the Board and faithfully and diligently serve the Group and use his best endeavours to promote the business and interests thereof;

(c)

devote himself exclusively and diligently to the business and interests of the Group and personally attend thereto at all times during usual business hours and during such other times as the Company may reasonably require except in case of incapacity through illness or accident in which case he shall forthwith notify the Personnel Manager of the Company of such incapacity and shall furnish to the Board such evidence thereof as it may require;

(d)

not demand or accept or permit any member of his family to demand or accept from third parties any gifts, benefits or advantages offered or given to the Executive or a member of his family by reason of his employment with the Company.

(e)

be permitted to be employed on a part-time basis by The Grande Holdings Limited or any of its subsidiaries and engage in other business activities approved in advance by the Board, provided that, such other business activities do not (i) conflict with the interests of the Company, (ii) inhibit, conflict with, or limit your ability to perform your duties to the Company, or (iii) otherwise violate your obligations under the Company’s Code of Ethics for Senior Financial Officers or the Company’s Code of Conduct for Officers, Directors and Employees.

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5.		REMUNERATION AND BENEFITS

		The remuneration of the Executive shall be:

(a)

a fixed salary at the rate of Hong Kong Dollars Two Hundred Forty Three Thousand and Seven Hundred Fifty only (HK$243,750.00) per month payable in arrears;

(b)

an annual discretionary bonus payable at any time and in such sum as the Board may in its absolute discretion determine. This will only be payable to those Executives still under employment of the Group on the date the discretionary bonus is to be distributed.

LEAVE

The Executive shall be entitled after completion of each year of service with the Company to twelve (12) working days leave with full pay, which leave shall be taken at such time or times as may be convenient to the Board having regard to the exigencies of the Company’s business provided that:

(a)

if the employment of the Executive hereunder is to cease on the completion of any year of service, the Executive shall be entitled to take his said leave immediately prior to the end of such year of service notwithstanding that at that time such year of service shall not have been completed;

(b)

if the employment of the Executive hereunder is to cease (for any reason other than termination pursuant to Clause 7) during any year of service, the Executive shall be entitled to an amount of leave proportionate to the part of the year during which he has been employed by the Company, such leave to be taken immediately prior to the termination of his employment; and

(c)

if for any reason the Executive shall not have taken his full entitlement of leave in any one year he shall not have any claim against the Company in respect thereof nor, unless the reason is the exigencies of the Company’s business (of which the Company shall be the sole judge), shall he be entitled to additional leave in any year in respect of leave not taken in previous years.

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TERMINATION

7.01

If the Executive is at any time incapacitated by illness, injury or accident from performing his duties hereunder and (if so required) furnishes the Board with evidence satisfactory to them of such incapacity and the cause thereof, he shall be entitled to receive his full salary for the first month or any shorter period during which such incapacity continues and if he continues so incapacitated for a longer period than two (2) consecutive months or if he is so incapacitated at different times for more than sixty (60) days in any one period of fifty-two (52) consecutive weeks then, and in either of such cases, his employment may be determined by the Company by one (1) month’s notice in writing.

7.02

The Employee’s employment hereunder may be determined at any time after the expiration of the probationary period of service, if any, by either of the parties hereto giving to the other not less than one (1) months’ prior written notice provided that the Company may elect to terminate the Employee’s employment hereunder forthwith upon payment to the Executive of not less than one (1) months’ Basic Salary in lieu of notice.

7.03

Unless otherwise agreed by the Company, the employee will retire on the first day of the following month immediately after his 60 ^th birthday without further notice required by either party.

7.04

The Employee shall not at any time during the continuance of his employment hereunder in Singapore, Macau, Hong Kong and the People’s Republic of China carry on or be employed, concerned or interested directly or indirectly whether as shareholder, director, employee, partner, agent or otherwise and whether alone or jointly with others in any business in which the Company and / or any member of the Group is engaged in during the continuance of the said employment in competition with the Company and / or any member of the Group.

7.05

In the event of termination of the Employee’s employment for whatever reason, the Executive shall (where relevant) forthwith resigns as Deputy Chief Executive Officer or of any member of the Group and shall cease to be entitled to any benefits under this Agreement.

7.06

Any delay or forbearance by the Company in exercising any right to terminate this Agreement shall not constitute a waiver of such right.

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EXECUTIVE’S UNDERTAKINGS

8.01

The Executive shall not either during the continuance of his employment hereunder or at any time thereafter divulge to any person whomsoever or to any body corporate or unincorporate and shall use his best endeavours to prevent the unauthorized publication or disclosure of any trade secret or any confidential information concerning the business or finances of the Company and any member of the Group or any of its dealings, transactions or affairs which may come to his knowledge during or in the course of his employment.

8.02

Forthwith upon the termination of the employment of the Executive hereunder, and/or at any other time if the Company shall so request, the Executive shall deliver to the Company all documents (including correspondence, lists of customers, notes, memoranda, plans, drawings and other documents of whatsoever nature) models or samples made or compiled by or delivered to the Executive during his employment hereunder and concerning the business, finances or affairs of the Company and any member of the Group. For the avoidance of doubt it is hereby declared that the property in all such documents as aforesaid shall at all times be vested in the Company or the relevant member of the Group.

8.03

The Executive shall not at any time during the continuance of his employment hereunder or for a period of twelve (12) months thereafter in Hong Kong and the People’s Republic of China carry on or be employed, concerned or interested directly or indirectly whether as shareholder, director, employee, partner, agent or otherwise and whether alone or jointly with others in any business in which the Company and/or any member of the Group is engaged in during the continuance of the said employment in competition with the Company and/or any member of the Group.

8.04

The Executive shall not at any time during the continuance of his employment hereunder or for a period of twelve (12) months thereafter either on his own account or in conjunction with or on behalf of any other person or body corporate or unincorporate in competition with the Company or any member of the Group directly or indirectly solicit or entice away from the Company or any member of the Group any person or body corporate or unincorporate who now is or at any time during or at the date of the termination of the said employment may have become a customer or supplier or prospective customer or supplier of the Company or any member of the Group and with whom the Executive had personal contact or dealings during his said employment.

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8.05

The Executive shall not at any time during the continuance of his employment hereunder or for a period of twelve (12) months thereafter either on his own account or in conjunction with or on behalf of any other person or body corporate or unincorporate directly or indirectly solicit or entice away from the Company or any member of the Group or employ or otherwise engage any person who now is or at any time during or at the date of the termination of the said employment may have become an Executive of the Company or any member of the Group and with whom the Executive had contact during this said employment.

8.06

The Executive shall not at any time or for any purpose after termination of his employment hereunder use either the English or Chinese name of the Company or any name similar thereto in connection with his own or any other name in any way calculated to suggest that he is or has been connected with the Company’s business, nor in any way hold herself out as having had any such connection.

INTELLECTUAL PROPERTIES

9.01

Unless otherwise expressly agreed between the parties hereto during the continuance of this Agreement:-

(a)

the whole interest of the Executive in any Inventions shall become the absolute beneficial property of the Company without any payment to the Executive therefor;

(b)

the Executive shall promptly communicate to the Company full particulars of all Inventions and, if any of the Inventions is capable of being protected by any Registrable Rights, the Company shall decide whether and where applications shall be made for such Registrable Rights in respect of the same;

(c)

all such Registrable Rights shall be applied for and taken out at the Company’s expense and in the name of the Company (or any member of the Group) or if the Company shall require in the joint names of the Executive and the Company and the Executive shall concur in applying for the same and shall (at the Company’s expense) prepare all such drawings specifications models and designs as may be necessary and give every assistance in the Employee’s power to procure the grant of such Registrable Rights; and

(d)

when granted the interest (if any) of the Executive in such Registrable Rights shall be unconditionally assigned by the Executive to the Company or as the Company may direct and the renewal fees payable in respect thereof shall be paid by the Company or any member of the Group for so long as it considers fit to keep the same alive.

- 6 -

9.02

In Clause 9.01:-

(a)

“Inventions” means any invention, formula, process or improvement, trade mark or name, copyright, design, plan, drawing, specification or device of whatever nature which relates to the business and/or products of the Company or any member of the Group, and is invented, developed, devised or otherwise acquired by the Executive (whether alone or jointly with any other person) during the continuance of this Agreement; and

(b)

“Registrable Rights” means letters patent, registered designs, trademarks or similar commercial monopoly rights created by registration (whether in Hong Kong, the United Kingdom, the United States of America or elsewhere in the world).

10.

ENTIRE AGREEMENT

This Agreement constitutes the entire understanding between the parties hereto and supersedes any prior understanding and/or agreements between:

(i)

Executive and

(ii)

the Company or any member of the Group, in respect of the subject matters of this Agreement.

11.

MISCELLANEOUS

11.01

The expiration or termination of this Agreement howsoever arising shall not operate to affect such of the provisions hereof as in accordance with their terms are expressed to operate or have effect thereafter.

11.02

In the event of any variation of the remuneration payable to the Executive hereunder being made by consent of the parties hereto such variation shall not constitute a new agreement but (subject to any express agreement to the contrary) the employment of the Executive hereunder shall continue subject in all respects to the terms and conditions of this Agreement with such variation as aforesaid.

11.03

Each notice, demand or other communication given or made under this Agreement shall be in writing and delivered or sent to the relevant party at its address or fax number set out below (or such other address or fax number as the addressee has by five (5) days’ prior written notice specified to the other party):

- 7 -


To the Company:		The Personnel Manager Emerson Radio Macao Commercial Offshore Limited Alameda Dr. Carlos D’ Assumpcao Nos 335-341, Hotline Centro 17 andar R-U, Macau

To the Employee:		Mr. HON Tak Kwong 456 Alexandra Road NOL Building #12-01, Singapore 119962

Any notice, demand or other communication so addressed to the relevant party shall be deemed to have been delivered (a) if given or made by letter, when actually delivered to the relevant address; (b) if given or made by fax, when despatched.

11.04

If at any time any provision of this Agreement is or becomes illegal, invalid or unenforceable in any respect, the legality, validity and enforceability of the remaining provisions of this Agreement shall not be affected or impaired thereby.

11.05

This Agreement shall be governed by and construed in accordance with the laws of Hong Kong.

IN WITNESS WHEREOF this Agreement has been executed on the day and year first above written.

- 8 -

Exhibit 10.32

DATED THE 28 ^th July 2011

CONSULTANCY AGREEMENT

Between

EMERSON RADIO MACAO COMMERCIAL OFFSHORE LIMITED

and

MR. MA CHI CHIU

THIS CONSULTANCY AGREEMENT is made on the 28 ^th July 2011.

BETWEEN:

(1)

Emerson Radio Macao Commercial Offshore Limited of Alameda Dr. Carlos D’ Assumpcao, Nos 335-341, Hotline Centro, 17 andar R-U, Macau (hereinafter referred to as “ Emerson ”); and

(2)

Mr. Ma Chi Chiu of Flat A, 8/F., Lung Man Building, 8 Homantin Street, Kowloon, Hong Kong. (hereinafter referred to as “Executive”) .

The parties record their Agreement to the following:-

Length of Consultancy

1.1

Subject to clause 1.2 and to the other clauses of this Agreement, the duration of this consultancy shall be between 1 ^st August 2011 to 31 ^th July 2012 .

1.2

The Duration of this Agreement shall be extended for a mutually agreed period if both parties shall have agreed in writing one month, or a mutually agreed shorter period, prior to the expiry date of this Agreement.

1.3

In this Agreement the Consultancy Period refers to the period during which the Agreement is in force.

Consultancy Responsibility and Role

2.1

Emerson appoints the Executive as its agent for the consultancy Period and in consideration of the Consultancy Fee described in clause 3. The Executive accepts the appointment for the Consultancy Period to discharge the functions specified in clause 2.2, and any other lawful functions, projects, or assignments which “Emerson” and /or any of its subsidiary / affiliate(s) / associate companies (hereinafter collectively known as “the Group”) may reasonably instruct (“the Consultancy Services”).

2.2

The Executive is retained to provide such technical consultancy services in Hong Kong, Singapore, USA and the People’s Republic of China to Emerson or the Group. In this respect, the Executive will subject always to clause 2.3 communicate to Emerson or the Group such information as it may receive and reasonably considers relevant to the objectives pursued by Emerson or the Group.

- 1 -

2.3

The Executive may accept assignments from persons other than Emerson, but the Executive must ensure that it does not undertake any other activities or commitments during the Consultancy Period which are or are likely to become in conflict with the interests of Emerson from time to time.

2.4

The Executive is appointed as Consultant to Emerson in which capacity he is subject to certain duties and obligations including those of confidentiality and good faith.

Consultancy Fee

3.1

For the period from August 1, 2011 to December 31, 2011, the Consultancy Fee is HK$231,666.67 per month and payable in arrears.

For the period from January 1, 2012 to July 31, 2012, the Consultancy Fee is HK$80,000.00 per month and payable in arrears.

3.2

The amount of the Consultancy Fee has been agreed on the basis that all the duties which the Executive is required to discharge under this Agreement can be properly and reasonably performed by the Executive with his devoting substantially all of his time to the business of Emerson .

3.3

The Executive will not be entitled to annual leave or public/ statutory holidays during the Consultancy Period.

3.4

The Executive will not be included in the company’s medical coverage.

Confidential Information

4.1

The Executive shall observe strict secrecy towards any third party regarding business secrets of which it gets knowledge during its activity, particularly regarding confidential information about Emerson or the Group, its technical plans, contract documentation, strategies and financial position or prospects or any other knowledge regarding the activity of Emerson or the Group which the Executive has acquired in connection with the provision of the Consultancy services.

4.2

On completion of the Consultancy Agreement, the Executive will return all documentation and materials of whatsoever nature compiled, received or otherwise utilized by the Executive during the Consultancy Period.

4.3

The Executive will not impart any confidential information concerning the business of the Company to any third party, at any time after the completion of the Consultancy Agreement.

- 2 -

Termination by Either Party

Without prejudice to any rights or remedies which either party may have against the other, either party will have the right at any time by notice in writing to terminate this Agreement immediately if any of the following happens:-

5.1

the other commits a serious breach of the term of this Agreement;

5.2

either party enters into liquidation whether compulsorily or voluntarily other than liquidation for the purpose of amalgamation or reconstruction or compounds with creditors;

5.3

The Executive becomes permanently incapacitated by illness or accident from continuing as Consultant of Emerson .

5.4

either parry may terminate this Agreement at any time by giving one month’s notice to the other party or by paying the sum of HK$80,000.00 in full and final settlement of this agreement to the other party.

General

6.1

This Agreement is personal to the parties and shall not be assigned by either of them.

6.2

Variations to this Agreement and the definition of the nature, scope and extent of any other projects which Emerson may instruct (for the purpose of clause 2.2) will be in writing and signed by both of parties’ authorised representatives.

6.3

This Agreement shall be governed and construed in accordance with the laws of Hong Kong Special Administration Region.

6.4

This Agreement embodies the entire understanding and agreement of Emerson and overrides and supersedes any prior promises, representations, understandings or implications.

6.5

Any notice which is required or permitted to be given by either party to the other may be given by prepaid letter post, telex or facsimile transmission to the address of the other party shown on the face of this letter or any other address which may have been notified by either party to the other and acknowledged by the other and any notice given under this Agreement shall be deemed to have been received within five days of posting, if given by letter, or on the same day on which a notice sent by telex or facsimile shall have been sent.

- 3 -


	For Emerson	For the Executive

Address:	Alameda Dr. Carlos D’ Assumpcao	Flat A, 8/F
	Nos 335-341, Hotline Centro	Lung Man Building
	17 andar R-U	8 Homantin Street
	Macau	Kowloon, Hong Kong

IN WITNESS whereof the duly authorised representatives of the parties have executed this Agreement.


/s/ Christopher W Ho Christopher W Ho		/s/ Ma Chi Chiu Ma Chi Chiu
For and on behalf of
Emerson Radio Macao Commercial Offshore Limited

- 4 -

Exhibit 31.1

Certification

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

I, Duncan Hon, certify that:

I have reviewed this quarterly report on Form 10-Q of Emerson Radio Corp.;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

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

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

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

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

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

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

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


Date: November 14, 2011	/s/ Duncan Hon
	Duncan Hon
	Chief Executive Officer

A signed original of this written statement required by Section 302 has been provided to Emerson Radio Corp. and will be retained by Emerson Radio Corp. and furnished to the Securities and Exchange Commission or its staff upon request.

Exhibit 31.2

Certification

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

I, Andrew L. Davis, certify that:

I have reviewed this quarterly report on Form 10-Q of Emerson Radio Corp.;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

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


Date: November 14, 2011	/s/ Andrew L. Davis
	Andrew L. Davis
	Chief Financial Officer

Exhibit 32

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Emerson Radio Corp. (the “Company”) on Form 10-Q for the period ended September 30, 2011, filed with the Securities and Exchange Commission, Duncan Hon, Chief Executive Officer, and Andrew L. Davis, Chief Financial Officer, of the Company each hereby certifies pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that:

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

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

Dated: November 14, 2011


	By:	/s/ Duncan Hon
		Duncan Hon
		Chief Executive Officer


	By:	/s/ Andrew L. Davis
		Andrew L. Davis
		Chief Financial Officer

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

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

for and on behalf of
Emerson Radio Macao Commercial
Offshore Limited
in the presence of:

SIGNED by
Mr. HON Tak Kwong
in the presence of: