(Mark One)

     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 Yeso 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 definitionsdefinition of “large accelerated filer,”filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one)One):

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

     Indicate the number of shares outstanding of common stock as of February 12,November 14, 2008: 27,129,832.

 

The Company has entered into certain capital lease agreements. For the ninesix month periods ended December 31,September 30, 2008 and September 30, 2007, and December 31, 2006, the Company entered into agreements related to approximately $39$0 and $264$39 of equipment, respectively, which are excluded from the statement of cash flows as the transactions were non-cash in nature.

     The consolidated financial statements include the accounts of Emerson Radio Corp. (“Emerson”, consolidated —– the “Company”), which operates in the consumer electronics business. The consumer electronics business includes the design, sourcing, importing and marketing of a variety of consumer electronic products and the licensing of the “(EMERSON LOGO)” and H.H. Scott(R) trademarks for a variety of products domestically and internationally to certain licensees.

     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 ourthe Company’s consolidated financial position as of December 31, 2007September 30, 2008 and the results of operations for the three and ninesix month periods ended December 31, 2007September 30, 2008 and December 31, 2006.September 30, 2007. 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 our 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, 20072008 (“fiscal 2007”2008”), included in ourthe Company’s annual report on Form 10-K, as amended, for fiscal 2007.2008.

     Due to the seasonal nature of Emerson’s business, the results of operations for the three and ninesix month periods ended December 31, 2007September 30, 2008 are not necessarily indicative of the results of operations that may be expected for any other interim period or for the full year ending March 31, 20082009 (“fiscal 2008”2009”).

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

The Company accounts for all share based payments in accordance with Statement of Financial Accounting Standard (“FAS”) No. 123R, “Share-Based Payment” (“FAS 123R”). As a result, the Company has applied FAS 123R to new awards and to awards modified, repurchased, or cancelled. Compensation cost for the portion of awards for which the requisite service had not been rendered are being recognized as the requisite service is rendered (generally over the remaining option vesting period). The compensation cost for that portion of awards has been based on the grant-date fair value of those awards as calculated for pro forma disclosures under previously issued accounting standards. As a result of applying the provisions of FAS 123R, the Company has recorded compensation costs of $28,000$18,000 and $83,000$36,000 for the three monthsand six month periods ended December 31, 2007 and December 31, 2006,September 30, 2008, respectively. For the ninethree and six month periodperiods ended December 31,September 30, 2007, the Company recorded a recovery of compensation costs of $159,000,$266,000 and for the nine month period ended December 31, 2006, the Company recorded compensation costs of $138,000.$187,000, respectively.

     Comprehensive income for the three and nine month periods ended December 31,September 30, 2008 and September 30, 2007 and December 31, 2006 is as follows (in thousands):

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

in the Consolidated Statement of Operations and totaled $16,000.Operations. Accrued interest and penalties were $80,000$49,000 as of December 31, 2007September 30, 2008 and are recognized in the balance sheet.

     TheFor fiscal 2009, 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 and state income taxes. For fiscal 2008, the respective three and nine months ended December 31, 2007Company’s effective tax rate differs from the federal statutory rate primarily as a result of the settlement made in relation to the California franchise tax issue described in the second paragraph of this note. The effective tax rate for the respective three and nine months ended December 31, 2006 differs from the federal statutory rate primarily as a result of 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 December 31, 2007:September 30, 2008:

     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.

     On December 5, 2005,From time to time, Emerson engages in business transactions with its controlling shareholder, The Grande Holdings Limited and its subsidiaries (“Grande”) purchased approximately 37% (10,000,000 shares).  Set forth below is a summary of the Company’s outstanding common stocksuch balances and transactions.  As of September 30, 2008, substantially all monies then currently due to Emerson from our former Chairman and Chief Executive Officer, Geoffrey P. Jurick. Since its initial purchase, Grande hashave been paid in full.

Grande’s Ownership Interest in Emerson.Grande increased its ownership of the Company’s common stock through open market anda private purchases, including the purchase of 1,853,882 shares on September 21, 2007 from a former holder of more than five percent of Emerson’s common stock of 1,853,882 shares.stock.  Grande beneficially owned approximately 57.6% of the Company’s common stock on December 31, 2007.September 30, 2008.

     In October 2006, Emerson entered into an agreement with a consumer electronics distributor , APH (the “Licensee”), pursuant to which, among other things, Emerson agreed to grant the Licensee a license to distributeBalances Due from Affiliates as of September 30, 2008 and sell LCD televisions (“LCD sets”) in North America under Emerson’s “H.H. Scott” brand name. The licensee has a distributor relationship with Grande, a related party to Emerson. In the fiscal quarter ended December 31, 2006, the Licensee began selling 32” and 37” LCD sets to a major United States based retailer. Pursuant to the terms of the agreement with the licensee, Emerson was paid a royalty of $110,000 as a result of such sales through March 31, 2007. No sales2008.As of LCD televisions pursuantSeptember 30 and March 31, 2008, Grande was indebted to this agreement occurred and no royalty was paid to Emerson under this agreement during the nine month period ended December 31, 2007.

form of transfer letters of credit to the suppliers, and goods are shipped directly from the suppliers to Sansui Sales’ and Akai Sales’ customers. Emerson recorded income totaling $100,000$2,000 and $7,000 for providing this service in the ninethree months ended DecemberSeptember 30, 2008 and September 30, 2007, respectively, and $15,000 and $92,000 in the six months ended September 30, 2008 and September 30, 2007, respectively. As of September 30, 2008 and March 31, 2007.2008, Sansui Sales and Akai Sales collectively oweowed Emerson $126,000 at December 31, 2007 as a result$7,220 and $134,000, respectively, relating to this activity.

          Leases and Other Real Estate Transactions.Effective January 1, 2006, weEmerson entered into a lease agreement for office space in Hong Kong with Grande and an agreement for services in connection with this office space rental from Grande, which was extended through December 31, 2008, and which will expire at that date unless terminated earlier by either party upon three months prior written notice of termination by either party. We incurred rentUnder a new agreement commencing March 1, 2008, the office space rented was increased from 7,810 square feet to 18,476 square feet. Rent expense and related service charges with Grande of approximately $105,000totaled $95,000 and $45,000$44,000 for the three month periodsmonths ended December 31,September 30, 2008 and September 30, 2007, respectively and December 31, 2006,$214,000 and $79,000 for the six months ended September 30, 2008 and September 30, 2007, respectively. Rent expense withand related service charges described in this activity are included in the Consolidated Statements of Operations as a component of selling, general, and administrative expenses. Emerson owed Grande was $185,000$17,400 and $158,000$0 related to this activity at September 30, 2008 and March 31, 2008, respectively.

          Emerson utilizes the services of Grande employees for the nine month periods ended December 31, 2007certain administrative and December 31, 2006, respectively. The amountexecutive functions. Grande pays Emerson’s quality assurance personnel in Renminbi in China on Emerson’s behalf for which Emerson subsequently pays a reimbursement to Grande. Payroll and travel expenses, including utilization of expense incurred with Grande for all other services in connection with this office space rental was approximately $58,000employees as well as payroll and $61,000travel expenses paid on Emerson’s behalf and reimbursed to Grande, were $28,000 and $10,000 for the three month periodsmonths ended DecemberSeptember 30, 2008 and September 30, 2007, respectively, and $119,000 and $101,000 for the six months ended September 30, 2008 and September 30, 2007, respectively. Because Emerson’s payments to Grande from time to time include estimates of expenses Grande pays on Emerson’s behalf which are adjusted later to the actual expenses Grande incurs on Emerson’s behalf, Emerson has paid $6,000 in advance related to this activity at September 30, 2008. Emerson owed Grande $70,000 related to this activity at March 31, 2008.

          From May to October 2007, Emerson occupied office space in Shenzhen, China under a lease agreement with Akai AV Multimedia (Zhongshan) Co Ltd, an affiliate of Grande. Rent expense and related charges totaled $53,000 for the three months ended September 30, 2007 and December 31, 2006, respectively. The amount of expense incurred with Grande for all other services in connection with this office space rental was approximately $172,000 and $182,000$96,000 for the nine month periodssix months ended December 31, 2007 and December 31, 2006, respectively.September 30, 2007. The agreement was not renewed after its termination in October 2007.

          In May 2007 Emerson paid an initiala $10,000 commission to Vigers Hong Kong Ltd, (“Vigers”), a property agent and a subsidiary

     In June 2008, Capetronic physically possessesrepaid the $546,000 advance it received from Emerson in July 2007.

     In August 2008, Capetronic requested that Emerson reimburse it for the costs it had incurred to purchase the production materials required to produce the musical instrument molds owned by Emerson and owes to Emerson $546,000 for the upfront advances made in anticipation of Capetronic’s manufactureinstruments. After a review of the instruments. As a resultfacts, the material purchase orders, the physical material at the Capetronic premises, and deducting an agreed upon scrap value of the above,material, Emerson has writtendecided to honor the costrequest and paid $313,000 to Capetronic on September 30, 2008. These materials are the property of Capetronic.

     Capetronic is currently in physical possession of Emerson’s molds originally required to produce the molds down to $0 at December 31, 2007.musical instruments, which Emerson wrote off in fiscal 2008.

Freight Forwarding Services.In June 2007, Emerson and Capetronic signed an agreement for Emerson to provide freight forwarding services to Capetronic, whereuponCapetronic. Under this agreement, which contains no specified termination date, Emerson will pay the costs of importation into the United States of Capetronic’s inventory on Capetronic’s behalf. Under the agreement, Emerson is alsobehalf, and to arrange for the inventory to be received at a port of entry, cleared through the United States Customs Service using Emerson’s regularly engaged broker, and transfer the inventory to a common carrier as arranged by Capetronic’s customer. If Capetronic’s customer has not madefailed to make such arrangements with a common carrier, Emerson isagreed to transfer the inventory to Emerson’s warehouse for storage or make other arrangements with a public warehouse. Following the transfer of Capetronic’s inventory, Emerson is required to provide Next Day delivery of all importation documents and bills of lading to Capetronic’s customer. Capetronic agreesagreed to reimburse Emerson for all costs incurred by Emerson in connection with the activity just described within thirty days of demand by Emerson, after which interest will accrue.accrues. As compensation, Capetronic agreesagreed to pay Emerson a service fee of 12% of the importation costs. Emerson billed Capetronic for the reimbursement of importation costs totaling $246,000 and a commission of $29,000.$29,000 for the six month period of September 30, 2007. Capetronic paid Emerson the full amount due of $275,000 on November 14, 2007.

Other.Between August and December 2007, Emerson paid invoices and incurred charges for goods and services relating to the 2007 Hong Kong Electronics Fair of $153,069.00.$153,069. Portions of these charges, totaling $87,353.18,$87,353, have been allocated and invoiced to affiliates of Grande in proportion to their respective share of space occupied and services rendered during the Electronics Fair as follows;follows: Nakamichi Corporation Ltd. $17,143.08,$17,143, Akai Sales PtePTE Ltd $44,495.48$44,495 and Sansui Sales PtePTE Ltd $25,714.62. All$25,715. Akai Sales and Sansui Sales collectively owed Emerson $6,437 and $70,210 in connection with the Hong Kong Electronics Fair as of September 30, 2008 and March 31, 2008, respectively.

     In June 2007 Emerson paid a one-time sales commission in the amount of $14,000 to an Executive Director of Grande Holdings, who is also a Director of Emerson. The commission was 50% of the net margin on a sale by Emerson to an unaffiliated customer.

members then currently in effect. As a result of this resolution, in October 2008 the Company made onetime cash payments of $90,000 and $37,500 to two respective amounts have been classified as Due from Affiliates.members of the Board of Directors.

     During the third quarterAs of fiscalSeptember 30, 2008 Emerson elected to cancel it’s foreign bank facilities. As a result, the $3.0 million in certificates of deposit at these banks to assure the availability of the credit facilities was returned.

Revolving loan agreement– On August 7, 2008, Emerson entered into a revolving loan agreement with Citigroup Global Markets Inc. The limit of the credit facility was determined as a percentage of the outstanding under foreign bank facilities heldprincipal value of the Company’s auction rate securities as of the date of the agreement. The loan is secured by the sum of all cash and other securities maintained by us in the Company’s foreign subsidiaries. Availability underaccounts with Citigroup Global Markets Inc. The agreement compels Emerson to keep the foreign bank facilities totaled $17.5 million prioraforementioned cash and securities free of security interests, liens, or other impediments to their cancellationtransfer which do not favor Citigroup Global Markets, and Emerson may not pledge the collateral to a different third-party. All payments received in December 2007.

     As of December 31, 2007September 30, 2008 and March 31, 2007,2008, borrowings under long-term facilities consisted of the following:

     TheIn March 2007, the Company entered into fixed period foreign exchange forward contracts (between the U.S.US and Hong Kong dollar), based on economic and market conditions and solely for the purpose of speculative trading, (See “Other Events and Circumstances Pertaining to Liquidity” and Item 4.b “Changes in Internal Control Over Financial Reporting” ).not for the purpose of hedging other business opportunities. The contract terms arewere for fixed periods and at DecemberMarch 31, 2007,2008, the Company’s foreign exchange forward contracts had expiration dates that ranged from one to sixtwo months, with notional amounts of $11$10 million.

     At each balance sheet date the Company accounts for its foreign exchange forward contracts as a current asset with corresponding realized or unrealized gains and losses included in the income statement. Realized gains of $281,308 and unrealized gains of

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

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

     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 Emerson’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 Emerson’s control, and which may cause Emerson’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. You can identify these forward-looking statements through Emerson’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:

Net Revenues — Net revenues for the thirdsecond quarter of fiscal 2009 were $55.1 million as compared to $57.9 million for the second quarter of fiscal 2008, a decrease of $2.8 million or 4.8%. For the six month period of fiscal 2009, net revenues were $75.8$98.2 million as compared to $89.3$110.5 million for the third quarter of fiscal 2007, a decrease of $13.5 million or 15.1%. For the ninesix month period of fiscal 2008, net revenues were $186.3 million as compared to $244.2 million for the nine month period of fiscal 2007, a decrease of $57.9$12.3 million or 23.7%11.1%. Net revenues are comprised of Emerson(R) branded product sales, themed product sales and licensing revenues. Emerson(R) branded product sales are earned from the sale of products bearing the Emerson(R) or HH Scott(R) brand name; themed product sales represent products sold bearing a certain theme or character; andcharacter. Furthermore, licensing revenues are derived from licensing the Emerson(R) and HH Scott(R) brand names to licensees for a fee. The major elements which contributed to the overall decrease in net revenues was comprised of:were as follows:

Cost of Sales — In absolute terms, cost of sales decreased $8.1$4.0 million, or 10.5%7.8%, to $68.4$47.4 million in the thirdsecond quarter of fiscal 20082009 as compared to $76.5$51.4 million in the thirdsecond quarter of fiscal 2007.2008. In absolute terms, cost of sales was $165.1$85.4 million in the ninesix month period of fiscal 20082009 as compared to $211.0$96.6 million in the nine monthssix month period of fiscal 2007.2008. Cost of sales, as a percentage of net revenues, was 90.3%86.0% and 85.6%88.8% in the thirdsecond quarters of fiscal 20082009 and fiscal 2007,2008, respectively, and 88.6%86.9% and 86.4%87.4% in the ninesix month periods of fiscal 20082009 and fiscal 2007,2008, respectively. Cost of sales as a percentage of sales revenues less license revenues increased to 92.2%was 89.0% in the thirdsecond quarter of fiscal 2008 from 87.3%2009 as compared to 91.5% in the thirdsecond quarter of fiscal 2007.2008. Cost of sales as a percentage of sales revenues less license revenues increased to 91.0%was 90.3% in the ninesix month period of fiscal 2008 from 88.1%2009 as compared to 90.2% in the ninesix month period of fiscal 2007. As a percentage of net revenues for the third quarter and nine month period of fiscal 2008, cost of sales associated with sales to Akai Sales PTE, Ltd and Sansui Sales PTE, Ltd, related parties, were 0.3% and 0.1% of total Emerson net revenues. As a percentage of net revenues for the third quarter and nine month period of fiscal 2007, cost of sales associated with purchases from Capetronic Displays Ltd, a related party, was 13.6% of total Emerson net revenues.2008. The decrease in cost of sales in absolute terms for the thirdsecond quarter and nine month period of fiscal 20082009 as compared to the same periodssecond quarter of fiscal 20072008 was primarily related to the decrease in sales volume, an increase in reserves for sales returns, a decrease in inventory reserves,warehousing costs, import brokerage, and a decrease in royalty expense offset by an increase in costs of personnel in Asia involved in quality assurance in production of our product, an increase in writedowns of inventory, warehousingand costs and inventory overhead.in fiscal 2009 associated with independent quality assurance consultants. The increasedecrease in cost of sales as a percentage of net revenues for the thirdsecond quarter of fiscal 2009 as compared to the second quarter of fiscal 2008 as comparedwas primarily related to fiscal 2007decreased warehousing costs which largely resulted from higher inventory levels in the second quarter of fiscal 2008 offset by lower margins in several audio categories as well asand an increase in warehousingquality assurance costs. The decrease in cost of sales in absolute terms for the six month period of fiscal 2009 as compared to the six month period of fiscal 2008 resulted from the decrease in sales volume and lower royalty expense offset by an increase in quality assurance costs. The decrease in cost of sales as a percentage of net revenues for the ninesix months of fiscal 2009 as compared to the six months of fiscal 2008 as compared to fiscal 2007 resulted from lower marginsdecreased warehousing costs offset by an increase in several audio categories offset byquality assurance costs. In addition, a decrease in inventory costs due to a decreasereserves in inventory reserves. The decrease in inventory reservesthe six month period of fiscal 2008 resulted primarily from the reduction of inventory levels of a discontinued themed-product line and returned, substandard goods which are not sold to retailers, which werehad been fully reserved in our previous quarter; however, there was an offsetting impact on margins forat the reduction in themed-product line goods as a consequence.end of the preceding fiscal year.

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

Other Operating Costs and Expenses — As a percentage of net revenues, other operating costs and expenses were 1.9%2.9% in the third

2009 was primarily comprised of interest earned on the auction rate securities net of interest expense on an outstanding balance on a line of credit. Interest expense, net, for the second quarter of 2008 was related partyto letter of credit purchases offset by interest income as well asearned on money market accounts.

Unrealized holding losses and realized gains on trading securities – In the second quarter of fiscal 2009, the Company recorded realized gains of $301,000 on redemptions and unrealized holding losses of $52,000 after evaluating the Company’s investments in auction rate securities. For the six months of fiscal 2009, the Company recorded realized gains of $532,000 and unrealized holding losses of $21,000. The Company’s valuation was estimated by comparing current value based on projected cash flows discounted to the present and taking into account interest.yields of similar illiquid instruments and assumptions about the extent of the failure of the auction process and the amount of discounts exhibited in limited sales of comparable securities. For the second quarter of fiscal 2009, the Company based its valuation of one of the securities on the price extended in an offer from its broker to purchase from Emerson the securities of a particular CUSIP, which was discounted from principal, rather than the estimation method mentioned in the preceding sentence. See note 11 – Marketable Securities.

Provision for Income Taxes — The Company’s provision for income taxes, which primarily represents the deferred tax charges associated with its profits in the United States, was $699,000 for the second quarter of fiscal 2009, or 1.3% of net revenues, as compared to a provision of $4.0 million for the second quarter of fiscal 2008, or 6.8% of net revenues. In the second quarter of fiscal 2008, Emerson increased its estimated liability for California franchise taxes due and owing by its predecessorfor tax years 1979-1990 in the amount of $3.7 million. California franchise taxes are effectively tax on income and are recorded as such. In the third quarter of fiscal 2008, Emerson reduced its estimated liability by $1.0 million as a result of having resolved the matter. See Note 6 —– “Income Taxes”. Separate from the decreaseincrease in the liability associated with California franchise taxes, ourthe Company’s provision for income taxes, which primarily represents the deferred tax charges associated with ourits profits in the United States, resulted in a benefitprovision of $1.4 million$255,000 for the thirdsecond quarter of fiscal 2008, or 1.8%0.4% of net revenues, as compared to a provision of $1.9 million forrevenues. For the third quartersix months of fiscal 2007,2009, Emerson’s provision for income taxes was $1.2 million, or 2.1%1.2% of net revenues. Separate from the increase in the liability associated with California franchise tax paid on amounts due and owing by Emerson’s predecessor, we had a benefittaxes, the provision for income taxes for the ninesix month period of fiscal 2008 of $719,000,was $634,000, or 0.4%0.6% of net revenues, as compared torevenues.

Minority interest in net loss of a provisionconsolidated subsidiary – Minority interest of $3.8 million, or 1.6%$39,000 in the second quarter of fiscal 2009 represents the share of net revenues,loss of the Company’s joint venture formed in February 2008, Advanced Sound and Image, LLC (“ASI”), that is attributable to the equity of ASI that Emerson does not own. Because the minority share of accumulated losses has exceeded the minority shareholder’s total equity in ASI, the Company has charged the excess loss of $84,000 to its interest in ASI for the ninesecond quarter of fiscal 2009. For the six month period of fiscal 2007.2009, the share of net loss attributable to the equity of ASI that Emerson does not own was $133,000. Transactions between Emerson and ASI are eliminated in the consolidated financial statements.

Net Income (Loss) —– As a result of the foregoing factors, Emerson recognizedEmerson’s net income of $1.1 million (1.5%was $687,000 (1.2% of net revenues) for the thirdsecond quarter of fiscal 20082009 as compared to net income(loss) of $3.7$3.3 million (4.1% of net revenues) in the thirdsecond quarter of fiscal 2007.2008. For the ninesix month period of fiscal 2008, our2009, Emerson’s net (loss) was $1.7 million$242,000 as compared to net income(loss) of $8.1$2.8 million for the ninesix month period of fiscal 2007.2008.

accounts receivables and inventories and bears interest ranging from Prime plus 0.00% to 0.50% or, at our election, the London Interbank Offered Rate (“LIBOR”)LIBOR plus 1.25% to 2.25% depending on excess availability. Pursuant to the loan agreement, we arethe Company is restricted from, among other things, paying certain cash dividends, and entering into certain transactions without the lender’s prior consent and are subject to certain leverage financial covenants. Borrowings under the loan agreement are secured by substantially all of ourthe Company’s tangible assets.

     At December 31, 2007,September 30, 2008, there were approximately $11.1$32.2 million of letters of credit outstanding under this facility. There were no borrowings outstanding at December 31, 2007September 30, 2008 under this facility. At December 31 2007, we wereSeptember 30, 2008, the Company was in compliance with the covenants on ourits credit facilities.

     AsOn August 7, 2008, Emerson entered into a resultrevolving loan agreement with Citigroup Global Markets Inc. The limit of Emerson electing to cancel its foreign bank facilities in December 2007, our foreign subsidiaries maintain nothe credit facilitiesfacility was determined as a percentage of the outstanding principal value of the Company’s auction rate securities as of December 31, 2007.the date of the agreement. The loan is secured by the sum of all cash and other securities maintained by us in the Company’s accounts with Citigroup Global Markets Inc. The agreement compels Emerson to keep the aforementioned cash and securities free of security interests, liens, or other impediments to transfer which do not favor Citigroup Global Markets, and Emerson may not pledge the collateral to a different third-party. All payments received in respect of securities in the Company’s accounts, including interest received and redemptions of principal, may be applied against the Company’s outstanding loan balance and accrued interest thereon at the sole discretion of Citigroup Global Markets Inc. There is no specific term for the credit facility, and full or partial payment of the loan principal and accrued interest may be demanded at any time by Citigroup Global Markets Inc. Interest on the outstanding loan balance is calculated at the Federal Open Market Rate plus 1.1% to 1.5%.

     At December 31, 2007, asSeptember 30, 2008 were approximately $4.1 million of borrowings outstanding under this facility.

     As of September 30, 2008 the Company has maintained $3.0 million on deposit with Wachovia Bank, to secure on a resultdollar for dollar basis, additional letter of Emerson electing to cancel its foreign bank facilities, the requirement to maintain pledged deposits with foreign banks for our foreign subsidiaries was eliminated.credit availability. As such, $3.0 million in certificates of deposit held at these banks havethis amount has been returned.classified on the balance sheet as restricted cash.

     Short-Term Liquidity.Liquidity is impacted by seasonality in that Emerson generally records the majority of its annual sales in the quarters ending September and December. This requires Emerson to maintain higher inventory levels during the quarters ending June and September, therefore increasing the working capital needs during these periods. Additionally, Emerson receives the largest percentage of product returns in the quarter ending March. The higher level of returns during this period adversely impacts collection activity, and therefore liquidity. Management believes that continued sales margin improvement and the policies in place for returned products should continue to favorably impact cash flow. In the ninesix months ended December 31, 2007,September 30, 2008, products representing approximately 27%36.9% of net revenues were imported directly to Emerson’s customers. This contributes significantly to Emerson’s liquidity in that this inventory does not need to be financed.

     The following summarizes obligations at December 31, 2007September 30, 2008 for the periods shown (in thousands):

     The Company entered into foreign exchange forward contracts (denominated in U.S.US and Hong Kong dollar), based on economic and market conditions and solely for the purpose of speculative trading, (See “Note 10. Financial Instruments” and Item 4.b “Changes in Internal Control Over Financial Reporting” ).). The contract terms arewere for fixed periods and at DecemberMarch 31, 2007,2008, the Company’s foreign exchange forward contracts had expiration dates that ranged from one to sixtwo months, with notional amounts of $11$10 million.

     At each balance sheet date the Company accounts for its foreienforeign exchange forward contracts as a current asset with corresponding realized or unrealized gains and losses included in the income statement. Realized gains of $281,308 and unrealized gains of $233,547$132,647 have been recorded as non-operating income at December 31,in the six months ended September 30, 2008. Realized gains of $73,857 were recorded in the six months ended September 30, 2007. There were no

     All foreign exchange forward contracts to report at December 31, 2006.have expired and the Company has not entered into any new contracts.

     For the ninethree month period ended December 31, 2007,September 30, 2008, there were no significant changes to accounting policies from those reported in the Annual Report on Form 10-K for the fiscal year ended March 31, 2007.2008.

     Neither inflation nor currency fluctuations had a significant effect on ourthe Company’s results of operations during the first quarter of fiscal 2008. OurEmerson’s exposure to currency fluctuations has been minimized by the use of U.S. dollar denominated purchase orders. We purchaseEmerson purchases virtually all of ourits products from manufacturers located in China.

     The interest on any borrowings under ourthe Company’s credit facilities would be based on the prime rate, Federal Open Market Rate, and LIBOR rate.LIBOR.

     There have been no significant changes from items disclosed in Form 10-K for the fiscal year ended March 31, 2007.2008.

(a)Disclosure controls and procedures.

During fiscal 2007, our management, including the principal executive officer and principal financial officer, evaluated our     The Company has established disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) related to the recording, processing, summarization and reporting of information in our reports that we file with the SEC. These disclosure controls and procedures have been designed to ensure that material information relating to us,the Company, including our

     There currently is pending against three directorsIn late July 2008, the Court of Chancery of the Company (Messrs. Ho, MaState of Delaware (the “Court”) entered an Order (the “Order”) consolidating for all purposes two previously disclosed derivative actions (the “Berkowitz” and Binney) a purported derivative action“Pinchuk” lawsuits) filed on Emerson’s behalf against certain of the Company’s behalf by twocurrent and former directors.  The complaints in each of its shareholders. The complaint, which has not yet been answered by the defendants, allegessuch actions alleged that the named defendants each of whom also is an executive officer of Grande Holdings, the Company’s controlling shareholder, violated their fiduciary duties to Emerson in connection with a number of previously disclosed related party transactions with affiliates of Grande Holdings.Holdings, Emerson’s controlling shareholder.  The Order also organizes counsel for the plaintiffs in the consolidated action, relieves the defendants of their obligation to answer the “Berkowitz” and “Pinchuk” complaints and contemplates the filing of a consolidated complaint as soon as practicable. The recovery, in such lawsuit, if any, in the consolidated action, will inure to Emerson’s benefit.

     There were no changes in any risk factors previously disclosed in our Annual Report on Form 10-K, as amended, for the fiscal year ended March 31, 2007.2008.

   (a) None

   (b) None

          The Annual Meeting of the Stockholders of the Company (the “Annual Meeting”) for the Company’s fiscal year ended March 31, 2008 was held on December 13, 2007,September 19, 2008, at which time the stockholders of the Company elected the following individuals to serve as directors of the Company until the next annual meeting of stockholders of the Company and until their successors are duly elected and qualified: Michael A.B. Binney, W. Michael Driscoll, Christopher Ho, Adrian Ma, Mirzan Mahathir, David R. Peterson, Greenfield Pitts, Kareem E. Sethi, Terence A. Snellings and Eduard Will and Norbert R. Wirsching.Will. There were 27,129,832 shares of capitalcommon stock of the Company outstanding and entitled to vote at the record date for the Annual Meeting. There were present at the Annual Meeting, in person or by proxy, stockholders holding 26,047,52826,067,973 shares of common stock of the Company, which represented approximately 96% of the total capital stock outstanding and entitled to vote.

          The matters voted upon at the Annual Meeting and the results of the voting at the Annual Meeting are set forth below:

          (i)  With respect to the election of directors of the Company by the holders of common stock of the Company, the persons named below received the following number of votes:

     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.