VOXX INTERNATIONAL : Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") (form 10-K)

This section should be read in conjunction with the "Cautionary Statements" and "Risk Factors" in Item 1A of Part I, and Item 8 of Part II, "Consolidated Financial Statements and Supplementary Data."

We begin Management's Discussion and Analysis of Financial Condition and Results
of Operations with an overview of the business, including our strategy to give
the reader a summary of the goals of our business and the direction in which our
business is moving. This is followed by a discussion of the Critical Accounting
Policies and Estimates that we believe are important to understanding the
assumptions and judgments incorporated in our reported financial results. In the
next section, we discuss our Results of Operations for the year ended February
28, 2021 compared to the years ended February 29, 2020 and February 28, 2019.
Next, we present EBITDA, Adjusted EBITDA, and Diluted Adjusted EBITDA per common
share for the year ended February 28, 2021 compared to the years ended
February 29, 2020 and February 28, 2019 in order to provide a useful and
appropriate supplemental measure of our performance. We then provide an analysis
of changes in our balance sheet and cash flows and discuss our financial
commitments in the sections entitled "Liquidity and Capital Resources." We
conclude this MD&A with a discussion of "Related Party Transactions" and "Recent
Accounting Pronouncements."

Business Overview and Strategy

VOXX International Corporation is a leading international distributor,
manufacturer and value-added service provider in the automotive electronics,
consumer electronics and biometrics industries. We conduct our business through
nineteen wholly-owned subsidiaries and one majority owned subsidiary. Voxx has a
broad portfolio of brand names used to market our products as well as private
labels through a large domestic and international distribution network. We also
function as an OEM ("Original Equipment Manufacturer") supplier to several
customers, as well as market a number of products under exclusive distribution
agreements.

In recent years, we have focused our attention on acquiring synergistic
businesses with the addition of several new subsidiaries. These subsidiaries
have helped us to expand our core business and broaden our presence in the
accessory and OEM markets. Our acquisitions of Klipsch and Invision provided the
opportunity to enter the manufacturing arena, and our acquisition of a
controlling interest in EyeLock Inc. and EyeLock Corporation allowed us to enter
the growing and innovative biometrics market. The Company has also made
strategic asset purchases in order to strengthen its product offerings and
increase market share, such as the acquisition of certain assets and assumption
of certain liabilities of Rosen Electronics LLC in Fiscal 2018, Vehicle Safety
Holding Corp. in Fiscal 2020, and Directed LLC and Directed Electronics Canada
Inc. in Fiscal 2021. Our intention is to continue to pursue business
opportunities which will allow us to further expand our business model while
leveraging overhead and exploring specialized niche markets in the electronics
industry. Notwithstanding the above acquisitions, if the appropriate opportunity
arises, the Company has been willing to explore the potential divestiture of a
product line or business, such as with the sale of the Company's Hirschmann
subsidiary in Fiscal 2018.

The Company classifies its operations in the following three reportable
segments: Automotive Electronics, Consumer Electronics, and Biometrics. The
characteristics of our operations that are relied on in making and reviewing
business decisions within these segments include the similarities in our
products, the commonality of our customers, suppliers and product developers
across multiple brands, our unified marketing and distribution strategy, our
centralized inventory management and logistics, and the nature of the financial
information used by our Chief Operating Decision Maker ("CODM"). The CODM
reviews the financial results of the Company based on the performance of the
Automotive Electronics, Consumer Electronics, and Biometrics segments.

The Company's domestic and international business is subject to retail industry
trends and conditions and the sales of new and used vehicles. Worldwide economic
conditions impact consumer spending and if the global macroeconomic environment
deteriorates, this could have a negative effect on the Company's revenues and
earnings. In an attempt to offset any negative market conditions, the Company
continues to explore strategies and alternatives to reduce its operating
expenses, such as the consolidation of facilities and IT systems, and has been
introducing new products to obtain a greater market share.

Although we believe our product groups have expanding market opportunities,
there are certain levels of volatility related to domestic and international
markets, new car sales, increased competition by manufacturers, private labels,
technological advancements, discretionary consumer spending and general economic
conditions. Also, all of our products are subject to price fluctuations which
could affect the carrying value of inventories and gross margins in the future.

                                       30

--------------------------------------------------------------------------------
During March 2020, a global pandemic was declared by the World Health
Organization related to the rapidly growing outbreak of COVID-19, which began
spreading during the fourth quarter of our 2020 fiscal year. The pandemic has
significantly impacted the economic conditions in the United States, as federal,
state, and local governments have reacted to the public health crisis, creating
significant uncertainties in the United States, as well as the global economy.
In the interest of public health and safety, U.S. jurisdictions (national,
state, and local) where our primary operations and those of many of our
customers are located, required mandatory business closures and capacity
limitations during Fiscal 2021, or other restrictions for those that were
permitted to continue to operate. As of February 28, 2021, all of our operating
locations were open, some of which were at a reduced in-office employee
presence.

As a result of these events, the Company has experienced certain adverse impacts
on its revenues, results of operations and cash flows during Fiscal 2021. The
situation is still rapidly changing and additional impacts to the Company's
business may arise that we are not aware of currently. We cannot predict
whether, when, or the manner in which the conditions surrounding COVID-19 will
change, including the timing of the lifting of any restrictions or closure
requirements, or any subsequent re-impositions of restrictions. Due to the
changing situation, the results of the first quarter ending May 31, 2021 and the
full fiscal year ending February 28, 2022 could be impacted in ways we are not
able to predict today, including, but not limited to, non-cash write-downs and
impairments; foreign currency fluctuations; potential adjustments to the
carrying value of inventory; and the delayed collections of, or inability to
collect, accounts receivable. During April 2020, as a precautionary measure to
ensure financial flexibility and maintain maximum liquidity in response to the
COVID-19 pandemic, the Company borrowed $20,000 from its revolving credit
facilities in the U.S. This borrowing was repaid in full during the third
quarter of Fiscal 2021. As of the date of this report, the Company continues to
focus on cash flow and anticipates having sufficient resources to operate during
Fiscal 2022.

The Company also implemented a number of other measures to help mitigate the
operating and financial impact of the pandemic, including: (i) furloughing
approximately 20% of its employees globally starting April 6, 2020; (ii)
implementing temporary salary and hour reductions for both management and
non-management level employees Company-wide, including its executive officers,
and the Company's board of directors; (iii) executing substantial reductions
in expenses, service provider costs, occupancy costs, capital expenditures and
overall costs, including through reduced inventory purchases; and (iv) working
globally with management teams to actively explore and identify all eligible
government and other initiatives available to businesses or employees impacted
by the COVID-19 pandemic. As of the filing date of our report, less than 1% of
our employees remain on furlough. The above referenced salary and hour
reductions were eliminated by the Company during the third quarter of Fiscal
2021, and the salary reductions taken were repaid to all employees during the
fourth quarter of Fiscal 2021.

Acquisitions and Dispositions

We have acquired and integrated several businesses, as well as divested certain
businesses, the most recent of which are outlined in the Acquisitions and
Dispositions section of Part I and presented in detail in Note 2 to the Notes to
the Consolidated Financial Statements.

Net Sales Increase

Net sales over a five-year period have increased 10% from $514,530 for the year
ended February 28, 2017 to $563,605 for the year ended February 28, 2021. During
this period, our sales were positively impacted by the following items:

• The introduction of new products and product lines in the Automotive

Electronics and Consumer Electronics segments, such as: OEM rear seat

entertainment; remote start and security products; premium audio computer

speaker systems; various premium and non-premium Bluetooth and wireless

speaker products; multi-room streaming audio solutions; neckband, on-ear,

in-ear, and over-ear headphones; nursery products; and karaoke products,

  • the acquisition of certain assets of Rosen Electronics LLC,


  • the acquisition of certain assets of Vehicle Safety Holdings Corp.,

• the acquisition of certain assets of Directed LLC and Directed Electronics

Canada Inc.,

• the introduction of activity tracking band fulfillment programs and the

        increase in product offerings under these programs,


                                       31

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

• international digital broadcasting upgrades necessitating the purchase of

        updated consumer accessory products, and


  • successful marketing and promotional activity.

These items were partially offset by:

• impacts of the COVID-19 pandemic, which caused nationwide and global

business closures, including car manufacturers, car dealerships, movie

theaters, and other brick and mortar businesses where our products are

sold;

• volatility in core Automotive Electronics and Consumer Electronics sales

due to declines in global automotive sales, increased competition, lower

selling prices, changes in technology and demand, and the volatility of

the national and global economy;

• the discontinuance and reduction of various high volume/low margin product

lines such as clock radios, digital players, digital voice recorders, and

portable DVD players;

• decreased box office sales affecting the Company's cinema audio products;

• weather factors resulting in changes in demand for aftermarket remote

start products; and

• the sale of certain branded product inventory of the Company to a third

party in order to license the brand name for a commission.

Critical Accounting Policies and Estimates (see Note 1 to the Consolidated Financial Statements)

General

Our consolidated financial statements are prepared in conformity with accounting
principles generally accepted in the United States of America. The preparation
of these financial statements requires us to make certain estimates, judgments,
and assumptions that we believe are reasonable based upon the information
available. These estimates and assumptions can be subjective and complex and may
affect the reported amounts of assets and liabilities, revenues, and expenses
reported in those financial statements. As a result, actual results could differ
from such estimates and assumptions. During Fiscal 2021, as well as subsequent
to February 28, 2021, there has been continuous and significant changes to the
global economic situation as a consequence of the COVID-19 pandemic. It is
possible that this could cause changes to estimates as a result of the financial
circumstances of the markets in which the Company operates, the price of the
Company's publicly traded equity in comparison to the Company's carrying value,
and the health of the global economy. Such changes to estimates could
potentially result in impacts that would be material to the consolidated
financial statements, particularly with respect to the fair value of the
Company's reporting units in relation to potential goodwill impairment and the
fair value of long-lived assets in relation to potential impairment.

The significant accounting policies and estimates which we believe are the most critical in fully understanding and evaluating the reported consolidated financial results include the following:

Revenue Recognition

On March 1, 2018, the Company adopted ASC Topic 606, Revenue from Contracts with
Customers, and all the related amendments ("ASC 606"), using the modified
retrospective method. Most of the changes resulting from the adoption of ASC
Topic 606 on March 1, 2018 were changes in presentation within the Consolidated
Balance Sheet, and we made no changes to opening Retained Earnings. The impact
of the adoption of ASC Topic 606 has been immaterial to our net income; however,
the adoption did increase the level of disclosure concerning our net sales.

The core principle of ASC 606 is that an entity recognizes revenue to depict the
transfer of promised goods and services to customers in an amount that reflects
the consideration to which the entity expects to be entitled in exchange for
those goods and services. We apply the FASB's guidance on revenue recognition,
which requires us to recognize the amount of revenue and consideration that we
expect to receive in exchange for goods and services transferred to our
customers. To do this, the Company applies the five-step model prescribed by the
FASB, which requires us to: (i) identify the contract with the customer; (ii)
identify the performance obligations in the contract; (iii) determine the
transaction price; (iv) allocate the transaction price to the performance
obligations in the contract; and (v) recognize revenue when, or as, we satisfy a
performance obligation.

We account for a contract or purchase order when it has approval and commitment
from both parties, the rights of the parties are identified, payment terms are
identified, the contract has commercial substance, and collectability of

                                       32

--------------------------------------------------------------------------------
consideration is probable. Revenue is recognized when control of the product
passes to the customer, which is upon shipment, unless otherwise specified
within the customer contract or on the purchase order as delivery, and is
recognized at the amount that reflects the consideration the Company expects to
receive for the products sold, including various forms of discounts. When
revenue is recorded, estimates of returns are made and recorded as a reduction
of revenue.

Sales Incentives

Sales incentives are accounted for in accordance with ASC 606. We offer sales
incentives to our customers in the form of (1) co-operative advertising
allowances; (2) market development funds; (3) volume incentive rebates; and (4)
other trade allowances. We accrue the cost of co-operative advertising
allowances, volume incentive rebates, and market development funds at the later
of when the customer purchases our products or when the sales incentive is
offered to the customer. We record the provision for other trade allowances at
the later of when the sales incentive is offered or when the related revenue is
recognized. Except for other trade allowances, all sales incentives require the
customer to purchase our products during a specified period of time. All sales
incentives require customers to claim the sales incentive within a certain time
period (referred to as the "claim period"). All costs associated with sales
incentives are classified as a reduction of net sales.

Depending on the specific facts and circumstances, we utilize either the most
likely amount or the expected value methods to estimate the effect of
uncertainty on the amount of variable consideration to which we would be
entitled. The most likely amount method considers the single most likely amount
from a range of possible consideration amounts, while the expected value method
is the sum of probability-weighted amounts in a range of possible consideration
amounts. Both methods are based upon the contractual terms of the incentives and
historical experience with each customer. Although we make our best estimate of
sales incentive liabilities, many factors, including significant unanticipated
changes in the purchasing volume and the lack of claims from customers could
have a significant impact on the liability for sales incentives and reported
operating results. We record estimates for cash discounts, promotional rebates,
and other promotional allowances in the period the related revenue is recognized
("Customer Credits"). The provision for Customer Credits is recorded as a
reduction from gross sales and reserves for Customer Credits are presented
within accrued sales incentives on the Consolidated Balance Sheet.

Unearned sales incentives are volume incentive rebates where the customer did
not purchase the required minimum quantities of product during the specified
time. Volume incentive rebates are reversed into income in the period when the
customer did not reach the required minimum purchases of product during the
specified time. Unclaimed sales incentives are sales incentives earned by the
customer, but the customer has not claimed payment within the claim period
(period after program has ended). Unclaimed sales incentives are investigated in
a timely manner after the end of the program and reversed if deemed appropriate.

Accounts Receivable

We perform ongoing credit evaluations of our customers and adjust credit limits
based upon payment history and current credit worthiness, as determined by a
review of current credit information. We continuously monitor collections from
our customers and maintain a provision for estimated credit losses based upon
historical experience and any specific customer collection issues that have been
identified. While such credit losses have historically been within management's
expectations and the provisions established, we cannot guarantee that we will
continue to experience the same credit loss rates that have been experienced in
the past. Our five largest customer balances comprise 25% of our accounts
receivable balance as of February 28, 2021. A significant change in the
liquidity or financial position of any one of these customers could have a
material adverse impact on the collectability of accounts receivable and our
results of operations.

On March 1, 2020, we adopted Accounting Standards Update ("ASU")
2016-13, "Financial Instruments-Credit Losses (Topic 326): Measurement of Credit
Losses on Financial Instruments," which did not have a material impact on our
financial statements. Our financial instruments consist of trade receivables
arising from revenue transactions in the ordinary course of business. We extend
credit to customers based on pre-defined criteria and trade receivables are
generally due within 30 to 60 days.

Inventory

We value our inventory at the lower of the actual cost to purchase or the net
realizable value of the inventory. Net realizable value is defined as estimated
selling prices, less cost of completion, disposal, and transportation. We
regularly review inventory quantities on-hand and record a provision in cost of
sales for excess and obsolete

                                       33

--------------------------------------------------------------------------------
inventory based primarily on selling prices, indications from customers based
upon current price negotiations, and purchase orders. The cost of the inventory
is determined primarily on a weighted moving average basis, with a portion
valued at standard cost, which approximates actual costs on the first in, first
out basis. Our industry is characterized by rapid technological change and
frequent new product introductions that could result in an increase in the
amount of obsolete inventory quantities on-hand. In addition, and as necessary,
specific reserves for future known or anticipated events may be established.

Estimates of excess and obsolete inventory may prove to be inaccurate, in which
case we may have understated or overstated the provision required for excess and
obsolete inventory. Although we make every effort to ensure the accuracy of our
forecasts of future product demand, any significant unanticipated changes in
demand or technological developments could have a significant impact on the
carrying value of inventory and our results of operations.

Long-Lived and Intangible Asset Impairments

As of February 28, 2021, intangible assets totaled $90,104 and property, plant
and equipment totaled $52,026. Management makes estimates and assumptions in
preparing the consolidated financial statements for which actual results will
emerge over long periods of time. This includes the recoverability of long-lived
assets employed in the business, including assets of acquired businesses. These
estimates and assumptions are closely monitored by management and periodically
adjusted as circumstances warrant. For instance, expected asset lives may be
shortened or an impairment recorded based upon a change in the expected use of
the asset or performance of the related asset group. At the present time,
management intends to continue the development, marketing and selling of
products associated with its intangible assets, and there are no known
restrictions on the continuation of their use.

In connection with the annual impairment test performed as of the last day of
the fourth quarter of Fiscal 2021, the Company determined that one of its
trademarks in the Consumer Electronics segment was impaired. The impairment was
the result of shortfalls in sales due to reduced demand of the product
category. As a result, an impairment charge of $1,300 was recorded for the year
ended February 28, 2021 (see Note 1(k)). Related long-lived assets were tested
for recoverability and determined to be recoverable and therefore no additional
impairments related to long-lived assets were recorded.

In connection with the annual impairment test performed as of the last day of
the fourth quarter of Fiscal 2020, the Company determined that several of its
indefinite-lived trademarks in the Consumer Electronics segment, were impaired.
The impairments were the result of the Company being unable to secure product
placement into customer stores, anticipated shortfalls in sales due to economic
uncertainty as a result of the COVID-19 pandemic, reduced demand from a large
traditional brick-and-mortar customer, along with continued declines in the
German economy. As a result, several indefinite-lived tradenames in the Consumer
Electronics segment were impaired resulting in impairment charges of $2,828
recorded for the year ended February 29, 2020 (see Note 1(k)). Related
long-lived assets were tested for recoverability and determined to be
recoverable and therefore no additional impairments related to long-lived assets
were recorded in the Consumer Electronics segment.

In the Biometrics segment, in connection with the annual impairment test for
Fiscal 2020, the Company determined that its indefinite-lived trademark was
impaired. The impairment of the trademark was the result of lack of customer
acceptance of the related technology, lower than anticipated results, adjusted
expectations for demand and anticipated delays of product deployment with target
customers due to economic uncertainty given the COVID-19 pandemic. Related
long-lived assets in the Biometrics segment were tested for recoverability and
determined not to be recoverable. The fair value of the long-lived assets that
were not recoverable were estimated, and when compared to their carrying value,
were determined to also be impaired. As a result, total impairments in the
Biometrics segment of $27,402 for indefinite-lived and definite-lived intangible
assets were recorded for the year ended February 29, 2020 (see Note 1 (k)).

The combined impairment charges for both the Consumer Electronics segment and
the Biometrics segment aggregated $30,230 for fiscal year ended February 29,
2020.

During the second quarter of Fiscal 2019, the Company re-evaluated its
projections for several brands in its former Consumer Accessories and Automotive
segments based on lower than anticipated results. Specifically, during the
second quarter of Fiscal 2019, the lower than anticipated results were due to
reduced product load-ins, increased competition for certain product lines, a
streamlining of SKU's, and a change in market strategy for one of its brands.

                                       34

--------------------------------------------------------------------------------
Accordingly, these were considered indicators of impairment requiring the
Company to test the related indefinite-lived tradenames for impairment as of
August 31, 2018. The Company also tested its indefinite-lived intangible assets
as of February 28, 2019 as part of its annual impairment testing. During the
fourth quarter, the Company further streamlined its SKUs in conjunction with its
corporate realignment and transformation initiatives, and adjusted expectations
for select customer demand, and the anticipated results from alternative sales
channels for one of its brands. As a result of these analyses, it was determined
that several of the Company's former Consumer Accessories trademarks and one of
the Automotive trademarks were impaired with total impairment charges of $25,789
recorded for the year ended February 28, 2019 (see Note 1(k)).

Approximately 39% of our indefinite-lived trademarks ($24,432) are at risk of
impairment as of February 28, 2021. When testing indefinite-lived assets for
impairment, we have the option to first assess qualitative factors to determine
whether the existence of events or circumstances leads to a determination that
it is more likely than not that the estimated fair value is less than its
carrying amount. If we elect to perform a qualitative assessment and determine
that an impairment is more likely than not, we are then required to perform the
quantitative impairment test; otherwise, no further analysis is required. Under
the qualitative assessment, we consider various qualitative factors, including
macroeconomic conditions, relevant industry and market trends, cost factors,
overall financial performance, other entity-specific events, and events
affecting the indefinite-lived asset that could indicate a potential change in
the fair value of our indefinite-lived assets. We also considered the specific
future outlook for the indefinite-lived asset. We may also elect not to perform
the qualitative assessment and instead, proceed directly to the quantitative
impairment test. The Company uses an income approach, based on the relief from
royalty method, to value the indefinite-lived trademarks as part of its
quantitative impairment test. This impairment test involves the use of
accounting estimates and assumptions, changes in which could materially impact
our financial condition or operating performance if actual results differ from
such estimates and assumptions. The critical assumptions in the discounted cash
flow model include revenues, long-term growth rates, royalty rates, and discount
rates. Management exercises judgment in developing these assumptions. Certain of
these assumptions are based upon industry projections, facts specific to the
trademarks and consideration of our long-term view for the trademark and the
markets we operate in. If we were to experience sales declines, a significant
change in operating margins which may impact estimated royalty rates, an
increase in our discount rates, and/or a decrease in our projected long-term
growth rates, there would be an increased risk of impairment of these
indefinite-lived trademarks.

The cost of other intangible assets with definite lives and long-lived assets
are amortized on an accelerated or straight-line basis over their respective
lives. Management has determined that the current lives of these assets are
appropriate.

Long-lived assets and certain identifiable intangibles are reviewed for
impairment in accordance with ASC 360 whenever events or changes in
circumstances indicate that the carrying value of an asset may not be
recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying value of an asset to future undiscounted net cash
flows expected to be generated by the asset. If the carrying value of the
long-lived assets are not recoverable on an undiscounted basis, they are then
compared to their estimated fair market value. If such assets are considered to
be impaired, the impairment to be recognized is measured by the amount by which
the carrying value of the assets exceeds the fair value of the assets.

The Company holds certain long-lived assets in Venezuela, which are held for
investment purposes. During the second quarter of Fiscal 2019, the Company
assessed the recoverability of these properties as a result of the country's
continued economic deterioration, which included a significant currency
devaluation in August of 2018. The Company estimated the future undiscounted
cash flows expected to be received from these properties. The estimate of the
future undiscounted cash flows considered the Company's financial condition and
its intent and ability to retain its investments for a period of time sufficient
to allow for the recovery of the carrying value. The future undiscounted cash
flows did not exceed the net carrying value for the long-lived assets. The
estimated fair value of the properties, which also considered the current
conditions of the economy in Venezuela, the volatility of the real estate
market, and the significant political unrest, resulted in a full non-cash
impairment charge of $3,473 for the year ended February 28, 2019. The non-cash
impairment charge is included in Other Income (Expense) on the Consolidated
Statements of Operations and Comprehensive (Loss) Income. The value of the
Company's properties held for investment purposes in Venezuela is $0 as of
February 28, 2021.

Voxx's goodwill totaled $58,311 as of February 28, 2021. Goodwill is tested for
impairment as of the last day of each fiscal year at the reporting unit level.
When testing goodwill for impairment, we have the option to first assess

                                       35

--------------------------------------------------------------------------------
qualitative factors to determine whether the existence of events or
circumstances leads to a determination that it is more likely than not that the
estimated fair value of a reporting unit is less than its carrying amount. If we
elect to perform a qualitative assessment and determine that an impairment is
more likely than not, we are then required to perform the quantitative
impairment test; otherwise, no further analysis is required. Under the
qualitative assessment, we consider various qualitative factors, including
macroeconomic conditions, relevant industry and market trends, cost factors,
overall financial performance, other entity-specific events, and events
affecting the reporting unit that could indicate a potential change in fair
value of our reporting unit or the composition of its carrying values. We also
consider the specific future outlook for the reporting unit. We also may elect
not to perform the qualitative assessment and instead, proceed directly to the
quantitative impairment test. Application of the goodwill impairment test
requires judgment, including the identification of reporting units, assignment
of assets and liabilities to reporting units, assignment of goodwill to
reporting units, and estimation of the fair value of each reporting unit. Based
on the Company's goodwill impairment assessment, all the reporting units with
goodwill had estimated fair values as of February 28, 2021 that exceeded their
carrying values. As a result of the annual assessment, no impairment charges
were recorded related to goodwill during Fiscal 2021, Fiscal 2020, or Fiscal
2019.

Goodwill allocated to our Klipsch, Invision, Rosen, VSM, and DEI reporting units
was 79.8% ($46,533), 12.6% ($7,372), 1.5% ($880), 1.0% ($572 ), and 5.1%
($2,954), respectively. The fair values of the Klipsch and Invision reporting
units are greater than their carrying values by approximately 544.9% ($188,149)
and 25.5% ($5,094), respectively, as of February 28, 2021. The quantitative
assessment utilizes either an income approach, a market approach, or a
combination of these approaches to determine the fair value of its reporting
units. These approaches have a degree of uncertainty. The income approach
employs a discounted cash flow model to value the reporting unit as part of its
impairment test. This impairment test involves the use of accounting estimates
and assumptions, changes in which could materially impact our financial
condition or operating performance if actual results differ from such estimates
and assumptions. The critical assumptions in the discounted cash flow model are
revenues, operating margins, working capital and a discount rate (developed
using a weighted average cost of capital analysis). Management exercises
judgment in developing these assumptions. Certain of these assumptions are based
upon industry projections, facts specific to the reporting unit, market
participant assumptions and data, and consideration of our long-term view for
the reporting unit and the markets we operate in. The market approach employs
market multiples from guideline public companies operating in our industry.
Estimates of fair value are derived by applying multiples based on revenue and
earnings before interest, taxes, depreciation, and amortization ("EBITDA")
adjusted for size and performance metrics relative to peer companies. If the
Klipsch reporting unit were to experience sales declines, sustained pricing
pressures, unfavorable operating margins, lack of new product acceptance by
consumers, changes in consumer trends and preferred shopping channels, less than
anticipated results for the holiday season, a change in the peer group or
performance of the peer companies, an increase to the discount rate, and/or a
decrease in our projected long-term growth rates used in the discounted cash
flow model, there would be an increased risk of goodwill impairment for the
Klipsch reporting unit. If the Invision reporting unit experienced an increase
to the discount rate, a lack or delay in new product acceptance, cancellation,
or reduction in projected volumes from OEM customers, or a change in our
projected long-term growth rates used in the discounted cash flow model, there
would be an increased risk of goodwill impairment for the Invision reporting
unit. If the Rosen, VSM, and DEI reporting units experienced an increase to the
discount rate, sales declines, changes in consumer trends, or increases in cost
factors, there would be an increased risk of goodwill impairment for the Rosen,
VSM, and DEI reporting units.

Warranties

We offer warranties of various lengths depending upon the specific product. Our
standard warranties require us to repair or replace defective product returned
by both end users and customers during such warranty period at no cost. We do
not sell extended warranties. We record an estimate for warranty related costs
in cost of sales, based upon historical experience of actual warranty claims and
current information on repair costs and contract terms with certain
manufacturers. While warranty costs have historically been within expectations
and the provisions established, we cannot guarantee that we will continue to
experience the same warranty return rates or repair costs that have been
experienced in the past. A significant increase in product return rates, or a
significant increase in the costs to repair products, could have a material
adverse impact on our operating results.

                                       36

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

Stock-Based Compensation

We use the Black-Scholes option pricing model to compute the estimated fair
value of stock-based awards. The Black-Scholes option pricing model includes
assumptions regarding dividend yields, expected volatility, expected option term
and risk-free interest rates. The assumptions used in computing the fair value
of stock-based awards reflect our best estimates, but involve uncertainties
relating to market and other conditions, many of which are outside of our
control. We estimate expected volatility by considering the historical
volatility of our stock, the implied volatility of publicly traded stock options
in our stock and our expectations of volatility for the expected term of
stock-based compensation awards. For restricted stock awards, the fair value of
the award is the price on the date of grant. As a result, if other assumptions
or estimates had been used for restricted stock awards granted in the current
and prior periods, the total stock-based compensation expense for the current
fiscal year of $1,749 could have been materially different. Furthermore, if
different assumptions are used in future periods, stock-based compensation
expense could be materially impacted in the future.

Income Taxes

We account for income taxes in accordance with the guidance issued under
Statement ASC 740, "Income Taxes" ("ASC 740") with consideration for uncertain
tax positions.  We record a valuation allowance to reduce our deferred tax
assets to the amount of future tax benefit that is more likely than not to be
realized.

Income taxes are accounted for under the asset and liability method. Deferred
tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying values of
existing assets and liabilities and their respective tax basis and operating
loss and tax credit carryforwards. In evaluating our ability to recover our
deferred tax assets within the jurisdiction from which they arise, we consider
all positive and negative evidence including the results of recent operations,
scheduled reversal of deferred tax liabilities, future taxable income, and tax
planning strategies. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled (see Note
8). The effect on deferred tax assets and liabilities from a change in tax rates
is recognized in income in the period that includes the enactment date.

The Company accounts for uncertain tax positions in accordance with the
authoritative guidance issued under ASC 740, which addresses the determination
of whether tax benefits claimed or expected to be claimed on a tax return should
be recorded in the financial statements. The Company may recognize the tax
benefit from an uncertain tax position only if it is more likely than not that
the tax position will be sustained on examination by the taxing authorities
based on the technical merits of the position. The tax benefits recognized in
the financial statements from such position should be measured based on the
largest benefit that has a greater than fifty percent likelihood of being
realized upon ultimate settlement. The Company provides loss contingencies for
federal, state, and international tax matters relating to potential tax
examination issues, planning initiatives and compliance responsibilities. The
development of these reserves requires judgments about tax issues, potential
outcomes, and timing, which if different, may materially impact the Company's
financial condition and results of operations. The Company classifies interest
and penalties associated with income taxes as a component of Income tax expense
(benefit) on the Consolidated Statements of Operations and Comprehensive Income
(Loss).

Results of Operations

Included in Item 8 of this annual report on Form 10-K are the Consolidated
Balance Sheets as of February 28, 2021 and February 29, 2020 and the
Consolidated Statements of Operations and Comprehensive Income (Loss),
Consolidated Statements of Stockholders' Equity and Consolidated Statements of
Cash Flows for the years ended February 28, 2021, February 29, 2020 and
February 28, 2019. In order to provide the reader meaningful comparisons, the
following analysis provides comparisons of the audited year ended February 28,
2021 with the audited year ended February 29, 2020, and the audited year ended
February 29, 2020 with the audited year ended February 28, 2019. We analyze and
explain the differences between periods in the specific line items of the
Consolidated Statements of Operations and Comprehensive Income (Loss).

                                       37

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

Year Ended February 28, 2021 Compared to the Years Ended February 29, 2020 and February 28, 2019

Continuing Operations

The tables presented in this section set forth, for the periods indicated, certain Statement of Operations data for the years ended February 28, 2021 ("Fiscal 2021"), February 29, 2020 ("Fiscal 2020") and February 28, 2019 ("Fiscal 2019").

Net Sales



                          Fiscal        Fiscal        Fiscal
                           2021          2020          2019
Automotive Electronics   $ 163,903     $ 114,154     $ 161,647
Consumer Electronics       398,263       279,675       283,144
Biometrics                     836           461         1,098
Corporate                      603           599           927
Total net sales          $ 563,605     $ 394,889     $ 446,816

Fiscal 2021 compared to Fiscal 2020

Automotive Electronics sales, which include both OEM and aftermarket automotive
electronics, represented 29.1% of the net sales for the year ended February 28,
2021, compared to 28.9% in the prior year. Sales in this segment increased
$49,749 for the year ended February 28, 2021, as compared to the prior year. The
primary driver of sales increases in this segment was sales of OEM and
aftermarket products related to the Company's VSM and DEI subsidiaries,
established in connection with the Company's acquisitions in the fourth quarter
of Fiscal 2020 and the second quarter of Fiscal 2021, respectively. Sales from
these two new subsidiaries totaled approximately $71,000 and comprised
approximately 43% of the segment's sales for the year ended February 28, 2021.
In the prior year, the Company's VSM subsidiary contributed approximately $2,300
of sales to the Automotive Electronics segment. The Company also saw an increase
in sales of its aftermarket security and remote start products of approximately
$3,600 during the year ended February 28, 2021, partly due to a boost in demand
following business re-openings after the COVID-19 shut-downs, as purchases could
not be made by customers during the shutdowns. Offsetting these increases, the
segment experienced sales declines in certain product lines during the year
ended February 28, 2021 related to the COVID-19 pandemic, as well as certain
other factors. The Company experienced a net decrease in sales of OEM rear seat
entertainment products totaling approximately $10,300 due to several automotive
manufacturing plant shut-downs beginning in March 2020 as a result of COVID-19,
including Ford, GM, FCA, and Subaru. Many plants began to gradually re-open
during the second quarter of our fiscal year, and while some of the programs
have begun to ramp up production again, others have yet to return to pre-COVID
levels, thus negatively impacting sales for the year. Additionally, OEM rear
seat entertainment sales were negatively impacted during the year ended February
28, 2021 by the cancellation of a program with one of the Company's larger
customers that had been in production during the prior year. This was partially
offset by the successful launch of a new program with a customer in October
2020. The Company's OEM remote start sales decreased approximately $6,200 during
the year ended February 28, 2021 as a result of an increase in the use of Tier 1
factory installed remote start products by many automotive manufacturers (which
the Company does not sell) over accessory level remote starts. This has
negatively impacted the Company's sales to certain of its OEM remote start
customers. Sales of aftermarket rear seat entertainment products also decreased
during the year ended February 28, 2021 by approximately $2,700 due to the
COVID-19 related shutdowns of car dealerships and other brick and mortar
businesses during the first quarter of the year, followed by stock-outages of
several products, which continued to negatively impact sales through the
remainder of the fiscal year. Finally, satellite radio fulfillment sales
decreased approximately $900 during the year ended February 28, 2021 both as a
result of business shut-downs during COVID-19, as well as due to the fact that
most new vehicles include this product as a standard option.

Consumer Electronics sales represented 70.7% of net sales for the year ended
February 28, 2021 as compared to 70.8% in the prior year. Sales increased
$118,588 for the year ended February 28, 2021 as compared to the prior year due
primarily to the positive sales and promotion of several of the Company's
premium audio products. During Fiscal 2021, the Company experienced greater
consumer demand and achieved market share growth in its premium home theater,
subwoofer, and premium wireless categories, launching a new premium wireless
computer speaker

                                       38

--------------------------------------------------------------------------------
system and selling many of its products through warehouse club channels, as well
as through online platforms, which resulted in an increase of approximately
$118,400 in sales for the year ended February 28, 2021. The Company's newly
formed subsidiary, 11 Trading Company LLC, also began selling Onkyo and Pioneer
products through new distribution agreements during the third quarter of the
fiscal year, contributing to an increase of approximately $13,700 in sales for
the year ended February 28, 2021. Within Europe, the Company experienced
stronger online sales during year ended February 28, 2021 of approximately
$6,300 due to many consumers shopping from home during the COVID-19 pandemic, as
well as an increase in sales in its Do It Yourself ("DIY") line of products, a
new sales channel of discount retailers, and a shift in focus of premium audio
products in Europe from low margin to traditional home theater products.
Offsetting these sales increases were decreases in sales related to the COVID-19
pandemic, as well as other factors. The Company experienced decreases in sales
of approximately $12,200 in certain consumer electronic and accessory products
for the year ended February 28, 2021, such as reception products, remotes,
wireless speakers, and other power products, primarily due to nationwide brick
and mortar business closures and delayed customer orders related to the COVID-19
pandemic, as well as due to the Company's continuing rationalization of SKUs for
certain of these products, with the goal of limiting sales of lower margin
products. There was also a decrease in sales of the Company's premium commercial
speaker products of approximately $3,100 due to the shut-down of cinemas during
the pandemic. Additionally, the Company experienced a decrease in sales of its
motion products during the year ended February 28, 2021 of approximately $2,700,
as one of the Company's healthcare programs ended during the fiscal year, and
there was a decrease in sales of smart home security products of approximately
$800, as the Company began exiting this category during Fiscal 2020. Finally,
product sales in the Company's rest of world locations declined approximately
$700 as a result of the COVID-19 pandemic due to overseas lockdowns and customer
order delays and cancellations.

Biometrics represented 0.1% of our net sales for both of the years ended
February 28, 2021 and February 29, 2020 and sales increased in the segment by
$375 for the year ended February 28, 2021 as compared to the prior year. This
segment experienced an increase in product sales for the year ended February 28,
2021 due to increased sales of its EXT outdoor perimeter access product, and the
updated version of its Nano NXT perimeter access product, both of which launched
in the second quarter of Fiscal 2020. Additionally, the Company began selling
its NIXT product during the year ended February 28, 2021, which can be
optionally fitted with iTEMP, a product that can take an individual's
temperature before allowing iris access.

Fiscal 2020 compared to Fiscal 2019

Automotive Electronics sales, which include both OEM and aftermarket automotive
electronics, represented 28.9% of the net sales for the year ended February 29,
2020, compared to 36.2% in the prior year. Sales in this segment decreased
during the year ended February 29, 2020 as compared to the prior year due to
various factors, including a decline in sales of the Company's EVO rear seat
entertainment product line, which was due in part to slower sales for certain
programs that began in the prior year and the discontinuation of two planned
programs, which is attributable to a softening of global automotive industry
sales during the year. The Company's OEM and aftermarket security and remote
start sales also declined during the year ended February 29, 2020 as a result of
competition due in part to a shift in demand from analog to digital remote start
products, as well as the discontinuation of passive entry programs with certain
customers. Sales of aftermarket satellite radio and headrest products have
declined for the year ended February 29, 2020 as compared to the prior year, as
a result of an increase in standard factory equipped vehicles with these
options, as well as due to price competition and increased tariffs for
aftermarket headrest products. Additionally, during the year ended February 29,
2020, the Company made a non-refundable up-front payment to one of its customers
as consideration for a future OEM program award, which resulted in a reduction
of revenue. Offsetting the sales declines in this segment for the year ended
February 29, 2020 were increases in sales of certain aftermarket safety and
security products as compared to the prior year, as well as sales related to the
Company's newly acquired Vehicle Safety Holdings Corp. business in the fourth
quarter.

Consumer Electronics sales represented 70.8% of net sales for the year ended
February 29, 2020 as compared to 63.4% in the prior year. Sales decreased for
the year ended February 29, 2020 as compared to the prior year due to several
factors. The Company experienced decreases in sales of certain products, such as
in the Project Nursery line, as a result of the elimination of baby video
monitors; in wireless and bluetooth speakers, due a reduction in product
placement with one of the Company's larger customers and the timing of annual
orders from another; in sales of smart home products, as the Company is exiting
this category; and in karaoke products, due to a one time holiday sale to one of
the Company's customers in the prior year that did not repeat in the current
fiscal year. The Company also continued to see a decline in sales of certain
hook-up, power products, and headphones, as a result of changes in

                                       39

--------------------------------------------------------------------------------
customer demand and technology, and due to the Company's continuing
rationalization of SKUs in Fiscal 2020, with the goal of limiting sales of lower
margin products. Within Europe, the Company experienced decreases in sales
across all product lines, as well as in the DIY business during the year ended
February 29, 2020 as a result of a slowdown in the European market. Offsetting
these decreases, the Company had an increase in sales within both of its premium
mobility and premium wireless and bluetooth speaker categories as a result of
the launch of new lines of soundbars, Bluetooth speakers, and wireless earbuds,
as well as stronger sales of several existing products. The Company's premium
home separate speaker product sales also increased as a result of the continued
successful sales of its new domestic product lines that launched during the
second quarter of Fiscal 2019, and additional distribution partners for the
Company's premium commercial speaker products had a favorable impact on sales
for the year ended February 29, 2020 as well. Additionally, reception product
sales were up for the year ended February 29, 2020 as a result of expanded SKU
offerings with certain customers and stronger market share, and sales of the
Company's activity bands have increased year over year as a result of increased
motion program participants, as well as additional product offerings for
participants, including the Apple watch and Fitbit.

Biometrics represented 0.1% of our net sales for the year ended February 29,
2020, compared to 0.2% in the prior year. This segment experienced a decrease in
product sales for the year ended February 29, 2020 as a result of its product
mix, as the Company was selling more of its higher dollar Hbox products during
the year ended February 28, 2019. During the year ended February 29, 2020, the
Company began selling its EXT outdoor perimeter access product, as well as an
updated version of its Nano NXT perimeter access product, which both sell at a
lower price point and have not yet achieved the sales volumes to surpass prior
year sales dollars.

Gross Profit and Gross Margin Percentage

                          Fiscal        Fiscal        Fiscal
                           2021          2020          2019

Automotive Electronics $ 39,296 $ 23,131 $ 40,621

                              24.0 %        20.3 %        25.1 %

Consumer Electronics 118,866 86,588 82,230

                              29.8 %        31.0 %        29.0 %
Biometrics                    (191 )        (160 )      (1,082 )
                             -22.8 %       -34.7 %       -98.5 %
Corporate                      576           217          (352 )
                         $ 158,547     $ 109,776     $ 121,417
                              28.1 %        27.8 %        27.2 %

Fiscal 2021 compared to Fiscal 2020

Gross margins in the Automotive Electronics segment increased 370 basis points
for the year ended February 28, 2021. The primary driver of the margin increases
in this segment has been sales of OEM and aftermarket products related to the
Company's VSM and DEI subsidiaries, whose products have higher profit margins
than those typically achieved by the segment. DEI's sales were not present in
the prior year, and VSM contributed to sales for one month of Fiscal 2020, or 2%
of the segment's sales. The increase in sales of higher margin aftermarket
remote start and security products also contributed positively to the segment's
margins during the year ended February 28, 2021. Offsetting these positive
impacts, the decline in sales of higher margin OEM security and remote start
products during the year ended February 28, 2021, due to the shift in demand
from accessory level remote starts to production level, factory installed remote
starts, caused a decline in margins. In addition, there was a decline in
aftermarket headrest sales during the year ended February 28, 2021, which
typically generate higher margins for the segment and thus had a negative impact
on margins for the year.

Gross margins in the Consumer Electronics segment decreased 120 basis points for
the year ended February 28, 2021 compared to the prior year. Margin declines
during the year ended February 28, 2021 were primarily driven by the Company's
newest line of premium wireless computer speakers, as well as other premium
audio products sold through warehouse club channels, which have contributed
positively to sales, but have been sold at lower margins than those typically
associated with the Company's premium wireless speaker products. The Company's
premium headphone margins also negatively impacted the segment's overall margins
during the year ended February 28, 2021 due to close out sales of certain older
products in preparation for the launch of its newest line of wireless earbuds,

                                       40

--------------------------------------------------------------------------------
which contributed to an increase in sales of these product, but a decline in the
margins. Additionally, although sales in Europe have increased during the year
ended February 28, 2021, the increase in sales generated from a new sales
channel of discount retail customers has generated lower margins and has had a
negative impact on the year. As an offset to these negative impacts, the segment
has experienced margin increases during the year ended February 28, 2021 due to
factors including a shift in focus of premium audio products in Europe from low
margin to traditional home theater products. Additionally, while the Company
experienced decreases in sales of certain product lines during the year ended
February 28, 2021, such as reception products and remotes, the margins earned on
these products improved as compared to the prior year due to the movement of
production out of China.

Gross margins in the Biometrics segment improved for the year ended February 28,
2021 compared to the prior year. The increase in margins for the year ended
February 28, 2021 was primarily a result of prior year events that negatively
impacted the segment's margins in Fiscal 2020. Certain tooling and defective
repair costs incurred during the year ended February 29, 2020, as well as the
provision of beta samples to certain customers at no cost during the prior year,
negatively impacted Fiscal 2020 margins. A large sale made at a loss during the
year ended February 29, 2020 also caused lower margins in the prior year. During
the year ended February 28, 2021, the Company provided more onsite and remote
support to customers, which generates higher margins for the segment. Offsetting
these positive margin impacts for the year ended February 28, 2021 has been the
reduction in pricing on certain products, which has helped to drive higher sales
in Fiscal 2021 but has resulted in lower margins for the segment. In addition,
the release of inventory reserves in the prior year had a positive impact on the
segment's gross margin in Fiscal 2020, thus negatively impacting the current
year margin comparisons.

Fiscal 2020 compared to Fiscal 2019

Gross margins in the Automotive Electronics segment decreased 480 basis points
for the year ended February 29, 2020. The decrease in margins was driven
primarily by the declines in higher margin OEM security, remote start, and rear
seat entertainment sales, which also resulted in lower absorption of fixed
overhead costs in the current year periods, further decreasing margins for the
segment. Additionally, slow moving write-off adjustments were made during the
fiscal year, in part due to the slower rear seat entertainment sales and the
discontinuation of certain programs. There was also a decline in aftermarket
headrest product sales, which typically generate higher margins for the segment.
Margins were negatively affected further during the year ended February 29, 2020
by tariff increases, as certain of the Company's products are manufactured in
China, while production of certain other products were relocated to other
countries with higher labor costs. During the year ended February 29, 2020, the
Company also made a non-refundable up-front payment to a customer as
consideration for a future OEM program award, which negatively impacted margins.
As an offset to these margin declines during the year ended February 29, 2020,
the Automotive Electronics segment experienced declines in satellite radio
sales, which contribute lower margins to the group, while increased sales of
certain aftermarket security products and products related to the newly acquired
Vehicle Safety Holdings Corp. business contributed favorably to margins for the
year.

Gross margins in the Consumer Electronics segment increased 200 basis points for
the year ended February 29, 2020 compared to the prior year. Margin increases
during the year ended February 29, 2020 were driven in part by increased sales
of the Company's high margin premium wireless and bluetooth speakers, mobility
products, home separate, and commercial speakers, as well as the result of heavy
discounts offered on older mobility products in the prior year, such as wired
headphones and neckbands, that did not repeat in the current year. Margins have
been negatively affected during the year ended February 29, 2020 by tariff
increases, as certain of the Company's products are manufactured in China, while
production of certain other products were relocated to other countries with
higher labor costs. The Company offset some of the effects of these tariff
increases, where possible, with price increases. Margin declines were also
driven by declining sales of products with typically higher margins, such as
Project Nursery and karaoke products, as well as by sales declines within the
European market and higher warehousing costs incurred related to the use of a
third party for warehousing services in Europe beginning during the first
quarter of Fiscal 2020.

Gross margins in the Biometrics segment increased for the year ended
February 29, 2020 compared to the prior year. These increases were primarily due
to the write off slow moving inventory and parts in Fiscal 2019 related to its
myris product, which negatively impacted margins in the prior year. Offsetting
these factors were sales of certain inventory during the year ended February 28,
2019 that had been previously written off, and contributed positively to margins
in the prior year, as well as higher sales of licensing fees in the prior year,
which earned higher margins for the segment. Additionally, during the year ended
February 29, 2020, the Company incurred certain tooling and

                                       41

--------------------------------------------------------------------------------
defective repair costs, as well as provided beta samples to certain customers
and prospects at no charge, which negatively impacted margins for the current
fiscal year.

Operating Expenses



                                       Fiscal        Fiscal        Fiscal
                                        2021          2020          2019
Operating Expenses:
Selling                               $  43,786     $  39,319     $  41,731
General and administrative               70,085        68,928        66,935

Engineering and technical support 20,897 21,602 24,387 Intangible asset impairment charges 1,300 30,230 25,789 Restructuring expense

                         -             -         4,588
Total Operating Expenses              $ 136,068     $ 160,079     $ 163,430

Fiscal 2021 compared to Fiscal 2020

The Company experienced an overall decrease in operating expenses of $24,011 for
Fiscal 2021 as compared to Fiscal 2020; however, in the absence of intangible
asset impairment charges in both years, operating expenses would have increased
by $4,919.

Selling expenses have increased $4,467 for the year ended February 28,
2021. This increase was primarily due to increased commission expense of
approximately $4,600 as a result of higher sales for the fiscal year. A net
increase in salary expense of approximately $1,200 was due to the additional
headcount created by acquisitions resulting in the establishment of the VSM and
DEI subsidiaries in the fourth quarter of Fiscal 2020 and the second quarter of
Fiscal 2021, respectively, as well as additional hires related to the Company's
new 11 Trading Company subsidiary related to distribution agreements for Onkyo
and Pioneer products. This was slightly offset by the furlough of certain
employees during the fiscal year due to the COVID-19 pandemic. Web advertising
and platform expenses increased approximately $1,800 for the year ended February
28, 2021 due to an increase in online traffic, with many consumers working and
shopping from home during the mandatory quarantines and business shutdowns
throughout the country as a result of the pandemic. Additionally, credit card
fees increased approximately $600 primarily as a result of the Company's DEI
subsidiary, established in connection with the Company's acquisition in the
second quarter of Fiscal 2021, whose subscription sales are transacted online.
Offsetting these increases in selling expenses for the year ended February 28,
2021 were decreases due to factors directly related to the COVID-19 pandemic,
which resulted in the temporary shut-down of many brick and mortar stores and
mandatory quarantine orders during the first quarter of our Fiscal 2021 year,
with phased re-openings taking place beginning in the second quarter through the
remainder of our fiscal year. The elimination of all non-essential travel
Company-wide resulted in a decrease in travel and entertainment expenses of
approximately $1,700. Additionally, trade show expenses decreased approximately
$1,800 as all events were either cancelled or held virtually due to COVID-19.

General and administrative expenses increased $1,157 during the year ended
February 28, 2021. Increases in general and administrative expenses were due in
part to a net increase in salary expense of approximately $3,300 during the
fiscal year. Salary increases were due to higher bonus accruals as a result of
the positive performance of the Company for the year ended February 28, 2021, as
well as due to increased headcount resulting from the Company's new DEI and VSM
subsidiaries established in the fourth quarter of Fiscal 2020 and the second
quarter of Fiscal 2021, respectively. This was offset by the furlough of certain
employees during the year ended February 28, 2021, as well as due to the prior
year grant of 200,000 fully vested shares of Class A Common Stock to the
Company's Chief Executive Officer in accordance with his employment agreement,
which resulted in compensation expense of approximately $800 for the year ended
February 29, 2020 that did not repeat in the current fiscal year. Professional
fees also increased by approximately $1,300 as a result of acquisition-related
services provided in connection with the Company's DEI and VSM subsidiaries and
insurance expense increased approximately $400 as a result of the deductible
related to an IT security incident in the second quarter of the fiscal year, as
well as due to the Company's new VSM, DEI, and 11 Trading Company LLC
subsidiaries. As an offset to these general and administrative expense increases
were decreases related to the COVID-19 pandemic, as well as other factors.
Depreciation and amortization expense decreased approximately $1,300, net, for
the year ended February 28, 2021 as a result of the impairment of certain
definite-lived intangible assets at EyeLock in Fiscal 2020, which reduced the
amortizable base of these assets. This was offset by increases in depreciation
and amortization expense related to newly acquired

                                       42

--------------------------------------------------------------------------------
tangible and intangible assets within the VSM and DEI subsidiaries. Bad debt
expense decreased approximately $1,100 as a result of the prior year reserves of
certain customers who filed bankruptcy, which did not repeat in the current
year, as well as due to the recovery of certain balances during the year ended
February 28, 2021 that were previously written off. The elimination of all
non-essential travel as a result of the COVID-19 pandemic resulted in travel and
entertainment expense decreases of approximately $900 for the year ended
February 28, 2021. Additionally, office and occupancy expenses decreased
approximately $700 due to lower overhead, as certain of the Company's offices
were shut down during the first and second quarters of the fiscal year due to
the COVID-19 pandemic, and many re-opened offices have remained at a reduced
capacity through the remainder of the fiscal year.

Engineering and technical support expenses for the year ended February 28, 2021
declined $705 as compared to the prior year. For the year ended February 28,
2021, furloughs and headcount reductions at many of the Company's locations
related to the COVID-19 pandemic resulted in lower labor expenses of
approximately $3,000. The elimination of all non-essential travel as a result of
the pandemic also resulted in travel and entertainment expense decreases of
approximately $500. These decreases were offset by increases in labor of
approximately $2,600 as a result of the Company's new VSM and DEI subsidiaries
established in connection with the Company's acquisitions in the fourth quarter
of Fiscal 2020 and second quarter of Fiscal 2021, respectively.

In connection with its annual impairment test performed as of the last day of
the fourth quarter of Fiscal 2021, the Company determined that one of its
trademarks in the Consumer Electronics segment was impaired. The impairment was
the result of shortfalls in sales due to reduced demand of the product
category. As a result, an impairment charge of $1,300 was recorded for the year
ended February 28, 2021.

In connection with its annual impairment test performed as of the last day of
the fourth quarter of Fiscal 2020, the Company determined that several of its
indefinite-lived intangible assets within the Consumer Electronics segment, as
well as certain indefinite-lived and definite-lived intangible assets within the
Biometrics segment were impaired. The impairments within the Consumer
Electronics segment were the result of the Company being unable to secure
product placement into customer stores, anticipated shortfalls in sales due to
economic uncertainty as a result of the COVID-19 pandemic, reduced demand from a
large traditional brick-and-mortar customer, along with continued declines in
the German economy. The impairments within the Biometrics segment were the
result of lack of customer acceptance of the related technology, lower than
anticipated results, adjusted expectations for demand, and anticipated delays of
product deployment with target customers due to economic uncertainty related to
the COVID-19 pandemic. The Company recorded total impairment charges of $30,230
for the year ended February 29, 2020 related to these impairments.

Fiscal 2020 compared to Fiscal 2019

The Company experienced an overall decrease in operating expenses of $3,351 for Fiscal 2020 as compared to Fiscal 2019.

Selling expenses have decreased for the year ended February 29, 2020 due to
various factors, including headcount reductions related to Fiscal 2019
restructuring activities, lower commissions as a result of the decline in sales
for the year, lower trade show expenses due to attending fewer shows, and lower
advertising costs and display amortization expense, due to cost cutting
measures, as well as the fact that many displays and fixtures are fully
amortized or have been removed. These expense decreases were offset by salary
increases resulting from transfers of certain employees from general and
administrative to selling in conjunction with restructuring activities taking
place in Fiscal 2019, and additional hires at the Company's Klipsch, Oehlbach
and Schwaiger subsidiaries, as well as higher web fees as a result of an
increase in the Company's online platform activity and web advertising.

General and administrative expenses increased during the year ended February 29,
2020. During the year ended February 29, 2020, the Company granted 200,000 fully
vested common shares to the Company's Chief Executive Officer, as well as
granted additional shares which vest on future dates in accordance with his
employment agreement signed in July 2019, resulting in an increase in
compensation expense of approximately $1,700 for the year ended February 29,
2020. Additionally, during the year ended February 28, 2019, the Company
received reimbursement of approximately $3,000 for certain professional fees and
disbursements resulting from the favorable outcome of a lawsuit, which did not
occur during the year ended February 29, 2020. Disregarding these specific
items, general and administrative expenses would have decreased for the year.
General and administrative expenses were also higher during the year ended
February 29, 2020 due to higher payroll expenses resulting from increased
medical claims as compared to the prior year. Offsetting the increases to
general and administrative expenses discussed above were decreases in salary
expense during the year ended February 29, 2020 due to reductions in

                                       43

--------------------------------------------------------------------------------
headcount and the transfer of certain employees to selling in conjunction with
Fiscal 2019 restructuring activities, lower executive salaries due to salary and
bonus structures under new employment agreements, as well as lower office and
equipment rental expenses as a result of cost containment measures and lease
expirations that were not renewed.

Engineering and technical support expenses for the year ended February 29, 2020
declined as compared to the prior year. For the year ended February 29, 2020,
expenses were down primarily due to headcount reduction at certain of the
Company's subsidiaries, decreased research and development spending related to
projects that were completed during the current year period, as well as due to
the movement of work related to certain projects utilizing outside contractors
to in-house employees at both EyeLock and Invision. These declines were
partially offset by an increase in research and development expenses related to
the start of new projects and higher certification fees for certain products
under development, as well as salary and related expenses resulting from new
hires at certain subsidiaries.

In connection with its annual impairment test performed as of the last day of
the fourth quarter of Fiscal 2020, the Company determined that several of its
indefinite-lived intangible assets within the Consumer Electronics segment, as
well as certain indefinite-lived and definite-lived intangible assets within the
Biometrics segment were impaired. The impairments within the Consumer
Electronics segment were the result of the Company being unable to secure
product placement into customer stores, anticipated shortfalls in sales due to
economic uncertainty as a result of the COVID-19 pandemic, reduced demand from a
large traditional brick-and-mortar customer, along with continued declines in
the German economy. The impairments within the Biometrics segment were the
result of lack of customer acceptance of the related technology, lower than
anticipated results, adjusted expectations for demand, and anticipated delays of
product deployment with target customers due to economic uncertainty related to
the COVID-19 pandemic. The Company recorded total impairment charges of $30,230
for the year ended February 29, 2020 related to these impairments.

Other (Expense)Income



                                                 Fiscal       Fiscal       Fiscal
                                                  2021         2020         2019
Interest and bank charges                       $ (2,979 )   $ (2,975 )   $  (3,788 )
Equity in income of equity investee                7,350        5,174       

6,618

Gain on sale of real property                          -        4,057       

-

Impairment of Venezuela investment properties          -            -        (3,473 )
Impairment of notes receivable                         -            -       (16,509 )
Investment gain (loss)                                42          775          (530 )
Other, net                                           746        2,332           732
Total other (expense) income                    $  5,159     $  9,363     $ (16,950 )

Fiscal 2021 compared to Fiscal 2020

Interest and bank charges represent expenses for the Company's bank obligations
and supply chain financing arrangements, interest related to finance leases, and
amortization of deferred financing costs. Interest and bank charges were
relatively flat comparing the year ended February 28, 2021 to the prior year.
During the second half of Fiscal 2020, the Company repaid the entire outstanding
balance of its asset-based lending facility in Germany, thus eliminating the
interest expense related to this obligation for the year ended February 28,
2021, which was offset by interest paid on the $20,000 precautionary borrowing
from the Company's Credit Facility in Fiscal 2021, which was outstanding from
April 2020 through November 2020.

Equity in income of equity investee represents the Company's share of income
from its 50% non-controlling ownership interest in ASA Electronics, LLC ("ASA").
The increase in income for the year ended February 28, 2021 is due to an
increase in ASA's gross profit, lower overhead, and growth in the RV and marine
markets.

On September 30, 2019, the Company, through its subsidiary Voxx German Holdings
Gmbh (the "Seller"), sold its real property in Pulheim, Germany to CLM S.A. RL
(the "Purchaser") for €10,920. Net proceeds received from the transaction were
approximately $9,500 after transactional costs and repayment of the outstanding
mortgage. Concurrently with the sale, the Seller entered into an operating lease
arrangement with the Purchaser for a small portion of the real property to
continue to operate its sales office in Germany. The transaction qualified for
sale

                                       44

--------------------------------------------------------------------------------
leaseback accounting in accordance with ASC 842 and the Company recognized a
gain on the execution of the sale transaction for the year ended February 29,
2020.

During Fiscal 2018, the Company sold its investment in RxNetworks, a
non-controlled corporation, consisting of shares of the investee's preferred
stock. Voxx recognized a gain during Fiscal 2018 for the sale of this
investment; however, a portion of the cash proceeds were subject to a hold-back
provision, which was not included in the gain recognized in Fiscal 2018. During
the second quarter of Fiscal 2020, the hold-back provision expired, and the
Company received additional proceeds from the sale, recording an investment gain
of $775 for the year ended February 29, 2020. A final payout of $42 received in
November 2020 was recorded as an investment gain for the year ended February 28,
2021. During the fourth quarter of Fiscal 2019, all of the outstanding common
stock of Fathom Systems Inc., a non-controlled corporation in which Voxx was
invested, were repurchased by the investee for a price per share significantly
below the value when issued. This resulted in a loss on Voxx's investment in
Fathom of $530 for the year ended February 28, 2019.

Other, net includes net foreign currency gains or losses, interest income,
rental income, and other miscellaneous income and expense. Other, net decreased
for the year ended February 28, 2021. During the year ended February 28, 2021,
interest income decreased $835 primarily as a result of lower interest rates
applicable to the Company's short term money market investments and lower cash
balances available for investment during the year. Additionally, the Company had
foreign currency losses of $(862) for the year ended February 28, 2021, as
compared to foreign currency gains of $405 for the year ended February 29, 2020.

Fiscal 2020 compared to Fiscal 2019

Interest and bank charges represent expenses for the Company's bank obligations
and supply chain financing arrangements, interest related to finance leases, and
amortization of deferred financing costs. During the second and third quarters
of Fiscal 2020, the Company temporarily suspended its domestic supply chain
financing, thus resulting in a reduction of the related fees. The Company also
repaid two of its outstanding mortgages and the entire outstanding balance of
its asset-based lending obligation in Germany during the second half of Fiscal
2020, thus reducing interest expense related to these obligations.

Equity in income of equity investee represents the Company's share of income
from its 50% non-controlling ownership interest in ASA Electronics, LLC ("ASA").
The decrease in income for the year ended February 29, 2020 is primarily a
result of the impact of tariffs, increase in warranty costs, as well as due to
certain product recall expenses incurred during the year ended February 29, 2020
that were not present in the prior year.

On September 30, 2019, the Company, through its subsidiary Voxx German Holdings
Gmbh (the "Seller"), sold its real property in Pulheim, Germany to CLM S.A. RL
(the "Purchaser") for €10,920. Net proceeds received from the transaction were
approximately $9,500 after transactional costs and repayment of the outstanding
mortgage. Concurrently with the sale, the Seller entered into an operating lease
arrangement with the Purchaser for a small portion of the real property to
continue to operate its sales office in Germany. The transaction qualified for
sale leaseback accounting in accordance with ASC 842 and the Company recognized
a gain on the execution of the sale transaction for the year ended February 29,
2020.

During Fiscal 2018, the Company sold its investment in RxNetworks, a
non-controlled corporation, consisting of shares of the investee's preferred
stock. Voxx recognized a gain of $1,416 during Fiscal 2018 for the sale of this
investment; however, a portion of the cash proceeds were subject to a hold-back
provision, which was not included in the gain recognized in Fiscal 2018. During
the second quarter of Fiscal 2020, the hold-back provision expired, and the
Company received the remaining proceeds from the sale, recording an investment
gain of $775 for the year ended February 29, 2020. During the fourth quarter of
Fiscal 2019, all of the outstanding common stock of Fathom Systems Inc., a
non-controlled corporation in which Voxx was invested, were repurchased by the
investee for a price per share significantly below the value when issued. This
resulted in a loss on Voxx's investment in Fathom of $530 for the year ended
February 28, 2019.

Other, net includes net foreign currency gains or losses, interest income,
rental income, and other miscellaneous income and expense. Other, net increased
for the year ended February 29, 2020. During the year ended February 29, 2020,
the Company received the proceeds from a key man life insurance policy in the
amount of $1,000, related to a former employee of Klipsch Group, Inc. that Voxx
became the beneficiary of in conjunction with the acquisition of Klipsch in
Fiscal 2012. As an offset to this income, the Company incurred a charge of $804
during the year ended

                                       45

--------------------------------------------------------------------------------
February 29, 2020 for a payment made to TE Connectivity Ltd. in final settlement
of the working capital calculation related to the Fiscal 2018 sale of Hirschmann
Car Communication GmbH.

Income Tax Provision

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act ("CARES
Act") was enacted in response to the COVID-19 pandemic. Under ASC 740, the
effects of changes in tax rates and laws are recognized in the period in which
the new legislation is enacted. The CARES Act made various tax law changes
including among other things (i) increased the limitation under IRC Section
163(j) for 2019 and 2020 to permit additional expensing of interest; (ii)
enacted technical correction so that qualified improvement property can be
immediately expensed under IRC Section 168(k) (iii) made modifications to the
federal net operating loss rules including permitting federal net operating
losses incurred in 2018, 2019, and 2020 to be carried back to the five preceding
taxable years in order to generate a refund of previously paid income taxes, and
(iv) enhanced recoverability of alternative minimum credit carryforwards. The
CARES Act did not have a material impact on the income tax provision.

During Fiscal 2021, the Company recorded an income tax provision of $4,272
related to federal, state, and foreign taxes. The Company's effective tax rate
of 15.5% differs from the statutory rate of 21% primarily related to (i) partial
release of its valuation allowance as a result of recent profitability for which
certain of the Company's deferred tax assets became realizable on a
more-likely-than-not basis; (ii) permanent differences, including the
non-controlling interest and a global intangible low tax income ("GILTI")
inclusion; and (iii) state and local taxes. As of February 28, 2021, the Company
continued to maintain a valuation allowance against certain U.S. and foreign
deferred tax assets as the Company could not conclude that such assets will be
realized on a more-likely-than-not basis. Any decline in the valuation allowance
could have a favorable impact on our income tax provision and net income in the
period in which such determination is made.

The effective tax rate of (2.2)% in Fiscal 2020 differs from the statutory rate
of 21% primarily related to (i) current year losses for which limited tax
benefit was provided; (ii) permanent differences, including the non-controlling
interest and a global intangible low tax income ("GILTI") inclusion; and (iii)
an increase in the valuation allowance recorded against foreign deferred tax
assets. During Fiscal 2020, the Company maintained a partial and full valuation
allowance against certain U.S. and foreign deferred tax assets as the Company
could not conclude that such assets will be realized on a more-likely-than-not
basis. Any decline in the valuation allowance could have a favorable impact on
our income tax provision and net income in the period in which such
determination is made.

The effective tax rate of 10.4% in Fiscal 2019 differs from the statutory rate
of 21% primarily related to current year losses for which limited tax benefit
was provided. During Fiscal 2019, the Company maintained a partial valuation
allowance against certain U.S. and foreign deferred tax assets as the Company
could not conclude that such assets will be realized on a more-likely-than-not
basis. Any decline in the valuation allowance could have a favorable impact on
our income tax provision and net income in the period in which such
determination is made.

EBITDA and Adjusted EBITDA

EBITDA and Adjusted EBITDA are not financial measures recognized by GAAP. EBITDA
represents net income (loss), computed in accordance with GAAP, before interest
expense and bank charges, taxes, and depreciation and amortization. Adjusted
EBITDA represents EBITDA adjusted for stock-based compensation expense, life
insurance proceeds, certain settlements, gains and losses, impairment charges,
restructuring charges, and environmental remediation charges. Depreciation,
amortization, stock-based compensation, and impairment charges are non-cash
items.

We present EBITDA and Adjusted EBITDA in this Form 10-K because we consider them
to be useful and appropriate supplemental measures of our performance. Adjusted
EBITDA helps us to evaluate our performance without the effects of certain GAAP
calculations that may not have a direct cash impact on our current operating
performance. In addition, the exclusion of certain costs or gains relating to
certain events that occurred during the periods presented allows for a more
meaningful comparison of our results from period-to-period. These non-GAAP
measures, as we define them, are not necessarily comparable to similarly
entitled measures of other companies and may not be an appropriate measure for
performance relative to other companies. EBITDA and Adjusted EBITDA should not
be assessed in isolation from, are not intended to represent, and should not be
considered to be more meaningful measures than, or alternatives to, measures of
operating performance as determined in accordance with GAAP.

                                       46

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

Reconciliation of GAAP Net Income Attributable to VOXX International Corporation
                         to EBITDA and Adjusted EBITDA



                                                    Fiscal         Fiscal         Fiscal
                                                     2021           2020           2019
Net income (loss) attributable to VOXX
International Corporation                         $   26,767     $  (26,443 )   $  (46,091 )
Adjustments:
Interest expense and bank charges (1)                  2,404          2,476 

2,223

Depreciation and amortization (1)                     10,907         11,175 

11,112

Income tax expense (benefit)                           4,272            882         (6,131 )
EBITDA                                                44,350        (11,910 )      (38,887 )
Adjustments:
Stock-based compensation                               1,749          2,282            551
Life insurance proceeds                                 (420 )       (1,000 )            -
Gain on sale of real property                              -         (4,057 )            -
Settlement of Hirschmann working capital                   -            804              -
Impairment of investment properties in
Venezuela                                                  -              - 

3,473

Impairment of notes receivable                             -              - 

16,509

Investment (gain) loss                                   (42 )         (775 )          530
Environmental remediation charges                          -              -            454
Restructuring charges                                      -              - 

4,588

Intangible asset impairment charges (1)                1,300         19,543         25,789
Adjusted EBITDA                                   $   46,937     $    4,887     $   13,007

(1) For purposes of calculating Adjusted EBITDA for the Company, interest

expense, bank charges, depreciation and amortization, and intangible asset

impairment charges added back to net income (loss) have been adjusted in

order to exclude the minority interest portion of these expenses attributable

to EyeLock LLC.

Liquidity and Capital Resources

Cash Flows, Commitments and Obligations

As of February 28, 2021, we had working capital of $172,543 which includes cash
and cash equivalents of $59,404 compared with working capital of $146,798 at
February 29, 2020, which included cash and cash equivalents of $37,425. We plan
to utilize our current cash position as well as collections from accounts
receivable, the cash generated from our operations, when applicable, and the
income on our investments to fund the current operations of the
business. However, we may utilize all or a portion of current capital resources
to pursue other business opportunities, including acquisitions, or to further
pay down our debt.  The following table summarizes our cash flow activity for
all periods presented:



                                            Year                Year                Year
                                            Ended               Ended               Ended
                                        February 28,        February 29,        February 28,
                                            2021                2020                2019
Cash provided by (used in):
Operating activities                   $        36,611     $        (1,009 )   $        22,562
Investing activities                           (13,865 )            (6,709 )           (11,037 )
Financing activities                            (1,940 )           (12,593 )              (924 )
Effect of exchange rate changes on
cash                                             1,173                (500 )            (4,105 )
Net increase (decrease) in cash and
cash equivalents                       $        21,979     $       (20,811 )   $         6,496




                                       47

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

Net cash used in/provided by operating activities:

Operating activities provided cash of $36,611 for Fiscal 2021, due to factors
including sales increases, as well as increases in accounts payable, accrued
expenses, and accrued sales incentives. This was offset by increases in
inventory and accounts receivable, which were driven by the increases in sales
during the fiscal year, as well as due to losses incurred by EyeLock LLC.

During Fiscal 2020, operating activities used cash of $1,009, due to factors
including sales declines and losses incurred by EyeLock LLC, as well as
decreases in accounts payable, accrued expenses, and accrued sales incentives.
This was offset by decreases in inventory and accounts receivable, which were
driven by the decreases in sales.

During Fiscal 2019, operating activities provided cash of $22,562, partially due
to a decrease in inventory, as the Company purchases its inventory in line with
sales levels, which have declined in the current fiscal year, as well as a
decrease in prepaid expenses and other assets. This was offset by lower earnings
achieved by the Company in Fiscal 2019, driven in part by sales declines and
losses incurred by EyeLock LLC. The Company also had a decrease in accounts
receivable, directly resulting from lower sales in the fiscal year.

Net cash used in/provided by investing activities:

Investing activities used cash of $13,865 during Fiscal 2021, primarily due to
the acquisition of DEI in July 2020 (see Note 2), as well as capital additions
made by the Company.

Investing activities used cash of $6,709 during Fiscal 2020, primarily due to
the acquisition of VSM in January 2020 (see Note 2), as well as capital
additions made by the Company. This was offset by the proceeds received from the
sale of the Company's real property in Pulheim, Germany (see Note 11).

Investing activities used cash of $11,037 during Fiscal 2019, primarily as a
result of the issuance of notes receivable to 360fly, Inc. (see Note 1(f)), as
well as capital additions made by the Company.

Net cash used in/provided by financing activities:

Financing activities used cash of $1,940 during Fiscal 2021, primarily due to
the repayment of the Company's precautionary borrowing of $20,000 from the
Credit Facility, payments on the Florida Mortgage, repayments of finance leases,
and the payment of deferred finance fees related to the amendment of the Credit
Facility in Fiscal 2021, offset by the precautionary borrowing of $20,000 made
in April 2020.

During Fiscal 2020, financing activities used cash of $12,593, primarily due to
the repayment of outstanding bank obligations, including the entire outstanding
balance of Voxx Germany's Euro asset-based lending facility, and the repurchase
of shares of the Company's Class A common stock.

During Fiscal 2019, financing activities used cash of $924 primarily due to the
repayment of outstanding bank obligations, which include mortgages, capital
leases, and an asset-based lending facility in Germany, offset by borrowings
related to the German asset-based lending facility.

The Company has a senior secured credit facility (the "Credit Facility") that
provides for a revolving credit facility with committed availability of up to
$127,500. The Credit Facility also includes a $30,000 sublimit for letters of
credit and a $15,000 sublimit for swingline loans. The availability under the
revolving credit line within the Credit Facility is subject to a borrowing base,
which is based on eligible accounts receivable, eligible inventory and certain
real estate, subject to reserves as determined by the lender, and is also
limited by amounts outstanding under the Florida Mortgage (see Note 7(b)). As of
February 28, 2021, there was no balance outstanding under the revolving credit
facility. The availability under the revolving credit line of the Credit
Facility was $96,745 as of February 28, 2021.

All amounts outstanding under the Credit Facility will mature and become due on
April 26, 2022; however, it is subject to acceleration upon the occurrence of an
Event of Default (as defined in the Credit Agreement). The Company may prepay
any amounts outstanding at any time, subject to payment of certain breakage and
redeployment costs relating to LIBOR Rate Loans. The commitments under the
Credit Facility may be irrevocably reduced at any time, without premium or
penalty, as set forth in the Credit Facility.

                                       48

--------------------------------------------------------------------------------
Generally, the Company may designate specific borrowings under the Credit
Facility as either Base Rate Loans or LIBOR Rate Loans, except that swingline
loans may only be designated as Base Rate Loans. Loans under the Credit Facility
designated as LIBOR Rate Loans shall bear interest at a rate equal to the
then-applicable LIBOR Rate plus a range of 2.00% - 2.50%. Loans under the Credit
Facility designated as Base Rate Loans shall bear interest at a rate equal to
the applicable margin for Base Rate Loans of 1.00% - 1.50%, as defined in the
Credit Facility.

Provided that the Company is in a Compliance Period (the period commencing on
that day in which Excess Availability is less than 20% of the Maximum Revolver
Amount and ending on a day in which Excess Availability is equal to or greater
than 20% for any consecutive 30-day period thereafter), the Credit Facility
requires compliance with a financial covenant calculated as of the last day of
each month, consisting of a Fixed Charge Coverage Ratio. The Credit Facility
also contains covenants, subject to defined carveouts, that limit the ability of
the loan parties and certain of their subsidiaries which are not loan parties
to, among other things: (i) incur additional indebtedness; (ii) incur liens;
(iii) merge, consolidate or dispose of a substantial portion of their business;
(iv) transfer or dispose of assets; (v) change their name, organizational
identification number, state or province of organization or organizational
identity; (vi) make any material change in their nature of business; (vii)
prepay or otherwise acquire indebtedness; (viii) cause any Change of Control;
(ix) make any Restricted Junior Payment; (x) change their fiscal year or method
of accounting; (xi) make advances, loans or investments; (xii) enter into or
permit any transaction with an Affiliate of any Borrower or any of their
Subsidiaries; (xiii) use proceeds for certain items; (xiv) issue or sell any of
their stock; or (xv) consign or sell any of their inventory on certain terms. In
addition, if excess availability under the Credit Facility were to fall below
certain specified levels, as defined in the agreement, the lenders would have
the right to assume dominion and control over the Company's cash. As of February
28, 2021, the Company was not in a Compliance Period.

The obligations under the Credit Facility are secured by a general lien on and security interest in substantially all of the assets of the borrowers and certain of the guarantors, including accounts receivable, equipment, real estate, general intangibles, and inventory. The Company has guaranteed the obligations of the borrowers under the Credit Facility.

On April 19, 2021, the Company amended the Credit Facility. Under the amendment,
the committed availability of the revolving credit facility was revised to
$140,000 and the maturity date of the facility was extended to April 19, 2026
(see Note 17).

The Company has a Euro asset-based loan facility in Germany with a credit limit
of €8,000 that expires on July 31, 2023. The Company's subsidiaries Voxx German
Holdings GmbH, Oehlbach Kabel GmbH, and Schwaiger GmbH are authorized to borrow
funds under this facility for working capital purposes.

The Company also utilizes supply chain financing arrangements and factoring
agreements from time to time as a component of its financing for working
capital, which accelerates receivable collection and helps to better manage cash
flow. Under these agreements, the Company has agreed from time to time to sell
certain of its accounts receivable balances to banking institutions who have
agreed to advance amounts equal to the net accounts receivable balances due,
less a discount as set forth in the respective agreements (see Note 1(h)). The
balances under these agreements are accounted for as sales of accounts
receivable, as they are sold without recourse. Cash proceeds from these
agreements are reflected as operating activities included in the change in
accounts receivable in the Company's Consolidated Statements of Cash Flows. Fees
incurred in connection with the agreements are recorded as interest expense by
the Company. During Fiscal 2020, the Company temporarily suspended its domestic
supply chain financing activities; however, the Company has resumed its
activities under all supply chain financing arrangements during Fiscal 2021 in
response to general economic concerns related to the COVID-19 pandemic.

As noted elsewhere in this report, we expect the COVID-19 pandemic may continue
to have an adverse effect on our business. Federal, state, and local governments
have taken a variety of actions to contain the spread of COVID-19. Many
jurisdictions required mandatory business closures or imposed capacity
limitations and other restrictions affecting our operations during Fiscal 2021.
We have proactively taken steps to increase available cash including, but not
limited to, utilizing existing supply chain financing agreements that had
previously been suspended during Fiscal 2020 as noted above, and utilizing funds
available under our existing Credit Facility. In April 2020, the Company
borrowed $20,000 from its available Credit Facility funds, which was
subsequently repaid in November 2020. As further noted in Item 7 and elsewhere
in this report, the Company also implemented a number of other measures to help
preserve liquidity in response to the COVID-19 pandemic.

                                       49

--------------------------------------------------------------------------------
Certain contractual cash obligations and other commitments will impact our short
and long-term liquidity. At February 28, 2021, such obligations and commitments
are as follows:



                                                    Amount of Commitment Expiration per Period
                                                       Less than        1-3          4-5          After
Contractual Cash Obligations               Total         1 Year        Years        Years        5 Years
Finance lease obligations (1)            $     720     $      418     $    302     $      -     $       -
Operating lease obligations (1)              4,701          1,119        1,581          912         1,089
Total contractual cash obligations       $   5,421     $    1,537     $  1,883     $    912     $   1,089

Other Commitments
Bank obligations (2)                     $       -     $        -     $      -     $      -     $       -
Stand-by letters of credit (3)              19,656         19,656            -            -             -
Other (4)                                    7,114            500        1,000        1,000         4,614
Pension obligation (5)                         827              -            -            -           827

Unconditional purchase obligations (6) 158,886 158,886

  -            -             -
Total commercial commitments             $ 186,483     $  179,042     $  1,000     $  1,000     $   5,441
Total Commitments                        $ 191,904     $  180,579     $  2,883     $  1,912     $   6,530

(1) Represents total principal payments due under finance and operating lease

obligations. Total current balances (included in other current liabilities)

due under finance and operating leases are $418 and $1,119, respectively, at

February 28, 2021. Total long-term balances due under finance and operating

leases are $302 and $3,582, respectively at February 28, 2021.

(2) Represents amounts outstanding under the Company's domestic Credit Facility

and the VOXX Germany asset-based lending facilities at February 28, 2021.

(3) We issue standby letters of credit to secure certain purchases and insurance

requirements. These letters of credit are issued during the ordinary course

of business through major domestic banks as requested by certain suppliers.

(4) This amount represents the outstanding balance of the mortgage for our

manufacturing facility in Florida.

(5) Represents the liability for an employer defined benefit pension plan

covering certain eligible current and former employees of VOXX Germany.

(6) Open purchase obligations represent inventory commitments. These obligations

are not recorded in the consolidated financial statements until commitments

are fulfilled and such obligations are subject to change based on

negotiations with manufacturers.

We regularly review our cash funding requirements and attempt to meet those
requirements through a combination of cash on hand, cash provided by operations,
available borrowings under bank lines of credit and possible future public or
private debt and/or equity offerings. At times, we evaluate possible
acquisitions of, or investments in, businesses that are complementary to ours,
which transactions may require the use of cash. We believe that our cash, other
liquid assets, operating cash flows, credit arrangements, and access to equity
capital markets, taken together, provides adequate resources to fund ongoing
operating expenditures for the next twelve months, including the intercompany
loan funding we provide to our majority owned subsidiary, EyeLock LLC. In the
event that they do not, we may require additional funds in the future to support
our working capital requirements, or for other purposes, and may seek to raise
such additional funds through the sale of public or private equity and/or debt
financings, as well as from other sources. No assurance can be given that
additional financing will be available in the future or that if available, such
financing will be obtainable on terms favorable when required.

For further information about COVID-19, refer to  "Item 1A. Risk Factors," "Item
7. Management's Discussion and Analysis of Financial Condition and Results of
Operations," and Note 17, "Subsequent Events," of the Notes to the Consolidated
Financial Statements included in "Item 8. Consolidated Financial Statements and
Supplementary Data," of this Annual Report on Form 10-K.

                                       50

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

Off-Balance Sheet Arrangements

We do not maintain any off-balance sheet arrangements, transactions, obligations, or other relationships with unconsolidated entities that would be expected to have a material current or future effect upon our financial condition or results of operations.

Impact of Inflation and Currency Fluctuation

Inflation did not have a material impact on our operations for the years ended
February 28, 2021, February 29, 2020 or February 28, 2019. Severe increases in
inflation, however, could affect the global and U.S. economies and could have an
adverse impact on our business, financial condition, and results of operations.
Discussion of the impact of foreign currency fluctuations is included in Item
7A.

In accordance with the guidelines in ASC 830, Venezuela is designated as a
hyper-inflationary economy. A hyper-inflationary economy designation occurs when
a country has experienced cumulative inflation of approximately 100 percent or
more over a 3-year period. The hyper-inflationary designation requires our local
subsidiary in Venezuela to record all transactions as if they were denominated
in U.S. dollars. Net currency exchange gains (losses) of $37 and $(2) were
recorded for the years ended February 28, 2021 and February 29, 2020,
respectively. All currency exchange gains and losses are included in Other
(Expense) Income on the Consolidated Statements of Operations and Comprehensive
Income (Loss).

The Company has certain U. S. dollar denominated assets and liabilities in its
Venezuelan subsidiary, including our U.S. dollar denominated intercompany debt,
which has been subject to currency fluctuations associated with the devaluation
of the Sovereign Bolivar. The Company also has certain long-lived assets in
Venezuela, which are held for investment purposes. During the second quarter of
Fiscal 2019, the Company assessed the recoverability of these properties as a
result of the country's continued economic deterioration, which included a
significant currency devaluation in August of 2018. The Company estimated the
future undiscounted cash flows expected to be received from these properties.
The estimate of the future undiscounted cash flows considered the Company's
financial condition and its intent and ability to retain its investments for a
period of time sufficient to allow for the recovery of the carrying value. The
future undiscounted cash flows did not exceed the net carrying value for the
long-lived assets. The estimated fair value of the properties, which also
considered the current conditions of the economy in Venezuela, the volatility of
the real estate market, and the significant political unrest, resulted in a full
non-cash impairment charge of $3,473 for the year ended February 28, 2019. This
non-cash impairment charge is included in Other (expense) income on the
Consolidated Statements of Operations and Comprehensive Income (Loss).

Seasonality

We typically experience seasonality in our operations. Our business is
significantly impacted by the holiday season, as we generally sell a substantial
amount of our products during September, October, and November due to increased
promotional and advertising activities during the holiday season.

Related Party Transactions

None noted.

Recent Accounting Pronouncements

We are required to adopt certain new accounting pronouncements. See Note 1(w) of
the Notes to the Consolidated Financial Statements of this Annual Report on Form
10-K.

                                       51

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

Item 7A-Quantitative and Qualitative Disclosures about Market Risk

The market risk inherent in our financial instruments and positions is the potential loss arising from adverse changes in marketable equity security prices, interest rates and foreign currency exchange rates.

Marketable Securities

Marketable securities at February 28, 2021, which are related to the Company's
deferred compensation plan, are recorded at fair value of $1,777 and have
exposure to price fluctuations. This risk is estimated as the potential loss in
fair value resulting from a hypothetical 10% adverse change in prices quoted by
stock exchanges and amounts to $178 as of February 28, 2021. Actual results may
differ.

Interest Rate Risk

Our earnings and cash flows are subject to fluctuations due to changes in
interest rates on investments of available cash balances in money market funds
and investment grade corporate and U.S. government securities. In addition, our
bank loans expose us to changes in short-term interest rates since interest
rates on the underlying obligations are either variable or fixed. In connection
with our Florida Mortgage, we have debt outstanding in the amount of $7,114 at
February 28, 2021. Interest on the Florida Mortgage is charged at 70% of 1-month
LIBOR plus 1.54%. We have an interest rate swap for the Florida Mortgage with a
notional amount of $7,114 at February 28, 2021 which locks the interest rate at
3.48% (inclusive of credit spread) through the mortgage end date of March 2026.

Foreign Exchange Risk

Voxx conducts business in various non-U.S. countries including Germany, Canada,
China, Denmark, the Netherlands, and France and thus is exposed to market risk
for changes in foreign currency exchange rates. As a result, we have exposure to
various foreign currency exchange rate fluctuations for revenues generated by
our operations outside of the U.S., which can adversely impact our net income
and cash flows. A hypothetical 10% adverse change in the foreign currency rates
for our international operations would have resulted in a negative impact on
sales and net income of approximately $9,190 and $1,010, respectively, for the
year ended February 28, 2021.

While the prices we pay for products purchased from our suppliers are
principally denominated in United States dollars, price negotiations depend in
part on the foreign currency of foreign manufacturers, as well as market, trade,
and political factors. The Company also has exposure related to transactions in
which the currency collected from customers is different from the currency
utilized to purchase the product sold in its foreign operations, and U. S.
dollar denominated purchases in its foreign subsidiaries. The Company enters
forward contracts to hedge certain Euro-related transactions. The Company
minimizes the risk of nonperformance on the forward contracts by transacting
with major financial institutions. During Fiscal 2021, 2020, and 2019, the
Company held forward contracts specifically designated for hedging (see Note
1(e) of the Notes to Consolidated Financial Statements). As of February 28, 2021
and February 29, 2020, unrealized (losses) gains of $(720) and $331,
respectively, were recorded in other comprehensive income associated with these
contracts. A hypothetical 10% adverse change in the fair value of our forward
exchange contracts would have resulted in a negative impact of $32 on the fair
value of our forward exchange contracts at February 28, 2021. There were no
foreign currency hedge contracts outstanding at February 29, 2020.

We are also subject to risk from changes in foreign currency exchange rates from
the translation of financial statements of our foreign subsidiaries and for
long-term intercompany loans with foreign subsidiaries. These changes result in
cumulative translation adjustments, which are included in accumulated other
comprehensive (loss) income. At February 28, 2021, we had translation exposure
to various foreign currencies with the most significant being the Euro, Canadian
Dollar, and Mexican Peso. A hypothetical 10% adverse change in the foreign
currency exchange rates would result in a negative impact of $124 on Other
comprehensive (loss) income for the year ended February 28, 2021.

                                       52

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

The Company continues to monitor the political and economic climate in
Venezuela. The Company did not have any sales in Venezuela for the year ended
February 28, 2021 and had no significant cash related assets subject to
government foreign exchange controls. The Company has certain long-lived assets
in Venezuela, which are held for investment purposes. During the second quarter
of Fiscal 2019, the Company assessed the recoverability of these properties as a
result of the country's continued economic deterioration, which included a
significant currency devaluation in August of 2018. The Company concluded that
these properties were fully impaired as of its second quarter ended August 31,
2018 and recorded an impairment charge of $3,473 for the year ended February 28,
2019. The non-cash impairment charge is included in Other (expense) income on
the Consolidated Statements of Operations and Comprehensive (Loss) Income. The
Company's properties held for investment purposes in Venezuela had no value as
of February 28, 2021.

© Edgar Online, source Glimpses