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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐

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

Number of shares of each class of the issuer's common stock outstanding as of the latest practicable date.

	May 31, 2021			February 28, 2021			August 31, 2021			February 28, 2021
	(unaudited)						(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	36,710		$	59,404		$	41,051		$	59,404
Accounts receivable, net		95,498			106,165			90,346			106,165
Inventory		137,723			130,793			145,711			130,793
Receivables from vendors		357			277			362			277
Due from Onkyo (see Note 2)								8,390			0
Prepaid expenses and other current assets		26,864			22,266			24,149			22,266
Income tax receivable		440			434			435			434
Total current assets		297,592			319,339			310,444			319,339
Investment securities		1,685			1,777			1,544			1,777
Equity investment		23,145			23,267			22,457			23,267
Property, plant and equipment, net		51,659			52,026			51,022			52,026
Operating lease, right of use asset		4,559			4,572			4,309			4,572
Goodwill		57,408			58,311			56,958			58,311
Intangible assets, net		88,699			90,104			87,192			90,104
Deferred income tax assets		101			99			98			99
Other assets		990			1,323			798			1,323
Total assets	$	525,838		$	550,818		$	534,822		$	550,818
Liabilities, Redeemable Equity, and Stockholders' Equity
Current liabilities:
Accounts payable	$	46,320		$	61,826		$	58,006		$	61,826
Accrued expenses and other current liabilities		47,893			53,392			47,742			53,392
Income taxes payable		1,868			1,587			1,390			1,587
Accrued sales incentives		21,029			25,313			21,648			25,313
Contract liabilities, current		4,005			4,178			3,698			4,178
Current portion of long-term debt		500			500			1,328			500
Total current liabilities		121,615			146,796			133,812			146,796
Long-term debt, net of debt issuance costs		5,260			5,962			5,192			5,962
Finance lease liabilities, less current portion		229			302			155			302
Operating lease liabilities, less current portion		3,540			3,582			3,327			3,582
Deferred compensation		1,685			1,777			1,544			1,777
Deferred income tax liabilities		7,010			6,645			6,910			6,645
Other tax liabilities		1,079			1,170			1,007			1,170
Other long-term liabilities		4,422			5,255			4,701			5,255
Total liabilities		144,840			171,489			156,648			171,489
Commitments and contingencies (see Note 25)
Commitments and contingencies (see Note 24)
Redeemable equity (see Note 8)		3,226			3,260			3,345			3,260
Stockholders' equity:
Preferred stock:
NaN shares issued or outstanding (see Note 21)		0			0
NaN shares issued or outstanding (see Note 20)								0			0
Common stock:
Class A, $.01 par value, 60,000,000 shares authorized, 24,476,847 and 24,416,194 shares issued and 21,727,629 and 21,666,976 shares outstanding at May 31, 2021 and February 28, 2021, respectively		245			245
Class B Convertible, $.01 par value, 10,000,000 shares authorized, 2,260,954 shares issued and outstanding at both May 31, 2021 and February 28, 2021		22			22
Class A, $.01 par value, 60,000,000 shares authorized, 24,476,847 and 24,416,194 shares issued and 21,614,629 and 21,666,976 shares outstanding at August 31, 2021 and February 28, 2021, respectively								245			245
Class B Convertible, $.01 par value, 10,000,000 shares authorized, 2,260,954 shares issued and outstanding at both August 31, 2021 and February 28, 2021								22			22
Paid-in capital		299,782			300,402			300,019			300,402
Retained earnings		151,622			148,906			151,933			148,906
Accumulated other comprehensive loss		(14,485	)		(14,977	)		(15,634	)		(14,977	)
Less: Treasury stock, at cost, 2,749,218 shares of Class A Common Stock at both May 31, 2021 and February 28, 2021		(23,918	)		(23,918	)
Less: Treasury stock, at cost, 2,862,218 and 2,749,218 shares of Class A Common Stock at August 31, 2021 and February 28, 2021, respectively								(25,138	)		(23,918	)
Less: Redeemable equity		(3,226	)		(3,260	)		(3,345	)		(3,260	)
Total VOXX International Corporation stockholders' equity		410,042			407,420			408,102			407,420
Non-controlling interest		(32,270	)		(31,351	)		(33,273	)		(31,351	)
Total stockholders' equity		377,772			376,069			374,829			376,069
Total liabilities, redeemable equity, and stockholders' equity	$	525,838		$	550,818		$	534,822		$	550,818

	Three months ended May 31,						Three months ended August 31,						Six months ended August 31,
	2021			2020			2021			2020			2021			2020
Net sales	$	137,060		$	71,987		$	143,109		$	128,032		$	280,169		$	200,019
Cost of sales		100,365			52,012			105,923			89,956			206,288			141,968
Gross profit		36,695			19,975			37,186			38,076			73,881			58,051
Operating expenses:
Selling		11,467			8,567			11,838			9,233			23,305			17,801
General and administrative		19,352			14,995			17,884			15,424			36,560			30,294
Engineering and technical support		6,232			4,485			7,886			4,781			14,118			9,266
Acquisition costs								2,316			121			2,992			246
Total operating expenses		37,051			28,047			39,924			29,559			76,975			57,607
Operating loss		(356	)		(8,072	)
Operating (loss) income								(2,738	)		8,517			(3,094	)		444
Other (expense) income:
Interest and bank charges		(528	)		(799	)		(582	)		(1,010	)		(1,110	)		(1,809	)
Equity in income of equity investee		2,723			862			2,035			1,883			4,758			2,745
Other, net		442			685			376			(226	)		818			460
Total other income, net		2,637			748			1,829			647			4,466			1,396
Income (loss) before income taxes		2,281			(7,324	)
Income tax expense		484			1,781
Net income (loss)		1,797			(9,105	)
(Loss) income before income taxes								(909	)		9,164			1,372			1,840
Income tax (benefit) expense								(217	)		2,609			267			4,390
Net (loss) income								(692	)		6,555			1,105			(2,550	)
Less: net loss attributable to non-controlling interest		(919	)		(833	)		(1,003	)		(785	)		(1,922	)		(1,618	)
Net income (loss) attributable to VOXX International Corporation	$	2,716		$	(8,272	)	$	311		$	7,340		$	3,027		$	(932	)
Other comprehensive income (loss):
Foreign currency translation adjustments		372			504			(1,334	)		3,025			(962	)		3,529
Derivatives designated for hedging		119			(177	)		163			(294	)		282			(471	)
Pension plan adjustments		1			(14	)		22			(65	)		23			(79	)
Other comprehensive income, net of tax		492			313
Comprehensive income (loss) attributable to VOXX International Corporation	$	3,208		$	(7,959	)
Other comprehensive (loss) income, net of tax								(1,149	)		2,666			(657	)		2,979
Comprehensive (loss) income attributable to VOXX International Corporation							$	(838	)	$	10,006		$	2,370		$	2,047
Income (loss) per share - basic: Attributable to VOXX International Corporation	$	0.11		$	(0.34	)	$	0.01		$	0.30		$	0.12		$	(0.04	)
Income (loss) per share - diluted: Attributable to VOXX International Corporation	$	0.11		$	(0.34	)	$	0.01		$	0.30		$	0.12		$	(0.04	)
Weighted-average common shares outstanding (basic)		24,266,242			24,224,478			24,281,220			24,224,478			24,273,731			24,223,935
Weighted-average common shares outstanding (diluted)		24,925,974			24,224,478			24,855,307			24,552,064			24,890,641			24,223,935

	Class A and Class B Common Stock		Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Non- controlling Interests			Treasury Stock			Redeemable Equity			Total Stock- holders' Equity			Class A and Class B Common Stock		Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Non- controlling Interests			Treasury Stock			Redeemable Equity			Total Stock- holders' Equity
Balances at February 28, 2021	$	267	$	300,402		$	148,906		$	(14,977	)	$	(31,351	)	$	(23,918	)	$	(3,260	)	$	376,069		$	267	$	300,402		$	148,906		$	(14,977	)	$	(31,351	)	$	(23,918	)	$	(3,260	)	$	376,069
Net income (loss)		0		0			2,716			0			(919	)		0			0			1,797			0		0			2,716			0			(919	)		0			0			1,797
Other comprehensive income, net of tax		0		0			0			492			0			0			0			492			0		0			0			492			0			0			0			492
Net settlement of 60,693 shares of common stock upon vesting of stock awards		0		(856	)		0			0			0			0			0			(856	)		0		(856	)		0			0			0			0			0			(856	)
Stock-based compensation expense		0		236			0			0			0			0			34			270			0		236			0			0			0			0			34			270
Balances at May 31, 2021		267		299,782			151,622			(14,485	)		(32,270	)		(23,918	)		(3,226	)		377,772			267		299,782			151,622			(14,485	)		(32,270	)		(23,918	)		(3,226	)		377,772
Net income (loss)																									0		0			311			0			(1,003	)		0			0			(692	)
Other comprehensive income, net of tax																									0		0			0			(1,149	)		0			0			0			(1,149	)
Repurchase of 113,000 shares of Class A common stock																									0		0			0			0			0			(1,220	)		0			(1,220	)
Stock-based compensation expense																									0		237			0			0			0			0			(119	)		118
Balances at August 31, 2021																									267		300,019			151,933			(15,634	)		(33,273	)		(25,138	)		(3,345	)		374,829


Balances at February 29, 2020	$	266	$	299,228		$	122,139		$	(19,055	)	$	(27,950	)	$	(23,918	)	$	(2,481	)	$	348,229		$	266	$	299,228		$	122,139		$	(19,055	)	$	(27,950	)	$	(23,918	)	$	(2,481	)	$	348,229
Net loss		0		0			(8,272	)		0			(833	)		0			0			(9,105	)		0		0			(8,272	)		0			(833	)		0			0			(9,105	)
Other comprehensive income, net of tax		0		0			0			313			0			0			0			313			0		0			0			313			0			0			0			313
Stock-based compensation expense		1		351			0			0			0			0			(201	)		151			1		351			0			0			0			0			(201	)		151
Balances at May 31, 2020		267		299,579			113,867			(18,742	)		(28,783	)		(23,918	)		(2,682	)		339,588			267		299,579			113,867			(18,742	)		(28,783	)		(23,918	)		(2,682	)		339,588
Net income (loss)																									0		0			7,340			0			(785	)		0			0			6,555
Other comprehensive income, net of tax																									0		0			0			2,666			0			0			0			2,666
Settlement of SERP restricted stock units																									0		(575	)		0			0			0			0			0			(575	)
Stock-based compensation expense																									0		335			0			0			0			0			(85	)		250
Balances at August 31, 2020																									267		299,339			121,207			(16,076	)		(29,568	)		(23,918	)		(2,767	)		348,484

	Three months ended May 31,						Six months ended August 31,
	2021			2020			2021			2020
Cash flows from operating activities:
Net income (loss)	$	1,797		$	(9,105	)	$	1,105		$	(2,550	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization		2,807			2,543			5,572			5,290
Amortization of debt discount		83			206			147			395
Bad debt expense (recovery)		19			(7	)
Bad debt expense								153			—
Reduction in the carrying amount of the right of use asset		341			243			683			508
Loss (gain) on forward contracts		174			(67	)		203			(54	)
Equity in income of equity investees		(2,723	)		(862	)		(4,758	)		(2,745	)
Distribution of income from equity investees		2,845			1,502			5,568			2,364
Deferred income tax expense		318			644			188			2,969
Non-cash compensation adjustment		(92	)		(541	)		(233	)		(443	)
Stock based compensation expense		236			351			473			686
Changes in operating assets and liabilities:
Accounts receivable		10,803			14,842			15,301			(27,932	)
Inventory		(5,827	)		(6,059	)		(14,515	)		(18,714	)
Receivables from vendors		(80	)		(4	)		(86	)		(336	)
Prepaid expenses and other		(1,223	)		(255	)		(1,407	)		(3,064	)
Investment securities-trading		92			541			233			443
Accounts payable, accrued expenses, accrued sales incentives, contract liabilities, and other liabilities		(26,777	)		7,638			(13,833	)		42,400
Income taxes payable		164			675			(323	)		693
Net cash (used in) provided by operating activities		(17,043	)		12,285
Net cash used in operating activities								(5,529	)		(90	)
Cash flows from investing activities:
Purchases of property, plant, and equipment		(927	)		(586	)		(1,838	)		(1,104	)
Issuance of promissory note		(3,000	)		—
Issuance of promissory notes								(8,390	)		—
Purchase of acquired business, less cash received								—			(11,000	)
Net cash used in investing activities		(3,927	)		(586	)		(10,228	)		(12,104	)
Cash flows from financing activities:
Principal payments on finance lease obligation		(114	)		(169	)		(218	)		(329	)
Repayment of bank obligations		(125	)		(125	)		(250	)		(250	)
Borrowings on bank obligations		—			20,000			836			20,335
Deferred financing costs		(660	)		—			(667	)		(260	)
Withholding taxes paid on net issuance of stock award		(856	)		—			(856	)		—
Purchase of treasury stock								(1,220	)		—
Net cash (used in) provided by financing activities		(1,755	)		19,706			(2,375	)		19,496
Effect of exchange rate changes on cash		31			209			(221	)		1,162
Net (decrease) increase in cash and cash equivalents		(22,694	)		31,614			(18,353	)		8,464
Cash and cash equivalents at beginning of period		59,404			37,425			59,404			37,425
Cash and cash equivalents at end of period	$	36,710		$	69,039		$	41,051		$	45,889

The accompanying unaudited interim consolidated financial statements of VOXX International Corporation and Subsidiaries ("Voxx" or the "Company") have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission as defined in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 270 for interim financial information, and in accordance with accounting principles generally accepted in the United States of America (“GAAP”), and include all adjustments (consisting of normal recurring adjustments), which, in the opinion of management, are necessary to present fairly the consolidated financial position, results of operations, changes in stockholders’ equity, and cash flows for all periods presented. The results of operations are not necessarily indicative of the results to be expected for the full fiscal year or any interim period. These unaudited consolidated financial statements do not include all disclosures associated with audited consolidated financial statements prepared in accordance with GAAP. Accordingly, these statements should be read in conjunction with the Company's audited consolidated financial statements and notes thereto contained in the Company's Form 10-K for the fiscal year ended February 28, 2021. Certain amounts in the prior year have been reclassified to conform to the current year presentation.

We operate in 3 reportable segments: Automotive Electronics, Consumer Electronics, and Biometrics. See Note 2322 for the Company's segment reporting disclosures.

On July 1, 2020, the Company completed the acquisition of certain assets and liabilities, which comprise the aftermarket vehicle remote start and security systems and connected car solutions (telematics) businesses of Directed LLC and Directed Electronics Canada Inc. (collectively, with Directed LLC, “Directed”) via an asset purchase agreement. The acquired assets included inventory, accounts receivable, certain fixed assets, IT systems, and intellectual property. The cash purchase price was $11,000. Net sales from the Company’s newly formed subsidiaries, VOXX DEI LLC and VOXX DEI Canada, Ltd. (collectively, with VOXX DEI LLC, “DEI”), included in our consolidated results for the three and six months ended ~~May~~August 31, 2021, represented approximately ~~8.8%~~9.5% and 9.1% of our consolidated net ~~sales.~~sales, respectively, as compared to 3.7% and 2.4% for the three and six months ended August 31, 2020, respectively. DEI’s results of operations are included in the consolidated financial statements of Voxx in our Automotive Electronics segment. The purpose of this acquisition was to expand the Company’s market share within the automotive electronics industry.

The following summarizes the allocation of the purchase price based upon the fair value of the assets acquired and liabilities assumed at the date of acquisition:

	July 1, 2020		Measurement Period Adjustments			July 1, 2020 (as adjusted)		July 1, 2020		Measurement Period Adjustments			July 1, 2020 (as adjusted)
Assets acquired:
Inventory	$	7,054		956			8,010	$	7,054		956			8,010
Accounts receivable		5,173		214			5,387		5,173		357			5,530
Other current assets		160		-			160		160		-			160
Property and equipment		2,815		-			2,815		2,815		-			2,815
Operating lease, right of use asset		1,771		-			1,771		1,771		-			1,771
Customer relationships		2,600		(100	)		2,500		2,600		(100	)		2,500
Trademarks		4,500		-			4,500		4,500		-			4,500
Patented technology		1,030		-			1,030		1,030		-			1,030
Goodwill		3,290		(1,240	)		2,050		3,290		(1,690	)		1,600
Total assets acquired	$	28,393	$	(170	)	$	28,223	$	28,393	$	(477	)	$	27,916

Liabilities assumed:
Accounts payable		8,144		-			8,144		8,144		-			8,144
Accrued expenses		1,406		(181	)		1,225		1,406		(136	)		1,270
Contract liabilities		4,872		11			4,883		4,872		11			4,883
Warranty accrual		1,200		-			1,200		1,200		(352	)		848
Operating lease liability		1,771		-			1,771		1,771		-			1,771
Total	$	17,393	$	(170	)	$	17,223	$	17,393	$	(477	)	$	16,916
Total purchase price	$	11,000	$	-		$	11,000	$	11,000	$	-		$	11,000

The purchase allocation presented above is preliminary. We are in the process of refining the valuation of acquired assets and liabilities, including goodwill, and expect to finalize the purchase price allocation prior to June 30, 2021. During Fiscal 2021 and during the three and six months ended ~~May~~August 31, 2021, the Company recorded a cumulative net measurement period adjustment that decreased goodwill by ~~$1,240,~~$1,690, as presented in the table above. The measurement period adjustment would have resulted in an insignificant decrease in amortization expense related to the customer relationships in the prior year. The Company made these measurement period adjustments to reflect facts and circumstances that existed as of the acquisition date and did not result from intervening events subsequent to such date. Goodwill was determined as the excess of the purchase price over the fair value of the assets acquired (including the identifiable intangible assets) and represents synergies expected.

On April 29, 2021, the Company’s subsidiary, Premium Audio Company LLC (“PAC”), signed a Letter of Intent to acquire the home audio/video business of Onkyo Home Entertainment Corporation (“Onkyo”), along with Sharp Corporation (“Sharp”) as ~~the Company’s~~PAC’s partner. On May ~~28,~~26, 2021, ~~the Company~~PAC and Sharp signed an asset purchase agreement to jointly acquire the home audio/video business of Onkyo through a joint venture entity for a total purchase price of approximately $30,800, plus the assumption of certain liabilities. The agreement was approved by Onkyo’s shareholders at its ordinary general meeting of shareholders on June 25, 2021 and on June 28, 2021, the Company announced that ~~it has~~PAC had entered into a joint venture with Sharp in order to execute the transaction. ~~Finalization~~PAC owns approximately 77% of the ~~transaction is subject to customary~~joint venture and ~~regulatory closing conditions and is expected to be completed on or about August 30, 2021.~~Sharp owns approximately 23%.

In conjunction with the signing of the Letter of Intent on April 29, 2021, Onkyo signed a promissory note with the Company in the amount of $3,000 for the purpose of funding certain operating requirements of the business, including compensation related expenses and the payment of accounts payable during the negotiation process and through the completion date of the transaction. The note was amended on ~~June 22,~~July 26, 2021 to provide for additional borrowings of ~~$2,250.~~$5,390. The note ~~bears~~bore interest at 4.00% and ~~is due~~matured on August 30, ~~2021, or will be deducted from the cash purchase price paid by the Company upon completion of the transaction.~~2021. As of ~~May~~August 31, 2021, the outstanding balance of the note was ~~$3,000~~$8,390 and is ~~included within Prepaid expenses and other current assets in~~presented as Due from Onkyo on the Consolidated Balance Sheet. As collateral for the amounts borrowed under the promissory note, Onkyo ~~has~~ granted a security interest in certain of its trademarks and other assets included in the asset purchase agreement, as defined in the Security Agreement signed on April 29, 2021 and amended on June 22, 2021.

On September 8, 2021, PAC completed the transaction to acquire the home audio/video business of Onkyo with its partner Sharp through the newly formed joint venture, Onkyo Technology KK (the “JV”). Total consideration paid by the JV on the date of the transaction was $30,737, with $23,723 contributed by PAC and $7,014 contributed by Sharp. $8,390 of PAC’s total contribution was satisfied through settlement of the loans made to Onkyo in June and July 2021 which were due and payable to Voxx on September 8, 2021. The joint venture owns the Onkyo and Integra brands and will market, and sell a variety of products under the Onkyo, Pioneer, and Integra brands.

Basic net income (loss) per common share, net of non-controlling interest, is based upon the weighted-average common shares outstanding during the period. Diluted net income (loss) per common share, net of non-controlling interest, reflects the potential dilution that would occur if common stock equivalent securities or other contracts to issue common stock were exercised or converted into common stock.

There are 0 reconciling items which impact the numerator of basic and diluted net income (loss) per common share. A reconciliation between the denominator of basic and diluted net income (loss) per common share is as follows:

	Three months ended May 31,				Three months ended August 31,				Six months ended August 31,
	2021		2020		2021		2020		2021		2020
Weighted-average common shares outstanding (basic)		24,266,242		24,224,478		24,281,220		24,224,478		24,273,731		24,223,935
Effect of dilutive securities:
Restricted stock and stock grants		659,732		0		574,087		327,586		616,910		0
Weighted-average common shares and potential common shares outstanding (diluted)		24,925,974		24,224,478		24,855,307		24,552,064		24,890,641		24,223,935

Restricted stock and stock grants of 0 and ~~596,379~~15,666 for the three months ended ~~May~~August 31, 2021 and 2020, respectively, and 0 and 593,632 for the six months ended August 31, 2021 and 2020, respectively, were not included in the net income (loss) per diluted share calculation because the grant price of the restricted stock and stock grants was greater than the average market price of the Company’s common stock during these periods, or the inclusion of these components would have been anti-dilutive.

As of ~~May~~August 31, 2021, and February 28, 2021, the Company had the following investments:

	May 31, 2021		August 31, 2021
	Fair Value		Fair Value
Investment Securities
Marketable Equity Securities
Mutual funds	$	1,685	$	1,544
Total Marketable Equity Securities		1,685		1,544
Total Investment Securities	$	1,685	$	1,544

The Company’s mutual funds are held in connection with its deferred compensation plan. Changes in the carrying value of these securities are offset by changes in the corresponding deferred compensation liability.

The Company applies the authoritative guidance on “Fair Value Measurements," which among other things, requires enhanced disclosures about assets and liabilities that are measured and reported at fair value. This guidance establishes a hierarchal disclosure framework that prioritizes and ranks the level of market price observability used in measuring investments at fair value. Market price observability is impacted by a number of factors, including the type of investment and the characteristics specific to the investment. Investments with readily available active quoted prices, or for which fair value can be measured from actively quoted prices, generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value.

Investments measured and reported at fair value are classified and disclosed in one of the following categories:

Level 1 - Quoted market prices in active markets for identical assets or liabilities.

Level 2 - Inputs other than Level 1 inputs that are either directly or indirectly observable.

Level 3 - Unobservable inputs developed using the Company's estimates and assumptions, which reflect those that market participants would use.

At ~~May~~August 31, 2021 and February 28, 2021, the Company did 0t have any assets or liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3).

The following table presents financial assets and liabilities measured at fair value on a recurring basis at ~~May~~August 31, 2021:

				Fair Value Measurements at Reporting Date Using							Fair Value Measurements at Reporting Date Using
	Total			Level 1		Level 2			Total		Level 1		Level 2
Cash and cash equivalents:
Cash and money market funds	$	36,710		$	36,710	$	0		$	41,051	$	41,051	$	0
Derivatives:
Designated for hedging	$	(646	)	$	0	$	(646	)	$	(385)	$	0	$	(385)
Investment securities:
Mutual funds	$	1,685		$	1,685	$	0		$	1,544	$	1,544	$	0

The following table presents financial assets and liabilities measured at fair value on a recurring basis at February 28, 2021:

At ~~May~~August 31, 2021, the carrying value of the Company's accounts receivable, short-term debt, accounts payable, accrued expenses, bank obligations, and long-term debt approximates fair value because of either (i) the short-term

nature of the financial instrument; (ii) the interest rate on the financial instrument being reset every quarter to reflect current market rates; or (iii) the stated or implicit interest rate approximates the current market rates or are not materially different from market rates.

The Company’s derivative instruments include forward foreign currency contracts and an interest rate swap agreement. The forward foreign currency contracts are utilized to hedge a portion of the Company’s foreign currency inventory purchases. The forward foreign currency derivatives qualifying for hedge accounting are designated as cash flow hedges and valued using observable forward rates for the same or similar instruments (Level 2). The duration of open forward foreign currency contracts ranges from 1 month to 96 months and are classified in the balance sheet according to their terms. The Company’s interest rate swap agreement hedges interest rate exposure related to the outstanding balance of its Florida Mortgage, with monthly payments due through March 2026. The swap agreement locks the interest rate on the debt at 3.48% (inclusive of credit spread) through the maturity date of the loan. Interest rate swap agreements qualifying for hedge accounting are designated as cash flow hedges and valued based on a comparison of the change in fair value of the actual swap contracts designated as the hedging instruments and the change in fair value of a hypothetical swap contract (Level 2). We calculate the fair value of our interest rate swap agreement quarterly based on the quoted market price for the same or similar financial instruments. Interest rate swaps are classified in the balance sheet as either assets or liabilities based on the fair value of the instruments at the end of the period.

The following table discloses the fair value as of ~~May~~August 31, 2021 and February 28, 2021 of the Company’s derivative instruments:

	Derivative Assets and Liabilities							Derivative Assets and Liabilities
		Fair Value							Fair Value
	Account	May 31, 2021			February 28, 2021			Account	August 31, 2021			February 28, 2021
Designated derivative instruments
Foreign currency contracts	Prepaid expenses and other current assets	$	542		$	412		Prepaid expenses and other current assets	$	592		$	412
	Accrued expenses and other current liabilities		(760	)		(731	)	Accrued expenses and other current liabilities		(568	)		(731	)
Interest rate swap agreement	Other long-term liabilities		(428	)		(446	)	Other long-term liabilities		(409	)		(446	)
Total derivatives		$	(646	)	$	(765	)		$	(385	)	$	(765	)

The Company's policy is to enter into derivative instrument contracts with terms that coincide with the underlying exposure being hedged. As such, the Company’s derivative instruments are expected to be highly effective. For derivative instruments that are designated and qualify as cash flow hedges, the entire change in fair value of the hedging instrument included in the assessment of the hedge ineffectiveness is recorded to Other comprehensive ~~income~~ (loss). income. When the amounts recorded in Other comprehensive (loss) income ~~(loss)~~ are reclassified to earnings, they are presented in the same income statement line item as the effect of the hedged item.

During Fiscal 2021, the Company entered into forward foreign currency contracts, which have a current outstanding notional value of ~~$8,100~~$5,400 and are designated as cash flow hedges at ~~May~~August 31, 2021. The current outstanding notional value of the Company's interest rate swap at ~~May~~August 31, 2021 is ~~$6,989.~~$6,866. For cash flow hedges, the gain or loss is reported as a component of Other comprehensive (loss) income ~~(loss)~~ and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. The net (loss) income recognized in Other comprehensive (loss) income ~~(loss)~~ for foreign currency contracts is expected to be recognized in Cost of sales during the next ~~twelve~~nine months. NaN amounts were excluded from the assessment of hedge effectiveness during the respective periods. The gain or loss on the Company’s interest rate swap is recorded in Other comprehensive (loss) income ~~(loss)~~ and subsequently reclassified into Interest and bank charges in the period in which the hedged transaction affects earnings. As of ~~May~~August 31, 2021, 0 interest rate swaps originally designated for hedge accounting were de-designated or terminated.

Activity related to cash flow hedges recorded during the three and six months ended ~~May~~August 31, 2021 and 2020 was as follows:

	Three months ended						Three months ended					Six months ended
	May 31, 2021						August 31, 2021					August 31, 2021
	Pretax Gain (Loss) Recognized in Other Comprehensive Income			Pretax Loss Reclassified from Accumulated Other Comprehensive Income			Pretax Gain (Loss) Recognized in Other Comprehensive Income		Pretax Loss Reclassified from Accumulated Other Comprehensive Income			Pretax Gain (Loss) Recognized in Other Comprehensive Income		Pretax Loss Reclassified from Accumulated Other Comprehensive Income
Cash flow hedges
Foreign currency contracts	$	(28	)	$	(176	)	$	172	$	(29	)	$	144	$	(205	)
Interest rate swaps		18			0			19		0			37		0

	Three months ended					Three months ended						Six months ended
	May 31, 2020					August 31, 2020						August 31, 2020
	Pretax Loss Recognized in Other Comprehensive Income			Pretax Gain Reclassified from Accumulated Other Comprehensive Income		Pretax (Loss) Gain Recognized in Other Comprehensive Income			Pretax Loss Reclassified from Accumulated Other Comprehensive Income			Pretax Loss Recognized in Other Comprehensive Income			Pretax Gain Reclassified from Accumulated Other Comprehensive Income
Cash flow hedges
Foreign currency contracts	$	0		$	68	$	(465	)	$	(16	)	$	(465	)	$	52
Interest rate swaps		(130	)		0		15			0			(115	)		0

	Foreign Currency Translation Losses			Pension plan adjustments, net of tax			Derivatives designated in a hedging relationship, net of tax			Total			Foreign Currency Translation Losses			Pension plan adjustments, net of tax			Derivatives designated in a hedging relationship, net of tax			Total
Balance at February 28, 2021	$	(13,374	)	$	(869	)	$	(734	)	$	(14,977	)	$	(13,374	)	$	(869	)	$	(734	)	$	(14,977	)
Other comprehensive income (loss) before reclassifications		372			1			(2	)		371			(962	)		23			141			(798	)
Reclassified from accumulated other comprehensive loss		0			0			121			121			0			0			141			141
Net current-period other comprehensive income		372			1			119			492			(962	)		23			282			(657	)
Balance at May 31, 2021	$	(13,002	)	$	(868	)	$	(615	)	$	(14,485	)
Balance at August 31, 2021													$	(14,336	)	$	(846	)	$	(452	)	$	(15,634	)

During the three and six months ended ~~May~~August 31, 2021, the Company recorded other comprehensive income (loss), net of the associated tax impact of ~~$46~~$63 and $108, respectively, related to derivatives designated in a hedging relationship, and $0 in both periods related to pension plan adjustments.

The other comprehensive income (loss) before reclassification of ~~$372~~$(962) includes the remeasurement of intercompany transactions of a long-term investment nature of ~~$(272)~~$152 with certain subsidiaries whose functional currency is not the U.S. dollar, and ~~$644~~$(1,114) from translating the financial statements of the Company's non-U.S. dollar functional currency subsidiaries into our reporting currency, which is the U.S. dollar.

The following is supplemental information relating to the Unaudited Consolidated Statements of Cash Flows:

	Three months ended May 31,					Six months ended August 31,
	2021			2020		2021			2020
Non-cash investing and financing activities:
Change in redeemable equity	$	(34	)	$	201	$	85		$	286
Change in goodwill due to measurement period adjustments, net		(903	)		-		(1,353	)		-
Right of use assets obtained in exchange for operating lease obligations		-			276		-			347
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	341		$	243	$	677		$	508
Operating cash flows from finance leases		4			9		7			17
Finance cash flows from finance leases		114			169		218			329
Cash paid during the period:
Interest (excluding bank charges)	$	128		$	291	$	310		$	569
Income taxes (net of refunds)		1,553			466		402			742

The Company has various stock-based compensation plans, which are more fully described in Note 1 of the Notes to the Consolidated Financial Statements contained in the Company’s Form 10-K for the fiscal year ended February 28, 2021.

Restricted stock awards are granted pursuant to the Company's 2012 Equity Incentive Plan (the "2012 Plan"). A restricted stock award is an award of common stock that is subject to certain restrictions during a specified period. Restricted stock awards are independent of option grants and are subject to forfeiture if employment terminates for a reason other than death, disability, or retirement prior to the release of the restrictions.

The Company's Omnibus Equity Incentive Plan was established in 2014 (the "2014 Plan"). Pursuant to the 2014 Plan, Restricted Stock Units ("RSUs") may be awarded by the Company to any individual who is employed by, provides services to, or serves as a director of the Company or its affiliates. RSUs vest on the later of three years from the date of grant, or the grantee reaching the age of 65 years. The RSU awards will also vest upon the sale of all of the Company's issued and outstanding stock, the sale of all, or substantially all, of the assets of a subsidiary of which the grantee serves as CEO and/or President, or the termination of the grantee's employment without cause, provided that the grantee, at the time of termination, has been employed for at least 10 years. When vested, RSU awards may be settled in shares of ~~common stock~~Class A Common Stock or in cash, at the Company's sole option. There are no market conditions inherent in an RSU award, only the employee performance requirement for performance awards, and the service requirement that the respective employee continues employment with the Company through the vesting date. In July ~~2020,~~2021, the Company granted ~~48,269~~48,527 RSU awards to employees under the 2014 Plan. The Company expenses the cost of RSU awards on a straight-line basis over the requisite service period of each grantee. For these purposes, the fair market value of each RSU is determined based on the mean of the high and low price of the Company's common stock on the grant date. The fair market value of each RSU granted in July ~~2020~~2021 was ~~$5.76.~~$13.59.

On July 8, 2019, the Board of Directors approved a five-year Employment Agreement (the “Employment Agreement”), effective March 1, 2019, by and between the Company and Patrick M. Lavelle, the Company’s President and Chief Executive Officer. Under the terms of the Employment Agreement, in addition to a $1,000 annual salary and a cash bonus based on the Company’s Adjusted EBITDA, Mr. Lavelle was granted the right to receive certain stock-based compensation as discussed below:

All stock grants under the Employment Agreement are subject to a hold requirement as specified in the Employment Agreement. The Employment Agreement gave Mr. Lavelle, in certain limited change of control situations, the right to require the Company to purchase ~~the~~ shares issued in connection with the Employment Agreement, shares personally acquired by Mr. Lavelle, and shares issued to him under other incentive compensation arrangements. Accordingly, the stock awards issued in connection with the Employment Agreement are presented as redeemable equity on the Consolidated Balance Sheets at grant-date fair value. RSUs previously held by Mr. Lavelle under the 2014 Plan and shares personally purchased by Mr. Lavelle have been reclassified from permanent equity to redeemable equity. As the contingent events that would allow Mr. Lavelle to redeem the shares are not probable at this time, remeasurement of the amounts in redeemable equity have not been recorded. The Employment Agreement contains certain restrictive and non-solicitation covenants.

The following table presents a summary of the activity related to the initial stock grant, additional stock grants under the Employment Agreement, and RSU grants under the 2014 Plan for the ~~three~~six months ended ~~May~~August 31, 2021:

	Number of Shares			Weighted Average Grant Date Fair Value		Number of Shares			Weighted Average Grant Date Fair Value
Unvested award balance at February 28, 2021		603,724		$	5.18		603,724		$	5.18
Granted		0			—		48,527			13.59
Vested							(136,008	)		5.50
Vested and settled		(100,000	)		4.15		(100,000	)		4.15
Unvested award balance at May 31, 2021		503,724		$	5.39
Unvested award balance at August 31, 2021							416,243		$	6.30

At ~~May~~August 31, 2021, there were ~~278,318~~414,326 vested and unsettled stock grants and RSU awards under the Company’s 2014 Plan with a weighted average fair value of ~~$7.71.~~$6.98.

During the three and six months ended ~~May~~August 31, 2021 and ~~May~~August 31, 2020, the Company recorded ~~$236~~$237 and ~~$351,~~$473, respectively, compared to $335 and $686, respectively, in total stock-based compensation related to the 2014 Plan, as well as additional stock grants and MSU’s under the Employment Agreement. As of ~~May~~August 31, 2021, there was approximately ~~$1,233~~$1,656 of unrecognized stock-based compensation expense related to unvested RSU awards, stock grants, and MSU’s.

The Company has supply chain financing agreements and factoring agreements that were entered into for the purpose of accelerating receivable collection and better managing cash flow. The balances under the agreements are sold without recourse and are accounted for as sales of accounts receivable. Total receivable balances sold for the three and six months ended ~~May~~August 31, 2021, net of discounts, were ~~$12,201~~$29,975 and $42,176, respectively, compared to ~~$18,875~~$19,320 and $39,184 for the three and six months ended ~~May~~August 31, ~~2020.~~2020, respectively.

Expenditures for research and development are charged to expense as incurred. Such expenditures amounted to ~~$2,321~~$3,624 and $5,945 for the three and six months ended ~~May~~August 31, 2021, respectively, compared to ~~$1,855~~$1,666 and $3,521 for the three and six months ended ~~May~~August 31, ~~2020.~~2020, respectively. All amounts are net of customer reimbursements and are ~~included within Engineering and technical support expenses on the Unaudited Consolidated Statements of Operations and Comprehensive Income.~~

included within Engineering and technical support expenses on the Unaudited Consolidated Statements of Operations and Comprehensive (Loss) Income.

Automotive Electronics:	Amount			Amount
Beginning balance at March 1, 2021	$	11,778		$	11,778
Activity during the period		(903	)		(1,353	)
Balance at May 31, 2021	$	10,875
Gross carrying value at May 31, 2021	$	10,875
Balance at August 31, 2021				$	10,425
Gross carrying value at August 31, 2021				$	10,425
Accumulated impairment charge		0			0
Net carrying value at May 31, 2021	$	10,875
Net carrying value at August 31, 2021				$	10,425
Consumer Electronics:
Beginning balance at March 1, 2021	$	46,533		$	46,533
Activity during the period		0			0
Balance at May 31, 2021	$	46,533
Gross carrying value at May 31, 2021	$	78,696
Balance at August 31, 2021				$	46,533
Gross carrying value at August 31, 2021				$	78,696
Accumulated impairment charge		(32,163	)		(32,163	)
Net carrying value at May 31, 2021	$	46,533
Net carrying value at August 31, 2021				$	46,533
Total Goodwill, net	$	57,408		$	56,958

The Company's Biometrics segment did 0t carry a goodwill balance at ~~May~~August 31, 2021 or February 28, 2021.

	Gross Carrying Value		Accumulated Amortization		Total Net Book Value		Gross Carrying Value		Accumulated Amortization		Total Net Book Value
Finite-lived intangible assets:
Customer relationships	$	54,697	$	37,400	$	17,297	$	54,511	$	38,170	$	16,341
Trademarks/Tradenames		5,545		941		4,604		5,545		1,071		4,474
Developed technology		14,144		12,583		1,561		14,144		12,651		1,493
Patents		6,736		4,863		1,873		6,735		5,095		1,640
License		1,400		1,400		0		1,400		1,400		0
Contracts		1,556		1,556		0		1,556		1,556		0
Total finite-lived intangible assets	$	84,078	$	58,743		25,335	$	83,891	$	59,943		23,948
Indefinite-lived intangible assets
Trademarks						63,364						63,244
Total intangible assets, net					$	88,699					$	87,192

The Company recorded amortization expense of ~~$1,411~~$1,375 and $2,786 for the three and six months ended ~~May~~August 31, 2021, respectively, compared to $1,327 and ~~$1,169~~$2,496 for the three and six months ended ~~May~~August 31, 2020, respectively. The estimated aggregate amortization expense for all amortizable intangibles for ~~May~~August 31 of each of the succeeding years is as follows:

Year	Amount		Amount
2022	$	5,417	$	5,171
2023		4,545		4,432
2024		4,226		4,167
2025		4,052		4,035
2026		3,320		2,710

As of ~~May~~August 31, 2021 and February 28, 2021, the Company ~~has~~had a 50% non-controlling ownership interest in ASA Electronics, LLC and Subsidiary (“ASA") which acts as a distributor of mobile electronics specifically designed for niche markets within the automotive industry, including RV's; buses; and commercial, heavy duty, agricultural, construction, powersport, and marine vehicles.

The following presents summary financial information for ASA. Such summary financial information has been provided herein based upon the individual significance of ASA to the consolidated financial information of the Company.

	May 31, 2021		February 28, 2021		August 31, 2021		February 28, 2021
Current assets	$	51,128	$	49,956	$	49,881	$	49,956
Non-current assets		4,669		4,757		4,901		4,757
Liabilities		9,507		8,179		9,868		8,179
Members' equity		46,290		46,534		44,914		46,534

	Three months ended May 31,				Six months ended August 31,
	2021		2020		2021		2020
Net sales	$	33,225	$	16,441	$	61,560	$	40,858
Gross profit		8,645		4,137		15,769		10,593
Operating income		5,429		1,604		9,488		5,345
Net income		5,446		1,724		9,516		5,490

The Company's share of income from ASA was ~~$2,723~~$2,035 and $4,758 for the three and six months ended ~~May~~August 31, 2021, respectively, compared to $1,883 and ~~$862~~$2,745 for the three and six months ended ~~May~~August 31, ~~2020.~~2020, respectively.

The Company’s provision for income taxes consists of federal, foreign, and state taxes necessary to align the Company’s year-to-date tax provision with the annual effective rate that it expects to achieve for the full year. At each interim period, the Company updates its estimate of the annual effective tax rate and records cumulative adjustments, as necessary.

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) was enacted in response to the COVID-19 pandemic. 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 corrections so that qualified improvement property can be immediately expensed under IRC Section 168(k) and net operating losses arising in tax years beginning in 2017 and ending in 2018 can be carried back two years and carried forward twenty years without a taxable income limitation as opposed to carried forward indefinitely, and (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. With respect to the technical correction to net operating losses, the Company recorded a discrete income tax provision of $4,275 during the three months ended May 31, 2020, as its valuation allowance related to net operating losses with limited carryforward periods increased.

For the three months ended ~~May~~August 31, 2021, the Company recorded an income tax ~~provision~~benefit of ~~$484,~~$217, which includes a discrete income tax benefit of ~~$74~~$70 related primarily to the reversal of uncertain tax position liabilities as a result of the lapse of the applicable statute of limitations. For the three months ended ~~May~~August 31, 2020, the Company recorded an income tax provision of ~~$1,781,~~$2,609, which includes a discrete income tax benefit of $142 related primarily to the reversal of uncertain tax provision liabilities as a result of the lapse of the applicable statute of limitations.

The effective tax rates for the three months ended August 31, 2021 and 2020 were an income tax benefit of 23.9% on a pre-tax loss of $909 and an income tax provision of 28.5% on pre-tax income of $9,164, respectively. The effective tax rate for the three months ended August 31, 2021 differs from the U.S. statutory rate of 21% as a result of a number of factors, including the non-controlling interest related to EyeLock LLC, state and local income taxes, nondeductible permanent differences, income taxed in foreign jurisdictions at varying tax rates, and a tax benefit related to the decrease in the valuation allowance based on current year forecasted earnings. The effective tax rate for the three months ended August 31, 2020 differed from the statutory rate of 21% primarily due to the anticipated reversal of a portion of the U.S. valuation allowance based on projected current year earnings, immediate U.S. taxation of foreign earnings, non-controlling interest related to EyeLock LLC, state and local income taxes, nondeductible permanent differences, and income taxed in foreign jurisdictions at varying tax rates.

For the six months ended August 31, 2021, the Company recorded an income tax provision of $267, which includes a discrete income tax benefit of $144 related primarily to the reversal of uncertain tax position liabilities as a result of the lapse of the applicable statute of limitations. For the six months ended August 31, 2020, the Company recorded an income tax provision of $4,390, which includes a discrete income tax provision of ~~$4,292.~~$4,151. The Company recorded a discrete tax provision of $4,275 related to an increase in valuation allowance as a result of the technical correction to net operating losses as provided in the CARES Act and a discrete tax benefit of $155 related to the reversal of uncertain tax provision liabilities as a result of the lapse of the applicable statute of limitations, offset with a discrete tax provision of ~~$17~~$31 related to the accrual of interest for unrecognized tax benefits.

The effective tax rates for the ~~three~~six months ended ~~May~~August 31, 2021 and 2020 were an income tax provision of ~~21.2%~~19.5% on pre-tax income of ~~$2,281~~$1,372 and an income tax provision of ~~24.3%~~238.6% on pre-tax ~~loss~~income of ~~$7,324,~~$1,840, respectively. The effective tax rate for the ~~three~~six months ended ~~May~~August 31, 2021 differs from the U.S. statutory rate of 21% as a result of a number of factors, including the non-controlling interest related to EyeLock LLC, state and local income taxes, nondeductible permanent differences, ~~and~~ income taxed in foreign jurisdictions at varying tax rates, and a tax benefit related to the decrease in the valuation allowance based on current year forecasted earnings. The effective tax rate for the ~~three~~six months ended ~~May~~August 31, 2020 differed from the statutory rate of 21% primarily due to the anticipated reversal of a portion of the U.S. valuation allowance based on projected current year earnings, immediate U.S. taxation of foreign earnings, ~~nondeductible permanent differences,~~ non-controlling interest related to EyeLock LLC, state and local income taxes, nondeductible permanent differences, and income taxed in foreign jurisdictions at varying tax rates.

At ~~May~~August 31, 2021, the Company had an uncertain tax position liability of ~~$1,079,~~$1,007, including interest and penalties. The unrecognized tax benefits include amounts related to various U.S. federal, state, and local, and foreign tax issues.

	May 31, 2021		February 28, 2021		August 31, 2021		February 28, 2021
Raw materials	$	20,223	$	21,228	$	21,944	$	21,228
Work in process		1,673		1,732		1,717		1,732
Finished goods		115,827		107,833		122,050		107,833
Inventory	$	137,723	$	130,793	$	145,711	$	130,793

The following table provides a summary of the activity with respect to product warranties and product repair costs. The liability for product warranties is included within Accrued expenses and other current liabilities and the reserve for product repair costs is recorded as a reduction of Inventory on the Consolidated Balance Sheets.

	Three months ended May 31,						Three months ended August 31,						Six months ended August 31,
	2021			2020			2021			2020			2021			2020
Opening balance	$	5,290		$	4,748		$	5,390		$	4,566		$	5,290		$	4,748
Liabilities for warranties accrued during the period		700			791			537			684			1,237			1,475
Liabilities (adjusted) acquired during acquisition								(352	)		1,200			(352	)		1,200
Warranty claims settled during the period		(600	)		(973	)		(1,080	)		(930	)		(1,680	)		(1,903	)
Ending balance	$	5,390		$	4,566		$	4,495		$	5,520		$	4,495		$	5,520

At February 28, 2021, the Company had accrued restructuring charges of $31 included in Accrued expenses and other current liabilities, representing charges incurred in Fiscal 2019 for the realignment of certain businesses within the organization. During the three months ended May 31, 2021, these remaining accrued charges were settled.

	May 31, 2021		February 28, 2021		August 31, 2021		February 28, 2021
Debt
Domestic credit facility (a)	$	—	$	—	$	—	$	—
Florida mortgage (b)		6,989		7,114		6,866		7,114
Euro asset-based lending obligation - VOXX Germany (c)		—		—		828		—
Total debt		6,989		7,114		7,694		7,114
Less: current portion of long-term debt		500		500		1,328		500
Long-term debt		6,489		6,614		6,366		6,614
Less: debt issuance costs		1,229		652		1,174		652
Total long-term debt, net of debt issuance costs	$	5,260	$	5,962	$	5,192	$	5,962

	Three months ended May 31,					Three months ended August 31,						Six months ended August 31,
	2021		2020			2021			2020			2021		2020
Foreign currency gain (loss)	$	116	$	(116	)
Foreign currency (loss) gain						$	(2	)	$	(363	)	$	114	$	(479	)
Interest income		7		86			5			(15	)		12		71
Rental income		164		186			197			182			361		368
Miscellaneous		155		529			176			(30	)		331		500
Total other, net	$	442	$	685		$	376		$	(226	)	$	818	$	460

The Company has a subsidiary in Venezuela. Venezuela has experienced significant political and civil unrest, as well as economic instability for several years, and has implemented various foreign currency and price controls. The Company accounts for its Venezuela subsidiary as hyper-inflationary in accordance with the guidelines in ASC 830, "Foreign Currency." 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 the local subsidiary in Venezuela to record all transactions as if they were denominated in U.S. dollars. The Company’s operations in Venezuela are suspended and net currency exchange gains and losses for the three and six months ended August 31, 2021 were not significant.

~~operations in Venezuela are suspended and net currency exchange gains and losses for the three months ended May 31, 2021 were not significant.~~

The Company has certain long-lived assets in Venezuela, which are held for investment purposes. These properties had 0 value at ~~May~~August 31, 2021.

We account for leases in accordance with ASC 842 “Leases” (“ASC 842”). We determine whether an arrangement is a lease at inception. This determination generally depends on whether the arrangement conveys the right to control the use of an identified fixed asset explicitly or implicitly for a period of time in exchange for consideration.

We have operating leases for office equipment, as well as offices, warehouses, and other facilities used for our operations. We also have finance leases comprised primarily of computer hardware and machinery and equipment. Our leases have remaining lease terms of less than 1 year to 10 years, some of which include renewal options. We consider these renewal options in determining the lease term used to establish our right-of-use assets and lease liabilities when it is determined that it is reasonably certain that the renewal option will be exercised. The Company had 0 short-term leases during the three and six months ended ~~May~~August 31, 2021.

The components of lease cost for the three and six months ended ~~May~~August 31, 2021 and 2020 were as follows:

	Three months ended May 31,				Three months ended August 31,				Six months ended August 31,
	2021		2020		2021		2020		2021		2020
Operating lease cost (a) (c)	$	341	$	243	$	342	$	265	$	683	$	508
Finance lease cost:
Amortization of right of use assets (a)		121		169		101		161		222		326
Interest on lease liabilities (b)		4		9		3		8		7		17
Total finance lease cost	$	125	$	178	$	104	$	169	$	229	$	343

	May 31, 2021			February 28, 2021			August 31, 2021			February 28, 2021
Operating Leases
Operating lease, right of use assets	$	4,559		$	4,572		$	4,309		$	4,572
Total operating lease right of use assets	$	4,559		$	4,572		$	4,309		$	4,572
Accrued expenses and other current liabilities	$	1,162		$	1,119		$	1,101		$	1,119
Operating lease liabilities, less current portion		3,540			3,582			3,327			3,582
Total operating lease liabilities	$	4,702		$	4,701		$	4,428		$	4,701
Finance Leases
Property, plant, and equipment, gross	$	2,503		$	2,503		$	2,503		$	2,503
Accumulated depreciation		(1,926	)		(1,805	)		(2,028	)		(1,805	)
Total finance lease right of use assets	$	577		$	698		$	475		$	698
Accrued expenses and other current liabilities	$	366		$	418		$	335		$	418
Finance lease liabilities, less current portion		229			302			155			302
Total finance lease liabilities	$	595		$	720		$	490		$	720
Weighted Average Remaining Lease Term
Operating leases	5.9 years			6.0 years			6.1 years			6.0 years
Finance leases	1.8 years			1.8 years			1.6 years			1.8 years
Weighted Average Discount Rate
Operating leases		4.40	%		4.49	%		4.24	%		4.49	%
Finance leases		3.87	%		3.87	%		3.87	%		3.87	%

Maturities of lease liabilities on ~~May~~August 31 of each of the succeeding years are as follows:

	Operating Leases		Finance Leases		Operating Leases		Finance Leases
2021	$	1,319		374	$	1,241		342
2022		1,022		193		920		157
2023		756		40		696		—
2024		558		—		492		—
2025		397		—		347		—
Thereafter		1,196		—		1,243		—
Total lease payments		5,248		607		4,939		499
Less imputed interest		546		12		511		9
Total	$	4,702		595	$	4,428		490

As of ~~May~~August 31, 2021, the Company has not entered into any lease agreements that have not yet commenced.

The Company owns and occupies buildings as part of its operations. Certain space within these buildings may, from time to time, be leased to third parties from which the Company earns rental income as lessor. This leased space is recorded within property, plant, and equipment and was not material to the Company's Consolidated Balance Sheets at ~~May~~August 31, 2021 and February 28, 2021. Rental income earned by the Company for the three and six months ended ~~May~~August 31, 2021 and 2020 was ~~$164~~$197 and ~~$186,~~$361, respectively, compared to $182 and $368, respectively, and is recorded within Other income (expense).

			Shares Authorized				Shares Outstanding										Shares Authorized				Shares Outstanding
Security	Par Value		May 31, 2021		February 28, 2021		May 31, 2021		February 28, 2021		Voting Rights per Share		Liquidation Rights		Par Value		August 31, 2021		February 28, 2021		August 31, 2021		February 28, 2021		Voting Rights per Share		Liquidation Rights
Preferred Stock	$	50.00		50,000		50,000		0		0		—	$50 per share		$	50.00		0		50,000		0		0		—	$50 per share
Series Preferred Stock	$	0.01		1,500,000		1,500,000		0		0		—		—	$	0.01		0		1,500,000		0		0		—		—
Class A Common Stock	$	0.01		60,000,000		60,000,000		21,727,629		21,666,976		1	Ratably with Class B		$	0.01		60,000,000		60,000,000		21,614,629		21,666,976		1	Ratably with Class B
Class B Common Stock	$	0.01		10,000,000		10,000,000		2,260,954		2,260,954		10	Ratably with Class A		$	0.01		10,000,000		10,000,000		2,260,954		2,260,954		10	Ratably with Class A
Treasury Stock at cost	at cost			2,749,218		2,749,218	N/A		N/A		N/A				at cost			2,862,218		2,749,218	N/A		N/A		N/A

During the three and six months ended August 31, 2021, the Company repurchased 113,000 shares of common stock for an aggregate cost of $1,220. As of August 31, 2021, 2,305,876 shares of the Company’s Class A common stock are authorized to be repurchased in the open market.

A variable interest entity ("VIE") is an entity that either (i) has insufficient equity to permit the entity to finance its activities without additional subordinated financial support, or (ii) has equity investors who lack the characteristics of a controlling financial interest. Under ASC 810 – “Consolidation,” an entity that holds a variable interest in a VIE and meets certain requirements would be considered to be the primary beneficiary of the VIE and required to consolidate the VIE in its consolidated financial statements. In order to be considered the primary beneficiary of a VIE, an entity must hold a variable interest in the VIE and have both:

On September 1, 2015, Voxx acquired a majority voting interest in substantially all of the assets and certain specified liabilities of EyeLock, Inc. and EyeLock Corporation, a market leader of iris-based identity authentication solutions, through a newly formed entity, EyeLock LLC. The Company issued EyeLock LLC a promissory note for the purposes of repaying protective advances and funding working capital requirements of the entity. On ~~April 5,~~August 29, 2021, this promissory note was amended and restated to allow EyeLock LLC to borrow up to ~~$64,600.~~$60,600. Through March 1, 2019, interest on the outstanding principal of the loan accrued at 10%. From March 1, 2019 forward, interest accrues at 2.5%. The amended and restated promissory note is due on ~~June 30,~~December 31, 2022. The outstanding principal balance of this promissory note is convertible at the sole option of Voxx into units of EyeLock LLC. If Voxx chooses not to convert into equity, the outstanding loan principal of the amended and restated promissory note will be repaid at a multiple of 1.50 based on the repayment date. The agreement includes customary events of default and is collateralized by all of the property of EyeLock LLC.

We concluded that we became the primary beneficiary of EyeLock LLC on September 1, 2015 in conjunction with the acquisition. This was the first date on which we had the power to direct the activities that most significantly impact the economic performance of the entity because we acquired a majority interest in substantially all of the assets and

certain liabilities of EyeLock, Inc. and EyeLock Corporation on this date, as well as obtained a majority voting interest as a result of this transaction. Although we are considered to have control over EyeLock LLC under ASC 810, due to our majority ownership interest, the assets of EyeLock LLC can only be used to satisfy the obligations of EyeLock LLC. As a result of our majority ownership interest in the entity and our primary beneficiary conclusion, we consolidated EyeLock LLC within our consolidated financial statements beginning on September 1, 2015.

On April 29, 2021, EyeLock LLC entered into a three-year exclusive distribution agreement (the “Agreement”) with GalvanEyes LLC (“GalvanEyes”), a Florida LLC managed by ~~Voxx’s largest~~Beat Kahli, a significant shareholder ~~Beat Kahli.~~of Voxx. The Agreement provides that GalvanEyes will become the exclusive distributor of EyeLock products in the ~~EU,~~European Union, Switzerland, Puerto Rico, Malaysia, and Singapore, with the exception of any existing customer relationships. GalvanEyes was also granted exclusive distribution rights in the United States for the residential real estate market and specific U.S. Government agencies, and non-exclusive distribution rights in all other territories and verticals with the Company’s consent. In consideration of the grant of exclusivity, GalvanEyes has agreed to pay EyeLock $10,000 in the form of an annual fee of up to $5,000, with payments on a quarterly ~~basis.~~basis beginning on September 1, 2021. Any gross profit generated ~~by GalvanEyes~~ on the sale of EyeLock LLC products by GalvanEyes will be deducted from the annual fee. ~~The transaction is subject~~Within the Agreement, a put/call arrangement has been established, whereby GalvanEyes has the right to put the exclusivity back to EyeLock after the initial two-year period, for a 20.0% interest in EyeLock. In turn, EyeLock has the ability to call the exclusivity during the Agreement, based on the occurrence of certain ~~closing conditions, including formal approval by the Company’s Board of Directors and approval by the Company’s stockholders at the Annual Meeting of Stockholders scheduled for July 29, 2021.~~events, which would result in a 20.0% equity interest given to GalvanEyes.

The following table sets forth the carrying values of assets and liabilities of EyeLock LLC that were included on our Consolidated Balance Sheets as of ~~May~~August 31, 2021 and February 28, 2021:

	May 31, 2021			February 28, 2021			August 31, 2021			February 28, 2021
Assets	(unaudited)						(unaudited)
Current assets:
Cash and cash equivalents	$	—		$	—		$	—		$	—
Accounts receivable, net		59			167			102			167
Inventory, net		2,173			2,245			2,251			2,245
Prepaid expenses and other current assets		56			30			88			30
Total current assets		2,288			2,442			2,441			2,442
Property, plant and equipment, net		47			39			45			39
Intangible assets, net		2,260			2,329			2,193			2,329
Other assets		60			60			59			60
Total assets	$	4,655		$	4,870		$	4,738		$	4,870
Liabilities and Partners' Deficit
Current liabilities:
Accounts payable	$	1,357		$	1,396		$	1,386		$	1,396
Interest payable to VOXX		11,850			11,453			12,261			11,453
Accrued expenses and other current liabilities		562			824			606			824
Due to VOXX		63,114			61,072			65,231			61,072
Total current liabilities		76,883			74,745			79,484			74,745
Other long-term liabilities		1,200			1,200			1,257			1,200
Total liabilities		78,083			75,945			80,741			75,945
Commitments and contingencies
Partners' deficit:
Capital		41,416			41,416			41,416			41,416
Retained losses		(114,844	)		(112,491	)		(117,419	)		(112,491	)
Total partners' deficit		(73,428	)		(71,075	)		(76,003	)		(71,075	)
Total liabilities and partners' deficit	$	4,655		$	4,870		$	4,738		$	4,870

The following table sets forth the revenues and expenses of EyeLock LLC that were included in our Unaudited Consolidated Statements of Operations and Comprehensive (Loss) Income for the three and six months ended ~~May~~August 31, 2021 and 2020:

	For the three months ended May 31,						For the three months ended August 31,						For the six months ended August 31,
	2021			2020			2021			2020			2021			2020
Net sales	$	205		$	97		$	253		$	263		$	458		$	360
Cost of sales		163			119			177			262			340			381
Gross profit		42			(22	)		76			1			118			(21	)
Operating expenses:
Selling		163			177			163			125			326			302
General and administrative		344			429			432			428			776			857
Engineering and technical support		1,487			1,155			1,641			1,094			3,128			2,249
Total operating expenses		1,994			1,761			2,236			1,647			4,230			3,408
Operating loss		(1,952	)		(1,783	)		(2,160	)		(1,646	)		(4,112	)		(3,429	)
Other expense:
Interest and bank charges		(401	)		(354	)		(415	)		(368	)		(816	)		(722	)
Other, net		—			—			—			—			—			—
Total other expense, net		(401	)		(354	)		(415	)		(368	)		(816	)		(722	)
Loss before income taxes		(2,353	)		(2,137	)		(2,575	)		(2,014	)		(4,928	)		(4,151	)
Income tax expense		—			—			—			—			—			—
Net loss	$	(2,353	)	$	(2,137	)	$	(2,575	)	$	(2,014	)	$	(4,928	)	$	(4,151	)

The Company operates in 3 distinct segments based on our products and our internal organizational structure. The 3 operating segments, which are also the Company’s reportable segments, are Automotive Electronics, Consumer Electronics, and Biometrics.

Our Automotive Electronics segment designs, manufactures, markets and distributes rear-seat entertainment devices, remote start systems, automotive security, vehicle access systems, mobile interface modules, mobile multimedia devices, aftermarket/OE-styled radios, car link-smartphone telematics applications, driver distraction products, collision avoidance systems, location-based services, turn signal switches, automotive lighting products, automotive sensing and camera systems, USB ports, cruise control systems, heated seats, and satellite radio products.

Our Consumer Electronics segment designs, manufactures, markets and distributes home theater systems, high-end loudspeakers, outdoor speakers, business music systems, cinema speakers, wireless and Bluetooth speakers, soundbars, wired and wireless headphones and ear buds, DLNA (Digital Living Network Alliance) compatible devices, remote controls, karaoke products, personal sound amplifiers, infant/nursery products, as well as A/V connectivity, portable/home charging, reception, and digital consumer products.

Our Biometrics segment designs, manufactures, markets, and distributes iris identification and biometric security related products.

The accounting principles applied at the consolidated financial statement level are generally the same as those applied at the operating segment level and there are no material intersegment sales. The segments are allocated interest expense, based upon a pre-determined formula, which utilizes a percentage of each operating segment's intercompany balance, which is offset in Corporate/Eliminations.

	Automotive Electronics			Consumer Electronics			Biometrics			Corporate/ Eliminations			Total			Automotive Electronics			Consumer Electronics		Biometrics			Corporate/ Eliminations			Total
Three Months Ended May 31, 2021
Three Months Ended August 31, 2021
Net sales	$	42,657		$	94,113		$	205		$	85		$	137,060		$	45,761		$	96,959	$	253		$	136		$	143,109
Equity in income of equity investees		2,723			0			0			0			2,723			2,035			0		0			0			2,035
Interest expense and bank charges		373			1,975			401			(2,221	)		528			309			1,911		415			(2,053	)		582
Depreciation and amortization expense		783			1,001			76			947			2,807			755			1,003		75			932			2,765
Income (loss) before income taxes		3,230			5,468			(2,353	)		(4,064	)		2,281			926			2,439		(2,575	)		(1,699	)		(909	)

Three Months Ended May 31, 2020
Three Months Ended August 31, 2020
Net sales	$	17,276		$	54,514		$	97		$	100		$	71,987		$	32,633		$	94,992	$	263		$	144		$	128,032
Equity in income of equity investees		862			0			0			0			862			1,883			0		0			0			1,883
Interest expense and bank charges		168			2,134			355			(1,858	)		799			353			2,106		367			(1,816	)		1,010
Depreciation and amortization expense		466			965			86			1,026			2,543			708			954		86			999			2,747
Loss before income taxes		(3,110	)		(53	)		(2,137	)		(2,024	)		(7,324	)
Income (loss) before income taxes																	239			12,789		(2,014	)		(1,850	)		9,164

Six Months Ended August 31, 2021
Net sales																$	88,418		$	191,072	$	458		$	221		$	280,169
Equity in income of equity investees																	4,758			0		0			0			4,758
Interest expense and bank charges																	682			3,886		816			(4,274	)		1,110
Depreciation and amortization expense																	1,538			2,004		151			1,879			5,572
Income (loss) before income taxes																	4,156			7,907		(4,928	)		(5,763	)		1,372

Six Months Ended August 31, 2020
Net sales																$	49,909		$	149,506	$	360		$	244		$	200,019
Equity in income of equity investees																	2,745			0		0			0			2,745
Interest expense and bank charges																	521			4,240		722			(3,674	)		1,809
Depreciation and amortization expense																	1,174			1,919		172			2,025			5,290
(Loss) income before income taxes																	(2,871	)		12,736		(4,151	)		(3,874	)		1,840

The Company recognizes revenue in accordance with ASC Topic 606, “Revenue from Contracts with Customers” (“ASC 606”). 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.

Within our Automotive Electronics segment, while the majority of the contracts we enter into with Original Equipment Manufacturers (“OEMs”) are long-term supply arrangements, the performance obligations are established by the enforceable contract, which is generally considered to be the purchase order. The purchase orders are of durations less than one year. As such, the Company applies the practical expedient in ASC paragraph 606-10-50-14 and does not disclose information about remaining performance obligations that have original expected durations of one year or less for which work has not yet been performed.

The Company’s primary source of revenue is derived from the manufacture and distribution of consumer electronic, automotive electronic, and biometric products. Our consumer electronic products primarily consist of finished goods sold to retail and commercial customers, consisting of premium audio products and other consumer electronic products. Our automotive electronic products, some of which are manufactured by the Company, are sold both to

OEM and aftermarket customers. Our ~~biometrics~~biometric products, primarily consisting of finished goods, are sold to retail and commercial customers. We recognize revenue for sales to our customers when transfer of control of the related good or service has occurred. The majority of our revenue was recognized under the point in time approach for the three and six months ended ~~May~~August 31, 2021. Certain telematic subscription revenues generated by our Automotive Electronics segment are recognized over time. Contract terms with certain of our OEM customers could result in additional products and services being transferred over time as a result of the customized nature of some of our products, together with contractual provisions in the customer contracts that provide us with an enforceable right to payment for performance completed to date; however, under typical terms, we do not have the right to consideration until the time of shipment from our manufacturing facilities or distribution centers, or until the time of delivery to our customers. If certain contracts in the future provide the Company with this enforceable right of payment, the timing of revenue recognition from products transferred to customers over time may be slightly accelerated compared to our right to consideration at the time of shipment or delivery.

Under ASC 606, we are required to present a refund liability and a return asset within the Consolidated Balance Sheets. The changes in the refund liability are reported in Net sales, and the changes in the return asset are reported in

Cost of sales in the Unaudited Consolidated Statements of Operations and Comprehensive (Loss) Income. As of ~~May~~August 31, 2021 and February 28, 2021, the balance of the return asset was ~~$2,185~~$1,873 and $2,404, respectively, and the balance of the refund liability was ~~$4,575~~$3,928 and $5,145, respectively, and are presented within Prepaid expenses and other current assets and Accrued expenses and other current liabilities, respectively, on the Consolidated Balance Sheets.

We warrant our products against certain defects in material and workmanship when used as designed, which primarily range from 30 days to 3 years. We offer limited lifetime warranties on certain products, which limit the customer’s remedy to the repair or replacement of the defective product or part for the designated lifetime of the product, or for the life of the vehicle for the original owner, if it is an automotive product. We do not sell extended warranties.

Contract assets primarily relate to the Company’s rights to consideration for work completed but not billed at the reporting date on contracts with customers. Contract assets are transferred to receivables when the rights become unconditional. Contract liabilities primarily relate to contracts where advance payments or deposits have been received, but performance obligations have not yet been met, and therefore, revenue has not been recognized. The Company had current and non-current contract liability balances totaling ~~$5,037~~$4,641 at ~~May~~August 31, 2021 related to telematic subscription services of the Company’s DEI subsidiary established in connection with the Company’s acquisition of DEI in July 2020 (see Note 2). Revenue recognized for the ~~three~~six months ended ~~May~~August 31, 2021 that was included in the contract liability balance of ~~$5,265~~$3,766 at February 28, 2021 was $1,847. The Company had 0 contract asset balances at ~~May~~August 31, 2021 or February 28, 2021.

The Company operates in 3 reportable segments: Automotive Electronics, Consumer Electronics, and Biometrics. ASC 606 requires further disaggregation of an entity’s revenue. In the following table, the Company's net sales are disaggregated by segment and product type for the three and six months ended ~~May~~August 31, 2021 and 2020:

	Three months ended May 31,				Three months ended August 31,				Six months ended August 31,
	2021		2020		2021		2020		2021		2020
Automotive Electronics Segment
OEM Products	$	14,914	$	7,659	$	16,403	$	10,714	$	31,317	$	18,373
Aftermarket Products		27,743		9,617		29,358		21,919		57,101		31,536
Total Automotive Segment		42,657		17,276		45,761		32,633		88,418		49,909
Consumer Electronics Segment
Premium Audio Products		71,593		34,538		76,140		69,282		147,733		103,820
Other Consumer Electronic Products		22,520		19,976		20,819		25,710		43,339		45,686
Total Consumer Electronics Segment		94,113		54,514		96,959		94,992		191,072		149,506
Biometrics Segment
Biometric Products		205		97		253		263		458		360
Total Biometrics Segment		205		97		253		263		458		360
Corporate/Eliminations		85		100		136		144		221		244
Total Net Sales	$	137,060	$	71,987	$	143,109	$	128,032	$	280,169	$	200,019

The Company is currently, and has in the past, been a party to various routine legal proceedings incident to the ordinary course of business. If management determines, based on the underlying facts and circumstances of each matter, that it is probable a loss will result from a litigation contingency and the amount of the loss can be reasonably estimated, the estimated loss is accrued for. The Company does not believe that any current outstanding litigation matters will have a material adverse effect on the Company's financial statements, individually, or in the aggregate.

The products the Company sells are continually changing as a result of improved technology. As a result, although the Company and its suppliers attempt to avoid infringing known proprietary rights, the Company may be subject to legal proceedings and claims for alleged infringement by patent, trademark, or other intellectual property owners. Any claims relating to the infringement of third-party proprietary rights, even if not meritorious, could result

in costly litigation, divert management’s attention and resources, or require the Company to either enter into royalty or license agreements that are not advantageous to the Company, or pay material amounts of damages.

In August 2018, the FASB issued ASU No. 2018-14, "Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans." ASU 2018-14 removes certain disclosures that are not considered cost beneficial, clarifies certain required disclosures and added additional disclosures. This ASU is effective for public companies for annual reporting periods and interim periods within those annual periods beginning after December 15, 2020. The amendments in ASU 2018-14 must be applied on a retrospective basis. The adoption of ASU 2018-14 did not have a significant effect on the disclosures in the Company’s consolidated financial statements.

In December 2019, the FASB issued ASU No. 2019-12, “Simplifying the Accounting for Income Taxes.” This guidance removes certain exceptions related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities for outside basis differences. This guidance also clarifies and simplifies other areas of ASC 740. This guidance is effective for fiscal years beginning after December 15, 2020. The guidance in this update has various elements, some of which are applied on a prospective basis and others on a retrospective basis with earlier application permitted. The adoption of ASU No. 2019-12 did not have a material impact on the Company’s consolidated financial statements and related disclosures.

In January 2020, the FASB issued ASU No. 2020-01, “Investments – Equity Securities (Topic 321), Investments – Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) – Clarifying the Interactions between Topic 321, Topic 323, and Topic 815.” The ASU is based on a consensus of the Emerging Issues Task Force and is expected to increase comparability in accounting for these transactions by clarifying the interaction of the accounting for equity securities under Topic 321 and investments accounted for under the equity method of accounting under Topic 323, and the accounting for certain forward contracts and purchased options accounted for under Topic 815. This ASU is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. Early adoption is permitted. The adoption of ASU 2020-01 did not have a material impact on the Company’s consolidated financial statements.

In March 2020 and January 2021, the FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting” and ASU No. 2021-01, “Reference Rate Reform: Scope,” respectively. Together, these ASU’s provide optional expedients and exceptions for applying U.S. GAAP to contract modifications and hedging relationships that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. ASU 2020-04 provides, among other things, guidance that modifications of contracts within the scope of Topic 470, Debt, should be accounted for by prospectively adjusting the effective interest rate; modifications of contracts within the scope of Topic 840, Leases, should be accounted for as a continuation of the existing contract; and, changes in the critical terms of hedging relationships caused by reference rate reform should not result in the de-designation of the instrument, provided certain criteria are met. ASU 2021-01 clarifies the scope and application of ASU 2020-04 and among other things, permits entities to elect certain optional expedients and exceptions when accounting for derivative contracts and certain hedging relationships affected by changes in the interest rates used for discounting cash flows. The Company’s exposure to LIBOR rates includes its Credit Facility, as well as its Florida Mortgage and related interest swap agreement. ~~The amendments~~These optional expedients and exceptions are effective as of March 12, 2020 through December 31, 2022. Adoption is permitted at any time. The Company is currently evaluating the impact this update may have on its consolidated financial statements.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Certain information in this Quarterly Report on Form 10-Q would constitute forward-looking statements, including, but not limited to, information relating to the future performance and financial condition of the Company, the impact of the COVID-19 pandemic on our results of operations, the plans and objectives of the Company’s management, and the Company’s assumptions regarding such performance and plans that are forward-looking in nature and involve certain risks and uncertainties. Actual results could differ materially from such forward-looking information and could be exacerbated by the COVID-19 pandemic and any worsening of the global business and economic environment as a result.

We begin Management’s Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") with an overview of the business. 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 three and six months ended ~~May~~August 31, 2021 compared to the three and six months ended ~~May~~August 31, 2020. Next, we present EBITDA and Adjusted EBITDA attributable to Voxx for the three and six months ended ~~May~~August 31, 2021 compared to the three and six months ended ~~May~~August 31, 2020, in order to provide a useful and appropriate supplemental measure of our performance. We then provide an analysis of changes in our balance sheets 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."

Unless specifically indicated otherwise, all amounts presented in our MD&A below are in thousands, except share and per share data.

VOXX International Corporation ("Voxx," "We," "Our," "Us" or the "Company") is a leading international manufacturer and distributor operating in the Automotive Electronics, Consumer Electronics, and Biometrics industries. The Company has widely diversified interests, with more than 30 global brands that it has acquired and grown throughout the years, achieving a powerful international corporate image, and creating a vehicle for each of these respective brands to emerge with its own identity. We conduct our business through nineteen wholly-owned subsidiaries: Audiovox Atlanta Corp., VOXX Electronics Corporation, VOXX Accessories Corp., VOXX German Holdings GmbH ("Voxx Germany"), Audiovox Canada Limited, Voxx Hong Kong Ltd., Audiovox International Corp., Audiovox Mexico, S. de R.L. de C.V. ("Voxx Mexico"), Code Systems, Inc., Oehlbach Kabel GmbH ("Oehlbach"), Schwaiger GmbH ("Schwaiger"), Invision Automotive Systems, Inc. ("Invision"), Premium Audio Company LLC ("Klipsch"), Omega Research and Development, LLC ("Omega"), Voxx Automotive Corp., Audiovox Websales LLC, VSM-Rostra LLC (“VSM”), VOXX DEI LLC, and VOXX DEI Canada, Ltd. (collectively, with VOXX DEI, LLC, “DEI”), as well as a majority owned subsidiary, EyeLock LLC ("EyeLock"). We market our products under the Audiovox® brand name and other brand names and licensed brands, such as 808®, Acoustic Research®, Advent®, Avital®, Car Link®, Chapman®, Clifford®, Code-Alarm®, Crimestopper™, Directed®, Discwasher®, Energy®, Heco®, Invision®, Jamo®, Klipsch®, Mac Audio^™, Magnat®, Mirage®, myris®, Oehlbach®, Omega®, Prestige®, Project Nursery®, Python®, RCA®, RCA Accessories, Rosen®, Rostra®, Schwaiger®, Smart Start®, Terk®, Vehicle Safety Automotive, Viper®, Onkyo®, Integra®, and Voxx Automotive, 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, such as SiriusXM satellite radio products and Onkyo & Pioneer products in North America.

During March 2020, a global pandemic was declared by the World Health Organization and a National Emergency was declared by the President of the United States related to the rapidly growing outbreak of COVID-19. The pandemic has significantly impacted economic conditions in the United States, as federal, state, and local governments 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, capacity limitations, or other restrictions for those permitted to continue to operate or allowed to reopen since the initial shut-downs in March 2020. As of the date of this filing, all of our operating locations are open, with certain locations operating at reduced capacity.

Although the Company’s revenues have increased for the three and six months ended ~~May~~August 31, 2021, as compared to the prior year ~~period,~~periods, the ~~situation~~impact of COVID-19 on the market is still rapidly changing and additional impacts to the business may arise that we are not aware of currently, which could have an adverse impact on revenues, results of operations, and cash flows for the 2022 fiscal year. We cannot predict whether, when, or the manner in which the conditions surrounding COVID-19 will

duration and scope of the pandemic; the severity of the virus, including the emergence of new variants; the impact of the COVID-19 vaccines, including the speed at which they are disseminated and their effectiveness; the actions taken by governments to contain the virus or treat its impact; and how quickly and to what extent normal economic and operating conditions can resume. Due to the evolving situation, future results of the Company 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 receivables.

The Company continues to focus on cash flow and anticipates having sufficient resources to operate for the coming twelve-month period. In April 2021, the Company amended its Credit Facility in the U.S. in order to increase the maximum borrowing base ~~under the facility~~thereunder and to extend the maturity date of the Credit Facility to April 2026 (see Note ~~17(a)~~16(a)).

The Company operates in three reportable segments based on our products and internal organizational structure. The operating segments consist of Automotive Electronics, Consumer Electronics, and Biometrics. See Note 2322 to the Company's Consolidated Financial Statements for segment information.

We believe our segments have expanding market opportunities with 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. All of our products are subject to price fluctuations which could affect the carrying value of inventories and gross margins in the future. Macroeconomic factors, such as increases in the unemployment rate, have been pressured as a result of the COVID-19 pandemic and have created a challenging demand environment in some of our markets, the duration and severity of which we are still unable to predict.

Our objective is to continue to grow our business by acquiring new brands, embracing new technologies, expanding product development, and applying this to a continued stream of new products that should increase gross margins and improve operating income. In addition, it is our intention to continue to acquire synergistic companies that would allow us to leverage our overhead, penetrate new markets and expand existing product categories through our business channels. Notwithstanding the above, if the appropriate opportunity arises, the Company will explore the potential divestiture of a product line or business.

On September 8, 2021, the Company’s subsidiary, Premium Audio Company LLC (“PAC”), completed the transaction to acquire the home audio/video business of Onkyo Home Entertainment Corporation with its partner Sharp through the newly formed joint venture, Onkyo Technology KK (see Note 2).

The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses reported in those financial statements. These judgments can be subjective and complex, and consequently, actual results could differ from those estimates. Our most critical accounting policies and estimates relate to revenue recognition; accrued sales incentives; expected credit losses on accounts receivable; inventory valuation; valuation of long-lived assets; valuation and impairment assessment of goodwill, trademarks, and other intangible assets; warranties; stock-based compensation; recoverability of deferred tax assets; and the reserve for uncertain tax positions at the date of the consolidated financial statements. A summary of the Company's critical accounting policies is identified in Management’s Discussion and Analysis of Financial Condition and Results of Operations in the Company's Form 10-K for the fiscal year ended February 28, 2021. During Fiscal 2021, there were significant changes to the global economic situation as a consequence of the COVID-19 pandemic that could continue during Fiscal 2022. It is possible that this could cause changes to estimates in the future 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 Company’s 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. Since February 28, 2021, there have been no changes in our critical accounting policies.

As you read this discussion and analysis, refer to the accompanying Unaudited Consolidated Statements of Operations and Comprehensive (Loss) Income, which present the results of our operations for the three and six months ended ~~May~~August 31, 2021 and 2020.

The following tables set forth, for the periods indicated, certain statements of operations data for the three and six months ended ~~May~~August 31, 2021 and 2020.

	May 31,										August 31,
	2021		2020		$ Change			% Change			2021		2020		$ Change			% Change
Three Months Ended
Automotive Electronics	$	42,657	$	17,276	$	25,381			146.9	%	$	45,761	$	32,633	$	13,128			40.2	%
Consumer Electronics		94,113		54,514		39,599			72.6	%		96,959		94,992		1,967			2.1	%
Biometrics		205		97		108			111.3	%		253		263		(10	)		(3.8	)%
Corporate		85		100		(15	)		(15.0	)%		136		144		(8	)		(5.6	)%
Total net sales	$	137,060	$	71,987	$	65,073			90.4	%	$	143,109	$	128,032	$	15,077			11.8	%

Six Months Ended
Automotive Electronics											$	88,418	$	49,909	$	38,509			77.2	%
Consumer Electronics												191,072		149,506		41,566			27.8	%
Biometrics												458		360		98			27.2	%
Corporate												221		244		(23	)		(9.4	)%
Total net sales											$	280,169	$	200,019	$	80,150			40.1	%

Automotive Electronics sales represented ~~31.1%~~32.0% of the net sales for the three months ended ~~May~~August 31, 2021, compared to ~~and 24.0%~~25.5% in the prior year period and increased ~~$25,381~~$13,128 for the three months ended ~~May~~August 31, 2021, as compared to three months ended ~~May~~August 31, 2020. One of the primary drivers of sales increases in this segment was sales of aftermarket products related to the Company’s DEI subsidiary, established in connection with the ~~Company’s~~ acquisition in July 2020. Although the Company generated sales from DEI during the three months ended August 31, 2020, these sales increased approximately $8,800 for the three months ended August 31, 2021 as a result of having a full quarter of sales for the second quarter of Fiscal ~~2021. Sales from DEI totaled approximately $12,100~~2022, as well as due to the fact that immediately following the acquisition, the Company did not have sufficient inventory during the three months ended ~~May~~August 31, ~~2021, and comprised approximately 28% of the segment’s sales for the quarter. These sales were not present during the three months ended May 31, 2020.~~2020 to satisfy customer demand. The Company’s OEM rear seat entertainment sales ~~increased~~also experienced a net increase of approximately ~~$5,300~~$3,700 during the three months ended ~~May~~August 31, 2021, primarily as a result of the rebound from prior year COVID-19 shut-downs, as several automotive manufacturing plants were not operating during the first quarter of Fiscal 2021, including Ford, GM, Stellantis (FCA), and Subaru, as well as due to the start of a new rear seat entertainment ~~program.~~programs with Nissan and Stellantis that were not present in the prior year. This was offset by declines in sales for certain rear-seat entertainment customers due to part shortages during the quarter. Sales of OEM automotive safety electronics increased approximately ~~$3,200~~$1,500 as a result of rebounding sales following the COVID-19 shut-downs of automotive manufacturers in the prior year. In addition, the Company’s OEM and aftermarket security products, which include remote starts, increased by approximately $800 for the three months ended August 31, 2021 as a result of rebounding sales following the prior year COVID-19 shut-downs, as well as due to current year component shortages that have caused some customers to purchase product earlier to avoid future stock outages. As an offset to these increases, the Company experienced net decreases in both satellite radio and aftermarket safety electronics sales during the three months ended August 31, 2021 of approximately $1,400 and $600, respectively, as a result of inventory shortages that have negatively affected the Company’s ability to fulfill orders.

Automotive Electronics sales represented 31.6% of the net sales for the six months ended August 31, 2021, compared to 25.0% in the prior year period and increased $38,509 for the six months ended August 31, 2021, as compared to six months ended August 31, 2020. The primary driver of the sales increase in this segment was sales of aftermarket products related to the Company’s DEI subsidiary, established in connection with the Company’s acquisition in July 2020. These sales increased approximately $20,700 for the six months ended August 31, 2021 as a result of six full months of sales included for Fiscal 2022 as compared to two months during the comparable Fiscal 2021 year-to-date period. Additionally, immediately following the acquisition of DEI in July 2020, the Company did not have sufficient inventory to satisfy customer demand which negatively impacted sales in the prior year. The Company’s OEM rear seat entertainment sales also experienced an increase of approximately $9,000 during the six months ended August 31, 2021, primarily as a result of the start of new rear seat entertainment programs with Nissan and Stellantis that were not present in the prior year. Sales of OEM automotive safety electronics increased approximately $4,200, both as a result of rebounding sales following the COVID-19 shut-downs of automotive manufacturers, and due to backordered sales from the fourth quarter of Fiscal 2021 that ~~that~~ were fulfilled during the ~~three~~six months ended ~~May~~August 31, 2021. In addition, the Company’s aftermarket security products, which include aftermarket remote ~~starts;~~starts, and aftermarket rear seat entertainment ~~products; and satellite radio~~ products increased by approximately ~~$2,200, $1,800,~~$2,600 and ~~$1,000,~~$1,700, respectively, for the ~~three~~six months ended ~~May~~August 31, ~~2021. All of these increases were~~2021, due to rebounding sales following ~~brick and mortar business re-openings following~~ the prior year COVID-19 ~~pandemic restrictions, which were in effect during the three months ended May 31, 2020,~~shut-downs, as well as due to current year component shortages that have caused some customers to purchase product earlier in order to avoid future stock outages. Finally, aftermarket accessory products increased ~~demand experienced~~approximately $400 for ~~certain aftermarket security products.~~the six months ended August 31, 2021 due to the successful launch of new soundbars for club cars during the second quarter. As an offset to these increases, the Company experienced ~~a decrease~~net decreases in ~~OEM remote start products~~both satellite radio and aftermarket safety electronics sales during the ~~three~~six months ended ~~May~~August 31, 2021 of approximately $400 ~~primarily~~each, as a result of ~~global semi-conductor~~inventory shortages which have negatively ~~affecting~~affected the Company’s ability to fulfill ~~certain~~ orders.

Consumer Electronics sales represented ~~68.7%~~67.8% of our net sales for the three months ended ~~May~~August 31, 2021, compared to ~~75.7%~~74.2% in the comparable prior year period and increased ~~$39,599~~$1,967 for the three months ended ~~May~~August 31, 2021, as compared to the three months ended ~~May~~August 31, 2020. The Company continues to experience high consumer demand and has achieved market share growth in its domestic premium home theater, subwoofer, and premium wireless categories, launching a new premium wireless computer speaker system and other new Bluetooth speakers during the second quarter of Fiscal 2021, and began selling many of its products through warehouse club channels. Additionally, the lifting of many of the COVID-19 restrictions that were in place during the three months ended May 31, 2020 has also contributed positively to the sale of these products during the three months ended May 31, 2021, which resulted in a total sales increase of approximately $28,900 for the quarter. The Company’s 11 Trading Company LLC subsidiary, which was established during the second quarter of Fiscal 2021 and began selling Onkyo and Pioneer products through ~~new~~ distribution agreements during the third quarter of Fiscal 2021, contributed to an increase of approximately ~~$6,400~~$11,400 in sales for the three months ended ~~May~~August 31, 2021. These sales were not present during the three months ended August 31, 2020. The Company also saw an increase in sales of its premium wireless speakers, including wireless computer speakers, of approximately $900, as these speakers were launched at the end of the second quarter of Fiscal 2021 and had a full quarter of sales during the three months ended August 31, 2021. Additionally, the Company experienced an increase in sales of approximately $800 related to its other wireless speakers for the three months ended ~~May~~August 31, 2021, due to the rebound in sales following nationwide COVID-19 brick and mortar business closures in the comparable prior year period. Within Europe, the Company experienced an increase in its premium audio product sales of approximately $400 as a result of the partial lifting of COVID-19 restrictions during the three months ended August 31, 2021, although many restrictions are still noted to be in place. Offsetting these increases, the Company experienced a decrease in sales of premium home separate speaker products for the three months ended August 31, 2021 of approximately $5,700 due to available shipping vessel shortages and delays, which have led to many customer backorders. Declines in sales of hook-up products, reception products, and remotes totaling approximately $2,100 during the three months ended August 31, 2021 occurred due to the fact that these product sales increased significantly during the prior year COVID-19 shutdowns, as many people were working from home during this period. During the second quarter of Fiscal 2022, sales of these products have returned to normal levels. Additionally, inventory and chip shortages leading to production delays have resulted in lower sales of certain products including those within the nursery and karaoke lines, and within the premium mobility line, including wireless ear buds, totaling approximately $1,000 for the three months ended August 31, 2021. Finally, the Company experienced a net decrease of approximately $600 in accessory products sales in Europe as a result of the timing of prior year sales and holiday orders placed early due to the pandemic.

Consumer Electronics sales represented 68.2% of our net sales for the six months ended August 31, 2021, compared to 74.7% in the comparable prior year period and increased $41,566 for the six months ended August 31, 2021, as compared to the six months ended August 31, 2020. The Company has continued to experience high consumer demand and has achieved market share growth in its domestic premium home theater, subwoofer, and premium wireless categories for the six months ended August 31, 2021, launching a new premium wireless computer speaker system and other new Bluetooth speakers during the second quarter of Fiscal 2021 and new soundbars during the second quarter of Fiscal 2022, and began selling many of its products through warehouse club channels during Fiscal 2021. Additionally, the lifting of many of the COVID-19 restrictions that were in place during the six months ended August 31, 2020 has contributed positively to the sales of these products during the six months ended August 31, 2021, resulting in a total sales increases of approximately $24,300 for the year-to-date period. The Company’s 11 Trading Company LLC subsidiary, which was established during the second quarter of Fiscal 2021 and began selling Onkyo and Pioneer products through distribution agreements during the third quarter of Fiscal 2021, contributed to an increase of approximately $17,700 in sales for the six months ended August 31, 2021. These sales were not present during the six months ended August 31, 2020. The Company also experienced ~~increases in sales~~improvements of approximately ~~$2,300~~$2,200 related to ~~certain~~ other ~~consumer electronic and accessory products for~~wireless speakers during the ~~three~~six months ended ~~May~~August 31, 2021, ~~such as wireless speakers, remotes, karaoke products, and nursery products,~~ due to the rebound in sales following nationwide COVID-19 brick and mortar business closures and delayed customer orders during the ~~three~~six months ended ~~May~~August 31, ~~2020, as well as due to limited inventory for certain nursery products in the prior year.~~2020. Within Europe, the Company experienced increases in ~~both~~its premium ~~and other consumer accessory products~~audio product sales of approximately $1,400 as a result of the partial lifting of ~~many~~ COVID-19 restrictions ~~and~~during the ~~re-opening of brick-and-mortar businesses where these products~~six months ended August 31, 2021, although many restrictions are ~~sold, as well as continued strong sales from online platforms.~~still noted to be in place. Finally, the Company experienced increases in sales of premium mobility products of approximately ~~$1,100~~$700 for the ~~three~~six months ended ~~May~~August 31, 2021, as a result of both the re-opening of brick-and-mortar businesses due to COVID-19 restrictions lifting, and the launch of new wireless earbud products in the fourth quarter of Fiscal 2021. Offsetting these increases, the Company experienced ~~a decrease in~~declining sales of hook-up products, ofreception products, and remotes totaling approximately ~~$600~~$2,700 during the ~~three~~six months ended ~~May~~August 31, 2021, as these products saw a large increase ~~in sales~~ during the ~~three months ended May 31, 2020~~comparable prior year period due to the significant number of people working from home during the COVID-19 pandemic. During the first ~~quarter~~half of Fiscal 2022, sales of these products have ~~normalized.~~returned to normal levels.

Biometrics sales represented ~~0.1%~~0.2% of our net sales for both the three and six months ended ~~May~~August 31, 2021 and 2020. Sales ~~during~~for the three months ended ~~May~~August 31, 2021 have remained relatively flat, while sales of the six months ended August 31, 2021 increased ~~$108 compared to~~$98. The increase in sales during the ~~prior year period~~six months ended August 31, 2021 was due primarily to an increase in sales of ~~its~~

the NIXT product, which the Company began selling during the second half of Fiscal 2021. The NIXT product can be optionally fitted with iTEMP, a product that can take an individual’s temperature before allowing iris access.

	May 31,												August 31,
	2021			2020			$ Change			% Change			2021			2020			$ Change			% Change
Three Months Ended
Automotive Electronics	$	11,522		$	3,056		$	8,466			277.0	%	$	10,941		$	6,722		$	4,219			62.8	%
		27.0	%		17.7	%								23.9	%		20.6	%
Consumer Electronics		25,052			16,844			8,208			48.7	%		26,051			31,213			(5,162	)		(16.5	)%
		26.6	%		30.9	%								26.9	%		32.9	%
Biometrics		40			(22	)		62			281.8	%		77			1			76			7600.0	%
		19.5	%		-22.7	%								30.4	%		0.4	%
Corporate		81			98			(17	)		(17.3	)%		117			140			(23	)		(16.4	)%
	$	36,695		$	19,976		$	16,719			83.7	%	$	37,186		$	38,076		$	(890	)		(2.3	)%
		26.8	%		27.7	%								26.0	%		29.7	%

Six Months Ended
Automotive Electronics													$	22,463		$	9,778		$	12,685			129.7	%
														25.4	%		19.6	%
Consumer Electronics														51,103			48,057			3,046			6.3	%
														26.7	%		32.1	%
Biometrics														117			(22	)		139			631.8	%
														25.5	%		-6.1	%
Corporate														198			238			(40	)		(16.8	)%
													$	73,881		$	58,051		$	15,830			27.3	%
														26.4	%		29.0	%

Gross margin percentages for the Company have decreased 90370 and 260 basis points for the three and six months ended ~~May~~August 31, 2021, respectively, as compared to the three and six months ended ~~May~~August 31, 2020.

Gross margin percentages in the Automotive Electronics segment increased ~~930~~330 and 580 basis points for the three and six months ended ~~May~~August 31, 2021, respectively, as compared to the prior year ~~period.~~periods. The primary driver of the margin increases in this segment has been sales of aftermarket products related to the Company’s DEI subsidiary, whose products have higher profit margins than those typically achieved by the segment, and whose sales were ~~not~~ present in the prior year ~~period.~~period for only two months. The increase in sales of high margin OEM automotive safety electronics, as well as rebounding sales of OEM rear seat entertainment, aftermarket security, and aftermarket rear seat entertainment products following the COVID-19 pandemic shut-downs also contributed positively to the segment’s margins during the three months ended May 31, 2021. Offsetting these positive impacts, the decline in sales of high margin OEM security and remote start products also contributed positively to both the three and six month periods. Offsetting these positive impacts, the increased cost of materials and shipping included in cost of goods sold have negatively affected margins during the three and six months ended ~~May~~August 31, 2021 ~~resulted in~~for such items as OEM and aftermarket rear seat entertainment and aftermarket security products, which the Company is actively working to mitigate through a ~~negative impact on margins. In addition, although there was an increase in satellite radio~~combination of sales ~~for~~price adjustments and other sourcing strategies. Additionally, certain new OEM rear seat entertainment programs that began during the three and six months ended ~~May~~August 31, 2021, and that have positively contributed to sales during the ~~low~~periods, have generated lower margins ~~generated by these product sales did not result~~than are normally achieved in ~~a positive impact on margins for the period.~~this segment.

Gross margin percentages in the Consumer Electronics segment decreased ~~430~~600 and 540 basis points for the three and six months ended ~~May~~August 31, 2021, respectively, as compared to the prior year ~~period. Margin~~periods. The primary driver of these declines during the three and six months ended ~~May~~August 31, 2021 ~~were primarily driven by~~has been significant increases to container costs and surcharges affecting cost of sales for many of the products within the segment, which the Company is actively working to mitigate through pricing adjustments and other sourcing strategies. In addition, 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~~during the three and six month periods, have been sold at lower margins than those typically associated with the Company’s premium audio products. ~~The Company also offered additional discounts on some of~~Offsetting these ~~products during~~negative margin impacts, the ~~first quarter of the fiscal year following the holidays and incurred increased shipping costs due to surcharges related to container shortages and port delays, which negatively impacted margins. The~~ Company’s premium headphone margins ~~also declined during~~increased for the three and six months ended ~~May~~August 31, 2021, due to ~~post holiday discounts on certain products and increased shipping costs and surcharges related to container shortages and port delays. Additionally, although sales~~the launch of new product lines during the fourth quarter of Fiscal 2021. Sales from the Company’s 11 Trading Company subsidiary also positively impacted margins for the ~~Company’s revenue,~~three and six month periods, as ~~they~~these sales were not present induring the prior year ~~the margins earned for these premium audio products are lower than those typically earned for similar products within the segment. As an offset to these margin declines, the increase in sales~~comparable periods. Finally, in Europe, ~~as well as the increase in other consumer accessory wireless speakers during~~margins have improved for both the three and six months ended ~~May~~August 31, 2021 ~~contributed positively~~primarily due to the ~~segment’s margins.~~product mix sold.

Gross margin percentages in the Biometrics segment improved for the three and six months ended ~~May~~August 31, 2021 as compared to the prior year ~~period.~~periods. The increase in margins for the three and six months ended ~~May~~August 31, 2021 was primarily a result of the increase in sales ~~for~~during the ~~quarter,~~six months ended August 31, 2021 and consistent sales levels during the three months ended August 31, 2021, as the Company’s NIXT product has generated high margins for the segment. Additionally, in the prior

year comparable periods, the Company reduced pricing on certain products, which helped generate sales, but resulted in lower margins for the segment.

	May 31,									August 31,
	2021		2020		$ Change		% Change			2021		2020		$ Change		% Change
Three Months Ended
Operating expenses:
Selling	$	11,467	$	8,567	$	2,900		33.9	%	$	11,838	$	9,233	$	2,605		28.2	%
General and administrative		19,352		14,995		4,357		29.1	%		17,884		15,424		2,460		15.9	%
Engineering and technical support		6,232		4,485		1,747		39.0	%		7,886		4,781		3,105		64.9	%
Acquisition costs											2,316		121		2,195		1814.0	%
Total operating expenses	$	37,051	$	28,047	$	9,004		32.1	%	$	39,924	$	29,559	$	10,365		35.1	%

Six Months Ended
Operating expenses:
Selling										$	23,305	$	17,801	$	5,504		30.9	%
General and administrative											36,560		30,294		6,266		20.7	%
Engineering and technical support											14,118		9,266		4,852		52.4	%
Acquisition costs											2,992		246		2,746		1116.3	%
Total operating expenses										$	76,975	$	57,607	$	19,368		33.6	%

Total operating expenses have increased ~~$9,004~~$10,365 and $19,368 for the three and six months ended ~~May~~August 31, 2021, respectively, as compared with the prior year ~~period.~~periods.

For the three months ended ~~May~~August 31, 2021, selling expenses increased $2,605. This increase was primarily attributable to higher salary expenses and related payroll taxes, which increased approximately $1,500 due to the absence of COVID-19 related furloughs and salary and bonus reductions that were present in the comparable prior year period, as well as due to the additional headcount created by the July 2020 acquisition resulting in the establishment of the Company’s DEI subsidiary and new hires related to the 11 Trading Company and Australia Premium Audio Company (“Australia PAC”) subsidiaries established in the second quarter of Fiscal 2021 and first quarter of Fiscal 2022, respectively. Advertising expenses and web fees increased approximately $600 for the three months ended August 31, 2021, due to new product displays used at customer sites, the lifting of COVID-19 related cost cutting measures in place during the prior year, and due to the increased price of web advertising as compared to the prior year. The Company also experienced an increase in credit card fees of approximately $300 during the three months ended August 31, 2021, due primarily to sales generated by the Company’s new DEI subsidiary, as its telematic subscription sales are paid by customers through credit card transactions. Additionally, a larger number of customers have gradually begun using credit cards to pay for orders than in prior periods across the entire Company. Finally, the Company saw in increase in travel expenses for the three months ended August 31, 2021 of approximately $200 due to the lifting of some of the Company’s COVID-19 related restrictions which have allowed salesmen to begin traveling to customer sites again.

For the six months ended August 31, 2021, selling expenses increased ~~$2,900.~~$5,504. This increase was primarily attributable to higher salary and commission expenses during the ~~three~~six months ended ~~May~~August 31, 2021, as compared to the prior ~~year.~~year-to-date period. Salary expense and related payroll taxes increased approximately ~~$1,600~~$3,100 due primarily to the absence of COVID-19 related furloughs and salary and bonus reductions that were present in the comparable prior year period, as well as due to the additional headcount created by the July 2020 acquisition resulting in the establishment of the Company’s DEI subsidiary and new hires related to the 11 Trading Company ~~subsidiary~~and Australia PAC subsidiaries established in the second quarter of Fiscal ~~2021.~~2021 and first quarter of Fiscal 2022, respectively. Commission expense increased approximately ~~$1,200~~$1,300 as a result of the increase in the Company’s sales for the ~~three~~six months ended ~~May~~August 31, 2021 as compared to ~~the~~ prior year. Advertising expenses and web fees increased approximately ~~$900~~$1,500 for the ~~three~~six months ended ~~May~~August 31, 2021, due to new product displays being used at customer sites, ~~as well as~~ increased web advertising in response to higher online traffic and ~~sales. Additionally,~~sales, the lifting of COVID-19 related cost cutting measures, as well as due to the increased price of web advertising compared to the prior year. The Company also experienced an increase in credit card fees of approximately ~~$300~~$600 during the ~~three~~six months ended ~~May~~August 31, 2021, due primarily to sales generated by the Company’s new DEI subsidiary, as its telematic subscription sales are paid by customers through credit card transactions. Additionally, a larger number of customers have gradually begun using credit cards to pay for orders than in prior periods across the entire Company. Offsetting these increases in selling expenses for the ~~three~~six months ended ~~May~~August 31, 2021 was a decrease in trade show expenses of approximately ~~$1,000~~$1,100, as all trade shows have continued to be either cancelled or held virtually due to the COVID-19 ~~pandemic.~~pandemic through the second quarter of the fiscal year.

General and administrative expenses increased $2,460 during the three months ended August 31, 2021, as compared to the prior year period. Salary expense and related payroll taxes increased approximately $1,200 during the three months ended August 31, 2021, due to the absence of COVID-19 related furloughs and salary and bonus reductions that were present in the comparable prior year period. Professional fees increased approximately $900 for the three months ended August 31, 2021 due to increased litigation fees, as well as legal and professional fees related to the Company’s newest 11 Trading Company and PAC Australia subsidiaries established in the second quarter of Fiscal 2021 and the first quarter of Fiscal 2022, respectively. Professional fees were also higher during the quarter due to the lifting of many COVID-19 related restrictions, as both the Company and certain of its professional service providers had temporary office closures during the three months ended August 31, 2020 or provided fee concessions as a result of the pandemic that did not repeat in the current year. Additionally, office expenses increased approximately $200 as a result of the lifting of prior year COVID-19 related office closures. Finally, fees related to taxes and licensing increased approximately $200 during the three months ended August 31, 2021 due to the establishment of Company’s DEI, 11 Trading Company, and PAC Australia subsidiaries.

General and administrative expenses increased ~~$4,357~~$6,266 during the ~~three~~six months ended ~~May~~August 31, 2021, as compared to the prior year period. Professional fees increased approximately ~~$2,600~~$3,000 for the ~~quarter~~year-to-date period due ~~primarily~~ to consulting and due diligence fees related to the asset purchase agreement signed with Onkyo Home Entertainment Corporation during the three months ended May 31, 2021 and the joint venture the Company is creating with Sharp Corporation to complete the transaction, increased litigation fees, as well as consulting fees related to the EyeLock distribution agreement with GalvanEyes LLC, ~~signed during the three months ended May 31, 2021~~ and ~~subject to stockholder approval at the Company’s July 29, 2021 Annual Meeting of Stockholders, as well as~~ legal and professional fees related to the Company’s newest ~~DEI and~~ 11 Trading Company and Australia PAC subsidiaries established in the second quarter of Fiscal ~~2021.~~2021 and the first quarter of Fiscal 2022, respectively. Professional fees were also higher during the ~~three~~six months ended ~~May~~August 31, 2021, due to the lifting of many COVID-19 related restrictions, as both the Company and many of its professional service providers had temporary office closures during the ~~three~~six months ended ~~May~~August 31, ~~2020.~~2020 or provided fee concessions as a result of the pandemic that did not repeat in the current year. Salary and related payroll tax expense increased approximately ~~$1,100~~$2,500 during the ~~three~~six months ended ~~May~~August 31, 2021, due to the absence of COVID-19 related furloughs and salary and bonus reductions that were present in the comparable prior year period. ~~Additionally, the~~The Company’s office and occupancy ~~expense and depreciation and amortization expense~~expenses increased approximately ~~$200 and $300, respectively, during~~$500 in total, both as a result of the ~~three months ended May 31, 2021, primarily~~lifting of prior year COVID-19 related office closures, as well due to the office space required for the Company’s new DEI ~~subsidiary,~~subsidiary. Additionally, fees related to taxes and licensing also increased approximately $400 during the six months ended August 31, 2021 due to the ~~acquired assets~~establishment of Company’s DEI, 11 Trading Company, and ~~office space required. Increases~~PAC Australia subsidiaries. Finally, net increases to depreciation and amortization expense of approximately $300 were related to assets acquired in the DEI transaction. This was offset by Company assets that ~~were~~became fully depreciated or amortized during the ~~three~~six months ended ~~May~~August 31, ~~2021, as compared~~2021. As a further offset to the general and administrative increases, the Company experienced a decrease in insurance expense of approximately $100 as a result a deductible paid in the prior ~~year.~~year that did not repeat in Fiscal 2022.

Engineering and technical support expenses increased ~~$1,747~~$3,105 for the three months ended ~~May~~August 31, 2021, as compared to the prior year period. The Company experienced a net increase in direct labor and related payroll tax expense of approximately ~~$1,300 primarily~~$1,100 as a result of additional headcount created by the July 2020 acquisition resulting in the establishment of the Company’s DEI subsidiary, as well as due to the reimbursement of engineering labor expense incurred in prior periods, and the absence of Company-wide furloughs and pay reductions related to COVID-19 that were in place during the three months ended ~~May~~August 31, 2020. This was offset by ~~lower utilization~~a post-acquisition headcount adjustment at the Company’s VSM subsidiary. There was also an increase in research and development expense of ~~outside services~~approximately $2,000 for the three months ended August 31, 2021, as a result of the Company’s product development projects for Stellantis in the Automotive Electronics segment, headcount increases within the Biometrics segment, and product certification costs within the Consumer Electronics segment.

Engineering and technical support expenses increased $4,852 for the six months ended August 31, 2021, as compared to the prior year period. The Company experienced a net increase in direct labor and related payroll tax expense of approximately $2,400 as a result of additional headcount created by the July 2020 acquisition resulting in the establishment of the Company’s DEI subsidiary, as well as due to the reimbursement of engineering labor expense incurred in prior periods, and the absence of Company-wide furloughs and pay reductions related to COVID-19 that were in place during the six months ended August 31, 2020. This was offset by a post-acquisition headcount adjustment at the Company’s VSM subsidiary. There was also a net increase in research and development expense of approximately ~~$500~~$2,400 for the ~~three~~six months ended ~~May~~August 31, 2021, as a result of the ~~start of new~~Company’s product development projects for Stellantis in the Automotive Electronics segment and headcount increases within the Biometrics segment, offset by the delay of certain soundbar and headphone launches in Consumer Electronics.

Acquisition costs increased $2,195 and $2,746 for the three and six months ended August 31, 2021, as compared to the respective prior year periods. During the three and six months ended August 31, 2021, acquisition costs incurred were related to consulting and due diligence fees for to the asset purchase agreement signed with Onkyo Home Entertainment Corporation and the joint venture created with Sharp Corporation to complete the transaction. This transaction was completed on September 8, 2021. In the prior year, acquisition costs incurred were related to the Company’s VSHC and DEI acquisitions, completed in January 2020 and July 2020, respectively.

	May 31,												August 31,
	2021			2020			$ Change			% Change			2021			2020			$ Change		% Change
Three Months Ended
Interest and bank charges	$	(528	)	$	(799	)	$	271			33.9	%	$	(582	)	$	(1,010	)	$	428		42.4	%
Equity in income of equity investee		2,723			862			1,861			215.9	%		2,035			1,883			152		8.1	%
Other, net		442			685			(243	)		(35.5	)%		376			(226	)		602		266.4	%
Total other income	$	2,637		$	748		$	1,889			252.5	%	$	1,829		$	647		$	1,182		182.7	%

Six Months Ended
Interest and bank charges													$	(1,110	)	$	(1,809	)	$	699		38.6	%
Equity in income of equity investee														4,758			2,745			2,013		73.3	%
Other, net														818			460			358		77.8	%
Total other income													$	4,466		$	1,396		$	3,070		219.9	%

Interest and bank charges represent interest expense and fees related to the Company's bank obligations, supply chain financing ~~agreements~~ and factoring agreements, interest related to finance leases, and amortization of debt issuance costs. ~~For~~During the ~~three months ended May 31,~~first quarter of Fiscal 2021, interest expense was lower due primarily to the amendment of the Company’s Credit Facility on April 19, 2021, which resulted in a decrease in amortization of debt issuance costs of $123 for the three months ended May 31, 2021. In addition, during the three months ended May 31, 2020, the Company made a precautionary borrowing from the Credit Facility of $20,000 related to COVID-19 pandemic concerns. This balance was repaid during the third quarter of Fiscal 2021 and there ~~was~~has been no balance outstanding ~~at May~~during the three and six months ended August 31, 2021. This resulted in a decrease in interest expense related to the Credit Facility of approximately ~~$75~~$130 and $210 for the three and six months ended ~~May~~August 31, 2021, respectively, as compared to the prior year. In addition, interest expense was lower during the three and six months ended August 31, 2021 due to the amendment of the Company’s Credit Facility on April 19, 2021, which resulted in a decrease in amortization of debt issuance costs of $72 and $195 for the three and six months ended August 31, 2021, respectively.

Equity in income of equity investee represents the Company's share of income from its 50% non-controlling ownership interest in ASA Electronics LLC and Subsidiaries ("ASA"). The increase in income for the three and six months ended ~~May~~August 31, 2021 is due to an increase in ASA net income resulting from improved sales inacross all of its markets due primarily to the lifting of COVID-19 restrictions on customers and end ~~consumers.~~consumers and an increase in demand for product.

Other, net includes net foreign currency gains or losses, interest income, rental income, and other miscellaneous income and expense. During the three and six months ended ~~May~~August 31, 2021, the Company had foreign currency (losses)/gains of $(2) and $114, respectively, as compared to foreign currency losses of $(363) and $(479) for the three and six months ended August 31, 2020, respectively. During the six months ended August 31, 2020, the Company also received the proceeds of a key man life insurance policy in the net amount of ~~$444,~~$420, which did not recur in the current year period. Offsetting this decrease in other income, net, during the three months ended May 31, 2021, the Company had foreign currency gains of $116 as compared to foreign currency losses of $116 for the three months ended May 31, 2020.

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) was enacted in response to the COVID-19 pandemic. 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 a technical corrections so that qualified improvement property can be immediately expensed under IRC Section 168(k) and net operating losses arising in tax years beginning in 2017 and ending in 2018 can be carried back two years and carried forward twenty years without a taxable income limitation as opposed to carried forward indefinitely, and (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. With respect to the technical correction to net operating losses, the Company recorded a discrete income tax provision of $4,275 during the three months ended May 31, 2021, as its valuation allowance related to net operating losses with limited carryforward periods increased.

$4,390, which includes a discrete income tax provision of ~~$4,292.~~$4,151. The Company recorded a discrete tax provision of $4,275 related to an increase in valuation allowance as a result of the technical correction to net operating losses as provided in the CARES Act and a discrete tax benefit of $155 related to the reversal of uncertain tax provision liabilities as a result of the lapse of the applicable statute of limitations, offset with a discrete tax provision of ~~$17~~$31 related to the accrual of interest for unrecognized tax benefits.

non-controlling interest related to EyeLock LLC, state and local income taxes, nondeductible permanent differences, and income taxed in foreign jurisdictions at varying tax rates.

EBITDA and Adjusted EBITDA are not financial measures recognized by GAAP. EBITDA represents net income (loss) attributable to VOXX International Corporation, 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, acquisition costs, certain non-routine legal and professional fees, and life insurance proceeds. Depreciation, amortization, and stock-based compensation are non-cash items.

We present EBITDA and Adjusted EBITDA in this Form 10-Q 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 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.

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

	Three months ended May 31,					Three months ended August 31,					Six months ended August 31,
	2021		2020			2021			2020		2021		2020
Net income (loss) attributable to VOXX International Corporation	$	2,716	$	(8,272	)	$	311		$	7,340	$	3,027	$	(932	)
Adjustments:
Interest expense and bank charges (1)		372		661			420			867		792		1,528
Depreciation and amortization (1)		2,778		2,509			2,735			2,715		5,513		5,224
Income tax expense		484		1,781
Income tax (benefit) expense							(217	)		2,609		267		4,390
EBITDA		6,350		(3,321	)		3,249			13,531		9,599		10,210
Stock-based compensation		236		351			237			335		473		686
Acquisition costs		676		125			2,316			121		2,992		246
Professional fees related to distribution agreement with GalvanEyes LLC		325		—			—			—		325		—
Non-routine legal fees		686		82			548			—		1,234		—
Life insurance proceeds		—		(444	)		—			24		—		(420	)
Adjusted EBITDA	$	8,273	$	(3,207	)	$	6,350		$	14,011	$	14,623	$	10,722

As of ~~May~~August 31, 2021, we had working capital of ~~$175,977~~$176,632 which includes cash and cash equivalents of ~~$36,710,~~$41,051, compared with working capital of $172,543 at February 28, 2021, which included cash and cash equivalents of $59,404. 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. As of ~~May~~August 31, 2021, we had cash amounts totaling ~~$2,792~~$1,373 held in foreign bank accounts, none of which would be subject to United States federal income taxes if made available for use in the United States. The Tax Cuts and Jobs Act provides a 100% participation exemption on dividends received from foreign corporations after January 1, 2018, as the United States has moved away from a worldwide tax system and closer to a territorial system for earnings of foreign corporations.

Operating activities used cash of ~~$17,043~~$5,529 for the ~~three~~six months ended ~~May~~August 31, 2021 due to factors including the increase in inventory and the decrease in accounts payable, accrued expenses, and accrued ~~expenses, the increase in inventory,~~sales incentives, as well as due to losses incurred by EyeLock LLC. This was offset primarily by the increase in consolidated net sales, as well as ~~decreases~~the decrease in accounts ~~receivable and accrued sales incentives.~~receivable. For the ~~three~~six months ended ~~May~~August 31, 2020, operating activities ~~provided~~used cash of ~~$12,285~~$90 due to factors including ~~decreases~~the increases in both accounts receivable ~~driven in part by the Company’s domestic supply chain financing arrangements,~~and inventory, as well as ~~due to an increase in accounts payable. These operating cash inflows were offset primarily by sales declines due to COVID-19 and~~ losses incurred by EyeLock ~~LLC, as well as~~LLC. This was offset primarily by increases in ~~inventory,~~accounts payable, accrued expenses, and ~~decreases in~~ accrued sales incentives.

Investing activities used cash of ~~$3,927~~$10,228 during the ~~three~~six months ended ~~May~~August 31, 2021 primarily due the issuance of a promissory note to Onkyo, as well as capital expenditures. For the ~~three~~six months ended ~~May~~August 31, 2020, investing activities used cash of ~~$586~~$12,104 primarily due to the acquisition of the Directed business, as well as capital expenditures.

Financing activities used cash of ~~$1,755~~$2,375 during the ~~three~~six months ended ~~May~~August 31, 2021 due to the purchase of treasury shares, the payment of withholding taxes on the net issuance of a stock award, the payment of deferred finance fees related to the amendment of the Credit Facility, as well as repayments of finance leases and the FLFlorida mortgage, ~~balance.~~offset by borrowings under the Company’s Euro asset-based loan in Germany. During the ~~three~~six months ended ~~May~~August 31, 2020, financing activities provided cash of ~~$19,706~~$19,496 primarily due to the precautionary borrowing of $20,000 from the Credit Facility made in April 2020, offset by repayments of bank ~~obligations.~~obligations and finance leases, as well as the payment of deferred finance fees related to the amendment of the Credit Facility.

Federal, state, and local governments have taken a variety of actions to contain the spread of COVID-19. Many jurisdictions required mandatory business closures during the Company’s 2021 fiscal year and imposed capacity limitations and other restrictions affecting our operations, some of which have continued into Fiscal 2022. Many of these restrictions were lifted in phases throughout Fiscal 2021 but could return if there is a resurgence of the pandemic spread. We have proactively taken steps to increase available cash, including, but not limited to, utilizing existing supply chain financing and factoring agreements, and utilizing available funds under our existing Credit 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 $140,000. 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 ~~17(b)~~16(b)). The availability under the revolving credit line of the Credit Facility was ~~$101,450~~$107,422 as of ~~May~~August 31, 2021.

All amounts outstanding under the Credit Facility will mature and become due on April 19, 2026; 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 ~~agreement.~~Agreement.

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 designated as LIBOR Rate Loans shall bear interest at a rate equal to the then applicable LIBOR rate plus a range of 1.75 - 2.25%. Loans designated as Base Rate loans shall bear interest at a rate equal to the applicable margin for Base Rate Loans plus a range of 0.75 - 1.25%, as defined in the ~~agreement,~~Agreement, and shall not be lower than 1.75%. The Credit Facility provides for a Benchmark Replacement that will replace the LIBOR rate for all revolver usage. The Benchmark Replacement is subject to the occurrence of a Benchmark Transition Event, as defined in the Second Amended and Restated Credit Agreement and becomes effective after a five-day transition period following the event.

Provided that the Company is in a Compliance Period (the period commencing on that day in which Excess Availability is less than 15% of the Maximum Revolver Amount and ending on a day in which Excess Availability is equal to or greater than 15%

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,~~Agreement, the lenders would have the right to assume dominion and control over the Company's cash.

The obligations under the ~~loan~~Credit Facility documents 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~~ Agreement.

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 as a component of its financing for working capital, which accelerates receivable collection and helps to better manage cash flow. Under the agreements, the Company has agreed 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 9). 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.

Certain contractual cash obligations and other commercial commitments will impact our short and long-term liquidity. At ~~May~~August 31, 2021, such obligations and commitments are as follows:

	Amount of Commitment Expiration per Period										Amount of Commitment Expiration per Period
Contractual Cash Obligations	Total		Less than 1 Year		2-3 Years		4-5 Years		After 5 Years		Total		Less than 1 Year		2-3 Years		4-5 Years		After 5 Years
Finance lease obligation (1)	$	595	$	366	$	229	$	—	$	—	$	490	$	335	$	155	$	—	$	—
Operating leases (1)		4,702		1,162		1,572		862		1,106		4,428		1,101		1,427		749		1,151
Total contractual cash obligations	$	5,297	$	1,528	$	1,801	$	862	$	1,106	$	4,918	$	1,436	$	1,582	$	749	$	1,151
Other Commitments
Bank obligations (2)	$	—	$	—	$	—	$	—	$	—	$	828	$	828	$	—	$	—	$	—
Stand-by and commercial letters of credit (3)		19,949		19,949		—		—		—		6,754		6,754		—		—		—
Other (4)		6,989		500		1,000		1,000		4,489		6,866		500		1,000		1,000		4,366
Pension obligation (5)		533		—		—		—		533		519		—		—		—		519
Unconditional purchase obligations (6)		207,307		207,307		—		—		—		170,752		170,752		—		—		—
Total other commitments		234,778		227,756		1,000		1,000		5,022		185,719		178,834		1,000		1,000		4,885
Total commitments	$	240,075	$	229,284	$	2,801	$	1,862	$	6,128	$	190,637	$	180,270	$	2,582	$	1,749	$	6,036

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, provide 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 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.

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.

We are required to adopt certain new accounting pronouncements. See Note 2625 to our consolidated financial statements included herein.

Voxx conducts business in various non-U.S. countries, including Germany, Canada, Mexico, China, Denmark, the Netherlands, France, and Australia 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. For the three and six months ended ~~May~~August 31, 2021, a uniform 10% strengthening of the U.S. dollar relative to the local currency of our foreign operations would have resulted in a decrease in sales of approximately ~~$2,600,~~$2,700 and $5,300, respectively, and in net income of approximately ~~$190.~~$210 and $400, respectively. The effects of foreign currency exchange rates on future results would also be impacted by changes in sales levels or local currency prices.

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. For the three and six months ended ~~May~~August 31, 2021, unrealized losses recorded in Other comprehensive income (loss) associated with these contracts were ~~$28.~~$172 and $144, respectively. A hypothetical 10% adverse change in the fair value of our forward exchange contracts would result in a negative impact of ~~$22~~$2 on the fair value of these forward exchange contracts at ~~May~~August 31, 2021.

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 the foreign subsidiaries. These changes result in cumulative translation adjustments, which are included in Accumulated other comprehensive (loss) income. At ~~May~~August 31, 2021, we had translation exposure to various foreign currencies with the most significant being the Euro. A hypothetical 10% adverse change in the foreign currency exchange rates would result in a negative impact of ~~$27~~$15 on Other comprehensive income (loss) for the ~~three~~six months ended ~~May~~August 31, 2021.

The Company continues to monitor the political and economic climate in Venezuela. Venezuela did not have sales for the three and six months ended ~~May~~August 31, 2021 and there were minimal cash related assets invested in Venezuela as of ~~May~~August 31, 2021 that would be subject to government foreign exchange controls. The Company has certain long-lived assets in Venezuela, which are held for investment purposes and had no value as of ~~May~~August 31, 2021.

Our earnings and cash flows are subject to fluctuations due to changes in interest rates on investment 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 the Florida Mortgage, we have debt outstanding in the amount of ~~$6,989~~$6,866 at ~~May~~August 31, 2021. Interest on this mortgage is charged at 70% of 1-month LIBOR plus 1.54%. The Company currently has one interest rate swap for the Florida Mortgage with a notional amount of ~~$6,989~~$6,866 at ~~May~~August 31, 2021. This swap locks the interest rate at 3.48% (inclusive of credit spread) on the Florida Mortgage through the mortgage end date of March 2026. The Company also has a Euro asset-based lending facility in Germany with a variable rate, which did not have an outstanding balance at ~~May~~August 31, 2021 (see Note ~~17)~~16).

As of ~~May~~August 31, 2021, the total net fair value of the interest rate swap recorded in other liabilities on our Consolidated Balance Sheet is ~~$428,~~$409, which represents the amount that would be paid upon unwinding the interest rate swap agreement based on market conditions on that date. Changes in the fair value of this interest rate swap agreement is reflected as an adjustment to other assets or liabilities with an offsetting adjustment to Accumulated other comprehensive (loss) income.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rules 13a-15(e) and 15d-15(e) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, these disclosure controls and procedures are effective as of ~~May~~August 31, 2021 to provide reasonable assurance that information required to be disclosed by the Company in its filing under the Exchange Act was recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission.

There were no material changes in our internal control over financial reporting (as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) during the ~~three~~six months ended ~~May~~August 31, 2021 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

See Note 2524 of the Notes to the Unaudited Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q and Note 15 of the Form 10-K for the fiscal year ended February 28, 2021 for information regarding legal proceedings.

There have been no material changes from the risk factors previously disclosed in the Company’s Form 10-K for the fiscal year ended February 28, 2021.

We have an ongoing authorization from our Board of Directors to repurchase shares of the Company's Class A Common Stock. During the three and six months ended ~~May~~August 31, 2021, ~~we did not repurchase any~~the Company purchased 113,000 shares for an aggregate cost of ~~the Company’s Class A Common Stock.~~$1,220 as follows:

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

Delaware (State or other jurisdiction of incorporation or organization)		13-1964841 (IRS Employer Identification No.)
2351 J Lawson Blvd., Orlando, Florida (Address of principal executive offices)		32824 (Zip Code)

(800) 645-7750 (Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:

Title of each class:	Trading Symbol:	Name of Each Exchange on which Registered
Class A Common Stock $.01 par value	VOXX	The Nasdaq Stock Market LLC

		Page
PART I	FINANCIAL INFORMATION

Item 1	FINANCIAL STATEMENTS
	Consolidated Balance Sheets at ~~May~~August 31, 2021 (unaudited) and February 28, 2021	3
	Unaudited Consolidated Statements of Operations and Comprehensive Income for the Three and SixMonths Ended ~~May~~August 31, 2021 and 2020	4
	Unaudited Consolidated Statements of Stockholders’ Equity for the Three and Six Months Ended ~~May~~August 31, 2021 and 2020	5
	Unaudited Consolidated Statements of Cash Flows for the ~~Three~~Six Months Ended ~~May~~August 31, 2021 and 2020	6
	Notes to Unaudited Consolidated Financial Statements	7
Item 2	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	30
Item 3	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	4143
Item 4	CONTROLS AND PROCEDURES	4143

PART II	OTHER INFORMATION

Item 1	LEGAL PROCEEDINGS	4244
Item 1A	RISK FACTORS	4244
Item 2	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	4244
Item 6	EXHIBITS	4345
SIGNATURES		4446


Exhibit Number		Description


31.1		Certification of Patrick M. Lavelle Pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934 (filed herewith).

31.2		Certification of Charles M. Stoehr Pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934 (filed herewith).

32.1		Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).

32.2		Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).

101		The following materials from VOXX International Corporation's Quarterly Report on Form 10-Q for the period ended ~~May~~August 31, 2021, formatted in Inline eXtensible Business Reporting Language (iXBRL): (i) the Consolidated Balance Sheets, (ii), the Unaudited Consolidated Statements of Operations and Comprehensive Income, (iii) the Unaudited Consolidated Statements of Stockholders’ Equity, (iv) the Unaudited Consolidated Statements of Cash Flows, and (v) Notes to the Unaudited Consolidated Financial Statements.

104		Cover Page Interactive Data File (embedded within the Inline XBRL document).

VOXX INTERNATIONAL CORPORATION

~~July~~October 12, 2021

By:		/s/ Patrick M. Lavelle
Patrick M. Lavelle,
President and Chief Executive Officer

By:		/s/ Charles M. Stoehr
Charles M. Stoehr,
Senior Vice President and Chief Financial Officer


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


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

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

Class		As of ~~July 9,~~October 8, 2021
Class A Common Stock		~~21,727,629~~21,614,629 Shares
Class B Common Stock		2,260,954 Shares

Period	Total Number of Shares Purchased (1)		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Shares That May Yet Be Purchased Under the Plans or Programs
7/20/2021 - 7/31/21		113,000	$	10.80		113,000		2,305,876
Total other commitments		113,000