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 August 25, 2022, this promissory note was amended and restated to allow EyeLock LLC to borrow up to $71,200. 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 February 28, 2025. 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 “Distribution Agreement”) with GalvanEyes LLC (“GalvanEyes”), a Florida LLC managed by Beat Kahli, the Vice Chairman of Voxx's Board of Directors. The Distribution Agreement provided that GalvanEyes would be the exclusive distributor of EyeLock products in the European Union, Switzerland, Puerto Rico, Malaysia, and Singapore, with the exception of any existing customer relationships prior to the Distribution Agreement date. The Distribution Agreement also included a put/call arrangement, whereby GalvanEyes had 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 had the ability to call the exclusivity during the term of the Distribution Agreement, based on the occurrence of certain events, which would result in a 20.0% equity interest given to GalvanEyes. Under the Distribution Agreement, in addition to paying for any products purchased, GalvanEyes agreed to pay EyeLock $10,000 in the form of an annual fee, over a two-year period, of up to $5,000 per year, with payments on a quarterly basis beginning on September 1, 2021. As of February 29, 2024, quarterly installment payments due from GalvanEyes under the Distribution Agreement were past due and totaled $2,578. A promissory note was signed by GalvanEyes on March 1, 2024 for the repayment of the remaining quarterly installments payable. The balance will be paid in eight quarterly installments beginning May 31, 2024 and ending on February 28, 2026 with interest accruing at a rate of 8%. The balance due under the promissory note at November 30, 2024, including accrued interest, totaled $2,424. A payment was received for the third quarterly promissory note installment in the amount of $352 on December 31, 2024.

On March 1, 2024, EyeLock LLC entered into a joint venture agreement (the "JV Agreement") with GalvanEyes to engage in a newly formed entity, BioCenturion LLC, to operate a biometrics business (see Note 13). EyeLock contributed assets, including all of its inventory and intangible assets, to the joint venture. Simultaneously with the

formation of the joint venture and execution of the JV Agreement, the Distribution Agreement was terminated. The put option established by the Distribution Agreement was canceled and the liability of $9,817 on the Company's Consolidated Balance Sheet at February 29, 2024, representing the prepayment made by GalvanEyes of a 20.0% interest in EyeLock upon exercise of the put option, was reclassified to Additional paid in capital and Non-controlling interest in proportion to the Company's ownership interest in EyeLock. The balance due on the promissory note receivable from GalvanEyes was also reclassified to Additional paid in capital, representing a contra-equity balance until the note is repaid. On November 1, 2024, GalvanEyes was acquired by Gentex, the largest shareholder of Voxx's Class A Common Stock. Steven Downing, CEO of Gentex, also serves as a member of Voxx's Board of Directors.

The Company has concluded that BioCenturion is a variable interest entity for which EyeLock lacks the power to direct the activities that most significantly impact the joint venture's economic performance. As EyeLock is not the primary beneficiary, it does not consolidate the variable interest entity.

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 November 30, 2024 and February 29, 2024:


	November 30, 2024			February 29, 2024
Assets	(unaudited)
Current assets:
Cash and cash equivalents	$	83		$	-
Accounts receivable, net		-			64
Inventory, net		-			1,839
Due from GalvanEyes LLC, current		-			1,238
Prepaid expenses and other current assets		-			58
Total current assets		83			3,199
Equity investment		1,147			-
Property, plant and equipment, net		-			4
Intangible assets, net		-			1,514
Due from GalvanEyes LLC, less current portion		-			1,340
Other assets		-			5
Total assets	$	1,230		$	6,062
Liabilities and Partners' Deficit
Current liabilities:
Accounts payable	$	630		$	759
Interest payable to VOXX		17,853			16,525
Accrued expenses and other current liabilities		127			287
Due to VOXX		69,174			69,377
Total current liabilities		87,784			86,948
Prepaid ownership interest in EyeLock LLC due to GalvanEyes LLC		-			9,817
Other long-term liabilities		1,200			1,200
Total liabilities		88,984			97,965
Commitments and contingencies
Partners' deficit:
Capital		48,808			41,416
Retained losses		(136,562	)		(133,319	)
Total partners' deficit		(87,754	)		(91,903	)
Total liabilities and partners' deficit	$	1,230		$	6,062

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 nine months ended November 30, 2024 and 2023:


	For the three months ended November 30,						For the nine months ended November 30,
	2024			2023			2024			2023
Net sales		-		$	91		$	8		$	401
Cost of sales		1			90			140			295
Gross profit		(1	)		1			(132	)		106
Operating expenses:
Selling		-			88			(9	)		305
General and administrative		-			399			33			1,260
Engineering and technical support		-			385			(19	)		1,606
Restructuring expenses		-			-			-			27
Total operating expenses		-			872			5			3,198
Operating loss		(1	)		(871	)		(137	)		(3,092	)
Other expense:
Interest and bank charges		(439	)		(435	)		(1,338	)		(1,296	)
Equity in loss of equity investee		(478	)		47			(1,843	)		-
Other, net		41			-			75			47
Total other expense, net		(876	)		(388	)		(3,106	)		(1,249	)
Loss before income taxes		(877	)		(1,259	)		(3,243	)		(4,341	)
Income tax expense		-			-			-			-
Net loss	$	(877	)	$	(1,259	)	$	(3,243	)	$	(4,341	)